Finance

Your first trade for Thursday, February 1

The “Fast Money” traders shared their first moves for the market open. Tim Seymour was a buyer of Facebook. Brian Kelly was a buyer of Square. Dan Nathan was a buyer of the iShares Nasdaq Biotechnology ETF. Guy Adami was a buyer of Advanced Micro Devices. Trader disclosure: On January 31, 2018, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Tim Seymour is long AMZA, APC, BABA, BAC, BX, C, CCJ, CLF, CMG, CSCO, CX, DAL, DPZ, DVYE, EEM, ERJ, EUFN, EWM, FB, FXI, GE, GILD, GM, GOOGL, HAL, INTC, JD, MAT, MCD, MO, MOS, MPEL, PAK, PHM, PYPL, RAI, RH, RL, SBUX, SQ, T, TIF, TWTR, UA, UAL, VALE, VIAB, VIPS, VOD, VRX, X, XLE, XRT, 700.HK. Tim is short IWM, RACE, SPY. Bou...

Opening Bell: 2.1.18

Yellen era ends with Fed set for March rate rise [WSJ]The Federal Open Market Committee held its target range for the federal funds rate unchanged at 1.25 to 1.5 per cent, as widely expected, while giving an upbeat assessment of the economy’s recent performance and stressing “further” rate rises lie ahead.The committee upgraded its near-term outlook for inflation, saying it expected year-on-year readings to “move up this year” before stabilising around its 2 per cent goal in the medium term. Expectations for inflation in financial markets have risen in recent months, even if they remain low, the central bank said. Facebook Aims to Soothe Wall Street Over News Feed Changes [NYT]On Wednesday, Facebook sought to soothe Wall Street’s worries over those questions. No, people will not spend as m...

India’s banks have a bad loan problem, but financial experts still see opportunity

Indian banks may have scared off some investors with the sector’s bad loan problem, but financial experts told CNBC they’re positive on Indian lenders. That’s thanks to the government’s economic management, they said, adding that it was still important to differentiate within the sector. On the one hand, India’s private banks offer “strong” returns on investment, Rashmi Gupta, emerging markets multi-asset portfolio manager at J.P. Morgan Private Bank, told CNBC. “Many of them are considered well run with capable management teams,” she added. Meanwhile, India’s state banks are largely plagued with high levels of stressed (non-performing, restructured or rolled-over) loans. Those assets amounted to 8.25 trillion rupees ($130 billion...

Kansas GDP and Employment under Brownback: A Retrospective

Now that Brownback is an ex-governor, and the tax plan he touted as a “shot of adrenaline” is largely reversed, it’s a good time to see what damage was wrought. Figure 1: Log real GDP for Missouri (blue), Kansas (red), normalized to 2011Q1=0. Source: BEA and author’s calculations. Kansas GDP growth was negative q/q from 2015Q3-2016Q1. Hence, Kansas was in recession using the conventional rule of thumb over this period. The timing of the start of the recession is in line with results obtained using the Philly Fed coincident indices and the Hamilton Markov switching approach, as discussed in this post. The rebound is more pronounced in the employment data which extends through December. Figure 2: Log nonfarm payroll employment for Missouri (blue), Kansas (red), normalized to 2011M01=0. Sourc...

Fed Statement: Highlights, Red Line

Ok, here comes the Fed. And you should enjoy this FOMC statement because it represents the outcome of the last meeting Janet Yellen will chair. So you know, maybe print it out and frame it for posterity in case the equity bubble she’s spent years presiding over crashes an burns under a relatively hawkish Powell. The consensus is that this should be some semblance of upbeat as a way of both conveying confidence in the outlook (perhaps on the back of the growth prospects tied to the tax plan) and paving the way for Powell’s Fed to adopt a slightly more aggressive stance going forward. Just to give you something to benchmark this against in terms of reality versus expectations, here’s a reminder about what Goldman said in their preview: At Janet Yellen’s final FOMC meeting next week, we expec...

