Finance

Your first trade for Thursday, January 25

The “Fast Money” traders shared their first moves for the market open. Pete Najarian was a buyer of SPDR S&P Regional Banking ETF. Tim Seymour was a buyer of MedReleaf. Dan Nathan was a buyer of Lionsgate. Guy Adami was a buyer of Discovery Communications. Trader disclosure: On January 24, 2018, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Pete Najarian is long calls AAPL, AEO, AKS, BAC, C, CELG, CHK, DAL, DSW, FCX, GDX, HBI, IBM, INTC, MAC, OA, ORCL, OXY, RIG, T, XOM. Pete is long stock AAPL, BAC, BKE, C, CELG, DLTR, GILD, GIS, GM, HBI, HUM, IBM, INTC, KMI, KMX, KO, LOW, MRK, MSFT, MU, NKE, PBR, PEP, PFE, STZ, SPY, TGT, TPX, UPS, WDC, WFC. Bought PBR, ...

Best Buy shares slip after top analyst says the retailer’s comeback against Amazon is priced in

Best Buy stock slipped Thursday after a top retail brokerage firm downgraded shares on fears that Wall Street has already priced in the store’s rebound. Telsey Advisory Group cut its rating to market perform from outperform, sending shares sliding. Best Buy closed down 0.7 percent Thursday. “The low hanging fruit has already been picked, and going forward, the company is increasing investments in technology, labor, and supply chain to maintain its leadership position,” Telsey analyst Joseph Feldman wrote to clients. “The overall product cycle remains average in 2018, with no highly-anticipated launches. Smart-home devices and appliances remain growth areas, while we anticipate weaker trends in computing and mobile phones.” Feldman added that given Best BuyR...

One of Wall Street’s loudest bulls says the economy is ‘stronger than a garlic milkshake’

Raymond James’ Jeffrey Saut isn’t letting the string of new record highs and soaring optimism intimidate him. He doesn’t see these factors as contrary indicators to the rally. Saut still contends there are years remaining in the secular bull market, and his bull call sounds even louder. “The economy is stronger than a garlic milkshake. Earnings are coming in better than people think,” the firm’s chief investment strategist said Wednesday on CNBC’s “Trading Nation.” It’s now 12 months since the Dow broke through the 20,000 milestone, and it’s now striking distance from the 26,500 market — a more than 30 percent gain. In January alone, the Dow and S&P 500 have secured intraday all-time highs 13 times. “There’s ...

Opening Bell: 1.25.18

Trump Says He Is Willing to Speak Under Oath to Mueller [NYT]President Trump said on Wednesday that he was willing and eager to be interviewed by Robert S. Mueller III, the special counsel investigating Russia’s interference in the 2016 presidential campaign, insisting that he has done nothing wrong.“I’m looking forward to it, actually,” Mr. Trump said of talking to Mr. Mueller, answering months of speculation over whether he was willing to submit to questions from the special counsel, who is also believed to be looking into whether the Trump campaign aided Moscow’s effort and whether the president sought to thwart the inquiry itself. Dollar Steadies After Selloff but Weighs on Global Stocks [WSJ]European stocks and U.S. futures inched higher Thursday shortly ahead of a European Central Ba...

Barclays CEO says new US tax policy is a ‘very big deal’ for his company

The U.S. is setting an example for the world in terms of tax friendliness, Barclays CEO Jes Staley told CNBC while at the World Economic Forum in Davos. “The USA has clearly embarked on a strategy to be very business friendly as a regulatory matter and now as a tax matter,” Staley said Thursday. “And the question is, how is the rest of the world going to respond?” “45 percent of our business is in the U.S., now 45 percent of our business is in the lowest tax jurisdiction in the world … for Barclays, it’s a very big deal.” “What does this mean for Europe? What does it mean for the U.K.?,” he posited. “The tax policy will change the dialogue about how countries are coordinating globally both in terms of how to deal with busine...

Grocer Kroger has had early talks to work together with Jack Ma’s Alibaba

Chinese e-commerce and technology company Alibaba and U.S. grocer Kroger have had early discussions on working together, including a meeting in which U.S. executives traveled to China, a source familiar with the matter said. The business development talks are at an initial stage, and it is not clear if they will lead to any cooperation, the person said, declining to be named. The discussions come as U.S. e-commerce company Amazon.com has expanded aggressively into groceries with its acquisition of Whole Foods Market. The talks between the two firms were reported earlier by the New York Post. Spokespeople for Kroger in the United States and Alibaba in China did not immediately respond to requests for comment. This week Amazon opened to the public its Amazon Go checkout-free grocery store, w...

