The “slower summer season” is nearly upon us. For investors, that means if this market isn’t crashing, then it’s bullish.
So says Cracked Market blogger Jani Ziedins, who thinks the path of least resistance for equities is still higher, largely because a) scary trade headlines don’t have the bite they did months ago and b) the “sell the news” crowd largely bailed out weeks ago. (A reboot on that war of words between North Korea and the U.S. ahead of the an on-again, off-again summit may be another matter.)
While Ziedins seems fairly at ease about this stock market’s direction, and futures have an air of summertime laze about them, you might want to sit near the lifeguard based on our call of the day.
It comes from Canaccord strategists Martin Roberge and Guillaume Arseneau, who say the S&P 500 has been following a “correction road-map” since the 10% February pullback, but now faces a fork in the road that will be decided by the performance of three big assets.
They see the S&P headed for some choppy waters over the next few weeks before that definitive move higher or lower, which is laid out in this chart:
They mark out two diverging directions for stocks based on Fed tightening scenarios. The green line indicates a bullish scenario for equities, predicated on Powell and the Fed gang managing a so-called soft landing — interest rates rise enough to keep inflation under control and not trigger a recession. The blue line shows a “hard-landing” scenario — rate hikes trigger a recession and equities pull back.
Canaccord analysts are betting investors will get path No. 1, but aren’t turning their backs on a hard landing. They say a combination of three things — 10-year bond yields above 3.25%, oil prices atop $75 a barrel and the ICE Dollar Index above 95 — would trigger a recession and hence a slide for stocks.
“This does not mean that stock markets would peak right away. Nevertheless, we believe equities would become a higher-risk proposition,” say Roberge and Arseneau.
For now, they have no worries about bonds or a bigger dollar blowout, but are keeping an eye on the oil-price “wildcard.”
is down, and the Turkish lira
is back under pressure after yesterday’s central-bank move that’s clearly not working. Crude oil
is down and gold
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Auto stocks in Asia and Europe took a knock from reports Trump is considering new tariffs on cars and car-part imports.
And no rest elsewhere on the geopolitical front, after North Korea’s senior envoy for U.S. affairs called Vice President Mike Pence a “political dummy” and suggested a “nuclear-to-nuclear showdown” if the June summit with the U.S. doesn’t go ahead. Meanwhile, North Korea says it has destroyed its Punggye-ri nuclear test site, with journalists present.
is reportedly teaming up with Volkswagen
to modify VW vans into self-driving shuttles for its workers. That’s after BMW
and Daimler rejected Apple’s partnership ideas.
Weekly jobless claims and existing home sales are the key data today. New York Fed President William Dudley spoke in London early, but didn’t touch on monetary policy, and Philly Fed President Patrick Harker is on the docket too.
The Nasdaq led yesterday’s gains, with a standout performance by star player Netflix
, whose nearly 4% pop was its best one-day gain since mid-April. That got the attention of Michael Kramer, founder of Mott Capital, who called it a “breakout of epic proportions.”
Here’s his chart:
“The breakout came on strong volume, which is a bullish indication. Additionally, the relative strength index also broke out, crossing above a downtrend, another bullish signal,” Kramer explains in an email to MarketWatch.
And he thinks this is bullish for stocks overall. “Netflix has been the leader all year long, and the soldiers will follow the generals, and there is no doubting Netflix’s leadership this year,” he adds in the blog.
The bank’s derivatives unit raked in that huge profit after making a bullish bet on volatility as the VIX surged 116% on Feb. 5. The profit that session was more than the division typically makes in an entire year, reports CNBC, citing sources.
“I’m incredibly embarrassed and deeply sorry to have done that to Jessica. This is a big learning moment for me. I shouldn’t have tried so hard to mansplain, or fix a fight, or make everything okay.” — that was actor Jason Bateman on Twitter this morning, apologizing over his part in a group interview with fellow “Arrested Development” cast-members.
The Internet erupted over how Bateman helped defend male co-start Jeffrey Tambor who Jessica Walters said verbally abused her on the set. Tambor was fired by Amazon
after accusations of harassment and sexual abuse.
Here’s a couple from his tweetstorm apology:
Based on listening to the NYT interview and hearing people’s thoughts online, I realize that I was wrong here.
I sound like I’m condoning yelling at work. I do not.
It sounds like I’m excusing Jeffery. I do not.
It sounds like I’m insensitive to Jessica. I am not.
In fact, I’m-
— Jason Bateman (@batemanjason) May 24, 2018
– horrified that I wasn’t more aware of how this incident affected her.
I was so eager to let Jeffrey know that he was supported in his attempt to learn, grow and apologize that I completely underestimated the feelings of the victim, another person I deeply love – and she was..
— Jason Bateman (@batemanjason) May 24, 2018
New York Jets boss says he’ll pay any player fines over new anthem rules.
Huge political corruption probe in Spain ends in lengthy jail sentences for ringleaders.
Woody Allen’s son says his mom was the abuser, not his dad.
Not just a pic, here’s the video. Buried and burning vegetation produces methane, igniting in road cracks to produce a blue flame. Kīlauea Volcano’s Lower East Rift Zone. https://t.co/RGbJxzEYxF pic.twitter.com/2H1iPpzcKZ
— USGS Volcanoes🌋 (@USGSVolcanoes) May 23, 2018
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