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April 8, 2020
Stocks – SBUX, DIS
Macro- SPY
Stocks rallied yet again and are about 19% off their highs at this point, so the S&P 500 has done a lot of work to repair the damage from March. The Fed minutes didn’t read particularly well, and my key take away was that the US economy was deteriorating by the middle of March.
S&P 500 (SPY)
The S&P 500 is either living in la-la land or being assisted by all the liquidity the Fed is pushing into the system. It seems reasonable to think that the liquidity from the Fed is undoubtedly giving the S&P 500 a needed boost. But at some point, earnings and fundamentals will matter, and the market is not cheap at current levels. I’m sorry. Maybe I’m not the perma-bull some of you thought I was.
I don’t know what to tell you, read the Fed minutes, they give you two rather bleak scenarios. In the first scenario, the Fed paints a picture where an economic recovery first STARTS in the second half of this year. In the other more dire situation, the recovery does not get underway until next year.
Tomorrow we get a lot of economics thrown at us. The most important will be initial jobless claims at 8:30 am, which are expected to be 5 million, with a range of 3 million to 7.95 million. This is on top of the nearly 10 million we have already lost.
Then at 10 am, we get consumer sentiment, which is forecast to be 75. To top it all off, we get Jay Powell speaking at the Brookings Institution in a Q&A session.
Mike’s Reading The Markets Premium Content $35/Month or $300/Year
- The Next Live Webinar Will Be April 16 At 9 PM ET
- I Still Don’t Trust This Market Rally
- Another Interesting Day Lies Ahead
- Finishing Phase 2, Entering Phase 3?
- Stocks Are Testing Big Resistance Levels
- Stocks Set To Rally, But Options Still Betting It Doesn’t Last
- Stocks Reach Critical Levels
- Stocks Are Jumping, Lots Of Bearish Options Betting
- Earnings Decline, Still Have Further To Fall- For The Week Of April 6
S&P 500 (SPY)
The S&P 500 is attempting to break a downtrend, but with tomorrow being the last day of the trading week, it is anyone’s guess as to what happens. The S&P 500 could easily retrace lower or just easily keep moving higher towards 2,900. Again, I continue to see bearish betting in the options market, and the fundamentals and economics support a lower valuation for the index. But we know that in the short-term the equity market is capable of anything. Premium content – Another Interesting Day Lies Ahead
Both the RSI and the Advance/Decline support the bullish momentum at the moment. Premium content – I Still Don’t Trust This Market Rally
Starbucks (SBUX)
Starbucks cut its earnings guidance for the fiscal second quarter again. On March 15, it cut its guidance BY a range of $0.15 to $0.18. Now today, it cut its guidance TO a range of $0.28 to $0.32. To give you a sense of how much the earnings have been impacted, on February 12 of estimates were for $0.60. The stock is trading down by 2% after-hours. I still think this one is likely to fall to around $60.
Disney (DIS)
Disney is jumping after hours on the news; it now has 50 million subscribers. That’s nice, and all, but the revenue they generate from Disney+ isn’t likely to even out the revenue they will be losing from theme parks, movies, etc. Again, be careful here.
Anyway, that is going to be all today.
-Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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