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Afternoon Note

Spinning Wheels

By Charles Payne, CEO & Principal Analyst
8/19/2019 1:35 PM

The market is mostly spinning its wheels after jumping out the gate on positive signals in the trade dispute and widening of 2- and 10-year yields.  This week could follow a pattern like those that  happen with jobs report release.  There is cautious optimism that will last until we hear from Jay Powell on Friday.  It’s hard not to believe the Fed will cut rates several times over the next several FOMC gatherings.  The question is how much Powell articulates policy.

This sort of wait and see approach was echoed by JP Morgan today, as the firm says wait until September before buying this market.  But also stating it will reach a new all-time high in the first half of 2020.

Mislav Metejka the firm’s chief strategist at the firm also noted:

“The yield-curve inversion that took place last week may be more of "an indicator of extreme market nervousness at present, of increasing central banks action, skewed bond ownership, and of a global search for yield, rather than a sure sign that U.S. is about to enter a recession."

Strong Dollar

The stock of the day is Estee Lauder (EL), which blew away consensus with strong sales outside the United States.  The results also underscore the hit multinational businesses are taking from the dollar being too strong.   This is something else the Federal Reserve must consider.   Estee offset the strong dollar with strong demand in skin care and makeup. 

Estee Lauder

Geographic

Revenue

Reported

Constant Currency

Skin care

$6,551

+17%

+20%

Makeup

$5,860

+4%

+7%

Fragrance

$1,802

-1%

+1%

Hair care

$584

+2%

+4%

Other

$69

+3%

+4%

                                                                                                                                                                  Sales in million USD

Product Category

Revenue

Reported

Constant Currency

Americas

$4,741

-5%

-5%

EMEA

$6,452

+15%

+18%

Asia/Pacific

$3,677

+21%

+25%

                                                                                                                                                                   Sales in million USD

Communication Services is coming on strong, as investors flock to momentum darlings, and investors eschew fears of volatility that spooked many over the last three weeks.

Note: I need to see the Dow Jones Industrial Average close the gap and finish above 26,249 before pounding the table.

 


Comments
Since the Liberals want to cause a recession next year, we and I am sure everyone else will want to get out of the market before that happens, which I believe will cause a pullback in the market. Not sure how this can be avoided.

MICHAEL B ERICKSON on 8/19/2019 1:54:20 PM
 

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