WHAT’S POWERING STEALTH RALLY?
There have been some peculiar sessions that closed over the last two weeks, and yesterday was the latest. Under pressure for most of the session, the market staged a strong move into the closing bell. Stocks seemed to take their lead from the 10-year yield, which rallied more than 5.0% and has now rallied 28 basis points (bps) off the September 4th low to 1.744. The 2-year yield is just 1.688.
The Dow and S&P closed at the high of the session, and other big-equity indices closed near their intra-day high point.
- Dow Jones Industrial Average rallied almost 200 points to close at 26,909
- S&P 500 closed at 2,979
- NASDAQ Composite closed at 8,084, just missing the high of 8,086, but above the opening print of 8,049
Internals Impress
As impressive as the close was for the market, the internals were even more ebullient as the market breadth was overwhelmingly positive.
Market Breadth | NYSE | NASDAQ |
New Highs | 1,712 | 2,006 |
New Lows | 1,218 | 1,128 |
New Highs | 82 | 48 |
New Lows | 10 | 42 |
Up Volume | 2.83 billion | 1.45 billion |
Down Volume | 1.54 billion | 910 million |
Does Market Smell a Deal?
Over the last few days, there has been an intriguing mix of poor economic data and overtures from China, which lends hope to the notion there could be good news on the way.
Wall Street doesn’t expect a deal before the election, which would make positive news even more impactful.
These overtures include removing foreign investment restrictions and an offer for an increase in agriculture buys. The State Administration of Foreign Exchange (SAFE) announced it removed the $300 billion overall cap on overseas purchases of Chinese stocks and bonds.
It should be noted that only $111 billion in funds have been used in such purchases through August 30, so it’s unlikely there is pent-up demand. That said, even symbolic overtures should be considered an olive branch these days. Coupled with pulling the extradition rule in Hong Kong and agreeing to meet with the U.S. on trade, it’s compelling.
I get there was news and a big event in the case of Apple (AAPL), but I don’t think cheap iPhones moved those shares. There is accumulation, and I think it has everything to do with potential positive news.
- Boeing (BA): +3.0%
- Caterpillar (CAT): +2.4%
- John Deere (DE): +3.6%
- Apple (AAPL): +2.2%
Everyone’s Eating Better
"And I'm eating, but I'm still thirsty"
-Kanye West
There’s more evidence the same tide lifts all ships as we got Household Income & Poverty data for 2018 from the Census Bureau. Income distribution saw a greater share of overall income increase in the bottom two quintiles while declining in wealthier quintiles.
Income
Median income $63,179 +0.9%
- White: $70,642 +1.1%
- Black: $41,361 +2.6%
- Asian: $87,194 +4.6%
- Hispanic: $51,450 +0.1%
Real median earnings: $40,247 +3.45
Share of Aggregate Income by Percentile
- Lowest: 3.1% from 3.0% +0.6%
- Second: 8.3% from 8.1% +2.3%
- Third: 14.1% from 14.0% -0.1%
- Fourth: 22.6% from 22.6% -0.6%
- Highest: 52.0% from 52.3% -0.2%
Full time workers: +2.3 million
- Men: 700,000
- Women: 1,600,000
Female to Male Earnings Ratio: 81.6%
Poverty
Americans in Poverty: -1.4 million to 38.1 million
Poverty Rate: 11.8% from 12.3%
- White: 8.1% -0.4%
- Black: 20.8% -0.9%
- Asian: 10.1% +0.4%
- Hispanic: 17.6% -0.8%
At some point during this morning, take some time to remember the events of September 11, 2001, which changed our world forever.
Say thanks and shake the hand of a first responder.
Approach
Communication Services | Consumer Discretionary | Consumer Staples |
1 | 2 | 1 |
Energy | Financials | Healthcare |
1 | 1 | 2 |
Industrial | Materials | Real Estate |
3 | 2 | 1 |
Technology | Utilities | Cash |
3 | 0 | 3 |
Today’s Session
President Trump has had a busy morning and was out blasting the Fed again this morning on its monetary policy and interest rates.
@realDonaldTrump
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet....
…The USA should always be paying the the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”
The major indices are pointing to a higher open.
Join the conversation as a VIP Member