Trump Just Demanded The Treasury Department “Substantially Increase” Sanctions On Iran

Plus, the Fed should deliver a quarter point cut today, CEOs of the nation’s largest companies downgraded their outlook for the economy, and FedEx shares are tanking.

Stocks opened slightly lower Wednesday with the Dow down 67 points, or -0.2%. The S&P 500 and Nasdaq both traded down -0.3%.

Welcome to Fed Day. The Federal Reserve will wrap up its two-day meeting this afternoon and it’s widely expected that the central bank will deliver a quarter-point interest rate cut. Chairman Jerome Powell will give a press conference today at 2:30pm EST, and while markets may get the cut they want, it’s likely Powell will deliver a message markets don’t want to hear on plans for future cuts. The Fed’s sharply divided policy panel may be reluctant to forecast further rate cuts this year, even with pressure from some in the markets for two more rate cuts in 2019 and from President Trump who called for rates to be cut to zero or less in a tweet storm last week.

The central bank also stepped in and injected $75 billion into U.S. money markets this morning after yesterday’s spike in the repossession rate, or the interest at which financial institutions fund themselves. The overnight Treasury repurchase rate spiked as high as 10% on Tuesday, four times the level seen a week ago, which sent the Fed pumping $53.2 billion into the market yesterday to calm nerves and regain control over interest rates, its first such intervention since the 2008 financial crisis. There’s evidence this morning that things are calming down as the rate for general collateral repurchase agreements has dropped to 2.43%, though that rate is still above the 2.20% and lower levels seen last week. It’s unclear if the FOMC will today announce further steps to relieve pressure on the overnight lending business to ensure higher rates don’t impact other parts of the economy. “The underlying problem is that there isn’t enough liquidity in the system to satisfy the demand and the job of the central bank is to provide such liquidity,” said Roberto Perli, a former Fed economist and parterre at Cornerstone Macro. “What the Fed did was just a patch.”

The CEOs of some of the country’s biggest companies downgraded their outlook for the U.S. economy, according to a new survey released this morning. The Business Roundtable said its members now forecast growth to come in at 2.3%, down from last quarter’s estimate of 2.6%, amid uncertainty over the trade war and slowing global growth. Additionally, the Roundtable’s indexes of hiring, capital investment and sales all declined. “This quarter’s survey shows American businesses now have their foot poised above the brake, and they’re tapping the brake periodically,” said Business Roundtable President Joshua Bolten. “Uncertainty is preventing the full potential of the economy from being unleashed, limiting growth and investment here in the U.S.” Chairman Jamie Dimon, CEO of JPMorgan, blamed the trade tension with China and the stalled free-trade agreement with Canada and Mexico for Roundtable members’ downbeat assessment. A survey of 225 CFOs by Duke University also shows pessimism on the U.S. economy and found that 53% of chief financial officers believe that a recession will hit by the end of the third quarter next year and 67% see a recession by the end of 2020. “Dr. No is back,” said Duke University Finance Professor John Graham, and author of the report, referring to the rising pessimism. CFOs “growing more pessimistic outnumber those growing more optimistic by a five to one margin.”

Saudi Arabia said Wednesday that the weekend attacks on its critical oil infrastructure were “unquestionably sponsored by Iran.” “Despite Iran’s effort to make it appear so,” the attack didn’t originate from Yemen, said Saudi defense ministry spokesman Col. Turki al-Maliki. Al-Maliki said the 25 drones and missiles used in the attacks—which Yemen’s Houthi rebels claimed responsibility for—were Iranian Delta-wing unmanned aerial vehicles (UAVs) that flew in from the north to the south. Oil prices were down this morning after President Trump said that he had ordered the Treasury Department to “substantially increase” sanctions on Iran following the attacks that temporarily knocked out 5% of the global oil supply. Brent crude is down -1.08%, while U.S. West Texas Intermediate Crude futures are down -1.5%.

FedEx shares are down nearly -14% after the shipping giant reported earnings that missed estimates and cut its full year forecast after the bell yesterday. Management blamed the loss of business from Amazon, trade issues, and foreign business related to TNT Express integration on the downbeat quarterly report. Analysts from Stifel, BMO, Deutsche Bank, KeyBanc, and others all downgrading the stock swiftly afterward. “The downgrade reflects two key issues: very weak fiscal 1Q results and guidance, and lack of acknowledgement from management with respect to its own execution failures,” said Deutsche Bank. “While some may view this as the bottom in shares, we don’t see any support until management takes responsibility for recent performance and clearly articulates a credible path to better results and cash flow (and delivers on it). In the meantime shares will continue to melt lower, and rightfully so.”

