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T3’s Take 3: Stocks Drop Ahead of Epic Trump vs. Clinton Showdown
A Unique Way to Trade Options… My buddy Doug Robertson is hosting a FREE options trading webinar this Thursday. Doug’s going to be teaching his unique method for creating income with options, so I suggest you check it out. ********* 1) Disney for Twitter? Seriously? Twitter (TWTR) shares got a huge lift on record options volume Friday on rumors that the company could be acquired by Google (GOOGL) or Salesforce.com (CRM). Today, a host of analysts and commentators threw water on the rumors, and the stock was even downgraded by Oppenheimer, driving some profit-taking. But this afternoon, Bloomberg reported that Disney (DIS) is working with an adviser on a potential Twitter bid, sending the stock up all over again. Presumably, Twitter’s real-time news and data feeds could be integrated into Disney media properties like ABC and ESPN. However, a T3 Twitter poll indicates that trader still think Google (GOOGL) is the most likely buyer, assuming it happens at all: 2) Bank Scare Drives Downside German Chancellor Angela Merkel ruled out state assistance for Deutsche Bank (DB) before next year’s national election, which hit the stock hard. Deutsche has been fined $14 billion by the US Department of Justice for its mortgage-backed securities practices, which could cause liquidity problems for the bank. That sent European equities down this morning, setting the tone for the US. The S&P 500 fell -0.9% to 2146.10, with the Nasdaq Composite and Russell 2000 making similar moves. US bank stocks led the decliners’ column, following their European counterparts. Gold mining stocks fell after precious metals slipped in the afternoon. On the plus side, crude oil and energy stocks pushed higher on continued chatter about a possible OPEC output freeze. 3) Trump vs. Clinton The first Presidential debate between Donald Trump and Hillary Clinton will be held tonight. Aside from the general market fallout, traders will especially be interested in how health care and drug stocks perform tomorrow. One major reason biotech (IBB) has rallied in recent weeks was Hillary Clinton’s pneumonia diagnosis. Since she has been an outspoken critic of rising drug prices — specifically targeting Mylan’s (MYL) Epipen — she is seen as an enemy of biotech and big pharma. Her illness boosted Trump in the polls, which in turn gave biotech a reprieve. So if Clinton scores a clear victory, drug and biotech stocks are likely to fall. And obviously, the reverse is likely to be true if Trump wins. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 09:00 S&P CoreLogic CS US HPI MoM SA (Jul): prior 0.21% 09:00 S&P CoreLogic CS 20-City NSA Index (Jul): prior 189.87 09:00 S&P CoreLogic CS 20-City MoM SA (Jul): exp. 0.00%, prior -0.07% 09:00 S&P CoreLogic CS 20-City YoY NSA (Jul): exp. 5.10%, prior 5.13% 09:00 S&P CoreLogic CS US HPI NSA Index (Jul): prior 182.42 09:00 S&P CoreLogic CS US HPI YoY NSA (Jul): prior 5.07% 09:45 Markit US Services PMI (Sep P): exp. 51.2, prior 51 09:45 Markit US Composite PMI (Sep P): prior 51.5 10:00 Consumer Confidence Index (Sep): exp. 99, prior 101.1 10:00 Richmond Fed Manufact. Index (Sep): exp. -2, prior -11 11:15 Fed Vice Chair Fischer Discusses Why Study Economics? Global Economics 04:00 EUR M3 Money Supply 20:20 AUD RBA Assist Gov Edey Speaks Earnings Before Open: None of significance After Close: Cintas (CTAS) Nike (NKE)
Continue Reading -->T3’s Take 3: SPX Makes Record High on Huge Jobs Report
1) Jobs Report Delivers, and Then Some! For the second month in a row, the monthly nonfarm payrolls report blew away expectations. The US economy added 255,000 jobs in July, easily smashing the 180,000 consensus. Plus, June and May’s numbers were revised higher, and average hourly earnings beat forecasts with a 0.3% gain. With two strong months in the bag, the awful May jobs report now looks like a statistical anomaly, and traders are also quickly forgetting last Friday’s weak GDP report. The market’s conclusion reaction was clear… 2) The Fed Is Gonna Hike. Really? In the aftermath of the report, investors see a higher probability of a Fed rate hike this year. Fed Funds futures now imply a 47% chance of a December rate hike, up from 37% yesterday, and just 9% post-Brexit on June 27. Plus, all the usual hawkish trades quickly fell into place today: The US dollar ripped Gold took a major hit US Treasuries fell Now as far as whether this report actually moves the Fed, I have my doubts. The Fed’s been sitting still for so long that I doubt a couple data points makes a huge difference at this point. The Brexit is also still an issue. The Bank of England made a huge downgrade to its growth forecasts, and European commercial/investment banks are doing the same, which implies a good degree of fallout. This could give the Fed another reason to hold off. But either way, the numbers had equity traders in a great mood today… 3) New Record Highs! After the numbers hit, I said I would not count out a strong rally in stocks today. I thought it would take an upward reversal in bonds to make that happen, but that was wrong. Unlike in last month’s post-NFP rally, bonds stayed down, as did gold. The S&P 500 hit a new all-time record high at 2182.87, led by a big move in bank stocks, which benefit from higher interest rates. The index rose 0.9% to close right on the highs. Regional banks were especially strong with the KRE ETF powering 3.5% higher. Small caps and transports also posted strong gains. The decliners’ column was led by the G.U.T.S complex that has dominated the action in 2016: Gold, Utilities, Treasuries, and Silver, all instruments that suffer from higher rates. Crude oil was down for most of the day on the dollar’s rise, but nearly squeezed into the green by day’s end. Monday’s Trading Calendar US Economics (Time Zone: EDT) 10:00 Labor Market Conditions Index Change (Jul): prior -1.9 Mortgage Delinquencies (2Q): prior 4.77% MBA Mortgage Foreclosures (2Q): prior 1.74% Global Economics 08:30 CAD Building Permits 21:30 AUD NAB Business Confidence 21:30 CNY CPI y/y 21:30 CNY PPI y/y Earnings Before the Open: Allergan (AGN) Dean Foods (DF) Horizon Pharma (HZNP) After the Close: Arena Pharma (ARNA) Ctrip.com (CTRP) Hertz Global (HTZ) Nuance Comm. (NUAN)
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