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Monday, September 20, 2021
But there are green pastures
In a noisy environment of growing profit warnings for companies and Wall Street pros market correction calls, I’ve been on a secret mission to find some good things investors could chew on in the middle of a volatile September.
I breathed in a whiff of hopium on the surprising August retail sales report that showed consumers were spending their savings (or higher wages from their new job) on a new pair of jeans or back-to-school supplies for their kids.
For the record, I expected the report to miss economists’ estimates due to low weekly readings on consumer mobility due to the booming Delta variant. So this upbeat report left me with an egg on my face. But that’s okay, there’s nothing wrong (usually) in getting good economic data.
Dare I say that Friday’s Consumer Sentiment report was a bright spot. Although it fell short of estimates, it improved slightly from August despite delayed office reopens and fears from Delta.
To top off my search for a new pair of rose-colored glasses, Cisco CEO Chuck Robbins told Yahoo Finance Live his business is pretty solid right now.
“It’s clean [the global economy], but obviously the comparisons are going to get more difficult as we go along. I think you just need to look at the math and make sure you don’t read too much of the math change. But from what we’re seeing right now, our customer’s spending is very balanced, ”Robbins said.
I loved hearing that. That said, despite this greener pasture, the markets – much like my clumsy New York Yankees – are starting to rack up losses this month. Data doesn’t lie.
On Friday, the S&P 500 slipped below the key 50-day moving average. The index is around 7.5% of its 200-day moving average. In case you were wondering why you should care: Market sentiment is deteriorating.
Global stocks have fallen for two consecutive weeks.
For the first time in 10 months, less than 75% of S&P 500 stocks closed above their 200-day moving averages on Friday, according to Sundial capital search. This ended the fourth longest positive streak since at least 1928.
So what gives here?
Pick your poison, as to why the market can correct to the rhythm of a melting ice cube, as Mike Wilson, chief investment officer of Morgan Stanley described it.
First, earnings warnings slowed the bullish momentum of analyst estimates. Remember, this upward momentum in earnings estimates has been oxygen to the market. “Throughout 2021, stocks have trended higher alongside upward revisions to EPS estimates for this year and next. In recent months, however, the pace of those revisions has slowed, while like the momentum of the S&P 500, “recalls Julian Emanuel, head of actions at BTIG. and derivatives strategist.
Meanwhile, the Federal Reserve’s meeting this week could serve as a dot chart pushing interest rate hikes forward. What long trader wants to see this title cross the papers in the afternoon? (Answer: none).
And then, investors realize that the fall could bring overall risk to stocks. Read the warning from Treasury Secretary Janet Yellen in a WSJ Editorial about a government disaster limit (which fuels the household disaster) if the debt ceiling is not raised soon. This should be a wake-up call, even for the most hardcore bulls.
“The challenge of upcoming deadlines in Washington may be contributing to investor cautiousness – declining spending levels and ‘pay fors’ complicate the goal of finalizing the budget bill before the targeted vote on infrastructure in the United States. September 27, while the debt ceiling suspension expires on 9/30 with extraordinary measures exhausted by October – coinciding with traditional volatility in the fall, ”Emanuel adds.
So in other words, there is a lot for investors to consider.
At this point bring October. Hopefully that will include a New York Yankees playoff run and the bull’s return to Wall Street.
Netflix: On September 25, Netflix (NFLX) will hold its very first “fan event“via a livestream where it will show its upcoming content. The stock has increased by 13% before the event, raising expectations so high that the headline may fade if there is any positive news. But beyond the day, the event could stoke optimism over Netflix’s subscription prospects in 2022. “Ultimately, Netflix’s stock is moving onto subscribers. [the content slate] this causes a re-acceleration in subscriber growth, the stock goes up from here, “EvercoreISI technical analyst Mark Mahaney told Yahoo Finance Live.
Sears: We all have a job to do, so hats off to a Sears [now known as Transformco] spokesperson for trying to portray his business as vibrant and dynamic. After reporting (along with other media) that the last Sears store in her hometown of Illinois was closing in November, the spokesperson said in an email:
“There are Sears hometown stores in Illinois and other states that carry a large assortment of sustainable products, including Kenmore products, and are primarily operated by independent resellers or franchisees of a subsidiary of Transformco. In total, there are over 300 large and small Sears and Kmart stores nationwide, including 11 in Illinois. In addition, Transformco is very focused on growth sears.com and the Sears Home Services Business. All 11 are small format Sears Hometown stores operated by independent dealers or franchisees of a subsidiary of Transformco. But Sears stores, nonetheless. It was incorrect for the media to say that “Sears has closed its last store in Illinois”.
A nice pun, but technically the last Sears / Transformco-owned store in its hometown has closed. I also have a job to do – it’s called reporting the facts.
What to watch today
President Biden will travel to New York for three days of meetings at United Nations General Assembly. The President kicks off with a bilateral meeting with UN Secretary General António Guterres this evening. Biden will then address the assembly on Tuesday and host a virtual COVID-19 summit on Wednesday.
The two United States House of Representatives and the Senate back to Washington this afternoon with looming deadlines. Lawmakers want to avoid a government shutdown and pass the infrastructure deal by the end of the month. They also hope to avoid a public debt default and embrace Biden’s social spending package soon after.
Also: Federal Reserve decision, housing data: what to know this week
European stocks fall due to energy market slump, Asian real estate market is shaking [Yahoo Finance UK]
Senate parliamentarian gives Democrats’ immigration push a hard blow [AP]
The default US date is an estimate Congress wants, Yellen cannot give [Bloomberg]
Apple joins streaming elite, Netflix hits milestone with Emmy wins [Reuters]
Yahoo Finance Highlights
Facebook executive says stablecoins ‘likely’ need more regulation
China: ‘We are not even at the very beginning’ of tech crackdown, short seller says
Young people involved in the stock market ‘is here to stay’: a teenage investor