Markets rebound in late day trading

Dow shot up 431 closing near the highs, advancers over decliners 2-1 & NAZ recovered 111.  The MLP index was up fractionally to the 249s & the REIT index added 4 to the 342.  Junk bond funds were mixed & Treasuries slid lower.  Oil retreated, falling to the 66s (more below) & gold fell 2 to 1224.

AMJ (Alerian MLP Index tracking fund)

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The rock-solid jobs market and strong economy has consumers feeling confident, with the Conference Board reporting that their Consumer Confidence Index climbed to an 18-year high in Oct.  The index came in at 137.9 in Oct, up from 135.3 in Sep.  Consumers' assessment of current business & labor market conditions also improved, rising to 172.8 from 169.4, as did their short-term outlook, which increased to 114.6 from 112.5.  Consumer optimism is important this time of year when businesses hope for a holiday season shopping boost.  As previously reported, consumer spending increased 0.4% in Sep, at an annual rate of 4.0%, according to data from the gov, the fastest in nearly 4 years.  Consumer spending is crucial to the US economy, with more than 2/3 of US economic growth based on consumer spending.  A large portion of a consumers' willingness to open their purse strings comes from their opinion on their employment prospects.  The jobs market is very robust, with the unemployment rate falling to 3.7% in the Sep jobs report, the lowest since 1969.  The latest reading on the jobs market, for Oct, will be released Fri.

Consumer confidence hits 18-year high

Apple (AAPL) revealed new versions of the iPad Pro tablet & Mac computers, offering updates, including facial recognition & faster processing speeds.  During an event in New York, CEO Tim Cook introduced a redesigned iPad Pro without the traditional home button.  The company also detailed changes to the MacBook Air, which last underwent an overhaul in 2011, & the Mac Mini desktop computer.  The company is refreshing some of its older products shortly after launching new Apple Watches & the next generation of iPhone models, including the $1099 iPhone XS Max.  Also, AAPL announced that iOS 12.1, an update to the company's mobile operating system, is available for iPhone & iPad customers.  The stock went up 1.06.

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Apple unveils new products at NYC event

Oil prices fell, depressed by concerns that the US-China trade dispute will dent economic growth & by signs of rising global supply despite upcoming sanctions against Iran.  Benchmark Brent crude oil fell $1.05 a barrel to a low of $76.29 before recovering slightly to around $76.44, down 90¢. US light crude was 60¢ lower at $66.44.  Both contracts have recovered some ground over the last week but are around $10 a barrel below 4-year highs reached in the first week of Oct.  Oil has been caught in the global financial market slump this month, with equities under pressure from the trade war between the world's 2 largest economies.  Financial markets found some support from reports that Pres Trump thinks "a great deal" with China is possible on trade.  But for now the dispute between DC & Beijing goes on & looks set to curb global economic growth & fuel demand.  The Intl Energy Agency (IEA) said high oil prices were hurting consumers & could dent fuel demand at a time of slowing global economic activity.  "There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they're directly related to consumer prices. The second one is global economic growth momentum slowing down," IEA chief Fatih Birol told an energy conference in Singapore.  Oil is also under pressure from rising output by the world's biggest producers - Russia, the US & Saudi Arabia - who are helping to replenish global oil inventories after more than a year of stock draws.  Oil production from these 3 producers reached 33M barrels per day (bpd) for the first time in Sep.  That's an increase of 10M bpd since the start of the decade & means these 3 producers alone now meet 1/3 of global crude demand.  The US is set to impose new sanctions on Iranian crude from next week & exports from the Islamic Republic have already begun to fall.  But there appears to be no significant shortage of crude.  Saudi Arabia & Russia have said they will pump enough to meet demand once US sanctions are imposed.

Oil prices fall on rising supply, trade tensions

Pfizer (PFE), a Dow stock, beat Q3 earnings expectations but fell short on revenue & narrowed its full-year forecast.  EPS rose to 69¢, up from 47¢ a year earlier.  Excluding items, EPS was 78¢, more than the 75¢ expected.  Net sales rose 1% to $13.3B, shy of the $13.53B that had expected.  Innovative health revenue increased 4% to $8.47B, boosted by sales of blood thinner Eliquis & breast cancer drug Ibrance outside of the US, among others.  Essential health revenue fell 4% to $4.38B, with generic versions of Viagra entering the market.  For the full year, PFE narrowed its revenue forecast to $53- 53.7B from the previously guided $53-55B.  For adjusted EPS, PFE expects $2.98-3.02 which compares with a previous estimate of $2.95-3.05.  The company attributed the revenue changes to shortages of its Hospira Sterile Injectable Pharmaceuticals product in the US & weakening currency in some emerging markets & the € starting this summer.  Earlier this month, PFE announced CEO Ian Read will retire & Albert Bourla will take over in Jan.  “Albert’s extensive knowledge of our business, firm grasp of the issues, and deep caring for patients will help Pfizer continue to build on the outstanding foundation we have put in place,” Read said.  “I am confident that he is implementing a structure and building a leadership team that will maximize the company’s growth opportunities.”  The company bought back $1.1B of its shares in the qtr, bringing its 2018 total to $9B & expects to repurchase about $12B this year.  Incoming CEO Bourla said that PFE doesn't see the need for any large-scale mergers or acquisitions right now as it focuses on its pipeline.  The stock finished down 35¢.

