“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day – and you lose more than you should had you not listened to hope – the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out – too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts . . . Instead of hoping he must fear; instead of fearing he must hope.” — Jesse Livermore

1 Occidental Seeks to Buy Anadarko for $38 Billion, Topping Chevron’s Offer — Occidental Petroleum Corp. (OXY) offered to buy Anadarko Petroleum Corp. (APC) for $38 billion, launching a potential bidding war for a company that previously agreed to be purchased by Chevron Corp. (CVX) for about $33 billion.
2. Chip Stocks Volatile After TI, STM — Texas Instruments (NASDAQ:TXN) lost its post-earnings gains after the CFO said the cyclical downturn was likely still in its early stages. European semi peer STMicroelectronics (NYSE:STM) reported Q1 misses and said lower-than-expected FY19 plans would be addressed with inventory adjustments and spending cuts. European chip stocks shook off early losses, but the U.S. sector could still have a volatile day as investors seek clearer sector visibility.
3. Boeing Details Financial Hit From 737 MAX Grounding — The aerospace giant said that it was taking an initial hit of more than $1 billion while the plane is grounded and production of additional aircraft remains scaled back. Mr. Muilenburg, CEO said the Federal Aviation Administration would soon conduct certification flights to test the 737 MAX’s updated software, a key step to restarting commercial flights. Boeing is also working with airlines and pilots to restore trust among fliers. the plane maker reported first-quarter earnings of $2.15 billion. The profit demonstrated the resilience of Boeing’s broader portfolio, with sales of 787s and other jetliners as well as services and military hardware limiting the decline.
However, the company said it would suspend the huge share buybacks that have propelled its share price over the past three years and it dropped full-year profit and sales guidance for 2019.
4. Bank of Japan Leaves Policy Unchanged — the Bank of Japan left policy unchanged, as most economists expected, maintaining its policy balance rate at -0.1% and guiding to keep extremely low interest rates until at least spring 2020. That’s putting a date to policy guidance it had previously just said it would keep for an “extended period.” The BOJ’s target for the 10-year government bond yield is zero, and for the first time the bank projected economic growth for the year ending March 2022 (it expects 1.2% growth then). It sees core CPI rising at 1.6% in fiscal 2021; time’s running out for Gov. Haruhiko Kuroda to hit a 2% inflation rate before his term expires in 2023.
5. Japan Trade Talks Kick Off — U.S. Treasury Secretary Steven Mnuchin is scheduled to meet with Japanese Finance Minister Taro Aso to discuss provisions against currency manipulation and other trade issues. Economy Minister Toshimitsu Motegi is also set to meet with U.S. Trade Representative Robert Lighthizer to negotiate trade issues that could impact automobile manufacturers Honda (NYSE:HMC), Toyota (NYSE:TM), Mazda (OTCPK:MZDAY) and Nissan (OTCPK:NSANY). The meetings precede the planned summit between Prime Minister Shinzo Abe and President Donald Trump later in the week.

The week ahead — Economic data from Econoday.com:

“When you talk, you are telling people what you already know. When you listen, however, that’s how you learn something new.” — Dalai Lama

1. Deutsche Bank Subpoenaed Over Trump Business — Congressional investigators have subpoenaed Deutsche Bank (NYSE:DB) as Democrats step up their probes into President Trump and his longtime lender. The subpoenas from the U.S. House of Representatives Intelligence and Financial Services committees mark an escalation of Democratic-led probes into Trump’s business dealings. The committees also subpoenaed multiple other financial institutions, including JPMorgan (JPM), Bank of America (BAC) and Citigroup (C) as part of their investigations.
2. U.S.-China Trade Talks Near Final Round — U.S. Treasury Secretary Steven Mnuchin said a U.S.-China trade agreement would go “way beyond” previous efforts to open China’s markets to American companies and the two sides were “getting close to the final round of concluding issues.” “This is way beyond anything that looked like a bilateral investment treaty,” he added. U.S. negotiators have also reportedly tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing.
3. U.S., Turkey Deadlock over Russia Missile Dispute Continues — the U.S. and Turkey have failed to break their impasse over Turkey’s plan to deploy a Russian air defense system the Pentagon says could jeopardize U.S. fighter aircraft including Lockheed Martin’s (NYSE:LMT) F-35, which Turkish manufacturers helped build. Turkish officials repeated that the deal with Russia has been signed and is final, while the U.S. has threatened to impose sanctions under legislation that allows the punishment of entities doing business with Russia, and to expel Turkey from the F-35 program. The first batch of Russian S-400 missiles may be delivered as early as June.
4. Qualcomm, Apple Drop All Litigation — Qualcomm (NASDAQ:QCOM) and Apple (NASDAQ:AAPL) agreed to dismiss all litigation worldwide in a settlement that involves Apple paying QCOM. The companies also reached a six-year license agreement, effective April 1, with two one-year option periods plus a multiyear chipset supply agreement. In a regulatory filing Qualcomm says it expects incremental EPS of about $2 as product shipments ramp up.

