Investors should ’embrace’ a recession and watch for retest of market lows, Morgan Stanley says

Morgan Stanley equity strategists believe the stock market priced in an earnings recession when it plunged to December’s low, and it is very likely to retest that level. In short, the market is discounting our out of consensus views on growth and it may have even discounted a modest economic recession,” they wrote. The risks are getting higher that the earnings recession could become an economic recession. “While that’s technically not a recession, that kind of deceleration will feel like a rece


Morgan Stanley equity strategists believe the stock market priced in an earnings recession when it plunged to December’s low, and it is very likely to retest that level. In short, the market is discounting our out of consensus views on growth and it may have even discounted a modest economic recession,” they wrote. The risks are getting higher that the earnings recession could become an economic recession. “While that’s technically not a recession, that kind of deceleration will feel like a rece
Investors should ’embrace’ a recession and watch for retest of market lows, Morgan Stanley says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-14  Authors: patti domm, jeenah moon
Keywords: news, cnbc, companies, watch, buy, investors, stanley, embrace, morgan, retest, earnings, economic, lows, sp, quarter, say, market, recession, strategists


Investors should 'embrace' a recession and watch for retest of market lows, Morgan Stanley says

Morgan Stanley equity strategists believe the stock market priced in an earnings recession when it plunged to December’s low, and it is very likely to retest that level.

But the strategists, led by Mike Wilson, also say in a note that there is nothing to fear in a potential recession, and investors should “embrace it.” As earnings revisions come down, the analysts expect the S&P 500 to fall back to the lows, and that would be a time to buy.

To play these next moves, Wilson and the strategists warn investors that the S&P should hit resistance and they should lighten up if it gets to 2,600 to 2,650. But once the market responds to the worsening earnings picture and returns to recent lows in the 2,400 area, investors should jump back in and buy cyclical names.

“While there was a confluence of technical factors that conspired to create one of the worst Decembers in history, we also think the market embraced our earnings recession call as earnings revision breadth rolled over. In short, the market is discounting our out of consensus views on growth and it may have even discounted a modest economic recession,” they wrote.

The strategists, notably among the Street’s most bearish, also say they had expected to see the S&P 500 touch the 2,400 level but not until the first quarter of this year. The S&P reached an intraday low of 2,346 on Dec. 26 and has since risen about 10 percent off those lows.

The risks are getting higher that the earnings recession could become an economic recession. “Risks are rising, and we don’t have a crystal ball but we also don’t really care about such an outcome if it’s already priced,” they wrote.

The strategists say they don’t know if a recession is coming but the economics team at Morgan Stanley is modeling in a severe drop in GDP growth from 4.2 percent in the second quarter of 2018 to just 1 percent by the third quarter of 2019.

“While that’s technically not a recession, that kind of deceleration will feel like a recession to the market and will help our earnings recession call come to fruition — which is really what matters to us, and the market. In other words, by the time investors figure out we are in a recession it may be too late to do anything about it and, quite frankly, it’s more likely time to buy than sell,” the strategists noted.

That would be the time to buy favored cyclicals and lighten up on defensive stocks.

The type of sell-off in December that drove the S&P down 10 percent year over year is very rare and only has happened when there was an earnings recession, an economic recession or both, they said.

The slowdown in manufacturing data is also something that has foreshadowed an earnings recession, and they expect the ISM survey to break below 50, a sign of contraction. “Once again, such a collapse in manufacturing PMI would provide another reason for the re-test of the lows and a time to buy, not sell,” they wrote.

Another sign of more economic weakness is the move in fixed income markets. The market had been pricing three Federal Reserve interest rate hikes but by early January was nearly pricing in a rate cut. If the hard economic data deteriorates, the strategists expect to see the weakness reflected in expectations for the Fed.


Company: cnbc, Activity: cnbc, Date: 2019-01-14  Authors: patti domm, jeenah moon
Keywords: news, cnbc, companies, watch, buy, investors, stanley, embrace, morgan, retest, earnings, economic, lows, sp, quarter, say, market, recession, strategists


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Brexit might overshadow earnings as the biggest risk to markets Tuesday

Prime Minister Theresa May’s Brexit plan is widely expected to fail in parliament Tuesday, but the defeat could still trigger a violent market reaction. She would also be at risk of a no-confidence vote, and parliament could seize the process of forming a Brexit plan. “If the government gets crushed, then you have a big risk off move,” said Michael Schumacher, director of rate strategy at Wells Fargo. Chandler said the odds have shifted away from a “no deal” Brexit in which Britain exits the E.U


