Market Weekly: Sep 24 – Sep 30 2018

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    Where have we been and where are we…



    Why do I think this will be a Trump Tweet crazy week – Iran, OPEC, UN, Iran …. and so much more 🙂 Thank you for the layout of what is coming – have a great weekend 🙂

    Helmholtz Watson

    From JPMorgan Chase & Co Note Friday:

    Worried That Overconfident President Donald Trump gets so overconfident and makes “major miscalculation.”

    “U.S. economic and equity market resilience despite tariffs will embolden the President on all geopolitical fronts — autos, Nafta and particularly Iran — and thus risk a major miscalculation from sanctions that are tough to calibrate,” strategists led by John Normand wrote in a note Sept. 21.

    Also the strategists said that’s part of the reason the firm has boosted oil-price forecasts, with a spike in Brent to $90 a barrel “likely” on revised estimates of how much crude demand from Iran might drop as countries respect the U.S. sanctions due to begin in November.

    JPMorgan also is starting to factor into its strategy a growing potential for a “Phase III” of the U.S.-China trade war next year affecting all Chinese imports. That could, the strategists say, lead to weaker Chinese growth and hit the commodities complex — not to mention U.S. stocks.

    “For U.S. equities, 25% tariffs on all imports from China could take $8 off consensus 2019 EPS projections of $179 and reduce next year’s EPS growth from 10% to 5% year-on-year,” the note said, citing a Sept. 12 report from JPMorgan strategists led by Dubravko Lakos-Bujas. The $179 refers to average Wall Street estimates for the S&P 500.

    “Even with a forward multiple of 17, an EPS downgrade this large would end the U.S. stock rally unless some other offset materialized.”
    Concerns for the markets and economy include “second-round” effects from trade battles, including hits to confidence, supply-chain disruption and and tighter financial conditions, the report said. It noted that improvements at the country level in key markets have been “incremental rather than transformational,” citing Turkey, Russia, Brazil and Argentina.

    Also, the Federal Reserve meeting this week presents some uncertainty, especially if the statement language changes to suggest the Fed is near the end of its hiking cycle.

    “The deeper question is whether this week’s rallies are the beginning of an unmissable strategic opportunity (lasting six months or more, delivering at least 10% upside) or just a more tactical one (lasting another week or two, delivering about 5% upside)?,” the strategists wrote. “Across research teams, conviction is higher around the latter than the former.”


    Is Trump overconfident the risk or the markets blind willfulness in disregarding risk? After all he’s putting enough out there – and not just trade wars that suggest the marking at record highs is disregarding risk and in a euphoric stage. Its not Trump buying stocks …


    Chicago Federal Reserve National Activity Index at 0.1 versus 0.20 estimate, prior month to 0.18 from 0.13


    Sept Dallas Fed manufacturing activity 28.1 vs 31.0 expected, Prior 30.9

    Texas factory activity continued to expand in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, dipped six points to 23.3, indicating output growth continued but at a slower pace than last month.

    Output 23.3 versus 29.3 prior
    Production 23.3 versus 29.3
    new orders 14.7 versus 23.9
    employment 17.7 versus 28.9
    wages and benefits 33.0 versus 33.4
    prices paid for raw materials 44.4 versus 45.3
    prices received for finished goods 13.6 versus 15.3
    growth rate of orders 11.5 versus 19.9
    capacity utilization 21.6 versus 25.2
    unfilled orders 1.8 versus 9.1
    hours worked 12.7 versus 19.0
    capital expenditures 17.0 versus 25.1


    [b]Dallas Fed September 24, 2018
    Comments from Survey Respondents[/b]
    These comments are from respondents’ completed surveys and have been edited for publication.

    Chemical Manufacturing
    We are starting to see our larger clients postpone inventory positions, thus increasing cycle times. Raw materials are increasingly more difficult to obtain, even with supply agreements in place.
    The demand for skilled employees is much higher than the supply. If skilled workers don’t move to the Texas Gulf Coast, there will be trouble.
    We are experiencing a severe raw material shortage, which is causing a flat rate of production. We could sell more, but lack of raw materials limits this.

    Nonmetallic Mineral Product Manufacturing
    Prices for steel have increased by 30 percent due to import tariffs. This has cut operating margins for the past four months and will continue to have an effect until these fixed-price bids are completed. New contracts will reflect higher raw material costs and higher prices to our customers.


    US sold 37 billion of two-year note at 2.829% high yield
    Bid to cover at 2.44x vs 2.89x prior auction
    Awarded 44.96% at the high yield which was the highest yield since July 2008
    13.4% to direct bidders
    40% to indirect bidders
    46.6% to primary dealers


    [size=6][b][color=red]Dow 26,562.05 -181.45 -0.68%
    S&P 500 2,919.37 -10.30 -0.35%[/color]
    Nasdaq 7,993.25 6.29 0.08%
    Gold 1,203.20 1.90 0.16%
    Oil 72.26 1.48 2.09%[/b][/size]


    [color=purple][b]I do hope the KAV conformation votes occurs soon, so the madness ends … he is well qualified, experienced, and for most part public record is of excellent character (family man in recent years) … He is even moderate in some views & well educated for a great fit as next SCOTUS. .

    no one is perfect & believe these are more delay tactics than serious character flaws in youth or college 30 some years ago. While I personally find both last minute attacks are falsely manufactured, this clearly illustrates the power of “me too” movement even when misused. If both of these last-minute allegations end up being untrue, it is a sad state of affirms to go to these lengths in obstructing the process. And I actually believe FBI should investigate both cases & if false or a “setup” — justice should prevail…. Still, I believe if KAV hangs in there for a few more weeks, and these issues get cleared, he has good chance of still becoming latest member of SCOTUS … and like baking a cake – some things are worth waiting on 8).[/b][/color]

    Helmholtz Watson

    Sadly the whole system has imploded with integrity and sadly if you are a victim now you maybe not taken seriously as the boy who cried wolf secondly if you are someone who wants to chose to become a public servant or indeed anyone of note why would you run? The hypocrisy and political expediency has forever turned me off I know that and I assure you I am just one of many. Shame on all.


    Philly Fed Non-Manufacturing index 37.4 vs 41.7 prior

    Firm-level activity 46.8 vs 41.1 prior
    New orders 26.7 vs 29.0 prior
    Full time employment 36.7 vs 32.2 prior
    Wage and benefit cost index 48.1 vs 46.4


    Trump will also meet with South Korean President Moon Jae-in, Israeli Prime Minister Benjamin Netanyahu as well as the leaders of Egypt, France, Japan and the United Kingdom.

    Helmholtz Watson

    [size=5][color=red]Trump at UN

    US stronger, safe, richer than when I took office
    More sanctions will follow resumption of oil sanctions on Iran on Nov 5
    Iran’s leaders sow death, chaos and destruction
    Any solution for Syria must include plan to deal with Iran
    Iran leaders have stolen wealth

    Many steps remain to be taken by North Korea
    Sanctions will remain until denuclearization occurs

    Trade must be fair and reciprocal
    China market distortions ‘cannot be tolerated’
    We reject the ideology of globalism

    OPEC and non-OPEC partners are ripping of the rest of the world
    Wants OPEC nations to contribute substantially to military protection from now on

    Germany will become completely reliant on Russian energy with construction of Nordstream pipeline

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