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Snowflake = Biggest ever software IPO

SP500 – Monthly Candlesticks
Source: GKFX / MT4 (September 16, 2020)

Taking a very long-term view, looking back over this entire 11-year bull market, it can be seen that the S&P 500 index is showing a third instance of bearish divergence across its highs in price versus the highs in the RSI indicator.
 

TAKEAWAYS


•    Snowflake IPOs today in biggest software IPO ever (ticker: SNOW)
•    PREVIEW: Fed rate decision and economic forecasts
•    Apple competes with Peloton; announces online fitness classes
•    DAY AHEAD: Fed, UK CPI, US retail sales
 

GURU WISDOM


“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.” – Low Simpson
 

MARKETS


Another lift in tech stocks on the day of Apple’s product launch bolstered Wall Street for a second day. Sentiment was strong in Europe too after Germany’s ZEW survey showed that sentiment in Europe’s largest economy easily topped expectations in September. The UK’s FTSE was an out-performer as retailer H&M and online supermarket Ocado stocks both jumped over 10%.

FX markets reversed course a tad with some late dollar strength coming though after a multi-day losing stretch before today’s important Fed meeting and the subsequent meetings from the Bank of Japan and Bank of England on Thursday.

Gold slid $20 from its high at $1970 per oz in some apparent pre-Fed meeting jitters. Crude oil prices got a lift from the threat of another Gulf coast storm – Hurricane Sally – which saw output shutdown creating a short term shock to supply.
 

Snowflake IPO

Snowflake, the American cloud-computing and data management company, which has been backed by Warren Buffet and Salesforce is going public today in what is set to be the biggest software IPO ever. The huge valuation for a relatively unknown name outside of techie circles is a big feat and demonstrates ongoing investor demand for technology stocks. But at 72x trailing revenues, it appears to be another example of market froth.
 

Fed Preview

The focus of today’s Fed meeting will be the latest updates to economic forecasts and the so-called dot-plot projecting where policymakers see interest rates in the next three years. The dot plot should remain pinned to the floor so attension will be on the Fed’s reaction to the economy recovering quicker than it had expected in its last forecasts in June. At that time the Fed had projected 9.3% US unemployment by the end of the year, now it stands at 8.4%. All-else being equal, higher revsions to economic forecasts would be good for the dollar.
 

What Apple did


Apple released two new Apple Watches: the series 6 and the SE, an 8th generation iPad and a new iPad Air but it was the two new additions on the service-side that garnered the most attension. Apple confirmed its Apple ‘One’ Music/TV/storage services bundle and annoucned a surprise new service Fitness+ that will compete directly with Peloton’s own fitness subscription service. Peloton shares dropped 5% on the news before rebounding.
 

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