Prime Minister Theresa May’s Brexit plan is widely expected to fail in parliament Tuesday, but the defeat could still trigger a violent market reaction. She would also be at risk of a no-confidence vote, and parliament could seize the process of forming a Brexit plan. “If the government gets crushed, then you have a big risk off move,” said Michael Schumacher, director of rate strategy at Wells Fargo. Chandler said the odds have shifted away from a “no deal” Brexit in which Britain exits the E.U
Brexit might overshadow earnings as the biggest risk to markets Tuesday Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-14  Authors: patti domm, luke macgregor, bloomberg, getty images
Keywords: news, cnbc, companies, brexit, plan, think, earnings, biggest, uk, overshadow, markets, parliament, likely, market, vote, risk, chandler


Brexit might overshadow earnings as the biggest risk to markets Tuesday

Prime Minister Theresa May’s Brexit plan is widely expected to fail in parliament Tuesday, but the defeat could still trigger a violent market reaction.

“We could see knee-jerk volatility. She could lose by a historic margin. This could be a historic loss by the government,” said Marc Chandler, Bannockburn Global Forex chief market strategist. Chandler said the U.K. government has only ever had three votes go down in parliament by more than 100 votes, and this could be a fourth.

U.S. strategists are watching the vote closely, and the outcome could be announced sometime in the afternoon east coast time. If the vote fails, May then has three days to come up with an alternative way to move forward to separate the U.K. from the European Union. She would also be at risk of a no-confidence vote, and parliament could seize the process of forming a Brexit plan.

“If the government gets crushed, then you have a big risk off move,” said Michael Schumacher, director of rate strategy at Wells Fargo. “If it’s a close defeat, you might see equities do okay.” He said there could be a big move in short-end Treasury yields if the vote and headlines around it trigger a big flight to quality.

Schumacher said handicapping the aftermath of the vote is difficult, but a closer vote could signal that the government is more likely to work out a compromise exit plan. On the other hand, the public could also be given another referendum to remain in the European Union.

“It’s Pandora’s box. We talk to clients in the U.K. They don’t know what to expect,” said Schumacher.

Either way, the already volatile markets could be on edge going into the vote.

“I think it’s a tough headline, but it’s another step along the road of them having to come to the best agreement they can before March 29,” said David Bianco, chief investment officer Americas, DWS. “Maybe when it fails it causes them to amend it a little bit, which is what we expect. We don’t think they put a referendum to the public.”

Sterling has been rising ahead of the vote and reached 1.293 against the dollar Monday in U.S. trading, its highest since Nov. 15.

“I think the market’s a little ahead of the news media. The market has already adjusted,” Chandler said. He said the wild card will be how long it will take to come up with a plan B, adding the market has probably already priced in the failed vote. The European Union is also unlikely to demand Brexit stick to its schedule, and it could be delayed while a new plan is worked out.

“Sterling got up to almost 1.30 today. A Brexit with a no-deal divorce is not the most likely scenario even if the government loses the vote, and perhaps ultimately May is right that if a withdrawal vote is rejected, it’s more likely you don’t get a Brexit than if you get a Brexit with no agreement,” Chandler said.

Chandler said the odds have shifted away from a “no deal” Brexit in which Britain exits the E.U. with no rules or plan, hurting the economy and leaving all sorts of things, like trade with Europe, in chaos.

“In order for sterling to continue to outperform, the risk of a ‘no deal’ has to be minimized. Last week, an amendment passed that said they can’t spend any money on preparation for a no-deal exit,” Chandler said.


Company: cnbc, Activity: cnbc, Date: 2019-01-14  Authors: patti domm, luke macgregor, bloomberg, getty images
Keywords: news, cnbc, companies, brexit, plan, think, earnings, biggest, uk, overshadow, markets, parliament, likely, market, vote, risk, chandler


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Stock market comeback faces big test with earnings season starting

Earnings season may not be the club for stocks it could have been had the market not gotten so beaten down. First quarter earnings are expected to be up around 3.9 percent, according to Thomson Reuters. As of September, earnings for quarter were expected to be up more than 18 percent but that number has been revised down. “I think the earnings expectations are low enough that people feel they need to exceed those lowered expectations for Q4,” said Sam Stovall, CFRA chief market strategist. I thi


Earnings season may not be the club for stocks it could have been had the market not gotten so beaten down. First quarter earnings are expected to be up around 3.9 percent, according to Thomson Reuters. As of September, earnings for quarter were expected to be up more than 18 percent but that number has been revised down. “I think the earnings expectations are low enough that people feel they need to exceed those lowered expectations for Q4,” said Sam Stovall, CFRA chief market strategist. I thi
Stock market comeback faces big test with earnings season starting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-09  Authors: patti domm, drew angerer, getty images news, getty images
Keywords: news, cnbc, companies, expected, stock, comeback, companies, positive, earnings, market, season, test, big, strong, quarter, faces, expectations, think, starting, going


Stock market comeback faces big test with earnings season starting

Earnings season may not be the club for stocks it could have been had the market not gotten so beaten down.

