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Another Day, Another Record Set? Market Benchmarks on Track to Rally Again?

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September 12, 2017

(Tuesday Market Open) Technology might lead the way to help market benchmarks test records today as the relief rally that started yesterday could continue ahead of a much-hyped Apple reveal event later.

In a sharp reversal that recovered last week’s losses and then some, the markets appeared to soar out of nowhere Monday and lock in the biggest one-day gains in months. The S&P 500 tapped a fresh peak as every sector turned to the upside. The Dow Jones Industrials tacked on 259 points, putting it back within toppling record highs again with 28 of the 30 sectors advancing, and the Nasdaq Composite came within three points of matching its crest.

In the early going, it looked like more of the same as investors’ geopolitical fears about North Korea appear to have subsided. All three benchmarks were in record territory at the open.

As we’ve said before, the market always tells you what it thinks, and the gains that are being logged now seem to indicate that it thinks the threat of a war with North Korea has subsided, at least in the near term.

For now, investors trade what is in front of them, and that appears to be technology ahead of Apple’s (AAPL) annual September event this afternoon. The keynote presentation is scheduled to begin at 1 p.m. ET.

Not surprisingly, those so-called haven assets like gold retreated yesterday, falling nearly 1.5% and on a down slope again today. The VIX, Wall Street’s fear gauge, also fell back to the 10 level again, losing 11.45%, and is retreating again today. With that, 10-year Treasury yields are climbing as their prices are declining—remember, the two move in opposite directions—with rates hovering at 2.155% after testing lows of 2.017% last week.

What also might be worth taking note of is the Job Openings and Labor Turnover Survey out later this morning. Known as JOLTS, it will be interesting to see how many job openings are out there and if it might precede any kind of wage pressure in the labor market. Rising wages typically lead to higher inflation, which the Federal Reserve is closely watching.

Speaking of the Fed, the CME FedWatch tool’s probabilities of a December hike has risen to almost 47%, up 15 percentage points over the past two days. 

10 year yield

FIGURE 1: TREASURY YIELDS CLIMB.

Bond prices are falling as market anxiety retreats, pushing yields back up in the early going. Data sources: CME Group, Standard & Poor’s. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Consumers Are Spending: Consumer credit, a key measure of consumer confidence and, of course, spending, climbed $18.5 billion in July to $3.75 trillion, up by 5.9%, according to the Federal Reserve. Non-revolving credit grew at a 6.9% annual clip, higher by $15.8 billion to $2.76 trillion. Revolving credit, largely comprised of credit card debt, rose by $2.6 billion, or 3.2%, to $1 trillion.

“Revolving credit remains just below its pre-recession peak while non-revolving credit continues to set a record each month,” according to Wells Fargo. “With consumer confidence remaining solid, there is a good chance that revolving credit will reach a new high in early 2018.”

Look Ma, No Hands! Transportation Secretary Elaine Chao is expected to unveil streamlined safety guidelines for self-driving cars today, according to Reuters.

Her remarks, scheduled at a testing facility at the University of Michigan, are expected to give automakers a green light to putting self-driving vehicles on the streets without a regulatory OK. Last week the House gave the nod to legislation allowing carmakers to annually test up to 100,000 self-driving autos on roads.

The Big Apple Reveal: Apple’s Big Event, scheduled for later today, might have few surprises. Among the features expected to be announced today: encryption designed to make it harder for anyone, including Apple, to grab information from a phone. That’s bad news for the bad guys stealing phones, but might also “mark another escalation in Apple’s tensions with law enforcement officials and customs agents,” according to Wired

Good Trading,
JJ
@TDAJJKinahan

Economic calenda

FIGURE 2: THIS WEEK'S ECONOMIC CALENDAR

Source: Briefing.com

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