Monday, 31 December 2018

S&P 500 weekly rise seen as bear market rally

The S&P 500 rose 2.9 percent last week, its first weekly rise since the end of November.

Ralph Acampora, director of technical research at Altaira Capital Partners, told CNBC on Friday: "The rally continues here. That's the good news."

However, he added: "The bad news is that when we get up there we're going to run into a little overhead supply. I think it's premature to say we have seen the final low."

Indeed, Peter Boockvar, the chief investment officer at Bleakley Advisory Group, told CNBC on Thursday: "We are in a bear market, and a bear market is not just going to end in a couple of months considering the ten years of a bull market."

Saturday, 29 December 2018

Paulsen bets on no recession, time to buy the dips

Markets were mixed on Friday.

The S&P 500 dipped 0.1 percent and the Nikkei 225 fell 0.3 percent but the STOXX Europe 600 surged 2.0 perrcent.

Eric Wiegand, senior portfolio manager at US Bank Wealth Management, suggested that the stock market is experiencing “selling fatigue” after several sessions of “indiscriminate selling”.

However, Lukman Otunuga, research analyst at FXTM, wrote in a note that “it is certainly too early for any celebrations” and said that “global equity markets remain vulnerable to downside shocks”.

Still, Jim Paulsen, chief investment strategist at Leuthold, said that it is time to “buy the dips”.

“I'm betting we don't have a recession,” he told CNBC. “I think sometime in 2019, if you buy down here in this area, you'll probably be happy.”

Friday, 28 December 2018

Markets mixed, Boxing Day rally may be “no more than a wicked bear trap”

Markets were mixed on Thursday.

The S&P 500 reversed early losses to close 0.9 percent higher while the Nikkei 225 surged 3.8 percent.

However, the STOXX Europe 600 tumbled 1.7 percent.

Meanwhile, some analysts are not impressed by the US stock market's 5 percent rally on Wednesday.

“Such rallies are not uncommon in troubled times, and we have experienced many of them in past bear markets,” said Hussein Sayed, market strategist at FXTM, in a note.

Russ Mould, investment director at AJ Bell, noted that historically, gains of 5 percent or more usually came during bear markets.

Mould said “there is still a risk that this year’s Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble”.

Jeff deGraaf, chairman of Renaissance Macro, said that while it is possible that stocks set a tactical low on Wednesday, it remains unlikely that an “ultimate low” has been established.

Thursday, 27 December 2018

Markets rebound, "close enough to bottom"

Markets were mostly higher on Wednesday.

The S&P 500 surged 5.0 percent while the Nikkei 225 rose 0.9 percent. Most European markets were closed.

Scott Minerd, Guggenheim's head of investing, told CNBC on Wednesday: "We're close enough to a bottom [in the equity market] that investors should be stepping in."

Other analysts think that a recovery in stocks could take a while to come.

Nick Colas, Data Trek Research co-founder, said that there have been many issues hitting the market towards the end of the year and that "there's no horizon to see any one of these individual topics to resolve themselves in the next 20, 30, 40, 50 days".

UBS economist Rob Martin said that this could be a "short-lived temporary shock" but expects a pick-up in economic growth in the second half of next year.

Washington Crossing Advisors senior portfolio manager Chad Morganlander said that there is still money to be made in 2019 but expects "deceleration" and suggests that "one has to be a little bit more cautious".

In contrast, Charles Bobrinskoy, portfolio manager at Ariel Investments, thinks that "we're going to have earnings growth next year, which is why we just think this market is attractive".

Wednesday, 26 December 2018

US and Japanese stocks plunge, time "to nibble at some stocks"

It was not a merry Christmas for investors.

On Monday, the S&P 500 plunged 2.7 percent while the STOXX Europe 600 fell 0.5 percent.

Then on Tuesday, the Nikkei 225 dived 5.0 percent, leaving it 21 percent lower than its high in early October and confirming a bear market for the index.

While the S&P 500's decline on Monday left it 19.8 percent lower than its record close on 29 August, some investors remain undaunted.

On Friday, Leuthold Group chief investment strategist Jim Paulsen told CNBC that the market is "getting close to the bottom".

