Here's how a slap-happy stock market may get derailed – MarketWatch

This post was originally published on this site

Thanks, Mooch?

A market that by now probably should be immune to D.C. chaos is taking in stride the news that White House communications director Anthony “Mooch” Scaramucci is out after just a few days.

In fact, it’s looking positively giddy, with DJIA futures up by triple digits. What gives?

Paul Donovan, UBS’s global chief economist, says the latest reshuffling at 1800 Pennsylvania Avenue “could be interpreted as the reasserting of authority over the executive branch, or a signal of the worst chaos the White House has known since President Jackson’s inauguration.”

Then again, it is Apple reporting day, which comes against a backdrop of a pretty upbeat earnings season and a fairly ravenous appetite for those FAANG stocks. That’s not to say there’s not some fear that the run has been too hot for stocks, given August performances usually aren’t that great. Oh, and millennials are ready to go all in — a top if ever there was one.

If you’re looking for trouble, our call of the day may have found it. Greg Guenthner of the Daily Reckoning blog sees worrying times ahead, as transport stocks wave a warning flag.

That sector matters because truckers and railroads reflect what’s happening on the ground and can usually spot market trends.

The Dow Jones Transportation Index DJT, -0.48%  fell sharply last Thursday. Guenthner thinks the index be hard-pressed to recover, as stocks like Union Pacific UNP, -0.33%  slide and airlines surrender their summer rally.

The index feeds into Dow Theory, a market-timing tool that says both the DJIA and the Dow Jones Transportation Average have to march higher together to keep market gains going. That tool was flashing a fresh buy signal in July and a false signal went up in May — but things may be starting to unravel anew, as this chart from Guenthner shows:

Of course the transports sort of led investors astray in May as well.

Check out his full post here:

Key market gauges

No worries so far, as Dow futures YMU7, +0.48% signal an all-time high ahead, and S&P ESU7, +0.27%  and Nasdaq NQU7, +0.32%  futures also look pretty upbeat, with plenty of data and earnings ahead.

Asia markets ADOW, +0.37% ADOW, +0.37% were up again, led by Korea’s Kospi SEU, +0.84% Europe SXXP, +0.57%  is also on the rise.

The dollar DXY, +0.16%  is holding steady, gold GCU7, -0.03%  is flat and U.S. oil prices CLU7, -0.66%  are holding above $50 a barrel.

See the latest in Market Snapshot.

The chart

More bubble signs? Americans are piling into the stock market, according to this chart from Credit Suisse. It shows that equities as a percentage of household’s financial assets are now at the biggest level since the stock bust of 1999. (h/t The Wall Street Journal’s Daily Shot):

The buzz

After a tweet about his “amazing life,” Telsa TSLA, -3.46%  CEO Elon Musk talks about “great highs, terrible lows and unrelenting stress” and possibly being bipolar.

Meanwhile, DNA-testing group 23andMe, backed by Alphabet’s GOOGL, -1.34%  Google, is looking for 25,000 people to be involved in a study about depression and bipolarism.

Former Federal Reserve boss Alan Greenspan says it’s bonds, not stocks, that should be the big worry for investors right now, speaking in an interview with Bloomberg.

It’s split day for bitcoin BTCUSD, -3.60% which is under pressure. What’s it about? Basically, a group of developers has launched a new version of the cryptocurrency, and it’s due to launch Tuesday. Read this explainer.

MarketWatch

Bitcoin blues

The U.S. slapped sanctions on Venezuela President Nicolás Maduro, freezing his assets over a hotly contested weekend vote, and investors are waiting to see if that will be extended to oil. The country is a big exporter to the U.S. and a member of OPEC.

Meanwhile, Twitter lit up with news that two opposition leaders were taken to jail in the middle of the night. The below tweet purportedly shows Caracas Mayor Antonio Ledezma being removed from his home by armed officers hours after criticizing the Venezuela vote. They also hauled popular politician Leopoldo López back to jail:

Earnings

It’s another big earnings day, with the highlight Apple AAPL, -0.52%  coming after the close, along with Herbalife HLF, -1.09%  .

Read: Apple earnings: How long will iPhone sales be on ‘pause’?

And: Apple changes tune on new revenue-recognition rules

Ahead of the open, the docket includes Pfizer PFE, +0.03%  , Archer Daniels ADM, +0.96%  , Xerox XRX, +0.79%   and Sprint S, -2.92%  . BP BP, -0.06% BP., +3.19%  swung to profit, but a 2010 oil spill is still taking a toll. Stock is down.

Lumber Liquidators LL, -3.40%  is soaring on a surprise profit and sales beat.

Under Armour UA, +4.32%  is dropping on restructuring talk and lowered guidance in its earnings this morning.

Tesla TSLA, -3.46%  will report earnings Tuesday, and you can read a preview here.

The economy

It’s a big data day, with personal income, consumer spending, core inflation The jobs report is the big number to watch this week, but that doesn’t hit until Friday. In between, we’ll get ISM manufacturing and nonmanufacturing indexes, along with July car sales.

The stat

1 year, 7 months — That’s how long, on average, African-American women need to work to earn the same average yearly wage as a white male.

The quote

“If this was our Faus­tian bargain, then it was not worth it.” — Arizona Republican Jeff Flake says his party is in denial over President Donald Trump, in an op/ed for Politico.com that’s been making the rounds.

As well as the Scaramucci sacking, in the past 24 hours we’ve had Jared Kushner argue that the Trump campaign was too disorganized to collude with Moscow, a report saying Trump dictated his a misleading statement about meeting with Russians, and email pranksters fooling White House officials and getting its cybersecurity chief to give out his private email address.

So how bold is Flake being? Meh, say some:

Random reads

In more digital spoofing, a fake McDonald’s Hong Kong Twitter account trips up the mother ship

HBO got hacked, and an unaired “Game of Thrones” script is finally filtering online

Hours after criticizing the Venezuela vote, Caracas Mayor Antonio Ledezma was removed from his home by armed officers:

Exchange between Calif. Rep. Maxine Walters and Treasury chief Steven Mnuchin inspires this:

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Follow MarketWatch on Twitter, Instagram, Facebook.

More from MarketWatch

More Coverage