| Thursday's Headlines 1. U.S. markets churn higher again as the DJIA hits an all-time high 2. Oil prices continue to fall, giving up recent gains 3. Apple makes another all-time high 4. CEOs are still not confident 5. Happy Birthday, iPhone! Markets Closed
 Markets Today Equity investors were buyers again today, shedding any concerns about the recent conflict between Iran and the U.S. The White House indicated that the Ukrainian 737 that crashed shortly after takeoff from Tehran two days ago, killing all 176 passengers and crew aboard, may have been accidentally shot down by an Iranian missile. We haven't heard the end of this, not by a long shot. Oil prices fell slightly and are now near where they were a week ago, before the current Iranian-U.S. conflict. Gold prices fell 1.36% as the flight to the relative safety of the precious metal is all but over for now. Investors are preparing for the U.S. December employment report due out tomorrow morning, which is expected to show job gains of around 160,000 for the month. We'll also get a report on U.S. business inventories, which will shed light on how the apparent easing of trade tensions between the U.S. and China impacted American manufacturers and their willingness to stock up in anticipation of future international sales.
Headlines
chart courtesy YCharts  CEOs are Still Not Confident Despite record highs for equity markets and the apparent easing of trade tensions between the U.S. and China, chief executives are still not confident about business conditions going forward. Don't get me wrong, we want our business leaders to have a healthy dose of paranoia and skepticism, but their concerns fly in the face of pretty strong confidence on the part of consumers. The chart above shows the NY Federal Reserve's survey of business leaders future capital spending plans going back 3 years, which is one way of looking at confidence.
The Conference Board, which is made up of some of the top executives in the world runs its own quarterly survey of CEOs, which tells a similar tale. According to the Conference Board's latest survey, CEOs have regained some of their mojo after losing it in the first three quarters of 2019, but it is still not as high as you might expect given the trade news and the stock market's upward march.
According to the survey, "CEO Confidence improved in the final quarter of 2019, after having declined to its lowest level in a decade in Q3...While the abatement of trade and tariff issues has helped improved confidence, CEOs still remain apprehensive about global growth prospects in early 2020."
12% of CEOs surveyed anticipate economic conditions will improve over the next six months, up from just 4 percent in the third quarter. Meanwhile, 44 percent expect economic conditions will worsen, which is down from 67% last quarter. CEOs' expectations regarding short-term prospects in their own industries over the next six months were also slightly more positive. 23% anticipate an improvement in conditions, up from 13% last quarter. Those expecting that conditions will worsen in the short term declined to 40% from 56% in Q3.
Their outlooks are improving, but given the uptick in consumer confidence (see below), you might expect their attitudes to be a little rosier. Maybe they are fearful because so many of them lost their jobs in 2019?
chart courtesy YCharts  U.S. Employment Report on Deck One key reason consumers are feeling confident is the strength of the U.S. jobs market. In November 260,000 jobs were added to U.S. payrolls, far exceeding expectations. The unemployment rate is at 3.5% - historically low for the U.S. 180,000 jobs per month were added on average in 2019, and although tomorrow's December employment report is only expected to show a gain of 160,000 jobs, if the unemployment rate sticks at or near 3.5%, it will be 11 straight months with joblessness under 4%.
To be sure, not all jobs are equal and many workers are working more than one job to make ends meet given the rising cost of living and small increases in wages. But the last employment report showed meaningful growth in manufacturing jobs, which is a sign of a strengthening economy.
Let's see what tomorrow brings.
chart courtesy tradingeconomics.com  (chart courtesy YCHARTS)  Maker of plant-based meat substitutes, Beyond Meat, rose substantially today after its main rival Impossible foods announced it was no longer attempting to make a deal with McDonald's. Biomarin Pharmaceutical rose today after Cowen and Cantor Fitzgerald reaffirmed "buy" ratings, although Raymond James downgraded it from "outperform" to "market perform." Investment management firm Voya Financial gained today after it said it was in discussion with multiple insurers about a sale of the company.  Lighting firm Acuity Brands dropped nearly 14% after an earnings miss today. Kohl's fell today after it announced a same-store-sales decline over the holidays. Word of the Day The Conference Board (CB) is a member-driven economic think tank. Founded in 1916 this not-for-profit research organization is a widely quoted private source of business intelligence.  Image: David Paul Morris / Stringer
Today in History January 9, 2007 Today in 2007, the first iPhone was announced by Steve Jobs. The new phone combined "three products—a revolutionary mobile phone, a widescreen iPod® with touch controls, and a breakthrough Internet communications device," in one device. 12 years later, the iPhone's enormous success allowed Apple to be the first publicly-traded company with a market value of $1 trillion. iPhone sales generated over half of Apple's $266 billion in revenue for 2019.
Sources: https://www.apple.com/newsroom/2007/01/09Apple-Reinvents-the-Phone-with-iPhone/ https://www.apple.com/newsroom/pdfs/Q4%20FY19%20Consolidated%20Financial%20Statements.pdf
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Thursday, January 9, 2020
Jitters at the Top
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