\September 0408, 2017 HOUSTONS RECOVERY WILL BE ON EVERYONES MIND
Harveys toll could be felt this week. Piper Jaffray European Energy, though
scheduled for 8/2931 in Perthshire Scotland was canceled because Texas airports were
closed, keeping executives from flying out, if they werent out before Hurricane
Harvey hit. And even when they were, they preferred to stay back to help with the
recovery, and keep abreast of the restarts & recovery of pipelines, refineries, and
chemical plants, if not the drilling rigs, themselves. That could happen, as well, to
Platts Pipeline Development & Expansion planned for Houston on the 7th.
Not that the waters wont have receded but its hard to imagine the city getting
back to business that fast, with a 3-day holiday between now and then.
Yet, its the recovery from Harvey well all be watching. I tend to list events
in the order of expected importance. I.e. BAC/MER will draw more people to a NY conference
than, say, Wolfe Research does. But in the case of Sept 6th, I gave KBW
Insurance Conference (Boston thru 7th) precedence over UBS Global Chemicals,
Paper & Packaging Conference (NY thru 7th), because the question on
everyones mind is how much Harvey is going to cost insurerseven if it seems
the biggest cost will be for vehicles totaled in the floods. I happen to have a FEMA flood
policy, and find myself extremely bothered by its habit of bailing out people who never,
once, paid for a policy. Well see if that happens after Harvey, as well.
The Earnings Calendar winds down, while the Economic Calendar is decidedly light, leaving
Events to star. And even with potential cancellations, the Event Calendar is simply insane
this weekWednesday and Thursday, in particular. Where firms could host conferences
stateside they loaded the boat in the Far East & Europe.
One item to note, especially, is that T-3 settlement is, now, being replaced by T-2, which
means paying for purchases one day sooner, or getting funds from a sale a day sooner,
also. The change starts at of Tuesday, the first day back, when Congress will return from
summer Recess, also. Wall Street consensus assumes raising the debt ceiling and passing
billions in funds for Houston, post Harvey, will go more smoothly, because Congress needs
to help the 4th largest city in the country recuperate. Other than that, I find
the number of events scheduled for this week simply insane. No human can possibly absorb
all the webcasts on tap, if they were to try. Then again, the crowds never return from
summer vacation immediately after Labor Day, as the schedule presumes. In fact, more
commonly, CNBCs Pisani often bemoans the lack of volume during the week following
Labor Day. Well, no one but him predicted busier markets before the holiday, so hell
be most disappointed that it doesnt materialize. I prefer a slow ramp up from a
vacation weekend, getting my sea legs steadied with an eye on the US Open.
Welcome back!
ECONOMIC: (Highlights, only, below.
The Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 28Sept 1st, 2017 SLOW
CRAWL TO A HOLIDAY WEEKEND This
week could be the slowest crawl to a holiday weekend, with the August Unemployment Report
worth about 10 minutes trade Friday morning. Before that several 2ndlooks of previously
released data, and I-banks concentrating their conferences overseas, where this coming
weekend isnt a holiday. End of month data arriving on Friday, the first of the new
month and in such a slow week, otherwise, doesnt always occur. But the BLS is
getting the data out, as are OEMs, releasing the August sales of new vehicles, all
Friday.
Because Janet Yellen referred to the financial crisis timeline being available at the St.
Louis Fed, I became curious about when the timeline ends, if it did, and what it includes,
or excluded. For other curious souls, it ends in 2011, and can be found here: https://www.stlouisfed.org/financial-crisis/full-timeline
Fed Reserve of Chicago Large-Bank Directors Conference is flush with corporate board
members, including from: BBT, CMA, CIT, Mitsubishi UFJ Financial, Fifth Third Financial
Corp, SCHW, BNPP, DFS, SAN, STI, USB, HBAN, as of this post.
Of all the companies reporting this week, and there are few of them, to be sure, Best Buy
could attract some of the most curious, since its defied expectations, holding stock
gains, despite JCP moving into Appliances, and Amazon expected to do the same. Those
analysts who tout the Geek Squad has, probably, never used it for anything, or theyd
know how few of the Geeks know a thing about anything computer related. And while it is
one of the retailers likely getting a fair share of Switch consoles from Nintendo. As
GameStops Friday earnings proved, thats not necessarily enough to hold up a
stock.
OF the weeks events, Morgan Stanleys Houston Energy Summit, obviously,
wont take place; that city is underwater. That leaves Jefferies Semis,
Hardware & Communications Infrastructure summit to lead the pack stateside. But
thats also a group that hasnt needed Jefferies help to rise. Im notably
disappointed by the new films offered at the movies, for the coming holiday weekend,
making the US Open, in Flushing Meadow Park, the best alternative. If you grab a Broadway
Show ticket at the TKTS booth in Times Square, dont be disappointed if the leads are
all substituted by stand-ins for the weekend. Just like you and me, stars of Broadway get
invited to out of town weddings and take a few days off over holidays. If you pay $140 for
a Broadway ticket and expect to see the regular stars, fhegheddaboudfit when it comes to
Broadway Shows on both Labor Day & Memorial Day weekends
And with that, well leave you with the slim schedule, and a warning that we may not
post a regular Outlook next week because we have a tax return to complete, and because,
the post-Labor Day schedule is so busy, its barely possible to list all the events,
let alone anything else.
Have a happy, safe, holiday.
ECONOMIC: (Highlights, only,
below. Full Int'l Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors
alone, and should be just one factor in more complete due diligence.
August 2125, 2017 VOLUME LIKELY TO
DRY UP While most of us would
prefer to hear less of Pres. Trump, hes scheduled a 9pm (et) Monday national address
to tell us what he decided to do with Afghanistana long running war that Obama
intended to end but never did. Lets hope he doesnt engage in a Q&A because
thats when hes at his worst. Speaking of low volume, Monday should be the
worst of all, as the solar eclipse becomes the most hyped event in history. Funny thing
about it is I remember the last one, and cant remember it being as hyped as this one
is. If you miss this one, theres another in 2024, anyway. Those who were expecting a
correction coincident with the solar eclipse might, instead, find stocks making a bottom
on Monday, though my view of the charts Ive looked at suggests theres likely
to be more losses before a bottom is put in. In fact, its been a long time since so
many charts looked so unappetizing to anyone but shorts.
US Data this week will includes, Tuesday, FHFAs June & Q2 House Price Index, and
July New Home Sales on Wednesday. Then Thursday, July Existing Home Sales will be released
The big Economic event of the week is the Kansas City Feds Annual Economic Symposium
in Jackson Hole. Yellen speaks Friday at 10am et, and Draghi during lunch, Friday, too.
Those anticipating Draghi signaling a coming end to the ECBs QE may well be very
disappointed. Why would he go to Jackson Hole to preview future ECB moves, when he could
speak in any of the 28 EU countries, if he wanted to deliver that message. The symposium
theme is "Fostering a Dynamic Global Economy," and thats what hell
stick to, even as Yellen plans to speak on financial stability. The full agenda will not
be published until the 26th, so I cant tell you who else is scheduled to
speak or their topics. Yellens schedule is published by the Federal Reserve, and
Draghis by the ECB. And even then, one has to convert GMT to local time, to figure
it out. Assuming lunch is around noon or 12:30pm, then Draghis speech will be
sometime after 2pm on the east coast.
The Earnings Calendar promises more retailers, not all of whom are emboldened, this week.
But in addition to the retailers, Medtronic, Sanderson Farms, Autodesk, Broadcom, Intuit,
JM Smucker and Hormel, in addition to Royal Bank of Canada and Salesforce.com --just some
of the other names beyond Retailers, while Ulta Salon, on Thursday afternoon, is one
Ive been waiting to see fail to grow at the outstanding rates its posted over
the last few years.
As for Events, note Interventional Cardiology finishing up as I type, Sunday, along with
an Intensive Review of Cardiology that will run though Wednesday. Meanwhile, The European
Society of Cardiology opens next Saturday, in Barcelona, which combined with
Medtronics earnings release, Tuesday morning, is a plethora of cardiology
discussions, for a single week. Hot Chips, starting Monday, and Autonomous Cars, Tuesday,
caught my attention, Monday & Tuesday, respectively.
But note, I doubt any event this week will supplant the attention the K.C. Fed Symposium
will attract. There will be at least a dozen economists from I-banks, and dozens more
reporters who will discuss what they expect, and few of them will have more than
speculation to back up their commentary. But the Fed is known to whisper in ears
selectively, so its probably foolish to dismiss everything written, out of hand. The
Fed speakers talking recently included one whos comment made sense; when he said the
debt ceiling is likely to influence when the FOMC begins to unwind its balance
sheet--sooner rather than later. I cant find in my daily notes who it was who said
it but I think it was Kashkari, and that makes tremendous sense to me. Because the Fed
turns over to the central government its excess earnings, and the cash it will receive
from selling its treasuries & agency debt, it makes sense to me that the start of the
unwind will begin in Oct., sooner after the FOMC meeting that ends 9/20. If you dont
think the Street is really properly prepared for unwind, then you probably want to buy
some puts on the next rallyor maybe not even wait for the "next" rally.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 1418, 2017 NOT
QUITE ALL, RETAIL ALL THE TIME
Because Retailers big and small dominate the Earnings Calendar,
it may feel like All RETAIL, All the Time but that wont really be the case. In fact,
there are a few tech heavy hitters reporting earnings, this week, including NetApp,
Synopsys, Cisco, Alibaba, Applied Materials, heavy equipment manufacturer Deere & Co,
along with defense contractor Caci. Can Deere do what Caterpillar did with its recent
Quarterly report? Run to the upside as if it was the last bargain stock in the world?
But Retail is not just a feature on the Earnings Calendar, because well also hear
about July US Retail Sales, on Tuesday, US Q2 (p) eCommerce Sales, on Thursday, and, even,
UK July Retail Sales in the wee hours of Thursday morning, while well hear about
Chinas July Retail Sales, overnight Sunday, shortly after I post. Other items of
interest on the Economic Calendar, apart from global retail sales, includes a very light
US Treasury issuance calendar, that ends on Tuesday, with $20B of 52-week bills offered.
Housing peppers the Economic Calendar, with the NAHB (Homebuilders) Aug. Housing Market
Index released Tuesday, US July Housing Starts/Building Permits, on Wednesday,
Chinas July Property & House Prices on Thursday, with Canadas July
Existing Home Sales, for that matter, out Tuesday, too. Some Canadian provinces have
tightened requirements for home purchases, and/or enacted taxes on home sales, to slow the
foreignparticularly Chinesemoney that was looking to hide out in Canadian
property, despite Chinas attempt to clamp down on currency outflows. Chinese inflows
to Canada were boosting home prices to sometimes overinflated heights, now cooled with new
taxes, as Sunday nigh/early Mondays Teranet/National Bank July Canada Home Price
Index is likely to show for another consecutive month. .
In addition to Retailers big and small reporting earnings, this week, Target (Wed. a.m.)
& Walmart (Thurs. a.m.), the largest of them, TJ Maxx (Tues. a.m.) & Ross Dress
for Less Stores (Thurs. p.m.), the ones expected to please the most, theres also L
Brands (Wed. p.m.) the newest member of the naughty list, after discontinuing swim &
apparel at Victorias Secret, last year, posting declining comp store sales this
year, as a result. and GAP Stores (Thurs. p.m.), for some a newly designated "safe
play" in retail, for outperformance at Old Navy, and its worst performing
divisionBanana Republicalso its smallest. Then, again, anyone who thinks of
GAP Stores as safe, hasnt noticed that shoppers no longer flood its namesake when
merchandise is 40% off, or more, not even when theres an added, Sales Tax Holiday,
to reduce prices by another 58%, as there was in several states on August 4th7th.
In addition to retail earnings, one of the largest events of the week will be MAGIC, the
massive apparel expo so large it nudged World Shoe to join its show in Las Vegas, instead
of holding its own, on other days. And while they were at it, MAGIC managed to get the PGA
to move its merchandise show to concurrent dates with MAGIC, in Las Vegas, too, even as
NSRA for shoe retailers moved its education conference to MAGIC, as did Apparel Sourcing
Summit, and Off-Price Apparel Show, to some, thought of as the competitors. So, as long as
so many manufacturers and retailers will be in Las Vegas, Citi, Wolfe Research and other
investment houses will be setting up shop, hosting clients, and sometimes, manufacturers
at dinners with clients. Theres one competitor that hasnt, yet, caught the
join MAGIC bug: eTail East will take place this week but in Boston, not Las
Vegas, ironically, starting the day Amazon hosts its AWS Summit, in New YorkAWS, no
doubt, a host for numerous eTail participants.
Aside from retail & apparel, EnerCom, The Oil & Gas Conference starts in Denver,
Sunday, as I post. Like MAGIC, there are a few I-banks planning on doing hosting duties at
EnerCom, including the 2 that will set up shop at MAGIC. The I-banks will host clients and
Oil & Gas presenters, over drinks, coffee, dinner, and breakfast. Leerink will be busy
with small healthcare events, Ribs n Bones on Memphis, Monday, and on Tuesday,
Heart of Health Care Facilities" in Nashville. D.A. Davidson is hosting
Technology, Tuesday, Wedbush PacGrow Healthcare, in NY.
Note ASRA, for Retina Specialists, which started Saturday, because Regeneron & Eylea,
for wet age-related macular degeneration (AMD) could be the stars, again. What few casual
observers and, even, some traders dont know is that Eylea is, also, approved as a
treatment for metastatic colorectal cancer, under the brand name Zaltrapperhaps one
of the strangest dual use drugs in medical history. .
Piper Jaffrays Global Agriculture Symposium, Nomura/Instinets media, Internet
& Telecom/Communications Conference, UBS Genomics 2.0 Summit, and Citis
Insurance & Asset Managers Forum, all starting Monday, highlight a mini flurry of
I-bank events, before the summer lull returns until right after Labor Day. Also notable,
Citis 1-1 MLP/Midstream Infrastructure Conference, RBCs Restaurants &
Consumer Staples, Raymond James Park City TMT Summit, OpCos Boston Oncology
Insight Summit, Stephens Southeast Bank Field Trip, and OpCos Midwest
Corporate Access Day all startand in some cases, also, endWednesday. Note how
loosely RBC uses the term "consumer Staples;" Johnson & Johnson is
presenting there. Agnico-Eagle Mines Ltd and Equifax, on the other hand, have scheduled
traveling investor days, bringing their IR & other Execs to clients, instead of
clients coming to their Hdqtrs or an I-bank auditorium.
Pebble Beach Concours dElegance, part of a weekend of classic car auctions, often
offers a good read on how optimistic the 1.0% are. Then, again, LABACE, for Latin American
Business Aviation probably wont be as buoyant as similar Expos are in other areas of
the world. Between Brazils recession and bribery trails, and Argentinas
political turmoil, thats 2 big countries probably not ordering too many business
jets, this year.
And if none of the above gets your attention, we have 2 other tidbits. Tuesday is the
deadline to request a redemption from a hedge fund, whose Quarter ends September 30th,
if the fund requires 45 days notice. Also, Wednesday, the FOMC will public the Minutes of
its July 2526th Meeting. Since there was no press conference after the
July Meeting, and many expect the balance sheet unwind to begin next month, its
quite possible the July Minutes will be more specific than FOMC members have been, Yellen
included, hinting that "very soon" means September. Furthermore, NY Fed Pres.
Dudley gave 2 speeches that led the Street to believe there wont be any rate hikes
while the balance sheet unwind gets underway, at least not initially. Should Yellen and
other members of the FOMC have discussed that notion, and decided that the Street is
misleading itself, that topic could, well, turn up in the minutes. Any suspicion that
Yellen prefers waiting for meetings with press conferences to get more specific could well
be unfounded, as we may find out Wednesday. On the other hand, Kashkari and a couple of
other FOMC voters want inflation to get closer to the FOMCs 2.0% target, before any
more rate increases are announced. The Minutes are where support or dissent from that
desire could well be a highlight of the minutes. Kashkari, of course, did NOT dissent
against the June rate hike but has spoken explicitly against additional hikes while
inflation remains so far below the FOMC target.
All in, with Retail so prominent on this weeks schedule, the problem children of the
S&P are front and center, which may make it that much harder for stocks to recover the
rest of the ground lost, last Thursday. In fact, while Target upsided, theres a lot
riding on Walmart and Home Depot (Tues.) to perform, and even some pressure on Target to
deliver the upside promised, and probably a little more to really please. The bulls have
their work cut out for them, this week. Some downside protection and cash couldnt
hurt, especially with a Pres. bullying a madman in North Korea, both of them used to
getting their way. Trumps pissing fight makes me extremely uncomfortable. How bout
you?
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors
alone, and should be just one factor in most complete due diligence.
August 0711, 2017 RETAILERS EARNINGS
FRONT & CENTER Monday, the important data will be
June Consumer Credit (Debt, really), not out until 3pm et. Even during the Sales Tax
Holiday that was held on the just ending weekend the malls didnt seem particularly
popular. Then, in Florida, there wasnt much expected. Clothing & shoes were
capped at $60 in cost to qualify for the sales tax holiday, and its quite tough to
find even sneakers for that little. Some retailers, like Journeys (GCO) and Nordstrom
(JWN), offered discounts that allowed some sneakers to qualify by a penny but, even then,
the selection was limited. So, if consumers didnt boost their revolving credit, it
wont surprise me. The malls have become the setting for out of town visitors to
scoop up bargains but sparse for locals.
Also this week, Q2 Productivity & Costs, AWOL productivity the mystery Bernanke &
Yellen have puzzled over. Wed, the Treasury will auction off 10-year notes, then on
Thursday, 30-year Bonds though NY Feds Dudley speaking that day probably will be
key. Notable on Thursday, also, are earnings reports expected from Brinker &
DinEquity, as well as Kohls, Macy*s, and Nordstrom, along with News Corp, nVidia,
and Snap Inc, before JCPenney wraps up the bigger department store reports on Friday.
Otherwise, a week heavy with the volume of reports promised few companies to highlight.
And thats because most of the heavy hitters have already weighed in, outside
retailers, a reason for a flutter of investment bank events scheduled during this week,
after a few weeks in which they were all but non-existent on our shores.
