Just think... "The mind is everything. What you believe you become."
-- The Trader
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| | Traders:
I've said before and I say again...
Belief is far more powerful than mere thought.
If you believe, you're MUCH more likely to follow through.
Apologies for the late update... I luv you guys, but my kids... 'nuff said.
If you're interested in upping your trading return game in 2020, stay tuned to your inbox over the next few days (you can also reply to this message and indicate as much).
Now on to the info... |
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In Sum The markets closed on a bounce last week on the back of comments out of the U.S. Trade Representative’s office that it was close to finalizing some sections of a “Phase 1” trade deal with China.
S&P 500 +1.2%, Nasdaq +1.9% DJIA +0.7%.
Earnings season continued in earnest with Amazon and Twitter missing expectations while Intel, PayPal and Tesla outperformed. Earnings reports will flood the markets again this week as we enter into the heart of the reporting period.
On the economic front, business activity continued to slow around the world. In the U.S., durable good orders fell in September, in the eurozone, business activity for October was close to stagnation, while in Japan it actually declined.
Next week, all eyes will be on the Federal Reserve as it releases its latest policy statement (10/30). The market is currently pricing in about a 94% chance of a rate cut. Economists will be watching for language-tweaking by the central bank to determine if the Fed is done with its “mid-cycle adjustment” or if the recent soft economic data will come into play.
In other news, a new McKinsey & Company study showed that a majority of banks around the world may not be economically viable if the global economy falters. The report showed that return on equity has fallen below costs for nearly 60% of banks, which is financially unsustainable in the long run. A downturn in the economy, or even a spread of negative interest rates around the world, could make things even worse. And banks face new competition from all corners, from fintech start-ups with lower costs to tech giants muscling into lucrative banking activities.
And for what it’s worth, next Tuesday marks the 90th anniversary of Black Tuesday. Inaccurate name aside (shouldn't it be Red Tuesday?), it marks the anniversary of the day the Dow Jones Industrial Average fell 12% and is often cited as the beginning of the Great Depression. |
| | | | - The ideological leader of Islamic State died in a U.S.-led raid in northwestern Syria. As usual, 45 used it as an opportunity to take a personal victory lap while sharing more details than the intelligence community deemed appropriate.
- Top US and Chinese trade officials reportedly planned to discuss plans on Friday for China to buy more U.S. farm products, but in return, China wants cancellation of some planned and existing U.S. tariffs on Chinese imports. U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He plan to speak by telephone as the two sides try to hammer out the text for a "Phase 1" trade deal announced earlier this month. So far, 45 has only agreed to cancel the Oct. 15 increase in tariffs on $250B in Chinese goods, but Beijing is expected to ask Washington to drop its plan to impose tariffs on $156B worth of Chinese goods plus 15% tariffs imposed on Sept. 1 on $125B of Chinese goods.
- Russian and Turkish troops will take joint control over a vast swath of territory in northern Syria. The move, which came after President Vladimir Putin of Russia hosted President Recep Tayyip Erdogan of Turkey for talks on how they will divide control of Syria, cements Russian influence there at the expense of the U.S. and its Kurdish former allies. Russia, which rescued the government of President Bashar al-Assad of Syria with brutal airstrikes over the last four years, now looks to be the arbiter of the power balance there, days after 45 left a power vacuum with his sudden withdrawal of U.S. troops.
- 45 is lifting U.S. sanctions against Turkey after being assured that the country is permanently halting an offensive in northern Syria as part of a deal brokered with Russia. He also said he intends to keep a small number of U.S. troops in northern Syria to protect the oil fields, but didn’t provide details. That should go over REALLY WELL with the Kurds.
- The eurozone economy is stuck in the mud. IHS Markit's composite purchasing managers index, which measures activity in the manufacturing and service sectors, inched up to a preliminary reading of 50.2 in October, barely above the 50-mark that separates expansion from contraction. “The manufacturing downturn remains the fiercest since 2012, and continues to infect the service sector," IHS Markit economist Chris Williamson said.
- Utah is beginning to voluntarily collect an electric and hybrid vehicle fee, based on the number of miles driven. State lawmakers gave the Utah Department of Transportation permission to collect the fee, in a move to make up for lost gasoline tax revenue. However, the agency will make it optional for now, offering drivers an incentive of waiving the annual flat fee for those vehicles, instead of charging 1.5 cents per mile driven.
- Home sales rose for two straight months in July and August but fell 2.2% in September, the National Association of Realtors said.