But it could be a period when the stock market is put to the test, as companies discuss trade, slowing global growth and other issues that have shaken investor confidence.

There have been some high profile warnings, like Apple, Constellation, FedEx and Lennar.

Analysts expect that most of the bad news is out on earnings, but if the results and comments are worse than expected, the market could easily retest its lows. On the other hand, if earnings are better-than-expected, they could act as a positive force to help fend off further declines, strategists said.

Fourth quarter reporting season, with major banks releasing numbers next week, will also serve as an important transition period between 2018’s strong double-digit profit growth and 2019’s much slower single-digit pace.

Earnings are expected to be strong, up 14.7 percent in the fourth quarter, but corporate executives will be discussing the activity in the current quarter, which is expected to see much slower profit growth. First quarter earnings are expected to be up around 3.9 percent, according to Thomson Reuters.

But analysts say while the expectations have come down sharply for 2019, so have stock prices, and that could provide breathing room.

“We could see continued volatility, but I think the bar is set so much lower with valuations so much lower than going into Q3 reporting,” said Keith Parker, chief U.S. equities strategist at UBS. “You’ve had such an unwind in the fourth quarter. Momentum stocks were unduly punished and there’s less of an overhang. You put that all together, and it makes the likelihood of a bust, in our view, much less likely. Our view is we’ll probably have more mixed results and guidance going into the quarter, but it does raise the likelihood of relief rallies, given where positions and expectations are.”

For the fourth quarter, at least 72 S&P 500 companies have issued earnings warnings, twice as many as have issued positive guidance, according to FactSet. Earnings growth rates have also been revised lower by companies in all 11 S&P sectors. As of September, earnings for quarter were expected to be up more than 18 percent but that number has been revised down.

“I think the earnings expectations are low enough that people feel they need to exceed those lowered expectations for Q4,” said Sam Stovall, CFRA chief market strategist. “In each of the last 27 quarters, the S&P 500 had earnings that exceeded estimates. So, with the bar having been set lower, I think that investors are expecting Q4 of 2018 to be the 28th consecutive quarter. I think investors are not going to be very forgiving of companies that miss reduced Q4 earnings estimates.”

Stovall said 2019 earnings had been expected to be up 10 percent, as of September, but that forecast has fallen closer to 6.5 percent.

“Stock prices won’t get pounded as much for a miss now since we’ve already gone through corrections or bear markets, depending on the what sectors or stocks you’re looking at. I think investors will sell off shares of companies if they miss their already reduced expectations,” said Stovall.

Tony Roth, chief investment officer at Wilmington Trust, said the earnings season is being overshadowed by issues that are concerning the market, but it could be a positive. “There’s a lot more upside than downside,” he said. “One thing that’s going to temper earnings is the uncertainty around the impact of the federal government shutdown, assuming that continues, and the outlook for trade and tariffs. I think we’re unlikely we’re going to get a significant miss, but it’s very unlikely we’re going to get the kind of beat and raise environment we usually get. Companies are going to be very cautious about providing that kind of guidance.”

Paul Hickey, co-founder of Bespoke, said positive corporate guidance peaked during the summer, and now fewer companies offer upside guidance than lowered guidance.

Source: Bespoke

Hickey said the market looks set to retest the lows of late December. “It’s about seeing how this is going to play out. We’re relatively cautious,” said Hickey. “I think early on in earnings, over the next week or so, if you start to see positive reactions to companies reporting, you won’t get that typical retest you would expect to see.”

“If they’re bad, we’ll see at least a retest of December lows,” he said.

Roth said health care should be a strong setor this earnings season.

“I think you will see a good number beats because the consumer was so strong in the fourth quarter. It could be more in discretionary but it could also be in communications services, in financials. You saw rates come down so there’s a little bit of momentum in housing,” said Roth.


