Monday November 21 Daily Market Primer
Happy
Thanksgiving week. US stocks dropped on Friday the election rally cooled off. Stocks were
modestly up for the week, with the Dow rising .1% compared to 5.4% on election
week, and the S&P is up 2% since the election through Friday. Health
care stocks fell last week after getting overheated during election
week. Oil rebounded last week, with prices up just over 5%, as
Iran and Iraq indicated that they may be able to pull off supply cuts.
The US 10 year note has jumped 50 basis points since the election, and
the dollar is up 3.5%. International stock markets are mostly up
on Monday, and the US S&P futures are slightly positive.
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LAST
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CHANGE
|
% CHANGE
|
|
|
18,867.93
|
-35.89
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-0.19%
|
|
|
5,321.51
|
-12.46
|
-0.23%
|
|
|
2,181.90
|
-5.22
|
-0.24%
|
|
|
1,315.64
|
6.16
|
0.47%
|
|
|
Stoxx
Europe 600
|
340.01
|
0.62
|
0.06%
|
|
Nikkei
225
|
18,106.02
|
138.61
|
0.06%
|
|
UK:
FTSE 100
|
6,779.80
|
4.03
|
0.06%
|
|
CBOE
Volatility
|
13.21
|
0.36
|
2.80%
|
|
Australia:
S&P/ASX 200
|
5,351.30
|
-8.10
|
-0.15%
|
|
3,218.15
|
25.29
|
0.79%
|
|
|
22,357.78
|
13.57
|
0.06%
|
|
|
India:
S&P BSE Sensex
|
25,765.14
|
-385.10
|
-1.47%
|
|
France:
CAC 40
|
4,528.98
|
24.63
|
0.55%
|
|
Germany:
DAX
|
10,703.77
|
39.21
|
0.37%
|
|
Italy:
FTSE MIB
|
16,219.23
|
-46.67
|
-0.29%
|
|
Spain:
IBEX 35
|
8,618.70
|
-4.20
|
-0.05%
|
|
0.436
|
0/32
|
||
|
1.06
|
1/32
|
||
|
1.768
|
5/32
|
||
|
2.319
|
10/32
|
||
|
2.998
|
24/32
|
||
|
-0.666
|
0/32
|
||
|
0.286
|
-3/32
|
||
|
46.56
|
0.87
|
1.90%
|
|
|
47.81
|
0.95
|
2.03%
|
|
|
3.04
|
0.06
|
2.01%
|
|
|
365.16
|
5.44
|
1.51%
|
|
|
2186.25
|
5.5
|
0.25%
|
Barron’s made a convincing
case that the US should issue 50 or 100 year bonds while rates are low, but
talked about the treasury’s dismal track record of taking advantage of low
rates in the past, and included some scary debt projections, in an article this
weekend http://bit.ly/TameFedDebt.
It’s
hard to find much news that hasn’t been Trumpified, as Mr. Trump continues nonstop
interviews for his administration, including Wall Street luminaries Wilbur
Ross, Blackstone’s real estate chief Jon Gray, and Bridgewater’s Robert
McCormick. In France, next year’s
presidential election is in the primary stage, and
former president Sarkozy is has been knocked out. Facebook announced a $6
billion stock buyback as they formulate plans to battle fake news.
Nigeria, Africa’s largest economy, is in
a recession, with negative 2.4% GDP. Oracle is buying internet
backbone provider Dyn, this is the company that suffered a massive
denial of service attacks last month that disrupted some major web services
including Twitter, Paypal, the WSJ, and others.
We will get preliminary PPI
for Europe, US and Japan, along the Fed minutes from the November meeting in this
short holiday week. The stock market is open Friday, but
closes early, at 1:00pm Eastern (10:00am Pacific).
Here’s
the news:
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President-elect Donald
Trump met with Wall Street veterans over the weekend as
he seeks to fill the role of Treasury Secretary in his new administration.
Billionaire investor Wilbur Ross, Global Head of Real Estate at Blackstone
Group Jon Gray, and David McCormick, president of the hedge fund
Bridgewater Associates, all met with Trump and are said to be in the running
for the position. The staff choices that have already been announced show that the
new administration is willing to appoint Washington outsiders to key
roles in the government.
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A barrel of West Texas
Intermediate for December delivery — a contract which expires today — was trading at $46.31 at 5:07 a.m. ET as
Iran and Iraq signaled optimism that a production cut deal could be agreed at
OPEC's meeting in Vienna next week. Russian President Vladimir Putin
said he sees no obstacles to an agreement, adding that
Russia is willing to freeze production at current levels.
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Former French
President Nicolas Sarkozy was knocked out of the running for next year's
presidential election when he came third in the first-round
center-right primary yesterday. A surge in support for former Prime
Minister Francois Fillon, a Thatcherite, marks him as the new
front-runner to win the election, easing fears over a victory for far-right
Marine Le Pen. In Germany, Angela Merkel confirmed she will seek a fourth term as Chancellor in next year's
national election.
