Archives of “September 2019” month

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Gundlach says he is ‘less positive’ on gold

  
  Analysis
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Jeffrey Gundlach is chief executive of DoubleLine Capital, comments across a range of issues.

Speaking with Reuters and on his regular webcast:

  • repo market squeeze makes it even more likely that the Fed will resume expansion of its balance sheet ‘pretty soon’
  • Federal Reserve will embark on ‘QE lite, Fed will grow balance sheet ‘in line with the growth in currency, like they did before the credit crisis’
  • says he is ‘less positive’ on gold as a buying entry because of recent rally
  • says chances of a US – China trade deal are ‘below zero’ ahead of the 2020 presidential election
Jeffrey Gundlach is chief executive of DoubleLine Capital, comments across a range of issues.

US Indices break 2-day slide. Close near day highs.

  
Analysis, US Market

Late day rally sends stocks higher

A late day rally has sent stocks higher into the close. The major indices are are closing near the session highs for the day with the Nasdaq stocks leading the way.
The provisional closes are showing:
  • S&P index up 7.62 points or 0.25% at 3005.58
  • NASDAQ index up 32.47 points or 0.40% at 8186.01
  • Dow industrial average up 31.74 points or 0.12% at 27108.56/

After the close FedEx is reporting weaker than expected earnings on the top and bottom lines and lowers expectations going forward.  First-quarter revenues $17.05 billion versus $17.06 billion estimate. Earnings per share $3.05 versus $3.15 estimate. They see fiscal year EPS at $11-$13 versus estimates of $14.73. They cite trade tensions for the decline.  FedEx after the close is trading down sharply at $160.36. That is down from the closing level of $173.55

Adobe, meanwhile be on the bottom and top lines.
  • Earnings-per-share to rose by $2.05 versus $1.97 estimate
  • Revenues $2.83 billion versus $2.82 billion estimate
Adobe did lower fourth-quarter earnings-per-share to $2.25 from an estimate $2.30 and revenues to $2.97 billion versus estimate $3.02 billion.  Adobe is trading in after markets at $284.10. It closed at $284.69
Some winners for the day include:
  • Chipotle, +3.27%
  • General Motors, +2.90%
  • Boeing, +1.53%
  • Netflix, +1.53%
  • Starbucks, +1.49%
  • Stryker, +1.45%
  • micron, +1.38%
  • United airlines, +1.37%
  • McDonald’s, +1.20%
  • American Express, +1.17%
  • Twitter, +1.15%
  • Intuit, +1.02%
  • Facebook, +1.0%
Some losers on the day include:
  • Schlumberger, -2.93%
  • Papa John’s, -1.35%
  • Morgan Stanley, -1.23%
  • Charles Schwab, -1.15%
  • Cisco, -1.10%
  • Emerson, -1.10%
  • PNC financial, -0.90%
  • Caterpillar, -0.71%
  • Bank of America, -0.70%
  • Deutsche Bank, -0.61%
  • Goldman Sachs, -0.60%
  • Citigroup, -0.53%
  • J.P. Morgan, -0.50%
  • Wells Fargo, -0.49%

European major indices are ending with mixed/modest results

  
Analysis, Global Indices

Little changes up and down on the day

The  European stock markets are ending the day mixed with mostly modest changes for most of the major indices. Italy’s FTSE MIB fared the worst, while France rose modestly higher.

The provisional closes are showing

  • German DAX, unchanged
  • France’s CAC, up 0.2%
  • UK’s FTSE, unchanged
  • Spains Ibex, -0.5%
  • Italy’s FTSE MIB, -0.76%
In  the benchmark 10 year note sector, yields are higher with Italy Portugal and Spain up the most.
European 10 year yields are up on the day
In the forex market as London/European traders look to exit, the EUR is the strongest while the AUD is the weakest.  The USD has weakened in the NY session after being marginally higher earlier.

Markets eventually need to deal with the China reality

  
  Analysis
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The situation in Saudi Arabia and focus on the Fed has took the spotlight away from China’s economic worries to start the week

China
  • China’s Premier Li says maintaining economic growth of 6% or more is very difficult
  • China Industrial Production in August 4.4% y/y (expected +5.2%)
  • China Retail sales for August: 7.5% y/y (expected +7.9%)
I still don’t think markets are paying much attention to the message emanating from China to start the new week, and that may be a sign of complacency.
Industrial production slowed to its weakest in 17 ½ years while retail sales slumped more than expected and the PBOC is still showing no signs of easing its lending rates just yet – as evident by today’s MLF operations.
Prospects of a trade deal may sound attractive for risk sentiment but it isn’t going to be a massive game changer to the slowing Chinese economy in my view. Domestic demand is weakening and that will continue to eat away at global economic growth.
Markets may be a bit distracted for the time being amid oil news, central bank focus, and hopeful optimism surrounding trade talks. But don’t expect that to stay the course for too long. The longer the ramifications of the above go unnoticed, the greater the hit it will have on markets when reality snaps back in.
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