Company: cnbc, Activity: cnbc, Date: 2019-01-09  Authors: patti domm, drew angerer, getty images news, getty images
Keywords: news, cnbc, companies, expected, stock, comeback, companies, positive, earnings, market, season, test, big, strong, quarter, faces, expectations, think, starting, going


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Stocks gain under the ‘first five days’ rule, setting up for a good 2019 performance

Therefore, this year’s early January performance could be a good omen. Stocks finished Tuesday with a gain, with the S&P 500 up 2.6 percent at 2,574, in the first five days of the year. “Positive investor and trader behavior at the beginning of the year shows that there are good economic and market readings out there,” said Jeff Hirsch, the editor-in-chief of Stock Trader’s Almanac. A solid first five days is a good start to the month of January, which also is its own market barometer or perform


Therefore, this year’s early January performance could be a good omen. Stocks finished Tuesday with a gain, with the S&P 500 up 2.6 percent at 2,574, in the first five days of the year. “Positive investor and trader behavior at the beginning of the year shows that there are good economic and market readings out there,” said Jeff Hirsch, the editor-in-chief of Stock Trader’s Almanac. A solid first five days is a good start to the month of January, which also is its own market barometer or perform
Stocks gain under the ‘first five days’ rule, setting up for a good 2019 performance Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-08  Authors: patti domm
Keywords: news, cnbc, companies, stocks, shows, days, rule, performance, good, sp, higher, setting, market, stock, gain, 2019, traders


Stocks gain under the 'first five days' rule, setting up for a good 2019 performance

Stocks jump on renewed optimism for a US-China trade deal—here’s what five experts say to watch next 17 Hours Ago | 03:07

When stocks bounce at the beginning of the year, history shows the market is more often up than down at year-end.

Therefore, this year’s early January performance could be a good omen.

Stocks finished Tuesday with a gain, with the S&P 500 up 2.6 percent at 2,574, in the first five days of the year. Stock Trader’s Almanac has studied the “first five days” phenomena going back to 1950 and finds that when stocks finish that period higher, the S&P 500 has been positive 82 percent of the time at year-end with an average gain of 13.3 percent.

“Positive investor and trader behavior at the beginning of the year shows that there are good economic and market readings out there,” said Jeff Hirsch, the editor-in-chief of Stock Trader’s Almanac.

A solid first five days is a good start to the month of January, which also is its own market barometer or performance predictor. A higher January should mean a higher year, and that’s the thinking behind the Wall Street saying: “So goes January, so goes the year.”

Hirsch said the market has even better odds of doing well if January is positive, the first five days are higher and there was a Santa rally in the period that includes the last five trading days of the prior year and first two of the new year. Last month, the Santa rally resulted in a 1.3 percent gain in the S&P 500.

Last year’s market had all three of those things going for it, but still the S&P still ended down 6.6 percent for the year after a turbulent fourth quarter.


Company: cnbc, Activity: cnbc, Date: 2019-01-08  Authors: patti domm
Keywords: news, cnbc, companies, stocks, shows, days, rule, performance, good, sp, higher, setting, market, stock, gain, 2019, traders


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Apple hasn’t been this unloved by Wall Street since 2005

Apple has become more unloved by Wall Street analysts than at any time in the past 14 years. Wall Street analysts have the lowest percentage of ‘buy’ ratings on Apple stock since 2005 — at 49 percent, according to FactSet. Wall Street analysts’ ratings on Apple stockgreen represents percentage of buy ratingsSource: FactSet”It’s interesting from a sentiment and contrarian view point ,” said Todd Sohn, technical strategist at Strategas Research. Buy ratings reached a high in 2010 to 2012 when they


Apple has become more unloved by Wall Street analysts than at any time in the past 14 years. Wall Street analysts have the lowest percentage of ‘buy’ ratings on Apple stock since 2005 — at 49 percent, according to FactSet. Wall Street analysts’ ratings on Apple stockgreen represents percentage of buy ratingsSource: FactSet”It’s interesting from a sentiment and contrarian view point ,” said Todd Sohn, technical strategist at Strategas Research. Buy ratings reached a high in 2010 to 2012 when they
Apple hasn’t been this unloved by Wall Street since 2005 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm
Keywords: news, cnbc, companies, stock, unloved, high, 2005, point, apple, percentage, wall, 14, ratings, analysts, buy, street


Apple hasn't been this unloved by Wall Street since 2005

Apple has become more unloved by Wall Street analysts than at any time in the past 14 years.

Wall Street analysts have the lowest percentage of ‘buy’ ratings on Apple stock since 2005 — at 49 percent, according to FactSet. Another 51 percent are ‘holds.’

As Apple shares plummeted in the fourth quarter, losing more than 30 percent, analysts changed their views on the stock. The percent of buy ratings has fallen by 14 percentage points from 63 percent in August.

Wall Street analysts’ ratings on Apple stock

green represents percentage of buy ratings

Source: FactSet

“It’s interesting from a sentiment and contrarian view point ,” said Todd Sohn, technical strategist at Strategas Research. “The analysts are throwing in the towel on the name. It may take a few months for it to repair and chop around here, but I think it’s in the process of forming a bottom.”

