 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Friday's Headlines 1. Markets End Week on Down Note as Trade Talks Fizzle 2. U.S. Imposes Economic Sanctions on Iran's Central Bank 3. Walmart Stops Selling e-Cigs 4. What to Expect Next Week Markets Closed
Year-to-Date
 Markets Today
U.S. markets ended the week in the red today as all major indexes failed to make gains. The U.S. China trade talks ended rather hastily as the Chinese trade delegation abruptly canceled a trip to visit several farms in Montana, according to the Montana Farm Bureau.
Rebecca Colnar, a spokesperson for the Bureau, told me that her team didn't know the Chinese delegation was planning a visit until yesterday, and there was no agenda in place. This morning, Colnar received a call from the Chinese embassy, which informed her that the delegation had to return to China earlier than planned, but provided no other reason.
They missed a potential tour of a dairy farm, a cattle ranch, and a trip up to Montana's Golden Triangle. They also popped the balloon of good will that had been floating around recent trade talks, which was inflated by China's promise to purchase more U.S. agricultural goods.
(Side note... it's a good day for me when I get to call the Montana Farm Bureau on a story. Nice people, great state.)  It's hard to know whether that impacted markets, but the DJIA did fall a leg lower when news of the cancellation was made public.
What a Week It's been a busy week for investors that began with the spike in oil prices following Saturday's drone attack on Saudi Arabia's oil fields. Today, the Trump Administration announced economic sanctions against Iran's Central Bank, placing direct blame on Iran for the attacks on Saudi Arabia.
In a statement, U.S. Treasury Secretary Steven T. Mnuchin said:
"Iran's brazen attack against Saudi Arabia is unacceptable. Treasury's action targets a crucial funding mechanism that the Iranian regime uses to support its terrorist network, including the Qods Force, Hizballah, and other militants that spread terror and destabilize the region. The United States will continue its maximum pressure campaign against Iran's repressive regime, which attempts to achieve its revolutionary agenda through regional aggression while squandering the country's oil proceeds."
While oil prices settled back down after their biggest one day spike in history, this situation seems far from over. Here's Light Sweet Crude Oil this week:  On Wednesday, the Federal Reserve did what everyone expected it to do by lowering interest rates by 0.25%, but not committing to future rate cuts.
On Thursday, U.S. and Chinese trade representatives met in D.C., which seemed like the beginning of a new and friendlier way forward. We now know how that didn't work out, and Chinese trade officials missed a cool tour of Montana's agricultural treasures.
Still, the S&P 500 is only about 1% away from record highs, despite a pretty big rotation out of stocks at the end of August.
With about one full trading week left in the third quarter, here's how major asset classes are doing so far in 2019:
September Has Been Tame Before the month began, we cited research from LPL Financial that showed how September has historically been the cruelest of months for stocks. This September had all the makings of repeating that trend, given the global economic slowdown, high expectations for the Fed, contentious trade talks, the Brexit impasse, and the recent attacks on Saudi Arabia's oil supply.
Yet, markets keep grinding higher and approaching new records. Some of that is attributable to low interest rates and global treasury bond yields, which make stocks more attractive than fixed income securities. When we look at asset flows over the past two weeks, we see an extreme rotation by investors out of bonds and into stocks. In fact, according to research from Bank of America, $19.2 billion from retail investors went into stocks over the past two weeks, while only $6 billion went into bonds. It's the first time we have seen that all year, per the Bank.  (source: Bank of America Global Equity Research)
We know institutional investors have continued to buy stocks in 2019, and of course, companies themselves have been big purchasers of their own equities. But retail investors are returning to the stock market after a pretty choppy first nine months of the year. That may be enough to push U.S. markets to new record highs, which would be good news. The bad news, according to LPL Financial, is that the last part of September is historically bad for the stock market—not the first. Does that mean history will repeat itself this time around? Who knows? The market has been ultra-resilient this year, but we live in strange times.  Walmart Drops e-Cigs The world's largest retailer has proven to be pretty woke, of late. Earlier this month, Walmart announced that it would stop selling automatic firearm ammunition, some high-powered rifles, and ban the carrying of firearms inside its stores. This followed two mass shootings at Walmart locations in Texas.
Today the retail giant announced that it would stop selling e-cigarettes in its Walmart and Sam's Club locations in the U.S.
Vaping has been linked to at least eight deaths in the U.S. and hundreds of illnesses, according to the Food and Drug Administration. While Walmart did not cite those reasons, the company reportedly sent a memo to its local store managers across the country saying it would stop selling vaping products, given the uncertainty surrounding the products.
"Given the growing federal, state and local regulatory complexity and uncertainty regarding e-cigarettes, we plan to discontinue the sale of electronic nicotine delivery products at all Walmart and Sam's Club U.S. locations."
Some big companies are taking the moral lead on controversial subjects, lately. Sometimes it's because it's good for business. Sometimes, their leadership team just thinks it's the right thing to do. It's often a combination of both.
It's tricky to pin a company's stock price to decisions like this, but it's worth noting that shares of Walmart are pretty close to all-time highs right now. Walmart's an indispensable part of people's lives and it is everywhere, but shareholders and customers have not revolted against the company's recent decisions... at least not yet.  What to Expect Next Week? As I mentioned, it's basically the last week of the third quarter, so company news should be fairly light. The economic calendar, however, is pretty busy.
We refer to Trading Economics calendar, and recommend it to you, if you are interested:
On Monday we'll get manufacturing reports out of the European Union and the U.S. We know both economies are contracting, especially in Europe as Germany is in the grips of an extreme slowdown. In fact, we'll get a report on the German Business Climate on Tuesday to get a sense of just how bad it is. Remember, Germany is the fourth largest economy on the planet, and two of its biggest trading partners, the U.S. and China, are kind of busy with their own issues. China's slowdown has taken a big dent out of Germany's industrial sector, so we will be looking for more data on just how bad it is.
In the U.S., we'll get two housing reports on Tuesday and Wednesday. Home prices in major U.S. cities will be released on Tuesday and home sales on Wednesday. Lower mortgage rates have made it a buyer's market in this country, which is also good for potential sellers. Early indications show that activity is picking up, which is a good sign for the economy overall.
On Thursday we'll get the U.S. trade balance figures for the prior month. Given the give and take on tariffs in the past few months, we'll get a chance to see what impact it has had on U.S. trade. We'll also get a report on industrial profits from China on Thursday. Last month, those numbers were better than expected. Was that an aberration, or is the economy holding up during this trade war?
We'll see.
Have a great weekend, everyone.
chart courtesy www.koyfin.com  Shares of Align Technology rose by almost 4% today, following the signing of a global distribution deal with Zimmer Biomet Dental. Regeneron Pharmaceuticals' stock price rose by over 3% after the European Medicines Agency's advisory group, CHMP, recommended approval of the company's Dupixent for the treatment of adults with severe chronic rhinosinusitis with nasal polyposis.  Shares of Xilinx fell by nearly 7% following the sudden announcement of its CFO's departure from the company. Netflix's stock price decreased by almost 6% today, after the company's CEO acknowledged the "tough competition" that Apple TV+ and Disney+ will pose, in addition to Evercore analysts discovering that international downloads for the app have decreased.  Word of the Day Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by taking either the total amount of new securities purchased or the number of securities sold (whichever is less) over a particular period, divided by the total net asset value (NAV) of the fund. The measurement is usually reported for a 12-month time period. 
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Friday, September 20, 2019
Early Exit
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