WELCOME TO LEIBOVIT VR NEWSLETTERS FOR ‘TURNAROUND TUESDAY’ – SEPTEMBER 26, 2023

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U.S. MARKETS:  GENERAL PRESS COMMENTARY

Following the sell-off seen last week, stocks showed a lack of direction over the course of the trading session on Monday. The major averages spent the day bouncing back and forth across the unchanged line before closing in positive territory.

The major averages moved to the upside going into the close of trading. The Nasdaq climbed 59.51 points or 0.5 percent to 13,271.32, the S&P 500 rose 17.38 points or 0.4 percent to 4,337.44 and the Dow inched up 43.04 points or 0.1 percent to 34,006.88.

The higher close on Wall Street partly reflected bargain hunting, with traders pick up stocks at reduced levels following the steep drop seen last week.

The turnarounds by the Nasdaq and the S&P 500 came after they ended last Friday’s trading at their lower closing levels in well over three months.

Buying interest remained somewhat subdued, however, as ongoing concerns about the outlook for interest rates continued to hang over the markets following last week’s Federal Reserve meeting.

The Fed left interest rates unchanged as widely expected but forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

CME Group’s Fed Watch Tool is currently indicating a 78.9 percent chance the Fed will leave interest rates unchanged at its next meeting in late October/early November and just a 21.1 percent chance of a quarter point rate hike.

Meanwhile, the Fed Watch Tool is indicating a 61.0 percent chance the Fed will leave rates unchanged at its December meeting and a 34.2 percent chance the central bank will raise rates by a quarter point.

Later in the week, the Commerce Department is due to release its report on personal income and spending in the month of August, which includes readings on inflation said to be preferred by the Fed.

Sector News

Energy stocks turned in a strong performance despite a modest decrease by the price of crude oil. While crude for November delivery fell $0.35 to $89.68, the Philadelphia Oil Service Index advanced by 1.7 percent and the NYSE Arca Oil Index climbed by 1.3 percent.

Natural gas, retail and transportation stocks also moved to the upside, while airline and gold stocks showed notable moves to the downside.

While the NYSE Arca Airline Index slid 1.2 percent to its lowest closing level in six months, the NYSE Arca Gold Bugs Index dropped by 1.0 percent amid a modest decrease by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while Hong Kong’s Hang Seng Index dove by 1.8 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 1.0 percent, the French CAC 40 Index slid by 0.9 percent and the U.K.’s FTSE 100 Index fell by 0.8 percent.

In the bond market, treasuries pulled back sharply, more than offsetting the rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, soared 10.4 basis points to a nearly sixteen-year closing high of 4.542 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the latest U.S. economic data, including reports on new home sales and consumer confidence.

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Mark Leibovit: Value of US Dollar Tied to Interest Rates

https://tinyurl.com/bdejpjuv

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SPY – WEEKLY – BULLS ON THE RUN HERE AS FORECAST

CRYPTO UPDATE AS OF SEPTEMBER 26:

CANNABIS MOVERS AND SHAKERS SEPTEMBER 26:

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Government Shutdown Could Push Unemployment To 4%, Triggering Recession Start Signal -ZeroHedge

by Tyler Durden

According to Bloomberg chief economist Anna Wong, online betting markets see a 69% chance of a federal government shutdown starting Oct. 1, when appropriations will lapse if lawmakers can’t agree on a funding bill (in reality, the odds of a shutdown are just about 100%, although after a few weeks all should go back to normal as it always does after people get bored with the theatrics).

According to Goldman, a government-wide shutdown would reduce quarterly annualized growth by around 0.2% for each week it lasted after accounting for modest private sector effects. Goldman’s baseline is that a shutdown could last for 2-3 weeks (the Trump government shutdown, the longest in history, lasted 35 days, from Dec 22, 2018 to Jan 25, 2019).

Meanwhile, Bloomberg Economics estimates a month-long government shutdown could temporarily push up the unemployment rate in October, triggering a popular rule for identifying the start of a recession.

And while the hit to unemployment and GDP growth will reverse once the funding impasse is resolved, Bloomberg’s baseline is for the shutdown to have a mild negative impact overall due to forgone economic activity and uncertainty.

Bloomberg also speculates that in an extreme tail event, the maximum hit to 4Q GDP would be a drag of 2.8% if the shutdown lasts for the entire quarter.

Considering that the current Bloomberg survey median sees just 0.4% GDP growth for 4Q, a shutdown that lasts all quarter would push 4Q growth deep into negative territory, something we first said on Tuesday. However, as noted above, past shutdowns have, on average, been much shorter. The eight government shutdowns since 1982 have lasted an average of two weeks. The longest one — in 2018 — lasted five weeks.

Assuming a two-week duration, the shutdown will knock 0.5% off annualized quarterly GDP growth while it’s ongoing, and raise the unemployment rate by 0.1% in October. The effects will mostly reverse within 4Q once the funding stalemate is resolved, but forgone economic activity and the uncertainty from the shock could produce a net drag of 0.1% on 4Q GDP.

In the scenario of a month-long shutdown — and assuming the unemployment rate remains at 3.8% in September — October’s unemployment rate could increase to 4.0%. That would meet the Sahm Rule threshold for identifying a recession.

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‘Bond King’ Jeffrey Gundlach warns of ‘demons on the horizon’ for stocks – and predicts a dollar disaster and recession next year -Yahoo! Finance

by Theron Mohamed

Jeffrey Gundlach issued a slew of warnings about the stock market, the US dollar, and an upcoming recession during the Future Proof conference last week.

The S&P 500 and Nasdaq Composite have surged 16% and 31% respectively this year, as investors price in the potential boost to companies from artificial intelligence and future cuts to interest rates. However, they’re overlooking “demons on the horizon,” Gundlach cautioned.

The billionaire CEO of DoubleLine Capital highlighted signs of a faltering US economy as a key concern. He pointed to a recent wave of corporate layoffs, and consumers feeling the squeeze from record amounts of credit-card debt as red flags. He also noted the chilling effect of higher mortgage rates on the housing market, and the challenge for small businesses of having to refinance their debts at much higher interest rates.

“The economy is definitely weakening,” Gundlach said. “I look for one next year, and I think the indicators are getting really convincing in that regard,” he said about the prospect of a recession.

The fund manager — whose nickname is the “Bond King” — also argued that economic growth has been shored up this year by a dangerous and unsustainable amount of government spending.

“The economy is only growing because we have a budget deficit that is 8% of GDP,” he said. “It’s about the same today as the depths of the global financial crisis.”

Gundlach underscored that the federal government financed most of its spending at rock-bottom rates. However, the Federal Reserve’s war on inflation has seen it hike rates from nearly zero to over 5% since last spring, meaning the government’s interest charges on trillions of dollars of debt are poised to balloon. 

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