Fed-Treasury Say More Stimulus Needed

Tuesday saw a gap higher and early rally before markets ground sideways from 10:30 through the midafternoon.  A late rally took stocks out near the highs.  Once again the QQQ and SPY both printed new all-time high closes and the DIA managed to print a bullish engulfing signal.  On the day, QQQ gained 1.70%, SPY gained 0.94%, and DIA gained 0.91%.  The VXX gained a bit to 27.27 and T2122 also rose a little to 60.39 (still in mid-range).  10-year bond yields fell to 0.677% and Oil (WTI) rose slightly to $42.88/barrel.

During the day Treasury Sec. Mnuchin told Congress that the US economy urgently needs additional fiscal stimulus.  He did not offer a new proposal on the matter but did say he’d be calling Speaker of the House Pelosi after being prompted to do so by one of the Democratic committee members.  During his testimony, he specifically said that the Services and Travel industries, as well as small businesses, need a fresh round of funds.  Fed Speaker Brainard reiterated the same thing in his speech, adding that FOMC help will continue to be needed for years.

In a related story, White House Chief of Staff Meadows told reporters that the primary stumbling block in negotiations is emergency funding for states and municipalities.  As is normal in partisan negotiators, he went on to say that the starting point for resumed negotiations sholuld not be the Democrat $3 trillion plan from May, nor the Democrat $2 trillion offer of 5 weeks ago, nor the Republican $1 trillion offer from 5 weeks ago. Instead, he thinks they should start from a $500 billion level to negotiate.

On the virus front, in the US, the numbers show we now have 6,258,028 confirmed cases and 188,907 deaths.  New cases are back to the elevated flattened curve average of 42,000, but deaths remain above the 7-day average at 1,164.  On Tuesday a panel of NIH experts said that just as with hydroxychloroquine, the data does not support recommending the recently touted treatment of convalescent plasma therapy.  In separate news, while the CDC guidelines say a person can return to work 10 days after the onset of symptoms, a new study out of Britain suggests patients need to wait at least a month before going back to public exposure and that symptoms can last for many months.

Globally, the numbers rose to 25,935,511 confirmed cases and 861,900 deaths.  Global GDP numbers continue to trickle in showing what we all knew, Q2 was a bad quarter (how bad depends on the expectation-lowering done ahead of time) with Australia showing a 7% decline for the quarter and an annual GDP decline of 6.3%. A study out of Iceland shows that coronavirus antibodies stay in the body at least 4 months. This finding contradicts smaller studies that showed the antibodies fade more quickly.  It also does not address the cases of reinfection found recently…but does show we are gaining knowledge on the virus all the time now that we are studying it. 

Overnight, Asian markets were mixed, but mostly modestly green.  Shanghai, Hong Kong, and Taiwan were the only red and even they posted modest loses.  Europe is even more bullish with the big 3 bourses up sharply at mid-day.  The FTSE is up 1.71%, while the DAX and CAC are both up 2.35%.  The only red is in Norway and like Asia, that is only a minor loss.  In the US, at 7:30 am, the futures are pointing to another gap-up open with the large caps implying a 0.65% higher open and the QQQ implying a 1% higher open.   

The only major economic news for Wednesday is August ADP Nonfarm Employment (8:15 am), July Factory Orders (10 am), Crude Oil Inventories (10:30 am) and a trio of Fed speakers (Williams at 10 am, Mester at noon, and Kashkari at 2pm).  The only major earnings reports on the day are M before the open and PVH and SAIC after the close.

Like the Honeybadger, the bulls simply don't give a damn, especially about extension from averages. The run continues and looks to be back in play for the open today. So, as tempting as it might be, don't predict reversals...follow the trend. And remember not to chase moves you have missed, because there will be another one any minute.  Stick with your rules and consistently lock-in profits and reduce your risk. 

Ed

The Daily Swing Trade Ideas for today: TNA, PZZA, MOS, FB, AMD, MAS, LB, LEN, URI. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick... I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%.... this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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