Archive for June, 2016

• Morning News: June 30, 2016
  Eddy Elfenbein, June 30th, 2016 at 7:04 am

  ECB No Closer to Inflation Target After Series of Stimulus Measures

  UK Current Account Gap Remained Near Record High Before EU Vote

  German Jobless Rate Edges Below 6% in June

  CIBC Extends Canada Push Into U.S. With PrivateBancorp Deal

  The Slow-Motion Crisis in Saudi Arabia, in Two Minutes

  Fed Stress Tests Clear 31 of 33 Big U.S. Banks to Boost Returns to Investors

  Puerto Rico Relief Measure Clears Senate, Goes to Obama

  Amazon Sets A Date for Annual Prime Day Shopping Blitz

  With Amazon in Mind, Wal-Mart to Offer Free Shipping for 30 Days

  Drones Have a Role in Your Company’s Future

  Why Shares of General Mills, Inc. Have Popped 14% in 2016

  U.S. ‘Ham Capital’ Proves Chinese Investment Can Be a Good Thing

  A Real Rock of a Diamond Fails to Sell at Auction

  Cullen Roche: Failure to Predict the Financial Crisis Does Not Discredit Economists

  Howard Lindzon: Past Performance is Overrated …Stock Markets and Angel Investing

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• How It Looks With Partial Data
  Eddy Elfenbein, June 29th, 2016 at 9:04 pm

  Here’s how the S&P 500 has performed over the last several years. But I have to admit that I excluded a little bit of the data.

  

  I’m being facetious but I have a serious point — the market has been remarkably range-bound since late-2014. Thanks to a nice rebound yesterday and today, the S&P 500 is largely back where it’s been for the last 20 months.

  Here’s the same chart as above but zoomed in some. I wanted to show you that the flat range wasn’t comprised of just one data point.

  

• Today Begins the Historic Summer Rally
  Eddy Elfenbein, June 29th, 2016 at 11:17 am

  

  Many investors are aware of the Santa Claus Rally, the historic effect that stocks have done well around Christmastime.

  There’s a similar effect for the middle of the year, although it’s not quite as strong. I’ve crunched 120 years of the Dow’s history and found that the index has gained an average of 3.56% between today, June 29, and September 6.

  Roughly speaking, that means that the Dow has historically made about half its gain for the entire year during a stretch that’s a little over two months.

  I caution investors not to read too much into this data. I just think it’s interesting how investors have behaved during different parts of the year.

• Morning News: June 29, 2016
  Eddy Elfenbein, June 29th, 2016 at 7:10 am

  German Consumer Morale Brightens Further Heading Into July

  Indoneia’s Parliament Passes New Tax Amnesty Bill

  Brexit For Traders: The Good, The Bad And The Uncertainty

  Merkel Says No Way Back From Brexit as Cameron Regrets Loss

  Bitter Scotland Weighs Its Own Divorce

  U.S. First-Quarter GDP Revised Up, Brexit Risk to Outlook

  Brexit: Vodafone Could Move Thousands Of Jobs Out of U.K.

  To Compete Better, States Are Trying to Curb Noncompete Pacts

  Uber’s App Will Soon Begin Tracking Driving Behavior

  CIBC to Buy Privatebancorp in Deal Valued at $3.8 Billion

  Airbnb Is Said to Be Seeking Funding Valuing It at $30 Billion

  Sony’s PlayStation 4 Sales Help Keep Profit Target Within Reach

  This Teen’s Lawyer-Bot Is Busting Thousands Of Parking Tickets

  Cullen Roche: Brexit, Bregret and Bredo?

  Jeff Carter: Don’t Fake It

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• Q1 GDP Revised up to 1.1%
  Eddy Elfenbein, June 28th, 2016 at 12:10 pm

  The government again revised Q1 GDP higher. Now that Q2 is almost over, the Q1 numbers are looking somewhat dated, but the government now says that the U.S. economy grew, in real terms, by 1.1% during the first three months of the year. The initial report was for 0.5% which was later revised to 0.8%.

  Exports actually rose slightly instead of falling and business investment was not as dismal as previously reported, according to the government’s second update. Those changes accounted for the upward revision in gross domestic product, the official scorecard for the U.S. economy.

  On a negative note, consumer spending was revised to show the smallest gain in two years.

  Although first-quarter growth was twice as strong as the Commerce Department’s original reading, the slow start in 2016 might be enough to prevent the U.S. from reaching 3% annual growth for the 11th straight year.

  We’ll get our first look at Q2 at the end of July. It’s broadly assumed that the economy did better than in Q1. The latest estimate from Atlanta GDPNow is for Q2 growth of 2.5%.

  Here’s real GDP going back a few years. The shaded area is the recession.

• Morning News: June 28, 2016
  Eddy Elfenbein, June 28th, 2016 at 6:41 am

  China’s Li Won’t Allow ‘Rollercoaster’ Markets After Brexit

  Draghi Calls for Global Policy Alignment to Lift Economic Growth

  U.K. Stocks Rise With Global Markets as Barclays, Lloyds Rebound

  Cameron Heads to Last Supper in Brussels Amid Impasse in London

  Brexit Is Strengthening the Forces That Already Haunt the Global Economy

  Who Will Now Invest £100 Billion to Keep Britain’s Lights On?

  South Korea Cuts Outlook, Plans Stimulus Package

  Justices Defer on Case Limiting Debt Collectors

  A Single Senator Stymies the Export-Import Bank

  Is Medtronic Overpaying For HeartWare?

  Uber, Lyft Settle Litigation Involving Top Executives

  Volkswagen to Pay $14.7 Billion to Settle Diesel Clams in U.S.

  Takata Chief Executive to Resign in Effort to Quell Recall Scandal

  Josh Brown: The Riskalyze Report: How Advisors Handled Brexit

  Roger Nusbaum: Brexit With a Vengeance

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• Brexit Does the Fed a Favor
  Eddy Elfenbein, June 27th, 2016 at 2:04 pm

  Another effect of the Brexit vote is that any plans for a Fed rate hike this year are completely off the table. This was a huge favor for the Fed as they now have a disingenuous excuse to abandon an untenable policy.

  Brexit won’t hurt us that much, but the idea of the Fed hiking rates this year is nuts. Remember that not that long ago, the Fed was planning to raise rates four times this year, and four more times in 2017.

• The Market Turns Defensive
  Eddy Elfenbein, June 27th, 2016 at 12:05 pm

  This is an instance where charts can say it all. Here’s the relative strength of staples (blue) and utilities (black):

  

  Here are the financials:

  

  And the 10-year yield:

  

  The 10-year yield is now down to 1.46%. Four years ago, it hit 1.39% which was the lowest yield since 1790.

• The Pound Continues to Fall
  Eddy Elfenbein, June 27th, 2016 at 10:48 am

  

  The pain for the British pound continues. The currency had been at $1.50 just before the vote. Today, it’s been below $1.32.

• The Post-Brexit Blues
  Eddy Elfenbein, June 27th, 2016 at 9:40 am

  Friday was obviously a very dramatic day on Wall Street. Stocks plunged and bonds soared. Gold rallied to a two-year high and the 10-year yield is close to a multi-decade low. The Japanese yen soared to under 100 against the dollar.

  Stocks opened lower this morning. The S&P 500 is currently down about 1%. The index has been as low as 2,015 this morning.

  The post-Brexit fallout is mostly a financial issue, meaning it’s impacting banks and the credit markets. While stocks involved in the production part of the economy are down, the pain isn’t nearly as severe. Hormel Foods, for example, closed higher on Friday. Walmart came close to closing in the green as well.