We’ve had two measly days of green out of five for the S&P 500, and Friday isn’t looking like one for the bulls after the world’s second biggest growth engine dropped some downbeat data.
China retail sales and industrial production missed expectations, while highlights from elsewhere show France’s economy basically ground to a halt.
Send in the trade-cheer squad, quick.
“I think the Fed early warning signal a few weeks ago that they are concerned that the benefit of Trumps tax cuts would fade continues to resonate” said Stephen Innes, head of Asia-Pacific trading at Oanda, in an email. “If the U.S. economy turns south, we’re in for a world of hurt,”
U.S. retail sales data was bang in line with forecasts, though that hasn’t done much to ease the gloom. That’s as our call of the day, from bond-fund giant Pimco, says get ready for a “synchronized global slowdown in 2019,” with the warnings signs over a U.S. recession “flashing orange.”
Pimco says investors should “keep their powder dry and look for specific opportunities,” in a recent outlook posted on their website.
“We believe equity markets will remain volatile, favoring cautious positioning overall and a focus on high quality defensive growth and minimal exposure to cyclical equity beta. We continue to favor more profitable U.S. equity markets to the rest of the world and prefer high quality large-cap equities at this stage in the cycle, while we wait for select opportunities to present themselves over the cyclical horizon,” Pimco said.
They also cautioned that the next recession may be caused by “the derating of financial assets — rather than traditional macroeconomic overheating or overborrowing.” And given the current market environment, it won’t take a “recession for turmoil to roil financial markets,” they warn.
We’ll give the last word to The Felder Report’s Jesse Felder, who has a warning for those investors who have been seeking safety in defensive sectors via consumer staples and utility stocks.
“It’s true that these companies are recession-resistant if not recession-proof in many cases. However, both sectors now trade at their highest valuations in over 30 years (perhaps ever),” Felder writes. His charts show how indeed valuations have been climbing for those two havens:
Felder explains values are jumping for these stocks because they are in “two of the highest-paying sectors in the market when it comes to dividend yields.” But if a new trend of rising rates comes to pass that could pressure those defensive names, he cautions.
futures are pointing to a lower start. Thursday’s action saw the Dow
squeak past with a gain, with the S&P
flat and the Nasdaq
Oil-trading “god” says shale flows make it really hard to predict crude supplies.
Check out the Market Snapshot column for the latest action.
$46 billion — That’s how much money flowed out of U.S. stock mutual funds and exchange-traded funds in the latest week, the biggest number ever, according to Lipper data, while bond funds lost $13 billion, a number that was also reportedly near a record.
Meanwhile, some $2.53 billion flew out of leveraged loan funds, also a record, notes the anonymous blogger behind The Heisenberg Report. Those types of loans cost are extended to companies that may not have such good credit and tend to cost the borrower a bit more.
“This is turning into something of a rout for one of the only assets that managed to perform for investors in 2018,” said the blogger, who adds that it just shows “generalized concerns about credit have collided with i) a bubble ii) seasonality and iii) the prospect of a less aggressive Fed.”
Has the bottom really and truly arrived? Hopes for that might be lifted if you’re buying into our chart of the day from the latest survey from the American Association of Individual Investors, or AAII. For the week ended Dec. 12, the group found investor pessimism hitting the highest level in more than 5 years.
Here’s our chart of the day from Yardeni Research, reproduced by The Daily Shot.
Or as some say the panic may have just arrived:
Panic in the air?
AAII bears highest since Boston Bombing in ’13.
Lipper says weekly outflows of US-based stock funds most ever ($46B).
EPFR says $28B pulled out of US equity funds last wk-largest since Feb selloff.
BAML says total equity outflows $39B last wk was a record.
— Ryan Detrick, CMT (@RyanDetrick) December 14, 2018
Shares of hotel operator Belmond
are soaring on news French luxury-goods group LVMH Moët Hennessy Louis Vuitton will snap it up in a $2.6 billion deal.
logged its worst day ever late Thursday after a short seller accused the company of using questionable accounting methods to conceal financial woes.
Paris could be facing more chaos this weekend. The government has warned the yellow jacket protesters not to go out, but it looks like they aren’t going to pay much attention. Rolling Stone says this is what we aren’t getting about the chaos in France right now.
Check out MarketWatch’s list of the 50 people to follow on financial Twitter.
Retail sales for November was in line with forecasts, with growth of 0.2%. Still to come — industrial production, the Markit manufacturing purchasing managers index and business inventories. Check out our economic preview here.
As for China, industrial output rose 5.4% and retail sales 8.1% on an annual basis in November, both missing forecaster’s marks. And a provisional measure of activity for France’s private sector fell below the threshold that indicates activity, while Germany’s purchasing managers index hit the lowest in four years.
A gut-wrenching anniversary. Six years since the Sandy Hook massacre
This morning, before you skip that goodbye kiss to your kids, please consider all the missed kisses for the #sandyhook families. Time is precious.
On this day 6yrs ago, the lives of 20 beautiful children and six brave adults were taken.
Please honor & remember them. pic.twitter.com/vpmsa9gq6g
— Stephanie Ruhle (@SRuhle) December 14, 2018
In Poland, negotiators at a climate summit are frustrated and getting desperate
7-year old migrant girl dies after being taken into U.S. custody
The assailant behind France’s Strasbourg market attack was shot dead by police
White House cancels press holiday party, reporters say ho, ho, ho, they wouldn’t go anyway
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