Financial Review

Down Again

…Stocks stumble again. Oil bear. Amazon picks 2 for HQ2. Possible Brexit deal. Cabinet shakeup. Still counting votes. AZ turns blue(-ish).

Financial Review by Sinclair Noe for 11-13-2018

DOW – 100 = 25,286
SPX – 4 = 2722
NAS + .01 = 7200
RUT – 3 = 1514
10 Y – .04 = 3.14%
OIL – 4.65 = 55.28
GOLD + 2.00 = 1202.90


Stocks started the morning in positive territory, however there was no rally. The major indices were just slightly higher – not enough to trigger computerized trading programs to buy. After a couple of hours of drifting aimlessly, stocks dropped. Energy stocks weighed heaviest on the S&P 500 as crude oil fell for a record 12th consecutive session, pushing prices down to a one-year low. WTI dropped more than 7%, its biggest one-day decline in about 3 years. Oil prices have plunged more than $20 a barrel since the start of October, when Brent crude rose to nearly $87 a barrel and U.S. crude traded just shy of $77. Both benchmarks are now trading firmly in bear market territory, having fallen more than 20 percent from their 52-week highs. Crude futures rose to four-year highs on Oct. 3 as the market braced for renewed U.S. sanctions on Iran, OPEC’s third biggest producer. Through September, the threat of sanctions wiped about 800,000 barrels a day off the market, fueling speculation that some oil importers would struggle to find supplies. One week after crude futures struck their highs, two-thirds of the stocks in the S&P 500 plunged into correction territory. That kicked off a broad market rout that saw investors shed risk assets, including crude futures. Oil and stocks do not always move in tandem, but the assets were closely correlated during last month’s sell-off.


General Electric was up 7.7 percent as the conglomerate unveiled plans to raise $4 billion by accelerating a sale of its stake in oilfield services provider Baker Hughes.


Homebuilder Beazer Homes jumped 30 percent after its quarterly revenue topped estimates and the company announced a $50 million buyback scheme.


Home Depot posted better-than-expected same-store sales, but suggested that U.S. home sales were slowing down and impending tariffs could lead to price hikes for its products.


Shares of Tyson Foods dropped 5.5 percent, the biggest percentage loser on the S&P 500, after the top U.S. meat processor’s sales missed Wall Street estimates due to lower demand for chicken.


Johnson Controls is selling its power solutions business, which makes car batteries, to investment firm Brookfield Business Partners, in a cash deal valued at $13.2 billion.


The head of Alphabet’s Waymo unit said it plans to launch its first commercial self-driving car service in the next two months. The service will initially be available to a small group of riders in the Phoenix area, but will expand to more people in the coming months.


Amazon has finally announced where its new headquarters will be located. The second headquarters will be split between the Long Island City neighborhood in Queens, New York, and the newly formed National Landing area of Arlington, Virginia.


UK Prime Minister Theresa May will put a draft Brexit deal to her Cabinet on Wednesday after UK and EU negotiating teams made a crucial breakthrough in talks. An agreement on preventing a hard Irish border was reached after two days of intensive talks. UK and EU negotiators agreed that there would be a UK-wide “backstop” if they fail to negotiate a trade deal that negates the need for border checks on the island of Ireland before the end of the two-year Brexit transition period. Brexiteers are concerned that this arrangement will leave the UK trapped in a customs union with the EU for years to come, unable to sign new free-trade deals.


Deputy National Security Adviser Mira Ricardel, a top staffer to national security advisor John Bolton, has been fired following a dispute with first lady Melania Trump. Earlier the First Lady’s office had issued an unusual, public statement saying Ricardel “no longer deserves the honor of serving in this White House.” According to reports, she also repeatedly clashed with Defense Secretary Jim Mattis. Meanwhile, chief of staff John Kelly may be out of his job soon as a result of a conflict with first lady Melania Trump and other people in the White House.


