“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.” – Jesse Livermore

1. U.S. Delays Tariffs on European Union, Canada and Mexico for 30 days — the Trump administration is delaying a decision about whether to impose steel and aluminum tariffs on the EU, Canada and Mexico until June 1, giving key allies a reprieve as the countries carry out further negotiations. The Iran deal is also on watch.
2. CFTC Chair Comments on Crypto Currency Regulation — according to CFTC Chairman J. Christopher Giancarlo, Bitcoin has “elements of all of the different asset classes,” stating that the popular crypto-currency is part currency, part security and part digital coin. “At the end of the day, it’s for Congress, and not regulators, to decide whether new policies should be evolved for these new asset classes… I don’t see it being resolved any time soon.”.
3. U.S. Trade Team Heads to China — A U.S. delegation led by Treasury Secretary Steven Mnuchin is on its way to China to discuss economic matters and the trade deficit. “Very much like North Korea, this should have been fixed years ago,” President Trump wrote in a tweet. Some economists anticipate that a short-term bargain involving the automobile industry and other previously announced moves could be struck. The yuan has weakened against the U.S. dollar for the fourth straight day with the trade talks just getting started.
4. FOMC Meeting Recap — the Federal Reserve held interest rates steady after its two-day policy meeting and said it will monitor inflation. The policy-making committee used the word “symmetric” twice in relation to its inflation target, in a potential cue to bond traders that a small overshoot past the 2% inflation target will be tolerated. The Fed noted that risks to the economic outlook are roughly balanced. “The FOMC statement reinforced market expectation for another 25 basis points rate rise in its June meeting,” said JPMorgan chief market strategist Tai Hui.
5. Iran Won’t Renegotiate Nuclear Deal — President Trump warns that unless European allies rectify the 2015 nuclear deal’s “terrible flaws” by May 12, he will refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic. Foreign Minister Mohammad Javad Zarif stated that “Iran will not renegotiate what was agreed years ago and has been implemented,”.
6. Berkshire Increased Apple Stake in Q1 by Adding an Additional 75M Apple Shares — Berkshire Hathaway bought 75M additional Apple (NASDAQ:AAPL) shares in Q1, with Warren Buffett outlining that the company “earns almost twice as much as the second most profitable company in the U.S.” The new investment brings its total stake in the tech giant to 240.3M shares worth $42.5B.
7. AAII Weekly Sentiment — according to this week’s sentiment survey from AAII, bullish sentiment declined from 36.91% down to 28.4%. While anything sub-30% is considered low, we actually saw a lower weekly print back in the first half of April, when bullish sentiment dropped down to 26.09%.

While bullish sentiment declined over 8 percentage points, bearish sentiment increased by less than 5 points. At the current level of 30.25%, it is nowhere near its recent high of over 40%.

The week ahead — Economic data from Econoday.com:

“That cotton trade was almost the deal breaker for me. It was at that point that I said, ‘Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?’” – Paul Tudor Jones

1. Jeff Immelt to Step Down as CEO of GE; John Flannery Takes Role — General Electric Co. (GE) Chief Executive Jeff Immelt will step aside this summer, and replace by John Flannery, head of the company’s health-care business and retire as chairman of the board on Dec. 31. Under Immelt ‘s term, GE shares have vastly underperformed the stock market during his tenure.
2. U.S. Retail Sales Fell 0.3% in May — retail sales which reflecting consumer spending at stores, restaurants and websites—fell 0.3% in May from a month earlier, the Commerce Department reported. That marked the steepest drop since January 2016. A big factor was cheaper gasoline, which translated into less spending at service stations. But consumers also cut spending at big-box stores, electronics retailers and restaurants. Car sales, after hitting a record in 2016, have fallen nearly 2% over the past three months. Retail sales are a big component of consumer spending, which in turn accounts for roughly two-thirds of U.S. economic output.
3. Quantitative Investing Based on Computer Formulas Accounts for About 90% of All Trades — JPMorgan’s Marko Kolanovic stated that “The majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals,” which estimates “fundamental discretionary traders” account for only about 10% of trading volume in equities.
4. Fed Raises Interest Rates and Sets Plan to Shrink $4.5 Trillion Balance Sheet ‘this year’ — the Fed as expected on Wednesday last week raised its benchmark federal-funds rate by a quarter percentage point to between 1% and 1.25% — the third increase in a year and a half. The Federal Reserve lifted a key U.S. interest rate and laid out a plan to shrink its massive $4.5 trillion balance sheet starting “this year,” a pair of moves reflecting its view that an economic expansion now entering its ninth year no longer needs so much propping up. Under the plan, the Fed will initially allow $6 billion a month in principal from maturing Treasury securities to runoff. That will increase in steps of $6 billion each quarter over a year until it reaches $30 billion a month. For mortgage-backed securities and federal agency debt, the Fed set an initial cap of $4 billion. That will increase in quarterly steps of $4 billion each quarter until it reaches $20 billion a month.
5. U.S. Stock ETF Inflows Surge — Investors raced into exchange-traded funds this past week despite market jitters, according to Lipper, delivering the most cash to those funds since late last year. Stock ETFs listed in the U.S. attracted $17.7B during the week ended June 14, while their mutual fund counterparts recorded $6.8B of outflows in their largest week of withdrawals since April.