Sohn said Apple is down 39 percent from its Oct. 3 high. “That’s a pretty good shake out and you can combine that with the stock ratings,” he said.

Buy ratings reached a high in 2010 to 2012 when they were mostly more than 90 percent of the ratings. At that point, Apple stock was in an uptrend.


Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm
Keywords: news, cnbc, companies, stock, unloved, high, 2005, point, apple, percentage, wall, 14, ratings, analysts, buy, street


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Trump is winning the game of economic chicken right now with China, but that could soon change

The trade war may be hurting China more than the U.S., but by spring, China could be looking up as the U.S. slows, particularly if the friction continues, economists said. According to Bank of America Merrill Lynch economists, the China slowdown could start to reverse in the next couple of months, due to large amounts of domestic stimulus. “So far the trade war has had a much bigger impact on Chinese growth than US growth. However, that could change by next spring,” the BofAML economists said in


The trade war may be hurting China more than the U.S., but by spring, China could be looking up as the U.S. slows, particularly if the friction continues, economists said. According to Bank of America Merrill Lynch economists, the China slowdown could start to reverse in the next couple of months, due to large amounts of domestic stimulus. “So far the trade war has had a much bigger impact on Chinese growth than US growth. However, that could change by next spring,” the BofAML economists said in
Trump is winning the game of economic chicken right now with China, but that could soon change Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm, andy wong
Keywords: news, cnbc, companies, spring, economic, chicken, looking, winning, trump, economists, growth, change, war, products, game, avoiding, right, stimulus, china, trade, soon


Trump is winning the game of economic chicken right now with China, but that could soon change

The trade war may be hurting China more than the U.S., but by spring, China could be looking up as the U.S. slows, particularly if the friction continues, economists said.

According to Bank of America Merrill Lynch economists, the China slowdown could start to reverse in the next couple of months, due to large amounts of domestic stimulus. For the U.S., economists have been forecasting a slower second half of the year, with growth under 2 percent in some forecasts, as stimulus from tax cuts and spending wears off.

Trade negotiators are meeting in Beijing this week, and positive comments around those talks have been helping steady markets.

“So far the trade war has had a much bigger impact on Chinese growth than US growth. However, that could change by next spring,” the BofAML economists said in a note. “… the US has tried to minimize the blowback from its tariffs by avoiding consumer products and either avoiding or giving exemptions for products without easy substitutes. Looking ahead, the next moves would be much more painful.”


Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm, andy wong
Keywords: news, cnbc, companies, spring, economic, chicken, looking, winning, trump, economists, growth, change, war, products, game, avoiding, right, stimulus, china, trade, soon


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Netflix, Amazon among biggest winners in monster comeback from the Christmas Eve low

Stocks have bounced hard off the Christmas Eve lows and many of the worst performers are the stars of the two-week period since then, including General Electric, Netflix and many energy names. “It was a dash for trash as the new year has come into play,” said Todd Sohn, technical analyst at Strategas Research. Stocks continued to rally Tuesday morning in the ninth session since the Christmas Eve shakeout. Amazon was u[ 1 percent, adding to its already 21 percent gain in the post-Christmas period


Stocks have bounced hard off the Christmas Eve lows and many of the worst performers are the stars of the two-week period since then, including General Electric, Netflix and many energy names. “It was a dash for trash as the new year has come into play,” said Todd Sohn, technical analyst at Strategas Research. Stocks continued to rally Tuesday morning in the ninth session since the Christmas Eve shakeout. Amazon was u[ 1 percent, adding to its already 21 percent gain in the post-Christmas period
Netflix, Amazon among biggest winners in monster comeback from the Christmas Eve low Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm, gina francolla, drew angerer, getty images news, getty images
Keywords: news, cnbc, companies, biggest, amazon, netflix, low, comeback, christmas, stocks, higher, worst, watching, market, twoweek, monster, winners, eve, period


Netflix, Amazon among biggest winners in monster comeback from the Christmas Eve low

Stocks have bounced hard off the Christmas Eve lows and many of the worst performers are the stars of the two-week period since then, including General Electric, Netflix and many energy names.

“It was a dash for trash as the new year has come into play,” said Todd Sohn, technical analyst at Strategas Research.

Stocks continued to rally Tuesday morning in the ninth session since the Christmas Eve shakeout. Amazon was u[ 1 percent, adding to its already 21 percent gain in the post-Christmas period. The stock’s gains in fact have pushed its market capitalization sharply higher to nearly $800 billion, and on Monday, it surpassed Microsoft as the largest public company.