On Monday, David Tepper, president of Appaloosa Management, told CNBC that the sharp sell-off presented an opportunity "to nibble at some stocks".

Monday, 24 December 2018

S&P 500 closing in on bear market

The S&P 500 fell 7 percent last week. It's fall since its last high brings it just about 2 percentage points from the 20 percent decline that is considered to be a bear market.

The Nasdaq Composite is already in a bear market, having fallen 22 percent from its high after another 8.4 percent tumble last week.

A CNBC report noted that after trading in a range of 2,600 to 2,800 for four months, the S&P 500 quickly fell out of it all the way to 2,400.

"The next level traders would like to see tested is 2,250 to 2,300," said Scott Redler of

For the near term, investors could be focused on the partial government shutdown in the US after Congress failed to pass spending bills ahead of the deadline amid disagreement over funding of President Donald Trump's proposed border wall.

Mark Cabana, head of US short rate strategy at Bank of America Merrill Lynch, said that the disagreement is "a signal about just how difficult things will ultimately be".

However, for next year, the key concerns are trade and monetary policy.

"If we moved into 2019 and all tariffs were implemented, that would very quickly outweigh all stimulus we have coming into 2019," Wilmington Trust chief economist Luke Tilley said.

On Friday, the US stock market briefly rallied when New York Fed President John Williams said the Fed is willing to reconsider its policy depending on the economy and conditions.

Still, Cabana said that "rates could be higher" and while the 10-year Treasury yield fell to 2.78 percent on Friday, he thinks a yield of "3 percent is reasonable".

Friday, 21 December 2018

Markets fall, “investors lose all hope”

Markets fell on Thursday.

The S&P 500 plunged 1.6 percent, the STOXX Europe 600 tumbled 1.5 percent and the Nikkei 225 dived 2.8 percent.

“Investors have lost all hope as Powell was really the last opportunity in ’18 that could possibly trigger an uptick in willingness to put risk back on,” wrote Joel Kulina, an analyst with Wedbush Securities, in a note.

Indeed, many analysts expect further declines for stocks.

Julian Emanuel, chief equity and derivatives strategist at BTIG, said: “It is entirely possible that looking out over the next three to six moths this correction turns into what you would call a bear market because of the fact that the Fed really didn't show sufficient sensitivity to the affect of policy tightening on the speed of asset price changes to the downside.”

“We already have rates that are high enough to push us into at least a growth recession,” said Ed Keon, QMA chief investment strategist and portfolio manager.

Still, some remain hopeful of a rebound next year.

“I still expect a positive year next year, but maybe something like 5 percent,” said Keon.

Michael Arone, chief investment strategist at State Street Global Advisors, said “fundamentals will support reasonably high stock prices in 2019”.

Thursday, 20 December 2018

US stocks fall as Fed lowers growth forecast

Markets were mixed on Wednesday.

The S&P 500 tumbled 1.5 percent and the Nikkei 225 fell 0.6 percent.

However, the STOXX Europe 600 rose 0.3 percent, with the FTSE MIB jumping 1.6 percent after the European Commission reached a deal with Italy over its 2019 budget, avoiding disciplinary steps against it.

US stocks fell after the Federal Reserve proceeded with its fourth rate hike of the year. However, its policy statement noted that it may be less aggressive in raising rates next year.

“The big takeaway for markets is that the Fed lowered its growth and inflation forecasts” for 2019 and beyond, said Matthews Bartolini, head of SPDR Americas research at State Street Global Advisors.

Peter Berezin, senior vice president of global investment strategy at BCA research, said that the Fed's statement is “dovish” but it still appears set to “take monetary policy into restrictive territory”, where “usually you get a recession”.

Wednesday, 19 December 2018

Markets mixed as investors turn bearish even as forecasts for S&P 500 at most bullish since 2009

Markets were mixed on Tuesday.

The S&P 500 was flat while the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 plunged 1.8 percent.

Oil plunged on Tuesday. West Texas Intermediate crude fell 7.3 percent while Brent fell 5.6 percent.

