“Central banks have made a $6t commitment to prop up financial markets via asset purchases. That might not limit the collapse in EPS, but it might limit the collapse in share prices,” Citi says.
Who needs earnings when you have central banks…
Archives of “Economy of New York City” tag
rssGoldman Sachs analyst on downside risk for US equities
Goldman Sachs’s chief equity strategist, David Kostin spoke Tuesday with CNBC
- “There’s a little bit of asymmetry in terms of the downside risk toward a level in the S&P 500 of around 2,000, which is down almost 25%, and upside of around 10% to a target at the end of the year of 3,000”
Unpicking/deciphering that – he thinks lower is more likely.
More:
- important investors not get too keen to buy
- during the 2008 financial crisis the market took several months of violent moves up and down before ultimately putting in a lasting bottoming on March 9, 2009
- “I would just remind you that in 2008 in the fourth quarter there were many different rallies…but the market did not bottom until March of 2009”
US stocks catch a big bid in the final 15-minutes of trading to limit the damage
Dramatic move late
The S&P 500 finished the day down just 24 points at 2954 in a big win for the bulls late in the day.
The index gained more than 70 points in the final 15 minutes of trading in a huge bid, that was likely helped by month-end rebalancing. The huge rallies in bond and selling in stocks this month left pensions and other balanced funds heavily overweight bonds, so they’re forced to buy to get back on target.
There may also be hopes for an emergency Fed cut on the weekend or some good coronavirus news. There’s no doubt the market could have overshot this week, with the S&P 500 posting its worst weekly performance since October 2008 — when Lehman Brothers collapsed.
The intraday chart shows the huge reversal that kicked off a test of the earlier low of 2880.
On the day:
- S&P 500 -25 points to 2954 (-0.8%)
- Nasdaq – flat
- DJIA -1.4%
On the week:
- S&P 500 -11.5%
- DJIA -12.4%
- Nasdaq -10.5%
The weekly chart is still ugly but at least the bulls have some lift as we closed off the weekly lows:
We will have to get back above the 200-dma at 3046 to generate any real optimism.
European shares end the session with sharp declines
German DAX -1.8%
The major European shares are ending the session with sharp declines. For the year, the major European indices are also in the red. A look at the provisional closes are showing:
- German DAX, -1.8%
- France’s CAC, -2.0%
- UK’s FTSE 100, -1.9%
- Spain’s Ibex, -2.4%
- Italy’s FTSE MIB, -1.4%
For the year, changes are all in the red led by a 7% decline in the UK FTSE 100.
- German DAX, -3.4%
- France’s CAC, -5%
- UK’s FTSE, -7%
- Spain’s Ibex, -3.1%
- Italy’s FTSE MIB, -1.6%
In other markets as the European/London traders look to exit are showing:
- Gold is still negative. It is trading down $10.80 or -0.65% at $1648.10. The spot price tried rebound and move higher on the fall in stocks, but seems to have sellers above. Recall that in yesterday’s trade, there was a large seller reported in the futures market which helped push the price lower in the New York afternoon session
- WTI crude oil futures are following the risk off sentiment with the contract trading down -$0.89 or -1.7% at $50.54. The price is not far off the low at $50.37. The high reached $52.02
In the US stock market, the NASDAQ is leading the charge to the downside. It is currently down -100 points or -1.11% and 9116.
- Dow -308 points or -1.11% at 27653
- S&P index -34.5 points or -1.07% at 3191
- Nasdaq down -100 points or -1.11% at 9116
Vanguard, BlackRock and State Street jointly own almost 20% of the shares that make up the Dow Jones 30 and 22% of the S&P 500 shares.
European shares end the day lower
German DAX, -0.66%. UK’s FTSE, -0.68%
the major European stock indices are ending the day with declines. The provisional closes are showing:
- German DAX, -0.66%
- France’s CAC, -0.79%
- UK’s FTSE, -0.68%
- Spain’s Ibex, -0.74%
- Italy’s FTSE MIB, -1.06%
- Portugal’s PSI 20, -0.62%
In the European debt market, yields moved sharply higher with the UK 10 year benchmark note leading the way with a rise of 11 basis points.
