Index (VIX) now firmly creeping above $26.5

The 10 year yield has reversed course to its lowest level in 3 weeks near 3.08% with renewed buying interest garnered in light of the deepening equity route. Gold Futures (/GC) are also showing more signs of life at $1236 after inching back within highs not seen since July thanks to the Volatility Index (VIX) now firmly creeping above $26.5. Oil Futures (/CL) are staging for a 3^rd weekly decline ahead of a routine rig count with crude back below $67 a barrel over concerns of demand waning should the global economic engine begin to slow further.
Economic news becomes ever more vital with the latest reveal of GDP coming in at 3.5% which was above its forecast of 3.3% to bring some much needed relief to overnight lows. Consumer Confidence will also be on display later this morning with a reading near 99 expected. Europe will be looking for any real direction from a speech from President Draghi momentarily as trouble around both Italy and Brexit are putting a severe strain on any possibility of growth in the region. Major indexes in the Eurozone are all showing daily losses in excess of 1% to add to its worst combined month since August of 2015 after rates were left unchanged due to unremitting stagnancy. Asia has fared slightly better overnight with a $30 billion currency swap agreement between China and Japan luring in some buyers with bilateral cooperation. 

Bank of America (BAC),

This week we will see earnings begin to move into full gear with Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), and American Express (AXP) all reporting.  This week’s economic calendar will contain important data concerning the housing industry. Housing starts, existing home sales, and building permits will all be released this week.  In addition,  investors will be looking at Wednesday’s FOMC minutes for clues as to the Federal Reserve’s future movement on interest rates.  As of this writing, U.S. crude oil futures (/CL) are 0.7% higher near $72 per barrel and S&P 500 (SPX) futures (/ES) are down slightly near 2765, after recovering from a drop of $20 earlier this morning. 

American Airlines (AAL)

–Hard Landing? – The airliner saw its lowest intra-day levels touched in more than two years yesterday following an update on the chaos caused by Hurricane Florence. Early estimates indicate that approx.. $55 million was lost in potential revenue after 2,100 flights were cancelled around the storm. The industry will be tested again this week with another Hurricane scheduled to make landfall on the Florida panhandle later today. Shares are indicating a flat open at this point after plummeting over 3% in yesterday’s session. 

Constellation Brands (STZ)

Constellation Brands  (STZ) –Buzzed! – The alcoholic beverage conglomerate saw a 10% jump in sales last quarter to capture $1.15 billion of revenue.  Shares are seeing nearly a 5% improvement pre-market after sliding a disappointing 8% YTD from a high of $236.62 reached back in May. The company has recently enjoyed new publicity surrounding an investment in Canopy Growth Company (CGC) as they attempt to break into the cannabis arena for an untapped source for further growth. 

Tesla (TSLA),

Elon Musk reached a settlement  agreement with the SEC that allows him to remain as chief executive of Tesla (TSLA), but requires him to step away from the position of chairman for three years.  This has sent the shares over 14% higher in the pre-market, erasing much of the loses suffered on Friday.  Late last night, the U.S. and Canada reached a deal revising the terms of the North American Free Trade Agreement, just beating out the midnight deadline.   This morning, General Electric (GE) is up over 14% after it named Lawrence Culp as its new CEO and chairman, replacing John Flannery.   As of this writing,  U.S. crude oil futures (/CL) are little changed near $73 per barrel and S&P 500 futures (/ES) are 0.5% higher and trading near 2934. 

Japanese Nikkei

The Japanese Nikkei has now seen eight straight session of gains to pierce through 24K for the first time since 1991 with the Shanghai also tacking on nearly 1%. Europe is seeing more mixed conditions as details around various Brexit deadlines continue to surface. Volatility remains fairly constant just above the $12 handle in the CBOE Volatility Index (VIX) which is still below its monthly average. Any new developments on the trade front may drive markets as Canada looks to possibly be the one left out of a North American deal between the U.S. and Mexico if it fails to meet some concessions by this weekend. The polarizing effects of the Supreme Court Nominee will also certainly keep audiences captivated as the showdown is scheduled for tomorrow due to its far-reaching implications.

Amazon (AMZN)

 –Amazon 3K! – It has been rumored that the online behemoth intends to open up to 3K new cashier-less stores over the next couple of year as retail trends continue to quickly evolve. Both Walmart (WMT) and Target (TGT) slipped as a result with little detail being concrete. The stock value of the company has fallen nearly $60 billion since reaching the $1 Trillion benchmark at the beginning of September but shares are up fractionally as a result ahead of the opening bell. 

FED EX (FDX)–

FED EX (FDX)–Boxed In! – The global shipper saw higher hourly wages and bonuses take a bite out of earnings the previous quarter.  Last night’s quarterly report also stated that ill effects of a cyberattack on a subsidiary also dented expectations despite an impressive $16.88 billion in revenue being generated. Shares are down 3% pre-market as a wave of downgrades have begun to surface. 

U.S crude oil prices

U.S crude oil prices rebounded on Friday, after a sharp drop on the prior day. Investors have reacted positively to the overall landscape of shrinking crude exports from Iran, strong global demand, and low U.S. inventories.  U.S. crude oil futures (/CL) rose 0.6% on Friday to $68.99,  and posted a 2% gain for the week.  Last Wednesday, the Energy Information Administration (EIA) reported that U.S. crude oil inventories dropped by 5.3 million barrels the prior week to their lowest level since 2015.

Adobe (ADBE)

Adobe  (ADBE) – Picturesque! –Software maker, Adobe saw $2.29 billion in revenue generated over the last quarter which was a 24% jump from the same time last year. Net income topped $666 million which was well ahead of analyst estimates.  A major shift from product purchases to a subscription model has helped to accelerate growth over the past few years. Shares are currently trading near yesterday’s close despite a projected market maker move of =/- $9.00 and several analyst price target raises overnight. 

