Quote of The Week "The financial crisis and the Great Recession posed the most significant macroeconomic challenges for the United States in a half-century, leaving behind high unemployment and below-target inflation and calling for highly accommodative monetary policies."
-- Jerome Powell
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| | | Traders:
All of the talk this weekend suggests we should prepare for times like the quote above... and soon. |
| Last Week In Sum Traders all over the world, started the week with a lot of optimism as world economies prepared to receive some stimulus.
Oops...
S&P 500 -1.43%; Nasdaq Composite -1.83% DJIA -0.9932%.
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| | | Macro News:
China announced interest rate reforms that will lower corporate borrowing rates, while Germany’s finance minister announced the possibility of spending as much as $55 billion (50 billion Euros) to help boost the economy.
Minutes from the U.S. Federal Reserve’s July meeting, where they cut rates by 0.25%, showed that the Fed debated cutting rates by 0.50%. This news helped global markets to stabilize. However, after waiting all week for U.S. Federal Reserve Chairman Jerome Powell’s Friday speech at Jackson Hole, Wyoming to provide more clues on the economy and interest rates, investors were disappointed by the lack of commitment in his statements. In his speech Powell stated that the Fed will “act as appropriate” to keep the economy healthy but didn’t commit to further interest rate cuts purportedly due to the mixed U.S. economic data. While admitting there’s a slowdown in the manufacturing sector and concerns about escalating trade issues, Powell said that “solid job growth and rising wages have been driving robust consumption and supporting overall moderate growth.”
Also on Friday, following yet another moronic tweet from 45 “ordering” U.S. companies to “immediately start looking for an alternative to China,” the Chinese government stated that it will impose additional retaliatory tariffs on 5,078 American goods. The combination pulled European and North American equity markets sharply lower on Friday to close the week.
Shares of Home Depot, Lowe’s and Target surged last week after reporting higher than expected Q2 earnings, showing that U.S. consumers have not lost their appetite to spend. On the other hand, a widely-followed survey of U.S. factory activity, IHS Markit, showed a reading of 49.9. It was the first time in almost 10 years that it fell below 50. A reading below 50 means that the manufacturing sector is contracting.
In global news, the British Pound experienced huge volatility as it dropped close to its three-year-low against the Euro on Tuesday as British Prime Minister Boris Johnson continued trying to negotiate his country’s divorce from the European Union (EU), but recovered strongly on Thursday after German Chancellor Angela Merkel’s comments that a solution to the Irish border issue (a huge sticking point in the Brexit negotiation) can be resolved before the October 31 deadline. The Chinese Yuan fell to an 11-year low against the U.S. dollar as traders worry about the escalation of the U.S./ China trade issue. Meanwhile, Europe’s largest economy, Germany, released weak manufacturing numbers as measured by the IHS markets’ manufacturing PMI index. Furthermore, a German automotive production dropped by 12 percent in the first half of 2019.
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| | | Micro News:
- TGT rocketed higher on Wednesday after delivering stellar results. Was it just because the results were good? Hardly. If you check the short interest information below the chart you can see that there are a lot of shares short. There were even more before the rally on Wednesday. Short shares provide fuel to the upside as short sellers run for cover.
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| | | | | | | Earnings Announcements:
- Monday -- SNP
- Tuesday -- SSNLF, BNS, BMO, ADSK
- Wednesday -- VWAGY, IFNNY, TIF, FIVE, WSM
- Thursday -- TD, PTR, DELL, DLTR, MRVL
- Friday -- CPB, BIG
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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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