There will not be any re-cap for the week of May 24 to May 31 2019. We are away for some needed R&R.

The staffs at EGS.

The week ahead — Economic data from Econoday.com:

“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” — George Soros

1. Walmart Pushes Veterinary Clinic — with spending on pets in the U.S. estimated to exceed $75.3B this year, Walmart (NYSE:WMT) aims to have 100 veterinary clinics open in its stores within the next 12 months, growing from the 21 it has today. The retailer is also for the first time launching an online pet pharmacy, WalmartPetRX.com, rivaling Chewy.com. Walmart has seen a roughly 60% increase in the number of dog- and cat-related health-care items sold on its website over the past year, according to a company spokeswoman.
2. China Hardens Trade Stance as Talks Enter New Phase — the new hard line taken by China in trade talks—surprising the White House and threatening to derail negotiations—came after Beijing interpreted recent statements and actions by President Trump as a sign the U.S. was ready to make concessions, said people familiar with the thinking of the Chinese side. Adding to the pressure, the U.S. formally filed paperwork Wednesday to raise tariffs on $200 billion of Chinese goods to 25% from the current 10% at 12:01 a.m. Friday. Beijing’s Commerce Ministry responded by threatening to take unspecified countermeasures. At a campaign rally in Florida Wednesday night, Mr. Trump said Chinese leaders “broke the deal” in trade talks with the U.S.
3. BlackRock Pulls Out of Italian Bank Banca Carige Rescue — BlackRock’s (NYSE:BLK) withdrawal from the proposed deal increases the possibility that the Italian government may have to bail out Banca Carige (OTC:BCIGY). BlackRock, which was to have bought about half a 720M euro ($806M) share issue, rejected the proposed deal for reasons including excessive risk. The deal would have given BlackRock control of Italy’s 10th-largest bank.
4. Iran Begins Withdrawal from Nuclear Deal — a year after the U.S. pulled out of the Iran nuclear accord, Tehran declared it’s no longer committed to parts of the deal. President Hassan Rouhani said the remaining signatories – the U.K., France, Germany, China and Russia – had 60 days to implement their promises to protect Iran’s oil and banking sectors, giving them a choice of following President Trump or engaging with the Islamic Republic in violation of American sanctions. Iran will also begin to build up its stockpiles of low enriched uranium and heavy water, and threatened to resume construction of the Arak nuclear reactor.
5. U.S. Hits China with Tariff Increase — President Trump’s tariff increase on $200B worth of Chinese goods took effect last Friday after midnight. China’s Commerce Ministry immediately announced it would take countermeasures against the American move, but did not reveal what its response would entail. President Trump is already taking steps to impose a fresh round of tariffs on $325B in Chinese goods that aren’t currently taxed. If that happens, virtually all Chinese exports to the U.S. would face 25% tariffs, further ratcheting up tensions between the world’s two largest economies.

The week ahead — Economic data from Econoday.com:

“The market is a device for transferring money from the impatient to the patient.”– Warren Buffet

1. U.S. Telecoms Prepare for Huawei Ban — paving the way for a ban on doing business with China’s Huawei, President Trump signed an executive order barring American companies from using telecom equipment made by firms posing a national security risk. The order would invoke the International Emergency Economic Powers Act and comes at a delicate time in relations between Beijing and Washington, with the two ratcheting up tariffs over what U.S. officials call China’s unfair trade practices.
2. Trade War Sees U.S. farmers Get $15B in Aid — the Trump administration is planning on providing about $15B in aid to help U.S. farmers whose products may be targeted by the newly unveiled Chinese tariffs. The group has been among the hardest hit in the trade war, with U.S. soybean futures falling to their lowest in a decade on Monday and shipments of the most valuable U.S. farm export to China dropping to a 16-year low in 2018. A new aid program would be the second round of assistance for American farmers, after the Department of Agriculture’s $12B compensation plan last year.
3. Teva, Drugmakers, Accused of Price-Fixing — forty-four U.S. states have filed a lawsuit accusing Teva Pharmaceuticals (NYSE:TEVA) of orchestrating a sweeping scheme with 19 other drugmakers to inflate drug prices – sometimes by more than 1,000% – and stifle competition for generic medicines. “We take these accusations seriously and we are going to defend ourselves,” CFO Mike McClellan declared. Soaring drug prices from both branded and generic manufacturers have sparked outrage across the political spectrum, from Republicans and Democrats alike.
4. AAII Weekly Sentiment — One week after coming in at its highest level since October, bullish sentiment has fallen off of a cliff this week to 29.82% versus 43.12% last week. From a historical perspective, this is not at any kind of extreme, but it did bring optimism to its lowest level of 2019 and by a pretty wide margin at that. Additionally, this was the largest drop in bullish sentiment since December 13th of last year when it fell 17.04% in a week.

Bearish sentiment spiked up to 39.3% from 23.19% last week. While this was a massive spike higher, it is still well off of any sort of extreme, and we actually saw higher readings late last year. Investors Intelligence is echoing the AAII results, as that survey showed the highest percentage of respondents since February (31.1%) expecting a correction. Granted, bearish sentiment in this survey remains muted, as it actually fell to its lowest level since April of last year.

5. Chip Makers Get Caught in Huawei Crossfire — WSJ, following the ban on Huawei, chip companies selling technology to the Chinese communications equipment giant must be granted a special license to do so. Among the hardest-hit chip stocks Thursday were Qualcomm , Broadcom , Qorvo and Skyworks Solutions —key makers of modem and radio-frequency processors used in smartphones. Xilinx is affected as well given its growing business in 5G equipment. Shares of memory suppliers Micron Technology and SanDisk parent Western Digital also slipped in the decision’s aftermath. Below shows a list of US companies effected by the ban.

The week ahead — Economic data from Econoday.com:

“Letting losses run is the most serious mistake made by most investors.” – William O’Neil

1. Tesla to Slash Solar Panel Prices by 38% — losing its status as the nation’s leading rooftop solar company last year, Tesla (NASDAQ:TSLA) announced plans to begin selling solar panels and related equipment for up to 38% below the national average price, NYT reports. This will be achieved by standardizing systems and requiring customers to order them online. Homeowners will also photograph electric meters and send the images to the company, reducing the need for site visits.
2. Boeing CEO to Pitch 737 Max Comeback — Boeing (NYSE:BA) CEO Dennis Muilenburg held his first press conference since the worldwide grounding of the 737 MAX, which led to investigations, lawsuits and a sharp loss in shareholder value. While reports over the weekend suggested that pilots have warned draft 737 MAX training proposals did not go far enough to address their concerns, the FAA may clear the plane to fly in late May or the first part of June.
3. FOMC Meeting Recap— Fed officials agreed to hold their benchmark interest rate steady and signaled comfort that their wait-and-see posture had steadied the economy. the Fed refused to signal anything other than that it was still on pause, while Chair Jerome Powell said the factors dragging on inflation might be “transitory,” not “persistent.”
4. Merck Steps Up Meales Vaccine Production — Merck (NYSE:MRK), the sole U.S. supplier of measles vaccines, has increased output to meet an uptick in U.S. demand amid the country’s biggest outbreak in 25 years. “The demand side of the equation hasn’t been outstripping our underlying capacity,” Chief Marketing Officer Mike Nally said in an interview. The CDC reported 704 cases of measles as of April 26, a 1.3% increase since the 695 reported the week before, with the vast majority of cases occurring in children who have not received the MMR vaccine.

The week ahead — Economic data from Econoday.com: