April 27, 2016
Fed’s calling in the ‘helicopter money,’ says Gundlach — buy bonds now
By Barbara Kollmeyer
Markets reporter
Marketwatch.com
Apple investors may be hoping that the Fed decision later Wednesday will divert away the spotlight’s glare this morning. That’s shining down and melting stocks in the pre-open, hours after the iconic company reported its first drop in sales in 13 years, along with other ugly numbers.
As you’d expect, investors are divided over Apple this morning:
“While shares may take a pause near-term, we like the set up of a lower bar heading into easier compares and product cycles” in the second half of the year, says Morgan Stanley’s analyst Katy L. Huberty, who kept her overweight rating on the stock, but trimmed the price target to $120 to $135.
Over to the “glass is half-empty” crew. Whenever “Apple notes that there is a notable slowing down in growth, we have to stop and look into this,” Nour Al-Hammoury, chief market strategist at ADS, said in an email. He says Apple could be signalling we’re “at the end end of the business cycle.”
Take heart, though, says Al-Hammoury, as this is an election year. “Therefore, the Fed will try to keep the markets happy as much as possible,” he adds.
We’ll see what kind of cheer the Fed can spread later. And that brings us to our call of the day, which says this Fed punching-bag asset is about to have its moment in the sun.
Our chart recaps last night’s Apple meltdown, though there are plenty of other stocks that will be hopping this morning after a big late-session earnings onslaught. Facebook is what we have to look forward to later. Carry on.
Key market gauges
Tech stocks were under pressure across the globe on Apple’s results. Nasdaq-100 futures NQM6, -1.37% are leading the way south, down about 1%, while Dow YMM6, -0.22% and S&P futures ESM6, -0.30% are also off. European stocks SXXP, +0.38% aren’t making much headway either.
Asia was mixed, with the Nikkei slipping on earnings disappointment and Chinese stocks also lower. The dollar is off and gold is up a little. The Aussie dollar meanwhile, got whacked over a surprise fall in inflation.
Oil prices are up 2% after data from the American Petroleum Institute late Tuesday showed a surprise fall in supplies. We’ll get the bigger Energy Information Administration report later.
The call
With investors pretty much ruling out a Fed rate hike Wednesday, and just an estimated 23% chance of action at the June meeting,Treasury prices TMUBMUSD10Y, -1.93% are now in the grip of the longest losing streak since May. Yields are at the highest level in over a month.
To that, DoubleLine Capital’s boss, Jeff Gundlach, says to come on in — the water’s fine.
“I think it is a reasonable strategy to start legging into the Treasury market,” the rock-star manager told Reuters Tuesday, noting that DoubleLine bought a bit as prices slid Tuesday.
While Gundlach expects some “hawkish” language at the Fed meeting, he also expects the central bank will resort to “helicopter money” eventually to get the economy charged up. Though some have warned that kind of move — an injection of money printed by the central bank directly into households and the private sector via tax cuts and public spending — could be costly for the eurozone, if it happens.
He also thinks investors looking to buy stocks right now should veer away from Wall Street as non-U.S. stocks are down more right now. And he repeated that a Donald Trump GOP nomination — which looks more likely after Tuesday’s primaries — will trigger a global growth scare. Read the whole interview here. http://www.reuters.com/article/us-funds-doubleline-idUSKCN0XN2LF
The economy[b]
Advance trade in goods for March is due at 8:30 a.m. Eastern and pending home sales for March are coming at 10 a.m. Eastern. The Fed announcement will hit at 2 p.m. Here’s how economists expect that will go down.
[b]There's more. A lot more, actually, but of it discussing Apple and Donald Trump's statement about Hillary playing the "woman card." I've left it out. Read the whole thing here:
http://www.marketwatch.com/story/gundlach-says-buy-bonds-and-get-ready-for-fed-helicopter-money-2016-04-27
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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