Beleaguered chip-makers — excluding Intel — get an A for effort this week, but still won’t save Wall Street from the first weekly loss of 2019.
The holiday-shortened week has been peppered with global growth and shutdown worries. And as investors wait for the federal government to get back to work,“let-them-eat-loans” comments from Commerce Secretary Wilbur Ross (h/t the Heisenberg Report), likely raised serious concerns the administration may be out of touch over the economic blowback from a lengthy shutdown.
Bank of America Merrill Lynch, for one is worried, as they shared a chart Friday with clients that shows a worsening drag on first-quarter GDP the longer a shutdown stretches on. The direct impact will be made up, but lost private spending is gone forever, they warn.
It’s back to earnings for our call of the day, also brought to you by Bank of America, whose strategists have declared a global earnings recession that can only be cured by a recovery in Asian export growth.
The bank points out that exports from the region are down around 4% year over year, which is in line with the picture of negative global earnings growth. Bank of America says it’s modeling global earnings growth of 0% for the next 12 months, well off the consensus for growth of 6%. The fact that stocks haven’t made new highs also backs up the picture of a global earnings rut, the strategists say.
Bank of America says investors will know the earnings recession has ended when the global purchasing managers index to rise to 53 from 51 and Asian export growth bounces back — via a rise in the ADXY Bloomberg JP Morgan Asia Dollar Index to over 108 (from a current 105.94), Korea’s Kospi Composite Index
hitting 2,300 (Friday close: 2,177.73) and copper prices
rise to over $300.
Investors will also want to look for a sign China’s financial conditions are easing as policy makers “U-turn on deleveraging $20 trillion shadow banking system and stop rising defaults in a $3 trillion corporate bond market.” Note, the People’s Bank of China unveiled a bill-swap mechanism late Thursday, which some say could mean “the floodgates to stimulus” will soon be open.
Until all this happens, the bank says investors will likely limit their asset purchases to credit, emerging markets, real-estate investment trusts and growth stocks.
futures are higher. On Thursday, the Dow
bucked an otherwise positive session for the S&P 500
to end lower.
is down, as the euro
climbs, while gold is modestly higher
is weaker as investors wait to see if the U.S. imposes sanctions on Venezuela amid a power struggle.
are mostly higher, and in Asia, the Hang Seng Hong
led a mostly upbeat day as tech shares rose.
On the shutdown front, POTUS is reportedly readying a draft national emergency order, with $7 billion earmarked for his border wall. In a proclamation seen by CNN the president referred to “massive amounts of aliens.” Because of the shutdown, we won’t get durable goods or new home sales for Friday, but the show will go on where next week’s Fed meeting is concerned.
Trump ally Roger Stone has been arrested and charged with obstruction, false statements and witness tampering as part of Special Counsel Robert Mueller’s probe into Russian tampering in the 2016 election.
is climbing on an earnings beat.
are on the earnings docket for Friday.
After a rough, scandal-filled year Facebook
CEO Mark Zuckerberg defends his company as “still evolving and improving,” in an op-ed for the WSJ.
are asking for trades to be canceled after a $41 billion flash crash Thursday in shares of Singapore-listed Jardine Matheson Holdings
Our chart of the day takes a whack at a basic problem with the growing pile of can’t-live-without- tech gadgets, under the category, the ones you love sometimes hurt you the most.
Observe the following Statista chart, from a blog post in Digital Information World.
“The basic problem here has to do with the fact that the Internet of Things creates so many different access points that hackers could potentially use to enter a system whereby viruses can infect entire networks of devices and steal untold amounts of data,” says the post, which adds that smart home technology, wireless earbuds and the like “can be a veritable feast” for hackers.
“O-C is popular because she says specific things. That her policies are bad is overwhelmed by public disgust for all the surrounding blather.” — That was a tweet from DoubleLine chief Jeffrey Gundlach, one of the first since the will-he-or-won’t-he-delete-his-Twitter-account crisis. He’s likely referring to the call by Rep. Alexandria Ocasio-Cortez, D-N.Y., for a 70% marginal tax rate, something that seemed to alarm Bridgewater boss Ray Dalio earlier this week.
She happens to be on the House Financial Services Committee, where Democrats may summon big banks to Washington.
Spanish rescuers dig through stones toward a 2-year old, who fell into a deep borehole over a week ago
Dead horses, bats falling out of trees and free beer: Australia battles heat wave
White House security experts rejected clearance for Jared Kushner, but were reportedly overruled
Don’t hate your skinny friends, it’s all in the genes
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