Stock Market News: May 11, 2019
Markets:
This was the market’s worst week of the year, with volatile sessions every day, due to constant trade talk fears, which were exacerbated by rhetoric. The market turned up Friday afternoon, after a comment by Fed member Bostic, who said on Friday that the central bank could cut interest rates if a trade fight begins to hurt to the U.S. economy.
The DOW lost the least, down -2.12%, with the S&P down -2.18%, while the Tech-heavy NASDAQ took the biggest hit, losing -3%, due to trade talk turmoil.
High Dividend Stocks:
These high yield stocks go ex-dividend next week – AHC, MAIN, PSX.
Market Breadth:
Only 4 out of 30 DOW stocks rose this week, vs. 18 last week. 24% of the S&P 500 rose, vs. 58% last week.
Volatility:
The VIX rose 25% this week, ending the week at $16.04.
FOREX:
The USD fell versus the yen, the Swiss franc, the euro, and the Loonie , and rose versus most major currencies once this week.
Economic News:
“U.S. stock prices are “elevated” and business debt is at historic levels, but the financial system overall “appears resilient” with low levels of leverage and less of a destabilizing run in key markets, the Federal Reserve said in its latest report on financial stability. Investor appetite for risk appears elevated by several measures, and the debt loads of businesses are historically high,” the Fed said on Monday in a report that noted the 20 percent growth in leveraged loans between the start of last year and this year, and other aspects of corporate debt.
The ratio of debt to assets among publicly traded, non-financial firms is near a 20-year high, the Fed noted, and the share of new loans going to the most indebted companies is near peaks reached in 2014 and just before the 2007 to 2009 financial crisis. With financial volatility easing since the end of last year, the Federal Reserve Board’s Financial Stability Report suggests stretched asset valuations and risky corporate debt merit continued vigilance against a backdrop of low-to- moderate vulnerabilities in the household and banking sectors.” (Reuters)
“Tomato prices could take off from recent lows as the U.S. is set to withdraw from a pact with its top supplier Mexico. The so-called Tomato Suspension Agreement will expire on Tuesday, triggering duties of more than 17 percent on supplies crossing into the U.S. from Mexico. The decision was made in part to protect growers in Florida.
U.S. tomato retail prices could climb by 40 percent to as much as 85 percent, with the bigger gains like coming in the October-June period, when Florida production slows and Americans are more reliant on imports, according to a study by Arizona State University.” (Bloomberg)
“Favorable treatment for commercial real estate occurs at multiple levels, including income and property taxes as well as more complicated structures that allow savvy families to pass real estate worth hundreds of millions to heirs tax-free. There are myriad benefits, all legal, created specifically for commercial real estate.
In the 2017 tax overhaul, the deductions for real estate taxes and mortgage interest on a home were severely curtailed. Not so for commercial real estate. The taxes a property incurs are fully deductible as business expense.” (NY Times)
Week Ahead Highlights:
There will be several consumer-based reports due out next week, in addition to the Industrial Production figures for April.
Sectors:
All sectors dropped this week, with defensive Consumer Staples holding up the best.
FUTURES:
WTI Crude fell -.37% this week, finishing the week at $61., while Natural Gas fell once again, down -.81%.
“Crude-oil prices dropped on Tuesday amid lingering worries about a protracted trade conflict between the U.S. and China, which could hurt demand for the commodity.”
