Monday, November 12, 2018

Markets topple led by a sharp selloff at Apple

Dow tumbled 433, decliners over advancers 5-2 & NAZ gave back 205.  The MLP index fell 1 to the 254s & the REIT index did little in the 351s.  Junk bond funds drifted lower & Treasuries remained steady.  Oil climbed higher above 60 (more below) & gold fell 3 to 1204.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil61.07

GC=FGold   1,203.40
 -5.20 -0.4%

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Global oil producers are getting closer to an agreement on an output cut.  Saudi representatives said that the kingdom would slash its exports unilaterally next month, as a broader OPEC alliance debated, but didn't agree to, a collective production cut.  Russia, the world's largest producer, which usually moves in lockstep on matters with OPEC, has sent mixed signals on whether it would pull back on supply.  Russia's oil minister Alexander Novak said he was open to crude production cuts if the coalition reaches a consensus & would adhere to any decision it makes.  But he also said Russian production had "reached a certain level where we have stabilized and we will be fluctuating around that level in coming months."  Saudi Arabia, Russia & other producers met in the UAE capital over the weekend to debate whether reductions of about one M barrels a day might be necessary next year, with a decision expected at an OPEC meeting next month.  Saudi Arabia, the de facto leader of OPEC & Russia, which heads an alliance of producers outside the cartel, agreed to boost production at a meeting in Jun over fears US sanctions on Iran would trigger shortages.  3 days after the sanctions went into effect on Nov. 5, US oil entered a bear market.

OPEC gets closer to a production cut

Apple (AAPL), a Dow & NAZ stock, shares fell after one of its facial recognition suppliers cut its outlook, citing a reduced shipment request from one of its largest customers.  Lumentum (LITE), a manufacturer that makes lasers capable of sensing in 3D, announced the reduced outlook.  The company creates components for the front-facing camera of the newer iPhones that enable FaceID & augmented reality.  The report builds speculation around the success of the latest iPhones as the holiday season approaches. Last week, it was reported that AAPL stopped a production boost for its new iPhone XR.  LITE CEO Alan Lowe said, "We recently received a request from one of our largest Industrial and Consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter."  In LITE's annual filing for its fiscal year 2018 it listed AAPL as its largest customer, accounting for 30% of revenue.  However, LITE did not mention AAPL by name in today.  APPL stock sank 9+ & LITE tumbled 17+.
If you would like to learn more about AAPL, click on this link:
If you would like to learn more about LITE, click on this link:

Apple slides after one of its suppliers cut its outlook, hinting at weak iPhone orders

Pres Trump claimed the recent downturn in stocks is a byproduct of "presidential harassment" by the Dems, maing his comments in a tweet today.  His message comes after the Dems took control of the House in the midterm elections held last week.  "The one issue that Leader Pelosi and I discussed this morning, where there could be a possible bipartisan agreement, would be something on infrastructure," McConnell told reporters, referring to Nancy Pelosi, who is in line to regain the House speakership.  Equities have been under pressure recently amid fears that tariffs on foreign goods slapped by the Trump administration may slow down global growth, according to investors.  There's also concern about technology stock valuations amid possible slowing demand.  The Trump administration has implemented charges on steel & aluminum imports across the board.  It has also targeted B$s worth of Chinese goods with tariffs this year, to which China has retaliated with levies of its own.  Strength in the $ has also dented stock prices recently.  The $ index, which tracks the US currency against a basket of its peers, hit a 16-month high earlier today.  A stronger $ puts pressure on companies that do large amounts of business outside the US.  Trump has repeatedly commented on the stock market during his presidency.  Most recently, he said on Oct 30 that equities were taking a "little pause" ahead of the midterms.

Trump claims 'presidential harassment by the dems' is weighing on the stock market

Generally this semi holiday is a quiet time for the stock market.  Not today.  The decline at AAPL affects the overall stock market.  Additionally comments about what mischief the Dems might do next year are unsettling.  Then there are the continuing problems of trade issues & the rising interest rates.  The Dow is well under 26K once again.  Not a good sign going forward.

Dow Jones Industrials

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