13 Jun HAS THE TIDE TURNED FOR MEGA SIZE TECH?
Equities fell for a myriad of reasons. Technology stocks just posted their best six day stretch in 7 ½ years—up nearly 9%–fell about 1.5%. The reasons for the decline varied but a major catalyst were reports that Facebook was aware of privacy issues, did little about it and did not put compliance with the FTC order at the top of priorities. Other causes for the decline were trade tensions, profit concerns and potential regulation.
Speaking of profits, Morgan Stanley slashed its 2020 forecast to flat from a 5% expected gain, while reiterating its call of negative earnings growth for 2019. If this were to occur, it would be two consecutive years of flat/negative profit growth, the weakest stretch since the 2015-16 oil induced recession.
Morgan Stanley stated the change in their outlook was the result of trade but companies that relies upon domestic sales should do well…aka value.
Speaking of which, Bloomberg wrote yesterday based upon several generally accepted metrics the disparity between growth and value is now at an all-time high. I am ardent believer monies will gravitate to sectors that offer the greatest potential reward with lowest amount of potential risk. The question at hand is when. What will be the catalyst?
Unfortunately only history will answer the above questions.
What will happen today?
Last night the foreign markets were mixed. London was up 0.25%, Paris up 0.06% and Frankfurt up 0.61%. China was up 0.05%, Japan down 0.46% and Hang Sang down 0.05%.
The Dow should open flat. Oil is surging on reports that several shipping attacks have occurred in the Gulf of Oman, the entrance way to the Straight of Hormuz. The 10-year is unchanged at 2.12%.