Investors are watching the action to see if new market leadership will emerge and whether the market is showing signs of having found a bottom. However, they say it will take time to tell, and there’s still a lot of doubt as to whether the move higher is a sign of recovery, or simply a bear market rally.

WATCH: How Netflix stock has made long-term investors rich


Company: cnbc, Activity: cnbc, Date: 2019-01-07  Authors: patti domm, gina francolla, drew angerer, getty images news, getty images
Keywords: news, cnbc, companies, biggest, amazon, netflix, low, comeback, christmas, stocks, higher, worst, watching, market, twoweek, monster, winners, eve, period


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Fed chief Powell just walked back his autopilot remark and the financial markets love it

“We wouldn’t hesitate to change it and that would include the balance sheet. We’re hearing a lot from different groups of people about the role the balance sheet normalization may be playing in the market,” he said. Powell explained that the Treasury issues more securities when the Fed’s balance sheet holdings mature. “If we came to the view that the balance sheet normalization or any other aspect of the normalization was part of the problem, we wouldn’t hesitate to make a change,” he said. Trea


“We wouldn’t hesitate to change it and that would include the balance sheet. We’re hearing a lot from different groups of people about the role the balance sheet normalization may be playing in the market,” he said. Powell explained that the Treasury issues more securities when the Fed’s balance sheet holdings mature. “If we came to the view that the balance sheet normalization or any other aspect of the normalization was part of the problem, we wouldn’t hesitate to make a change,” he said. Trea
Fed chief Powell just walked back his autopilot remark and the financial markets love it Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-04  Authors: patti domm, elijah nouvelage, bloomberg, getty images
Keywords: news, cnbc, companies, fed, hes, normalization, powell, balance, markets, market, autopilot, saying, sheet, remark, moved, financial, higher, love, chief, walked


Fed chief Powell just walked back his autopilot remark and the financial markets love it

“We wouldn’t hesitate to change it and that would include the balance sheet. We’re hearing a lot from different groups of people about the role the balance sheet normalization may be playing in the market,” he said. Powell explained that the Treasury issues more securities when the Fed’s balance sheet holdings mature. “We don’t believe our issuance is an important part of the story in the market turbulence that began in the fourth quarter of last year.”

“If we came to the view that the balance sheet normalization or any other aspect of the normalization was part of the problem, we wouldn’t hesitate to make a change,” he said. Powell was speaking on a panel with former Fed chairs Ben Bernanke and Janet Yellen.

The Dow, already higher on positive trade news and a strong jobs report, moved sharply higher as Powell spoke. Treasury yields, also higher on the surprisingly strong December jobs report, moved higher in tandem with stocks. The 2-year yield, the most sensitive to Fed policy, rose to 2.47 percent.

“That’s clearly moving the market. we know he’s flexible on rates, saying he’s flexible with the balance sheet is different than saying he’s on ‘auto pilot’…he’s basically pulling back the comment on ‘autopilot’ and that’s what the market is saying right now,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Powell also said the Fed had no pre-set path for policy and could be patient when it comes to interest rate hikes, also seen as a dovish comment.

“We’re seeing signs [the Fed] gets it. It was the absolute mirror image of the press conference last month,” said one market pro.

The dollar moved lower, as the market viewed Powell’s comments as more dovish. Powell also discussed inflation as being muted, also a dovish comment, suggesting the Fed will not be in a hurry to raise interest rates.

“He clearly made an effort not to spook the market. He also mentioned flexibility in terms of the balance sheet, which the equity market likes,” said Ian Lyngen, head of U.S. rates strategy at BMO.


Company: cnbc, Activity: cnbc, Date: 2019-01-04  Authors: patti domm, elijah nouvelage, bloomberg, getty images
Keywords: news, cnbc, companies, fed, hes, normalization, powell, balance, markets, market, autopilot, saying, sheet, remark, moved, financial, higher, love, chief, walked


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Stock market comeback is now in the hands of China-US trade talks

“What the market needs next week and the week after is positive guidance from companies. “What this market needed was a strong data release, an unequivocally strong data release,” said Krosby. It did in 2000 and it did in 1974, triggering broader stock market downturns and recessions,” said Emanuel. “That’s makes people feel better and from our point of view that it makes it more likely that the technical bear market we’ve seen…is the likelihood that this going to be a shorter, shallower non-rec


“What the market needs next week and the week after is positive guidance from companies. “What this market needed was a strong data release, an unequivocally strong data release,” said Krosby. It did in 2000 and it did in 1974, triggering broader stock market downturns and recessions,” said Emanuel. “That’s makes people feel better and from our point of view that it makes it more likely that the technical bear market we’ve seen…is the likelihood that this going to be a shorter, shallower non-rec
Stock market comeback is now in the hands of China-US trade talks Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-04  Authors: patti domm, nicolas asfouri, afp, getty images
Keywords: news, cnbc, companies, strong, comeback, chinaus, bear, stock, markets, talks, economy, seen, fed, market, week, data, hands, trade


Stock market comeback is now in the hands of China-US trade talks

Trade talks between the U.S.and China will dominate the market’s focus in the week ahead, while investors are also watching to see whether other companies join the ranks of Apple and warn about an earnings miss.

