By Alan Valdes, Director of Floor Operations at Silverbear Capital
Nothing like a major shake-up in the world’s biggest oil producer to get oil trading at a two-year high. Charges of corruption in Saudi Arabia has put $33 billion of personal wealth at risk. After Prince Alwaleed Bin Talal’s arrest on corruption charges, his Kingdom Holdings Company plunged, losing more than $1 billion in share value. The shake-up and uncertainty did just the opposite for oil prices, as black gold flies over $57 per barrel. As long as Crown Prince Mohammed bin Salman keeps expanding his powers in the Kingdom and ratcheting up tensions with Iran, expect to see oil prices continue to move to the upside.
With earnings continuing to push markets to new highs yesterday, the three major indexes closed at record highs. The Dow (^DJI, DIA) closed at 23,574.86. (It was only a year ago when that index closed at 17,994.64.) The Nasdaq (^IXIC, QQQ) finished the day at 6,790.67. Finally, the S&P 500 (^GSPC, SPY) reached a new closing high of 2,593.38. When the markets opened this morning, all three indexes were trading at new intraday highs.
With 85% of S&P companies reporting, 74% have beat earnings expectations this quarter. This has been another very solid earnings’ season. As it begins to slow down, don’t expect to see the market slow down with it. As tax cuts continue to be hammered out, there are new seasonal hires being added to employment rolls. A rate hike this December by the Fed would be a positive for the markets, and we could see the Dow at 24,000 by Thanksgiving.
It’s hard to believe that it’s only 48 days until Christmas. For retailers, all eyes will be on those four days from Thanksgiving through Cyber Monday. In particular, the big three: Thanksgiving, Black Friday and Cyber Monday. It is expected, for the first time in U.S. history, that mobile sales will outpace desktop sales. According to Adobe, desktop sales will be 66%, a drop of 6% year-over-year. Smartphone sales will increase by 26% to 24% of total revenue. Whether it is desktop or mobile, the game has changed for brick and mortar. Online shopping is expected to total $107.8 billion, surpassing brick and mortar by 10%! Cyber Monday alone is expected to be the busiest online shopping day in US history, with sales topping $6.6 Billion. Now, that makes for a Merry Christmas!