foxex: Smashing

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Friday's Headlines

1. U.S. markets rebound from three-day slide
2. Consumer sentiment rebounds in November, but future expectations fall
3. Unsecured personal loans are growing to troubling highs

4. Tesla Cybertruck's smashing debut

5. What to expect next week

Markets Closed

Dow
27,875.62 +0.39%

S&P
3,110.29 +0.22%

Nasdaq
8,519.88 +0.16%

VIX
12.37 -5.79%

Bitcoin
$7,370.80 -3.50%

US 10-Yr Yield
1.774 +0.11%

Year-to-Date

Dow
27,875.62 +19.50%

S&P
3,110.29 +24.07%

Nasdaq
8,519.88 +28.40%

Russell 2000
1,588.94 +17.83%

Crude Oil
$58.04 +19.52%

US 10-Yr Yield
1.7740 -33.95%

Markets Today

U.S. markets rebounded after a three day slide, but this week will mark the first in more than a month when the market closed lower on Friday than when it opened on Monday. A mix of economic reports out of the U.S. and Europe showed positive consumer sentiment on these shores while manufacturing continues to deteriorate across the Atlantic. Retail stocks in the U.S. charged higher on upbeat reports from Nordstrom late yesterday, which helped boost Macy's and The Gap, despite earnings misses from those two companies.

Headlines

The Federal Communications Commission labeled Chinese telecommunications firms Huawei and ZTE a "national security threat" and voted to ban them from a federal subsidy program. The FCC also began a regulatory process that would eventually force U.S. firms to replace Huawei and ZTE equipment they have already bought and installed. The FCC's move is in contrast to the Commerce Dept's decision this week to allow U.S. electronic firms to sell some components to Huawei.
Crude oil prices fell from two month highs as doubts appeared as to whether OPEC members will agree to a production cut when they meet on December 3.
Frozen 2, the second installment of Disney's Frozen franchise, will be released tomorrow. The first film made over $1.3 billion worldwide when it was released in 2013, making it the most successful animated movie in history.
Consumer sentiment improved in November, climbing about 1.5% above October levels, according to the Univ. of Michigan's monthly survey. While sentiment improved, there is a sharp division between consumers who feel that the economy will improve and those who think we are headed for a recession.

Unsecured Personal Loans are Growing

Underneath the strong consumer sentiment and healthy spending lies a disturbing trend, the rise in unsecured personal loans. Personal loans, by definition, are unsecured debt, meaning there is no underlying asset like a home or car that backs the loan if someone cannot repay. According to Experian, the average personal loan balance is $16,259, very close to levels reached just before the 2008-09 financial crisis. Personal loan balances over $30,000 have grown 15% in the past five years, just as consumer debt has reached record levels, according to the Federal Reserve.

Heather Long, an ace economics reporter for the Washington Post, has more in her important article on the subject. One of the main takeaways is that fintech companies that offer consumer loans and loan consolidation, are making it easier for consumers to keep borrowing, but since these companies did not exist during the last recession, they have not been tested in times of economic duress.

Even though money is cheap, consumers still need to consider their borrowing carefully. The same should be said for the United States and other governments with massive deficits, but that's another matter.

chart courtesy WaPo

The Tesla Cybertruck's Smashing Debut

Tesla's rollout of its new Cybertruck, which has very sharp angles, fell flat with investors today. Actually, shares of the automaker fell 7% as the truck's debut produced a few embarrassing moments and a month's worth of twitter jokes.

In a setup almost resembling a magic show, black-clad Tesla employees wielded sledgehammers and metal balls. The demonstration produced one particularly embarrassing moment when a metal ball hurled at a window shattered it. Musk first cursed, then chuckled, and then pointed out that it didn't go through the glass.

photo courtesy Reuters

Marvel Comic Book Sells for Record $1.26 Million

This one is from Editor Ward Williams, comic book aficionado...

The book responsible for kickstarting the Marvel Universe was purchased for $1.26 million yesterday. According to Heritage Auctions, the Dallas-based house that organized the sale, this makes it the most expensive comic from the House of Ideas ever sold at a public auction. This near-mint copy of Marvel Comics #1 was part of the Windy City pedigree collection, which was created by a Pennsylvanian mailman in the 1940s when he began purchasing every first issue of a comic book or magazine that he could get his hands on. The collection received its iconic name after being introduced to the the Chicago market by Gary Colabuono, a well-known comic book dealer.

