“Always something new, always something I didn’t expect, and sometimes it isn’t horrible.” – Robert Jordan

1. U.S. LNG Deliveries to Germany by 2022 — U.S. companies expect to begin delivering LNG to Germany in four years at the latest, according to deputy U.S. energy secretary Dan Brouillette, and will challenge Russia which now accounts for 60% of German gas imports. In July, President Trump accused Germany of being a “captive” of Russia due to its energy reliance and urged it to halt work on the $11B, Russian-led Nord Stream 2 gas pipeline.
2. Aurora Cannabis(OTCQX:ACBFF) on talks with Coca-Cola on CBD drinks — Coca-Cola (NYSE:KO) said it was closely watching the fast-growing marijuana drinks market for a possible entry. Molson Coors (NYSE:TAP) has already announced a joint venture with Hydropothecary to develop cannabis drinks, while Diageo (NYSE:DEO) is in talks with at least three Canadian cannabis producers about a possible deal.
3. SEC subpoenas Goldman, Silver Lake in Tesla probe — the tension continues to build at Tesla (NASDAQ:TSLA) as a DOJ probe runs alongside a wide-ranging SEC investigation. Subpoenas have already been received by Goldman Sachs and Silver Lake, the two firms hired by Tesla to help the company explore Elon Musk’s go-private plan.
4. US/China Tarriff Escalate — President Trump ordered another $200 billion in 10% tariffs on Chinese goods, which could rise to 25% by year end. China retaliated with $60 billion in tariffs at 5% to 10% and Trump threatened $267 billion more.
5. AAII Weekly Investor Sentiment — in the latest survey of individual investor sentiment from AAII, bullish sentiment declined (ever so slightly) for the third straight week, dropping from 32.09% down to 32.04%.

Meanwhile, bearish sentiment came in at the exact same level as bullish sentiment this week, dropping from 32.84% down to 32.04%. The last time both gauges of sentiment were at the exact same level was in June 2016.

6. Dow Theory Generates Buy Signal for the Dow Theorist Followers — this occurs when the Dow Industrials sets a new high following a new high for Dow Transports. This happened over the last two weeks as industrials set their high on September 21 following transports on September 14. This signal did not work in 2008 as Dow Transports was the last average to peak when it topped out in May 2008 while Dow Industrials peaked in October 2007.

The week ahead — Economic data from Econoday.com:

“Sometimes the best trade is no trade.” – Anonymous

1. G20 Finance Ministers Release Communique — world financial leaders called for stepped-up dialogue at a G20 meeting last Saturday, but ended the gathering with little consensus on how to resolve multiple disputes over U.S. tariff actions. The communique noted while growth is strong, it’s becoming less synchronized amid downside risks, including financial vulnerabilities, and heightened trade and geopolitical tensions. Ahead of the summit, Treasury Secretary Steven Mnuchin said he “wouldn’t minimize” the possibility that the U.S. will impose tariffs on all $500B worth of goods that the U.S. imports from China. He also discussed trade tensions with the EU. “If Europe believes in free trade, we’re ready to sign a free-trade agreement,” adding that any deal would have to eliminate tariffs, along with other barriers and subsidies.
2. U.S. Economy Grew at 4.1% Rate in Second Quarter — gross domestic product (GDP) — the value of all goods and services produced across the economy—rose at a seasonally and inflation-adjusted annual rate of 4.1% from April through June, the Commerce Department reported last Friday. The Commerce Department said U.S. soybean exports surged in the second quarter, delivering an outsize boon to economic growth even as China shifted much of its sourcing to Brazil in response to its worsening trade relations with the U.S. The export rally likely reflected efforts by buyers to get their soybeans before China’s 25% retaliatory tariffs on U.S. soybeans, which hit in July.
3. Venezuela To Lop Five Zeros Off Currency — Venezuela is delaying its planned currency re-denomination by two weeks to Aug. 20, lopping five zeroes off the refurbished bolivar (instead of three) and linking it to the country’s Petro cryptocurrency. It comes in response to Venezuela’s hyperinflation, which the IMF has said will soar to 1,000,000% this year, throwing the OPEC nation’s already battered economy into a deeper tailspin.
4. Trump Reportedly Wins EU Trade Concessions — President Trump announced at a press conference late last week with the EU’s Jean-Claude Juncker “We agreed today to work together towards zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods,”. The U.S. secured further trade concessions, including the import of more soybeans and possibly some liquefied natural gas, while potential auto tariffs will be sidelined as the two sides launch negotiations to cut other trade barriers.
5. AAII Weekly Sentiment — courtesy of BIG, according to this week’s report, bullish sentiment declined for the second week in a row, falling from 34.66% down to 31.52%.

As bullish sentiment declined, bearish sentiment ticked up from just under 25% to just under 27%.