Because there havent been many investment bank sponsored conferences June, the large
handful of I-bank events all stand out this week. KeyBanc started Sunday, with an event
that began as a Pacific Crest Global Technology Leadership Forum that has survived
Keys takeover of PacCrest. Monday, Wells Fargo hosts Technology Services, Jefferies
Industrials, and Cowen & Co Communications Infrastructure, though Inmans Real
Estate Connect, about online real estate services, even as Realogy has scheduled an
analyst meeting.
Tuesday, UBS hosts Financial Services, and JPMorgan Auto, even as Avondale Partners is
hosting its 5th Annual Healthcare Conference, and OpCo its 20th
Technology, Internet & Communications Conference. Citi is hosting meeting at the Flash
Memory Summit in Santa Clara, California. On Wednesday, Deutsche Bank is hosting an
Internet Conference in Palo Alto, while CanaccordGenuity is hosting its 37th
Annual Growth Conference, in Boston. Neither of those events will out shine STRs
Hotel Data Conference, in Nashville. STR is Smiths Travel Research, exactly why I
expect it to outshine the 2 I-bank events, especially given how hot data is, these days.
If Goldman Sachs is repeating last years Power, Utilities, MLP & Pipeline Conference
on the 10th, PS&G is the only company we could find participating.
So with I-banks hosting companies too early in the quarter for warnings, and probably too
early for upside comments, either, that leaves data and the earnings calendar to sway
stocks and bonds, with reports from the department stores, this week, leaving only one
question: Are expectations low enough? And which names can surpass low expectations?
Probably not Macy*s, new CEO or not. Kohls? Not a store I visit regularly, because
no one asks. And thats part of Kohls problem, PMs arent
particularly interested in retailers, at all, and not in KSS in particular. For my part, I
dont understand getting an extra 15% off purchases, plus $10 in Kohls cash for
every $50 spent, albeit no redeemable at time of the purchase that generated the $10
coupon. And, then, if you open a Kohls charge card, you can get 30% off that day. L
Brands is now touting discounts the day an Angel card is opened. And rather than get its
wrist slapped for discounting Under Armour athleisure, KSS doesnt advertise the
brand, at all. And thats a surprise because Dicks, which opened here recently, has
no trouble advertising Under Armour at anywhere from 2550% off. But, then, discounts
are the ways of the mall, in general, with some as steep as 80% off, like Macy*s clearance
shoes & "Last Cut" merchandise. As a former retailer who it pained to
discount as much as 50%, to clear out winter season ski wear just as spring swim &
tennis wear was arriving, 80% if a discount I dont understand because it sounds
dishonest. A retailer who can discount 80% probably is marking up their merchandise well
above Keystone to begin with, allocating room for the first 20 or 30% off in the alleged
"retail" price. And thats why Macy*s is being sued in 3 states, JCP in at
least one, and other department stores in many of the same states. Which begs the
question: Are stocks jacked up to allow for the first pullback to hurt most traders not at
all?
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors
alone, and should be just one factor in more complete due diligence.
July 31August 04, 2017 A SLUG of EARNINGS
REPORTS WONT BE THE MAIN DRIVER Itll be another
busy week for earnings but I dont think theyll drive the major averages to the
extent such a large quantity might, otherwise, be expected to. With July ending Monday,
and the July Unemployment Report out Friday, its the big picture, more than the
granular that will drive stocks. For all the volume of earnings reports expected, there
were just a handful of tickers that seemed worthy of emboldening, Apple on Tuesday
afternoon, among them. There are times the market likes to see the sunshine and other
times it doesnt believe therell ever be another sun shining day. At the
moment, the market prefers to believe theres a near perfect world driving stocks to
ever greater new all time highs, despite a totally dysfunctional White House, and a
President who issues policy via Twitter.
With June Pending Home Sales out Monday, July Motor Vehicle sales out Tuesday, along wit5h
June Personal Income & Outlays, and both the PMI & ISM July Manufacturing Index,
before Wednesdays ADPs mostly useless monthly private sector Unemployment
Report, and Thursdays Challenger Lay-off Report, and Monthly & Quarterly sales
reports from a few more than a handful of retailers. And it could be the BoEs
meeting, and Carneys early Thursday morning press conference that provides more food
fore thought to stocks than the earnings calendar.
As for the Events Calendar, theres very little there. CAR, or the Center for
Automotive Research Management Briefings started Sunday, in Traverse City Michigan.
Tuesday, Wells Fargo hosts Biotech Access Day in Boston, before moving the shebang to San
Francisco, on Thursday. BKW hosts Community Bank Investors, Tuesday, also. One of the
bigger events will be Credit Suisses 11th Midsummer Annual LatAm
Conference, in New York, starting Wednesday. Besides Wells, Thursday brings Needham &
Cos Annual Industrial Technologies 1x1 Conference, and UBS Transports, also
Thursday, on the eve of some 14 states offering a weekend of Back to School sales tax
holidays, over next weekend. The majority are from Friday through Sunday, the amount
thats tax free varying by each state, Florida, once again, one of the cheapest
states, even as its 10 day holiday has been shortened to 3 days. And thats probably
for the better, since people are procrastinators and wait until the last minute, no matter
how many days are set aside for the holiday.
Its been crazy to bet against this market but equally crazy to keep making bets on
more upside. Still, the latter has been the right side of the markets, with little reason
to hold back now. Perhaps therell be something in the FOMC Minutes, mid-month but
for now, the strength of the upside is powerful.
ECONOMIC: (Highlights, only, below. Complete International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 2428, 2017 EARNINGS, NOT FOMC WILL
SWAY By the end of this week, the Wednesday FOMC
statement may well be forgotten, as the deluge of Earnings reports dominate the
conversation. While some big tech names will report, including Google parent Alphabet, and
Facebook, each day of the week stands out for the smallish number of tickers highlighted,
as a percentage of total reports. Wednesday and Thursday stand out for me, because of the
disproportionate number of miners, homebuilders, airlines, and casinos slated to report.
Then, again, Tuesday promises 3M, Biogen Idec, Caterpillar, Dominos Pizza,
McDonalds, Newmont Mining, Pulte Homes, Seagate Tech, AMD, Akamai, Amgen, AT&T,
Chipotle, Chubb Group, Juniper Networks, Robert Half, Texas Instruments, US Steel, United
Technologies, and Wynn Resorts. And Friday, American Airlines, Baker Hughes--GE, Barclays,
Chevron, ExxonMobile, Credit Suisse, Merck, Nomura, and Weyerhaeuser, and I havent
even scratched the surface.
On July 24th, the oil Ministerial Monitoring Committee meeting, supposedly,
will try to get Nigeria, Libya, & Iran to agree to some production cuts, after they
were exempted since the Jan 1st start of the production suppression, and as
Ecuador abandoned participation, claiming need for the funds the crude sales provide. Back
in May, Saudi Oil Minister Khalid Al-Falih said the Saudis could cut deeper, to offset
some production ceiling on the 3, currently exempted, countries. But it appears US Shale
production has quickly offset Saudi/OPEC production cuts, not doing much for crude prices,
after all. Thats one meeting that may offer a wild card but, even then, crude
doesnt, necessarily, respond in the way the Saudis hope. Most recently, the
Saudis have been cutting exports to the US, not that we really need them.
A quick glance down the Events Calendar reveals how few investment bank events are
scheduled. Thats deference to both summer and the earnings season, with this week
and the next 2 the heaviest of the quarter. As for industry events, its once again,
medical/healthcare related meetings that dominate a much smaller than usual calendar.
Seeing lots of ads for Gardisil
? Thank the Intl IASAIDS & HIV Prevention & Treatment 2017 Conference
(starts Sunday, 7/23). It sounds crazy but parents choosing to inoculate their 1012
year old kids, before they become sexually active, can protect them from ever falling
victim to sexually transmitted diseases but, still, its a hard sell to parents who
think their kids are too young. And it turns out, its newly single seniors who may
need more convincing.
But lets list the health-related events besides AIDS/HIV, which includes Dental,
Orthopaedic Society for Sports Medicine, World Congress of Gerontology & Geriatrics,
Veterinary Medical Assn, Molecular Biology, Molecular Biology in Clinical Oncology,
MedAssets, Industrial Biotech, Echocardiographic symposium, Academy of Dermatology,
Intl Lung Cancer, Podiatrists, Best of ASCO, Laparoscopic Anatomy & Minimally
Invasive Surgery, AACR/ASCO Methods in Clinical Cancer Research, Natl medical
Association, Society of Nuclear Medicine & Molecular Imaging. Take out all of those,
and were left with a couple of Automotive events, in Detroit.
