ECONOMIC SILUET: A 'golden cross' for the Dow, the bond king says Fed should start easing

Rabu, 14 Desember 2022

A 'golden cross' for the Dow, the bond king says Fed should start easing

WED, DEC 14, 2022

The goal of this newsletter is to get you ahead of the next day of investing and trading. It's your first look at tomorrow and last look at today powered by the team of people who direct CNBC TV's stock market coverage.

Tomorrow's Top CNBC Stories Tonight

Dow hits a 'Golden Cross'

The Dow Jones Industrial Average's 50-day moving average closed above the 200-day moving average for the first time since March 7. While market insiders can debate the meaning of this so-called golden cross and its importance, many believe it's a good indicator of a trend and shows support or resistance around a specific level.

The Dow is outperforming the S&P 500, Nasdaq Composite and Russell over the last month, 3-month, 6-month, year-to-date and one-year periods. It is down 4.4% in the last year, but up 11.9% in the last six months and up 9% in three months.

Not only that, but 14 of the Dow 30 stocks are up by at least double-digit percentage points in the last three months led by Merck, Caterpillar and Boeing. All have gained more than 26%. Sixteen of the Dow 30 stocks are up by at least double-digit percentage points in the last six months, led by Boeing up 54%, Merck up 32% and Goldman Sachs up 27.5%.

Only six of the Dow 30 are negative over the last 3- and 6-month periods. Intel has fallen 25% over the past six months, Verizon is down 23.8% and Salesforce is down 18% over the same period.

Bond king Jeff Gundlach says it's time for Fed to ease up

DoubleLine Capital CEO Jeffrey Gundlach told CNBC's "Closing Bell Overtime" that it's time for the Fed to ease up. Other takeaways: He expects a bond market rally is coming, and emerging markets are very attractive right now. Gundlach's comments come as the EEM MSCI Emerging Markets ETF is down 24% off the January high. The iShares JPMorgan Emerging Market Bond index is 20% off its high from a year ago and pays a yield right now of 4.5%, which is less than several U.S. bond funds in both high yield and investment grade. Also, the U.S. 2-year is paying 4.2%, the U.S. 3-month is paying 4.3%.

Credit Suisse's top picks for 2023

CNBC Pro took a look at a list of 43 stocks rated outperform by Credit Suisse, together the group represents their analysts' top picks over the next 6 to 12 months. Here's a taste of the stocks on the list:

Merck, which is up 45% in 2022
Flex, which is up 25% in 2022
Ross Stores, which is up 2.8% in 2022
Visa, which is down 1.5% in 2022
Motorola Solutions, which is down 2% in 2022
Sunrun, which is down 4.6% in 2022
Discover Financial Services, which is down 10.5% in 2022
Microsoft, which is down 23.5% in 2022
Iqvia, which is down 24% in 2022
Nvidia, which is down 40% in 2022.

Rough day for broker-dealer stocks

The SEC formally proposed wide-ranging changes to how stocks should trade. There is no formal plan to ban order flow payments, which is the compensation a brokerage firm receives for sending orders to specific market makers. Critics argue that means retail investors don't get the best prices when they buy and sell stock.

Instead of a ban, the proposed SEC rule calls for very fast computerized auctions, making the practice more competitive and less profitable. Virtu Financial would likely be hurt by this change. Its shares fell 6.3% on the news. The stock is now 48% off the 52-week high it set in April. RobinHood, which routes trades and takes advantage of payment for order flow on the other end, was down 1.3% after falling further but shares recovered later in the day. Robinhood is trading 55% from its 52-week high set a year ago. Those in favor of payments for order flow argue that it allows retail investors to trade without the fees they once paid per trade.