Bonds are in ‘mild bear market,’ says Bill Gross

Bonds have entered a bear market, but it’s not one that is necessarily extreme, bond guru Bill Gross told CNBC on Wednesday. He predicts the benchmark 10-year Treasury will go “very gradually but not significantly higher,” in the next 12 months, hitting a yield of 3 percent. Rising yields mean lower prices, which in turn cut into returns for bond investors looking for capital appreciation. While bondholders will get the income from the yield, they’ll lose about 3 points in terms of price “so they’ll get nothing,” the manager of the Janus Henderson Global Unconstrained Bond fund said in an interview with “Power Lunch.” “To me, that’s a mild bear market.” However, he noted that the bear market will certainly not be the e...

Brexit: Still A Stupendously Bad Idea, Still Happening Anyway

By Rlevente [CC BY-SA 4.0], via Wikimedia Commons It’s been nearly two months since the European Union grudgingly agreed to let the British begin to mention the shape of a post-Brexit world in its presence in spite of their reaching an agreement on only two of the three things that the EU said was necessary. And ever since, they’ve been regretting it. Six weeks after EU leaders gave their blessing to moving the Brexit talks on to future arrangements, frustration is mounting that the UK is “not ready” to complete the divorce, which the EU deems essential for a deal before Britain’s departure on 29 March 2019…. The Irish border issue is the most difficult hurdle, but negotiators must also resolve a host of technical matters, including Euratom, police cooperation and the role of the European ...

Alan Greenspan says there are bubbles in both stocks and bonds

Alan Greenspan gave a stark warning about the financial markets Wednesday. “I think there are two bubbles. We have a stock market bubble and we have a bond market bubble,” Greenspan said in an interview on Bloomberg Television. “I think [at] the end of the day the bond market bubble will eventually be the critical issue.” The former Federal Reserve chairman predicted a rise in interest rates and fretted over the national debt and budget deficit. “We are dealing with a fiscally unstable long-term outlook in which inflation will take hold,” he added. “In fact I was very much surprised that in the State of the Union message yesterday all those new initiatives were not funded and I think we’re getting to the point now where the breakout is going ...

Traders are still expecting two to three rate hikes this year after Fed statement

The Federal Reserve likely remains on track to raise interest rates at least two times this year. Fed funds futures, contracts that measure the market’s bets on where the central bank’s benchmark rate will be, rose slightly but did not indicate a significant change in expectations after the release of the Fed statement Wednesday. Markets were pricing in a more than 90 percent chance of an interest rate rise in March, and another 1.75 hikes by the end of the year, according to Bank of America and Jefferies. That was essentially unchanged from before the Fed released its statement. “Still somewhere between two and three [rate hikes this year] is what people are expecting,” said Ian Winer, head of equities at Wedbush. The Fed “sounds ever so slightly hawkish but ...

Even Deutsche Bank Thinks GE Is A Hot Mess

When your new CEO admits almost right off the bat that the place is kind of a shithole, you really can’t expect your company to be going too great. And while GE shareholders have come to accept bad results, messy bitches causing ratchet drama and a deep distrust in the long-term recovery process as commonplace, you’ve got to believe that this still hurts… “We believe the chances that GE could be removed from the Dow are increasing as GE continues to face substantial challenges including earnings and cash pressure, tough global power generation markets, aggressive downsizing, shrinking its portfolio, management shake-up and SEC investigations,” Deutsche Bank analyst John Inch wrote Wednesday. “Apart from GE’s other challenges, as the company’s absolute share price has continued to drop, GE ...

Yellen leaving Fed Saturday, Powell to be sworn in Monday

Janet Yellen’s final days as head of the Federal Reserve are at hand. The Federal Open Market Committee, which sets monetary policy for the U.S. central bank, decided this week to select Jerome Powell as its new chairman effective Saturday. He will be officially sworn in Monday. The move was a formality considering that Powell already has been confirmed by the Senate as the new Fed chair, but it does delineate how the handoff of power will occur. Yellen has led the Fed since February 2014, but President Donald Trump chose not to reappoint her. She becomes the shortest-serving Fed chair since the late 1970s. After Trump made his choice of Powell public, Yellen said she would not stay on the FOMC.

Here’s what changed in the new Fed statement

This is a comparison of Wednesday’s FOMC statement with the one issued after the Fed’s previous policymaking meeting on December 12. Text removed from the December statement is in red with a horizontal line through the middle. Text appearing for the first time in the new statement is in red and underlined. Black text appears in both statements.