Your Weekly Market Blip 9/28/18

Your Weekly Market Blip 9/28/18

Stocks ended the day, the week and the third quarter with decent performance. The Dow finished the day up 18 on lighter volume to 26,458. For the week the Dow fell about 1.1% and for the quarter was up 9.4% bringing the ytd return to 7%. European stocks were lower after Italy said it would increase its budget deficit sending. German and Italian bank stocks were hit hard since they carry significant loads of Italian debt. It was once said that “Gentleman prefer bonds” and apparently the Italian’s prefer them too.

First Trust economist and honorary member of the Westport Mafia Brian Wesbury (who is also a University of Montana grad) noted that private sector wages and salaries were up 0.5% in August and are now up a healthy 5.3% in the past year. Total personal income is up 4.7% over the past year indicating that the consumer is in a relatively health financial position.

Boeing won a $9.2 billion contract to provide trainer jets for the US Air Force beating out Lockheed Martin and Uber (just kidding). The Air Force had originally estimated the cost of the 351 T-X aircraft and related support equipment at $19.7 billion but the team of Boeing and Swedish firm Saab presented a compelling offer to replace the 57-year-old fleet of T-38 Talon training jets. 90% of the new jets will be made in the US and future international orders could more than double the size of the current contract. Saab was up 8% on the news. The project is expected to support 17,000 jobs in 34 states with much of the work being done in St. Louis.

Who needs soap operas on TV when we have the nightly news. Yesterday the SEC filed fraud charges against Tesla CEO Elon Musk for tweeting out that he is “considering” taking the company private. The SEC took offence with this and apparently offered Elon a deal in which he would give them some cash (and maybe slip a new model 3 into the driveway) and step down as CEO. Elon rejected the deal, so the SEC went “full Monty” on him. The board of Tesla is backing him to the hilt and this news comes at an interesting time since, for the first time, Tesla is hitting its production targets. Check out this article from ElecTrek. The SEC’s action is causing disruption as shares of Tesla were whacked 14% on the news. This all will take time to sort out but model 3 buyers appear undeterred by the mess while they eagerly await delivery of their new car which is fast becoming a “Musk have” with all the cool kids. The shorts were thrilled with the SEC’s actions and SEC Chair Jay Clayton is #1 on their Christmas list! The SEC’s action however does point out the danger that all CEO’s face within this new era of social media. Will the SEC require all business related tweets to be filed with them prior to release or will they recognize that twitter is a spontaneous social platform for spouting off?