Envista Goes Public
Posted by Eddy Elfenbein on September 18th, 2019 at 3:00 pm

Today, Danaher‘s (DHR) dental business IPO’d. The new company, called Envista, trades under the symbol NVST.

Envista priced at $22 per share. The shares opened today at $25.65 per share and have been as high as $28.50.

Danaher owns around 80% of the company.

Today’s Fed Policy Statement
Posted by Eddy Elfenbein on September 18th, 2019 at 2:02 pm

The Federal Reserve cut by 0.25%.

There were three dissents. Two wanted no cut while one member wanted a 0.5% cut.

Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair, John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against the action were James Bullard, who preferred at this meeting to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent; and Esther L. George and Eric S. Rosengren, who preferred to maintain the target range at 2 percent to 2-1/4 percent.

Here are the Fed projections.

Waiting on the Fed
Posted by Eddy Elfenbein on September 18th, 2019 at 10:15 am

The Federal Reserve is meeting today. It looks very likely that the Fed will cut interest rates again.

This morning, we got news that housing starts rose to a 12-year high:

U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.

Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007, the Commerce Department said on Wednesday. Data for July was revised to show homebuilding falling to a pace of 1.215 million units, instead of decreasing at a rate of 1.191 million units as previously reported.

Morning News: September 18, 2019
Posted by Eddy Elfenbein on September 18th, 2019 at 6:53 am

EU’s Juncker Says the Risk of a No-Deal Brexit Is Now ‘Palpable’

Fed Preps Second $75 Billion Blast With Repo Market Still On Edge

Lawmakers Urge Aggressive Action from Regulators on Big Tech

G.M. Chief’s Test: Satisfy Striking Workers and Sustain Bottom Line

The Autoworkers Strike is Bigger Than G.M.

Window Closing Fast for WeWork Parent to Launch IPO This Year

Chinese Retailers Abruptly Stop Selling Juul e-Cigarettes

India Bans E-Cigarettes Amid Global Concern Over Health Risks

Where’s the Beef? Argentine Ranchers Hope More is Headed to China

Chipotle Stock Is Gaining Because It’s Not Turning Into Taco Bell

KFC Testing Fried Chicken Sandwich Between Two Glazed Donuts

IPhone 11 and 11 Pro Review: Thinking Differently in the Golden Age of Smartphones

Nick Maggiulli: The Cost of Waiting

Jeff Carter: Partner, Build or Ignore

Ben Carlson: Yes, the Stock Market is Going to Crash

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Good Industrial Production Report
Posted by Eddy Elfenbein on September 17th, 2019 at 10:03 am

We finally got a good industrial production report. This data series has struggled lately but the numbers for August were good. Last month, industrial production rose by 0.6% versus expectations for an increase of 0.2%. The figures for July were revised higher as well.

The Fed begins its two-day meeting today. The policy statement will come out tomorrow at 2 pm.

Morning News: September 17, 2019
Posted by Eddy Elfenbein on September 17th, 2019 at 7:39 am

Saudis Face Lengthy Oil Halt With Few Options to Fill Gap

Saudi Aramco Pursues IPO Planning Despite Attack Damage Doubts

WeWork Postpones Long-Awaited Listing as Valuations Plummet

Apple Says $14 Billion EU Tax Order ‘Defies Reality and Common Sense’

G.M. Workers Say They Sacrificed, and Now They Want Their Due

Ex-Tesla Executive Decamps to Brazil and Bets Big on Batteries

Why Bill Gates Thinks It’s Time to End Subsidies for Wind and Solar Power

Would a Purdue Bankruptcy Protect the Sacklers? Good Question

Aurora Cannabis: Nothing Makes This Market Happy

3 From JPMorgan Accused in Scheme to Game Precious Metals Market

FCC Approves Nexstar’s $6.4 Billion Acquisition of Tribune Media

Joshua Brown: What Advisors Bring to the Table

Howard Lindzon: Momentum Monday – Rotation…Rotation!

Jeff Miller: Is Falling Confidence a Threat to Markets?

Michael Batnick: Explainable Beta

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“The Fed has lost control of funding”
Posted by Eddy Elfenbein on September 16th, 2019 at 2:41 pm

The New York Fed should be taking care of this, but they’re not. Something is seriously not right.

One of the key U.S. borrowing markets saw a massive surge Monday, a sign the Federal Reserve is having trouble controlling short-term interest rates.

Amid the settlement of Treasury coupon auctions and the influx of quarterly corporate tax payments, the rate on overnight repurchase agreements soared by 153 basis points to 3.80%, the largest daily increase since December, based on ICAP pricing.

The Fed meets tomorrow and on Wednesday. A rate cut is still almost a certainty.

As the Federal Open Market Committee meets this week, this surge could force yet another tweak to the central bank’s interest on excess reserves rate to help ensure its main tool for guiding the economy — the fed funds rate — stays within policy makers’ preferred band.

“The Fed has lost control of funding,” said Mark Cabana, head of U.S. interest rates at Bank of America Corp.

Oil Surges After Attack on Saudi Arabia’s Oil Production
Posted by Eddy Elfenbein on September 16th, 2019 at 10:11 am

Over the weekend, Iran attacked Saudi Arabia’s oil production infrastructure. The result is that 6% of the world’s production has been knocked offline. Oil prices are surging today although the gains aren’t as dramatic as the initial pop we saw in other markets. Right now, I see that crude futures are up about 10%.

Most of the market is down today although energy stocks are up sharply. This is something you don’t see every day.

XLE +3.37%
XLB -1.08%
XLY -0.70%
XLP -0.48%

I doubt any production shortfall will last long. There’s certainly a lot of incentive to fill the void. The big question is, what comes next?

There are a lot of reserves held globally so no one is going to run out of oil. Right now, some experts are saying that it will take months for Saudi Arabia to get back to normal production. I’d take the under on that bet.

Morning News: September 16, 2019
Posted by Eddy Elfenbein on September 16th, 2019 at 7:22 am

Oil Prices Jump Most on Record After Saudi Arabia Strike

U.S. Shale Seen Unlikely to Quickly Replace Barrels Lost in Attack on Saudi Facilities

China’s Economy Aches All Over as Beijing Seeks Trade Fix With the U.S.

Fed Trades ‘Remarkably Positive’ For ‘No Precedents’ After Volatile Year

The Fed Faces a Tough End to 2019 as Worries Cloud the Horizon

Auto Union Digs In for GM Strike Over Pay and Benefits

OxyContin Maker Purdue Pharma Files for Bankruptcy to Wipe Out 2,000 Lawsuits

Senators Urge F.C.C. to Review Licenses of 2 Chinese Telecom Companies

Dream Global REIT to Be Bought by Blackstone Funds in $4.7 Billion Deal

NPR Shopping Cart Economics: How Prices Changed At A Walmart In 1 Year

Maybe We’re Not All Going to Be Gig Economy Workers After All

Better Bees May Be Able to Remake a $435 Million Crop Business

Lawrence Hamtil: The Low Vol – Momentum Barbell Using Sectors

Ben Carlson: The Powder Keg of Comparison & A Market of Stocks

Cullen Roche: Is This The Hardest Investing Environment Ever?

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Bloomberg’s “The Close”
Posted by Eddy Elfenbein on September 13th, 2019 at 10:46 pm

Here’s my appearance on Bloomberg’s market-wrap show “The Close” from this afternoon.

The link has the entire show but I’m on between 1:28:22 and 1:36:40.