Archive for December, 2019

• Jobless Claims Rise to Two-Year High
  Eddy Elfenbein, December 12th, 2019 at 3:34 pm

  I wouldn’t worry about this just yet, but it does catch my attention:

  The number of Americans filing applications for unemployment benefits jumped to more than a two-year high last week, but that probably does not signal a pickup in layoffs as the claims data tends to be volatile in the period following the Thanksgiving Day holiday.

  Initial claims for state unemployment benefits surged 49,000 to a seasonally adjusted 252,000 for the week ended Dec. 7, the highest reading since September 2017, the Labor Department said on Thursday. The increase was the largest since August 2017.

  Claims dropped to 203,000 in the prior week, which was a seven-month low. The decline likely reflected a late Thanksgiving Day this year compared to 2018, which could have thrown off the model used by the government to strip out seasonal fluctuations from the data.

  

• New All-Time High
  Eddy Elfenbein, December 12th, 2019 at 10:31 am

  The stock market is up to another new all-time high today. Lately, the financial sector has been particularly strong. The financials have been leading for over three months.

  

• Morning News: December 12, 2019
  Eddy Elfenbein, December 12th, 2019 at 7:19 am

  Lagarde Leaves Draghi’s Shadow for ECB Debut: Decision Day Guide

  Aramco Reaches Prince’s $2 Trillion Goal in Second-Day Surge

  China’s Companies Binged on Debt. Now They Can’t Pay the Bill.

  Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits

  Apple to Dodge $150-Per-IPhone Levy If Trump Delays Tariffs

  Want a Bigger Say on Corporate Behavior? Move Your Money

  ‘Black Swan’ Index Flashes Yellow: Wall Street Is Not Scared

  Delta Predicts 2020 Profit Growth; CEO Says More People Turning to Air Travel

  Citi, Credit Suisse Drop China’s Ucommune U.S. IPO Over Valuation

  Magic Mushrooms Pass First Hurdle as Depression Treatment

  GameStop Just Taught Investors a Painful Lesson

  Home Depot Ties Opioid Crisis to Recent Surge in Store Theft

  Howard Lindzon: Digging For Broken IPOs

  Jeff Carter: Too Hot

  Lawrence Hamtil: 2019’s Top Posts

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• No Change from the Fed
  Eddy Elfenbein, December 11th, 2019 at 2:01 pm

  Here’s the statement:

  Information received since the Federal Open Market Committee met in October indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

  Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

  In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

  Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.

  Here are the latest projections.

• The Santa Claus Rally
  Eddy Elfenbein, December 11th, 2019 at 12:19 pm

  We’re right at the historically best time of the year for stocks. Actually, that’s an understatement. Historically, this is the best time of the year by far. Over the last 123 years, one-third of the Dow’s annual gain has come in the next half a month.

  Let me be clear: I don’t think there’s any useful trading information in these historical seasonal patterns. I would never make an investment decision based on the calendar. Plus, if you run enough data, some oddball pattern will emerge. That doesn’t mean it’s real.

  But I do think these patterns are interesting for their own sake. My guess is that the ending of each year brings forth some optimism for the new year.

  Now let’s dig into the numbers. Crunching 123 years’ worth of data we find that from December 21 to January 8, the Dow has gained an average of 2.83%. That’s 18 days and trading is always closed on Christmas and New Year’s Day. That’s 36.5% of the Dow’s total annual price gain (dividends aren’t included) coming in just 4.9% of the year. What’s also interesting is how meager the gains have been for the rest of the time.

• The Gundlach Ratio
  Eddy Elfenbein, December 11th, 2019 at 11:37 am

  Steve Goldstein introduces us to the “Gundlach Ratio,” named after Jeffrey Gundlach.

  The ratio is copper divided by gold. It makes sense.

  Gundlach tracks the ratio of copper prices to gold. Gundlach believes in the predictive value of the ratio since copper is sensitive to swings in the economy, while gold climbs when investors get frightened.

  As the chart shows, copper is starting to climb relative to gold, which should imply that bond yields will rise, meaning bonds will fall in value.

  Works for me.

  The ratio has tracked the 10-year Treasury pretty closely for the last few years.