The week ahead — Economic data from Econoday.com:

“One of the frustrating things for people who miss the first rally in a bull market is that they wait for the big correction and it never comes. The market just keeps climbing and climbing. It feeds on itself in frenzied fashion and propels prices considerably higher for six months or so, and sometimes longer.” — Martin Zweig

1. China Wants to Eliminate Bitcoin Mining — China’s state planner has labeled Bitcoin (BTC-USD) mining as an “undesirable” industry in a draft proposal, recommending local governments eliminate the sector in the country. The public will have until May 7 to share feedback on proposed amendments, after which the final version will be published and become effective. Last week, the price of Bitcoin soared nearly 20% in its best day since the height of the 2017 bubble, breaking $5,000 for the first time since mid-November.
2. EU Leaders to Grant the U.K. Deadline to Oct. 31 — Theresa May managed to convince EU leaders to grant the U.K. more time before it leaves the bloc, extending the deadline to Oct. 31, but some experts are now saying her days in office are numbered. “A six-month period is clearly enough for the Conservative Party to contemplate a change in leadership while still allowing some time for the incoming PM to seek to negotiate with the EU,” JPMorgan economist Malcolm Barr said in a research note. “One could even cram a general election into that time frame too if PM May were to resign by roughly the end of May.”
3. Tesla Gigafactory Expansion Freeze — Tesla (NASDAQ:TSLA) and Panasonic (OTCPK:PCRFY) are suspending plans to expand the capacity of their $4.5B U.S. plant in the face of uncertain demand for electric vehicles, the Nikkei reports. The two had intended to raise capacity 50% by 2020 to the equivalent of 54 gigawatt-hours, but financial problems forced a re-think. Panasonic also intends to suspend planned investment in Tesla’s battery and EV plant in Shanghai, and instead provide technical support and a small number of batteries from the existing Gigafactory.
4. Chevron to Buy Anadarko in $33B Cash and Stock Deal — Chevron (NYSE:CVX) plans to acquire Anadarko Petroleum (NYSE:APC) in a stock and cash transaction valued at $33B, or $65 per share, enhancing its Upstream portfolio and strengthening its shale, deepwater and natural gas resource basins. Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each APC share. The deal anticipates annual run-rate synergies of approximately $2B, and will be accretive to free cash flow and earnings one year after close. If approved, Chevron said it also plans to boost its annual share buyback program to $5B from $4B.
5. EU Green Lights U.S. Trade Talks — Europe is set to start trade talks with the U.S. after EU ambassadors gave a green light to a proposed mandate for the European Commission to conduct the negotiations on behalf of the 28 EU member countries. The talks commence despite opposition from France, which expressed concerns over the U.S. intention to withdraw from the Paris Agreement on climate change. EU ministers still need to give their rubber stamp, which is due on April 15.
6. AAII Weekly Investor Sentiment Survey — AAII Weekly Sentiments the results are very similar to the final days of February with bullish sentiment around 40%, bearish down near 20%, and neutral once again in the upper 30’s. Up from 35.02% last week, bullish sentiment has crossed back over the 40% threshold; the first time it has done so since the previously mentioned week in February.
While bullish sentiment is sitting a couple of points above the historical average, this is still several percentage points from reaching any sort of extreme level (more than one standard deviation above the aforementioned average).

Bearish sentiment, on the other hand, fell all the way back down to 20.38% this week, the lowest since its 20% reading on February 28th. That is around 10% less than the historical average for bearish sentiment. That is also at the lower end of the range bearish sentiment has stayed within in the past decade.