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Pfizer posts mixed third-quarter results, narrows full-year forecast, shares drop 

Stocks had wide swings untiil the buyers returned in the last 2 hours.  Then they bid up stocks, taking the Dow up 375.  Going into the last day of trading for Oct, these kind of fluctuations must be expected.  Earnings are coming in on the drab side, especially when compared reports earlier this year, & US-China trade relations are as rocky as they have been for much of this year.  The Dow is still down a very big 1.6K in Oct.

Dow Jones Industrials

Higher markets on hopes for US-China talks

Dow rose 158, advancers over decliners 3-2 & NAZ gained 14.  The MLP index lost 2+, dropping to the 247s, &  the REIT index went up 4 to the 342s.  Junk  bond funds fluctuated & Treasuries was off a tad.  Oil fell to the 65s on rising supply concerns & gold was steady at 1227.

AMJ (Alerian MLP Index tracking fund)

CL=F

Crude Oil

65.70

-1.34

-2.0%

GC=F

Gold

1,226.50

-1.10

-0.1%

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Stocks were higher following yesterday's losses as investors digested the latest economic data & corp earnings reports.  It was a big day for earnings, with 2 Dow members – Pfizer (PFE) & Coke (KO) – reporting.  General Electric (GE) reported Q3 profit & revenue that fell short of estimates.  The company also slashed its div to a penny from 12¢.  Apple (AAPL)may also be a focus of the markets as the company holds a product introduction event.  Traders also digested the latest Case-Shiller report on home prices, which showed prices experienced their slowest annual growth in Aug since Dec 2016.  This was just the latest piece of data supporting a slowing housing market as rising rates & climbing prices are starting to dent demand.

Stocks higher ahead of Facebook, Apple earnings

US home price gains slowed for the 5th straight month in Aug as higher mortgage rates have lowered home sales.  The CoreLogic Case-Shiller 20-city home price index increased 5.5% in Aug compared with a year earlier, down from a 5.9% gain in the previous month.  The deceleration reflects a broader weakening in the nation's housing market.  Sales of existing homes have dropped for 6 straight months & sales of new homes have fallen for the past 4.  Home price increases have run ahead of wage gains for 5 years & appear to have left many would-be buyers on the sidelines.  Prices rose the most in Las Vegas, San Francisco & Seattle.  But price gains have slowed compared with a year earlier in 14 of the 20 cities tracked.  The slowdown in housing shows little sign of becoming a broader crisis similar to what occurred in 2007.  David Blitzer, chairman of the index committee at S&P Dow Jones, points out that mortgage defaults, which spiked in the housing bust, remain stable.  Higher borrowing costs have raised monthly payments for new buyers, on top of rising home prices.  Some of the biggest increases in mortgage rates occurred in Sep & Oct & there aren't reflected this data.  That suggests that price gains will likely slow further in the coming months.  The average 30-year fixed mortgage ticked up to 4.86% last week, from 4.85% the previous week.  A year ago, it stood at 3.94%.

US home price gains weaken for 5th straight month

Pres Trump said he thinks there will be “a great deal” with China on trade, but warned that he has B$ worth of new tariffs ready to go if a deal isn't possible.  “I think that we will make a great deal with China and it has to be great, because they’ve drained our country,” Trump said.  Trump added that he would like to make a deal now, but that China was not ready.  He did not elaborate.  It has been reported that administration was preparing to announce tariffs on all remaining Chinese imports by early Dec if talks next month between Trump & his counterpart Xi Jinping fail to ease the trade war.  Both Trump & Xi are expected to attend next month’s G-20 summit in Buenos Aires, where they could meet.  Chinese Foreign Ministry spokesman Lu Kang said China & the US have all along been in communication about exchanges at all levels, including a possible Xi-Trump meeting in Argentina, though he gave no details.  If the US is not willing to promote win-win cooperation with China then China is fully confident in being able to continue with its reforms & develop itself, Lu added.  The US has already imposed tariffs on $250B worth of Chinese goods & China has responded with retaliatory duties on $110B worth of US goods.  “And I have $267 billion waiting to go if we can’t make a deal,” Trump said.  Trump has long threatened to impose tariffs on all remaining Chinese imports into the US if Beijing fails to meet US demands for sweeping changes to Chinese trade, technology transfer & industrial subsidy policies.