Trump is reportedly about to fire Homeland Security Secretary Kirstjen Nielsen — giving the Department of Homeland Security its fourth boss in less than two years. The standard line from White House reporting is that Trump is mad that Nielsen isn’t tough enough on immigration enforcement. But this assessment doesn’t appear to be a reflection of her policy record at DHS. Nielsen has spent most of her tenure executing an ongoing crackdown at the US-Mexico border. Under her watch, thousands of National Guard units and active-duty military have been deployed to the border (many for no obvious purpose). Nielsen’s DHS has made it near-impossible for people to seek asylum. Under a proclamation signed by Trump on Friday, people who enter the US between official border crossings (called points of entry) are categorically ineligible for asylum; asylum-seekers who do try to come to ports of entry, meanwhile, are forced to wait for weeks (or simply turned away) under a department policy of “metering.” Most famously, Nielsen signed off on the “zero-tolerance” prosecution policy that resulted, in late spring and early summer, in the separation of thousands of families at the US-Mexico border without any apparent plans to reunite them.


Earlier in the week, Trump was telling people he wants to replace Commerce Secretary Wilbur Ross by the end of the year. Trump has often expressed displeasure about Cabinet members but has stopped short of making a personnel move. Yet, these developments come two days after Trump forced out Attorney General Jeff Sessions.


A federal judge has blocked the Georgia secretary of state from certifying election results before Friday, as the state’s governor’s race remains unsettled. The judge ruled that state and local officials must conduct a “good faith review” of all provisional ballots that had been rejected because a voter’s name was not found on the voter registration list. This includes using “all available registration documentation” from voters to verify their identity, instead of solely relying on the voter registration list. The Secretary of State’s office has reported that more than 21,000 provisional ballots were cast. The court also ordered the state to establish a hotline for voters to determine whether their provisional ballots were counted — and if not, the reason why.


Republican Martha McSally has lost the Arizona Senate race to Democrat Kyrsten Sinema, who will be the first female senator from Arizona. And Martha McSally could become the second female senator from Arizona. It’s conceivable that both McSally and Sinema could represent Arizona in the upper chamber in 2019. It’s a scenario made possible by current Arizona Sen. Jon Kyl — the former senator who was appointed earlier this summer to fulfill a portion of the late Sen. John McCain’s last term. While the next election for this seat won’t be held until 2020, Kyl has said that he only intends to serve until January 2019 — at which point, Arizona Gov. Doug Ducey will have to appoint someone new to tide the state over until the following year. State law requires that Ducey appoint someone of the same party as McCain and Kyl, which means he’ll have to pick a Republican — and McSally could very well be in the running. While McSally replacing Kyl seems like a good bet, it is far from a done deal.  There are several possible reasons Ducey could go with someone other than McSally — ranging from stigma over appointing a recent electoral “loser” to a key seat to questions over whom the broader Arizona Republican Party would like to potentially support. Arizona hasn’t sent a Democratic senator to Washington in more than 30 years. The metropolitan Phoenix and Tucson areas were strongly in favor of Sinema, while the rural areas favored McSally.


Democrat special education teacher and political novice Kathy Hoffman has won the race for Arizona superintendent of public instruction. Hoffman was declared the winner last night as her lead over Frank Riggs grew insurmountable during Arizona’s lengthy vote count.


Democrat Katie Hobbs has retaken the lead in the horse race to be Arizona’s next secretary of state. Hobbs passed Republican Steve Gaynor by about 5,600 votes Monday evening after more ballots were tallied in Maricopa and Pima counties. The two have traded places several times in recent days. If Hobbs succeeds in flipping the seat, it would be a major victory for Democrats. The party hasn’t held Arizona’s No. 2 executive office since early 1995. Gaynor had established a lead on election night, but Hobbs, a state Senator from Phoenix, steadily closed the gap as more votes came in from the state’s urban areas. The secretary of state’s primary duty is managing the statewide elections system, which has faced a string of problems in recent years. In Arizona, the secretary of state is the No. 2 statewide-elected official, next in line to succeed the governor if he or she leaves office early. That has happened four times since the late 1970s.


In and around the town of Paradise, California which has been largely destroyed by the Camp Fire raging since Thursday in Butte County in Northern California, authorities found the remains of 13 of the fire’s victims on Monday. The discovery brought the death toll up to 44 and made the Camp Fire the deadliest wildfire in the state’s history. The number of fatalities could continue to grow, as more than 200 people are still missing. The Camp Fire is considered the most destructive in state history, as it has destroyed more than 7,100 homes and other structures. It is still only 30 percent contained. To the south, another fire known as the Woolsey Fire has burned at least 435 structures. Two have died in that fire. The Woolsey Fire has also burned homes in the Thousand Oaks community, which is still reeling from a devastating mass shooting Wednesday. The fire is also just 30 percent contained.

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