While the US stock market was steady on Tuesday, Larry Benedict, CEO of the Opportunistic Trader, said that the current downtrend “has a lot further to go”.

Similarly, Yousef Abbasi, global market strategist with INTL FCStone, said that “it is hard to imagine this market rallying with any sort of fervor and retaining those gains”.

“It would be very surprising to see it sort of stabilize here, and then take off,” former Federal Reserve chairman Alan Greenspan said in an interview with CNN.

Indeed, professional money managers have turned sharply bearish in their outlook for the stock market and the economy, according to Bank of America Merrill Lynch’s December survey of more than 240 professional investors.

53 percent of those surveyed see the global economy deteriorating over the next twelve months, up from 44 percent in November, the highest share of those surveyed since October 2008.

And yet, forecasts for the S&P 500 next year are more optimistic than ever. “Wall Street sees a big rally of 17% from Monday’s close,” MarketWatch noted. “That’s the biggest bull call since 2009.”

Tuesday, 18 December 2018

Markets fall as Santa rally looking elusive

Markets were mostly lower on Monday.

The S&P 500 plunged 2.1 percent while the STOXX Europe 600 fell 1.1 percent.

Earlier, however, the Nikkei 225 rose 0.6 percent.

“The ‘Santa rally’ which had been hoped for has proven to be frustratingly elusive, and now markets are quite happy, if not desperate, for at least a dovish line to be thrown by the FOMC,” said Vishnu Varathan of Mizuho Bank.

“Anybody hoping for a Santa Claus Rally this year will be disappointed,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.

“People have been buying the dips, but it’s just not working, and at a certain point that will lead to a buyer’s strike,” said Alec Young, managing director of global markets research at FTSE Russell.

Indeed, William Watts at MarketWatch noted that there has been no sign of panic selling to suggest a market bottom while Tomi Kilgore also of MarketWatch suggested that the S&P 500's recent pattern of lower recovery highs indicates that the primary trend is now down.

Monday, 17 December 2018

S&P 500 at lowest since April as investors pull money out of stocks

The S&P 500 fell 1.9 percent on Friday to close at 2,599.95, its lowest finish since 2 April.

Markets have fallen as investors pulled money out of stocks. Data compiled by the Lipper team at Refinitiv showed investors pulled $46.2 billion from US equity mutual funds and exchange-traded funds in the week ending 12 December.

In its latest quarterly review, the Bank for International Settlements said that the latest market declines "took place amid mixed signals from global economic activity and the gradual, yet persistent, tightening of financial conditions" and "reflected the ebb and flow of ongoing trade tensions and heightened political uncertainty in the euro area".

However, Federated Investors' Steve Chiavarone told CNBC on Friday that "things are stable".

Chiavarone noted that price-earnings ratios have fallen 20 percent. "What that tells us is the market is pricing in recession in 2019. We just don't think that is going to happen."

Friday, 14 December 2018

Markets mixed as US recession risk rises

Markets were mixed on Thursday.

The S&P 500 was flat, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 rose 1.0 percent.

“Investors are clinging to the recent positive news about trade negotiations, but we won’t see the end of this volatility until there is a concrete agreement in place,” said Patrick Healey, president of Caliber Financial Partners.

Meanwhile, a Reuters poll of economists showed that the risk of a US recession in the next two years has risen to 40 percent.

However, Jeff Saut, chief investment strategist at Raymond James, told CNBC on Thursday that the US economy is not going to slow as much as expected and that the stock market has reached a bottom. “People are underinvested” in stocks, he said.

Also on Thursday, the European Central Bank left interest rates unchanged and affirmed plans to end monthly asset purchases at the end of the month.

Thursday, 13 December 2018

Markets rise on positive trade news but corporate debt levels “concerning”

Markets rose on Wednesday.

The S&P 500 rose 0.5 percent, the STOXX Europe 600 surged 1.7 percent and the Nikkei 225 soared 2.2 percent.

“Volatility of late can be blamed on tariffs and trade talks,” said Tatyana Bunich, president of Financial 1 Wealth Management Group.

Dave Lutz, head of ETFs at JonesTrading, noted that the market is in “a good mood”, with the Huawei CFO released on bail and strong market action in Asia on encouraging trade news.

