Industry Group revenues from China

Grid via Zerohedge. So if the largest amount of revenue for SPX companies comes from Chip stocks then it would make sense to follow the SOX, Semi conductor Index as A proxy for any Demand issues out of China.The SOX did just touch a 52 week high in Friday so up to this point no panic yet,But I will continue to watch this for a quick look at chip deamnd from China

A few things:

Spoos, Pit only charts watching 3352-53 area to see if can hold,small gap there.

Risk Off

Spot markets ; Gold +1.5%,Silver +2.5%,Platinum 2.3% palladium +2.6%, 30 year yields down 5 bps ,trading below 2% for first time since September,Next up 1.9% 30+ year lows

From Bank of America survey

Not surprisingly, participants in BofA’s closely-watched Global Fund Manager survey turned less bullish in February compared to last month thanks (in part anyway) to the coronavirus. The title of the new edition is “New highs, fewer bulls”.

The bank’s Michael Hartnett describes a “deflation theme” characterized by a “combo of tepid macro, COVID-19 virus [and] oil’s plunge offset by QE-forever consensus”. The result is what he calls “full capitulation into deflation assets”

The US election still tops the “tail risks” list, followed by a bursting of the bond bubble. Coronavirus came in a “disappointing” third place.But there’s no need to worry, apparently. Because through it all, respondents still see room for stocks to run. In fact, survey participants see upside to 3,470 on the S&P.

Deflation trades? is that why precious metals are Bid? The Stock market is the teflon Don,Nothing Negative will stick, there always appears to be greener pastures to every negative story. We all Know one day there won’t be

We don't need Apple!

yesterday evenings Apple announcement regarding the likelihood of Slowdown in sales in Q1 caused almost 1 1% drop in Nasdaq futures.Move clock ahead to today and Nasdaq Little changes as the Fang Index +1.3% and Apple down 2.3% Below the White line is Fang,yellow apple Nothing able to dent this rally it appears

Stocks were trying to claw back Losses but now taking a leg lower due to these headlines regarding U.S. sanction on Roseneft( Russian Energy Company):

Senior US Officials: Subsidiary Rosneft trading SA has propped up the Venezuelan oil sector, actively attempted to evade US sanctions.

Senior US Officials: The US gives a 90-day wind-down period for parties to cease engagements with Rosneft trading SA.

US says move to sanction Rosneft is the first in a campaign and there will be further steps

Gold,Silver platinum and palladium all higher(New ATH today for Pall) be aware that Dolal ris +.3% all due to drop in Euro but still take notice that Some Commostiites bid in face of Stronger dollar

Morning 2-18

Risk Off Theme Due to this Apple headline:


WSJ: Apple said they won’t meet their rev f/c due to the coronavirus outbreak which has limited iPhone prod for worldwide sales & capped Chinese demand; outside of China, demand for products has been strong & in-line with expectations https://on.wsj.com/39LQ99w Apple Unlikely to be the last Firm to Lower guidance due to Corona Virus)


More apple … Apple: Investor update on quarterly guidance- Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors….The first is that worldwide iPhone supply will be temporarily constrained….The second is that demand for our products within China has been affected.(apple.com)

These headlines adding to the negative sentiment:


RTRS Sources: US administration is considering changing US regs to allow it block chip shipments to Huawei; the proposal has been drafted but approval is not certain
US weighs new moves to limit China access to US chip tech https://on.wsj.com/39KrPEX

RTRS HSBC: FY adj pretax $22.2b vs $21.77b cons; FY adj rev $55.41b; Q4 interim dividend $0.21/shr; plan to suspend buy backs in 2020 & 2021; aim to reduce US branch network by around 30%, expected to incur costs of ~$6b & $1.2b in asset disposal costs
German Feb ZEW economic sentiment 8.7 vs 21.5 expected and 26.7 previously so a sharp fall on the month although the Jan rebound was very strong at the time (IFR)
WMT “Holiday sales lower than forecast and Guidance was short of Analysts’ expectations (BBG)


‘Every scenario on the table’ in China virus outbreak: WHO’s Tedros- “The data also appear to show a decline in new cases,” he told reporters. “This trend must be interpreted very cautiously. Trends can change as new populations are affected. “It’s too early to tell if this reported decline will continue. Every scenario is still on the table,” he said.


https://www.reuters.com/article/us-china-health-who-evolution/every-scenario-on-the-table-in-china-virus-outbreak-whos-tedros-idUSKBN20B1OF

Markets:
The peak has Not been reached, yet even though Business, Gov’t and CEO’s would like to declare it so. The longer We go with a peak in the Virus the larger the subtraction from Expected Global GDP, these are measures in Months not weeks. End of February was initial call for peak in virus and business getting back to something resembling Normal, if that Changes to Mid or late March expect more cuts to GDP.
Apple-3%, Nasdaq -.5%, Spoos -.4%, Stoxx 50-.5% 30 year yields dipped below 2% lowest since September. A quite active weekend for Bitcoin down 6.75% yesterday,Euro trading down to 1.08 level approaching 3 year lows

