Generally a calm week for the indexes as most of the action was in individual stocks due to earnings. President Trump did roil things a bit by criticizing the Federal Reserve – seen as a no no, but at this point nothing should surprise from that front.
In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery. Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt.
Trump said he’s concerned that the timing may be poor and that it will put the U.S. at a “disadvantage” while the Fed’s counterparts like the European Central Bank and the Bank of Japan maintain loose monetary policy.
The president acknowledged that his comments are unusual but said he doesn’t care. “Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”
Friday, Trump said he was “ready” to put tariffs on all Chinese goods imported to the U.S., which would amount to more than $500 billion. Thursday, Trump threatened “tremendous retribution” against the European Union and stood by a pledge to levy tariffs on automobile imports. So we see the same pattern here as we often do – when Trump first comes out saying these type of things markets reacted sharply — then after they hear them for months on end, they get a bit immune to it all.
Nothing too surprising from Chairman Powell’s testimony on Capital Hill as he indicated the Federal Reserve wouldn’t move too quickly in changing monetary policy, and that it would be flexible in the face of changing conditions.
Saying that monetary policy “should be a mystery to no one,” Federal Reserve Chairman Jerome Powell on Tuesday made clear the central bank plans to continue raising interest rate at a pace of once every three months, at least “for now.” This was seen as suggesting that the central bank wouldn’t become too aggressive in raising rates, something that is widely seen as a risk to markets.
Krishna Guha, Fed watcher at Evercore ISI said the phrase “hints…we may not be very far in time and in rate space from the point at which the case for further hikes will be less automatic and the Fed will have to make decisions on a meeting by meeting basis depending on the evolution of the outlook.”
U.S. retail sales rose 0.5% in June, as had been expected. Retail sales have increased 6.6% over the past 12 months, slightly above the long-run average since 1980.
The Fed’s Beige Book Wednesday revealed a domestic economy that has rapidly expanded, but one that has run out of room to grow much faster as shortages of skilled workers and rising costs of raw materials risk impeding another leg of expansion. The anecdotal account of business conditions in the Fed’s 12 districts showed that 11 regions of the country were growing at a “modest” pace or even faster.
For the week the S&P 500 gained just below 0.1% while the NASDAQ dropped 0.1%.
Very impressive action in biotech of late; back to highs of early 2018.
Oil had a rough day Monday and now is below its 50 day moving average.
Gold has fallen off quite a bit here of late as well.
Here is the 5 day weekly “intraday” chart of the S&P 500 … not via Jill Mislinski.
There is often so much talk about exports – but here is a cool infographic of the world’s largest importers. (click to enlarge)
The week ahead…
Next week marks the busiest week of S&P 500 corporations reporting quarterly results, with some 174 set to release earnings.
Short term: Obviously exactly where we were last week.
The Russell 2000 “double top” is still in play as last week we didn’t see a move to cross over those two blue circles… if that happens then false alarm!
The NYSE McClellan Oscillator dipped into red most of the week so keep an eye on that if indexes turn south early next week. Could mean the end of the “easy money” of this leg up and it was a short period indeed.
Long term: Still very positive for the “buy and never sell” crowd.
Charts of interest / Big Movers:
Tuesday, Netflix (NFLX) tumbled 5.2% after the streaming-media company late Monday reported revenue and subscriber numbers that came in below forecasts. The stock ended well off its lows of the session, having previously dropped as much as 14%. Shares remain up nearly 100% so far this year!!!
The company announced it added 5.15 million streaming users in the second quarter, a substantial drop from the 6.2 million estimate the company provided in April. The company added 4.47 million international subscribers and 670,000 domestic subscribers, missing its April estimates of 5.9 million and 1.2 million.
Wednesday, United Continental (UAL) gained 8.8% after the airline reported better-than-expected second-quarter earnings late Tuesday and lifted its profit projections.
Thursday, Ebay (EBAY) fell 10% after the company late Wednesday reported an earnings beat but issued weaker-than-expected guidance.
Mersana Therapeutics (MRSN) tumbled 32% Thursday after the Food and Drug Administration placed a cancer-drug trial on hold following a patient death.
Friday, Skechers (SKX) plunged 21% after the shoemaker’s results and outlook disappointed.
Have a great week and we’ll see you back here Sunday!