Caught in a trap.
That describes the S&P 500 right now, says Peter Schultz, chief strategist at the Winning Secret newsletter, who believes the 2,800 resistance level that the market has pushed against roughly four times since October needs a real catalyst to break. “And the one everyone’s been looking for — a trade deal with China — might be a while in coming.”
Schultz finds few reasons to buy right now, especially in a stock market that is “overextended from the December lows and is due for a real pullback — one we’re likely to see before new highs.”
Try summer for that big move down in equities, says our call of the day from DoubleLine Capital founder Jeffrey Gundlach, who told investors in a webcast on Tuesday that the “stock market was and still is in a bear market.”
‘I think they’ll go negative on a year-to-date basis, probably sometime during the second quarter, early third quarter.’ Jeffrey Gundlach, DoubleLine Capital
“I think they’ll go negative on a year-to-date basis, probably sometime during the second quarter, early third quarter. I think the Fed will react to that,” he said, according to this recap, doubling down on comments he’d made in January about “more zigzag behavior” for stocks.
“We’ve already had a pretty strong zig. I’m expecting before long a zag,” he said, calling the one-year Treasury bond the best “risk-free asset” going right now, as he bets on a recession.
But let’s balance the gloom with a bit of cheer, of which there has been a trickle this week. Here’s Baird’s chief portfolio strategist, Brian Rauscher, and his team in a note to clients Wednesday: “We continue expect any market weakness to be short-duration and shallow, and investors should be opportunistic buyers rather than sellers of the recent rally.”
While some are looking for signs of the U.S. falling apart later this year, Baird is looking for growth at the back end of 2019 and an economy normalizing once spring hits. It’s playing offense with cyclicals, FAANG stocks — the group comprising Facebook, Amazon, Apple, Netflix and Alphabet’s Google — real estate, consumer staples and traditional telecom.
“Spring in sight?” was the title of Deutsche Bank’s House View, where a team led by strategist Himanshu Porwal says the first quarter for the U.S. will be bumpy, after which the year brightens up. The House View team is sticking to a year-end S&P 500 forecast of 3,250 — a 9% gain from here, as it sees stocks as able to weather a Fed hike the team sees coming later this year. The key? A better-insulated financial sector.
We’ll close out with some more wisdom, on another topic, from Gundlach, who is among those critical of the so-called Modern Monetary Theory — using the Fed’s balance sheet to pay for social-safety-net programs — calling it a “crackpot” idea.
“It sounds good to a first-grader, ‘Hey, if the economy the economy is growing at a higher nominal rate than the yield in the bond market, then no problem.’ But what happens if the economy turns down?”
The market
There’s little enthusiasm out there, with Dow YMH9, +0.07% futures down again, and those for the S&P 500 ESH9, +0.16% and Nasdaq NQH9, +0.18% flat. Maybe we’ll get a repeat of Tuesday, where the Dow DJIA, -0.38% closed weaker, with Boeing again exerting disproportionate weight on the index, but the S&P 500 SPX, +0.30% and Nasdaq COMP, +0.44% managed modest gains.
Gold GCJ9, +0.75% and crude CLJ9, +0.95% are higher, while the dollar DXY, -0.09% is steady. The pound GBPUSD, +0.6578% is up after U.K. Prime Minister Theresa May’s Brexit deal was defeated. Next vote comes Wednesday, when the House of Commons is expected to reject a no-deal Brexit, and, if that fails, another vote will be conducted on delaying the split from the EU.
The Guardian front page, Wednesday 13 March 2019: Another huge defeat for May. And just 16 days until Brexit pic.twitter.com/fM1zuXRsA2
— The Guardian (@guardian) March 12, 2019
Europe stocks SXXP, +0.22% are going nowhere. Asia markets were largely down across the board, led by a nearly 0.9% drop for the Nikkei NIK, -0.99% .
The chart
The pound is up ahead of a vote by lawmakers in Britain, who are ready to vote on a no-deal Brexit. That is expected to be defeated. Driving gains for sterling are hopes that if that vote goes as expected, politicians will then vote Thursday to delay Brexit itself.
Our chart of the day from the Wall Street Journal’s Daily Shot shows that, indeed, fewer expect March 29 will be the true Brexit date.
The buzz
While the U.S. insists the Boeing BA, -6.15% 737 Max 8 is safe — Transportation Secretary Elaine Chao flew on one Tuesday — the nation’s pilots may not agree. Several lodged complaints about the jet, with one pilot describing an “almost criminally insufficient” flight manual. Ethiopian Airline’s CEO told CNN that the pilot had “flight-control problems,” before his plane crashed.
Meanwhile, Norwegian Air NAS, +1.64% , among the many airlines and aviation authorities slapping bans on the jet after a deadly airline crash in Ethiopia over the weekend, wants Boeing to foot the bill for lost revenue.
Rite Aid RAD, -2.02% is down after announcing a restructuring involving a CEO change and a bunch of job cuts.
Facebook FB, -0.09% reverses a ban on financial blog Zero Hedge after apparent spam-filtering miscue.
Elon Musk’s Boring Co. will build a next-generation transportation system for Las Vegas.
Sonoma County district attorney’s office says no criminal charges for PG&E PCG, -0.83% in relation to horrific wildfires in Northern California’s wine country in 2017.
Just how much is a hat trick worth? Shares of Italian football club Juventus JUVE, +16.76% are up 16% after famed Portuguese footballer Cristiano Ronaldo scored thrice to defeat Atletico Madrid in a Champions League match Tuesday.
The economy
Durable-goods orders, capital-goods orders and producer prices are headed our way, along with construction spending later.
The quote
“I do not see the difference between getting a kid into school by bribing the Building Committee, and by bribing someone else. But, apparently, the second is against the Law. So be it.” — That’s playwright David Mamet, a friend of Felicity Huffman — among those indicted for entering into a corrupt scheme to get kids into top colleges — defending the actress and saying admission policies are a “corrupt joke.”
Read: The cost of bribing your way into Yale: $1.2 million
Random reads
“Dumber than herpes”: Stormy Daniels on ex–Trump lawyer Michael Cohen
Dance kids take note: flossing, out; ‘triangle,’ in
Dazed and confused: millennials after ‘The Bachelor’ finale brought out Air Supply last night
How old does @BachelorABC think their audience is?
Who or what is Air Supply#thebachelor pic.twitter.com/6JBXTrM08q
— My Basic Roommate (@basicroommate) March 13, 2019
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