- Oregon's state legislature in June passed a zoning law requiring cities of 25,000 people or more to allow two-, three- and four-unit residential buildings in neighborhoods of single-family homes. In Bend, which sits on the Oregon high desert and is one of the fastest-growing small cities in the country, much of what the new zoning law requires is already under way.
- Lawmakers refused to put legislation enacting Brexit on a fast track to passage, which could have enabled PM Boris Johnson to meet his deadline of leaving the E.U. by October 31.
- A. Wayne Johnson, a top student-loan official in the current administration said he will resign and call for canceling most of the nation’s outstanding student debt.
- Confidence among C.E.O.s has fallen to its lowest level in a decade, according to a survey by the Conference Board. It’s now at a level last seen in the aftermath of the financial crisis.
- The IMF thinks autos contributed a fifth of last year’s slowing in global gross domestic product and a third of the slowdown in trade. World-wide sales fell in 2018, are expected to drop again this year, and Moody’s Investors Service projects another decline in 2020.
- Russian President Vladimir Putin sought to expand Moscow’s clout in Africa by touting military aid and economic projects at the first-ever Russia-Africa summit. As America pulls back, Russia steps into the void(s) being left.
- China appealed to the World Trade Organization to punish the United States with $2.4 billion in retaliatory sanctions, after the WTO ruled that the US did not comply with the body’s July ruling on tariffs imposed Chinese goods.
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| GLD The gold etf looks to be forming a bull flag on the weekly chart. |
| | | - Debt owed by U.S. companies excluding banks and other financial institutions is at nearly $10 trillion—up about 60% from precrisis levels. Years of rock-bottom interest rates have fueled a boom in borrowing, while bond ratings firms have gone easy on some heavily indebted firms. This as the Fed prepares to cut rates again with equity markets at all time highs.
- Softbank will provide WeWork $5 billion in new financing and up to $3 billion in a tender offer for existing shareholders. Softbank will also speed up an existing $1.5 billion financing commitment. After closing, and following the tender offer, Softbank will own approximately 80% of the co-working giant. WeWork secured a deal that could hand co-founder Adam Neumann a nearly $1.7 billion windfall and sever most of his ties with the company. The deal will value WeWork at approximately $8 billion. Ex-CEO Adam Neumann has the right to sell $970 million of shares, or roughly one-third of his stake, in the tender offer. Nice outcome for the former CEO...
- Unionized workers at several General Motors factories have voted in favor of the new labor contract struck last week by United Auto Workers and GM negotiators, according to the WSJ. Key approvals were obtained at key factories in Michigan and Ohio ahead of the final vote tally, which is expected to be announced Friday night. A simple majority is enough for the new contract to go into effect.
- Last March, Chinese researchers announced an ingenious and potentially devastating attack against one of America’s most prized technological assets—a Tesla electric car, The team had found several ways to fool the car’s AI algorithms. “By subtly altering the data fed to the car’s sensors, the researchers were able to bamboozle and bewilder the artificial intelligence that runs the vehicle.” The moral of the story? “Deep learning” algorithms are surprisingly easy to fool if you find their weak points. AI is seen as the next big military advantage around the world, powering such things as attack drones and systems for analyzing satellite imagery or intercepted communications. And you folks are handing over control of your homes to AI... I'll keep my regular, old school remotes and such thanks.
- Four large drug distributors, Teva, McKesson, AmerisourceBergen and Cardinal Health, edged closer to reaching a $48B settlement of all opioid litigation against them following this week's $260M deal with two Ohio counties that averted the first federal trial over their role in the U.S. opioid epidemic.
- With the latest down move for SaaS stocks, companies in the space have given back all their gains since February. Declines come as investors are increasingly questioning sky-high multiples that have characterized the sector.
- Social-media influencers are losing trust among the advertisers that pay them to pitch products. Businesses will funnel billions of dollars this year to these online personalities. But a whiff of deceit now taints the marketplace: Influencers have strained ties with sponsors by inflating their number of followers—sometimes buying fake ones—and damaged their credibility with real-life followers by promoting products they don’t use. And with no way to measure sales or verify how many people see the ads, companies are starting to question their value. I'm shocked... Really.
- JPMorgan Chase will try to make it easier for people with criminal records to enter the workforce, including at the bank itself—it's removing all questions about criminal records from its job applications. It also will lobby state and local governments to change laws so that fewer former felons are barred from employment in industries such as finance.