The week ahead — Economic data from Econoday.com:

1. Boeing Admits MCAS Played Role in 737 Max Crashes — “With the release of the preliminary report of the Ethiopian Airlines flight 302 accident investigation it’s apparent that in both flights the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to erroneous angle of attack information,” Boeing (NYSE:BA) CEO Dennis Muilenburg said in a statement. However, an update will “add additional layers of protection and will prevent erroneous data from causing MCAS activation. Flight crews will always have the ability to override MCAS and manually control the airplane.”
2. Tesla Deliveries Tumble 31% — the EV maker reported a 31% drop in Q1 deliveries to 63K vehicles (51K Model 3 and 12K Model S and X). While sales were hit by a reduction in U.S. federal tax credits and by difficulties in delivering to Europe and China, Tesla said it finished the quarter with “sufficient” cash. The automaker also reaffirmed its full-year forecast of 360K to 400K deliveries, but investors are asking if that big increase will be possible.
3. 5G Era for Smartphones Has Begun — Verizon (NYSE:VZ) has launched 5G wireless service in parts of Chicago and Minneapolis, while carriers in South Korea – SK Telecom (NYSE:SKM) and KT Corp. (NYSE:KT) – deployed their service in the Seoul metropolitan area. To access the network, Verizon subscribers for now will be limited to the Motorola Z3 (with an accessory clip-on), while Korean early adopters will have to use Samsung’s Galaxy S10. 4G helped reshape the way people hail taxis and order takeout and the mobile industry is hoping the faster speeds provided by 5G will enable self-driving cars, smart cities and will birth immersive digital worlds.
4. Third Consecutive Monthly Close Statistics — the S&P 500 (SPY) closed above the monthly Bollinger Band centerline at the end of January, it aligned the present day with favorable historical probabilities and also provided some distance from setups in the 1974, 2001, and 2008 bear markets. Twelve of the 13 similar historical cases, covered on Feb. 20, also went on to print three consecutive closes above the monthly Bollinger Band centerline. The exception was the 6/30/1960 case, which gave up the centerline in the second month. The table below shows S&P 500 (VOO) performance in the remaining 12 historical cases following the third consecutive close above the monthly Bollinger Band centerline (similar to what occurred at the end of March 2019).

The week ahead — Economic data from Econoday.com:

“When investors hear yield curve inversion, they automatically think ‘recession.’ That’s because every recession since 1962 has been preceded by an inversion. But, not every inversion has been followed by a recession, so keep that in mind.” — BIG

1. DOJ Moves to Strike Down Entire ACA — the U.S. Department of Justice has filed a motion calling for ObamaCare to be struck down in its entirety, siding with a Texas federal district court that had decided the individual mandate was unconstitutional. Hospital and health insurer stocks plunged following that ruling in December. Previously the DOJ was focused on eliminating mandatory coverage for people with pre-existing conditions, but under Attorney General William Barr the federal government’s position has now changed.
2. Aaple Unveils New Products — Apple Inc. (AAPL) unveiled new products for entertainment, financial services, news and videogames last week to extend push into new territory. It plans to make its TV app, which will carry that content, available on competitors’ televisions and other devices as well as its own. Apple also announced Apple Card, a mainly digital credit card launched in partnership with Goldman Sachs Group Inc. that aims to challenge incumbents by offering low interest rates and eliminating both late fees and annual fees. In addition, It unveiled Apple News+, a $9.99 monthly service that provides access to 300-plus magazines as well as newspapers, including The Wall Street Journal through an agreement with parent Dow Jones & Co. And it showed off Apple Arcade, a gaming subscription service offering access to 100-plus exclusive games for an unspecified monthly fee.
3. U.K. Parliament Fails to Get a Majority On Any Brexit Option — U.K. Prime Minister Theresa May pledged to quit in a bid to salvage her deal to leave the EU, but the move appeared to backfire as her political ally, Northern Ireland’s Democratic Unionist Party, said it would continue to reject her agreement. Lawmakers also failed to find a majority for any alternative Brexit arrangement to May’s pact, but overwhelmingly agreed that they opposed leaving the bloc without one. Britain has until April 12 to agree on a strategy./>
4. Lyft Prices IPO at $72/Share — tt’s the first IPO in the ride-hailing market ticker “LYFT,” and the first in a string of tech companies that are planning to go public in 2019. With over $2B raised so far, Lyft priced shares at $72 (at the high end of its range), putting its valuation at over $24B.
5. Yield Curve Inversion Statistics — based on the recent media chatter about the Yield Curve Inversion, the graph below shows that the standard 10yr/2yr yield curve has inverted on average 19 months before a recession, going back to 1968, whereas a top in the SPX has preceded recession by only an average of 7 months.

The week ahead — Economic data from Econoday.com: