Dow climbs in early Friday action as Wall Street attempts to cap tumultuous trading week with an upswing


Stock benchmarks on Friday rose modestly higher as investors looked to close out a volatile, holiday-shortened week that has the tech-heavy Nasdaq Composite on track for its biggest weekly loss since the height of the pandemic-induced market selloff in March.

How are major benchmarks trading?

The Dow Jones Industrial Average
DJIA,
+0.19%

rose 117 points, or 0.4%, to around 27,650, while the S&P 500
SPX,
+0.07%

gained 14 points, or 0.4%, to trade at 3,353. The Nasdaq Composite Index
COMP,
-0.09%

climbed 48 points, or 0.5%, at 10,952. But all three benchmarks were trading off their intraday peak near the open, highlighting the week’s choppy action.

The Dow on Thursday fell 405.89 points, or 1.5%, to close at 27,534.58, while the S&P 500 ended with a loss of 59.77 points, or 1.8%, at 3,339.19. The Nasdaq Composite fell 221.97 points, or 2%, to finish at 10,919.59. Through Thursday, the Dow was down 2.1% for the week, while the S&P 500 was off 2.6% and the Nasdaq was 3.5% lower; markets were closed Monday for Labor Day.

What’s driving the market?

A decline in the S&P 500 index for the week would mark the benchmark’s first back-to-back weekly drop since May.

“While monetary policy is set to remain supportive for several more quarters, valuations are high across assets and volatility is resurfacing,” said Elia Lattuga, co-head of strategy research at UniCredit Bank, in a note. “The breadth of the rally is still limited and the recovery uneven—hence developments in the economic outlook and political risks represent significant threats to risk appetite.”

Stocks were unable to follow through Thursday on a Wednesday bounce that saw equities recover somewhat from a three-day, tech-led rout that pushed the Nasdaq into correction territory, falling more than 10% from its record close set last week.

Weakness on Thursday was partly tied to the inability of U.S. politicians to agree on a new coronavirus rescue package after Democrats blocked a Republican bill on the Senate floor, leaving the way forward unclear, analysts said.

Meanwhile, investors have fretted that the sharp rally that took stocks from their March pandemic lows to new all-time highs had left valuations significantly stretched for the large-cap, tech-related stocks that had led the rally this year. Among those highfliers, shares of Apple Inc.
AAPL,
-0.85%

 and Netflix Inc.
NFLX,
+1.22%

 were on track for weekly declines of more than 6%, while Facebook Inc.
FB,
-0.57%

 is off more than 5%.

In U.S. economic news, the consumer-price index for August rose 0.4% last month, beating average economists’ estimates for a rise of 0.3% but falling below the past two months at 0.6%. On a year-over-year basis, the CPI increased 1.3% after gaining 1.0% in July, the Labor Department said on Friday

Looking ahead, Federal budget figures for August are due at 2 p.m. Eastern.

Which companies are in focus?
What are other markets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.675%

 rose 0.4 basis point to 0.687%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index
DXY,
-0.12%
,
which tracks the performance of the greenback against its major rivals, fell 0.1%.

Gold futures
GCZ20,
-0.08%

were off 0.3% at $1,958 an ounce, threatening to snap a three-day winning streak. The U.S. crude oil benchmark
CL.1,
-0.10%

 fell 16 cents, or 0.5%, to $37.13 a barrel.

The Stoxx Europe 600 index
SXXP,
-0.11%

 was edging 0.1% lower, while the U.K.’s benchmark FTSE
UKX,
-0.26%

rose 0.2%. In Asia, Hong Kong’s Hang Seng Index
HSI,
+0.78%

and the Shanghai Composite Index
SHCOMP,
+0.78%

 both rose 0.8%, while Japan’s Nikkei
NIK,
+0.73%

rose 0.7%.



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New York said ‘action,’ but many film and TV cameras won’t get rolling until September or later


New York City gave movie and television crews the Phase 4 green light on July 20, the same day professional sports teams were cleared to play without cheering (or jeering) fans in the stands — just silent cardboard cutouts. 

And while the Yankees and Mets are swinging for the fences and the Islanders and the Rangers hit the ice for an exhibition NHL game, the stars of “The Marvelous Mrs. Maisel,” “Law & Order: SVU” and “Blue Bloods” — popular New York TV shows — are still warming the bench. 

Things are progressing, though. Production offices, closed since mid-March, are opening, stars’ schedules are getting untangled and scripts are being written and fine-tuned. 

“We’ve tried to take a very measured response to the production rollout. September is when we’ll start to see some of the bigger shows come back,” said Anne del Castillo, commissioner of the Mayor’s Office of Media and Entertainment (MOME). “That will include some locations throughout New York City. 

“But even then, because of geographic limitation, it’s not like you’re going to see a hundred productions on the street,” continued del Castillo, whose office handles permits for on-location shoots. Widespread outdoor dining up-and-down New York City streets also poses a challenge for film crews, and will change the way productions are rolled out until the end of October, when the city’s street-eating initiative is due to end. As part of the rules for on-location shoots, they can’t come within 21 feet of eateries participating in the open-restaurants program without permission.

When it comes to people and businesses, “New York is so dense. We’re trying to share the streets. We can’t have shows filming on top of open restaurants,” she said. 

As of July 27, a maximum of 50 cast and crew are allowed for shoots on public property, which is double the number in the previous protocols. “I know a group of filmmakers making music videos who haven’t taken their foot off the gas,” Mitchell-Brown said, adding that they observed Phase 3 maximums and social distancing and safety guidelines. “They were in the Lower East Side. They were in Queens.”

Currently, no more than two cameras, three lighting stands, and five vehicles may be used for shooting through Oct. 31. In addition al-fresco dining, on-location shoots can’t get in the way of hospitals and COVID-19 testing centers to ensure 24/7 access.

“Right now,” del Castillo said, “we’re all just trying to figure out what all the constraints are.” 

They already know what the stakes are. 

In January, in response to an article about New York-based productions, Flo Mitchell-Brown, Chair of New York Production Alliance, which promotes and supports various facets of production, noted that “New York state is now the nation’s second-leading location for TV and film, behind only California, home of Hollywood.” 

William Baldwin filmed on location in Brooklyn for “Blowtorch” in 2012.


Getty Images

In 2019, roughly 200 productions applied for the state’s film tax credit, created more than 250,000 jobs and generated $4.8 billion in new spending, Mitchell-Brown said. 

See: New York metropolitan area lost nearly 1.5 million jobs in June, the most of any U.S. city

Figures from MOME show that New York City TV and film production was at an all-time high pre-pandemic, generating more than $60 billion in annual direct economic activity for the city and $3 billion in tax revenue. There were 80 TV series and 300 films being shot in the city before COVID hit, putting more than 100,000 New Yorkers to work. More than 2,000 local small businesses are supported by film and TV production.

“I want to be a little bit careful,” del Castillo said, adding that state and local government agencies, unions, production offices and others are in the cast of characters mapping out a safe return. “It’s an ongoing conversation that we’re having. It’s safe to say that in the first bit of Phase 4, most production will be on soundstages.”

Around the boroughs, that includes the sprawling Steiner Studios in Brooklyn and Silvercup Studios in Long Island City and the Bronx, to name just a few. But studios dot the Empire State. “We’ve been having weekly calls with these various stages since the start of the pandemic,” Mitchell-Brown said.

“The Marvelous Mrs. Maisel,” “God Friended Me” and “Hunters” are a few series shot at Steiner Studios. Steven Spielberg’s movie remake of “West Side Story” was as well, said Doug Steiner, CEO of the large studio that bears his name. It reopened July 20. 

However, Steiner Studios is still pretty quiet. Set construction there ahead of cameras rolling was already expected to begin, but that’s not happened yet. “We’re still working things out,” Steiner said, adding that there are “layers” of guidelines when it comes to masks, social distancing and other issues. “Productions have their own set of rules. We have our own protocols for entering the studio.” 

Steiner optimistically expects shooting to begin “sometime in September. Worst case scenario,” he said, “in October.”

Also read: A rough September lies ahead for New York City’s tourism sector as major events pivot to virtual

“Everyone has good intentions about starting back up,” Mitchell-Brown said. “But there’s still a level of divide between intention and reality. The government says you can have a certain number of people on the set that’s acceptable. Unions may require fewer people on the set when actors’ masks come off. What I’m hearing and seeing is that unions and guilds are going to do everything in their power to protect their members. There’s a lot to consider and iron out.”

Making sure that everyone’s on the same page isn’t just a hurdle for huge facilities, according to Matthew J. Pellowski, of Red Line Studios, a relatively compact Manhattan production and postproduction facility. Looking ahead to a “proper reopening” in September, he said that he anticipates that one major challenge will be ensuring the rules and regulations of outside production teams “coincide with their own.” 

