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Morning Commentary

FTC DENTS BIG TECH

By Charles Payne, CEO & Principal Analyst
2/12/2020 9:36 AM

It was an intriguing day for the Dow Industrial Average (DJIA), which essentially closed unchanged, following the trajectory of Boeing (BA) after it popped at the start of trading, only to stumble on news of zero aircraft orders and only 13 deliveries last month. Microsoft (MSFT) also pressured the Big Board as big Tech names were sideswiped by the Federal Trade Commission (FTC), which announced an investigation of up to 400 smaller rivals over the past ten years, including:

It’s a compelling move during an election year, where many candidates have promised to undo big acquisitions, such as Facebook’s (FB) purchase of Instagram. Imagine trying to unwind smaller deals from a decade ago. That would be a nightmare. There is no doubt the sharks have been circling these names for some time, but I have mostly felt it was all a part of international shakedown efforts, with governments grabbing big chunks of cash with antitrust action.

S&P 500 Index

+0.17%

 

Communication Services (XLC)

 

-0.11%

Consumer Discretionary (XLY)

+0.79%

 

Consumer Staples (XLP)

 

-0.37%

Energy (XLE)

+1.12%

 

Financials (XLF)

+0.35%

 

Health Care (XLV)

+0.60%

 

Industrials (XLI)

+0.38%

 

Materials (XLB)

+0.55%

 

Real Estate (XLRE)

+1.21%

 

Technology (XLK)

 

-0.34%

Utilities (XLU)

+0.36%

 

Broad Market Pulse

S&P 500

The Dow Jones is only thirty stocks, and nowhere near a representative of the overall stock market as it’s missing entire sectors. The S&P 500, on the other hand, is wider and more encompassing. Yesterday, the index finished at a record high, along with the NASDAQ Composite.

NYSE

NASDAQ

Workers on the Move

The so-called JOLTs report saw a sharp decline in job openings, but the 6.42 million is still higher than the 5.9 million Americans currently unemployed. Moreover, we are seeing a steady movement in ‘quits,’ which are higher now than a year ago at 3.49 million. I suspect this will translate into higher wage growth.

Portfolio Approach        

We added two positions in our model portfolio and edged closer to perhaps taking profits on two additional long ideas.  If you are not currently a subscriber to Hotline service, contact your account representative or email research@wstreet.com to get started today.

 


Comments
In the unemployment section: what's the definition of "quits"?

William Brown on 2/12/2020 10:30:20 AM
people voluntarily leaving job - it's a subcategory of separations 

Charles Payne on 2/12/2020 10:36:23 AM
The FTC can't unwind 10yr old small acquisitions. They can only use this as a trend of market predatory practices. Corporations will typically "incorporate" acquired companies into existing divisions.
Trading on this news is not a good idea at this time.

Ken Knight on 2/17/2020 5:17:16 PM
 

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