|Bid||0.0000 x 900|
|Ask||0.0000 x 800|
|Day's Range||239.25 - 244.71|
|52 Week Range||233.20 - 269.28|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.02|
|Expense Ratio (net)||0.15%|
In March, President Trump slapped tariffs on US steel and aluminum imports. While China doesn’t export much steel to the US (DIA), it does export a significant amount of aluminum. China (FXI) exported 536,000 metric tons of unwrought aluminum in November compared to 480,000 metric tons in October.
President Trump seems to be fixated on equity markets. On December 31, 2017, in response to a Fox Business article, Trump tweeted, “If the Dems (Crooked Hillary) got elected, your stocks would be down 50% from values on Election Day. Trump has always been quite quick to take credit for the stock market’s gains.
According to a report in the Wall Street Journal, President Trump is focused on stock markets and is contemplating the reasons behind the increased volatility lately. The S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite (QQQ) fell by 4.4%, 4.4%, and 4.7%, respectively, last week.
On December 6, US crude oil’s implied volatility was 48.1%, which was 1.5% above its 15-day average. You can see the inverse relationship between oil prices and oil’s implied volatility is in the following graph. Since reaching a 12-year low in February 2016, US crude oil active futures have risen 96.5%. Crude oil’s implied volatility has fallen 36% since February 11, 2016.
US steel stocks are in the red today, following the broader markets (DIA) lower. Looking at the leading steel names, U.S. Steel Corporation (X) and AK Steel (AKS) are trading at falls of 2.3% and 2.7%, respectively, as of 2:05 PM EST. Yesterday, in an interview, U.S. Steel’s CEO, David Burritt, praised President Donald Trump’s economic policies.
On November 29–December 6, US equity indexes had the following correlations with US crude oil January futures: the Dow Jones Industrial Average (DIA): 21% the S&P 500 (SPY): 19.3% the S&P Mid-Cap 400 (IVOO): 16.2%
Conclusion: My point is this: When I hear people say they are happy to pay 12.5 times for Apple, you have to put that into context of WHEN Apple will start reaccelerating its growth to make that valuation is worth it. Buying too far ahead of an earnings/cyclical trough is very dangerous, UNLESS the price gives you some major cover by just getting too cheap to ignore. But beware that gulf before growth starts again. Time usually should be your guide.
On December 7, a Reuters report said that Iran agreed to a 0.8 MMbpd (million barrels per day) production cut. The plan is only expected to be implemented by OPEC members in 2019. Iran might be exempt from the production cut. At 7:13 AM EST on December 7, US crude oil prices rebounded 5.7% from their intraday low.
The US jobs report for November was released today. The job additions came in at 155,000 as compared to consensus expectations of 198,000. While job additions in manufacturing remained strong at 27,000, construction net adds declined to 5,000.
The Labor Department reported U.S. non-farm payrolls were up 155,000 in November, short of the 200,000 economists were expecting. Wage growth of 0.2 percent was also short of expectations of 0.3 percent growth. The Labor Department also lowered its October jobs growth estimate from 250,000 to 237,000.
The huge sell-off in the U.S. stock market this week has gotten the attention of both investors and market experts. Cooperman in a CNBC interview said the increase in market volatility in the past decade is largely due to to the elimination of the Uptick Rule, a trading regulation eliminated in 2008 that required every short selling trade to be executed at a higher price than the previous trade. “I think your next guest ought to be somebody from the SEC to explain why they have sat back calmly, quietly, without saying anything and allowing these algorithmic, trend-following models to wreak havoc with what has, up to now, been the best capital market in the world,” Cooperman said.
On December 5, US crude oil January futures fell 0.7% and closed at $52.89 per barrel. The market wasn’t expecting a significant production cut during OPEC’s meeting on December 6, which might have dragged oil prices. On December 5, US equity markets were closed.
Today, the broader-market sell-off continues, seeming to intensify. In October, the S&P 500 Index (SPY) tanked 6.9% in a sell-off triggered by investor concerns over rising interest rates, slowing global economic growth, and the US–China trade war. However, the market recovered somewhat in November after Fed Chairman Jerome Powell’s dovish comments in a speech. US equities rallied sharply after news of a US–China trade truce earlier this month. ...
It has gotten downright ugly out there. The Standard & Poor's 500-stock index has been dancing in and out of correction territory and is down about 8% from its all-time highs at time of writing. It's also barely in positive territory in 2018. It doesn't get any prettier when you look at other corners of the market. The tech-heavy Nasdaq is up a meager 4% in 2018, but of more concern is that it's down 12% from its late-summer highs, putting it well into official correction territory. And when you drill down to the major players that have led the bull market in tech shares for years - the "FAANG" stocks Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google parent Alphabet (GOOGL) - it's a bona fide bloodbath. Facebook has lost more than a third of its value from its highs, and Netflix isn't far behind. Apple has been sliced by a quarter. Amazon has shed nearly 20% of its value, as has Alphabet. The picture doesn't get prettier overseas. Chinese stocks are in an official bear market, and the iShares MSCI EAFE ETF (EFA), a proxy for developed international stocks, is flirting with bear-market territory. We know it's ugly out there; the question is why. The first-quarter selloff shook out many of the less committed holders, meaning remaining investors should have been a little harder to rattle. And earnings still look strong, as does the health of the economy. So, what gives? It's rarely just one thing. Selloffs almost always have multiple, sometimes overlapping, drivers. Here are seven of those reasons - including which ones could threaten the market further. SEE ALSO: 7 Stocks Wall Street Is Souring on Right Now
OPEC members have provisionally decided to implement production cuts but are waiting for Russia to agree to a cut, according to a Reuters report. As of December 6 at 8:55 AM CST, US crude oil prices have declined ~2.7%. If Russia won’t agree to a production cut, OPEC alone cannot implement a cut because it could hurt its oil revenue.
Wage growth will likely be the most closely watched component of the US (VOO) jobs report. The metric has long been considered a missing piece of the otherwise strong labor market. While wage growth had disappointed market participants for the last few months, October’s wage growth was not disappointing.
The Department of Labor is scheduled to release November US (VTI) employment data on December 7. The jobs report is a key indicator of the health of the US economy. For the past few months, financial markets have been reacting sharply to the US jobs report data due to its importance for the Fed in deciding rate hikes. Therefore, investors should understand the expectations for the report before the actual numbers come out. The jobs report is expected to confirm the strength of the US labor market.
On November 20, Jeffrey Gundlach told Reuters that investors haven’t shown an appetite for Treasuries (TLT) even though US stock markets have fallen. He said, “Obviously, it is not a deflationary bear market, otherwise you would have a bond rally.” Gundlach also advised investors to stay out of investment-grade bonds. Gundlach is concerned that the selling pressure in the US stock markets (IVV) (QQQ) wasn’t accompanied by higher volatility (VIX). Investors should note that the drop on December 4 was also accompanied by higher volumes and volatility.
During an interview with Reuters, DoubleLine CEO Jeffrey Gundlach said that the current inversion of the yield curve (TLT) could signal that the US “economy is poised to weaken.” He added that the inversion at the short-end of the Treasury yield curve implies that the bond market doesn’t think the Fed plans to raise interest rates through 2019. As we discussed in Yield Curve Inverts for the First Time since 2007: What to Know, the spread between five and three-year Treasury yields narrowed to -0.01 percentage points on December 5.