Fed Chairman Jerome Powell, who sent stocks sharply higher Friday, speaks again Thursday at an Economics Club of Washington D.C. luncheon. He is expected to deliver the same dovish message about flexibility when it comes to policy and patience when it comes to raising interest rates.

Apple blamed a revenue miss in big part on a sudden drop off in iPhone sales in China in November. The hit was seen as a sign that not only are trade tensions hitting China’s economy, but the U.S. economy and corporations could feel the pinch. Apple’s comments came the day before a stunning drop in ISM manufacturing data which also was blamed in part on trade friction.

“What the market needs next week and the week after is positive guidance from companies. What are companies telling us? What are their customers telling us?” said Quincy Krosby, chief market strategist at Prudential Financial. “If we could move from a stellar earnings to a more moderate earnings backdrop, the market will accept that but if guidance is weak and companies are lowering revenue growth, that will affect the market.”

The S&P 500 surged over 3.3 percent Friday to 2,531, and was up 1.7 percent for the week. The S&P was up more than 7.5 percent from its Dec. 24 low close.

China and the United States will hold vice ministerial level trade talks in Beijing on Monday and Tuesday and are expected to hold another round of meetings the following week.

“China is going to be absolutely the big thing,” said Julian Emanuel, chief equities and derivatives strategist at BTIG. China cut reserve requirements Friday to encourage more bank lending, its latest policy move aimed at ending a slowdown.

Economists expect U.S. growth to slow slightly, to the 2-2.5 percent range in the fist half but markets have been reacting to the prospect of an even slower economy. The ISM data for December was particularly discouraging because of a steep drop in new orders.

“The question is are we likely to have warnings? Given the economic data that we’ve seen, particularly the slowdown in the new orders component, we probably are likely to get warnings and the question is, is it baked into stock prices? We think, for the most part, it is,” said Emanuel.

Markets will also remain heavily focused on data after the weak ISM survey was followed by a surprisingly strong December jobs report with 312,000 nonfarm payrolls added. The employment report showed a strong labor market, with wage growth of 0.4 percent and a pickup in participation by more than 400,000 workers.

“What this market needed was a strong data release, an unequivocally strong data release,” said Krosby. “It was an injection to positive data in a market that has been worried about an economy that is potentially stalling,”

Krosby said the market needs to build on its gains and the positive sentiment around the strong data. “This has been a market that had all of the signatures of the bear claws death by 1,000 cuts. No data release was seen as positive. Everything was seen as negative. If we could turn that psychology around and build on it, but we are waiting to see if there are sellers who were waiting to get out. We need to see if they’re still there.”

Data releases in the comign week include Services ISM Monday and international trade data, out Tuesday morning, but the data the markets are waiting for will be Friday’s CPI inflation report.

During his appearance Friday, Powell indicated that inflation was not a concern for the Fed and the economy is still in good shape despite concerns. He also said the Fed was paying attention to the market, which is reflecting a weaker outlook than the data suggests.

Powell also indicated the Fed can be “patient” and it will be flexible and willing to change policy if it sees changes in conditions. That comforted markets and sent stocks higher. Powell had said the Fed’s balance sheet reduction program was on ‘auto pilot’ when he spoke in December, and that spooked some investors who wanted to see the Fed willing to modify its policy in the face of the market’s sell off.

“Certainly, the market feels better about the fact that the Fed is moving towards its view on the hiking cycle. which is that it’s largely over. From that perspective it decreases the possibility that the Fed is going to hike too far like it did in 2004 and 2006. It did in 2000 and it did in 1974, triggering broader stock market downturns and recessions,” said Emanuel.

“That’s makes people feel better and from our point of view that it makes it more likely that the technical bear market we’ve seen…is the likelihood that this going to be a shorter, shallower non-recessionary bear market,” said Emanuel. The S&P 500 has briefly visited a bear market, falling 20 percent from its all-time high on an intraday basis.

Emanuel said the rally on the Fed was important since it had been a concern for the market.He expects the Fed to stay on hold this year and also announce that it will stop the roll off of its balance sheet by mid year.

“This reinforces the view the bulk of this bear market decline is behind us, and there’s at least an expectation that communication between the U.S. and China is poised to improve rather than become more acrimonious over the course of the next few weeks,” he said.