Trump says he expects a 'great deal' with China, but warned more tariffs are coming if he doesn't get it

Coca-Cola's (KO), a Dow stock & Dividend Aristocrat, diet soda sales & higher prices helped the company beat earnings & revenue projections during Q3, boosting profit by 30%.  EPS surged to 44¢, up from 33¢ during the same 3 months last year.  Excluding certain items, including discontinued operations, the company earned 58¢, outpacing the 55¢ forecast.  It generated $8.25B in revenue, a decline of about 9% from $9.08B a year ago, but sill beating estimates of $8.17B.  The company raised prices in North America to offset higher import & transportation costs, CEO James Quincey said.  “We had a solid quarter we’re on track to close out the year for our guidance,” he said.  KO said double-digit growth in sales volume for its popular diet soda, Coca-Cola Zero Sugar, & strong sales of other sparkling soft drinks helped drive the earnings results.  Overall, sparkling soft drink sales grew 2%, driven by sales of its trademark Coca-Cola & diet versions of Fanta & Sprite.  Its water & sports drink sales rose 5%, primarily due to strong sales in China & Mexico.  Those gains were offset by a 3% decline in juice, dairy & plant-based beverage sales, mostly hurt in the Middle East & North Africa, as well as a drop in tea & coffee.  A rise in sales of Fuze Tea & Gold Peak was hurt by a drop in sales of its local tea brand Turkey.  Overall, its unit case volume, a key indicator of how much product it sold, rose 2% from a year ago.  The company reiterated its previous forecast for growing organic revenue of at least 4% for the full year.  Organic revenue, which grew 6% over the previous year, strips out fluctuations in foreign currency rates.  The stock went up 69¢.
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Coca-Cola's diet soda sales, higher prices drive stronger-than-expected earnings

Stocks got off to a good start, but selling returned after the first hour of trading.  Currently the Dow is 100 below the earlier high.  Again, this is not a good time for the timid.  Talk about improved trade relations with China is helpful, but talk is merely talk.  If there is a meeting between the 2 leaders, that is still a month away.  The volatility index (VIX) is in the 25s, near its highs in recent years & far above the mid teens where it has been for much of thus period.  More sudden price swings are expected.

Dow Jones Industrials

Markets slump on talk of increased US tariffs for China exports

Dow tumbled 245 (600 off AM highs), decliners over advancers about 3-2 & NAZ sank 116 (but off earlier lows).  The MLP index fell 3+ to 250 (a 6 month low shown below) & the REIT index declined to the 337s.  Junk bond funds were sold & Treasuries finished steady.  Oil dropped under 67 (more below) & gold declined 5 to 1230.

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China's yuan sank to a 10-year low against the $, coming close to breaking the politically sensitive level of 7 to the $.  The yuan declined to 6.9644 per $ already, passing its most recent low in 2016 before recovering slightly.  It was the lowest level since May 2008.  The currency's weakness is one of a series of elements fueling America's trade complaints against Beijing.  The Treasury Dept declined this month to label China a currency manipulator but said it was closely watching Beijing.  Chinese authorities have promised to avoid "competitive devaluation" to boost exports amid a tariff war with Pres Trump over Beijing's technology policy.  But they are trying to make the state-controlled exchange rate more responsive to market forces, which are pushing the yuan lower.  The level of 7 yuan to the $ has no economic significance, but could revive US attention to the exchange rate.  The yuan, also known as the renminbi, or "people's money," has declined by almost 10% against the $ since April as China's economy cooled & US & Chinese interest rates went in opposite directions.  That helps exporters cope with tariffs of up to 25% imposed by Trump on B$ of Chinese goods.  But it raises the risk of inflaming American complaints about Beijing's trade tactics.  A Treasury report on Oct 17 said China failed to meet criteria to be labeled a currency manipulator, a status that can trigger sanctions.  But it said Beijing was, along with Japan & Germany, on a list of govs whose currency polices would be closely monitored.  A weaker yuan also might encourage an outflow of capital from the world's 2nd-largest economy.  That would raise borrowing costs at a time when its leaders are trying to shore up cooling growth.  The People's Bank of China has been trying to make its exchange rate mechanism more efficient by increasing the role of market forces.  The exchange rate is set each morning & allowed to fluctuate by 2% against the $ during the day.  The central bank can buy or sell currency, or order Chinese commercial banks to do so, to dampen price movements.  Some forecasters say Beijing's stance might change if Trump & his Chinese counterpart, Xi Jinping, make no progress at a possible meeting during a Nov gathering of the Group of 20 major economies.  The central bank tried to discourage speculation by imposing a requirement in Aug that traders post deposits for contracts to buy or sell yuan.  That allows trading to continue but raises the cost.  Beijing imposed similar controls in Oct 2015 after a change in the exchange rate mechanism prompted markets to bet the yuan would fall.  The currency temporarily steadied but fell the following year.

