31Jan2019 Market Close: Wall Street Closes Mixed, About Where It Started This Morning, DOW Down 15 Points, SP 500 Up 0.9%, Nasdaq Shining At Plus 1.4%

Germany drops F-35 from fighter tender; Boeing F/A-18 and Eurofighter to battle on

Germany will pick either the Eurofighter or Boeing’s F/A-18 fighter jet to replace its Tornado warplanes, knocking Lockheed Martin’s F-35 stealth fighter out of a tender worth billions of euros, Defence Ministry sources said on Thursday.

Amazon first-quarter sales forecast misses estimates

Amazon.com Inc on Thursday forecast first-quarter sales below Wall Street estimates, as it faces new regulatory hurdles in India and a slowdown in e-commerce sales in Europe.

Wall Street closes higher with help from Facebook, Fed

Wall Street extended its rally on Thursday as strong earnings from Facebook Inc added to optimism after the Federal Reserve’s dovish remarks the previous day, while investors waited for the outcome of U.S.-China trade talks.

Trump wants ‘very big’ U.S.-China trade deal, hints at delays

President Donald Trump said on Thursday he wanted a “very big deal” U.S. trade deal with China, but signaled there could be delays if negotiations fail to meet his goals of opening the Chinese economy broadly to U.S. industry and agriculture.

China’s Xi wants to meet U.S. half way on trade deal, Trump says

China’s leader Xi Jinping told U.S. President Donald Trump in a letter that he hopes both sides will be able to meet each other halfway to reach a trade agreement before a March 1 deadline, Trump said on Thursday.

Amazon removes numerous products from India site as new e-commerce rules bite

E-commerce rules that went into effect in India on Friday caused widespread disruption for Amazon.com, forcing it to take down an array of items from its India website including Echo speakers, batteries and floor cleaners.

Fed pause sets stocks for best January on record, yields fall

Global equity markets mostly rose on Thursday, propelled by Facebook’s upbeat earnings and the Federal Reserve’s pledge to be patient in raising borrowing costs further, while U.S. bond yields fell on indications of weaker-than-expected inflation.

VW’s Porsche informs authorities of possible issue with emissions

Volkswagen’s Porsche unit said on Thursday it had informed German authorities of potential issues with its emissions data, following a report in Germany’s Der Spiegel that the figures for its 911 models of 2016 and 2017 were inaccurate.

Fiat Chrysler cancels shifts due to strains on utility

Fiat Chrysler Automobiles NV said on Thursday it was canceling two additional shifts at its Warren Truck and Sterling Heights Assembly plants after CMS Energy Corp made an emergency appeal to users to conserve natural gas following a fire at a compressor station and extremely cold weather.

After Worst December In A Century, Stocks Soar To Best January In 32 Years

The Fed capitulation appears to have been seen early by gold and the market is now implying a 13.5bps rate-cut in 2019… as stocks soar…

After the worst December in 100 years, the S&P just experienced its best January since 1987…

Is this really what you wanted Mr.Powell? This is how it ends…

Chinese Company That Paid Debt In Ham Is Running Out Of Pigs

Forget PIK: China’s financial innovation has taken the concept of pay-in-kind bonds to a whole new level: PIG.

Regular readers of Zero Hedge are familiar with money-for-oil loans. But, as we reported last November, one liquidity-challenged pork producer implemented an absurd twist on that concept that has helped to expose the financial dysfunction at many small- and medium-sized Chinese companies.

Instead of receiving cash, holders of local-currency bonds issued by Zhengzhou-based pork producer Chuying Agro-Pastoral Group – which had 1.3 billion yuan in cash against a short-term debt load of 8.4 billion yuan – would be paid with the company’s ham, thanks to an agreement reached between the company and its creditors. The agreement was struck after the company failed to repay a 500 million yuan bond that was due last Nov 5. The spread of African swine fever caused pork demand in China to plummet, creating a cash-on-hand crisis for pork producers.

Well, if you thought that was absurd, you will love what happened next, because according to an announcement on the Shenzhe …

Venezuela Central Bank Begins Shipping 18 Tons Of Gold To UAE

Venezuela has sold and shipped three tons of central bank gold to the United Arab Emirates (UAE) on January 26 and is preparing to ship 15 more tons, according to Reuters. At today’s spot price of $1,320 per ounce, the sale will total roughly $760 million USD.

Reuters reports, citing sources, that a three ton shipment of Venezuela’s central bank gold left for the UAE on January 26 and the country is preparing a 15 ton shipment in the coming days.

— Steve Kopack (@SteveKopack) January 31, 2019

The shipment constitutes 11% of Venezuela’s current gold reserves, and follows the export last year of $900 million of unrefined gold to the UAE and Turkey.

“Lighten Up On Longs” – Dovish Fed Confirms “Late-Cycle Economy, Close To Recession”

Authored by Mark Orsley, Head of Macro Strategy at PrismFP,

Fed confirming all the economic and market signals that we are in late, late cycle close to “R”

Equities continue to shrug off poor earnings/guidance and breakout from the Trump Megaphone – equities tend not to rally at the end of the cycle

Trade War (TW) resolution can extend the cycle but there are signs that TW has gone on too long – now bleeding into domestic demand

Bias towards end of cycle trades like 5s30sn steepeners and Dollar shorts – use equity breakout to lighten up on longs

I am sure by now you have read enough “Fed was dovish” pieces so will spare you the recap.

For clients that I have had a chance to meet with since I started at Prism a little over a month ago, my thesis has been entirely about the end of the cycle. Readers may recall this list I provided back on Jan 10th as simple evidence:

Late cycle indicators:

Growth moderates (you could argue we are more than moderating, but check)

Credit tightens (for sure have seen that)

Earnings peak and start to decline (yes and being guided down now – see Apple, MSM, Samsung, LG, Delta, Skyworks, Macy’s, Kohl’s, American Airlines, Constellation Brands, Lindt, Goodyear, Ford, Stanley Black & Decker, Intel, and Nvidia for example )

Interest rates rise accelerates (had that in Sept- the decline in rates now is actually a recession indicator)

Confidence peaks (both business and consumer surveys have rolled over)

Inflation rises (also already had that – the recent easing of inflation …

February 2019 Economic Forecast Index Little Changed But ….

Written by Steven Hansen

Last month the Econintersect Economic Index (EEI) significantly declined, and dropped below territory associated with normal expansions. This month our economic index slid only marginally lower, and remains below territory associated with normal expansions. The question remains whether this downward trend will continue. Note, our index is built on data sets which were not affected by the government shutdown – and it is most likely that other recent economic forecasts you have seen fudged the missing data. A forecast with fudged data is simply a guesstimate.

The Sniff Test: Apple buys a lot of stock high, then stops buying low

Apple Inc. remained aggressive in buying back its stock when momentum was strong and prices held above the $200 mark, but when the going got tough for investors, Apple was nowhere to be found.

Market Extra: Here’s what will drive stocks after the Fed’s dovish retreat

Good news may once again be bad news — and vice versa — for financial markets after the Fed delivers a surprising about-face on its policy stance.

Diageo toasts U.S. millennials as it surpasses half-year revenue and profit targets

The millennial generation has been blamed for the demise of everything from movies to dinner dates to golf. But now the much-slighted demographic group has been credited for something unexpected: saving hard liquor.