Morning Report: S&P 500 enters correction territory

Vital Statistics:

Last Change
S&P futures 2648 4.5
Eurostoxx index 355.05 -0.48
Oil (WTI) 66.58 -0.46
10 year government bond yield 3.11%
30 year fixed rate mortgage 4.93%

Stocks are slightly higher this morning ahead of a big earnings day. Bonds and MBS are down small.

General Electric disappointed and cut its dividend to a nominal amount. Facebook reports after the close.

Stocks got kicked in the teeth again yesterday, with a 100 point intraday reversal in the S&P 500. Selling climaxed right around 3:30 before recovering some of the losses into the close. The S&P is officially in a correction, which is defined as a 10% retracement from the high. Tech was thrown overboard and investors are beginning to hide in consumer staples. Bonds largely ignored the action in stocks, with the 10 year stuck in a tight range right around 3.08%.

Personal Income rose 0.2% in September, which came in below consensus. Personal spending was strong at 0.4%, and the savings rate fell to the lowest level this year. Inflation remained tame however, with the PCE headline and core readings at 2.0%, spot on the Fed’s target. The December Fed Funds futures are beginning to up the probability that the Fed does nothing in its final meeting of the year. Between a global growth slowdown (Europe’s GDP numbers were terrible this morning), trade fears, and controlled inflation the Fed does have the leeway to take a wait and see approach in December.

savings rate

JP Morgan was secretly prevented from growing by the Obama administration as a penance for sins during the housing bubble. The Obama Administration wouldn’t let them open any new branches in new states in a penalty that went back to 2012. The fascinating part was that it wasn’t disclosed to the markets. Surely that info was relevant to stockholders. Was Dimon hiding info from the market? Or did the Obama Admin not want people to know he was imposing double-secret probation on certain banks? Regardless, the Trump OCC has reversed the decision and JP Morgan is now free to add branches subject to the 10% deposit cap.

11 Responses

    • Definitely, that was worth a read.

      The parties are changing alliances of interests, of course. When I was graduated from HS the Rs represented small biz, big biz, African-Americans, and almost no one in the South. The Ds represented Big Labor, ethnic northern urban pockets, and Dixiecrats. Farmers in the midwest split their affiliation based on Ag policy, which both parties courted. The northwest was reliably R. Cal was majority R.

      Because Ds ran the crooked urban politics of Boston, Chicago, Jersey City, and other Mafia infested areas the Rs were able to latch onto the “clean government” label in many places, especially NJ and IL.

      The alliances keep changing and they are always seemingly made of strange bedfellows – see this article; imagine also the “commonalities” between the former Dixiecrats, the religious fundamentalists, and everyone else who is still a R.

      On another note:

      https://www.nationalreview.com/2018/10/pittsburgh-synagogue-massacre-not-federal-case/

      I agree on both premises.

      Crimes motivated by “hate” should not be differentiated from crimes motivated by any mens rea. It’s just politicizing crime to do so.

      Federalizing an apparently intra-state mass murder because the killer’s gun was manufactured in CT is an unnecessary stretch of the commerce clause.

      I have no doubt told the story of my federal court appointed defense of a felon accused of possessing a gun that had been in commerce.

      Liked by 1 person

      • That one was great. That’s where you showed it was a knock off, not an actual Colt?

        Like

        • Yes. But I lost because the govt moved to reopen and the Judge let them, which was unusual but discretionary. Than they got a one day continuance while they brought down a witness from Colt to inspect the gun. And then he testified that it was indeed a knock-off, but that he could tell it was made in Mexico. I had no way to counter that, as the judge was not going to let me have a continuance to get my own expert who would have to be approved for court appointment and that paperwork would have to go through DC. Also, there was a good chance the Colt employee was telling the truth. There was that.

          Like

    • ““I think most voters were pretty happy with him. There wasn’t a specific vote or issue where we could get up in our representative’s face or have a sit-in in his office,” Bonthius says.”

      The disappointment is palpable. How else are you going to meet chicks without a good sit in?

      Liked by 1 person

  1. Liked by 1 person

    • “CNBC …learned about the “scheme” from journalists who had been approached by a woman alleging that she had been offered $20,000 by Burkman “to make accusations of sexual misconduct and workplace harassment against Robert Mueller.”

      We are supposed to believe her story that she was offered cash. To lie. Right?

      Liked by 1 person

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