China's yuan sinks to 10-year low against dollar

The US is preparing new tariffs against all remaining Chinese imports if trade talks between Pres Trump & Pres Xi Jinping fail to reconcile the ongoing trade dispute.  An announcement of new taxes against goods from China could occur as early as Dec & target the rest of the imports from the Asian nation that are not already subject to tariffs.  The total would amount to about $257B worth.  The stock market fell immediately after the report, with shares of global aerospace & aircraft maker Boeing (BA), a Dow, stock falling for its worst one-day performance since Feb 2016.  The new tariffs, if enacted, would be the final step in the administration's efforts to force Chinese leadership to the negotiation table thru pressure on Chinese goods.  The White House levied tariffs of 10% on $200B of Chinese products in Sep, with the rate set to increase to 25% by the end of the year barring a breakthrough in the trade talks.  In response, Beijing said it would impose taxes on 5K UK imports worth about $60B.  The 2 nations had already imposed tariffs on $50B of each other's goods before the Sep sanctions.  While China is targeting US goods including coal, grease, Vaseline, asphalt & plastic products, the US is taxing items such as appliances & furniture.

US reportedly planning tariffs on remaining $257 billion in Chinese goods if Trump-Xi talks fail

Oil prices fell as as Russia signaled its output will remain high & concern over the global economy put crude on track for its biggest monthly fall since mid-2016.  Losses were limited ahead of US sanctions on Iranian exports that are expected to reduce supplies when they come into effect in just under a week.  US crude futures ended the session down 55¢ to $67.04. The contract has slumped about 8.5% in Oct, on pace for its largest monthly percentage decline since Jul 2016.  Brent crude oi futures were down 8¢ at $77.54 a barrel, dropping 6.3% this month & also threatening to post the worst decline since Jul 2016.  Even with US sanctions on Iranian exports due to come into force on Nov 4, oil prices have fallen about $10 a barrel since 4-year highs reached in early Oct.  Russian Energy Minister Alexander Novak said on Sat there was no reason for Russia to freeze or cut its oil production levels, noting that there were risks that global oil markets could be facing a deficit.  The OPEC, led by Saudi Arabia & non-OPEC member Russia, agreed in Jun to lift oil supplies, but OPEC then signaled last week that it may have to reimpose output cuts as global inventories rise.  Industrial commodities such as crude & copper have been rattled by hefty losses in global equities due to concern over corp earnings, & fears over the impact to economic growth from escalating trade tensions.  Though equity markets recovered today, the benchmark S&P 500 was on track to post its worst monthly performance since May 2010.  The US $ index also rose, supported by robust US consumer spending data.  A stronger $ makes greenback-denominated commodities more expensive for holders of other currencies.

Oil falls as concern deepens over global economic outlook

Shares of Amazon.com (AMZN) tumbled, putting them on track to kick off their first bear market in over 2½-years.  The e-commerce & cloud giant's stock, which was headed toward the lowest close in 6 months, has now plunged 14.5% in 2 days, since the company reported Q3 after the Thurs close, shaving off $126B in market capitalization during that time.  That put the stock 25% below its Sep 4 record close of $2039.  Many traders define a bear market as a decline of 20% or more from a bull-market peak.  Its last bear market ended on Mar 1, 2016, when it closed 20% above its Feb 9, 2016 bear market low of $482, which was 30.5% below the previous bull-market peak of $693 on Dec 29, 2015.  The stock sank down a whopping 104 (6%) but off session lows.
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Amazon's stock plunges toward first bear market in 2 1/2 years

There was not much behind the AM rally other than hope.  The best wishes were dashed in the PM with talk about higher tariffs on Chinese imports to the US.  Dow stock BA sank 23.  Adding to market woes is the mass selling in the sexy high tech giants.  Besides AMZN, this was a very ugly day for Alphabet (GOOG) & Netflix (NFLX), among  many, with declines of 5-6%.  NAZ is down more than 1K from its recent record highs made just 2 months ago.  Even with buying into the close which trimmed losses, more selling in the stock market lies ahead.

Dow Jones Industrials