The week ahead — Economic data from Econoday.com:

“I always define my risk, and I don’t have to worry about it.” – Tony Saliba

1. EU Responds to U.S. Auto Tariff Threat — after President Trump threatened to impose a 20% tariff on all imports of EU-assembled cars, EU Commission Vice President Jyrki Katainen told French newspaper Le Monde “If they decide to raise their import tariffs, we’ll have no choice, again, but to react,”.
2. GE Plans Healthcare Spinoff, Baker Hughes Stake Sale — the once industrial conglomerate is spinning off its healthcare business and unloading ownership in its oil services company Baker Hughes (NYSE:BHGE). The final turnaround plan from CEO John Flannery. GE will focus on its power, aviation and renewable-energy divisions. The company was booted out of the Dow Jones Index and was replaced by Walgreen Boots.
3. Canada Prepares Moves to Block Chinese Steel Diverted from U.S. — Canada is preparing tariffs and quotas on steel from China and other countries to prevent a potential flood of imports from global producers seeking to avoid U.S. tariffs. The Bloomberg report follows warnings from the Canadian steel industry and the EU’s decision to ward off the dumping of steel that would have been sent to the U.S.
4. Amazon’s New Last-Mile Delivery Service — Amazon is building out its own last-mile delivery service, pushing further onto the turf of shipping partners UPS and FedEx (NYSE:FDX). The new program, called Delivery Service Partners, will let entrepreneurs run their own local delivery networks of up to 40 delivery vans emblazoned with Prime logos. “This is all about scaling cost effectively,” said Dave Clark, SVP of Amazon Worldwide Operations (NASDAQ:AMZN).
5. AAII Weekly Bearish Sentiment Surges — according to the latest weekly sentiment survey from AAII, bullish sentiment dropped more than ten percentage points, falling from 38.7% down to 28.4% in what was the largest one week decline since early March.

Meanwhile, bearish sentiment surged, rising from 26.2% up to 40.8% in what is only the second week in the last year where bearish sentiment has been above 40%. More importantly, though, it was the largest one week increase in negative sentiment since January 2016, which also happens to be another time when a plunging Chinese stock market was in the headlines.

The week ahead — Economic data from Econoday.com:

…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”… Jesse Livermore

1. Trump Drops G7 Communique Endorsement — President Trump refused to endorse a G7 statement pledging to “fight protectionism and reduce tariff barriers,” saying trade among the G7 nations should be free of tariffs and other barriers. “Based on the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!”.
2. Trump, Kim Sign ‘Comprehensive’ Document — the meeting between President Trump and Kim Jong-un signed a “comprehensive” and “historic” document that included the following four points: Establishing new US-DPRK relations, building a lasting and stable peace regime, reaffirming commitments to work toward complete denuclearization and recovering POW/MIA remains. U.S. sanctions will remain in effect for the time being and American forces will not be reduced on the Korean peninsula.
3. Lithium Revival Across the U.S. — In North Carolina, Nevada and half a dozen other states, miners are working to revive the U.S. lithium industry, once the world’s largest until it fell off in the 1990s. According to Reuters, Piedmont Lithium (NASDAQ:PLLL), Albemarle (NYSE:ALB) and Lithium Americas (NYSE:LAC) all see opportunity amid a surging EV market and increased battery demand. The U.S. produced only about 2% of the world’s lithium last year, but has around 13% of the world’s identified resources.
4. AT&T prevails in Time Warner merger trial — U.S. District Court Judge Richard Leon has approved AT&T’s (NYSE:T) $85.4B purchase of Time Warner (NYSE:TWX) without conditions, giving the pay-TV provider ownership of cable channels HBO and CNN, as well as film studio Warner Bros. The outcome could spur a wave of deals in the telecom and media industries, as well as clear the way for future vertical mergers.
5. Fed Raises Interest Rates and Signals 2 More Increases Are Coming — the Federal Reserve raised interest rates last Wednesday and signaled that two additional increases were on the way this year. Jerome H. Powell, the Fed chairman, said the economy had strengthened significantly since the 2008 financial crisis and was approaching a “normal” level that could allow the Fed to soon step back and play less of a hands-on role in encouraging economic activity. The Fed’s optimism about the state of the economy is likely to translate into higher borrowing costs for cars, home mortgages and credit cards over the next year as the central bank raises interest rates more quickly than was anticipated
6. Latest AAII Weekly Sentiment — based on the latest Weekly Sentiment, the Bulls are on the offensive this week as AAII Bullish sentiment jumped to 44.78% from 38.93% last week, which is the highest level since mid-February.

While bullish sentiment spiked higher, bearish sentiment did not see as big of a move to the downside. As shown in the chart below, negative sentiment declined from 26.72% down to 21.70%.

7. New High Cumulative A/D Line Versus S&P500 — below displays the chart of the S&P500 ‘s underlying breadth which points to an eventual new high in price for the S&P 500.