However, meanwhile, Lindsey Bell, an investment strategist at CFRA Research, told CNBC that the level of corporate debt is “concerning” while slowing earnings growth could also become a major market headwind for stocks in 2019.

Wednesday, 12 December 2018

Markets mixed but US stock market “is going to break down”

Markets were mixed on Tuesday.

The S&P 500 was flat and the Nikkei 225 fell 0.3 percent but the STOXX Europe 600 surged 1.5 percent and the Shanghai Composite rose 0.4 percent.

Jeffrey Gundlach, founder and chief executive officer of DoubleLine, thinks that the US stock market “is going to break down” as the economy is showing signs of weakness ahead.

Gundlach said that corporate bonds “remain very overvalued” and “should be avoided”.

Gundlach suggested that investors would do much better with stocks outside of the US.

Meanwhile, though, Nomura analysts recommended caution on China, suggesting that investors “may be unprepared for a significantly worse slowdown in Q2”.

Tuesday, 11 December 2018

US stocks reverse sharp falls, fears of economic downturn “overblown”

Markets were mixed on Monday.

The S&P 500 reversed a sharp fall early in the session to finish 0.2 percent higher. However, the STOXX Europe 600 tumbled 1.9 percent and the Nikkei 225 plunged 2.1 percent.

“Higher volatility and wider intraday and intraweek ranges are likely par for the course these days and momentum can shift without an easily-defined reason,” said Liz Ann Sonders, chief investment strategist, at Charles Schwab & Co.

While the S&P 500 managed to rebound from lows on Monday, almost half of its component stocks are already in a bear market.

Still, Tom Essaye, president of the Sevens Report, said in a note that the majority of the news last week was “net positive”.

Gad Levanon, chief economist of North America at The Conference Board, said that fears of an economic downturn are “overblown” and “the stock market is overreacting”.

“The U.S. economy will gradually slow during 2019 but GDP growth will not drop below 2%,” he wrote.

Monday, 10 December 2018

US stocks may already be in bear market

The S&P 500 fell 4.6 percent last week. It was its biggest weekly decline since March and its worst start to a December since 2008.

Ed Clissold, Ned Davis Research's chief US market strategist, told CNBC last week that US stocks may be experiencing a bear market that is "going to take you down around 20 percent — maybe a little bit more".

Clissold thinks that earnings growth is becoming a "front-burner issue". He thinks it will slow down "more than expected" and that downward earnings revisions are "going to continue to plague the market for a few more months".

However, Clissold does not expect a recession and thinks that the bear market will last until early second quarter next year, "and then we can look for a bottoming process from there".

Doug Gordon, a senior portfolio manager at Russell Investments, does not expect a bear market though. "While you can certainly see a path that could get us to a bear market, I think it's more of a messy correction," he told CNBC last week.

Gordon sees the US-China trade war as a major economic risk and thinks the ceasefire achieved last week is an important marker.

Saturday, 8 December 2018

US stocks plunge, “not a good time to take bold risks”

Markets were mixed on Friday.

The Nikkei 225 rose 0.8 percent and the STOXX Europe 600 rose 0.6 percent but the S&P 500 plunged 2.3 percent.

Vincent Juvyns, global market strategist at J.P. Morgan Asset Management, said that with “so much uncertainty surrounding trade talks, Brexit and Italy”, it is “not a good time to take bold risks”.

A report from the US Labor Department showed that the US economy added 155,000 new jobs in November.

While the employment report was weaker than expected, Martha Gimbel, director of economic research at Indeed Hiring Lab, said the US is still adding “twice the jobs that the economy needs to add each month to keep the unemployment rate steady”.

Eric Winograd, senior US economist at AllianceBernstein, said that “the labor market is strong and continues to get stronger” and thinks that the Federal Reserve “remains likely to raise rates over the course of the next year”.

Friday, 7 December 2018

Markets fall after arrest of Huawei CFO, “bottom isn’t in sight”

Markets fell on Thursday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 plunged 3.1 percent and the Nikkei 225 tumbled 1.9 percent.

