Technology or Bust
Netflix (NFLX) was hammered at the open on Tuesday, which rallied 35 points off its low point of the session while other hot tech names continued to sizzle:
- Google/Alphabet: +1.26%
- Facebook: +1.33%
- Amazon: +1.18%
However, the move to value continues as well. Investors made Materials (XLB) the best performing sector of the session. Even in Technology (XLK), chip names continue to rebound. Homebuilders powered consumer discretionary (XLY) higher after a jump in potential buyer foot traffic last month.
S&P 500 Index | +0.40% |
Consumer Discretionary (XLY) | +0.10% |
Consumer Staples (XLP) | +0.84% |
Energy (XLE) | -0.40% |
Financials (XLF) | +0.11% |
Health Care (XLV) | +0.55% |
Industrials (XLI) | +0.39% |
Materials (XLB) | +1.31% |
Real Estate (XLRE) | -0.67% |
Technology (XLK) | +0.72% |
Utilities (XLU) | -0.10% |
Avoiding Economic Recession
The market in July has exhibited a kind of grit that makes me very excited about the possibilities for a strong second half of 2018. In fact, the good times could last for a few years. That seems to be the central message from Jerome Powell in his opening statement, and answers to subsequent questions from Senators that were more interested in grandstanding and pushing their own agendas on tariffs, tax cuts, and the Helsinki summit.
"Looking ahead, my colleagues on the FOMC and I expect that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years."
-- Jerome Powell
Powell seemed to brag that the Fed would be wise enough not to trigger a recession.
Economic Rebirth
Without a doubt, the second quarter could be the quarter many Americans stopped believing if it was even possible. The Atlanta Federal Reserve has modeled for a 4.5% growth. There are numerous estimates over 4%, in which Barclays (BCS) sees 5.2%.
To put this into a proper perspective, the U.S. economy has only had nine quarters of a 4% Gross Domestic Product (GDP) growth since 2000 (the last was 3Q 2014; 5.2%). This lends credibility to the notion the annual GDP could finally come in above 3.0% for the first time since 2004. Interestingly, 2004 and 2005 were (4.1% and 3.3%) respectively; this occurred in the midst of the Bush Tax Repartition Plan.
This kind of economic momentum is a wave that Americans from all walks of life can ride to better lives.
Ground Up Economic Revival
Industrial production continues on a solid pace, but mining is on fire. The move, driven mostly by oil and gas related, actively reflects big-money investments and high-paying jobs. It’s a great economic indicator, and it means so much for those heartland voters that believed they were going to get a fair shake.
People want a hand-up, not a handout.
Earnings
After the close on Tuesday, earnings beats from key economic proxies:
- (CSX) CSX Corporation: Revenue $3.10, earnings $1.01, Street $3.00 and $0.87
- (UAL) United Continental Holdings: Revenue $10.78, earnings $3.23, Street $10.75 and $3.07 (management raised guidance)
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