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President-elect Donald
Trump met with Wall Street veterans over the weekend as
he seeks to fill the role of Treasury Secretary in his new administration.
Billionaire investor Wilbur Ross, Global Head of Real Estate at Blackstone
Group Jon Gray, and David McCormick, president of the hedge fund
Bridgewater Associates, all met with Trump and are said to be in the running
for the position. The staff choices that have already been announced show that the
new administration is willing to appoint Washington outsiders to key
roles in the government.
|
|
|
|
A barrel of West Texas
Intermediate for December delivery — a contract which expires today — was trading at $46.31 at 5:07 a.m. ET as
Iran and Iraq signaled optimism that a production cut deal could be agreed at
OPEC's meeting in Vienna next week. Russian President Vladimir Putin
said he sees no obstacles to an agreement, adding that
Russia is willing to freeze production at current levels.
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Former French
President Nicolas Sarkozy was knocked out of the running for next year's
presidential election when he came third in the first-round
center-right primary yesterday. A surge in support for former Prime
Minister Francois Fillon, a Thatcherite, marks him as the new
front-runner to win the election, easing fears over a victory for far-right
Marine Le Pen. In Germany, Angela Merkel confirmed she will seek a fourth term as Chancellor in next year's
national election.
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Some
new names have emerged for Treasury secretary. Jon Grey of Blackstone,
David McCormick of Bridgewater, and billionaire Wilbur Ross join the Trump
campaign's finance manager, Steven Mnuchin, as possible nominees for Treasury
secretary, Bloomberg reports.
Nicolas
Sarkozy is out of the running in the French election. Ex-President Nicolas
Sarkozy's bid for a return to politics has ended, as Francois Fillon and Alain
Juppe emerged from the first round of voting. A runoff between the two
candidates will take place Sunday, setting the stage for a likely showdown with
far-right candidate Marine Le Pen in April.
Japan's
exports fell for a 13th straight month. Japanese exports fell
10.3.% year-over-year in October as the stronger yen and weak overseas demand
weighed. The Japanese yen is up 0.3% at 110.66 per dollar.
Africa's
largest economy is stuck in recession. Nigeria's economy shrank
2.24% in the third quarter, making for a third straight quarterly contraction,
as the fallout from the oil crash has yet to work its way through the system.
Oil
shooting higher. Oil prices are climbing Monday amid hopes that OPEC producers
can agree to a production cut at the November 30 meeting in Vienna. West Texas
Intermediate crude oil is higher by 2.8% at $47.37 a barrel.
Facebook
is buying back stock. The social-media giant announced a $6 billion share-buyback
program that will begin in the first quarter of 2017 and is consistent with
what the company says is its "capital allocation strategy of prioritizing
investment to grow the business over the long term."
Analysts
are starting to worry about Apple's future profitability. Apple's gross margin on
the iPhone has slid from 57.7% in 2009 to 41% today, and it is expected to fall
to 39% in 2018, according to Toni Sacconaghi at Bernstein Research.
Stock
markets around the world are higher. China's Shanghai Composite
(+0.8%) hit a 10-month high and Britain's FTSE (+0.7%) paces the gains in
Europe. The S&P 500 is set to open higher by 0.3% near 2,187.
Earnings reporting is light. Tyson
Foods reports ahead of the opening bell, and Weibo releases its quarterly
results after markets close.
The Trump Team
Former Massachusetts Gov. Mitt Romney “is under active and serious consideration” to be Donald Trump’s secretary of state, Vice President-elect Mike Pence said Sunday, a move that would counterbalance the hard-line tilt of the president-elect’s national security team announced so far. Then again, there are other candidates for the job such as Rudolph Giuliani and Mr. Romney is far from assured. Mr. Trump’s remaining high-profile selections include the economic team that will join him at the White House. He continues to press for J.P. Morgan Chase Chief Executive James Dimon to be the next Treasury secretary, but the choice may well come down to investment banker Steven Mnuchin or Texas Rep. Jeb Hensarling. Those choices likely won’t be announced until after Thanksgiving, said Reince Priebus, the former RNC chairman whom Mr. Trump tapped to become his chief of staff. We examine the split within Mr. Trump’s economic team, particularly when it comes to trade.
Former Massachusetts Gov. Mitt Romney “is under active and serious consideration” to be Donald Trump’s secretary of state, Vice President-elect Mike Pence said Sunday, a move that would counterbalance the hard-line tilt of the president-elect’s national security team announced so far. Then again, there are other candidates for the job such as Rudolph Giuliani and Mr. Romney is far from assured. Mr. Trump’s remaining high-profile selections include the economic team that will join him at the White House. He continues to press for J.P. Morgan Chase Chief Executive James Dimon to be the next Treasury secretary, but the choice may well come down to investment banker Steven Mnuchin or Texas Rep. Jeb Hensarling. Those choices likely won’t be announced until after Thanksgiving, said Reince Priebus, the former RNC chairman whom Mr. Trump tapped to become his chief of staff. We examine the split within Mr. Trump’s economic team, particularly when it comes to trade.
