Table of Contents
Market Thoughts
As written past few days, I was Bullish Into Earnings but expect this to be a Sold-To-You Rally.
The S&P 500 closed up 3% today and is now up 27% from the March 23 bottom – 18% from all-time-highs. The Russell is 26.2% lower than February 5th versus -15.4% for the S&P 500.
The Russell looks nothing like the S&P 500 either in terms of sector concentrations or recent performance, and the first point explains the second. Not only does it obviously lack super-cap exposure, but its real leverage is to high yield spreads as a proxy for access to/cost of capital. With Federal Reserve interventions in that space, US small caps should do fine. But the fundamental drivers in this slice of the US equity market look nothing like large caps. Datatrek
With that, have a look at the inflows into two very popular HY + IG etfs:
$HYG – a $16.3B ETF – has 38% of shares outstanding, SHORT. https://t.co/rNdJFfoNf1
— Samantha LaDuc (@SamanthaLaDuc) April 15, 2020
That $LQD move was serious flow… https://t.co/AjhF9O3q7G
— Samantha LaDuc (@SamanthaLaDuc) April 15, 2020
As I highlighted this morning in my live trading room, and past 3 weeks: This market wants to go higher, even if in snake-like fashion. With that, I continue to check internals and they continue to hold firm. With VIX option expiration Wednesday, I expected the grind lower in VIX into Wednesday and for choppy SPX action into Friday monthly options expiration, with potential for $2800 pin after tag of $2872 SPX. Despite Oil fading – as discussed last week and posted for clients this weekend, and despite financials selling off after EPS releases this morning, and despite BA falling less than expected after announcing far fewer actual plane deliveries against actual very large order cancellations… market grinded higher to close above my intraday SPX $2836 price target. With the upcoming economic releases this week, market will likely stay range-bound until after OpEx this Friday..
Upcoming Calendar
Streaming here: Economic Calendar
Wednesday:
12:30 USD US Retail Sales (Control Group Mar p0.0%)
13:15 USD US Industrial Production
14:00 CAD BoC Rate Decision/Statement (e0.25% hold)
14:30 WTI EIA Oil Stocks
15:15 CAD BoC Press Conference
19:00 USD US Fed Beige Book
Thursday:
04:30 JPY Japan All Industry Activity Index
06:00 EUR Germany CPI (YoY p1.3%)
09:00 EUR Eurozone Industrial Production
12:30 USD US Building Permits/Housing Starts
12:30 USD Philly Fed Manuf Survey
12:30 USD Initial Jobless Claims (p6.6m)
Friday:
2-Day IMF meeting starts – can move USD
02:00 CNY China 19Q1 GDP (QoQ e-10% p1.5%)
04:30 JPY Japan Industrial Production
06:00 EUR Germany PPI
09:00 EUR Eurozone CPI
Some Recommended Longs:
- JNJ – recommended last month. This morning they announced earnings and a 6.3% dividend increase to $1.01 from $0.95 – this would be the 58th year in a row of dividend hikes. Crowd loved it!
- SHOP – recommended at $425 with $438.50, $476 and $500 price targets. All 3 were hit today.
- GME – recommended this one last Tuesday at $3.40, tagged $6.47 in 5 trading days. Freak of nature.
- AMZN – recommended once >$1957 on 2bar reversal on Wkly. It is now up 19% in the last six sessions, as majority of other retailers in the nation are closed and failing.
- TSLA – recommended April 7th with $650 PT. It tagged $741 today and is up 56% since April 2. The biggest freak of nature.
- NFLX – recommended above $360. It tagged almost $418 today. Freak of nature.
- AMD and NVDA – recommended as momentum chases. Both up double digits in past week.
- Gold/Silver/Miners – 4th straight day of highs. One solid reason (there are several) would be that US deficit is estimated to reach $3.8T this year with debt hitting 100% of GDP. As such, inflation expectation creep higher while real negative rates creep lower.
Gold Futures also continue to trade at a premium to spot in what’s likely a sign that physical holders don’t want to sell because of the difficulty in delivering right now. Ashraf Laidi
Some Recommended Shorts:
Crude: Short-term pain for long-term gain… I wrote about this very thing on Saturday for clients: Timing the Next Oil Trade and since then US crude has lost for the 3rd straight session to hit $20.30.
https://twitter.com/RobertMacMinn/status/1250177658803105793?s=20
Stocks of Interest
Quebec allows gold mines to reopen April 15: AEM, ELD, IAMgold, NEM, RGLD, Yamana.
“Six months from now, there will be huge, if not unprecedented, levels of wholesale supply in the market,”$KMX $CVNA $F $GM $TMhttps://t.co/dy93Z2kTWU
— Samantha LaDuc (@SamanthaLaDuc) April 14, 2020
Macro Matters
How 2020 could be the “shadow banking” crisis…
Banks are safer today, but tighter regulations have just squeezed risks into the bigger, more opaque world of asset managers, hedge funds, private equity, direct lenders and mortgage trusts. My big read on how 2020 could be the "shadow banking" crisis. https://t.co/0Bcv36ErZ7 pic.twitter.com/w3RdZHjwL4
— Robin Wigglesworth (@RobinWigg) April 13, 2020
New record in leveraged loan downgrades from S&P https://t.co/4fcQRsracE pic.twitter.com/dJGiAj3rY6
— Andrew Thrasher, CMT (@AndrewThrasher) April 13, 2020
Great Read/Listen
How coronavirus almost brought down the global financial system | Adam Tooze https://t.co/82eJPUJo6G
— Samantha LaDuc (@SamanthaLaDuc) April 15, 2020
One of my favorite panic with friends yet! @SamanthaLaDuc and @howardlindzon. Describes the current crisis as “Life preservation meets capital preservation” and credits ‘Mom Radar’ for her early market top call. Highly recommend! https://t.co/9gqb0Rn9KS
— Sam Stein (@Sam_Stein89) April 14, 2020