When shooting resumes full-gallop, or thereabouts — in studios large or small or on location — they will look different. There will be changes across the industry for safety and facilitation of contact tracing. 

“Productions will be specced out by zones,” Mitchell-Brown said. “Essentially that’s so they can control the amount of people on a live set at a particular time. There will be zones for hair and makeup and costumes and so on. Some people refer to the areas as pods. It’s a way to have the set’s ebb and flow in a way that adheres to guidelines.” 

The use of color-coded wrist wristbands to identify various members of the cast and crew and where they have access on a set is another strategy being discussed. “Like you wear at a nightclub, or, if you’re not old enough to drink, at an amusement park,” Mitchell-Brown said.

Meanwhile, up-for-grabs chow served communal-style, “is a thing of the past as previously presented,” Steiner said. “There will be no cafeteria tables. Catering for shoot days will be cooked on site and single served.”

Read next: Taking the New York City streets back before the cars return

As the movie and TV industry simmers in Phase 4, it’s been a time for reflection, according to Steiner. “There’s a sense of urgency. It’s important to get back on track as soon as possible. The pandemic has brought to the fore how important this industry is to New York City and New York state. It’s something New York does really well.” 



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UK lawmakers, retailers call for action to prevent garment workers’ exploitation By Reuters


© Reuters.

LONDON (Reuters) – A group of 50 British lawmakers, retailers such as Marks & Spencer and New Look, and investors and NGOs called on Monday for urgent action to prevent the exploitation of garment factory workers in the United Kingdom.

Their joint letter, coordinated by industry lobby group the British Retail Consortium (BRC) and addressed to interior minister Priti Patel, asked for the introduction of statutory licensing of garment factories to ensure they all meet their legal obligations to employees.

The letter was published following recent media reports of workers being paid below the minimum wage, not being supplied with personal protection equipment (PPE) and working in unsafe conditions.

Britain’s minimum wage is 8.72 pounds ($10.95) for people over 25 years old and 8.20 pounds for people aged 21 to 24.

The BRC said it and its members have long been calling for greater enforcement by the authorities to support the actions retailers are taking to ensure fair treatment of workers and to enourage businesses to invest in UK fashion manufacturing.

“Recent reports in the media demonstrate the urgent need for action before more workers are needlessly taken advantage of,” said BRC chief executive Helen Dickinson.

The letter said the proposed licencing scheme would protect workers from forced labour and mistreatment, ensure payment of taxes and create a level playing field for businesses to compete fairly by preventing rogue manufacturers undercutting prices.

It would also encourage retailers to source their clothing from the UK, supporting the development of the industry.

Retailer signatories include ASOS (L:), Walmart (N:) owned Asda, M & S (L:), Morrisons (L:), N Brown (L:), Joules (L:), New Look, River Island and Matalan.

Online fashion retailer Boohoo (L:) was not a signatory. It wrote its own letter to Patel on Friday backing a licensing scheme.

“We fully support the proposals of the BRC and others on the need to implement statutory licensing of garment factory owners and managers,” said a Boohoo spokesman.

Investor signatories include Allianz (DE:) Global Investors, Columbia Threadneedle Investments, Fidelity International, Jupiter Asset Management and Schroders (LON:) Investment Management.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Gold Miners The Only Action In Town: Pal


When asked about what’s going on in markets during today’s Daily Briefing, Real Vision CEO Raoul Pal put it simply: “There’s nothing going on,” he said.

Pal said that overall, markets are holding steady. Some things have moved, like gold mining shares (up 34% YTD), banks (down 35% YTD), and energy (down 39% YTD).

“A simple ‘sell oil, buy gold’ yields you 70% returns this year,” Pal said. “It’s a weird world where nothing’s going anywhere but everything’s going somewhere. I’ve never seen anything like this. Gold miners are the only action in town for the time being.”

Pal discussed the source of the stasis, which he argued must have something to do with central banks suppressing volatility. He said there’s no other explanation for the flatness we’re seeing, and there must be some sort of offsetting function that has effectively stopped everything.

“I don’t understand why things have stopped moving,” he said. “It feels like we’re going to get big moves, but which way? We’ll find out.”

Pal also discussed how traders and investors can build a macro framework and size position for investing. He said it is about matching your idea horizon to your trade time horizon and that people tend to look at bets in isolated terms when they should be looking at their whole portfolio.

For example, Pal said that people will decide to short the S&P one week based on a long-term pessimistic view, but a big picture view based on long-term economic data is not the key influencer of the week in the S&P. It is potentially the key influence over the next six months, but you’re only taking a view on what the S&P will do during that particular week. Considering time horizon helps people understand what they’re doing, the risk and rewards of their positions, and how to think about everything.