Selling to the Middle
Advertisers are grappling with a stark realization: After spending years courting U.S. consumers with aspirational images of upscale urban living, they may have misjudged the yearnings of much of their audience. In the wake of Mr. Trump’s victory with a wave of support from middle American voters, advertisers are reflecting on whether they are out of touch with the same people—rural, economically frustrated, elite-distrusting, anti-globalization voters—who propelled the businessman into the White House. Mr. Trump’s rise has them rethinking the way they collect data about consumers, recruit staff and pitch products. Some ad agencies are looking to hire more people from rural areas. The surprising outcome to the election also is likely to hamper advertising spending next year, as marketers try to figure out what implications the new administration’s decisions will have on businesses.
Advertisers are grappling with a stark realization: After spending years courting U.S. consumers with aspirational images of upscale urban living, they may have misjudged the yearnings of much of their audience. In the wake of Mr. Trump’s victory with a wave of support from middle American voters, advertisers are reflecting on whether they are out of touch with the same people—rural, economically frustrated, elite-distrusting, anti-globalization voters—who propelled the businessman into the White House. Mr. Trump’s rise has them rethinking the way they collect data about consumers, recruit staff and pitch products. Some ad agencies are looking to hire more people from rural areas. The surprising outcome to the election also is likely to hamper advertising spending next year, as marketers try to figure out what implications the new administration’s decisions will have on businesses.
A Final Push
The Obama administration is considering new measures in its final months in office to strengthen the landmark nuclear agreement with Iran, with Mr. Trump’s first appointments foreshadowing an increasingly rocky road for the controversial deal. Action under consideration to buttress the pact includes steps to provide licenses for more American businesses to enter the Iranian market and the lifting of additional U.S. sanctions. The effort to shore up the agreement was under way before the election and isn’t aimed at boxing in Mr. Trump, who opposes the deal, officials said, also acknowledging the proposals are unlikely to make the nuclear agreement more difficult to undo. Mr. Trump’s first two picks for his national security team—retired Army Gen. Mike Flynn as national security adviser and Rep. Mike Pompeo (R., Kan.) as CIA director—have voiced opposition to the nuclear deal.
The Obama administration is considering new measures in its final months in office to strengthen the landmark nuclear agreement with Iran, with Mr. Trump’s first appointments foreshadowing an increasingly rocky road for the controversial deal. Action under consideration to buttress the pact includes steps to provide licenses for more American businesses to enter the Iranian market and the lifting of additional U.S. sanctions. The effort to shore up the agreement was under way before the election and isn’t aimed at boxing in Mr. Trump, who opposes the deal, officials said, also acknowledging the proposals are unlikely to make the nuclear agreement more difficult to undo. Mr. Trump’s first two picks for his national security team—retired Army Gen. Mike Flynn as national security adviser and Rep. Mike Pompeo (R., Kan.) as CIA director—have voiced opposition to the nuclear deal.
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Why the Federal Reserve
must become the world's 'dealer of last resort.'
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For analysts, Trump can
literally make everything great again.
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Inside a moneymaking machine like no other.
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Iranian banks are trying to catch up after years of isolation.
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A Chinese city halts factories to curb pollution.
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Venezuela's nemesis is a
hardware salesman at a home depot in Alabama.
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Believe it or not, there
was a time when the news was more than Trump, Trump, and more Trump. For
example last August, there was a spirited debate over whether the Federal
Reserve would raise rates in September or December (or even November). All
that seems old hat now. Before Trump, one of the questions I used to ask guests
regularly on What'd You Miss was something along the
lines of: "Sure we can debate the timing of the next hike, but when are
we really going to get a fundamental change to the inflation and policy
outlook?" In other words, we've been grinding along for years in a
slow-flation environment that we've come to accept as normal. When is that
going to change? If the market reaction to the election is any clue, then
it's possible - though not certain - that we now have our answer. People
like to talk about this moment being a time of high "uncertainty"
but a better word for what we're experiencing is "openness." We've
been walking so long through this narrow path in the woods and now suddenly
we're at a huge clearing. Maybe the direction we take ends up looking similar
to the path we've been on. Maybe we move sharply in a direction of aggressive
fiscal expansion and the economy booms. Maybe the Fed gets politicized and we
see red-hot inflation again. Maybe we get a trade war. Maybe there's a major
regulatory rollback and we get a new bubble in markets. Nobody honestly can
say where we're going next; we're no longer on the narrow path. In the latest
note from Goldman economists Zach Pandl and Jan Hatzius, they write that the
U.S. economic outlook this year is "especially interesting." That
could prove to be an understatement.
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posted by Rich Barnett @ 7:32 AM
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