Disney (DIS) hits it out of the park. Are you really that surprised? In just 24 hours, the Disney+ streaming service signed up more than 10 million users. By tomorrow that number is sure to be at least 20 million. As a result, investors (algos) took the stock up 7.4% or $10.14 as the streaming wars kick into high gear, bringing Disney’s year-to-date performance to better than +39%.
Fed chair Jay Powell delivers his remarks to the JT Economic Committee and reveals nothing new. In fact, he confirms that we are on hold as the committee is prepared to allow the economy to digest the three cuts this year to see how it reacts. But he assures investors not to worry, that “he too will do what it takes” to keep the motor running, very Mario Draghi-ish. See my appearance on The Exchange yesterday, hosted by Becky Quick and joined by Julia Coronado
(I will confirm that the cameras do add 40 lbs, at least to me!)
And then there was the beginning of the Impeachment hearings, which added absolutely zero to the conversation about market action. News Flash: the market is not concerned about what is happening in DC on Capitol Hill. The circus taking place is sure to provide folly for the late night shows and will give both Chris Cuomo and Don Lemon something to talk about (ad nauseam).
Finally, as the market was moving higher, news hit the wires at 1:50-ish that the US/China trade deal hit another “snag.” This sent the markets immediately into negative territory, the headline indicating a “stalemate” despite all of the progress that we have been told has been made. China is apparently pushing back on IP protections, pushing back on forced technology transfer and hesitant to commit to any specific amount of agriculture purchases. They are also making the rollback of tariffs part of any deal. Yeah? So what’s the issue? Is that really a “snag?” Haven’t these been the issues all along? Phase One was supposed to deal with the easy stuff, while Phase Two and Three were supposed to attack issues in IP and tech. But, it appears now that China is once again not willing to sign Phase One knowing Phase Two and Three will get more “intimate.” Donny is not even going to consider rollbacks until he gets a real commitment out of Xi Xi.
So as the market went negative, Trump took to the airwaves disputing the report, telling us that the talks are progressing at warp speed, that China wants to make a deal; blah, blah, blah… So the algos go back into buy mode and by the end of the day The Dow added 92 points, the S&Ps tacked on 3 points while the Nasdaq and Russell gave up 4 points and 6 points respectively. All of this back and forth caused some money to find safety in treasuries, gold and utilities. (Think defensive, safety play).
Overnight, Reuters reports that Chinese Industrial Production MISSED the estimates, coming in at +4.7% vs. the 5.4% that was expected. This just gets added to the falling exports and slowing investment growth, which leads some economists to suggest that Fourth Quarter GDP growth will slow and 2020 expectations need to be revised (lower). Others will also suggest that consumer spending is slowing and to that I would say “that’s baloney.” Consumers in China just spent $38 billion in ONE day shopping on Alibaba’s Singles Day “Festival.” $38 billion in ONE day, which is more than Black Friday AND Cyber Monday combined. So no one is feeling bad for the Chinese consumer. But the weakness in the other measures would suggest that Xi Xi should be a bit more willing to make a deal… but everyone makes their own bed.
By the end of the day, Japan -0.76%, Hong Kong -0.93% (ongoing protests adding to the angst), China +0.15%, and ASX +0.55%.
European markets are churning just on either side of the unchanged line as the day gets under way. German GDP surprised the analysts, rising 0.1% vs. the expected negative 0.1%, helping that nation avoid a “technical recession.” In the meantime, the newest trade headlines (hitting the snag) continue to feed the cautiousness. In the UK, the polls are suggesting that current PM BoJo and his ruling Conservative party are in the lead over the opposition Labour Party ahead of the Dec. 12 election.
FTSE -0.47%, CAC 40 +0.04%, DAX – 0.17%, EUROSTOXX and SPAIN are both FLAT while Italy is ahead by 0.19%.
US futures are waffling, currently down small as the we await the sunrise. News that investment guru Ron Baron sees the Dow at 650,000 in 50 years borders on the ridiculous. He is currently 75 years old and would be lucky to see another 10 years. I mean, what does a 50-year prediction really mean? And then Gluskin Sheff’s Chief Economist Davey Rosenberg tells CNBC that it’s just a matter of time:
“Growth in the US will turn negative sooner than most anticipate, setting the stage for a painful pullback” and that “a recession is coming in the next 12 months.”
Well, he is right on one count: it IS just a matter of time. The economy is cyclical, we have both boom and bust cycles, which produce growth and then recession. So the only thing that is new here is that despite the recent FED action, he is confident that by this time next year, the country will be in recession…. So buckle up!
Economic data today includes PPI month/month – exp of +0.3%, ex food and energy of +0.2% and PPI year/year is expected to show +0.9% and +1.5%. Initial jobless claims of +215k and Cont Claims of +1.683 million. Unless these reports surprise on either side, do not expect any real market reaction.
The S&P continues to struggle at 3100, closing last night at 3094. The recent surge higher (after the last rate cut) appears to be tired. Any concerns over trade will surely be a reason to pause. Any confirmation that a date has been identified for a signing of Phase One will cause the algos to celebrate. I am still of the mindset that the market backs off a bit and settles into the end of the year in the 3025/3050 range.
Take good care.
Chicken Cutlets Milanese Topped with Arugula, Chopped Tomatoes and Grana Padano
This is a “simple dish,” easy to make and takes no time at all… you can also use with veal or pork cutlets – as you prefer.
For this you need:
Chicken cutlets – pounded thin, homemade Italian breadcrumbs, Arugula, Red Onion and Shaved Grana Padano Cheese, Eggs, flour.
You begin with pounded chicken cutlets. Rinse under cold water and pat dry with paper towel. Dredge the cutlet in flour, then dip in egg wash (scrambled eggs before you cook them)… then cover in the homemade Italian style breadcrumbs* and set aside.
When completed – heat up olive oil in a baking dish under the broiler… (being careful to watch as the oil will ignite if it gets too hot before you begin cooking.) Dip one side of the breaded cutlet in the hot oil and flip to the other side and broil – 3 to 4 mins. While broiling, prepare the Arugula for the finishing touch.
Mix the arugula with the chopped tomatoes and red onion – season with s&p and dress with fresh lemon juice and toss.
Flip the cutlet and broil the other side. When done remove from oven and place on center of warmed plate. Now using salad tongs place the Arugula salad on top of the cutlet top with the shaved Grana Padano and drizzle with olive oil.