Progenics Pharmaceuticals Inc. (PGNX)

Progenics Pharmaceuticals Inc. (PGNX) shares fell in the extended session Wednesday after the cancer drug company said one of its imaging agents was not sensitive enough to detect prostate cancer in a clinical study. Progenics shares fell 19% after hours, following a 1.6% decline to close the regular session at $7.30. The company said a late-stage clinical trial found its so-called "1404" imaging agent needed to positively detect prostate cancer with a 60% or more sensitivity but did so with a 47% to 51% range. The imaging agent, however, was able to detect the absence of prostate cancer correctly with a specificity of 71% to 75% compared with the study target of 60% or more.

Intel Corp (INTC)

Intel Corp (INTC) –Death Cross? – The chip maker just captured its 6^th consecutive losing session yesterday to slip into bearish territory for the 1^st time in 2 years. An 18 year high of $57.08 was tapped on June 1^st before plummeting over 20% since.  INTC became the Dow’s worst performer on Tuesday with a 3% setback.  Others in the space are experiencing similar weakness as of late despite robust economic growth being touted overall.

Five Below (FIVE)

Five Below (FIVE) – High Five!  – The discount retailer is trading significantly higher at record highs pre-market after soundly beating quarterly estimates by $0.04 a share.  Same Store Sales increased by 2.7% to see a 23% jump in revenue overall with a rosy outlook also conveyed. The positive move was somewhat surprising considering a rapid decline from competitors in the space like Dollar Tree (DLTR) in recent days. 

Coke (KO)

Coke (KO) – Coffee Break! – The legendary beverage maker has agreed in earnest to purchase British coffee maker, Costa for a $5.1 Billion price tag. The chain has over 4K outlets as Coke looks to further diversify as trends continue to diminish over their core product line. Costa’s popular Georgia brand is also distributed widely throughout Asia as the battle of the brew continues. Shares of KO are trading modestly higher pre-market with new rival Starbucks (SBUX) down nearly 2% off the initial reaction. 

Domestic energy companies

Domestic energy companies collectively saw 9 rigs taken off line last week which was the largest weekly reduction in over two years as concerns around over-supply begin to set in despite a larger than expected draw last Wednesday. Crude Futures (/CL) are essentially flat just below the $69 a barrel mark with the heaviest driving season quickly coming to an end. The 10 year Treasury has dropped near the 2.815% mark this morning with general applauds surrounding FOMC Powell’s comments out of Jackson Hole last week in a call to gradually reduce rates. There have now been seven rate hikes completed since the financial crisis with two of those occurring just this year. Analysts believe we will see the same number by year’s end should the market continue at the current pace. 

S&P 500 (SPX) 8/24

The S&P 500 (SPX) moved lower as the U.S. and China engaged in a second day of trade talks.  $16 billion of tariffs were put in place early yesterday on a wide ranging list of items, spanning Chinese machinery and chemicals to U.S. engines and fish meal.   Robust corporate earnings and strong economic numbers have helped the S&P 500 rise more than 5% since the end of June, putting it on pace for its best three month stretch of the year.   According to analysts, tariffs have not had a severe negative effect on corporate profits, so far.  Minutes from the latest Fed meeting show that trade tensions have risen to the top of the central bank’s list of concerns.  

U.S. crude oil futures 8/22

U.S. crude oil futures (/CL) are up nearly 1.8%, and are on track to make their fifth consecutive gain as a drop in U.S. oil inventories and a sliding dollar have helped propel oil to trade near $67 a barrel.    Gold (/GC) has also benefited from the weakening dollar and increasing political uncertainty.  Gold futures are up 0.4% this morning, and are trading near $1205 per troy ounce.    Existing Home Sales and the FOMC minutes will be the highlight of today’s economic reports.  Investors will be looking for clues in the minutes for direction on interest rate policy going forward.  As of this writing,  S&P 500 futures (/ES) are 0.2% lower near 2857 and 30yr. Treasury bonds (/ZB) are 0.3% higher near  145’19.

Canadian dollar 8/21

The Canadian dollar has posted small gains in the Tuesday session, continuing the trend seen on Monday. Currently, USD/CAD is trading at 1.3023, down 0.16% on the day. In economic news, Canada releases Wholesale Sales. There are no U.S events on the schedule. On Wednesday, Canada releases retail sales reports, while the U.S will publish Existing Home Sales. As well, the U.S releases Existing Homes and the Federal Reserve will publish the minutes of the July policy meeting.
Will USD/CAD drop below the symbolic 1.30 level? The Canadian dollar has been moving higher since Friday and could drop below 1.30 this week, for the first time since August 7. It’s been a rough August for the Canadian dollar, as the escalating trade war has dampened risk appetite and hurt the Canadian dollar, which is a minor currency. However, the announcement that the U.S and China will hold trade talks in Washington later this week have raised investor confidence and boosted the Canadian currency. If the talks show signs of progress, such as the suspension of a $16 billion tariff scheduled to take effect on August 23, then the Canadian dollar rally could continue.

U.S. crude oil prices

U.S. crude oil prices rose on Friday on the prospect of better relations between the U.S. and China.  September futures (/CL) rose 0.7% to $65.91.  Light sweet crude has been weighed down by signs of weaker demand, the Turkish currency crisis, and a stronger dollar, which helped oil futures drop 2.5% on the week.  After setting a new 52 week low on Thursday, Gold (/GC) has found some footing over the past two days and is currently trading near $1194 per troy ounce.