The week ahead — Economic data from Econoday.com:

1. N.Korea Expands Threat to Cancel Summit & Plans To Destroy Nuclear Test Site — North Korea is expanding on its threat to cancel the June 12 summit between Kim Jong-un and President Trump. Besides protesting the joint air force drills taking place in South Korea, Pyongyang said the U.S. must stop insisting it “unilaterally” abandon its nuclear program and lashed out at national security advisor John Bolton, who talked about a disarmament similar to “Libya 2004.”. Also, Pyongyang plans to destroy all of the tunnels at the country’s northeastern testing ground with an explosion and remove observation facilities, research posts and ground-based guard units.
2. New Ebola Outbreak Hits Congo — the deadly hemorrhagic disease Ebola has resurfaced again, with the WHO revealing 32 potential cases of the disease (including 18 deaths) in the Democratic Republic of the Congo. Experimental Ebola vaccines are under development, such as leading candidate – Merck’s (NYSE:MRK) rVSV-ZEBOV – but they have not been fully tested for safety or effectiveness.
3. The Supreme Court Ruled New Jersey Can Legalize Sports Gambling — the Supreme Court announced late last week that New Jersey can legalize sports betting in what could be a landmark case in the gaming industry. It clears the way for states, if they choose, to allow gambling on athletic events by striking down the 1992 Professional and Amateur Sports Protection Act, a federal law that said states couldn’t “sponsor, operate, advertise, promote, license, or authorize” sports gambling.
4. More States Sue Over Opioid Epidemic Drug Makers — Litigation against OxyContin maker Purdue Pharma is intensifying as six more U.S. states – Nevada, Texas, Florida, North Carolina, North Dakota and Tennessee – announced lawsuits that accuse the company of fueling a national opioid epidemic. Florida also sued Endo Pharmaceuticals (NASDAQ:ENDP), Allergan (NYSE:AGN), units of Johnson & Johnson (NYSE:JNJ), Teva Pharmaceutical (NYSE:TEVA), and Mallinckrodt (NYSE:MNK), as well as AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH) and McKesson (NYSE:MCK).
5. AAII Weekly Sentiment Survey — In this week’s sentiment survey from AAII, bullish sentiment ticked up to 36.68% from last week’s level of 33.51%. The bulls are back above the average of 36.62% for the current bull market.

in bearish sentiment, which declined for the second straight week, falling from 25.5% down to 20.6%. Since its recent high in early April, bearish sentiment has now been more than cut in half. It’s also at the lowest level since the first week of the year.

6. Small cap Russell 2000 Index and S&P 600 Small Cap Index Hit New All-Time Highs — over the past week, both the small cap Russell 2000 Index and S&P 600 Small Cap Index have recorded not only new bull market highs, but also new all-time highs. Historically, small caps have been among the first stocks to show developing weakness as a bull market enters its final stages; However, these new highs in both the small cap price indexes and Advance-Decline Lines suggest an ongoing and healthy primary uptrend showing few signs of age.

The week ahead — Economic data from Econoday.com:

“Only fools and liars buy at exact bottoms and sell at exact tops!” — unknown

1. S&P & ISDA Declare Venezuela in Default — S&P has downgraded Venezuela’s foreign currency sovereign credit rating to “selective default” after it failed to make $200M in payments on its global bonds. The decision capped off a day in which the government promised to keep paying its debts, but offered no firm proposals, at a conference in Caracas. Furthermore, the International Swaps and Derivatives Association (ISDA) has ruled that Venezuela and its state oil company PDVSA have defaulted on their debts. The decision will trigger credit-default swaps, with the details of how they will be settled to be determined by the committee on Nov. 20.
2. FDA Approves First Digital Pill — The FDA has approved the first digital pill – made by Otsuka Pharmaceutical (OTCPK:OTSKY) and Proteus Digital Health (Private:PRDI) – that is embedded with a sensor and can tell doctors whether, and when, patients take their medicine. While a patient can block transmissions via a smartphone app, the technology is still likely to prompt questions about privacy.
3. Norway, World’s Biggest Wealth Fund Wants Out of Oil and Gas — Norway finance ministry said it will study the proposal and decide what to do in “fall of 2018” that would entail the fund, which controls about 1.5 percent of global stocks, dumping as much as $40 billion of shares in international giants such as Exxon Mobil Corp. and Royal Dutch Shell Plc. Norway relies on oil and gas for a fifth of economic output, would be less vulnerable to declining crude prices without investments in the industry .
4. House Passes GOP Tax Reform Bill — the House of Representatives has passed a bill that would result in the biggest overhaul of the U.S. tax system in 31 years. It would reduce the number of individual brackets, increase the child tax credit, abolish the estate tax by 2025, chop the corporate tax rate to 20% and make other tweaks aiming to make businesses more competitive. But there are warning signs as the focus in Washington turns to the Senate’s companion bill.
5. AAII Bullish Sentiment Crashes — AAII bullish sentiment from this week crashed from 45.1% down to 29.35%. That’s the largest one-week decline since April 2013!

Meanwhile, Bearish sentiment didn’t see quite as big a move as bullish sentiment, but it did spike by 12 percentage points, and that’s the largest one-week increase since February 2016.

The week ahead — Economic data from Econoday.com: