Wednesday, October 30, 2019

Market update: Federal Reserve cuts interest rates by 0.25% for the third time this year (30 Oct 2019)

3rd rate cut this year:  The Federal Reserve did exactly what was expected Wednesday by lowering its key policy interest rate one-quarter percentage point, to a range of 1.50%-1.75% and implying in the directive that it is unlikely to cut the fed funds rate again in December.
Fed Chair Powell, at his press conference, provided some dovish fodder with the suggestion that the Fed will need to see a significant move higher in inflation to raise interest rates to address such a development.
  • Nasdaq Composite +24.7% YTD
  • S&P 500 +21.1% YTD
  • Russell 2000 +17.0% YTD
  • Dow Jones Industrial Average +16.1% YTD


Wednesday, October 2, 2019

TD Ameritrade (AMTD) and E*Trade (ETFC) eliminate trading commissions

 On October 2, shortly after the market closed, E*TRADE Financial Corp announced that its online brokerage would cut its base commission rate to $0, following in the footsteps of Charles Schwab and TD Ameritrade. 
  • Now that E*TRADE, TDA, and Interactive Brokers offer some form of free trading, the industry is closely waiting for Fidelity, TradeStation and other online brokers to respond. 

E*TRADE Financial Corporation (NASDAQ: ETFC) today announced it will eliminate retail commissions for online US listed stock, ETF, and options trades. It will also reduce the options contract charge to $0.65 per contract for all traders while maintaining its active trader pricing at $0.50 per contract. These changes will take effect on October 7, 2019.
The current commission schedule shows tiered rates, depending on the client's trading frequency. The base rate was $6.95, dropping to $4.95 for clients who traded more often than 30 times per quarter. Options were charged at $6.95 per leg with $0.75 per contract; active traders paid $4.95 per leg with $0.50 per contract. 

TD Ameritrade's commission-free trading starts October 3.

Sunday, September 29, 2019

Mini-SPX Index Options (XSP)


Underlying: The Mini-SPX Index, based on 1/10th the value of the Standard & Poor's 500 Index (SPX). The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks from a broad range of industries. The component stocks are weighted according to the total market value of their outstanding "free float" shares.

Exercise Style: European - Mini-SPX Index options generally may be exercised only on the expiration date.

Settlement of Option Exercise: Exercise will result in delivery of cash on the business day following expiration. The exercise settlement value, XSP, is one-tenth (1/10th) the official closing price of the S&P 500 Index as reported by Standard & Poor's on the last trading day of the expiring series. The exercise settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100.

More info

Sunday, September 22, 2019

Friday, September 20, 2019

Market outlook : S&P 500 at major resistance level (20 Sept 2019)

  • The all-time high close on the S&P 500 is 3025.86, set on July 26, 2019. 
  • On Thursday, the S&P 500 hit 3021.99, less than 4 points from that key level.

Wednesday, September 18, 2019

Market update: Federal Reserve cuts interest rates by 0.25% for the second time this year (18 September 2019)

FOMC Decision: Fed cuts its benchmark overnight lending rate 25 bps to 1.75-2.00% as widely expected
There was a 7-3 vote to cut the target range for the fed funds rate by 25 bps to 1.75-2.00%. Boston Fed President Rosengren and Kansas City Fed President George dissented on the belief the target range should be left unchanged at 2.00-2.25%. St. Louis Fed President Bullard dissented on the belief the target range should be cut by 50 basis points.
  • Nasdaq Composite +23.2% YTD
  • S&P 500 +19.9% YTD
  • Dow Jones Industrial Average +16.4% YTD
  • Russell 2000 +16.3% YTD

The FOMC voted 7-3 to cut the target range for the fed funds rate by 25 basis points to 1.75-2.00%, as expected. Price action leading up to the decision was muted and volatility quickly ensued after the policy directive. Buying conviction, however, was largely absent before and immediately after the decision as the market extended losses heading into Fed Chair Powell's press conference.

Key takeaways from the Fed's policy decision included:

(1) Voting members remained divided: St. Louis Fed President Bullard preferred a 50-basis points cut, while Boston Fed President Rosengren and Kansas City Fed President George preferred no change in the fed funds rate; (2) the median Fed member is suggesting there will be no more rate cuts in 2019 and 2020; and (3) the interest paid on excess reserve balances was lowered to 1.80% from 2.10% -- which could provide some stability in the repo market after the New York Fed injected more liquidity today.  

Selling pressure soon abated and stocks climbed to session highs, with the S&P 500 financials sector (+0.4%) providing influential leadership, as the Fed Chair Powell wrapped up his press conference. The utilities sector (+0.5%) outperformed, while the energy sector (-0.4%) underperformed as oil prices ($58.07/bbl, -1.30, -2.2%) continued to pull back. 

Mr. Powell said the Fed does not see a recession, is not interested in negative rates, and the repo issue has no implications for the economy or monetary policy. FedEx (FDX), meanwhile, provided a pessimistic view on the global economy. The company cut its FY20 EPS guidance due to a weakening global environment, driven by trade tensions and policy uncertainty.

President Donald Trump, who has been bashing the Fed on Twitter and demanding a larger cut, was predictably fast on his fingers.

President Trump, who has called Fed policymakers “boneheads” for not cutting rates enough, tore into Wednesday’s decision, saying Chairman Jay Powell and his colleagues have “no ‘guts.’” Trump says the Fed is risking U.S. competitiveness by keeping rates substantially higher than most of the rest of the developed world.

But Powell said he does not believe the Fed will ever resort to negative rates, instead relying on asset purchases and forward guidance, as it did following the 2008 financial crisis. For now, though, Powell foresees continued moderate growth for the U.S. economy.

Friday, August 16, 2019

Germany : DAX

The DAX is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.