01 Sep “PARTY LIKE IT IS 1999”
The comparisons back to 2000 are increasing daily. A major difference between today and yesterday is the massive concentration of wealth in just a few names. The pressure to own these names are intense, names that are entirely dominating the indices. As noted yesterday and as per CNBC 20 of the 30 Dow Jones stocks are still negative for the year, eight of which are still down between 25% and 40%.
Yesterday the markets were bifurcated as the vast majority of companies declined but several mega sized NASDAQ issues continued their relentless advance. Oil advanced nominally as Goldman raised their immediate and intermediate term outlook. Goldman is now forecasting $57.50 oil in the second quarter.
There is rising optimism a vaccine will be available “shortly,” albeit I am certain there will be great discussion regarding the shorten approval process.
JP Morgan commented yesterday the markets should position themselves for rising odds of another Trump presidency. JP Morgan referenced RealClear Politics data that if the perception of protests turns from peaceful to violent, there could be a 5-10-point shift to Trump. JP Morgan also referenced several polls stating that many are not truthful when asked about their preference fearing backlash if one supports the President.
Speaking of politics and possible impact on the markets, NJ governor Murphy is “very seriously mulling” a tax on high volume trades. Murphy is perhaps proposing that NJ will charge a quarter of a cent per financial transaction processed in NJ. The tax would be on transactions made via northern NJ server farms in volumes of 10,000 or more. There are reportedly “billions of financial transactions in NJ.
Wow! Will there be a migration out of NJ? Will New York follow New Jersey? As noted several months ago there were several Democratic Presidential Candidates that were advocating a security transaction tax of up to 0.25%. These proposals were not adopted by the Democratic Party but I think it is significant that NJ is seeking ways to plug their deficit.
What will happen today?
Last night the foreign markets were up. London was down 1.26%, Paris up 0.32%, and Frankfurt up 0.59%. China was up 0.44%, Japan down 0.01% and Hang Sang up 0.03%.
The Dow should open nominally higher as Chines manufacturing data indicated exports are underpinning a recovery. The dollar fell and oil advanced. The 10-year is down 3/32 to yield 0.72%.