Asian Shares Down Overnight, Futures Fall
In a hint that yesterday’s end-of-day selloff would continue at the open today, Japanese shares were down over 1% along with most Asian indexes. A few hours later, US stocks futures took a dive. The level to watch on the S&P 500 (^GSPC) today is 2,675, the current 50 day moving average. The 200DMA is at 2,630, making it the closest the two moving averages have been since May 2016. If 2,675 gets taken out, we’d be close to a so-called death cross, which happens when the 50DMA moves below the 200DMA and is a generally bearish sign for traders.
No Social Security Number? No Political Facebook Ads
FDR never imagined that his social security system would be used to identify political advertisers on Facebook (NASDAQ:FB). It may not be enough to mollify those hostile to Mark Zuckerberg across the sea in Europe, but Facebook may be hoping that logging the last four digits of social security numbers of political advertisers will help extricate the social network from future controversy surrounding political campaigns and foreign intervention and other unsavory topics. Advertisers will also have to provide a government ID and a physical US address. This should help prevent foreign actors from plastering Facebook with political ads and then Facebook getting accused of being a vector for manipulation of American elections by supposedly nefarious actors.
Bank Profits Soar Just In Time For Dodd Frank Rollback
In a victory for Republicans, the Dodd Frank Act of 2010 was rolled back in the House of Representatives at the same time that bank stocks (NYSEARCA:XLF) have pulled in record profits. Bank profits climbed by 28% during the first quarter according to the FDIC. That’s the good news. The other side is that this could be a sign of increasing inflation pressures as the reason that banks have profits to begin with is increased lending, which means increased money supply, which means higher prices generally speaking. A blunted Dodd Frank bill could add upward pressure on the money supply even further, sparking more inflationary pressures that could in turn push interest rates another notch higher.
Fed Minutes On Tap, Traders Excited To Read What They Already Heard
The Federal Reserve will be publishing the minutes of last month’s meeting, which trading algorithms will quickly scan, looking for keywords and probably cause a few short term jiggles in bond and commodity markets. The Fed usually tries to stay away from placing any obvious verbal indicators in these preplanned releases so markets are probably reading too much into it each time, but they still cause some tremors every time they are released anyway. Traders will be looking for any indication regarding how the Fed thinks the economy is doing, how many more rate hikes will come by the end of the year, and whether the Fed thinks that inflation is headed higher, steadying, or headed lower. Of course the Fed can and often does change its collective mind by the next minutes release, but that doesn’t stop Wall Street from inspecting these reports with an electron microscope each time.
Weed-Killing Robots Threaten $26 Billion Herbicide Industry
A Swiss company is in the late stages of testing a spider-like weed-killing robot drone that crawls all over seeded agricultural fields, inspects the soil for weeds, zeros in on any unwanted guests and squirts them with surgical strikes of weed killer. If successful, this could disrupt the demand for universal herbicides that are currently sprayed over entire areas during the sowing season. The biggest sellers of herbicides globally are Bayer (PNK:BAYRY), DowDuPont (NYSE:DWDP), and BASF (PNK:BASFY). Herbicides account for 46% of total pesticide revenue and 90% of seeds are genetically engineered to tolerate them, which could mean some disruption for companies like Monsanto (NYSE:MON) as well.
Make North Korea Great Again
Will Kim and Donald meet on June 12th? In a very Trumpesque statement to the media, the US President said yes and no and maybe and that we’ll know “pretty soon”, making sure that every side on the topic believes that its favored outcome will be the one to actually happen. “There’s a very substantial chance … it won’t work out. And that’s OK,” he said. And then “That doesn’t mean it won’t work out over a period of time. But it may not work out for June 12. But there is a good chance that we’ll have the meeting.”
He continued on the Make North Korea Great Again theme by adding, “North Korea has a chance to be a great country and I think they should seize the opportunity.”
That last statement might not be music to Kim Jong Un’s ears, as he probably believes that North Korea is already a great country and that he doesn’t have to meet with Donald Trump in order to be so. If the meeting does happen, expect a bump for Asian stocks, especially South Korea (NYSEARCA:EWY) and Japan (NYSEARCA:EWJ), the two countries repeatedly threatened by North Korean bluster.