Rescue is on the way for India’s troubled banks — but it comes with a catch

India’s government pledged on Wednesday to inject nearly $14 billion combined into all but one state-run lender by March in return for them implementing reforms, in a bid to boost lending and tackle a record bad debt problem. The funds will be injected into 20 lenders majority-owned by the government, which together hold most of India’s record $150 billion in soured loans. Lenders with high stressed-asset ratios, such as IDBI Bank, will get a bigger portion of the money. The government last October said it would inject a total of 2.11 trillion rupees ($33.1 billion) into its state-run lenders over two years. The 881.4 billion rupees announced on Wednesday will be injected by March, while the rest will be doled out over the next fiscal year. India desperately needs its lenders t...

Investing with borrowed money is tempting but a roll of the dice for most

In a 1991 speech at the University of Notre Dame, Warren Buffett offered a few of what are now regarded as some of his wisest words: “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money.” The Berkshire Hathaway CEO told the campus audience they could make a lot of money without other people’s money if they were smart. Still, the temptation now to use historically low-interest money from mortgages, personal credit lines and 401(k) plans to invest in the stock market is great, especially as the Dow is reaching historic heights at more than 26,000 — a milestone unfathomable in 2009, during the Great Recession. Professional traders have used leveraged money from brokers and lenders to invest in exchange-traded funds and other stocks...

California in Recession? (Part II)

The release of labor market indicators suggests not, contra some recent commentary. Figure 1: California civilian employment over age 16 from household survey (black), nonfarm payroll employment (dark blue), private nonfarm payroll employment (pink) from establishment survey, all in thousands, seasonally adjusted, on log scale. NBER defined recession dates shaded gray. Source: BLS and NBER. For comparison, here is Wisconsin and the Nation nonfarm payroll, all logged and normalized to 2011M01=0. Figure 2: Log nonfarm payroll employment for California (blue), Wisconsin (red), and US (black), seasonally adjusted, normalized to 2011M01=0. Source: BLS and author’s calculations. The Philadelphia Fed’s coincident index for California rose through the November reading; the November leading index i...

Guest Contribution: “Three Candidates for Fed Vice-Chair”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. It will be tough to fill the shoes of Stan Fischer as Fed vice-chair. The candidates most actively under consideration by the Administration, to serve as number 2 to Jay Powell as Chair, are Rich Clarida, Larry Lindsey, and John Williams. Clarida and Williams are both excellent economists; either one would be great for this job. Williams, who has been getting the most media play, has been at the San Francisco Fed since 2002. (I think he was an undergraduate student in a large macro class I taught at UC Berkeley long ago.) He argues that the natural rate of interest (“r*”) has undergone a long-lasting gl...

With no recession red flags on horizon, 2018 will see strong US, global GDP growth: Strategist

Nine years into the U.S. bull market in stocks, we are still optimistic for the year ahead. But there are some risks investors need to be mindful of as we start the new year. Fortunately, we do not believe recession is one of them, and so we remain bullish. Pending recessions typically end bull markets. And recessions are often presaged by certain signals: rising jobless claims; falling home sales; an inverted yield curve; wage pressures that impact corporate margins; exogenous shocks, including oil spikes; or destabilizing valuations in key asset classes. We don’t see those red flags on the horizon as we enter the new year, so we continue to believe that 2018 will witness strong U.S. and global GDP growth. Equity gains will likely moderate from 2017, but we continue to favor stocks ...

World Economic Outlook Update: Upwardly Revised Growth, Rising Risks?

The IMF released an update to WEO today: Source: IMF, WEO (January 2018). From the report: Buildup of financial vulnerabilities. If financial conditions remain easy into the medium term, with a protracted period of very low interest rates and low expected volatility in asset prices, vulnerabilities could accumulate as yield-seeking investors increase exposure to lower-rated corporate and sovereign borrowers and less credit-worthy households. As noted in the October 2017 Global Financial Stability Report, the share of companies with low investment-grade ratings in advanced economy bond indices has increased significantly in recent years. Non-financial corporate debt has grown rapidly in some emerging markets, calling for a policy response. The Chinese authorities have made a welcome start b...