March 29, 2018.
Things are not looking good this month for the major indexes. Dow’s heading towards declines of 4.7%, the S&P 500 on track to fall 4%, with the NASDAQ smack in the middle heading for losses of 4.5%. Trump’s who’s prided himself so much on the market’s gains has changed his narrative, touting the long-term integrity of the U.S. economy which he sees as hinging on protectionism. Announcing a spate of new tariffs, the president has succeeded in scaring investors. Where every economics student knows that the value of an asset is its future expected income stream, nobody knows with Trump in the picture how much American firms can now generate.
Companies performing well, the likes of GM, have gotten whiplashed, because their whole cost structure has changed. With Trump it seem like a work in progress and a lost cause, giving even algorithms a run for their money. For just a sampling, Trump announced hefty steel and import tariffs – and then backtracked for allies – leaving car producers and other steel users in the lurch with no way to ultimately know how much the tariffs will ultimately affect their bottom line, the bread and butter of stock trading. What every investors looks at is top line revenues and bottom line earnings, and now there’s no way to know, meaning investors are best off expecting the worst, and pricing that scenario in to their valuations.
“The president has said many times before he’s always looking to create a level playing field for all businesses and this is no different” noted Sarah Sanders, White House spokeswoman when asked about reports that Trump was targeting Amazon. “He’s always going to look at different ways, but there aren’t any specific policies on the table at this time.”
Tech stocks didn’t have a pleasant day by any measure of the word. Apple (AAPL) fell by 1.10%, Netflix shedding 4.96%. Google was off 0.17%.
Facebook (FB) managed to recover slightly, up 0.53% on the day. The stock showed a comeback after announcing that it would streamline privacy settings.
Two autonomous car players have been hit hard of late after news of fatalities, Tesla and NVIDIA. TSLA traded off 8.1%. At the same time, NVIDIA announced that it was putting on hold tests of self-driving vehicles after a fatality.
It could be that Trump’s tweets also heled lighten the load. At the same time, it’s anyone’s guess what will happen: “Received message last night from XI JINPING of China that his meeting with KIM JONG UN went very well and that KIM looks forward to his meeting with me. In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost!”
In turn, the 10-year T-bond yield remained at a seven week low, seeing downward pressure from geopolitical threats.
Daily Summary: The Dow and the S&P 500 each fell 0.04%. The NASDAQ fell the most of the major indexes, dropping 0.85%. The spread on indexes between the daily high and low has been rather large, the Dow trading down as low as 130 points and up as much as 235 points. The spread on the NASDAQ was 1.9%, as low as 1.5% at the daily bottom and up as much as 0.4%.
Trump continues to be the focal point of trading in some individual companies. Yesterday, word got out about Trump’s vendetta against Amazon, the stock in turn falling 65.63 points, falling 4.38%. We’ve seen over and over again individual companies – from gun, to steel and to mammoth tech companies – falling on Trump’s whims. That’s the peril of this market, and with Trump, it’s a numbers game, or a roll of the die. Who knows who Trump might target next, on Twitter or in an off the cuff remark at a White House press party.
GBH Insights analyst, Daniel Ives, noted, “With Facebook and regulatory worries swirling round tech names, the last thing nervous tech investors wanted to see today was news that Trump is targeting Bezos and Amazon over the coming months.”U.S.-listed shares of Shire PLC (SHPG), soared about 14% after Japan’s Takeda Pharmaceutical Co. noted it was weighing an offer for the Irish biopharma firm.
BlackBerry Ltd. (BB) shares fell 1.4% even though profit and sales beat the consensus.
Walgreens Boots Alliance Inc. (WBA) was up 2.5%, after the drugstore likewise beat expectations – while also raising its guidance.
Another key news point was Tesla (TSLA). Moody’s downgraded it from a corporate rating of B3 to B2.
Twitter (TWTR) rebounded 1.4% after having collapsed 12% on Tuesday after famed research company, Citron, announced a short on the stock.
Jobless claims and Personal Income and Outlays will be released at 8:30, the Chicago PMI coming out at 9:45. Consumer Sentiment numbers will be released at 10:00.
|Tuesday||9:00||S&P Corelogic Case-Shiller HPI||6.2 %||Medium|
|Wednesday||8:30||Wholesale Inventories [Advance]||0.5 %||Medium|
|Wednesday||10:00||Pending Home Sales Index||2.7 %||Medium|
|Wednesday||10:30||Oil Inventories||-2.6 M barrels||Low|
|Thursday||8:30||Jobless Claims||228 K||Medium|
|Thursday||8:30||Personal Income and Outlays||0.4 %||Medium|
|Friday||Good Friday – Market is Closed|
|TM||Toyota Motor Corporation||AM||Monday|
|DB||Deutsche Bank Aktiengesellschaft||AM||Monday|
|RHT||Red Hat, Inc.||PM||Monday|
|MKC||McCormick & Company, Incorporated||AM||Tuesday|
|LULU||Lululemon Athletica Inc.||PM||Tuesday|
|WBA||Walgreens Boots Alliance, Inc.||AM||Wednesday|
|VRNT||Verint Systems Inc.||PM||Wednesday|
|WOR||Worthington Industries, Inc.||AM||Thursday|
|SAIC||Science Applications International Corporation||AM||Thursday|
|STZ||Constellation Brands, Inc.||AM||Thursday|
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