Short Term
July 8, 2021 | Daily JAM, Short Term, You Might Have Missed |
I’ve read all the headlines explaining today’s drop in stocks, and yesterday’s and the day before. The chaos at OPEC and in oil prices. Fears that the economic recovery is slowing. Thoughts that inflation isn’t a worry and that instead we should fret about deflation. There is some truth to all these explanations. But I don’t see much of the way in news to support a major change in market trend and sentiment. And when I see a big, fast move like that of the last three days or so without much in the way of news to change investors’ view of the world, my thoughts turn to computers and program trades
June 23, 2021 | Daily JAM, Morning Briefing, Short Term |
I think the market reaction to this news is actually more important than the news itself. Today, June 23, we’re looking at yet another example of stocks shaking off bad economic news. Sales of new U.S. homes dropped unexpectedly in May with purchases of new single-family homes dropping 5.9% to an annualized 769,000 rate. In addition revisions lowered the annualized rate for April to 817,000. Economists surveyed by Bloomberghad expected an increase t a 865,000 annualized rate in May.
June 21, 2021 | Daily JAM, Dividend Income, FCX, Jubak Picks, NVDA, SCCO, Short Term, Special Reports, Top 50 Stocks, Volatility |
After Wednesday’s news from the Federal Reserve, we all know that an interest rate increase is coming–even if we don’t know when. Could be 2022. Could be 2023. And even if we don’t know how many increases we’re looking for in that time period. Could be one. Could be two. The need to revise your portfolio to take that change in monetary policy is obvious. But figuring out how and when isn’t by any means straightforward. What gives? And how should be navigate a period that is almost certainly going to end with a reversal of the lower for longer interest rates that have dominated asset prices for decades? Today, for the last installment in my Special Report: “5 Picks and 5 Hedges for a Falling Market” I’m going to take one last run at how to hedge this market and how to position your portfolio for the developing trends. (I don’t have much hope that this will be the last time I’m visiting this topic, of course.)
June 14, 2021 | Daily JAM, Morning Briefing, Short Term |
As of the close on Monday, June 4, the major stock indexes were treading water waiting to here what, if anything, the Federal Reserve might say after the Wednesday meeting of its interest-rate-setting body, the Open Market Committee. (No one really expects the Fed to actually do anything about the monthly schedule for bond purchases or about changing the benchmark interest rate now set at 0% to 0.25%.) The Standard & Poor’s 500 was up 0.18% but the Dow Jones Industrial Average was off 0.25%. The NASDAQ Composite was up 0.74% but the small cap Russell 2000 was lower by 0.54%.
June 3, 2021 | Daily JAM, Short Term |
Employment numbers today suggest that we could get a Goldilocks May job report tomorrow. The ADP Research employment survey said U.S. private employers added 742,000 jobs in May. That’s the most in seven months. But it is slightly below the 850,000 projected by economists surveyed by Bloomberg.
June 1, 2021 | Daily JAM, Short Term |
The last time the government reported monthly jobs numbers, investors and traders faced a big surprise. In April the U.S. economy added only 266,000 jobs. That was well below expectations for the addition of 1 million jobs in the month. Waiting for the May jobs report before the open on Friday Wall Street is hoping for a return to something like the run of months before April of 900,000+ plus. I suspect that Wall Street economists would be happy with any number strong enough to suggest that the April plunge was a fluke. Economists surveyed by Bloomberg are projecting that the economy added 650,000 jobs in May. But after last month’s failure to predict the drop fresh in investors’ minds, no one is rushing to stake out a position either long or short ahead of the data. Which is one reason why the Standard & Poor’s 500 fell by all of 0.05% today
May 23, 2021 | Daily JAM, Short Term |
This week financial markets will be focused on Friday’s release personal consumption expenditures (PCE) index for April on Friday by the Bureau of Economic Analysis will release. The PCE is the Federal Reserve’s preferred inflation gage. It tends to run a bit lower than the Consumer Price Index which slowed inflation running at a 4.2% annual rate in April. Economists surveyed by Bloomberg are expecting that the PCE will show a 3.5% year over year increase in inflation. That would be the biggest increase since 2008. It would also be a huge acceleration from the 2.3% year over year increases recorded in March. On a month-over-month basis, the PCE likely increased by 0.6%. That would be a slight increase from the 0.5% month-over-month increase in March.
May 20, 2021 | Daily JAM, Short Term |
At the close today the Standard & Poor’s 500 was up 1.06%; the NASDAQ Composite had gained 1.77%; and the small cap Russell 2000 finished ahead 0.64%. Those gains put a stop to a string of three straight days of declines. But today’s upside move wasn’t enough to reverse what looks like a downward trend in stocks.
May 3, 2021 | Daily JAM, Short Term |
The rise in the long end of the Treasury market resumed this week after inflation expectations hit a multi-year high. The Federal Reserve didn’t help. After its Wednesday meeting Chair Jerome Powell stressed that the central bank views any jump in price pressures as fleeting and it won’t be dialing back crisis-level monetary support any time soon. Short interest in the $12 billion iShares 20+ Year Treasury Bond ETF (TLT) rose to 25% of shares outstanding this week. That’s the highest level since early 2017, according to data from IHS Markit. Investors and traders continue to dump the long Treasury and the ETF: the iShares 20+ Treasury ETF has posted outflows every day this week, putting it on track for weekly withdrawals of over $1 billion. According to Bloomberg that’s the worst stretch since November. The ETF is down 12% in 2021.
May 2, 2021 | Daily JAM, Morning Briefing, Short Term |
The U.S. economy is likely to have added 978,000 jobs in April, the Bureau of Economic Analysis will report on Friday May 5, according to economists surveyed by Bloomberg. That would be up from March’s gain of 916,000 jobs and would be the biggest increase since August 2020. It would probably send the unemployment rate down to 5.7% in April from 6% in March. The report will also put added pressure on the Federal Reserve to begin to reduce its program of buying $120 billion a month in Treasuries and mortgage-backed securities to support the economy. An initial reduction in the size of that program would be seen by the financial markets as a sign that the central bank is beginning to think about raising interest rates.
April 28, 2021 | Daily JAM, Morning Briefing, Short Term |
Speculation, informed and otherwise, is that in his address to Congress tonight, President Joe Biden will propose raising the top income tax rate to 39.6% from the current 37%. And (this is the one that sticks in Wall Street’s craw) raising the tax on long-term capital gains to 39.6% for tax payers with an income above $1 million. The current rate on long-term capital gains is 20%. (There’s a tax surcharge from the Affordable Care Act that raises the effect capital gains tax rate to 23.8% currently. With that surcharge the proposed new rate would be 43.4%) What does this mean for your portfolio–assuming that you’re not one of those making more than $1 million a year?
April 12, 2021 | Daily JAM, Short Term |
Over the weekend I posted that I’d be looking at a possible buy of Call Options on the CBOE S&P 500 Volatility Index (VIX) today–depending on how the VIX behaved in the Monday action. Today the VIX regained some of the ground that it gave up last week, closing ahead 1.92% to 1701 after closing at 16.69 on Friday. And I’m going to hold off on buying VIX Call Options until I see the trend in first quarter earnings reports.