In other markets as European traders exit:- Spot gold is higher by $5.60 or 0.37% at $1516.18. It is trading at the highs for the day with the low down at $1510.86
- WTI crude oil futures are down $0.17 at $61.54, after failing to hold above the $62 level. The high price for the day reach $62.34
The US stocks are trading lower on the day led by declines in the NASDAQ index
- S&P index -14 points or -0.44% at 3226
- NASDAQ -51.18 points or -0.57% at 8955.82
- Dow -129 points or -0.45% at 28514
US yields are also higher with the yield curve steepening. The 2 – 10 year spread has widened out to 34.28 basis points from 29.4 basis points on Friday.
Base-case still for Fed to stay on hold in December and through 2020 – Citi
Citi on the Fed outlook
Citi discusses the Fed policy trajectory in light of yesterday’s FOMC minutes from the October meeting.
“Minutes from the October 30th FOMC released overnight are broadly consistent with Citi analysts expectations for disagreement regarding the need to cut, but agreement that on leaving policy rates on-hold. On USD supply to year end (the more interesting part of the Minutes), Fed officials continue to look for ways to make sure funding pressures in the overnight lending market don’t cause a problem again with a “standing repo” seen as the preferred option that would likely provide substantial assurance of control over the federal funds rate (and USD supply). However, Citi analysts do not expect a final decision until H1 2020. ,” Citi notes.
“The Citi analyst view remains for the Fed to stay on hold in December and through 2020 though muted inflation makes hikes in the next year very unlikely. Cuts are possible should domestic activity data indicate a slowdown,” Citi adds.
Here is what a US-China ‘currency pact’ would mean for the dollar and the yuan
Morgan Stanley (this via Bloomberg) say a pact is likely to weaken the USD and strengthen the Chinese yuan.
Well, yeah.
More:
- could lead to broad based USD weakness, especially benefitting China-proxy currencies
- yield curves would get steeper
- yen would weaken
MS say it’d be a ‘Plaza Accord’ lite.
A bit of a summary if its of interest.
Pres. Trump sounds off….
…Stocks are not liking the optics of it all
Pres. Trump is sounding off as he defends himself in the way he knows how. Below are a sampling of the recent tweets:
He is also on the wires saying:
- He thinks the whistleblower should be protected if he is a legitimate whistleblower
But adds:
- Person who provided whistleblower information is a spy
What does it have to do with the market?
Stocks continue to suffer, as things are seemingly more and more in disarray.
The S&P is currently down 56 points or -1.9% at 2884.30. The NASDAQ is down 142 points or -1.8% at 7766. Both are near lows for the day.
Gold prices remain elevated at plus $21.50 or 1.45% at $1500.50.
The USD is mixed
- The USDJPY is seeing the safe haven flows and trades near lows for the day
- The USDCHF, which was up near 90 pips earlier after weaker CPI inflation, has moved back to mid range.
- The EURUSD moved to new highs on some dollar selling
- The GBPUSD has also recovered (dollar selling) after being lower on Brexit concerns earlier.
3
…Stocks are not liking the optics of it all
Pres. Trump is sounding off as he defends himself in the way he knows how. Below are a sampling of the recent tweets:
He is also on the wires saying:
- He thinks the whistleblower should be protected if he is a legitimate whistleblower
But adds:
- Person who provided whistleblower information is a spy
What does it have to do with the market?
Stocks continue to suffer, as things are seemingly more and more in disarray.
The S&P is currently down 56 points or -1.9% at 2884.30. The NASDAQ is down 142 points or -1.8% at 7766. Both are near lows for the day.
Gold prices remain elevated at plus $21.50 or 1.45% at $1500.50.
The USD is mixed
- The USDJPY is seeing the safe haven flows and trades near lows for the day
- The USDCHF, which was up near 90 pips earlier after weaker CPI inflation, has moved back to mid range.
- The EURUSD moved to new highs on some dollar selling
- The GBPUSD has also recovered (dollar selling) after being lower on Brexit concerns earlier.
Overnight :Not a good day on Wall Street as major indices react to potential impeachment proceedings
Nasdaq stocks lead the charge lower
The US major industries are closing lower on the day led by the NASDAQ stocks. Some major stocks like Netflix and Amazon fell sharply. Today Netflix’s most bullish analyst slashed his price target for the stock from $515-$350. The stock was as high as $380 in July. For Amazon it fell below its 200 day moving average today.
The closing numbers for the major indices are showing:
- S&P index, -25.18 points or -0.84% at 2966.60
- NASDAQ index fell -118.83 points or -1.46% at 7993.62
- Dow fell -142.22 point surmise 0.53 present at 26807.73
Although the indices were off the lows for the day (see % chante ranges for the major indices in North America and Europe below), they are ending nearer the lows for the day.