Happy new week, new month and new quarter.
Resarch shows that April tends to be a winner for stocks, something investors would love to see after such dismal stock performances last week, last month and last quarter. They may need to move past two big distractions first: trade and tech-regulation worries. And both are at the forefront again Monday.
China has upped the trade-war ante by rolling out more than 100 tariffs against U.S. goods. Then there’s that Trump tweetstorm that some can’t stop talking about, where the President dials up his attack on Amazon and threatens to “stop Mexico’s cash flow” by cancelling NAFTA.
“So again, that sets the stage for God only knows what for Amazon this week and it exacerbates an already tense situation on trade by underscoring the notion that Washington cannot be relied upon to negotiate because America is being led by someone who spends Easter Sunday screaming at Mexico on Twitter,” says the anonymous blogger behind the Heisenberg Report.
But this stock market might have another problem on its hands, says our call of the day from RBC Capital’s head of equity strategy, Lori Calvasina: Investors think stocks are still too expensive and their caution can’t be ignored.
“Investors don’t see attractive valuations,” said Calvasina, who unveiled the results of her firm’s latest investor survey. The poll showed that just 16% see stocks as attractive, while 43% see them as expensive/very expensive.
“We are still constructive on stocks on a 6-12 month time horizon, but the lack of valuation appeal in the eyes of investors makes us a little more cautious in the near term,” she said.
As well, her chart from that same survey shows 49% of respondents have gotten “less constructive” on stocks over the past three months.
Calvasina and team also asked investors what they see as the biggest tail risk for stocks, and surprise, surprise, trade wars/tariffs were at the top. Stability and clarity on the political front is what the market needs to move forward.
“If recent lows don’t hold, we think the pullbacks of 2010, 2011 and 2015-2016, in which the S&P 500 fell 14%-19% peak to trough, are the next guideposts for potential downside,” adds Calvasina.
Note, it’s a heavy data week with jobs numbers at the end of it. To kick off, ISM manufacturing is one report to look out for this morning.
Key market gauges
Dow YMM8, -0.51% , S&P 500 SPX, +1.38% and Nasdaq futures NQM8, -0.74% are all tilting lower, with techs setting up to lead the downward drift. Europe’s markets are closed for an extended Easter break. Several exchanges were also shut in Asia, where the remainder had a mixed session.
Gold GCM8, +0.87% and crude CLM8, +0.05% are climbing, while the dollar DXY, -0.14% is down, largely against the British pound GBPUSD, +0.3139% .
See the Market Snapshot column for the latest action.
The buzz
After shares tanked 22% in March, it’s not surprising some investors didn’t find Tesla TSLA, +3.24% CEO Elon Musk’s April Fool’s tweetstorm about the company going bankrupt funny at all.
CEOs of public companies shouldn't be putting out tweets like this Elon. Let's get real here, stay focused on what you need to be doing for shareholders.
— Brian Sozzi (@BrianSozzi) April 2, 2018
The company has also attracted the ire of the National Transportation Safety Board, which is “unhappy” after the electric-car maker revealed detailed information about a fatal California crash. Shares are pitching lower in premarket.
Amazon AMZN, +1.11% is under some pressure, and as mentioned above, fresh weekend Twitter jabs by POTUS may not be helping. Trump tweeted that the U.S. Postal Service loses an average of $1.50 per Amazon delivery, something that the Associated Press says isn’t quite right.
Toronto-based Hudson’s Bay HBC, +3.60% could be in for a rough day after hackers stole credit- and debit-card data from more than 5 million customers of its retail brands Saks Fifth Avenue, Saks Off Fifth and Lord & Taylor Stores.
Sinclair Broadcast Group SBGI, +0.00% is getting some unwelcome attention after Deadspin strung together promo campaigns by the company that echo Trump’s anti-media rhetoric. It was Deadspin’s effort to show how Sinclair anchors across the country had been reading basically the same script. CNN is reporting how tensions between local stations and management are heating up.
On the data front, the Markit manufacturing purchasing managers index, the Institute for Supply Management manufacturing index and construction spending are all headed our way this morning.
Check out: MarketWatch’s Economic Calendar
Read: Crazy-fast pace of new job creation can’t last, can it? Slower hiring likely in March
The chart
With earnings right around the corner, here’s a look at what’s expected from Credit Suisse’s chief U.S. equity strategist, Jonathan Golub and his team, and there’s good news:
“As the exhibit below shows, 1Q18 is expected to deliver extremely strong results. Even without tax benefits, EPS growth should exceed 15%,” he said in a note to clients. Golub also reiterated his 2018 S&P 500 target of 3,000.
The quote
“I think it’s important that we don’t all get Stockholm Syndrome and let the companies that work hard to charge you more convince you that they actually care more about you.” — That was Facebook CEO Mark Zuckerberg, in an interview with Vox, criticizing Apple CEO Tim Cook’s recent bashing of the social-media group over its data breach.
“The truth is, we could make a ton of money if we monetized our customer — if our customer was our product. We’ve elected not to do that,” Cook said in a Recode interview that’s set to air on MSNBC Friday.
Random reads
What Midwestern youth think about the American dream.
Notre Dame women’s NCAA championship win was a nail-biter.
“Hill Street Blues” writer and producer Steven Bochco has died at 74.
Saudi Crown Prince visits the U.S., sends journalists on a wild goose chase.
North Korea’s leader gushes, in his way, over a South Korean pop concert.
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