I’ve just updated my Keeping Score page for September, 3Q17 and year-to-date. IT continues its remarkable run. Utilities et al continue to falter.
Tag Archives: market tactics
Employment Situation, August 2017
The Bureau of Labor Statistics issued its monthly Employment Situation for August on schedule at 8:30 edt this morning.
For the first time in a while, the results were mildly disappointing, in that:
–new positions added came in at +156,000 jobs, lower than in the recent past–although more than enough to absorb new entrants into the workforce
–the past two months’ results were revised downward by a total of -41,000 jobs
–wage gains continued to show no signs of the acceleration that economic theory, and past experience, predict will happen in a tight labor market. Wage growth remains at a +2.5% pace for the past year.
It will be interesting to see what Wall Street makes of the numbers. Pre-market S&P 500 futures were trading a +5.75 points just before the release and seem to be showing almost no change as I’m writing this at about 8:40.
To my mind, that’s the right response.
However, the ho-hum attitude could easily be due to the fact that it’s the last Friday in August and all thoughts have already turned to Labor Day. There’s also a distinct Fall feel in the air, which may be another distraction. The Amazon-Whole Foods combination has focused a lot of stock market attention on forces of structural change that have been in motion for a decade or so but are only now coming fully into the public, and press, consciousness. That puts them squarely (even if that’s mixing metaphors) in the wheelhouse of algorithmic traders. Then, of course, there’s Houston and Harvey.
By the way, continuing to ramble, the way the market closes today–both overall and with individual stocks–may give some hints as to how Wall Street will react as powerful traders return to work from the Hamptons next week.
a rainy Friday in August in New York
August is the month when many senior portfolio managers are away from the office on vacation. So big decisions on portfolio structure tend not to be made.
Friday is the day of the week when short-term traders’ thoughts turn to flattening their books so they won’t carry risk over the weekend.
It’s raining, which sparks thoughts in traders of sleeping in or leaving work early.
Add all that up, and the heavy betting should be that US stocks will likely move sideways in the morning and fade off toward the close.
That means this is a good day to stand on the sidelines and size up the tone of the market.
In pre-market trading, tech is up and bricks-and-mortar retailing (on the earnings miss by Foot Locker) is down. …nothing new about this. At some point there will doubtless be a fierce counter-trend rally. But the negative earnings surprises are still provoking severe selloffs. So I don’t think today is the day.
Pundits are speculating about the damaging effects on his political agenda of Mr. Trump’s apparent defense of neo-Nazis in Charlottesville. …but the Trump trade has been MIA since January, with the US a laggard among world stock markets during Mr. Trump’s time in office so far. Yes, there may be residual hope for corporate tax reform from the administration, which this latest demonstration of the president’s ineptness as a executive could arguably undermine. My guess is, however, that he is already well understood.
Two questions for today:
–will the market perform more strongly than the season and the weather are suggesting? This would be evidence that there’s still an untapped reservoir of bullishness waiting for somewhat better prices to express itself.
–should we be buying in the afternoon if it’s weaker than I expect? My answer is No. I think there is a lot of untapped bullishness, but we’re in a slowly rising channel whose present ceiling is less than 2500 on the S&P 500. That’s not enough upside for me. I’m also content to wait for any incipient bearishness to play itself out further.
It will be interesting to see how today plays out.
Current Market Tactics, June 29, 2017
I’ve just updated my Current Market Tactics page. …toppy?
the fiduciary rule; the UK election
advisers as fiduciaries
The fiduciary rule for retirement assets issued by the Labor Department goes into effect today, despite intense lobbying against it by the brokerage industry.
The rule requires financial advisers involved with retirement assets–with the notable exception of the 403b pension assets of government workers–to put their clients’ interest ahead of their own in dispensing investment advice.
In essence, this means that the financial adviser will no longer be permitted to recommend high-cost products with poor performance records to clients simply because they pay a high commission or that the broker gets an “educational” weekend for two at a beach resort for doing so.
The conceptual defense (such as it is) for such practices, which are still allowed for non-retirement assets, by the way, is that while the client is still not well off, he’s better off than if he had no advice at all.
No wonder Millennials are willing to take a chance on robo advice.
the British election
The British prime minister, Theresa May, called the election held yesterday with the intention of increasing her party’s four-seat majority in Parliament in advance of the first Brexit talks with the rest of the EU.
With one seat not yet decided, the Conservatives have lost 12 seats instead, according to the Financial Times.
As exit polls came out overnight predicting this unfavorable result, both Asian stocks with interests in the UK and sterling weakened.
Interestingly, as I’m writing this an hour before the US open, both sterling and the FTSE 100 are up slightly. S&P 500 futures, which had also dipped slightly in Asian trading as the UK news broke, are trading two points higher this morning.
To me as an outsider, it looks like UK citizens are having serious second thoughts about Brexit (politicians in Scotland advocating it’s breaking with the rest of the UK lost, as well). My point, though, is that except in extreme circumstances–like when Republican opposition torpedoed a proposed economic rescue plan in early 2009 and the S&P dropped 7%–politics make little day-to-day difference to stocks.