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Weekend Update
November 16, 2014
Equities posted moderate gains except for the Nasdaq (QQQ) which rose notably for the week on the back of Apple shares (AAPL) rising sharply. The consumer is in focus and retailers have out-performed so far on the earnings front. Volumes were light to start the week due to Veteran’s Day and many market Bears are pointing to this weak conviction on the rise to all-time highs. Data was light last week and Fed-Speak gave no clue to further monetary decisions anytime soon. The consumer is feeling more confidence and is willing to spend with gasoline prices down and this is being reflected in equities. The S&P 500 Index (SPX) was up a modest 0.4% and the Blue Chip-heavy Dow Jones Industrial Average’s ($DJI) rose only 0.3%. The tech-heavy Nasdaq (NDX) led stocks and finished up 1.2% for the week. The small caps (RUT, IWM) finished the week basically flat and we saw some late week divergence as they were under pressure more than other sectors.
Option volatility traded relatively flat for the week as markets got choppy into Thursday and Friday. The CBOE Volatility Index (VIX) rose a slight 1.4% but is approaching solid support near the $12 level to the downside. With many analysts predicting a further rise in stocks into the holiday season, we could see less and less demand for option buying if markets rise.
In a quiet week, Treasury yields ended the week little changed. The Treasury market was closed Tuesday for Veterans Day even though stocks and futures were open. 10-year yields finished the week at 2.32% and look to have found a tight range recently between 2.2 and 2.4%. We have the Fed minutes released on Wednesday afternoon, which could induce some moves in Bonds if anything unexpected is released. Oil futures (/CL) fell another 3% despite the rally during Friday’s session. The stock Bulls have already begun chirping about the positive affect on the economy due to low fuel prices and this exercise should continue into the holidays.
This coming week has a variety of indicators to be released. The biggest market mover may be Fed minutes on Wednesday which might provide more detail on when the Fed starts to raise policy rates next year and its plans for lowering its balance sheet. Quantitative easing is over and rate change and unwinding are the next key Fed issues. Both housing and manufacturing have been oscillating in recent months. Important updates are posted for housing starts, existing home sales, and industrial production. The fourth quarter is starting to look moderately healthy based on the consumer sector. This is likely to spread to manufacturing sector and there is some key data to be released.
Major Earnings for the Upcoming Week:
Monday:
A.M. – TSN
P.M. – A, JEC, URBN
Tuesday:
A.M. – DKS, HD, MANU, MDT, TJX, TSL
P.M.– JACK, LZB, PETM
Wednesday:
A.M. – LOW, SJM, SPLS, TGT
P.M. – CRM, GMCR, LB, WSM
Thursday:
A.M. – BBY, DLTR, GME, SHLD, SPB, BKE
P.M. – ADSK, TFM, GPS, INTU, MRVL, ROST, SPLK
Friday:
A.M. –ANN, FL
Economic Releases (11/17 – 11/21):
Monday:
7:30 am CT – Empire State Mfg. Survey
8:15 am CT – Industrial Production
Tuesday:
6:45 am CT – GS Store Sales
7:30 am CT – Producer Price Index (PPI)
9:00 am CT – Housing Market Index
12:30 pm CT – Fed’s Kocherlakota Speaks
3:00 pm CT – Treasury Intl. Capital
Wednesday:
6:00 am CT – MBA Purchase Applications
7:30 am CT – Housing Starts
9:30 am CT – Oil Inventories
1:00 pm CT – FOMC Minutes
Thursday:
6:45 am CT – Fed’s Tarullo Speaks
7:30 am CT– Weekly Jobless Claims
7:30 am CT – Consumer Price Index (CPI)
8:45 am CT – PMI Mfg. Index
9:00 am CT – Philly Fed Survey
9:00 am CT – Existing Home Sales
9:00 am CT – Leading Economic Indicators
9:30 am CT – Natural Gas Inventories
12:30 pm CT – Fed’s Mester Speaks
Friday:
10:00 am CT – Kansas City Fed Mfg. Index作者: tianfangye 时间: 2014-11-16 13:33
Will Japan drag down U.S. markets as they expose bumps in the economic road? This morning, U.S. equity futures (/ES) are pointing to a lower open as the week’s trading gets started. The early weakness is being blamed on data out of Japan which showed that its economy entered a recession but stocks are off of overnight lows. The Japanese market had its biggest one day loss since July, and the news has had a ripple effect around the world. Investors have not been buying protection in option market recently but the tide could turn today. The CBOE Volatility Index (VIX) is near support levels and should trend higher today if stocks remain in the red. Bulls will once again call this a buying opportunity but with stocks at all-time highs, it could be a more difficult endeavor.
Treasuries are higher after weaker than expected Japanese Q3 GDP knocked equities lower. Trading volume was strong as investors positions themselves after the news. U.K. housing data showed further signs of stagnating after a 1.7% drop in the house price index. Meanwhile, Dovish ECB speak was in part overshadowed by stronger than expected Euro-zone export data. This is an important week of data in the U.S. with reports on manufacturing, housing, and inflation, along with the FOMC Minutes. Today's calendar includes the November Empire State manufacturing index and the Fed's industrial production report for October. The Fed's Evans will give welcome remarks at an agricultural conference and it will most likely be dovish.
