January 24, 2018.

S&P 500 on a Tear!

The S&P 500 has reached another record, recording the greatest number of record highs ever for the month of January. The S&P 500 has traded up in 12 of this year’s 15 trading sessions. The market has ridden the wave of stronger domestic and international growth, tax reform, and solid corporate earnings.

Ray Dalio, the founder of Bridgewater Associates, the largest hedge fund in the world with $150 billion in assets, noted, “We are in this Goldilocks period right now. Inflation isn’t a problem. Growth is good, everything is pretty good with a big jolt of stimulation coming from changes in tax laws.” In his view, we’re going to see a “blowoff rally” – or a melt-up – that will take all 3 major indexes to new heights. “If you’re holding cash,” he noted, “you’re going to feel pretty stupid.”

Valero Energy rose in yesterday’s extended session, the largest refiner in the world approving a $2.5 billion stock buyback program, the company’s quarterly dividend raised 10 cents to 80 cents. Up 7% already in 2018, the stock rose 1% yesterday in afterhours trading.

Before opening today, General Electric (GE) will be reporting its quarterly numbers. Last time GE reported – despite the negative earnings surprise – the company’s stock managed to end higher on the day. Despite that bounce, the stock fell for 9 consecutive sessions thereafter. With the conglomerate trying to remake itself, the new CEO, Flannery, announced its transformation plan in mid-November. Players weren’t amused, the stock taking a further hit after word got out of a gaping loss from the company’s legacy insurance business. GE soared 4.5% yesterday. The stock, though, has fallen 43% over the past 12 months, and 24% over the past 3 months.

Ford will be reporting today. The stock has seen both lows and weak guidance of late – and more than anything, it’s played second fiddle to GM, which received two thumbs up after selling its European business and taking the helm in developing electric cars. What is going Ford’s way is its best-selling pickup trucks and SUVs.

Intel (INTC) will be reporting on Thursday after closing. The company has faced headwinds after a flaw was found in its microchips, making them vulnerable to hackers. Linux creator, Linus Torvalds, recently referred to the patches created by Intel as “complete and utter garbage,” placing the company even more in the hot seat. The patches could affect data center power users’ performance, which constitutes Intel’s largest area of expected growth, Wall Street expecting a 9% revenue increase to $5.09 billion for Q4.

Natural gas prices should also be watched today, soaring after forecasts for frigid weather in swaths of the U.S. Futures on the commodity have risen, February natural gas up 4%.

One of the biggest risk factors for the market now is the fate of international trade in a protectionist Trump era. With the tariffs recently placed on washing machines and solar panels, many are worried.

Senior international trade advisor at the law firm Miller & Chevalier, Welles Orr, noted: “I think it plays in nicely to the administration’s plan on being tough on enforcing trade rules and fighting out against the Chinese and other Asian countries that are clearly trying to circumvent the normal trade rules.” A decision to plop tariffs on aluminum and steel is expected soon. Orr added, “This all fits with the administration’s play to be tough trade negotiators. This comes in nicely just before or during the sixth round of negotiations on NAFTA. The administration shows its muscle. It’s not backing down from its campaign pledge.”

The operative question is whether NAFTA will be terminated. And what remains to be seen vis a vis the tariffs plopped on LG and Samsung, is the extent to which the new plants they’re opening in the U.S. will mitigate the fallout. Consumers likewise would be hurt by the price increases, Goldman noting that the cost for large imported residential washers could rise from 8% to 20% in the first year the tariff goes into effect.



Daily change


Today’s Economic Calendar: The FHFA House Price Index will be released at 9:00, followed by existing home sales at 10:00, and then oil inventories at 10:30.

Wednesday’s Hot Stocks: COF, CNR, TXN, UAL, VLO, GE


                                              Economic Calendar


DAYTIME (EST)EventForecastImpact
Wednesday9:00FHFA House Price Index0.5 %Medium
Wednesday10:00Existing Home Sales5.750 MMedium
Wednesday10:30Oil Inventories-6.9 M barrelsLow
Thursday8:30International Trade in Goods
$-68.9 BMedium
Thursday8:30Jobless Claims240 KMedium
Thursday10:00Wholesale Inventories683 KMedium
Thursday10:00New Home Sales0.5 %Medium
Friday8:30Durable Goods Orders0.8 %Medium
Friday8:30GDP2.9 %High


Earning Calendar


EDUNew Oriental Education & Technology Group Inc.AMTuesday
TRVThe Travelers Companies, Inc.AMTuesday
STTState Street CorporationAMTuesday
KMBKimberly-Clark CorporationAMTuesday
VZVerizon Communications Inc.AMTuesday
PGThe Procter & Gamble CompanyAMTuesday
JNJJohnson & JohnsonAMTuesday
TXNTexas Instruments IncorporatedPMTuesday
COFCapital One Financial CorporationPMTuesday
UALUnited Continental Holdings, Inc.PMTuesday
GDGeneral Dynamics CorporationAMWednesday
SWKStanley Black & Decker, Inc.AMWednesday
RCLRoyal Caribbean Cruises Ltd.AMWednesday
GEGeneral Electric CompanyAMWednesday
CMCSAComcast CorporationAMWednesday
ABTAbbott LaboratoriesAMWednesday
UTXUnited Technologies CorporationAMWednesday
LVSLas Vegas Sands Corp.PMWednesday
LRCXLam Research CorporationPMWednesday
CCICrown Castle International Corp. (REIT)PMWednesday
FFord Motor CompanyPMWednesday
WHRWhirlpool CorporationPMWednesday
XLNXXilinx, Inc.PMWednesday
URIUnited Rentals, Inc.PMWednesday
MKCMcCormick & Company, IncorporatedAMThursday
NOCNorthrop Grumman CorporationAMThursday
RTNRaytheon CompanyAMThursday
LUVSouthwest Airlines Co.AMThursday
AALAmerican Airlines Group Inc.AMThursday
CELGCelgene CorporationAMThursday
UNPUnion Pacific CorporationAMThursday
CATCaterpillar Inc.AMThursday
MMM3M CompanyAMThursday
BIIBBiogen Inc.AMThursday
INTCIntel CorporationPMThursday
SBUXStarbucks CorporationPMThursday
WDCWestern Digital CorporationPMThursday
KLACKLA-Tencor CorporationPMThursday
MXIMMaxim Integrated Products, Inc.PMThursday
CLColgate-Palmolive CompanyAMFriday
ABBVAbbVie Inc.AMFriday
HONHoneywell International Inc.AMFriday


New York Strategy Swing



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