Author Archives: TheAcsMan

Daily Market Update – August 14,  2015  (7:30 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:  none

Rollovers:  Intel, International Paper

Expirations:   Abercrombie and Fitch, Weyerhauser

The following were ex-dividend this week:  AZN (8/12 $0.45), IP (8/12 $0.40)

The following will be ex-dividend next week:  MRO (8/17 $0.21)

Trades, if any, will be attempted to be made prior to 3:30 PM EDT.

Daily Market Update – August 13,  2015  (Close)

Waking up in the morning and learning that the world’s second largest economy had devalued its currency for the third consecutive day should have added some credance to those believing that the People’s Bank of China was planning an overall 10% reduction in the Yuan’s value.

I don’t really follow, nor do I understand currencies, but that’s pretty huge.

As it is, the 3 days of central bank action, which also included moving in to support the currency on the same day that it was devalued, has already led to a large move and disrupted markets all around. Worldwide stocks, bonds and currencies have felt the impact of the move.

For those following interest rates and pointing to them just a few weeks ago that the die was cast, well those rates are down about 12% in the past month.

That’s huge, too.

Today they were up almost 3% and you probably know how big that kind of a move is, too.

This morning the PBOC said that it is done, but it’s not entirely clear if that is something to really accept on face value. The government of China has taken some very strong steps in an effort to control their economy, stock market and currency. What has to be of some concern is that reports from a few years ago that questioned the reality of the Chinese economic expansion may really have all been true. What was alleged at that time was that the government was engaged in a huge move to grow cities and population centers and was essentially building ghost towns with the most modern of amenities.

Lots of activity and lots of economic growth fueled by government projects, but without any reasonable expectation that they would lead to any real kind of economic growth after the projects were completed.

So we’ll see whether the fears of a Chinese bubble, which were once laughed at, may be the real reality.

What is especially of concern is that the trustworthiness of the data released by the Chinese government may be as suspect as the data released by its publicly traded companies.

That’s fine when the news is all good and markets head higher, but it’s not so good on the way down.

This morning’s futures, though, wa taking its lead from the really nice come back in the market that was seen yesterday. After having been down about 270 points, the bounce started at about noon. It looked as if Apple was leading that charge higher, just like in the old days. It had been sharply lower, but turned things around before the general market and the market then seemed to follow.

Technicians will simply say that the 2045 level of support in the S&P 500 held and would disregard any individual stock as having played a role in moving a broad basket of stocks.

That gain lasted most of the day but finally withered out in the final 30 minutes as materials and energy stocks reversed their previous gains on the week.

WIth now just one day left in the week, there is still a chance for some assignments or rollovers, so the hope at this point is simply that tomorrow doesn’t take its cue from some of the week’s earlier responses to the situation in China, and instead focuses on our own economic fundamentals.

For now, with more retail sales earnings reports being released, those fundamentals may not be so great, even as the JOLTS Report showed more people leaving their jobs for new jobs, which typically means new jobs with higher salaries.

As today’s Retail Sales Report was released, there will be time over this week and next to digest what in line retail sales data may mean for the FOMC given a context of major retailers reporting very disappointing revenues in the early stages of their reporting.

We may as we
ll also try to figure out what all of that means for the market, as it looks for any fuel to light up a rally.

Daily Market Update – August 13,  2015  (8:30 AM)

Waking up in the morning and learning that the world’s second largest economy had devalued its currency for the third consecutive day should have added some credance to those believing that the People’s Bank of China was planning an overall 10% reduction in the Yuan’s value.

I don’t really follow, nor do I understand currencies, but that’s pretty huge.

As it is, the 3 days of central bank action, which also included moving in to support the currency on the same day that it was devalued, has already led to a large move and disrupted markets all around. Worldwide stocks, bonds and currencies have felt the impact of the move.

For those following interest rates and pointing to them just a few weeks ago that the die was cast, well those rates are down about 12% in the past month.

That’s huge, too.

This morning the PBOC says that it is done, but it’s not entirely clear if that is something to really accept on face value. The government of China has taken some very strong steps in an effort to control their economy, stock market and currency. WHat has to be of some concern is that reports from a few years ago that questioned the reality of the CHinese economic expansion may really have all been true. What was alleged at that time was that the government was engaged in a huge move to grow cities and population centers and was essentially building ghost towns with the most modern of amenities.