Then, theres the Economic Calendar. We acknowledge the testimony Jared Kushner &
1st son, Donald Trump Jr will offer to Congress but both will happen behind
closed doors. What stands out, otherwise, is a surfeit of housing data, including
Mondays June Existing Home Sales, Tuesdays FHFA May House Price Index, as well
as the S&P/CoreLogic CaseShiller 20-city May House Price Index, before
Wednesdays June New Home Sales. Wednesday, at 2pm, the FOMC will release its
post-meeting statement but, so what? The Street is on board with a September start to the
balance sheet unwind, and feels fairly certain the FOMC will hold off on rate hikes until
December, under that circumstance. At least 3 FOMC voters have come out, vocally, in favor
of waiting to see whether inflation rises, again, before more hikes are added to those
already passed. And whether its done automatically in the background or discussed ad
nauseum, the unwinding of the balance sheet will be tightening credit, no matter how
its intended. And at least one problem has arisena TIPS auction that was, for
all intents and purposes, a fail, because there is no inflation in sight. That will focus
more interest on Tuesdays $26B 2-year Notes auction. Surely, floating rate notes are
a better hedge against inflation that hasnt made itself felt or seen. Not to diss
the BoJ but its best attempts to boost the Japanese economy hasnt worked since the
1990s bubble burst. I cant imagine theres much to be gleaned from its
Minutes of its June meeting, out overnight Monday, into our Tuesday morning.
I would not be surprised if the market merely marks time, from here. Obviously, Alphabet
& Facebook earnings will influence tech but, then, I could say that about Amgen &
Celgene, as well, both reporting this week. Granted, stocks may avoid the dip they usually
take in this, the third week of the earnings season, thanks to stronger the year ago
reports, perhaps even a benefit from the post-Trump election sentiment that was a bit
ebullient for awhile. Then, again, I have no reason to believe the next leg up in stocks
will start this week. The Street has a problem processing the amount of information
scheduled for release this week. But if youre a bettor, perhaps bet for the next leg
up after the next three weeks of earnings reports are done.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 1721, 2017 EARNINGS SHIFT INTO 2nd
GEAR Both the BoJ & ECB
meet this week, summing the global focus, just as US Earnings Season shifts into 2nd
gear. The UK & EU Brexit negotiators hold their second meeting, Monday. Cant
imagine theyre going to continue to meet once a month, for a single day, and hammer
out a divorce in the 2 years allotted for such discussions & deals. In the meantime,
the Economic Calendar promises updated data from both China & the UK, the latter
starting to suffer the effects of Brexit uncertainty, the former key to continued growth
in economies around the world, including the US. China will release Q2 GDP before US
markets open Monday, along with June Retail Sales, Industrial Production & Fixed Asset
Investments.
In the US, the Economic Calendar is dominated by housing data, even as the builders broke
out to new highs, last week. Tuesday, the Homebuilders July Housing Market Index is a
sentiment index, that is predictive of very little. But Wednesdays June Housing
Starts & Building Permits, is hard data subject to revisions, of course. Wednesday
will prove important for the BoJ Meeting, and Kurodas post-Meeting press conference,
followed by hours with an ECB post-meeting statement, and Mario Draghis Press
Conference late enough Thursday morning for US early birds to catch it before the market
opensbefore most of the earnings to be released will hit. The statements & press
conferences will occur on the 20th, in local time, overnight Wednesday, into US
Thursday morning. And then, anyone looking ahead will duly note the upcoming FOMC meeting,
on July 2526. Nothing is expected out of that meeting, except, perhaps, firmer
guidance on the start of balance sheet unwinding.
The Earnings is still heavily populated by major financial companies. On Monday,
BlackRock, on Tuesday Bk of America, Goldman Sachs, and TD Ameritrade. Wednesday, Morgan
Stanley, American Express, and for that matter, if we drill beyond the tickers
highlighted, Northern Trust, and US Bank, along with American Express, Bk of New York
Mellon, Blackstone, Keybanc, Capital One Financial, Citizens Financial, Visa, Huntington
Bank Corp, Regions Financial, SunTrust, Synchrony Financial, and insurers Travelers &
Progressive, E Trade Financial, and one day this week, Charles Schwab, too. And
thats without the many other, smaller financial companies on a schedule we omit,
because theyre not our universe of corporateswe concentrate on the major money
center banks & largest regionals. .
No surprise, in deference to analysts keeping track of earnings and commentary on
conference calls, there is a slowdown in investment bank events in the US. For the next 3
weeks, theres a slowdown worldwide but that doesnt stop certain industries
from hosting their own general or annual meetings, or in the case of the AGA (American Gas
Association), a meeting to plan the 2018 meeting. No doubt, the calendar matters not to
the Alzheimers Association, or the World Congress on Heart Disease. For some,
its not a convention or "congress" but Time Warners HBO launching
the 7th season of "Game of Thrones" Sunday, as I write, that means
the most, this week. Anyone wonder what Netflix streaming looked like as GoT season 7
streamed?
Healthcare dominates the events, this week, from Controlled Release Bioactive Materials,
in Boston, to SMA Focus on the Female Patient, the Intl Spine Intervention Society,
Congress on Mucosal Immunology in Health & Disease, and AOSSM: the American
Orthopaedic Society for Sports Medicine Annual Meeting, Congress on the Future of Breast
Cancer, National Dental Association, Veterinary Medical Association, and Intelligent
Systems for Molecular Biology, co-located with the Conference on Computational Biology,
both in Prague, Czech Republic, the only one so far away. I quickly glanced at UBER Java,
scratching my head before I read up on the "About" and FAQ and realized it means
"SuperJava" and has nothing to do with ride sharing.
Strip away all those health-related events, and the Events Calendar collapses to barely a
handful of events. NARUC, for Utilities Regulators, CHART, a Hospitality Training event,
and GBTAGlobal Business Travel Professionals. ASABE for Agricultural &
Biological Engineering has, on occasion, brought negative press for Bayer, Pioneer and
Monsanto. Typical, was a Friday Wall Street Journal article about chemical drift that
farmers claim are destroying their crops. The PAYMENTS Institute has lost attendees to
whatever Blockchain event is scheduled next. Casino Marketing & Technology Summit, a
Vegas event, even as some analysts are calling a top in Macau. NAED, for Electrical
Distributors has often brought news to companies like Arrow and Grainger but with Grainger
reporting, after twice warning during the quarter, its earnings that will rule.
And its Earnings that traders need to focus on. With strong bank earnings failing to
overcome more caution about the current Qtr, equities enter the 2nd week of
Earnings on shaky ground, just as the deluge of reports buries everyone with information
overload. Often, stocks back off or, at best, consolidate recent gains for the next few
weeks, before rising again, on an earnings season not nearly as bad as some feared. Make
no mistake: the next few weeks are, typically, more volatile than theyve been for
the past year. And often, a week or two of strength into August has sometimes been the
opportunity to get out of longs, before a deeper pullback materializes. No one ever got
fired for taking profits. Whats keeping a lot of traders from doing so is, first,
hopes that tax reform gets passed, and not qualifying for the benefits if stocks are sold
now. The other issue some have about taking profits is where to put the money theyll
get from selling. That is a particularly sticky wicket, because stocks are expensive.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 1014, 2017 YELLEN & BANK EARNINGS
Expect bank earnings, Friday, to really determine the tone of Q2 earnings
season. Some will be waiting for Yellens congressional testimony, Wednesday &
Thursday but with the monetary report already released, last Friday, and the recent
minutes of the last FOMC Meeting laying out in detail plans for unwinding the Feds
balance sheet, I just dont see what the suspense is about Yellens testimony.
Worse, if she happens to misspeak on Wednesday, she can always shade her comments on
Thursday. And, in line with the normalization of the Feds balance sheet,
theres a joint NY Fed/Columbia Univ. School of Intl Public Affairs event,
Tuesday, with Fed Gov. Brainard & the NY Feds chief trader, Simon Potter, on
"Normalizing Central Banks Balance Sheets; What is the New Normal?"
I think we can all reasonably conclude that CPI Friday, and for that matter, PPI on
Thursday, should offer few surprises, given the pressure oil has been exerting on the
commodity complex, in recent months. And, while were at it, forget all the calendars
that claim the ECB is meeting this week. Thats untrue. It meets on July 20th.
End of discussion, no matter that Barrons is among those that say something
different.
Two interesting features outside Yellens testimony and the major money center bank
earnings should be noted: The first is the FDA will be holding 3 days of meetings for
advisory committees to discuss and decide on Biologic Licenses, all of them BioSimilars to
existing drugs. While theres been a one-off biosimilar approved, here and there,
this weeks 3 days of meetings to determine the likely fate of several biosimilars
may prove a watershed moment.
Also of note, on July 13th, just 2 days after Amazon Prime Day, all
unauthorized sellers of Nike products must take their Nike listings down, or AMZN will
remove them. Im not a lawyer, but I come from a family of lawyers and, unless those
unauthorized dealers are selling counterfeit or stolen products, AMZN has no right to
restrain trade, and insist they remove the listings, to benefit the AMZN/NKE relationship.
This issue, to me, is the most exciting development in whats been, until now, the
most one-sided, dominant and feared company on the planet for retailers &
manufacturers, alike. Come 7/13, I say stay tuned!
Whos big idea is it to run Back To School ads 3 days after July 4th? Even
Florida, which used to start the school year earliest in the country isnt starting
until 2 weeks prior to Labor Day, as dictated by state law enacted about 4 years ago. But
really, Office Depot, Office Max, Staples & Target? Back to School circulars on July 8th?