Stocks fell on news that Canadian authorities had arrested Meng Wanzhou, the chief financial officer of Huawei Technologies, at the request of US authorities for allegedly violating sanctions against Iran.

However, US stocks rebounded in the afternoon after a report that the Fed may consider a pause after raising interest rates later this month.

Jasper Lawler, head of research at London Capital Group, wrote in a note that the arrest of Meng “has the potential to shatter very fragile U.S.-Sino relations which will weigh further on global trade and growth concerns”, and that “despite recent heavy selloffs, the bottom isn’t in sight and the markets have further to fall”.

Similarly, Art Cashin, UBS director of floor operations at the NYSE, said on CNBC that if stocks “slide through here, then you're going to look to test much deeper lows”.

Thursday, 6 December 2018

European and Asian stocks fall, Brexit "a factor"

Markets fell on Wednesday.

The STOXX Europe 600 fell 1.2 percent, the Nikkei 225 fell 0.5 percent and the Shanghai Composite fell 0.6 percent. The US stock market was closed.

While some of the declines in Europe and Asia were reactions to the sharp decline in the US on Tuesday, some investors would also have been concerned with the developments in the UK, where Prime Minister Theresa May suffered embarrassing defeats on Tuesday at the start of five days of parliamentary debate over her plans to leave the European Union.

Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, said that while the US economy "is likely to be able to withstand another rate hike or two", the economic outlook is "murkier than before", with Brexit also "a factor in the ongoing risk aversion".

Wednesday, 5 December 2018

Markets fall on US-China trade doubts and recessionary fear

Markets fell on Tuesday.

The S&P 500 plunged 3.2 percent, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 tumbled 2.4 percent.

Analysts are having doubts about whether a permanent trade agreement can be reached between the US and China after noting that the White House, President Donald Trump himself and Chinese officials all described the weekend agreement differently.

“The market is reassessing if anything tangible happened at the Trump-Xi dinner,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.

Adding to investor concerns is a flattening of the US yield curve. The 10-year Treasury note yield fell 6.9 basis points to 2.921 percent. With the 2-year yield falling 2.2 basis points to 2.811 percent, the spread between the 2-year yield and the 10-year rate was about 11 basis points, the narrowest in 11 years.

“Recessionary fear is starting to raise its ugly head,” wrote Stephen Innes at broker Oanda.

Indeed, Mike Wilson, chief US equity strategist at Morgan Stanley, sees an “earnings recession” at some point in 2019.

Tuesday, 4 December 2018

Markets rally on US-China trade war ceasefire but comprehensive agreement seems “impossible”

Markets rose on Monday following the agreement over the weekend by the US and China on a ceasefire in their trade war.

The S&P 500 rose 1.1 percent, the STOXX Europe 600 rose 1.0 percent and the Nikkei 225 rose 1.0 percent.

Oil surged, with both West Texas Intermediate crude and Brent crude jumping about 4 percent.

Some analysts remain wary of a resumption of the trade war.

“Reaching a comprehensive agreement on all the outstanding issues in 90 days seems, essentially, impossible,” Nomura analysts wrote of the deadline set for a permanent resolution.

“Who knows, President Xi and the Chinese authorities may pull a rabbit out of the hat through this new negotiating period and promote enough belief that the U.S. trade representatives permanently leave the tariffs on the $200 billion at 10%, but that is a big if,” said Chris Weston, head of research at currency broker Pepperstone, in a note.

Monday, 3 December 2018

Trump, Xi agree on trade war ceasefire

The world heaved a sigh of relief over the weekend after China and the United States agreed to a ceasefire in their trade war on Saturday after talks in Argentina between US President Donald Trump and Chinese President Xi Jinping.

According to Reuters, the White House issued a statement saying that the US will leave tariffs on US$200 billion worth of Chinese imports at 10 percent at the beginning of the new year, agreeing to not raise them to 25 percent “at this time”.

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” it said.

The White House said that the two leaders also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.

Analysts see the agreement as paving the way for more gains for markets.

“It sets a pretty positive tone (and) stocks should have a decent rally into December,” said Nathan Thooft, Boston-based global head of asset allocation for Manulife Asset Management.