  

• Today’s CPI Report
  Eddy Elfenbein, December 11th, 2019 at 11:08 am

  The Federal Reserve is meeting today. The policy statement is due out at 2 p.m. I don’t expect any change to interest rates.

  This morning, we got the inflation report for November. Consumer prices roses 0.3% last month which was 0.1% greater than expectations. Part of that was due to gasoline prices. In the last 12 months, consumer prices are up 2.1%.

  The core rate, which excludes food and energy, rose by 0.2% in November. In the last year, core prices rose by 2.3%.

  Here’s the monthly seasonally adjusted core CPI:

  

• Morning News: December 11, 2019
  Eddy Elfenbein, December 11th, 2019 at 7:35 am

  On Data Privacy, India Charts Its Own Path

  Saudi Aramco Surges in World’s Biggest IPO

  Signs Point to China Tariff Delay, but Decision Rests With Trump

  Mexican Businesses Want Clarity on Details of USMCA Trade Deal

  Fed Dots May Yield Clue on Split Over Pause: Decision Day Guide

  The Legacy of Paul Volcker

  America’s Dairy Farmers Are Hurting. A Giant Merger Could Make Things Worse.

  Ken Griffin Has Another Money Machine to Rival His Hedge Fund

  How Uber Drains Carmaker Profits in Latin America’s Biggest Market

  New York Loses Climate Change Fraud Case Against Exxon Mobil

  Five Charged in Alleged $722 Million Cryptocurrency Ponzi Scheme

  Nick Maggiulli: My Favorite Investment Writing of 2019

  Joshua Brown: Being a Financial Advisor and a Parent

  Ben Carlson: Financial Gifts For Your Holiday Wish List

  Michael Batnick: 10 Weirdest Stories From 2019

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• Morning News: December 10, 2019
  Eddy Elfenbein, December 10th, 2019 at 7:29 am

  A 5,000-Year-Old Plan to Erase Debts Is Now a Hot Topic in America

  Powell Steers for Economic Soft Landing Thwarted Twice by Trump

  The Federal Reserve’s Meeting Starts Today. Here’s What You Need to Know.

  Drowning In Uncertainty: Trade Questions Slow Investment, Squeeze Profits Across U.S.

  Amazon Accuses Trump of ‘Improper Pressure’ on JEDI Contract

  Big Tech Is Under Attack, and Investors Couldn’t Care Less

  Choppy Markets Leave U.S. Bank Bonus Decisions in Limbo

  Mistrust and the Hunt for Spies Among Chinese Americans

  Mohamed El-Erian Is A Confident ‘Yes’ on Buying Saudi Aramco Shares

  Rare Whiskey Collection Expected to Fetch $10 Million at Auction

  Online Luggage Startup Away Says CEO Is Stepping Down

  Michael Batnick: How To Maintain Your Life Style in Retirement

  Ben Carlson: Putting Private Equity Dry Powder Into Perspective & A Random Watch Down Wall Street: Boiler Room

  Roger Nusbaum: Mitigating Sequence Risk

  Cullen Roche: Three Things I Think I Think – More on Socialism

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• Disney Had Its Sixth Blockbuster this Year
  Eddy Elfenbein, December 9th, 2019 at 3:30 pm

  

  Some amazing numbers for Disney (DIS):

  The Walt Disney Co. has hit a new threshold by grossing $10 billion at the worldwide box office.

  No studio has ever done this. In fact, Disney (NYSE: DIS) broke its own record all the way back in July when it surpassed $7.6 billion — a high set in 2016 — driven by “Avengers: Endgame,” “The Lion King,” “Captain Marvel,” “Toy Story 4” and “Aladdin.”

  Each of those films has made more than $1 billion in global ticket sales, and with nearly $920 million worldwide, “Frozen II” is well on its way to becoming the studio’s sixth billion-dollar release — another record.

  Through Sunday, Disney had grossed $3.3 billion domestically and $6.7 billion internationally.

  That doesn’t even include releases from Fox, which Disney acquired in March. Counting those films, which include the recent hit “Ford v Ferrari,” the studio’s global take goes up to $11.9 billion.

  And “Star Wars: The Rise of Skywalker” hasn’t even hit theaters yet.