The market will keep falling apart.
Want to know the real mood of the market? Stalk equity futures on Sunday evening right on through until Monday morning. It's a helpful (though exhausting) exercise I have used for many years. Based on this investing trick, the mood of the market right now is gloomy and potentially on the verge of becoming gloomier. For yet another weekend, stock futures on Sunday kicked off into the green only to quickly reverse gains in the evening. Stocks then continued their selloff into Monday morning.
Last check has futures down 150 points as investors awake to slowing China economic data and a Donald Trump interview on Fox that sounded as if the prez is ready to fight to the death in his global tariff war. In this environment, the second-quarter's growth rate of around 4% is likely to be the peak (shout out to Caterpillar's (CAT) - Get Report chief financial officer who said this several months ago, even though the comment sparked a market selloff) and a second-half slowdown potentially could be eye-opening if the trade war continues along its current path.
As we said last week, until the market can go up on Trump's trade war comments it's likely to stay on the mat.
Stock of the Day
Sleeping in the office and torquing bolts on the assembly line floor in the second quarter paid off for Elon Musk.
Tesla (TSLA) - Get Report met its goal of producing 5,000 Model 3s in the last week of the second quarter, according to an email from Musk to employees seen by TheStreet. "We did it!" Musk exclaimed in the letter. A Tesla spokesman confirmed the letter's authenticity. Shares will be in focus on Monday (up 6% at last check) as the achievement could set off a debate on whether Tesla will still need to raise capital this year, which Musk said will not happen. For it not to happen, Musk likely won't only have to sustain the recent Model 3 production surge, but ramp up further in the weeks ahead without miscue.
"Hitting this milestone is a win for Tesla, but the real accomplishment will be if the company can keep up this pace," said Jeremy Acevedo, manager of industry analysis at Edmunds. "Erecting a tent and cramming in extra shifts aren't necessarily the signs of a company on a sustainable path, but Tesla has proved at least in the near term that the company is serious about quieting the naysayers and at least trying to keep its promises."
Read more about Tesla's business prospects from TheStreet here.
Monday Fun Facts
According to iSPYETF founder Simon Maierhofer, July 2 is set to be the most bullish day for the S&P 500 I:GSPC all year long. Since 2000, the benchmark index traditionally has traded higher most often in the first session of the month of July - Monday, in this year's case. The S&P returns on that day an average of 0.35% and boasts a win rate of 83.33%. For the first trading day in July, the Dow Jones Industrial Average I:DJI has a win rate of 77.77% and the Nasdaq I:IXIC 72.22%. Talk about skewing the data, pulling this off Monday will be a Herculean feat.
More realistic data comes the way of LPL Financial. Third quarters in the second year of a presidential cycle (like now) have often stunk, pointed out LPL Financial. From 1896 to 2017, the average return on the Dow in third quarters of a second year of a presidential cycle has been negative 0.5%. Only the second quarter of an election year has posted worse average returns, said LPL.
Staying with data, waning interest for richly valued momentum tech stocks could be seen in the first half of the year on earnings calls. In the first half of 2018, FAANG (Facebook (FB) - Get Report , Apple (AAPL) - Get Report , Amazon (AMZN) - Get Report , Netflix (NFLX) - Get Report and Alphabet (GOOGL) - Get Report ) stocks were mentioned on 950 earnings calls (compared to 1,087 in the second half of 2017), according to AlphaSense. Part of the secret recipe behind the massive runs in these stocks is how people obsessively talk about them, which pushes up interest in buying the names. If fewer people are talking about them, that could be a signal the FAANG run is due for more of a pause.