“Job Claims, China Stimulus, Disney+, Markets Hit Records” Vista Partners Daily Market Recap For January 2, 2020

With the New Year’s Eve & Day celebrations in our rearview mirrors, the markets positively toasted in the new year. All three major indices achieved new records once again as the party continued. The major indices and the global growth picture got another boost today as China announced that it will cut their reserve requirement ratio for small & large banks by 50 basis points beginning on Jan. 6 adding a significant amount of liquidity that could be pushed out to businesses as opposed to sitting on the balance sheet. This was the 4th time that China had made a cut over the last year. Today, the initial claims for the week ending December 28, 2019, were also confirmed to have gone down by 2k to 222k as the continuing claims for the week ending December 21, 2019, rose by 5k to 1.728M still confirming a tight job market.

On the day, the S&P 500 ended at 3,257.85, +.84%. Seven of the 11 S&P 500 sectors finished in the green today led by industrials (+1.8%),  information technology (+1.7%), communication services (+1.3%), & consumer discretionary (+1.3%) while utilities (-1.4%), real estate (-1.3%), materials (-1.2%), & consumer staples (-0.8%) sectors finished in the red. Highly weighted tech giant Apple (AAPL) jumped to a new high of $300.35/share, +2.3%.

The Dow Jones Industrial Average ended at 28,868.80, +1.16%. Shares of Disney (DIS) closed at $148.20/share, +2.47% as Rosenblatt Securities stated that they expect 20% more Disney+ streaming service subscribers than was expected by the end of Q1 2020 which would mean they could have 25 million subscribers.

The Nasdaq Composite topped the 9k level and ended at 9,092.19, +1.33%. Amazon (AMZN) closed at $1898.01/share, +2.7%, Alphabet (GOOG) $1367.37/share, +2.3%, & Facebook (FB) $209.78/share, +2.2% help lead the way today.

However the Russell 2000 moved lower by +.10 ending at 1666.77.

The “fear gauge” Vix (TVIX) also ended down sharply again at $47.33/share -7.77%.

Economic Reports

On Monday, the total durable goods report confirmed a drop by -2% in November below the 1.5% expected rate. However, new home sales in November surprisingly rose +1.3% month/month to a seasonally adjusted annual rate of 719k units while on a year/year basis new home sales are now up +16.9%. The median new-home price jumped +7.2% to $330,800 in November.

On Tuesday the Conference Board’s Consumer Confidence Index report showed a drop to 126.5 in December. The FHFA Housing Price Index Report for October rose by +.2%. The S&P Case-Shiller Housing Price Index for October rose by +2.2%.

On Wednesday, nothing will be reported on New Years Day.

On Thursday, the initial claims for the week ending December 28, 2019, were confirmed to have gone down by 2k to 222k as the continuing claims for the week ending December 21, 2019, rose by 5k to 1.728M.

Investing & Inspiration

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

Tomorrow

ISM Manufacturing Index for December, the FOMC Minutes from the Dec. 10-11 meeting, the Construction Spending report for November, and auto and truck sales throughout the day tomorrow.

Here are three trading ideas in biotech to check out:

• Acorda Therapeutics (ACOR) which closed at $1.96/share,  but recently announced a $276M exchange of convertible senior debt that moved maturity out to 2024.

•  Aduro Biotech, Inc. (ADRO) closed at $1.18/share today and has interesting data points due in the 1st half 2020.

• Neubase Therapeutics (NBSE) closed trading at $6.90/share today and expects several data points to be released in the 1st half of 2020 with regard to their gene silencing platform that is initially targeting HD and ALS.