Could the3y at least wait until Wimbledon finishes? Maybe this is contributing to slow
traffic at the mall. Stores are so deeply out of synch with consumers, no one is paying
attention at all. for Many northerners, especially, their kids have been away at camp all
of a week before these foolish stores started pushing pens, paper, and back packs.
Theyll do the same for Halloween, putting up stretched out gauzy webs by Labor Day,
giving no one time to make the adjustment they must from one season to another. And
especially since, I suspect, the motivation for the B-T-S ads is to combat Amazons Prime
Day deals that will be offered from 10pm Monday through Tuesday. If it were me, Id
be advertising that its too early to think about BTS and, instead, invite shoppers
in for great deals on swim wear, shorts, and B-B-Q Grills. Trying to match Prime Day deals
1-for-1 is simply foolhardy.
Lastly, next Fridays World Congress of Heart Disease & the Alzheimers
Assn Intl Conference should draw a lot of comment in the lead up.
Alzheimers is the heart break disease no one has been able to crack, yet. Now, some
are using CRISPR to edit genes in an all new attempt to crack the code but even those
researchers believe its probably several genes that come into play, and they
dont know which those are.
Theres another event on the calendar that Im not as positive about: The Allen
& Co annual Media Conference will be held before next weekend but the exact days are
unknown to me, at this time. SEMICON West should be one of the biggest events of the week,
starting Tuesday, if for no other reason than the number of I-banks lining up clients to
host at the event. JPMorgan is hosting clients from Japan. I imagine the CIBC &
Scotiabank Stampede Energy events in Calgary are somewhat similar: a place I-banks can
lead clients around an expo.
For the first time, last week, many groups that were barely doing more than churning
suddenly broke out. That action will extend the bull case for a few more weeks, assuming
earnings dont spoil the fun.
ECONOMIC: (Highlights, only, here. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 03--07, 2017 WEDNESDAY
FOMC MINUTES, FRIDAY UNEMPLOYMENT REPORT. Thats a Wrap Aside from waiting with baited breath to see if Pres.
Trump embarrasses the country, at the G20 Meeting next weekend, the week pivots on the
FOMC Minutes to be released Wed. at 2pm, then the June Unemployment Reportwhich
cant necessarily disappoint unless its a wildly large number, which seems
unlikely.
June Motor Vehicle Sales no longer count, since both GM & Ford have already prepared
the street for weak auto sales, and less strong pick-up trucks & SUVs than earlier
this year. Were the June Unemployment to show zero jobs were added last month, the Street
would celebrate the second thoughts Yellen & Co would have to entertain. Monday, as
youve surely noticed, is a toss off day;. Both Equities & bonds close early, and
no one will punch in, anyway.
The Earnings & Events Calendar are as slim as they ever get in the last week of the
year. Yum China, alone, is the earnings report of interest, Wednesday afternoon. As for
Events in the homeland, Macy*s Fireworks display on the East River Tuesday, and the
Wimbledon Tennis Championships will dominate the early part of the week. Thursday, the
NASH Symposium in Paris could be another chance for Gilead Sciences to flurry higher, for
a brief a moment as that flurry may appear. ISPO, the Sports Business Expo used to be in
Milan & Munich, Spring & Winter, respectively, but now its a Chinese Affair.
Go Figure!
Id sure like to know what fumes the Street is inhaling, that prompts buyers at every
turn but Im just not either smelling or buying it. Not with Earnings Warnings likely
to sneak in during a slow week when all the large PMs are out of town.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 1923, 2017 BIG WEEK IN SOME UNUSUAL
WAYS Last week I mentioned the index rebalances that took
place after the close, last Friday, coincident with Quarterly Futures & Options
expiration as a possible contributor to the big tech sell-off a week ago Friday. This week
will continue to drive into Fridays close and the Russell index rebalances, even
though FTSE Russell has already signaled changes being made.. But forget, for a moment,
Mondays first trades on the S&P & Nasdaq rebalanced indices, tech selling
resuming last week, or even housing data due out this week. The big event of the week is
Thursdays after hours release of the Federal Reserves Stress Tests on the 11
biggest banks in the world. Every cycle, theres been at least one bank singled out
to "fail" the test. This year could well be the last annual test, or the last
test, altogether. While current regulators would resist the Trump impulse to cancel every
regulatory rule the Obama administration pushed through, over 8 years, in the wake of the
great recession, they may have their hands tied by new leaders in every agency of
governmenteven heading up the FOMC, if Trump picks someone other than Yellen to
replace her when her term is up in February 2018.
Trump has actually been slow to fill all the appointed positions hes supposed to
fill but that doesnt mean he wont, ultimately, get down to business now, and
appoint the other 1.7K positions hes yet to fill. Some say the longer hes in
office, the tougher his job of attracting appointees who may not be comfortable with an
administration undermined by defensive, middle of the nigh tweets, also beset with the
Russia investigation. Forget such rationalizations: Hubris will win out, and Trump will
find the appointees he seeksif he concentrates on it.
Beyond the embarrassment of a single bank being chosen to fail each annual stress test, in
the past, theres a weeks lag before the Capital Adequacy
testsC-CARare released a week from Thursday. Those determine how large a
dividend and stock buyback any particular bank can execute, so have more direct bearing on
bank investors than the stress tests do. Because the results are discussed with the banks
before theyre released after the close, a week from Thursday (06/28), some banks
will jump the gun and announce how big an increase in the dividend or stock buybacks their
board will be asked to bless, early next week. Thats removed a good proportion of
the suspense of waiting for CCAR results at 4:30pm on the 28th, and no way to
know in advance whether the Fed will have put a stop to the pre-announcements this cycle.
Either way, with reconstituted indices starting to trade on Monday, expect a flurry of
activity at the markets open, and another wild flurry into Fridays close. With
Stress tests set for release at 4:30pm et, Thursday, theres really a whole lot more
for investors & traders to focus on, as the week wears on, especially given the
sudden, renewed interest and inflows into financials, as money left tech. And not to take
even more away from tech but the Paris Air Show is in full bloom and, so far, it sounds
like business is brisk. Its almost certain therell be nothing concrete out of
the UK/EU Brexit talks, as early as this week, though litigating terms through the press
is not beyond all possibilities.
What else? Well, the Earnings Calendar is slim, with only about 9 tickers highlighted,
albeit, a large percentage of the total number of reports expected, given such a slender
calendar. We know to expect some ugliness out of CarMax, given the slide in used car
prices, the vast majority of its sales. I dont have much hope of vast improvement
out of Finish Line, Friday, because its tied its fate to Macy*s, and we all know how
badly that chain is doing. RedHat often pleases more than Oracle, while Synnex has pulled
off upside to sales, defying expectations for a number of quarters.
The Events Calendar is stuffed with I-bank events, many of them repeats of events held
recently, others duplications within the week. Both Jefferies & Oppenheimer host
Consumer Conferences, in Nantucket & Boston, respectively. More of Tuesdays
conferences are overseas, with London hosting Credit Suisses Global Chemicals &
Agriculture, JPMorgans Technology CEO, and Citis European Healthcare
Conference. Wednesday is one of the heaviest days of the Events Calendar, with SunTrust
Robinson Humphreys weighing in with 3 conferences, that day, alone. Nevermind print media
will focus on Mens Couture Fashion Week, in Paris, France, once the Paris Air Show
is over. Thursday promises to be busy again, with Wells Fargos 5G Forum, JMP
Securities Financial Services & Real estate Conference, and JPMorgans
European Healthcare Conference, in Londonjust one of the duplications cited.
But make no mistake: Rebalanced indices will rule early in the week, and again Thursday
afternoon into Friday, even as the bank stress tests will trigger positioning in the
banks, before the Fed releases the results at 4:30pm, Thursday. Thats an awful lot
to game. The bank at biggest risk of failing the stress tests could be Wells Fargo, again.
Its a way for the Fed to punish it for its fraudulent opening of accounts customers
never asked for. And unlike the charges of added services customers never requested that
hit CenturyTelecom last week, Wells scandal hurt credit ratings of customers ensnared in
Wells fraud, which could have lead them to pay higher mortgage, auto loan, or credit
card interest rates. Trading volume has been awful, and volatility absent for long
stretches, this year. Both will pick up considerably, this weeka week in which I
suspect the decline in techs will have proven to be portfolio managers rebalancing their
holdings in advance of the index rebalances, into a typically slow summer period which has
often had a downside bias before July earnings reports are released.
ECONOMIC: (Full International
Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 1216, 2017 HIGH FLYERS USUALLY LAST TANK
Certain signals are developed over decades. One of those for me was
always to look for a decline to bottom when the selling finally gets to the strongest,
most resilient & reliable stocks. Friday, we saw the opposite, instead. The
unrelenting rise in this eras "Nifty 20," or so, had been so reliably
strong it caused VIX to plumb new lows But that all changed Friday, when the biggest
winners of the year were unceremoniously and suddenly dumped, wholesale. The weekend press
concentrated on the losses in the FAANG stocks plus Microsoft but it was quite a bit more
widespread than that. While financials, including property & life insurers, were
seeing inflows, Friday, shareholders were dumping Visa & MasterCard. Also tossed
overboard, the hoteliers whod joined FAANG in a non-stoppable rise, Intercontinental
(IHG) & Marriott (MAR), to name 2. Throw in Wynn Resorts & Boyd Gaming, plus Royal
Caribbean cruises, and while were at it, Adobe, Maxim Integrated Devices, Lam
Research (LRCX), Activision (ATVI) & Electronic Arts (EA), the latter 2 despite
E3The Electronic Entertainment Expoopening its doors just hours later. nVdia
(NVDA) also got slammed as did Applied Materials (AMAT) and Micron Technology (MU), and
Texas Instruments (TXN). So, yes, in pure point terms Amazon (AMZN) & Alphabets
Google (GOOGL) saw stunning declines, it was really all the big winners that got whacked
at the knees. So what should we make of a signal that came at the beginning, rather than
the end?
