One has to wonder if the end is near when a YouTube channel called the “Hydraulic Press Channel” receives almost 3 million views for a video about crushing gummy bears (some of the videos have more than 10 million). While squishing gummy bears was surprisingly mesmerizing – one has to wonder why there aren’t better, more productive things to do with our time (or the time of the guy that created the videos).
Panama Papers
Maybe not surprisingly, when the searchable database for the above was released yesterday, it was jammed up a few times as everyone and their uncle was looking for everyone and their uncle. I’m proud to say that my name was not there and thankful that my husband’s wasn’t either. But is there something wrong with journalists using stolen data to out crooks and money launderers? Discuss.
Pendulum swings
Right now there is a 100 per cent chance that there will be no shift in Fed policy in June, and only about a 35 per cent chance of a change by the end of the year. Meanwhile, equity market internals are shifting with only 65 per cent of NYSE and 60 per cent of TSX listed stocks now trading above their respective 50-day moving averages (versus an extended 90 per cent/85 per cent plus a few weeks ago). The CNN fear/greed index continues to move away from double-fisted greed to just ordinary greed (60). The Canadian and Aussie dollars have come off the boil as has the Yen, the latter on threat of intervention. Equities are down 2.78 per cent (TSX from April 29 high) and -2 per cent (S&P 500 from April 20 high). Using the Dow Industrials, 20 stocks are down from that high while some of the biggest losers from the high are Apple (-13 per cent), Caterpillar (-11 per cent) and Microsoft (-10 per cent) while Exxon, Disney and Coca Cola are above their highs on April 20. Within the TSX Composite, the collapsing stocks from the highs include the reflation trades Enerflex (-26 per cent), First Quantum (-25 per cent), Hudbay (-24 per cent) and Teck (-22 per cent). Where will that pendulum swing next? S&P 500 technical support at 2047. Today’s Gap decline on news of weak April sales (-4 per cent on the Gap brand) and an outlook that was almost 30 per cent below the street’s expectations would suggest that retailing stocks wouldn’t be a place to look for opportunities. However, yesterday’s option pit action was focused on the XRT (retail ETF) where volume was almost 10x normal and concentrated in September calls.
M&A
According to the Wall Street Journal, so far this year US$378 billion worth of U.S. deals have collapsed – the highest level for a year on record. Deals pending that could also collapse include Energy Transfer Equity’s proposed takeover of Williams Cos and $114 billion in unsolicited or hostile deals that could fail.
Calendar watch
Watch out for Boeing’s investor day (Goldman is negative), Allergan earnings this morning and Disney, Electronic Arts, Fossil after the close in the U.S. A company called Stamps.com (yup, they do what you think they do) is up 18 per cent in the pre-market on a beat and an improved outlook. In Canada, traders will be watching earnings from Intertape Polymer, Badger Daylighting, George Weston (modest beat), and after the close Kinross, Sunlife, Keyera, Alaris, Intertain, Avigilon, Rona and WSP.
Fort McMurray
We’ll continue to follow this story as the winds shift south and east away from the city and the discussion of rebuilding takes centre stage. We’ll also watch the re-entry of production facilities which could take up to a week. The price of oil has stabilized.
Markets
Yesterday’s action was “boring” according to traders and it feels that way today (many of my trader notes are coming in 15 minutes or so earlier than usual suggesting nothing else to do). From Raymond James’ Jeff Saut this morning, quoting Joe Slavin of RTA Real Time Analytics: “The odds favor a little more pullback before rallying”. Art Cashin at UBS notes resistance at 2064/2066. The TSX will be dictated by the easing of speculative action in the commodities sector in China where activity has been exceptionally large and young men feel it an equal opportunity trading arena but “it’s difficult to meet women” (from the Gartman Letter quoting the Financial Times quoting a young Chinese trader “hoping to make [his] fortune in an unstable but exciting market”). Markets are higher – we’ll see what actually happens as the day unfolds, and whether Gap’s disappointment weighs on consumers (U.S. retail sales and confidence numbers at the end of the week).
BNN
Do you have a purpose? We’ll speak to the author of The Purpose Effect. We will also speak to CEOs from Emera, Roxgold, Hempco and TMX Group. Earnings, U.S. banks, oil and the Nasdaq vs S&P 500 will be discussed.
Join us all day long.
Every morning Business Day Host Frances Horodelski writes a "chase note" to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins.
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