STARBUCKS- VERY NICE GESTURE BUT…

Be careful what you wish for.!

SOURCE: http://thehill.com/homenews/news/388472-new-starbucks-policy-allows-people-to-sit-in-cafes-without-buying-anything 

VENEZUELA-DEEPER INTO THE S—HOLE

SOURCE: https://apnews.com/1511c5f3955f4a4993d768603cd9f2db/The-Latest:-Maduro’s-challengers-criticize-‘red-points’

PRE MARKET

Laughable analyst move of the day: “Tesla target raised to $500 from $470 at Berenberg!” The stock has been weak, trading at $277 yet a ridiculously far away $470 price target gets raised for one reason…to juice the stock. Just laughable.

Futures up nicely off of the fake trade war that never was a trade war.  China is going to blah blah blah buy more stuff even though there are no specific numbers even though some are attaching specific numbers.

Nevertheless, markets were in a quiet, constructive pullback last few days and will now move towards the top of the consolidation. Unless we get the mother of reversals today, this will shape the indices even better.

Besides the trade stuff, MU raises numbers…helping the stock as well as the SEMIS….which had a rough Friday.

THERE’S NO STINKING TRADE WAR!

“We’re putting the trade war on hold!” With those words, Mr. Mnuchin put a stamp on everything we have been saying  on tv and radio as well as in this column. There’s no stinking trade war. Very simply, these people are not idiots. Well….? Let’s just say at the very least, they probably took a couple of weeks to realize how idiotic tariffs are as well as realizing the Chinese would not blink too much. If they mention again, do not believe a word as it is getting close to the very important mid-terms…and I guarantee you that is all they are thinking about.

Rest assured, after a constructive pullback week, we gather the market will pop on the news, at least in the short term. But we stick with our recent thoughts:

Most indices remain range-bound.

The RUSSELL is in new highs. The NASDAQ/NDX is not as good but better than the DOW/S&P, which are bringing up the rear.

OILS/ENERGY continue to be the big strength but again, very extended and overbought.

BONDS continue the ugly as rates back up. No coincidence that the most interest rate sensitive areas continue lower. (Housing, real estate, utilities)

Because of the higher oil, two of the worst areas are airlines and cruise lines. Again, no coincidence.

Emerging markets act poorly as Brazil and Argentina are basket cases. Other countries are also weak.

We love that so many big growth names are just sitting mostly tight after good moves. They may need some more time.

BIG FINANCIALS…still not happening.

SEMIS…did not like that AMAT reaction. As always, important group to be watched.

We suspect the DOW/S&P will remain range-bound while the NASDAQ/NDX having a chance to follow the RUSSELL as a few mega-cap names have major influence. We also suspect the harsh economic rhetoric will get less harsh as we head towards and get closer to November.

PRE MARKET

AMAT down decently pre market which has led to LRCX down $7 and other SEMIS following suit. Something to watch.

NDX futures down decently but RUSSELL hardly down. Small caps have been leading.

OILS now VERY extended off another strong day yesterday.

RETAIL acts well…a few names breaking out.

With rates higher, UTILITIES, HOUSING, REAL ESTATE worsen but very oversold.

More on the weekend….but also:

Go get Ken Langone’s book “I LOVE CAPITALISM!’ Have every one of your millenials read it before they continue to applaud Bernie Sanders.

 

 

COSTS!

By Gary Kaltbaum- March 17, 2018
We just wanted to alert you to some very important facts. Not opinion…facts! These numbers must be watched as very important costs continue to go up. Cost of energy, cost of borrowing, cost of doing business. All evidence in is that the economy remains in decent shape. After all, markets just held longer term support. (The market is a pretty darn good forecaster.) We just know there continues to be massive debt and deficits (a long term headwind) and not sure the following numbers do not start to affect things shorter term. The good news is that even with these numbers, a bunch of RETAIL names broke out of range yesterday. We doubt the economy gets in trouble when that type of action occurs.

The following are yields from the short to the long term. The 1st number was at the start of the year. The 2nd number is from yesterday. That’s a darn big move in just a few months. Savers are finally doing better but loans, mortgages and cost of capital are all going up. It is not an accident that the most interest rate-sensitive areas (housing, utilities, real estate) are some of the weakest areas in the market.
 3-Mo: 1.39% –> 1.92%

6-Mo: 1.53% –> 2.09%

1-Yr: 1.76% –> 2.32%

2-Yr: 1.89% –> 2.58%

5-Yr: 2.20% –> 2.76%

10-Yr: 2.40% –> 3.09%

30-Yr: 2.74% –> 3.21%

And oil prices. One year ago, the average price at the pump for regular was $2.336. Today, it is $2.902…and counting as we expect another bump in the next week or two. Estimates are that every 10 cents at the pump over a year’s time takes $10 billion out of the consumer’s pocket. You can add up and multiply the numbers yourself. That’s a lot of cake that would otherwise go towards anything but gas. Keep in mind, this does not include the cost to business and businesses that use oil in their manufacturing process. (Many!) And again, by no coincidence, 2 of the worst areas in the market right now are airlines and cruise lines.

PRE MARKET

Futures down modestly on the S&P but down decently on the NDX. CSCO not helping.

NTES whacked. Others to the downside are PLCE, ACXM, TTWO, JACK. On the upside are BZUN, DDS, WMT, MLNX, WWE.

Yesterday was about RETAIL as a few names moving out of range. NKE, M, URBN,come to mind but also good action in ANF, BBY, COST, GOOS, LULU and others. This is happening while rates go higher and oil prices soar. In fact, now above $72. Yields are above 3.1% on the 10 year. Rates have been moving higher all year. Keep in mind every 10 cents move at the pump over a year’s time is $10 billion out of the pocket of the consumer. The national average gas price is now $2.88.

And to give you an idea where rates were starting the year and where they are now…finally, some relief to the saver but higher costs on loans, mortgages and everything else.

3-Mo: 1.39% –> 1.92%

6-Mo: 1.53% –> 2.09%

1-Yr: 1.76% –> 2.32%

2-Yr: 1.89% –> 2.58%

5-Yr: 2.20% –> 2.76%

10-Yr: 2.40% –> 3.09%

30-Yr: 2.74% –> 3.21%