Futures down a wee bit. Considering FDX down $19 and ADBE down $9…that’s not bad.
Blah blah blah the fed today. Blah blah blah easier money…blah blah blah.
The OIL gap on Saudi news quickly unwinds.
The big story is oil prices and what to do. We freely admit that we dont know. The news is fluid. Normally, we would tell you this move will be fleeting but if the Saudis come back and state it will take a long time to get back on line, that would be less than thrilling.
The fed tomorrow. We were in the camp 1/2 point cut when rates were below 1.5% on the 10 year. We now believe 1/4 point as the 10 year is back up to 1.835.
Markets have loved easier money for over 10 years. This year is the same. Every pivot to easier by the fed coincided with a market bottom. This time?
Markets are quieting down in here as the big 4 approach the highs. There is nothing wrong with this.
Down and out SOFTWARE woke up yesterday but most all remain below resistance/50 day average with some below the 200 day…but they are higher beta.
SAUDI OIL ATTACKS…oil prices higher…oil stocks gap up…buy into gold and bonds…markets down but not by much.
The question is what next? The president used the language “locked and loaded!” Stay tuned. Markets have ripped the stuffings out of growth and into value. Not sure that lasts.
The good news is Saudi oil not as important as it was years ago but still important.
Sorry…these presidential debates are supposed to pull the covers off of all the proposals coming from the presidential candidates. These debates are supposed to hold feet to the fire. These debates are not for a candidate to provide their talking points. Unfortunately, for the most part, these debates were just that.
A couple of themes still playing out.
In the past few days, value has taken over growth. This after a whole year of the opposite. We were sent a study that in the past few days, stocks under $5 were up 20%. When we do our scans, unbelievable moves from stocks that were at new yearly lows. Keep in mind, many have horrible earnings and sales numbers.
Bond yields continue to back up as that final move looked a wee bit climactic. As we write this, the 10 year has backed up from 1.45% to 1.84% in just over a week. Anyone who bought long in the last week or so, not happy campers.
Financials, especially the down and out regionals, are benefiting most from the higher rates as the spread widens. We have to mention JP Morgan is on the verge of breaking out to all time highs, moving out of an almost 2 year trading range. To give you an idea, JP Morgan is up 250% in the past 12 years but:
Santander: -47% BBVA: -61% ING: -66% Credit Suisse: -71% Barclays: -79% Soc Gen: -81% Deutsche Bank: -92%
The SEMICONDUCTORS remain quite strong in the face of crappy earnings and sales but the big bet is that the bottom is in for the cycle. The problem with this is these companies always say the bottom is in. Regardless, our motto is always to watch this group as it continues to lead markets up and down. It is now back near the old highs.
With rates backing up, we think the Fed no longer needs to lower rates by 1/2 point. When the 10 year was under 1.5%, they needed to catch up. No longer. Then again, anything is possible with these easy money dolts.
Speaking of easy money dolts, Draghi, on his way out of the ECB decides to lower rates again and print more money even though rates are already big time negative and even though they have already printed a ton of money. We think it was Einstein who said: “Insanity is doing the same thing over and over again and expecting different results!” Unfortunately this is going to affect the long term health of the EU as it has done nothing for no one and guarantees a burst bubble down the road. On top of that, they continue to screw their savers.
Speaking of negative rates, we wish the president would lock it up on jawboning the fed. There is a reason why other countries have negative rates. They are basket cases. Yes, with $1 trillion deficits, we are also a basket case but less so. The president needs to be very careful with his words. He railed against Obama and Bernake for their 0% rates and their printing of money. Quite interesting to see the change of stance once you are running for re-election.
Will have our thoughts on the latest debate over the weekend as we have yet to watch most of it. Somehow, we will get through the 3 hours of socialist nonsense.