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 0509, 2017 PROPS TO ARIANA GRANDE et al
Two weeks after a terror attack at her concert in Manchester UK, and despite
another terror attack in London, Saturday night, Ariana Grande and her industry friends
put on quite a show on Sunday, not letting terror in London deter the benefit shed
planned for Manchester. Only 21, and caught in immature scenes in the past, Ariana &
the other musicians who ignored the threat and, surely, some fear, performed their hearts
out, for the people of Manchester. Hats off to them, even as the UK goes to the polls, on
Thursday, in what PM May had hoped would be a resounding affirmation of her plans for
Brexit but may result in another surprise result.
The US Treasury plans on offering just $72B in short-term bills, this week, not counting
the 4-week bills it auctions weekly, the amount of which for this week not yet announced.
Otherwise, ISM & PMI non-Manufacturing indices due out, Other than that, the US
Economic Calendatr includes some newer markers, like the LMCILabor Market Conditions
Index, and the Feds JOLTS, a measure of workers who quit and job turnover. The thin
schedule means the EIA Petroleum stats, and US April Consumer Credit, both on Wednesday,
promise elevated attention, until April US Wholesale Trade & the Baker-Hughes Rig
Count, both Friday. Overseas is another story, with data from UK, China May FX Reserves,
the OECD Eurozone Economic Outlook, and Eurozone Q1 GDP will all be important. Likewise,
Japan Q1 GDP, Chinas May Trade Balance, and an ECB Monetary Policy Committee Rate
Decision and QE Target, one day prior to the UKs vote, and a week shy of
Frances parliamentary elections. Draghi said the Eurozone still needs extraordinary
support as recently as last week, so theres no reason to expect a change of heart,
this week. Draghis post-meeting press conference will occur prior to US Markets
opening on Thursday. .
The Earnings Calendar remains dominated by consumer discretionary names, none of which can
move the markets, overall. The Event Calendar, though, picks up considerably, as
Investment Banks roll out their last mad rush of conferences before a summer recess. Major
events include the NYU International Hospitality Industry Investment Conference, Goldman
Sachs Lodging, Gaming, Restaurant & Leisure, and NAREIT REITWeek, at which Citi
will hold meetings. REITs, you might recall, were granted a new industry category by
S&P, last September. That was supposed to make them a hot investment commodity but,
instead, REITs are struggled since, as rising rates hurt the attraction of REIT Yields
which, at the time they were spun out into an 11th index, were far lower
because the stocks had run so much. REITWeek is as much a mass analyst meeting for a
single sector, as EPG & EEI were before it.
This week its hard to find a group that wont be covered by an I-bank
conferencehere or abroad. China is a popular location for conferences, with JPMorgan
hosting a China Summit, and several tours of Chinese sectors to round out the post-Summit
stay there. BAC/MER hosts its Global Technology Conference in San Francisco, starting
Tuesday but youll notice some doubling up of sector conferences, including 2 for
Automotive related forums, 2 for Global Energy, and other duplications, sometimes on both
sides of the Atlantic simultaneously. The puzzler for me is the Baird Global Consumer,
Technology & Services. Note, especially, Goldmans European Financials
Conference, Thursday. Last week, US Multinationals pointed out that trading & FICC are
slower this year than they were last year, which caused the financials to decline,
especially the host of that conference. However, Bk of America, JPMorgan, and Citi have
large credit card operations that should have benefited from rates raised in both Dec.
2016 & March of this year. Theyve got a lot more credit card holders whose rates
were boosted after both FOMC moves, so the dip in trading tells only one part of a much
bigger story for all but Goldman, which has always made its money skimming trades. Apple
will host its Worldwide Developers Conference this week, too, though analysts have barely
mentioned it, though it starts Monday. Usually, AAPL sticks to the iOS, rather than
products at WWDC but Tim Cook has handled it his own way, and one never knows.
In less than two weeks, the FOMC is scheduled to raise rates again, and will likely
discuss unwinding its balance sheet more concretely, even if that information doesnt
arrive until the minutes are out 3 weeks after the meeting. Yet, its fair to ask why
theyre hiking rates, at all, as inflation has dipped over the last 2 months, oil is
stuck in a rut thats so low even high test gasoline is less than $2.90 p/gallon,
again. Plus, the consumer is not doing his/her part at all, not at the mall and probably,
not as much online, either, this time of year. Even Netflix could find fewer bingers as
kids go off to summer camp. So, on the one hand, we have a president making all kinds of
promises his party is not, yet, keeping, and his hoped for 3.5% growth clearly out of
reach, as auto sales & housing slowno matter the reason for the latter.
Meanwhile, there cant be any American whos seen the carnage in London and
Manchester and not worry about showing up for an NBA Basketball best of 7 final, or, later
this summer, the US Open Tennis Championship.
I started by offering up props for Ariana Grandes brave performance, and wonder how
brave Id be in the face of so much uncertainty and bloodshed. Someone please tell me
what the bulls are smoking, cause I just dont see it and know this, too, will end
badly. But when? Thats the question at the heart of staying in or taking profits and
sitting out what may be the last 12% of a long running rally. I cant say I
have the answer to the question of when it will be the optimum moment to cash out. I fell
one thing very strongly, though: With Major Oil producers slashing their exploration
budgets severely, over the last 2 years, there are few big projects under construction.
Sooner or later, the lack of investment will make oil more precious than it is, at the
moment. And on that score, I do have an opinion about when the deficit will start to dawn
on the rest of the market2019, at the latest. That makes the June Expiration
important for something besides Russell Index rebalancesits when another out
year will be added to LEAPs availablethe moment Im waiting for to capitalize
on the imbalance in oil supply and demand I see ahead. Other than that, Ive got
nothing, mostly because I see a rally narrowing to a few, big cap stocks, while the rest
of the market falls away in exhaustion. Thats often a sign of a near-term top
closing in.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The 0pinions expressed are the authors,
alone, and should be just one factor in ore complete due diligence.
May 29thJune 2nd, 2017 RUSSIA PROBE CLOSING IN ON INNER CIRCLE Short weeks, somehow, always feel like some of
the longest weeks of the year, and I suspect this week wont be any different.
Tuesday, S&P Case Shillers March 20-City Home Price Index, April Personal
Income, Expenditures, and PCE along with the sole Treasury auctions for the week. Also
Tuesday, the Conference Boards version of Consumer Confidence.
Wednesday, the Fed will release its latest Beige Book, which the FOMC is supposed to use
to decide whether another rate hike is appropriate but it seems inevitable, no matter what
the Beige says. Also Wednesday, NARs April Pending Home Sales. Thursday, US May
Motor Vehicle Sales which it feels like a disappointment comingdespite tremendous
incentives offered across the boardas the flood of TV commercials attest. Also
Thursday, May Chain Store Sales, from the 9 that still report those numbers,
Challengers May Job-cut Report, and ADPs private sector Employment Report, the
usefulness of which remains a big open questions. All of that is the build up to
Fridays May Unemployment Report which could bear some surprises, as interns from
graduating classes start filling positions, temporarily, that wont be filled more
permanently, until the fall. In fact, thats exactly what some colleges are warning
their graduating class-to not lose hope for a job until late in the fall.
Other than quite a few of Canadian banks, the Earnings Calendar remains heavy with
retailers, and some late reporting tech companies including Hewlett-Packard Enterprise,
Palo Alto Networks, Ciena, Mobileye, Tech Data, VMware, & Workday, a richly valued
cloud software company. The retailers reporting are second string, except for Lululemon,
which will e the most closely watched name, once Michael Kors is done. LULU, for what
its worth, is proof that a retailer with a strong concept, that sticks to its
vision, can outperform the rest of the mall, no matter how slow overall traffic into the
mall turns out.
Investment Bank conferences ramp up again for a last hoorah into July, when they all but
dry up. Tuesdays Deutsche Banks Global Financial Services Conference will be
the scene of the first Q2 comments from the industry. Wednesday, Master Limited
Partnerships will try to bolster their value proposition with oil back below $50 p/barrel,
as the Association holds a semi-annual mass analyst meeting. Bernsteins Strategic
Decisions is a hodge podge of sectors, while Cowens 45th TMT Conference
could star. The big meeting of the week is ASCO, for Clinical Oncologists, which may boost
Merck more than some others, as the FDA gave approval to Keytruda for an extended number
of cancers that are not site specific but, instead, tied to a particular DNA
anomalywhich was a first of such approvals and, for now, the only one. Granted, the
DNA linked anomaly isnt very commonperhaps in 4% of cancer patients but that
misses the point of the first approval of a "personalized" treatment that
targets a specific DNA marker, no matter where the cancer occurred.