Stock Stories:
Target (TGT) –Over-exuberance?! – The retailer is putting its massive data breach behind it one year after the fact. Despite declining sales for 7 straight quarters, the stock is back near all-time highs into earnings this Wednesday. The stock is up 14% over the last month and looks extremely optimistic about the holiday season.
Major Economic Reports:
7:30 am CT – Empire State Mfg. Survey
8:15 am CT – Industrial Production
Notable Earnings:
Monday – 11/17:
Before Market: TSN
After Market: A, JEC, URBN
Tuesday – 11/18:
Before Market: DKS, HD, MANU, MDT, TJX, TSL
After Market: JACK, LZB, PETM作者: tianfangye 时间: 2014-11-17 10:05
THANKS FOR SHARING作者: sjwi 时间: 2014-11-17 10:26
作者: A悠 时间: 2014-11-19 10:06
11/19/2014
The benchmark S&P 500 Index (SPX) hit its 43rdrecord high yesterday and the Dow Industrials set a record for the 26thtime in 2014. This morning, U.S. equity futures (/ES) are down slightly but we have seen any pull-back bought quickly. Investors will be examining the minutes from the last meeting of the Fed's FOMC this afternoon for clues about the direction of interest rates.Option volatility continues to fall as risk protection is being ignored. The market ‘Fear Gauge’ (CBOE Volatility Index (VIX)) fell again during Tuesday’s session and could be in for more losses into the end of the year. Any downside catalyst is non-existent and economic data continues to out-perform.
Treasuries edged lower overnight, following the lead from Europe, while Asian bonds rallied. There was not much impact from the Bank of Japan's as-expected decision to remain sidelined after last month's surprise stimulus. Cautious comments from the ECB discouraged QE expectations, which weighed on Eurozone bonds. It looks like the ECB may remain on hold at its policy meeting next month despite the urging from other nations. Meanwhile, the Bank of England minutes from the November meeting showed a 7-2 vote for a steady stance, with the two dissenters arguing for a rate hike. In the U.S. today, the FOMC Minutes to the October 28, 29 policy meeting highlight. The question is whether there is a more dovish spin versus the more hawkish policy statement. The data calendar is light with just October housing starts of note. The MBA reported mortgage applications rebounded 4.9% in the week ended November 14.
Stock Stories:
Target (TGT) –Bullseye! – The retailer reported better than expected earnings this morning. The company beat soundly on EPS and top-line revenue as SSS increased slightly. The stock is up over 2% ahead of the opening bell.
While the global economy is showing signs of further slowdowns and headwinds, the U.S. data and economic indicators are favorable. Stocks touched all-time highs in 4 out of the five sessions this past week as investors believe there is more room to run to the upside. The FOMC released minutes to their last meeting on Wednesday and they were a little more hawkish and pointed to concerns of low inflation. We saw a massive boost on Friday after the Central Bank of China cut interest rates and the ECB stated that they will do what is necessary to increase inflation in the Euro-Zone. Despite the spike in equities on Friday, they sold off in the afternoon and technically look over-bought on a short-term basis. The S&P 500 Index (SPX) led benchmark indices up 1.2% and the Blue Chip-heavy Dow Jones Industrial Average’s ($DJI) rose 1%. The tech-heavy Nasdaq (NDX) finished up modestly at 0.5% for the week. The small caps (RUT, IWM) finished the week down a minimal 0.1% and may be signally the bullish run may be over as this sector historically leads the overall market.
Option volatility traded lower for most of the week as stocks continue to trade near all-time highs. The CBOE Volatility Index (VIX) fell a modest 3% and continues to see support below the $13 level. The consumer is showing signs of ramping up on spending and the retail sector is hot right now. The retail ETF (XRT) has risen 15% in the last month on earnings and the holiday shopping season has not even begun. Lower gas prices may put some further optimism in retailers as discretionary spending may rise.
Treasury yields ended the week little changed despite the continued rally in stocks.On Friday, rates slipped on comments by European Central Bank President Mario Draghi said officials would expand debt purchases if the inflation outlook weakens. At the same time, The People's Bank of China cut its one-year lending rate by 0.4 percentage point to 5.6 percent, while the one-year deposit rate was reduced by 0.25 percentage point to 2.75 percent. Stimulus overseas is ramping up as domestically we are ending the quantitative easing. Oil futures (/CL) finished the week relatively flat and look to have found a recent support level near $75 a barrel after its recent weakness. If crude remains low, it will help the U.S. economy and could support the next run-up for equities.
The U.S. recovery continues but on a moderate trajectory. Manufacturing and housing continue to oscillate while the consumer sector is slowly improving. Despite this, the Fed remains concerned about low inflation.Indicators are front loaded in the week ahead due to the Thanksgiving holiday on Thursday. Third quarter GDP gets a revision but that likely is a sleeper. Housing and manufacturing are two of the big issues as both sectors have been wavering. For housing, home prices will likely indicate strength of demand with the FHFA and Case-Shiller reports. For manufacturing, the key news will be durables orders this week. The consumer sector has been holding up moderately strong and is not as suspect. We may see volumes lighter than normal but there is plenty of economic data to sway markets this week.
