The end of the first quarter is being met a few celebratory fireworks, even if it has felt like a marathon to the finish line.
The S&P 500 set to end the first three months of the year with a gain of over 12%, which would mark the best one-quarter percentage gain since third quarter of 2009, according to Dow Jones Market Data. Other major equity indexes also showed some impressive gains.
And trade talk looks set to add some sparkle to last day of the quarter and week after Treasury Secretary Steven Mnuchin, who issued some upbeat comments about U.S.-China talks concluded on Friday. The Shanghai Composite soared on Friday, with a gain of over 3%.
.@USTradeRep and I concluded constructive trade talks in Beijing. I look forward to welcoming China’s Vice Premier Liu He to continue these important discussions in Washington next week. #USEmbassyChina pic.twitter.com/ikfcDZ10IL
— Steven Mnuchin (@stevenmnuchin1) March 29, 2019
Also generating excitement, Wall Street will get a much-anticipated IPO via Lyft, though some are cautious over perhaps too much fanfare over the ride-sharing group. “Snap had a similar pop higher in its first weeks of trading before falling flat on its face,” CMC’s Michael Hewson told clients in a note. More on Lyft in the buzz.
Risk is the theme of our chart of the day, from Notes from the Rabbit Hole blogger Gary Tanashian, who sees a potential warning for S&P 500 investors via a dramatic slide for palladium prices. Thursday’s session saw the June palladium futures contract tumble nearly $112 an ounce for the biggest dollar decline in records dating back to 1984.
Notes from the Rabbit Hole
“A pop in the palladium bubble means something, just like the silver pop meant something in Q1 2011,” said Tanashian, who cautioned that the slump in the white precious metal was “emblematic of the blow out of the last gasp of the commodity bubble and inflation trade of the time.”
“Palladium on the other hand, has gone more in correlation with the U.S. economy and stock market. If you believe that the daily chart above is the first shoe dropping in the palladium bubble then you are very much on guard about the S&P 500, says the chart below,” he writes.
Notes from the Rabbit Hole
In the above chart, he explains, that the dashed, vertical lines represent “cracks in palladium” and “they show that each time (2001 and 2008) palladium cracked just as SPX was about to begin vicious downtrends after a year or more of top-making,” he said.
And of course, he notes that the stock index has been making a “potential top for a year now.” Tanashian does recognize that the move could be more coincidence than market-timing signal, but said the relationship in the moves between the S&P 500 and palladium are worth paying attention to. Check out the blog for his full thoughts, where he also looks at what the palladium/gold ratio is saying right now.
Read: ‘Volatility cavalry’ is coming for the stock market, other assets, according to this chart
The market
Dow US:YMH9 S&P 500 US:ESH9 and Nasdaq US:NQH9 futures are climbing. Thursday’s session was a positive one for the Nasdaq COMP, +0.34% Dow DJIA, +0.36% and S&P 500 SPX, +0.36% More coverage in Market Snapshot.
The dollar DXY, -0.08% is up, while gold US:GCU8 is steady and crude US:CLU8 is climbing.
The Turkish lira USDTRY, +1.7312% is down another 1% ahead of a weekend election after a tough week. “The [dollar-lira pair] trade is now looking increasingly hard to defend. Data yesterday showed Turkey has used up a third of its FX reserves in an attempt to defend its currency,” Neil Wilson, chief market analyst for Markets.com, told clients.
Opinion: Six reasons why the dollar may weaken, and 12 ways to profit from it
The pan-European stock benchmark SXXP, +0.44% was also in the green. Asian equities rose across the board, led by an almost 3.2% gain for the Shanghai Composite SHCOMP, +3.20% on trade-talk optimism.
The call of the day
There’s much more ado about bond yields in our call of the day from the fixed-income team at HSBC Global Research, which has taken a “hatchet to U.S. Treasury yields,” in their outlooks.
From forecasts of 2.5% made in September, HSBC has cut their 10-year Treasury yield forecasts to 2.10% for end-2019 and end-2020. “What appears to be an end to Fed tightening and a corresponding shift in market expectations toward our ‘low for longer’ rate view have changed the tail risks in our long-term yield scenario analysis,” said Steven Major, global head of fixed income research.
Major and the team note that the market is now pricing in lower probabilities of higher interest rates in 2020, and replacing that with expectations for lower rates. They see a pause this year before two interest-rate cuts next year. “However, the risk is that the cuts come earlier, or even if it is net year, we should expect the bond market to price it in beforehand,” said Major and the team.
The buzz
All eyes on Lyft LYFT, +0.00% which will make its debut on the Nasdaq at $72 a share on Friday. That price puts it at the top of a range it had already increased, valuing the company at $24 billion. Meet the drivers who could cash in on the IPOs. As for investors, Lyft marks the unofficial opening of the IPO casino.
BlackBerry BB, +1.37% and CarMax KMX, -0.25% were expected to release quarterly results on Friday.
AstraZeneca AZN, -6.68% AZN, +0.77% will pay Japan’s Daiichi Sankyo 4568, +15.91% up to $6.9 billion for partial rights to a next-generation cancer treatment.
Nestlé NSRGY, -0.07% is reportedly facing a lawsuit that claims it filled its Poland Spring water bottles in the U.S. from groundwater supply, which means consumers from eight different states can pursue their own legal action from company.
Embattled Prime Minister Theresa May could be looking at yet another defeat Friday as she tries to get a section of her twice-rejected deal through Britain’s parliament. March 29 was intended to be the deadline for the U.K.’s exit from the European Union, but protracted political wrangling over terms has made that date moot as lawmakers focus on votes for alternative plans.
Brexiteers who don’t watch the news waiting for Brexit to happen today. pic.twitter.com/nFFVWcDSc1
— Chris McPhail (@ChrisMcPhaiI) March 29, 2019
The economy
Incomes rose modestly and inflation decline in February, according to data delayed by the government shutdown. Still to come,— the Chicago purchasing managers index, the University of Michigan consumer sentiment index and new-home sales.
Among Fed speakers, highlights include Dallas Fed President Rob Kaplan and Fed Vice Chairman for Banking Supervision Randal Quarles. Late Thursday, St. Louis Fed President James Bullard said it was “premature” to talk about rate cuts because any weaker data will be a “temporary.”
The tweet
I am over Warren Buffet's 'schtick'. If he was honest and said "I move money to low tax environments and I recognize that you can't do that", I would respect him. Versus his "it's crazy I pay less taxes than my secretary"....
— Brynne Kelly (@BrynneKKelly) March 29, 2019 The quote
“It’s going to be so much easier the second time: We’re one for one.” — That was President Donald Trump, who got everyone fired up at a rally in Michigan late Thursday, where he appeared pretty confident about his re-election prospects for 2020. He also unloaded over the Russian probe, bashed Democrats and the media in front of a packed audience at Van Andel Arena.
Massive overflow crowds in Grand Rapids, Michigan tonight. Thank you for joining us tonight! #MAGA pic.twitter.com/KQ5hTZAXsk
— Donald J. Trump (@realDonaldTrump) March 29, 2019 Random reads
The Purdue Boilermaker’s busted the final perfect March Madness bracket
Special Olympics will be funded, vows Trump after Education Secretary Betsy DeVos threatened cuts
Disney is cracking down on stroller sizes at its amusement parks
Three-quarters of Americans want to see the entire Mueller report
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