Last weeks break out while Trump was abroad was a bit of surprise, as the noose of
the Russian investigation started tightening around his son-in-law and chief advisor,
Jared Kushner. Sure, the "crime" hes accused oftrying to set up
direct communications with Russia outside the possible trace of the CIA, FBI or other US
agency is probably a rookie error, rather than a criminal offense but it still begs the
question of whether Trump needs to surround himself with experience operatives rather than
his direct relatives. One upshot is, supposedly, curtailment of Trumps Twitter
stream though I find that hard to believeit was his twitter stream that
distinguished his campaign from the standard operating procedure of election campaigns, so
its hard to imagine Trump being throttledeven if half the country prays for
that. The persistent elevation in markets has more than a whiff of a movie weve seen
before, that often ends very badly. I think it will this time, too, but there could be
more lift to come before the day of reckoning. As long as thats true, PMs are
not about to exit stocks wholesaleno matter the deterioration in the stocks that
arent in the top 10 of money flows and size. As long as PMs think theyll
be able to get out before the bottom falls out, stocks could continue to see higher
prices, before the trap door underneath opens.
ECONOMIC: (Highlights, only, below. Ful International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 2226, 2017 AT LEAST TRUMPS AWAY
ALL WEEK! There is a rising number of journalists willing to
write opinion pieces on Trumps lack of fitness for the presidency. "Trump
Unfit" is quickly becoming a mantra of its own. And even those who didnt vote
for him, which hed disappear, or otherwise evaporate, and go back to his gold
bathroom fixtures on Trump Air, and to the gold faucets at Trump Tower hope against all
hope Trump can get through ten days of travel without embarrassing the United States.
While Trumps away, former FBI director Comey is expected to testify at Congress,
even as Fed speakers are up and about not just the US but overseas, as well. Theres
not a heck of a lot of data on the Economic Calendar that isnt related to
housingTuesday April New Home Sales, Wednesday the FHFA March House Price Index, and
NARs April Existing Home Sales. Also Wednesday, the Bank of Canada is meeting on
rates. Given a housing market thats been getting out of control, foreign buyers like
Chinese moving from city to city, as each puts through taxes or other measures to slow the
pace of rising home prices that are pricing locals out of the market. The US Press has
spoken repeatedly of the cities Trump will visit on his current 10 day tour, making it
sound like a religious pilgrimage, winding up at the Vatican, in fact, theres a NATO
Heads of State Meeting, and a G7 Heads of State Meeting, all of which his agenda is
scheduled around.
More important, Wednesday, will be the FOMC Minutes of the 2-day Meeting that wrapped May
3rd, with a Fed that stood pat. But as weve seen in several sets of
minutes, the calm, do nothing attitude communicated by the FOMC Meeting Statement is only
half the story. Its quite possible that conversations about tapering the Feds
$4.5 trillion book could be farther along than any of us realize. And if thats the
case, then what of NY Fed Pres. William Dudleys one-time comment that its
possible rates will remain static while unwinding the Feds book gets started. He
seemed to back off that position just days later but the concept of not doing both at the
same time is at the heart of questions many have asked about the future. Heck, Bullard
last week flat out said weak data is a contradiction to the FOMCs rate hike path
which insists on 2 more hikes this year. One thing we may learn, as the year marches on is
that Fedheads speak their own opinions, while the actions & minutes of FOMC meetings
are a consensus not all that much concerned with anyone members personal position
unless thats the same position shared by Yellen, Fischer & Dudley3 voting
members who never rotate to non-voters.
OPECs regular meeting, this Thursday, is worth noting, as well. Though Saudi Arabia
& Russia have come out in support of extending the production cuts through March of
2018, US shale production increases have offset almost half of the 1.2m barrels the OPEC
& non-OPEC Members agreed to reduce production by, thats been verified as cut
from production.
The Earnings Calendar is filled with more consumer facing names, as well as 3 Canadian
banks, and Toll Brothers, the builder least impacted by mortgage rates that rose to above
4.0% recently. Also reporting, besides a number of retailers? Agilent, Hewlett Packard,
Lowes, Intuit, NetApp, Brocade, and Marvel Technology. There was one excellent
shopping day before Mothers Day, Saturday, the 13th, but before and
since, the mall has been dying. JCP, proving some stores will do whatever it takes, a la
Mario Draghi, to drum up sales, offered a coupon worth $10 off any $10 or higher purchase.
Crazy as that deal sounds, I distinctly remember Office Depot once offering that deal,
during Back to School shopping season, then complaining that people came in for pens and
other supplies, but didnt spend anything above the $10 offered free with the coupon.
Trust me, marketing bed & bath stuff to lodging owners is a much sounder way to pick
up incremental sales that dont require consumers to come to a store.
The Events Calendar could well rule the week. And in a rare instance, two industry
meetings could top the big I-bank conferences, this week, because the meetings are mass
analysts meetings, in a single hotel, with every company thats anyone in the
industries involved, attending & setting up 1x1 meetings with analysts, even if they
dont present to a larger group The first is AGA Financial Forum (05/2123)
is a mass analyst meeting for the power industry, the program linked here. However,
because so many meetings are 1x1s, in addition to starting on page 15 of the pdf
linked, you might want to, instead, to any of the other company listings on the forum home
page. I.e. "One-on-One Meetings," "Company Presentations,"
"Energy Utility Company Schedules," or even the "Registration List,"
are worth perusal. The 2nd biggie is EPGthe Electrical Products Group Spring
Annual Meeting. another mass analyst meeting
(05/2124) that includes presentations and one-on-ones, at the URL provided. Everyone
from 3M & Arrow to Textron, United Technologies, to Illinois Tool Works, and
Parker-Hannifan are at EPG. Unlike healthcare conferences, which have been held at least
2x monthly, by investment banks, since JPMorgan kicked them off in January, both of these
intend to make it easier for both companies & analysts to sit down face to
faceor face-off at the golf tee, and actually talk to each other, and get questions
answered. That makes both very well attended, with several I-banks hosting clients at each
of those 2 big events.
Given those 2 high profile conferences, Ill mention, only in passing, a couple of
other events, emboldened and highlighted, because they have traditionally provided
market-moving news. They are JPMorgans TMT, and UBS Healthcare conferences,
starting Monday. Bear in mind, while we are halfway through Q2, theres still enough
of the Quarter remaining for companies to strike a more confident tone than they did
before earnings were reported in April. And in some industries, particularly software,
its well known that the deals crank up as the quarter ends, so everyone can make
their numbers. A hat tip to UBS Global Oil & Gas Conference, Tuesday, and
SunTrust RHs Financial Services Conference, starting the same day. It cant be
coincidence that AutoZone reports earnings Tuesday, and Advanced Auto Parts on Wednesday,
the same day Jefferies schedule an Automotive Aftermarket Summit, in NY. The
Transportation Index has been the Debbie Downer of indices, even as other senior indices
made new all time highs. For that reason, a nod to Wolfe Researchs 10th
Annual Global Transportation Conference, also starting Wednesday. And whaddya know? UBS is
hosting an Auto & Auto Supplier 1x1 Conference on Thursday. Barclays Pharmacy
Benefit ManAGement & Drug Pricing Symposium, the same day, might attract bees to
honey, though ExpresScript was the only confirmed company I found by last Thursday, and
its AmeriSource Bergen Brunswick Barrons touted in the latest edition. Was it
just an oversight that Barrons neglected to mention ABC still serving out a sentence
imposed by the DEA, banning it from distributing narcotic drugs in the state of Florida,
through the rest of the year. Why? ABC was found negligent for failing to get suspicious
of the number of painkillers certain drug store customers were ordering, to fill
prescriptions written by the 13 pill mills rounded up a few years ago, by the state &
DEA, one of which was charged with murder. Given the number of older people in Florida,
and the arthritis and cancer they suffer, shutting down ABCs ability to full orders
for narcotics has wound up creating quite a challenge to some of the most vulnerable
citizens.
And even with such a jam packed week, bear in mind the month is ending, with a holiday
weekend, Memorial Day falling on the 29th this yearas late as its
been in years. That could well slow volume as the week wears on, and encourage less dip
buying than usual. Granted, stocks often rise on the Friday before a holiday weekend,
because shorts close their books just as retail investors try to position for bullish
trade after the holidayand the dip buyers have been right for months. But with Trump
abroad, talking to world leaders throughout the trip to NATO & G7, Id watch the
dollar to gauge what the world is thinking about his performance. So far, of late, it
doesnt appear Trump has instilled much confidence. Seems worth keeping in mind.
Thats one reason I read Barbara Rockefellers Treasury Report
daily, and suggest you get in touch & request a free trialthough shell be
away this week.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions are the authors, alone, and
should be just one factor in more complete due diligence.