The week ahead — Economic data from Econoday.com:

“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

1. US Retail Sales Dip in Feb — the Commerce Department said last week retail sales dipped 0.1 percent last month as automobile purchases slowed and cheaper gasoline undercut receipts at service stations. January’s sales were revised to show a 0.4 percent decline instead of the previously reported 0.2 percent increase. A sharp downward revision to January’s sales could reignite concerns about the economy’s growth prospects.
2. Bank of Japan (BOJ) Keeps Monetary Policy Steady — the BOJ kept its powder dry following the second day of its March policy meeting, but downgraded its assessment of the economy. Exports and production “have been sluggish due mainly to the effects of the slowdown in emerging economies,” while public expectations of future inflation have “recently weakened.” The central bank also maintained its pledge to increase base money at an annual pace of ¥80T ($700B) as widely expected, but clarified that money reserve funds would be excluded from the negative rates it introduced at the end of January.
3. Low Oil Prices Force Saudi Arabia Into New Austerity Drive — Reuters reported due to by low oil prices, Saudi Arabia is opening a fresh austerity drive by ordering ministries to cut their spending on contracts by at least 5%. The government ran a record budget deficit of nearly $100B last year and has been seeking ways to narrow the gap. It is laying plans to boost non-oil revenues with taxes, but that will take years to have much impact, leaving spending cuts as the main way to bring state finances under control.
4. Trump Wins the Super Tuesday, But Nomination Still Unclear –Donald Trump notched victories in the Republican presidential primaries Tuesday, winning Florida, the biggest delegate prize of the night, and driving home-state Sen. Marco Rubio out of the race. Trump also won in North Carolina and in Illinois. However, Ohio Gov. John Kasich prevailed in his home state. Hillary Clinton won the key states of Ohio and Florida Tuesday and seemed to pivot away from her Democratic opponent, Bernie Sanders.
5. FOMC Meeting — the central bank left interest rates unchanged, and scaled back the implied number of hikes that it expects from about four this year to just two. Policymakers said “Global economic and financial development continue to pose risks.”
6. US Crude Closes Above $40 — US oil closes above $40.02 a barrel, its 1st settlement above $40 in 2016 as the dollar fell, sinking to a 5-month low after the Fed cuts its rate-hike forecast. Qator oil minister said OPEC and Non-OPEC would meet in April.

The week ahead — Economic data from Econoday.com:

“I have learned through the years that after a good run of profits in the markets, it`s very important to take a few days off as a reward. The natural tendency is to keep pushing until the streak ends. But experience has taught me that a rest in the middle of the streak can often extend it.”“- Martin Schwartz

1. U.S. to export condensate for third month to Europe, South Korea — Reuters, export of ultra light oil, or condensate, from the United States are set to continue for a third month, with two cargoes due to load in September for shipment to Europe and South Korea. Oil producers are looking to export a growing surplus of condensate due to the shale boom, while consumers, such as refiners, have lobbied to keep exports forbidden to ensure lower energy costs in the U.S. Washington has still held back on issuing more permits to export the minimally refined oil, despite growing international pressure to soften the ban.
2. Bull Market Crosses The 2,000 Day Mark — courtesy of BIG, below is a chart showing the length (calendar days) of bull and bear markets for the S&P 500 as they have occurred from 1928 through today. As noted, only three other bull markets have lasted longer than current market.

3. FOMC Meeting — the Fed renewed its pledge to keep interest rates near zero for a “considerable time,” reassuring investors who might have been worried that the statement would point to an earlier than anticipated rate increase. As expected, the Fed said it would move to end its most recent asset purchase program at its next policy meeting in October.
4. “Dow Theory” Shows Bullish Move — courtesy of BIG, the Dow Transports index has broken out to a new high as well as the the Dow Industrial’s.

5. Scotland spurns independence in historic vote but demand new powers — Scotland spurned independence in a historic referendum that threatened to rip the United Kingdom apart. Opponents of independence won 55 percent of the vote while separatists won 45 percent with all 3.6 million votes – a record 85 percent turnout – counted.
6. Alibaba IPO prices at top of range, raising $21.8 billion — Alibaba raised $21.8B and shattering records as the largest U.S. IPO in history. The sale places Alibaba (NYSE:BABA) in the ranks of the most valuable Internet companies with a market capitalization of $168B, 20x FY14 (ended March ’14) sales and 45x FY14 earnings.

The week ahead — Economic data from Econoday.com: