March 14, 2018.
Even when things seem to be going right economically, Trump of late, seems to always have something up his sleeve. Once again, saber rattling and all, Trump sent shivers down the market. Just a bit ago it was boasts that trade wars were “easy to win.” Nobody doubted that Trump was pandering to his manufacturing base, but the hope was that Trump would minimize damage and fallout. “America first,” though, has proven itself a malleable golem, shaped and fitted to Trump’s policies which he cobbles together on the fly. Voices mounted from Trump’s party that tariffs would dent free enterprise, spreading the cost of higher manufacturing prices on the average Joe. Trump saw it through, though, to the end, Senate Majority leader, McConnell announcing that his party won’t block the president’s tariff. If that move didn’t put enough of a scare through markets, Trump, followed that up with a surprise decision to meet the North Korean head of state, bucking over half a century of American foreign policy. And the, on the roster yesterday, Trump announced that he was firing his Secretary of State, and placing stiffer tariffs on China, the very same tariffs over which Trump’s #1 economic expert decided to jump ship just a few days ago.
With the White House now planning on plopping tariffs of $60 billion on Chinese imports, the question, like we said recently, is, “Who’s next?!” There’s almost no way to know where to invest for the long-run. If the market perfectly prices in certainty and uncertainty, the latter has taken the lead of late, the laundry list growing of all of the things that can go awry. The same way that it worked on the upside, companies getting a massive boost in retained earnings due to a laxer tax code, on the flip side, overnight, a company’s cost structure can change dramatically, the likes of which we saw recently on the part of steel and aluminum users. The curve ball is that even within industries that seem to benefit at face value, not all steel workers will benefit. Those processing imported steel will take a hit, giving more credence to the notion that the tariffs were perfectly planned to coincide with the special Pennsylvania elections that took place yesterday. There in PA, it seems that with all of his meticulous planning, Trump’s coterie fell short, the special election seat going to the Democrats.
Daily Summary: All three major indexes fell. The blue chip Dow dropped 0.68%, the S&P 500 shedding 0.64%. The NASDAQ, after being the only index to rise two days ago, took the biggest losses yesterday, sliding 1.02%. On the S&P 500, only the utilities sector ended up on the day. The biggest loser was the IT sector, which traded off 1.66%, followed by financials which shed 0.99%. Tech stocks didn’t fare well yesterday, MSFT, FB, GOOGL all off over 1.5%.
Falling stock prices, yesterday, weighed on both the dollar and crude oil – and it could very well be that some sectors took a hit after the news of the next tariff round. Oil futures, at their lowest point, had fallen as much as 1.8% yesterday.
The CPI yesterday was in the sweet spot, recording a 0.2% rise, in keeping with the consensus, meaning the Fed, presumably, won’t hike rates too quickly. Though yesterday’s CPI reading was expected to be a tailwind for the market, Trump’s dramatic decisions, with the stroke of a pen or a tweet on the keyboard, have rattled markets, meaning you should continue to expect volatility from one day to the next. Trump seems to remind us of Gump’s famous “box of chocolates;” in other words, “You never know what you’re gonna get!”
Economic Calendar: Be primed for the key PPI, producer inflation numbers, at 8:30. The reading is crucial for the Fed which is on track to raise interest rates to quell inflationary forces. February’s retail sales numbers will be released at 8:30, economists projecting a 0.3% rise in sales over January’s reading.
Business inventories will be coming out at 10:00. Then, at 10:30, the EIA Petroleum Status Report will be released.
On the earnings front, be on the lookout today for the quarterly results of 3D Systems (DDD), Progressive (PGR), Williams-Sonoma (WSM) and Noodles & Co. (NDLS).
Wednesday’s Hot Stocks: CMCSA, DISH, TWX, SFIX
Have a great trading day!
|Tuesday||6:00||NFIB Small Business Optimism Index||107.1||Medium|
|Tuesday||8:30||Consumer Price Index||0.2 %||Medium|
|Wednesday||8:30||Retail Sales||0.4 %||Medium|
|Wednesday||10:00||Business Inventories||0.5 %||Medium|
|Wednesday||10:30||Oil Inventories||2.4 M barrels||Low|
|Thursday||8:30||Jobless Claims||230 K||Medium|
|Thursday||8:30||Philadelphia Fed Business Outlook Survey||23.3||Medium|
|Thursday||8:30||Empire State Mfg Survey||14.6||Medium|
|Thursday||8:30||Import and Export Prices||0.3 %/ 0.3%||Medium|
|Thursday||10:00||Housing Market Index||72||Medium|
|Friday||8:30||Housing Starts||1.284 M||Medium|
|Friday||9:15||Industrial Production||0.3 %||Medium|
|GBT||Global Blood Therapeutics Inc.||PM||Monday|
|COUP||Coupa Software Incorporated||PM||Monday|
|DKS||Dick’s Sporting Goods, Inc.||AM||Tuesday|
|GDS||GDS Holdings Limited||AM||Tuesday|
|SIG||Signet Jewelers Limited||AM||Wednesday|
|JUNO||Juno Therapeutics, Inc.||PM||Wednesday|
|CTRP||Ctrip.com International, Ltd.||PM||Wednesday|
|BITA||Bitauto Holdings Limited||AM||Thursday|
|DG||Dollar General Corporation||AM||Thursday|
|ULTA||Ulta Beauty, Inc.||PM||Thursday|
|TIF||Tiffany & Co.||AM||Friday|
New York Strategy Swing
|Status||Data Close||Profit\ |