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US Major indices close near lows for the day

  
Analysis, US Market

NASDAQ trades to record high before reversing lower

The major indices are closing near the lows for the day.

Highlights:
  • NASDAQ still on track for its best week in five weeks
  • Dow breaks a four day win streak
  • NASDAQ and S&P break as a five day win streak
  • NASDAQ traded to a record high before reversing lower
  • energy, consumer discretionary, technology and communications the weakest.
  • Real estate the only gaining sector in the 11 S&P sectors
The final numbers are showing
  • Dow Jones -192.38 points or -0.54% at 35213.12
  • S&P index -26.27 points or -0.58% at 4469.92
  • NASDAQ -96.05 points or -0.64% at 14945.81
Some oversized losers today included:
  • Dollar Tree -12.04%
  • AMC -8.21%
  • Roblox -5.05%
  • AirBNB, -4.8%
  • Robinhood, -4.27%
  • Snap, -4.10%
  • Express, -4.05%
  • Novavax, -3.26%
  • Chewy, -2.83%
Gainers today included:
  • Snowflake, +7.63%
  • Crowd strike, +3.24%
  • Trager, +3.19%
  • Game Stop, +2.70%
  • Salesforce, +2.68%
  • Palantir, +2.22%
  • Northrop Grumman +1.15%

Dow 30 losers today include:

  • Boeing, -2.05%
  • Nike, -1.71%
  • Caterpillar, -1.65%
  • Aubrey boots, -1.64%
  • Travelers -1.6%
  • Chevron, -1.31%

Dow 30 winners today include:

  • Salesforce, +2.68%
  • 3M, +0.52%
  • J.P. Morgan, +0.52%
  • Honeywell, +0.08%

U.S. Treasury sells $62 billion a seven year notes at a high yield of 1.155%

  
  Analysis

WI yield at the time of auction was at

  • High yield 1.155 % vs the WI level of 1.151%
  • Tail of 0.4 basis points
  • Bid to cover 2.34X versus 2.26X six month average
  • Directs, 18.86 % versus 20.3% six month average
  • Indirects, 61.07% versus 55.1% six month average
  • Dealers, 20.08% versus 24.6% six month average

The auction had strong international demand, but somewhat weak domestic demand. The demand note was at a higher level compared to the WI yield at the time of the auction.

AUCTION GRADE: D+/C-

Fed hawks weigh-in before Powells speech tomorrow

  
  Analysis

Esther George, James Bullard, and Richard Kaplan look for the Fed to start to taper process

The Jackson Hole Summit was expected to start today. The event is put on by the Kansas City Fed. Esther George is the president of the Kansas City Fed, and she argued that

  • the Fed has made substantial further progress in its goals and it is time to start to taper process.
  • Says that tapering should start sooner rather than later
Feds Bullard continued his hawkish ways saying that
  • we probably don’t need asset purchases
  • That we have a lot of inflation the US, that he is skeptical that inflation will moderate in 2022, and that it is currently more than expected even with the new framework
  • he looks for the taper to get going and finished by the end of the first quarter so that the Fed can have some optionality in 2022
  • he is concerned that inflation is running faster than wage increases
  • is also concerned about the high price of housing and that buying mortgage-backed securities is counterproductive to slowing those increases
Dallas Fed President Kaplan walked back his concerns about the Delta variant made last week (which prompted a move to the upside in stocks). He commented that:
  • He is not seeing anything that would make material changes outlook
  • his business contacts oh saying that they are weathering the Delta variant and businesses are seeing resiliency and adaptable
  • he is encouraged by the higher percentage of population that is vaccinated
  • Hopes that the Fed will announce a taper plan in September
  • Said that the purchases were designed to stimulate demand and that we don’t have a demand problem anymore
  • he does divorce considerations on that asset purchases from rate changes although he still expects a rate hike in 2022
  • he’s in favor of a gradual taper with “gradual” meaning taking 8 months or so (which would take it toward the end of the 2Q).

(more…)

European indices close lower

  
Analysis, Global Indices

Erase yesterday’s modest gains

The major US indices are ending the day lower, erasing the modest gains from yesterday:

  • German DAX, -0.4%
  • France’s CAC, -0.2%
  • UK’s FTSE 100 -0.3%
  • Spain’s ibex -0.9%
  • Italy’s FTSE MIB -0.7%
in other markets as London/European traders look to exit for the day:
  • Spot gold is up $4.50 or 0.23% $1794.56
  • spot silver is down $0.24 or -1.04%
  • WTI crude oil futures are down -1.13% at $67.58
  • The price of bitcoin is down over $2100 at $46,892
In the US debt market, yields remain tied to the unchanged to plus or -1 basis point:
Erase yesterday's modest gains_
In the European debt market, the benchmark 10 year yields are also modestly changed with gains of less than one basis point across the board:
US rates

More on the Bank of Korea rate hike, first in almost three years

  
  Analysis

The Bank of Korea raised its key policy rate by 25bps to 0.75%

Reuters have a recap up on the move, that was expected by 16 of 30 analysts it had]= surveyed, a bare majority.
Reuters point to comments from Citi:
  • “BOK’s concerns about financial imbalances may outweigh the downside risk to economic growth from the Delta variant,” said Kim Jin-wook, an analyst at Citibank said in a report ahead of the decision.
  • “We now bring forward the timing of our second hike call to 1.00%, to November 2021 from January 2022.”

Poll results – Rally in global stocks nearly over, further gains will be limited, correction likely by year-end

  
Analysis, Global Indices
#  #  #  #  #

Reuters polled equity market analysts and that headline above is the summary:

In very brief summary:
  • The spread of the Delta variant of the coronavirus and the U.S. Federal Reserve’s pending plans to taper its asset purchases are likely to leave equity markets exposed to turbulence over the coming months.
  • positive earnings season catalyst now behind us
  • 66 of 107 analysts said a correction in global equity markets by end-year was likely. The remaining 41 said unlikely.
Reuters have published a long piece, with a few anecdotal remarks that you might find of further interest, here is the link for plenty more.
Reuters polled equity market analysts and that headline above is the summary:

Jackson Hole agenda to be published later today, Thursday 26 August 2021

  
  Analysis
#  #  #  #  #

The Kansas City Federal Reserve symposium will be a ‘virtual’ affair, August  27 – 30.

We do know that the main event are opening remarks from Federal Reserve Chair Jerome Powell, due at 9 am CT/10 am ET/1400 GMT on August 27.
I posted on this earlier in the week, but for those who missed it, the full agenda will be made available at 7 pm US Central time (CT), which is 8 pm US ET on August 26
0000 GMT August 27
I’ll get the schedule of speakers and times posted once its made available in a little over 24 hours time.
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