“Sliding…” Vista Partners Daily Market Recap 8/23/19

By John Heerdink LinkedIn

The US markets slid aggressively throughout the day reacting negatively to the US-China trade wars and their associated fears. The trade war situation turned for the worse early Friday morning when China announced that they would be adding tariffs on $75B of US goods imported starting on Sept. 1 & Dec. 15 just as the US has stated it would. This action caused some selling but then all things seemed to be good when the much anticipated Fed Chair Jerome Powell’s comments came in from Jackson Hole and the market interpreted that he and the Fed would be aggressive in actively stimulating the economy if it needed to do so. However,  President Trump then took to the Twittersphere and attacked both China, by calling all US companies to look to “immediately start looking for an alternative to China” and the Fed’s lack of actions and all hell broke loose and the market declined significantly. All 11 S&P 500 sectors finished down today as the S&P 500 lost 75.84 points or 2.59% to end the session at 2,847.11. The Dow lost 623.34 points closing significantly below the 26k level at 25,628.90 down 2.37%.  The tech-heavy Nasdaq closed at 7,751.77 down a whopping 3% or 239.62 points. The Russell 2000, the small-cap stock market index representing the bottom 2,000 stocks in the Russell 3000 Index,  had the biggest move down today closing at 1,459.49 giving back 46.52 points or .3.09%. 

The yield curve declined and ended even. The 2-yr Treasury yield closed at 1.53% down .07, the 10-yr yield finished higher at 1.53% down .08. The U.S. Dollar Index closed at 97.73 down .05%.

Volatility bets closed greatly higher today.   The CBOE Volatility Index (VIX) closed at $19/87share up 19.97% or $3/19/share and traded between $16.04 and $21.07. The 2x leveraged ETF TVIX  closed at $20.40/share up 23.26% or $3.85/share and traded between $16.27 and $21.10 today.

Energy

Oil prices dropped today again today down another 2% closing at $54.16/bb. The energy sector was down by 3.4%. Dow 30 energy participants Chevron (CVX) moved lower by 2.17% closing at $115.18/share & Exxon (XOM) closed lower by 2.99% closing at $67.49/share.  Occidental Petroleum (OXY) closed at $42.37/share down 5.21% after their recent sale of $13 billion of debt to fund their Anadarko Purchase. 

Metals & Mining

Gold prices shot higher over $1500/oz level at $1529.5/oz. Silver jumped and closed at $17.53/oz. Hecla Mining Company (HL) closed at $1.67/share up 5.70%. 

Economy

Wednesday we received the existing home sales report which confirmed a 2.5% increase m/m in July resulting in a seasonally adjusted annual rate of 5.42M. Total sales came in .6% higher than a year ago. The weekly MBA Mortgage Applications Index report showed a decline of .9%.

Thursday, we received the initial jobless claims report and moved lower to 209,000 for the week ending August 17 & continuing claims dropped to 1.674 million for the week ending August 10. The Conference Board’s Leading Economic Index (LEI) moved up .5% in July.

Today,  we received the new home sales report which went down by12.8% month-over-month to a seasonally adjusted annual rate of 635,000, however, the new home sales report confirmed a 4.3% year-over-year.

President Trump announced after the market closed todayt that the 25% tariff previously placed on “List 3” that affects $250B of Chinese goods will be increased to 30% and will begin on October 1st this year. He also added an increase on “List 4” from 10% to 15% and this hits the remaining $300B of Chinese goods and this will go in affect on Sept. 1 of this year.

Day or Short Term Trading Update

Last Thursday’s buy of Bloom Energy ( BE) at $5.06/share and $4.99/share paid off as it surged to $5.70 about a 14% move. We were seeking a swing back up to at least the high $5’s after its recent beat down and we got it.

We identified San Jose, CA’s Zscaler (ZS), a cloud-based web security provider, as a  a bounce play after it got slammed earlier this week after being downgraded and closed down at $70.80. ZS popped then to $74.51/share for an approximate 5% gain.

The Hain Celestial Group (HAIN) was also identified as another bounce play. HAIN shares closed trading at $18.36/share Wednesday after a recent analyst downgrade and a simultaneous price drop from the $22 level that seemed to be triggered by fears surrounding The Brexit issue and associated near term timeline. Shares rose Thursday to an intraday high of $18.99 and then closed at $18.91 for 3% move.

Nothing to report on Friday in this department.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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