Published in 1939, back when the company was first known as Timely Comics, Marvel Comics #1 is best known for introducing the original Human Torch—preceding the better-known Johnny Storm of the Fantastic Four by 22 years—and Namor the Sub-Mariner, the first comic book antihero. Also making their debut appearances were the original Ka-Zar, the Angel (unrelated to the X-Man character of the same name), and the Masked Rider. The iconic cover art was created by renowned science fiction/pulp artist Frank R. Paul, with interiors from classic illustrators like Bill Everett, Carl Burgos, and Paul Gustavson.

image courtesy Heritage Auctions

What to Expect in the Markets Next Week

As those of us in the U.S. head into the Thanksgiving Holiday, investors should be thankful for relatively bountiful returns across a variety of asset classes. Here's a chart of what different asset classes have returned year-to-date.

Here's a brief look at the week ahead.

Monday:

Chicago Federal Reserve National Activity Index (Oct.)
Dallas Fed National Activity Index (Nov.)

Tuesday:

U.S. Goods Trade Balance (Oct.)
S&P/Case-Shiller House Price Index (Sept.)
U.S. Consumer Confidence (Nov.)
New Home Sales (Oct.)

Wednesday:

Durable Goods Orders (Oct.)
U.S. GDP (Q3)
U.S. Pending Home Sales (Oct.)
U.S. Personal Consumption Index (Oct.)
Chicago Purchasing Managers' Index (Oct.)
Fed Beige Book

Thursday:

U.S. Stock and Bond Markets Closed for Thanksgiving Holiday
Eurozone Consumer Confidence (Nov.)
Tokyo Core Consumer Price Index (Nov.)
Japan Industrial Production (Oct.)

Friday:

U.S. Stock and Bond Markets Close Early for Thanksgiving Holiday
Eurozone Consumer Price Index (Nov.)
Eurozone Unemployment Rate (Oct.)
India GDP (Q2)
China Purchasing Managers' Index (Nov.)

Black Friday
With consumer spending standing as one of the stronger segments of the U.S. economy, the coming shopping weekend will be an important bellwether. The National Retail Federation (NRF) expects that an estimated 165.3 million Americans will shop from Thanksgiving Day to Cyber Monday. Black Friday will be the biggest shopping day with an estimated 114.6 million Americans going shopping. The NRF estimates that next Sunday, December 1, will be the least popular shopping day of the weekend, with 33.3 million shoppers. The NRF's annual forecast estimates that holiday retail sales will rise to roughly $730 billion, about 4% higher than last year.

Third Quarter GDP
Right before the Thanksgiving weekend shopping bonanza, the U.S. Department of Commerce will release revised third quarter GDP numbers. These numbers will show whether or not the rest of the economy has been weathering the trade war as well as the stock market has. Preliminary numbers were released at the beginning of the month, which put growth at 1.9%. However, these are often subject to sizable revisions as more data comes in. A study by FiveThirtyEight in 2014 put the average first revision at about half a percent.

More News:

How Aramco IPO Will Change Oil Dynamics

Pullback in Farming Equipment Stocks Offers Trading Opportunity

Bank of America Stock Nears Major Breakout

chart courtesy YCHARTS

Department store Nordstrom rose 10.6% today after it reported substantially better-than-expected earnings. Fellow department store Macy's gained back some of its losses earlier in the week, as did The Gap. The stocks rose 5.0% and 4.5% respectively.

Tax preparation software maker Intuit dropped 4.2% today after it announced weak guidance numbers despite an earnings beat. Other stocks falling today include energy company Hess, which fell 3.8%, and alcoholic beverage maker Constellation Brands, which fell 2.9%

Word of the Day

Consolidation
Consolidation is a technical analysis term referring to security prices oscillating within a corridor and is generally interpreted as market indecisiveness. Said another way, consolidation is used in technical analysis to describe the movement of a stock's price within a well-defined pattern of trading levels.

Today in History

November 22, 2019
Today in 1995 Toy Story was released, the first computer animated feature film. In 1991 Disney commissioned Pixar to make up to three animated feature films after the enormous success of the 1989 animated film, The Little Mermaid, which marked the beginning of the Disney Renaissance. Costing, by today's standards, a relatively paltry $30 million Toy Story grossed over $370 million. It racked up three Oscar nominations and a special achievement award. Pixar would eventually be acquired by Disney for $7.4 billion in 2006.

https://www.oscars.org/collection-highlights/toy-story
https://www.the-numbers.com/movies/franchise/Toy-Story#tab=summary