January 23, 2018.
Shutdown Averted, Market Soars!
The major indexes hit new highs yesterday, the U.S. Senate approving a procedural bill that paves the way to ending the Federal government’s shutdown. The S&P 500 was up 0.8%, led by energy and telecom service stocks. Only 2 of its 11 sectors ended down. The NASDAQ was up 1%, propelled by biotech stocks. The blue chip Dow was up 0.6%.
All-in-all, governmental shutdowns have little bite in terms of affecting stock prices. In the last 35 years, in 4 of the last 7 shutdowns the market fell on average by only 1%; it took less than 2-weeks to get back on track. With shutdowns having little impact on the market, the biggest risk now is geopolitical, Trump, yesterday, plopping on his first protectionary trade measure on solar panels.
One of the leaders in yesterday’s trading was Netflix (NFLX), which soared after its subscriber growth beat out its own forecasts as well as the market’s. The company’s market cap hit $100 billion. Netflix beat revenue expectations, earnings coming out as expected. Net subscriptions rose 18% over the same period last year. Netflix’s international growth strategy seemed to pay off big time, the company tacking on 8.3 million new subscribers. The company also managed to hike rates, winning on all fronts.
Apple (AAPL) fell 0.8%, on new concerns about iPhone X sales. Celgene (CELG) rose 0.3% after the release that it planned on buying JUNO. JUNO rose 27%. Xerox (XRX) rose 2.6% on news that its biggest and third biggest investors have joined forces in creating an alliance to pressure the printing and copying giant to explore a sale.
Economic Diary: Today’s Economic Diary will be very light. Continue to follow movement in the U.S. 10-year T-bond, and keep your eyes peeled on movement in Bitcoin after Goldman’s downgrade yesterday.
That notwithstanding, Bitcoin – like cats – seem to have 9 lives, so don’t be so quick to eulogize it. Bubble or not – and from Warren Buffett to Jamie Dimon the greatest business minds out there have predicted its demise, the cryptocurrency, more than once has caught us off guard with remarkable comebacks after suffering large losses.
Goldman Sachs warned its investors about the perils of Bitcoin, the world’s largest digital currency, writing that there’s no doubt that it has been pushed “into bubble territory.” Goldman also noted that its “meteoric rise in a short time has dwarfed the rise seen during the dot-com bubble.” It would seem that Bitcoin is on thin ice, Goldman analysts noting, “We also believe that cryptocurrencies have moved beyond bubble levels in financial markets, and even beyond the levels seen during the Dutch ‘tulipmania’ between 1634 and early 1637.” The Securities and Exchange Commission (SEC) has referenced the extreme volatility in the cryptocurrency – and its lack of regulation – as the reason it’s unlikely to approve an ETF on the “currency” any time soon. Writing to clients, Goldman observed, “While we do not know if bitcoin or any other cryptocurrency will double or triple from prevailing prices, we do not believe that these cryptocurrencies will retain their value in the long run in their current incarnation.”
Tuesday’s Hot Stocks: ADBE, AMTD, RMD, NFLX
Have a great trading day!
|Wednesday||9:00||FHFA House Price Index||0.5 %||Medium|
|Wednesday||10:00||Existing Home Sales||5.750 M||Medium|
|Wednesday||10:30||Oil Inventories||-6.9 M barrels||Low|
|Thursday||8:30||International Trade in Goods
|Thursday||8:30||Jobless Claims||240 K||Medium|
|Thursday||10:00||Wholesale Inventories||683 K||Medium|
|Thursday||10:00||New Home Sales||0.5 %||Medium|
|Friday||8:30||Durable Goods Orders||0.8 %||Medium|
|EDU||New Oriental Education & Technology Group Inc.||AM||Tuesday|
|TRV||The Travelers Companies, Inc.||AM||Tuesday|
|STT||State Street Corporation||AM||Tuesday|
|VZ||Verizon Communications Inc.||AM||Tuesday|
|PG||The Procter & Gamble Company||AM||Tuesday|
|JNJ||Johnson & Johnson||AM||Tuesday|
|TXN||Texas Instruments Incorporated||PM||Tuesday|
|COF||Capital One Financial Corporation||PM||Tuesday|
|UAL||United Continental Holdings, Inc.||PM||Tuesday|
|GD||General Dynamics Corporation||AM||Wednesday|
|SWK||Stanley Black & Decker, Inc.||AM||Wednesday|
|RCL||Royal Caribbean Cruises Ltd.||AM||Wednesday|
|GE||General Electric Company||AM||Wednesday|
|UTX||United Technologies Corporation||AM||Wednesday|
|LVS||Las Vegas Sands Corp.||PM||Wednesday|
|LRCX||Lam Research Corporation||PM||Wednesday|
|CCI||Crown Castle International Corp. (REIT)||PM||Wednesday|
|F||Ford Motor Company||PM||Wednesday|
|URI||United Rentals, Inc.||PM||Wednesday|
|MKC||McCormick & Company, Incorporated||AM||Thursday|
|NOC||Northrop Grumman Corporation||AM||Thursday|
|LUV||Southwest Airlines Co.||AM||Thursday|
|AAL||American Airlines Group Inc.||AM||Thursday|
|UNP||Union Pacific Corporation||AM||Thursday|
|WDC||Western Digital Corporation||PM||Thursday|
|MXIM||Maxim Integrated Products, Inc.||PM||Thursday|
|HON||Honeywell International Inc.||AM||Friday|
New York Strategy Swing