Stocks We’re Watching

SunPower Corp (NASDAQ: SPWR): Shares of SunPower, the largest commercial solar installer in the U.S., were up as much as 14% yesterday and are up nearly 192% so far this year. The stock has benefitted from the attack on Saudi Arabia’s oil production which has raised questions about the stability of the world’s energy production sending investors pushing into the solar sector as an alternative. SunPower has also seen a boost following Walmart’s recent lawsuit against Tesla whose solar panels caused fires at seven Walmart stores. Walmart struck a new installation contract with SunPower last year soon after the Tesla panels began sparking fires on the retail giant’s rooftops, and commercial wins like this are a big part of why the solar company’s deployments are ramping up significantly.

Avadel Pharmaceuticals (NASDAQ: AVDL): Shares of this biotech are up 9.15% so far today and nearly 28% over the past week. Yesterday, the company announced that Dr. Michael Thorpy, Director of the Sleep-Was Disorders Center at the Montefiore Medical Center, will be giving a presentation highlighting pharmacokinetic data for Avadel’s FT218 candidate from its four Phase 1 studies. FT218 has already been granted Orphan Drug Designation from the U.S. FDA for the treatment of narcolepsy on the hypothesis that FT218 may be clinically superior and safer compared to already approved treatments for the indication.

Trending Ideas

Featured Stocks On The Move

Daily Rundown

Top 3 Stocks in Leading Sectors
  • 3 Electric Power Stocks To Buy Now

    Featured Content Hawaiian Electric Industries, Inc. (HE) Hawaiian Electric Industries, Inc. is a holding company that provides electric utility services and financial services in Hawaii. Through its subsidiaries, it supplies... Read More

  • 3 Bank Stocks To Buy Now

    Featured Content Comerica Incorporated (CMA) Comerica Incorporated is a financial services company headquartered in Dallas, Texas, offering a range of banking products and services, including commercial and retail banking, wealth... Read More

  • 3 Machinery Stocks To Buy Now

    Featured Content Alta Equipment Group Inc. (ALTG) Alta Equipment Group Inc. is an integrated equipment dealership platform in the United States, operating through three segments: Material Handling, Construction Equipment, and... Read More

  • 3 Silver Stocks To Buy Now

    Featured Content Gatos Silver, Inc. (GATO) Gatos Silver, Inc. is a precious metals mining company primarily focused on silver and zinc production. Its flagship Cerro Los Gatos mine in Mexico... Read More

  • 3 Metal Production Stocks To Buy Now

    Featured Content Century Aluminum Company (CENX) Century Aluminum Company is a primary aluminum producer, with operations that include the production of high-purity, low-carbon aluminum used in automotive, aerospace, and industrial... Read More

  • 3 Medical Drug Stocks To Buy Now

    Featured Content Teva Pharmaceutical Industries Limited (TEVA) Teva Pharmaceutical Industries Limited is a global pharmaceutical company specializing in generic and specialty medicines. The company provides a wide range of treatments... Read More

  • 3 Paper Product Stocks To Buy Now

    Featured Content AptarGroup Inc. (ATR) AptarGroup Inc. is a global leader in providing innovative dispensing and packaging solutions, serving diverse industries like beauty, personal care, and pharmaceuticals. They focus on... Read More

  • 3 Restaurant Stocks To Buy Now

    Featured Content Brinker International, Inc. (EAT) Brinker International, Inc. operates well-known restaurant brands such as Chili’s Grill & Bar and Maggiano’s Little Italy. The company is a leader in the... Read More

  • 3 Investment Brokerage Stocks To Buy Now

    Featured Content Robinhood Markets, Inc. (HOOD) Robinhood Markets, Inc. is a financial services company known for its commission-free trading platform, which allows users to trade stocks, options, cryptocurrencies, and ETFs.... Read More

  • 3 Shipping Stocks To Buy Now

    Featured Content ZIM Integrated Shipping Services Ltd. (ZIM) ZIM Integrated Shipping Services Ltd. is a global container shipping company that provides cargo transportation services worldwide. The company operates a modern... Read More

  • 3 Mining Stocks To Buy Now

    Featured Content Perpetua Resources Corp. (PPTA) Perpetua Resources Corp. is a mining company focused on the exploration and redevelopment of the Stibnite Gold Project in Idaho, which is one of... Read More

  • 3 Airline Stocks To Buy Now

    Featured Content General Electric Company (GE) General Electric Company is a global industrial conglomerate with operations spanning sectors such as aviation, healthcare, power, and renewable energy. GE is known for... Read More