Market Morning: A Rotten Apple In China, Chaotic Currencies, Yields Plunge, Gold Jumps

Stock Market Roundup

Apple Pulls Futures Way Down

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The big news of the day that will be analyzed and picked apart for the next 24 hours across every 24 hour financial news outlet is the stunning cut in Chinese sales forecasts for Apple (NASDAQ:AAPL) iPhones, which are the bedrock of the entire 21st century economy and main fulcrum directing human behavior since 2007. In a gloomy letter to investors by Tim Cook, Apple’s CEO, Cook said, “As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.” Asian markets are down, though modestly. US market futures are tanking though, led by the Nasdaq, down 2.64% in the futures market, led by Apple, down nearly 8% in premarket trading.

Currency Chaos In Wake of Apple Flash Crash

Zerohedge is reporting an interesting little earthquake happening in the currency markets, speculating that the Apple mini-crash is having the effect of pulling down currency hedges from traders that are taking losses on Apple. The Japanese Yen (NYSEARCA:FXY) surged against the US dollar early this morning, but the dollar has since regained much of those losses. The yen had gained as much as 4.33% against the dollar in the space of about 3 and a half hours. Other currencies affected were the Aussie Dollar, the Turkish Lira, the British Pound, and offshore Yuan. Apple is one of the largest equity holdings of some central banks, including the Swiss National Bank among others.

Yields at 52 Week Lows, Gold Jumps

Yields on the 10Y US Treasury have hit 52 week lows on a flight to safety from stocks and other risk assets, hitting 2.66% for the first time since January 2018. Also benefiting from the flight to safety has been gold (NYSEARCA:GLD), which jumped to highs not seen since June. Silver (NYSEARCA:SLV) is now pushing up against its 50WMA for the first time since June as well. Gold has already pushed through its 50 and 200WMAs without much resistance. Gold’s short term performances should hinge on whether silver is able to break its 50WMA or not.

Political Theater Aims to Impress, Fails

The first thing the new Democratically controlled House of Representatives is doing is trying to pass a federal funding bill without President Trump’s requested $5B of funding for a border wall. Since there is no way that Trump will sign the bill, Democrats expect that people will be mad at Trump for this because he’s the one not signing out and thereby extending the partial shutdown of the Federal government. Trump, for his part, believes that people will blame Democrats for introducing a bill that does not include funding for a border wall, and be mad at Democrats for this. What neither of the sides completely realize is that almost nobody cares about that partial government shut down in the first place, and everyone will just blame everybody for being annoying and taking up news space. People are much more interested in Apple’s iPhone sales or lack of them.

And the Top Dow Picks for 2019 Are…

The Dow 30 stocks with the most Buy ratings by Wall Street analysts are:

  • Visa (NYSE:V), target $163.89 for expected gains of 25%
  • United Health (NYSE:UNH), target $305.83 for expected gains of 25.6%
  • Microsoft (NASDAQ:MSFT), target $125.83, for gains of 26.6%
  • Merck (NYSE:MRK), target $81.99, for gains of 10.3%
  • Boeing (NYSE:BA) target $422.68, for gains of 30.5%

To be filed for later under: Misplaced Optimism?

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