 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Friday's Headlines 1. U.S. Markets Have Best June in 20 Years 2. Upside to Trade Talk Resolution
Markets Closed
Year-to-Date
 U.S. Markets Close out Best June in Decades
The summer wind came blowin' in from across the sea - As sung by Frank Sinatra
Stock investors should be humming this tune all the way to the beach this weekend.
Despite all the talk of a pending recession, the trade war, slowing profits and a listing economy, the Dow Jones Industrial Average surged 7.2% this month, capping off the best June performance for the DJIA since 1938. It was also the best first half of the year for the S&P500 since 1997, climbing 17.3%.
Other notables:
To be sure, the S&P500 is up 8.4% in the past year. Still very good, but the December bear market makes the first six months of the year look amazing.
Investors can thank the Federal Reserve for these statistics - or thank the Fed for what it expects it do - which is lower interest rates at least once, if not two or three times by the end of the year. Investors are also betting on an optimistic resolution to the U.S.-China trade talks, which are taking place at the G20 Summit in Japan right now. We may not see a resolution over the weekend, but we should have a good read on whether progress has been made, or not.
Bank of America's research team says the trade war has knocked about 2% off of corporate earnings, with technology, software and capital goods taking the biggest hit.
According to the Bank, a successful outcome to the trade talks would boost those sectors and be a net positive for the markets. A status quo outcome, wherein existing tariffs remain in place, would be neutral. But, a negative outcome would take another 1% off of corporate earnings, at least, and could be the catalyst that would send the markets into a tailspin.
Here is how BofA chartered the sector vulnerability during the see-saw trade talks over the past few months. The area in red is the most vulnerable.  Banks Aren't Waiting for Fed to Lower Rates
Speaking of the anticipation for lower interest rates courtesy of the Fed, two big online banks lowered the yields on their savings accounts in the past couple of days.
Goldman Sachs' Marcus, its new online bank, and Ally Financial, dropped rates from 2.25% to 2.15% and 2.2% to 2.1% respectively.
Given that the 10-Year U.S. Treasury is only yielding 2.005%, these banks are still paying you more to hold your money than the benchmark U.S. bond. A couple months ago, U.S. banks were offering rates close to 3% to put your money in a savings account, which is very high by historical standards.
What's remarkable and confounding is that most U.S. consumers don't even move their money out of traditional, low-yielding savings accounts to higher performing alternatives when they can. They put their money in the bank and just leave it there, earning less than inflation, effectively losing money.
As Ben Carlson of Ritholtz Wealth Management, points out, there is over $8 Trillion in savings accounts at U.S. banks earning an average yield of 0.10%!!!
That's absurd. Banks are dying to give us better interest rates to hold our money, but we are too lazy to move it. Don't just toss out what you think is junk mail from your bank. There could be some yield in there.  Apple Bowls for India
As our international readers know, the 2019 Cricket World Cup is underway in England and Wales. It's a six week tournament, and I hear some of the matches also take a couple of weeks to play. (I kid, but I really don't know).
Apple is taking advantage of the widely popular event to market the iPhone to Indian consumers.
Apple's prices, inflated by customs duties, cannot compete with the significantly cheaper, feature-rich, customizable Android options offered by Chinese companies to the Indian market. Keep in mind, the average price of a smartphone sold in India is $161, according to IDC.
 But this isn't a problem Apple intends to ignore, especially since it's a market of over 400 million smartphone users. Cook has called the growth potential in India "phenomenal" and said Apple plans on taking on the challenge with "all of our might." The company has begun assembling some phones and started an app accelerator in Bengaluru, cut the price of the iPhone XR and plans to open retail stores.
No one makes a better commercial than Apple, and they didn't disappoint with this one, which they released in India as its national team played England.
Watch it here.  Next Week
Next week will be a shortened trading week here in the U.S. as markets close half day on Wednesday and all day Thursday. Expect volume to be light and there are no corporate earnings due.
All eyes will be on the G20 summit this weekend, particularly the U.S and China trade talks. The Asian markets will give us a signal late Sunday, and that should set the tone for the week.
We'll get the U.S. non-farm payroll report for June on Friday. May's jobs numbers were very disappointing, so we'll see if that was an anomaly or the beginning of a troubling trend in the employment market.
We know that businesses and manufacturers have been losing confidence and conviction over the last month or two as the trade war intensified. If there is no resolution, expect more of that.
For now, take a few deep breaths, a swim, a hike, or whatever is your pleasure, and enjoy that summer wind.
chart courtesy www.koyfin.com  Western Digital Corp was up more than 6% today, to make a weekly gain of nearly 19%, the best weekly gain for the company in almost 7 years. Constellation Brands was up nearly 5% today after beating quarterly earnings and revenue estimates. Conagra was up 4% today, recovering partly from an earnings miss earlier in the week. AbbVie recovered from a drop earlier this week, too, following news of its acquisition of Allergan.  Biogen dropped 2.5% today as an analyst warned that the company's multiple sclerosis drug may be losing ground to competitors. Smuckers dropped more than 1% after a disappointing earnings report.  Word of the Day "The Russell 1000 Index is an index of approximately 1,000 of the largest companies in the U.S. equity market. The Russell 1000 is a subset of the Russell 3000 Index. It represents the top companies by market capitalization. The Russell 1000 typically comprises approximately 90% of the total market capitalization of all listed U.S. stocks. It is considered a bellwether index for large-cap investing."
That's important to know because at the end of June, the FTSE Russell indexes are rebalanced. Since the Russell 1000 is the 1,000 largest companies by market cap, this means there will be some new members of the club. Uber, Lyft, Beyond Meat and PagerDuty are all set to join the group. It could give some of these companies some upward momentum.
There's additional reading at Investopedia, too.  Today in History June 28th, 1995 - The first Internet software company goes public, as Spyglass, Inc., which has licensed the Mosaic web browser from the University of Illinois, sells 2 million shares on the NASDAQ for $8.50 apiece. The shares more than triple on the first day, closing at $27.25 and paving the way for the Internet stock boom. You can see a picture of what the browser looked like above. Those were the days.
The Industry Standard, Dec. 27, 1999, pp. 162-163; http://www.spyglass.com/about/history.html Chart of the Day: Russia is Rocking  Russian stocks have been among the best performers in the global markets this year, and for good reason. Having surged around a whopping 26% year to date (as of Friday), the representative VanEck Vectors Russia ETF (RSX) has been buoyed in large part by rising crude oil prices. As shown on the RSX chart above, Russian stocks have a significant positive correlation with oil prices due to the fact that Russia is one of the world's top three oil producers (along with the U.S. and Saudi Arabia) and that oil is at the heart of the Russian economy.
Also helping to drive the rally in Russian equities has been a marked reduction in political and economic risk perceptions stemming from allegations of Russian interference in the latest U.S. Presidential election. Fallout from the election scandal was at its strongest last year, when the U.S. government placed sanctions on certain suspected Russian companies and individuals. Since then, however, fears of further punitive measures have dwindled and investors have been drawn back into the Russian stock market with its relatively cheaper valuations.
From a technical perspective, RSX has reached up to closely approach the highs of early 2018. This means there's strong resistance directly above, right around the 24.00 level. Depending in large part on how crude oil prices move in the near-term, RSX could either turn back down at or near that resistance or make an upside breakout. How price moves around this key technical level should be critical in determining the next move for Russian stocks.
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Friday, June 28, 2019
One for the Books
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