David Moenning's Daily State of the Markets: 10/19
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The Old Guard Returns
After a brief two and one-half day hiatus, the bears resumed their �shock and awe� strategy for October yesterday. It is now clear that our furry friends had decided to wait until the start fourth quarter to make their case that higher inflation, stubbornly high energy prices, and rising rates would ultimately become a problem for earnings, the economy, and stock prices.
The big worry right now is that inflation will put a serious crimp in profit margins at some point. So while the Core Rate of inflation has only risen by 2.6% over the last 12 months, the PPI for finished goods has increased by 6.9%. And although there wasn�t any one big headline event that sent stocks down -62 on the day, the cumulative effect of several stories ($1.4 billion block trade in XOM, Greenspan commenting on oil hurting the global economy, and Yellen saying more rate hikes are on the way) got the ball rolling back downhill.
Turning to this morning, while Housing Starts and Building Permits came in stronger than expected, it looks like we will have some additional red ink to endure today. Traders are not at all happy with Intel�s outlook on revenues and the worry is that the bar is simply set too high right now. So with stocks looking to head lower at the open, be sure to watch last week�s lows for signs of support.
Stocks "In Play" This Morning:
INTC � Beat estimates but revenue outlook disappointing
EMC � Beats estimates by a penny
JPM � Beats by a penny
GDT � Says results for Q3 will be unavailable
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
After a brief two and one-half day hiatus, the bears resumed their �shock and awe� strategy for October yesterday. It is now clear that our furry friends had decided to wait until the start fourth quarter to make their case that higher inflation, stubbornly high energy prices, and rising rates would ultimately become a problem for earnings, the economy, and stock prices.
The big worry right now is that inflation will put a serious crimp in profit margins at some point. So while the Core Rate of inflation has only risen by 2.6% over the last 12 months, the PPI for finished goods has increased by 6.9%. And although there wasn�t any one big headline event that sent stocks down -62 on the day, the cumulative effect of several stories ($1.4 billion block trade in XOM, Greenspan commenting on oil hurting the global economy, and Yellen saying more rate hikes are on the way) got the ball rolling back downhill.
Turning to this morning, while Housing Starts and Building Permits came in stronger than expected, it looks like we will have some additional red ink to endure today. Traders are not at all happy with Intel�s outlook on revenues and the worry is that the bar is simply set too high right now. So with stocks looking to head lower at the open, be sure to watch last week�s lows for signs of support.
Stocks "In Play" This Morning:
INTC � Beat estimates but revenue outlook disappointing
EMC � Beats estimates by a penny
JPM � Beats by a penny
GDT � Says results for Q3 will be unavailable
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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