Short-term trading is a different perspective than building a macro portfolio, and risk is a function of where you are, the structure of markets, and what your portfolio looks like, Pal said.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors(collectively, “Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise (whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance. Well, that was pretty intense! We hope you got all of that – now stop reading the small print and go and enjoy Real Vision.





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Tesla: More To Go, And A Look At The Stock Market – Great News, Bad Action (Video) (NASDAQ:TSLA)


In this video we review Tesla’s (NASDAQ:TSLA) blow-out delivery number and what it means for future quarters. We also go through why the market (NYSEARCA:SPY) looks short-term peaky.

Tesla: Wow

Tesla had everything working against them. Fremont was down. The supply chain was disrupted. Global demand was in a depression. And they pulled it out?! Could you imagine if the world was in normal-mode right now? How good could it really have been?

About a week ago Electrek reported that Tesla was close to break even profit for the quarter. If so the only way we can get there is by having gross margins holding up strong in a very tough quarter.

We were bullish even if Q2 was an EPS loss. But profit means something special so we went from Buy to Strong Buy and even made Tesla a max 10% position in our model portfolio for a period (Model portfolio: Paywall). Our subscribers were pumped of course with the big move.

2020 2020 2020 2020 2021 2021 2021 2021
Q1 Q2E Q3E Q4E Q1E Q2E Q3E Q4E
COGS 3699.0 3462.5 3917.9 5611.6 7429.9 7746.4 8424.0 8363.8
Gross Profit 1433.0 1280.6 1523.6 2236.8 3034.7 3241.4 3610.3 3670.5
Auto Gross Margins 27.9% 27.0% 28.0% 28.5% 29.0% 29.5% 30.0% 30.5%
Gross Profit 1356 1217 1471 2196 2998 3219 3599 3671
Total Gross Margins 22.7% 21.4% 22.8% 24.7% 26.4% 26.8% 27.5% 27.9%

Source: Elazar Advisors model with data pulled from company releases

To get to breakeven for the quarter (paywall: Full model) we would need gross margins for auto in the high twenties percent range. That’s of course huge.

Gross margins are heavily influenced by production efficiency and pricing. To have gross margins hold up in tough times gives you some visibility that if and when things normalize they should jump higher.

If so, that would get our EPS numbers even higher than where they are right now.

That gives us conviction that our $1,500 12-month target could be low. We base that on our 2021 EPS X a 45 PE.

In fact we’re the only sell-sider with stock price upside. What’s up with that?

Data From Factset

Above you see the right column of all the sell-siders that follow Tesla. We’re the only ones with stock price upside potential. People are sleeping.

Earnings are jumping. This “weak” Q2 gives you visibility numbers can continue to jump if we ever get normal back in the world. But the brokerage firms can’t see it. They are stuck.

But, whenever Tesla gets S&P 500 inclusion for having multiple profitable quarters which could be soon, all these brokers are going to have to pile on higher to recommend it.

Stock Market Peaky?

S&P 500 SPY ChartChart From Think Or Swim

Look at the last few weeks. In the video we run through why we think this is having a tough time breaking out to new highs. Something’s weighing it down.

You just had two months of historic high non-farm payroll numbers and the market can’t see new highs. The market’s lower than last month’s NFP number.

Even with the huge Fed support the market seems stuck.

The combination of a slowdown in weekly jobless claims improvement with spiky coronavirus numbers could be holding markets back.

Conclusion

We have no problem switching, but for now the market is showing us even with all the “great” relative news it’s having a tough time moving higher. Coronavirus cases hitting new highs may be holding investors back.

In this video we run through some key measures to watch to help decide the market’s next move.

We also talk about Tesla’s amazing week last week. We were the only bulls? That tells us there’s much more to go as many other brokers have to switch from bears to bulls.

#1 Tech Stock Pick Service On SA. Consistent Correct Market Calls

Subscribers are saying;

“almost always correct in timing calls”

“increased profits greatly”

“pro with a great hit rate.”

“paid for itself many times over.”

Steady returns in all markets (bull and bear). No big drawdowns. Work side-by-side with a hedge fund pro with 20+ years experience to help you identify big stories and catch big stock and market moves.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All model portfolio trades are hypothetical to show direction, conviction and timing. Performance excludes all relevant transaction costs. Opinions given are at this moment and can change rapidly after this is published. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues.





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