 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Tuesday's Headlines 1. Global Markets Sell Off on Trade Discord 2. Volatility is Back 3. Beyond Meat Defies Markets Closed
 Global Markets in Steep Sell-Off as Trade Deadline Nears A broad selloff for global stocks today, and this time there was not the afternoon recovery that there was yesterday. The selling intensified into the final two hours of trading, which has not happened in recent months. Stocks recovered a bit in the final 15 minutes of trading, but the damage was done.
When the final bell rang at the NYSE, the DJIA fell 470 points or 1.79%, its biggest decline since January. The S&P500 dropped 1.65%, while the Nasdaq fell just under 2%.
The culprit - trade negotiations between the U.S. and China appear to be in a more precarious state today than they were Sunday morning, with just three days to go before new tariffs announced by President Trump go into effect.
U.S. Trade Rep. Robert Lighthizer confirmed to reporters today that those new tariffs will indeed go into effect this Friday evening. Trade representatives from China and the U.S. are scheduled to meet in Washington D.C. Friday, as well.
Most experts believe China will retaliate with increased tariffs of its own, which created further uncertainty in the market.
In a note to clients, UBS attempted to quantify the hit to global stock markets and indexes should trade tensions continue to escalate. The hardest hit indexes, according to the bank would be the S&P500 and the Stoxx600, Europe's index of its largest companies. When we consider that 35% of the EuroZone's exports go to China, the vulnerability facing its companies are understandable.  No Sector was Spared All 30 of the Dow Industrials traded in negative territory today, with big industrials like Caterpillar declining 2.26%, while Boeing fell 3.87%. Apple dropped 2.7% on concerns about demand for its products in China and because of its sensitivity to semiconductor stocks like Intel, which fell 1.4%.
Every one of the S&P500 Super Sectors was in the red today, as there was no place to hide during the broad sell-off.
chart courtesy www.koyfin.com  Volatility is Back, and its Mad
This is what VIX futures looked like today, courtesy of the CBOE.
That hard turn south at the end of the day tells you sentiment has really changed.
Buckle up. 
Germany Cuts Economic Outlook Just when it appeared that Germany, the largest economy in the Europe, was regaining its footing after a drawn out economic slowdown, the European Union cut the country's growth forecast for the second time this year. The EU is now forecasting that Germany will only grow 0.5% this year, down from its prior forecast of 1.1% growth. The culprit...China. While Germany's GDP is also heavily influenced by domestic consumption and exports to the U.S. and Europe, China is one of its biggest customers, which buys nearly $100 billion in vehicles, machinery, nuclear reactors and other heavy industrial products and equipment from it. Only Italy has a weaker economy than Germany in Europe right now, which is surprising given the UK's issues around Brexit.
Beyond Meat Still has Bite Beyond Meat, the plant-based food company that soared in its IPO last week, is now up 220% since it went public. The stock BYND shot up as much as 8% today, as Wall Street analysts began issuing research reports on the company. One, in particular, Alexia Howard from Alliance Bernstein, rated the company a 'Buy', citing its ability to mass produce its plant-based burgers which it sells in grocery stores and to burger chains in the U.S.
Howard also cited the African Swine Fever in China as a catalyst that will raise beef, pork and poultry prices, thereby creating more demand for Beyond Meat's products. It's all connected.
It's only been a public company since May 2, but it has defied the market and completely avoided the selloff of the past two days.
chart courtesy of tradingview.com  Charts courtesy of www.koyfin.com  It was hard to find winners today, but AIG posted strong earnings and a positive outlook for the rest of the year. The insurer has reinvented itself, ten years after it was a key player in the financial crisis.  Losers were everywhere today, but pharmaceutical maker Mylan badly missed earnings and is struggling to hit sales targets for its generic drugs. This, remarkably, had nothing to do with China.  Nowhere to run to... nowhere to hide. The sell-off hit every global market. Word of the Day Out a few days ago, the Fed's Financial Stability Report noted that the level of corporate debt is now higher than it was at peak levels in both 2007 and 2014. This is because leveraged lending increase 20% in 2018, to $1.1 trillion. What's leveraged lending, you ask?
A leveraged loan is a type of loan that is extended to companies or individuals that already have considerable amounts of debt and/or a poor credit history. Lenders consider leveraged loans to carry a higher risk of default, and as a result a leveraged loan is more costly to the borrower. Leveraged loans for companies or individuals with debt tend to have higher interest rates than typical loans. These rates reflect the higher level of risk involved in issuing the loan.  photo courtesy: http://www.antiquemoney.com/ - a $5 currency note issued by the Philadelphia Bank of the Southwark
Today in History May 7, 1825: IPO fever struck Philadelphia as the Bank of the Southwark goes public. Investors hire muscular goons to sign their names into the subscription books that confer the right to buy shares, and noses were smashed, hats jammed in, and the police court was at work over the wounded for weeks after.
Walter Werner and Steven Smith, Wall Street (Columbia University Press, New York, 1991), p. 223
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Tuesday, May 7, 2019
Sentiment Shift
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