Lots of activity and lots of economic growth fueled by government projects, but without any reasonable expectation that they would lead to any real kind of economic growth after the projects were completed.

So we’ll see whether the fears of a Chinese bubble, which were once laughed at, may be the real reality.

What is especially of concern is that the trustworthiness of the data released by the CHinese government may be as suspect as the data released by its publicly traded companies.

That’s fine when the news is all good and markets head higher, but it’s not so good on the way down.

This morning’s futures, though, is taking its lead from the really nice come back in the market that was seen yesterday. After having been down about 270 points, the bounce started at about noon. It looked as if Apple was leading that charge higher, just like in the old days. It had been sharply lower, but turned things around before the general market and the market then seemed to follow.

Technicians will simply say that the 2045 level of support in the S&P 500 held and would disregard any individual stock as having played a role in moving a broad basket of stocks.

WIth two days now left in the week, there is still a chance for some assignments or rollovers, so the hope at this point is simply that these last two days don’t take their cue from some of the week’s earlier responses to the situation in China, and instead focuses on our own economic fundamentals.

For now, with more retail sales earnings reports being released, those fundamentals may not be so great, even as the JOLTS Report showed more people leaving their jobs for new jobs, which typically means new jobs with higher salaries.

As today’s Retail Sales Report is released, there will be time over this week and next to digest what poorer than expected retail sales may mean for the FOMC and what that may mean for the market, as it looks for any fuel to light up a rally.

Daily Market Update – August 12,  2015  (Close)

Yesterday was a major disappointment following Monday’s very nice and broad rally, but probably shouldn’t have come as too much of a surprise to anyone. That is except for the few that thought that maybe Monday was the start of something that would take us to new highs.

As it is, after yesterday’s 200+ point loss that made Monday seem as if it never existed, the S&P 500 is barely 2.5% below those all time highs.

This morning that figure was going to get larger as the futures were again down sharply again being whipsawed by China as its markets again fell and late in their trading day the government stepped in to support the currency.

Given that it devalued it just a couple of days earlier it was a little unusual that it was now stepping in to support it. History has long shown that governments attempting to support their currency against what the market is doing tends to be a waste of time.

If there was any doubt as to whether there would be any thing actually going on while the Federal Reserve was on its vacation, China has left no doubt that it was fully capable of filling whatever voids we might have.

So this morning our futures were again down triple digits as we awaited the first of the major national retailers getting ready to report their earnings. Most of those, other than Wal-Mart shouldn’t be terribly impacted by currency and may in fact find benefit to the devaluation of the Chinese Yuan. Although the news of the Chinese currency was just beginning to get digested, that could result in providing improved guidance, which could easily offset disappointing earnings, if that is going to be retail’s theme this quarter.

Of course, that could lead to some minor deflation on our end if the price of consumer goods, largely imported from China falls or even stays the same. That would make it a little more difficult to find the data justifying an interest rate increase.

While most everyone agrees that it’s likely that we will see that increase come in September, suddenly there is reason to re-think that target.

Meanwhile, Macys did get retail off to a start early this morning and it reported disappointing revenues and wasn’t giving positive guidance, either. It blamed a decrease in foreign tourist shopping, an indirect result of the US Dollar’s relative strength.

Everything is increasingly connected.

This morning the market’s were down before the opening bell, but the numbers had improved just a little, or at least they may have stabilized. However, if Macys was going to be reflective of what other retailers are going to report, there may not be much reason to expect the market doing anything to turn things around this week or maybe not even next week.

But if you thought that Tueday was a whipsaw day, you would have really been impressed with the way today ended, after the DJIA having been down by about 260 points, only to close the day barely unchanged, while the S&P 500 actually gained a bit.

Since Wednesdays are usually slow days, I didn’t expect to do much today, but being reluctant to see any of those positions that were expiring this week potentially slip away from being assigned and then further slip away from being rolled over, thought that I might do something.

Because of that, there might have been reason to consider some early rollovers just to capture some more income and forego the possibility of collecting some cash from assignments.

That was the view from this morning, but as is always the case,the view is subject to change and very likely to change.

I’m glad it did and I didn’t.