Company: cnbc, Activity: cnbc, Date: 2019-01-04  Authors: patti domm, nicolas asfouri, afp, getty images
Keywords: news, cnbc, companies, strong, comeback, chinaus, bear, stock, markets, talks, economy, seen, fed, market, week, data, hands, trade


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Apple’s woes show US and China are both taking hits in trade war, could motivate them to make deal

That is reflecting weaker growth expectations by manufacturers in the U.S. and part of those are attributed to trade policy tensions,” said Gapen. It blamed the shortfall on a weaker Chinese economy and lower than expected iPhone revenue, “primarily in Greater China.” But he he said there are many things at work with iPhone sales, including a weaker upgrade cycle and the macro picture of a weaker China. “The perception is at least a portion of that is going to be due to trade,” said Clifton. The


That is reflecting weaker growth expectations by manufacturers in the U.S. and part of those are attributed to trade policy tensions,” said Gapen. It blamed the shortfall on a weaker Chinese economy and lower than expected iPhone revenue, “primarily in Greater China.” But he he said there are many things at work with iPhone sales, including a weaker upgrade cycle and the macro picture of a weaker China. “The perception is at least a portion of that is going to be due to trade,” said Clifton. The
Apple’s woes show US and China are both taking hits in trade war, could motivate them to make deal Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-01-03  Authors: patti domm, qilai shen, bloomberg, getty images
Keywords: news, cnbc, companies, hits, companies, apples, going, iphone, china, motivate, chinese, deal, things, think, stock, war, woes, trade, weaker, taking, sales


Apple's woes show US and China are both taking hits in trade war, could motivate them to make deal

Stocks were already weak Thursday after Apple’s warning but dropped even more when the ISM data signaled that investors’ fears about a slowdown may be realized.

“Up until now most of the bad news was out of China. Now the story is we’re vulnerable and we’re going to get hurt too,” said Art Cashin, director of floor operations at UBS.

The Dow was down nearly 500 points in afternoon trading.

“You look at things like the new orders data, which has been trending lower not just in the U.S. but globally. That is reflecting weaker growth expectations by manufacturers in the U.S. and part of those are attributed to trade policy tensions,” said Gapen.

Economist said the tightening of financial conditions from a falling stock market could be a factor in the ISM. “That could be part of it but the stock markets is also going down due to concerns about global growth, profitability, protectionism. I don’t think you can separate those things out,” Gapen said.

In an unusual warning Wednesday, Apple said its first quarter revenue would be $84 billion, down from the $89 to $93 billion it previously expected. It blamed the shortfall on a weaker Chinese economy and lower than expected iPhone revenue, “primarily in Greater China.” Apple also blamed upgrades to new iPhone model in other countries that were not as strong as expected.

Clifton said what investors are trying to discern now is how much of Apple’s problems are the Chinese economy, the iPhone upgrade cycle and how much is a possible boycott of U.S. goods.

“There may be some consumer backlash to American companies, a form of nationalism,” said Bernstein analyst Toni Sacconaghi. But he he said there are many things at work with iPhone sales, including a weaker upgrade cycle and the macro picture of a weaker China.

The U.S. has been cracking down on Chinese telecom companies ZTE and Huawei for suspected cyber espionage, and could still extradite the Huawei CFO who is under arrest in Canada.

Clifton said he expects to see other companies follow Apple, now that it has given them “cover” to blame China’s economy. Some companies have already pointed to China, while others, like Nike have not seen an impact. But Tiffany, for one, said its sales were impacted by softer spending from Chinese tourists in Hong Kong and New York.

According to Coresight Research, China’s retail sales fell to 8.1 percent in November, the slowest pace in 15 years.Some economists said the ISM data also reflects the decline in the stock market, denting confidence and causing manufacturers to pull back. But some is also trade, as reflected in comments by companies in the survey.

“The perception is at least a portion of that is going to be due to trade,” said Clifton. “There’s no fighting the narrative itself. That’s why I think it could accelerate the progress that’s being made in these talks. I think they’re much further along than anyone anticipates. I think the process has been going on for a year. They understand they were going to have a deal on Dec. 1, and the market didn’t believe it.”

Trade negotiators meet next week. The administration, including Trump, has sounded optimistic on a deal lately.


Company: cnbc, Activity: cnbc, Date: 2019-01-03  Authors: patti domm, qilai shen, bloomberg, getty images
Keywords: news, cnbc, companies, hits, companies, apples, going, iphone, china, motivate, chinese, deal, things, think, stock, war, woes, trade, weaker, taking, sales


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post