Stocks

New 52 week highs today

Chipotle Home Depot Lowe’s TJX Costco Hormel Coke Monster Bev Pepsico Ingersoll-Rand Fastenal Aon MSCI S&P Global
Adobe AMD Intuit NVIDIA MasterCard PayPal Visa
Duke Energy Dominion

Kudlow on the Wires saying trump wants 10% Middle class tax cut and thinking of making some of the previous tax cuts permanent.Plan likelt to be released in September,right Before Election.,This has lifted spoos a bit

Central bank rate Moves (Central bank news.com)

FEBRUARY 2020

NET CHANGE: -175 basis points
TOTAL RATE CUTS: 200 basis points
RATE CUTS: Iceland, Thailand, Brazil, Honduras, Philippines, Russia, Belarus and Mexico
TOTAL RATE RISES: 25 basis points
RATE RISES: Czech Republic

JANUARY 2020

NET CHANGE: -1,125 basis points
TOTAL RATE CUTS: 1,125 basis points
RATE CUTS: Argentina (3 times), Macedonia, Turkey, South Africa, Argentina, Malaysia, Kenya, Lesotho, Sri Lanka, Ukraine and Azerbaijan
TOTAL RATE RISES: 0 basis points
RATE RISES: None

I realize most of these Countries are not the Engines of World Economic growth but they are a part of the machine.19 central Banks have cut rates so far this year, this appears to be A World trying to reflate then one with Rapid growth. The virus will only force more central bank rate cuts not less at least for the next Quarter or two.This does not include the Fiscal policy ,lower taxes and Fees and Central bank measures cheap loan liquidity injections that China is implementing to soften the pain and provide plenty stimulus to goose economy .Not a good sign or confidence in world economy when most central banks have an easing bias before the impact of the Virus is truly known or felt. Easy monetary policy=Good for stocks

Trimming repo Operations

(Bloomberg) — About 24 hours ago, we saw overnight equity weakness devolve into what was basically a nothing day. Could the opposite be in play today as punters trim risk to avoid a shock over the long weekend? It’s entirely possible, because after all the S&P 500 has fallen on every Friday this year bar one (ironically enough, it was the Friday before the MLK holiday last month.) Yesterday afternoon’s announcement that the Fed is trimming the size of its repo operations twice over the next month came as something of a surprise, but it’s probably not a shock. While some of the recent operations have been over-subscribed, in the grand scheme of things the uptake of the repo facilities have been falling recently; the amount of repos on the Fed balance sheet has fallen by some $90 billion this year as bill purchases take over the responsibility of providing reserves to the system. The level of bank reserves ($1.69 trillion) is now the highest in nearly a year, so all in all the Fed’s operations are working as intended. The upshot, then, is that over the next couple of months speculation will start to mount as to how and when the Fed will talk about dialing down or ending the bill purchases. If you are skeptical that these operations have any influence on financial markets, then that will be no big deal. However, if you view them as QE (or think that everyone else views them as QE!), then there may well be a few interesting conversations to be had come March and April. To contact the reporter on this story: Cameron Crise in New York at ccrise6@bloomberg.net

Morning 2-14

Virus News:
• China reported 5000 new cases in Hubei after confirming close to 15K
• WHO said a Surge in diagnoses didn’t necessarily indicate a spike in Infections( good enough reason for stocks to push higher)
Still not much Clarity on Virus situation but what markets can say with Certainty is that Central banks are here to provide Stimulus by lowering rates cheap Loans and QE


Economic News:
The Eurozone economy grew only 0.1 percent in the fourth quarter of 2019, below 0.3 percent expansion reported in the previous three-month period, a second estimate showed. That was the weakest pace of growth since a 0.4 percent contraction in the first quarter of 2013. Among the bloc’s largest economies, German GDP stalled, while France and Italy contracted 0.1 and 0.4 percent respectively. On the other hand, Spain’s economy expanded 0.5 percent. (Trading Economics This is pre Virus Impact, Not good for Eurozone so Likely More Easing from ECB or Finally some type of Fiscal Boost thus the weakness in Euro. Mexico Cut rates by 25bps joining three other emerging market to cut rates this year.


Earnings
• Nvidia Much better than expected stock +6% All Chip makers bid
• Roku, Expedia also better earning they are trading higher premarket open


Stocks, bonds, bunds gold all a bit higher Jpy steady as long as no tape bombs regarding virus Stocks likely to bleed higher, Bonds Playing off expectations of Central bank easing 52% chance of June rate hike. Retails sales missed on the all-important control group per BBG “Average growth in US retail sales control group for the past 6 months: 0%” this will only add to rate cut probability