- Jamie Dimon of JPMorgan Chase called Libra, the Facebook cryptocurrency project that has been criticized by regulators worldwide, “neat idea that will never happen.” Yet it could still prompt global banking authorities to coordinate policies on digital currencies.
- Google unveiled its latest lineup of hardware devices last week, including many A.I.-powered features. Its new Pixel 4 mobiles will now process some queries for Google's A.I.-driven digital assistant directly on the phone, without having to transmit data to the cloud.
- Most of the discussion around deepfakes, realistic-looking fake videos created using widely-available A.I. software, has concerned malicious uses of the technology: from revenge porn to political disinformation. But Hollywood studios are eying the technique too to help generate visual effects and perhaps even, in the future, entire films.
- Long-time Nike CEO Mark Parker will step down next year and be replaced by board member and former eBay CEO John Donahoe, who will be tasked with bolstering the company's online strategy.
- This week marks the start of New York state's unprecedented lawsuit against Exxon Mobil, which it accuses of misleading investors about the cost of climate regulation. New York alleges that Exxon's internal documents show it was using higher forecasts of climate-related costs for evaluating new projects, compared with the figures it was showing investors.
- After weeks of hushed rumors, scientists unvelied a powerful advanced version of the popular CRISPR gene-editing technique that has the potential to treat a vast range of genetic diseases in humans. Known as "prime editing," the new approach can swap any of the DNA building blocks - think of the letters A, T, C, and G - for any other, at precise locations along the genome with a dramatic reduction in errors.
- Tesla delivered positive third-quarter earnings on Wednesday. The company turned a profit, earning $1.86 per share versus analyst expected losses of 42 cents per share. The company generated $6.3 billion of revenue versus analyst expected revenue of $6.33 billion. In after-hours trading, shares of TSLA spiked more than 20 percent on the news.
- Renovation and maintenance spending are forecast to decline over the next year for the first time in a decade, according to the Leading Indicator of Remodeling Activity, which was developed by Harvard University’s Joint Center for Housing Studies. That could be a threat to highflying stocks like Home Depot and Sherwin-Williams, which have shot to record highs this week. Following years of 5% to 7% growth in spending since last decade’s housing crash, Harvard’s model has been predicting slower growth for the past year or so and an outright decline next year for the first time since 2010.
- Amazon sells clothes from factories other stores shun. After a 2013 factory collapse killed over 1,100 in Bangladesh, most big U.S. apparel companies agreed not to sell goods from plants violating worker-safety standards.
- Coinbase is one of the rare unicorns that makes money. CEO Brian Armstrong revealed at Vanity Fair’s New Establishment Summit on Tuesday that Coinbase was profitable in 2017 and 2018, and has been profitable to date in 2019.
- Google claims to have harnessed the power of natural-language understanding to improve its search results, in an update that will start rolling out soon. The company says this is the biggest change to its core product that it's instituted in five years, and one that will improve one in 10 searches. The technology is an A.I. model called BERT.
- Companies including Amazon, Alphabet’s Wing and Uber are starting the most advanced trials of drone delivery in U.S. history.
- The Pentagon awarded Microsoft a hotly contested and controversial contract to build a large cloud-computing system for the U.S. military in a major setback to rival Amazon. The so-called JEDI contract could be worth up to $10 billion to Microsoft over a 10-year period.
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| Interesting Stocks From Last Week |
| | | | | | | | | | | | Select Economic Announcements: - Monday - Intl Trade In Goods, Dallas Fed Mfg Survey
- Tuesday - CaseShiller HPI, Consumer Conf., FOMC Mtg Begins
- Wednesday - Empl Report, GDP, Petro Status Report, FOMC Ann
- Thursday - Jobs Data, Natural Gas, Last Day October
- Friday - More Empl Data, ISM, PMI
Select Earnings Announcements: - Monday: Alphabet, AT&T, T-Mobile, Checkpoint, Akamai
- Tuesday: Mastercard, Merck, Pfizer, BP, Amgen, Petrochina, General Motors, Shopify, Advanced Micro
- Wednesday: Apple, Facebook, GlaxoSmithKline, Starbux, General Electric, CME Group, Vertex
- Thursday: Sanofi, Bristol Meyers, Altria, Celgene
- Friday: Alibaba, Exxon Mobile, Chevron, Colgate Palmolive
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| | | | As always, make up your own mind and, more important, minimize your risk no matter what you do.
KIS,
The Trader
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