On That Note...
Note that for the S&P 500 as well as for a host of other major indexes, this week's low is still above last week's low. In addition the lower trend line of our closing pennant has still not been violated. That's for the bulls. For the bears? A rising 50-day SMA will be a tough take and hold, while a still-sagging 200-day SMA will keep cash levels elevated.
Taiwan Policy Act
On Wednesday, the U.S. Senate Foreign Relations Committee passed the Taiwan Policy Act by a 17-5 margin. The bill provides $6.5B to fund weapons and other ancillary support for Taiwan as Communist Chinese forces have in recent months, escalated harassing activities around Taiwan, in both Taiwanese airspace as well as waters. The bill still requires passage by the full Senate as well as the House in addition to a presidential autograph, though there does appear to be bi-partisan support.
In addition to the $6.5B, the TPA would create a $2B loan facility to aid Taipei in the purchase of more weaponry and makes Taiwan eligible for a program that could help the autonomous island beef up its military capabilities rapidly. The bill, if passed, would also require the U.S. to impose sanctions on a minimum of five Chinese banks should Communist China escalate the situation though a naval blockade or the outright seizure of Taiwanese territory.
Yes, I remain long Lockheed Martin (LMT) and General Dynamics (GD) , as well as Northrop Grumman (NOC) . That last one was a Tuesday "buy the dip" re-initiation ahead of the firm's presentation at Morgan Stanley's annual Laguna Conference.
I saw on Wednesday that Walmart (WMT) was readying itself to offer checking accounts to its own employees (1.6M of them) as well as its shoppers through the fintech start-up known as "One," which is led by Walmart itself. Moving into fintech for the masses seems like a no-brainer for Walmart, as the chain caters to the common consumer, a number of whom might be underbanked. Where do they go? Where do they shop? Where do we all shop? Walmart. That's where. I thought to myself, "Self, this could be a home run." Did I buy the shares? No.
Why not? I thought Walmart is or was a Sarge fave? Used to be. Been flat a long time now. Look back a week. You'll see that Walmart filed its intention to raise $5B through a bond issuance bearing coupon rates between 3.9% and 4.5% and maturing from 2025 through 2052. So, I look at the balance sheet. Oh boy. At the end of the July quarter, Walmart ran with a current ratio of 0.84 and a quick ratio of 0.24. At that time, Walmart had a net cash position of $13.923B, current debt of $15.95B and long-term debt of $31.7B, not to mention accounts receivable of $7.522B and accounts payable of $54.191B. Not a misprint.
No wonder Walmart wants to borrow a chunk of dough. As for the equity, no thank you.
Economics (All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 225K, Last 222K.
08:30 - Continuing Claims (Weekly): Last 1.473M.
08:30 - Retail Sales (Aug): Expecting 0.0% m/m, Last 0.0% m/m.
08:30 - Core Retail Sales (Aug): Expecting 0.3% m/m, Last 0.3% m/m.
08:30 - Empire State Manufacturing Index (Sept): Expecting -15.3, Last -31.3.
08:30 - Philadelphia Fed Manufacturing Index (Sept): Expecting 3.5, Last 6.2.
08:30 - Import Prices (Aug): Expecting -1.2% m/m, Last -1.4% m/m.
08:30 - Export Prices (Aug): Expecting -0.4% m/m, Last -3.3% m/m.
09:15 - Industrial Production (Aug): Expecting 0.2% m/m, Last 0.6% m/m.
09:15 - Capacity Utilization (Aug): Last 80.3%.
10:00 - Business Inventories (July): Expecting 0.8% m/m, Last 1.4% m/m.
10:30 - Natural Gas Inventories (Weekly): Last +54B cf.
The Fed (All Times Eastern)
Fed Blackout Period.
Today's Earnings Highlights (Consensus EPS Expectations)
After the Close: ADBE (3.35)