May 1519, 2017 MOST
of THE REST of RETAIL REPORTS THIS WEEK--- NOT MUCH TO WARM THE HEART IN THAT Given what earnings from department stores Macy*s,
Kohls & JCPenney looked like, last week, a week of even smaller retailers
reporting Q1 could be a scary prospect. While Saturday, May 6th was the slowest
week Ive ever seen at the local Simon Property Mall, Town Center, the 13th
was devoted to Mothers Day, and hopping. You know shoppers are all about
Mothers Day when the busiest stores are Godiva & Palm Beach Confections,
Papyrus, which opened 2 weeks is commonly sighted around the mall, and more men are
carrying Victorias Secret bags than women (though I find that very sad, given the
polyester nightgowns on offer.) But a single week does not a season or quarter make, and
the quarter just finished was painful, with few exceptions. Unfortunately, two of the
exceptionsLululemon & Pandora Jewelryhave a lot of good news built into
their shares. Pandora, so its said, moved across the hall to a bigger location which
is unbelievably white, bright, and sparkling, and was packed with shoppers for
Mothers Day, a special bracelet on offer for Mom.
Among the retailers reporting earnings this week, which range from tiny CitiTrends (Wed)
& The Buckle (Thurs), to Home Depot (Tues), TJMaxx (Tues.), Target (Wed.), Walmart
(Thurs.), & Ross Stores (Thurs.), along with Gap Stores, Ralph Lauren, FootLocker (a
strong retailer staying strong), along with a couple of tech names, and Chinese ADRs,
along with Deere on Friday.
As often happens, when the Earnings Calendar is winding down, I-bank events crank up, even
as media companies will be hosting the Fall TV Season Upfronts, throughout the week.
Nomura Instinets Gaming, Leisure & Lodging Conference in New York should be well
attended. Gaming & lodging companies have been strong, none stronger than Marriott
since it closed on Starwood. Tuesday, alone, Bk of America Merrill Lynch hosts Health
Care, also in Vegas, Deutscher Bank Clean Tech, Utilities & Power, Goldman Sachs Basic
Materials, Citi Car of the Future, Credit Suisse Shale, Stephens an inaugural Energy
Executive Summit, D.A. Davidson a Financial Institutions Conference Recaprecapping
its Financial Institutions Conference held last week, JPMorgan Global Consumer &
Retail, Barclays Americas Select Franchise Conference, KBW European Financials, Needham
Emerging Technology, OpCo Emerging Growth, Citi Chemical Conference, BAC/MER Global
Metals, Mining & Steel, UBS a Pan-European Small & Mid-Cap Conference, RBC
Canadian Automotive, Transportation & Industrials, & CIBC Technology &
Innovation 5.0. If that isnt a st load of I-bank meetings starting on a single
day this week, I dont know what would be. And, ironically, its Varietys
Webby Awards (Streamed on YouTube) and Squares Analyst Meeting that could occupy the
media. Wednesday, the I-bank Conference schedule is only a little lighter than
Tuesdays.
As for Industry Events, a big Whoops! A Booboo! Interop ITX & 5G Forum USA to be
scheduled concurrently---not just in different cities but different states, altogether.
Interop & InformationWeek return to Vegas, while the 5G Communications conferences are
in Austin TX. And if they werent enough theres a telecom & media event,
tmForum Live Digital Disruption, in Nice France, just in time for the Cannes Film Festival
which will run through the 20th. .
If the financials dont pick up, Ill get a lot more negative on the market.
While PMs are piling into the FANG stocks, theres not much else going
upor not enough of the soldiers to sustain the market averages, even if the FANG
stocks continue outpacing all others. The charts I see, nightly, dont look
particularly healthy to me. Stalled at best, while at worst, hanging on by their
fingernails.
ECONOMIC: (Highlights
only below. Full International Economic Calendar here Full ECB Calendar
here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 0812, 2017 HAVE US STOCKS ALREADY CELEBRATED
MACRONS WIN? We have the French election to thank for
such poor coverage of many of last weeks conferences, especially "Reforming the
Fed & Government Sponsored Enterprises," which boasted San Francisco Fed Pres.
Williams keynote at the Shadow Open Market Committee Spring Meeting. Williams speech
"Now is Ideal Time to Consider Alternative Monetary Policy Frameworks"
wasnt even a footnote, last week. And the SECs new commissioner sworn in was
either mentioned too briefly for me to catch it or ignored, altogether. Thats
because Warren Buffett & Berkshire Hathaways Annual Meeting made for better
visuals with characters like Mr. Peanut. And for all the cut-aways to Paris, the election
was barely even a contest. Marcon won the French Presidency with 65% of the
votepolling, finally, scoring a win.
Fed speakers will be everywhere this week, again. And I do mean everywhere since NY Fed
Pres. Dudley is speaking in India. And its not just US policy makers, either. Mario
Draghi will be speaking at the Dutch Parliament, in the wee hours of Tuesday morning, US
East Coast time. And Chicago Feds Evans is in Dublin. I wont recap the entire
Economic Calendar, here, because the highlights, and even some lowlights, are below but
Id be watching Wednesdays 10-year Notes Auction, and Thursdays 30-year
Bond auction. Both feel like a tough sell, while the FOMC seems hellbent on raising rates,
again, in June, and after rates have slid down from this years highs. And its
hard to get too concerned about Fridays April CPI, when Oil has collapsed, recently,
even if that doesnt show up until Mays report.
Its hard to put together such a large Earnings Calendar that appears to amount to a
small hill of beans. The number of tickers emboldened are a small fraction compared to the
number reporting because, for many sectors, like financials, the gig is already up.
Tuesday, someone should declare Liberty Media day, because of the plentiful tracking
stocks reporting in the morning. Other media companies reporting this week include
Discovery, News Corp, 21st Century Fox, and Walt Disney (no"the"
because it's not intregral to the ticker) but its the retailers likely to draw even
more attention, given how much we, already, think we know about Foxs payoffs to
women who alleged sexual harassment. Come Thursday morning, Macy*s and Kohls report
earnings, while that afternoon Nordstrom is at bat. Friday, J C Penney reports. We might
also hear from Dillards on Thursday morning but it doesnt go out of its way to
keep non-Dillard shareholders informed of its plans, so thats only speculation based
on history, without any basis in fact.
A week prior to Mothers Day, the local, Simon Property owned Town Center Mall was
the least busy its been in months. Someone could have taken a bow and arrow and shot
it down any corridor without hitting a visitor. The quiet shook even me up, since I
thought Id seen it all until the new low in foot traffic hit on Saturday. Even
Starbucks stores didnt have lines to order or pick upand thats unheard
of, since mall workers are as likely to be those waiting on line as shoppers/visitors.
Anyone hoping for an improvement in retail, or some optimism from CEOs could be sorely
disappointed on the coming post-Eps conference callsassuming our mall was
representative of other malls around the country, which it usually is. In fact, the only
time we lead the rest of the country is during Back to School shopping, since our schools
start their fall session the 2nd week in August, which tends to pull BTS
shopping into early August. And for all the analysts talk about athleisure winding
down and denim making a comeback, Id posit the only thing driving denim sales is the
offer of 50% --70% discounts on denim jeans & shorts.
And you know the Earnings Calendar is larger than it is important because investment bank
conferences are ramping up for a last fling before summer becomes too big a distraction
and the ranks in New York thin. The one house at which were weak is BAC/Merrill
Lynch which has finally cut off our access, 17 years after we took our account elsewhere.
But Tuesday is fairly representative of what I mean, with Wells Fargo hosting 2 big
conferences, while others are offered from Jefferies, Goldman Sachs, Deutsche Bank, D. A.
Davison, Oppenheimer, Citi, and Imperial Capital, hosting events in the US, while Nomura
Instinet is in Hong Kong. Wednesday, Citi, BAC/MER, JPMorgan, Credit Suisse, and Citi host
conferences, while on Thursday, its 2 from Deutsche Bank, Credit Suisse, Instinet,
HSBC, and 2 from Citi, even as Wells Fargo hosts its Investor Day, which probably
wont be a sleepy event. And if youre looking ahead to Russells annual
rebalancing, the close this Friday informs its 6/23 decisions.
It was a bit surprising to see the major indices finish last week to the upside. The
number of stocks with strong charts are thinning, which is usually indicative of either
consolidation or a waning rally. Given were well into May, and stocks could barely
muster energy after the House finally passed the healthcare bill that is supposed to set
up the conditions for a sweeping tax reform bill suggests alls not well. Repeal of
the $900B in costs (over ten years) Obamacare (the ACA) swept into law was supposed to be
the linchpin upon which tax cuts can be instituted. Obviously, stocks didnt overlook
the hurdle the House bill faces in the Senate but Trump finally pulling his party together
to pass reform of Obamacare should have elicited more enthusiasm. The fact that it
didnt should be a warning that a period of more skepticism has arrived, which should
lead to consolidation, at the very least, and perhaps something more painful for the
bulls. Lets not overlook how badly the DJIA is lagging, for 46 days straight.
Granted, IBM was the biggest problem, last week, after Buffett said hed sold about a
1/3 of his position but it wasnt alone. The banks which led to the upside after the
election have been struggling after 20%, or worse, declines off their highs. Im not
going to endorse "sell in May and go away" because the track record of that
maxim has been damaged since the 2009 bottom was put in early March, or that year. But
reject the notion that you can buy willy nilly, here. With so many charts breaking down
or, at a minimum, backing off more than one would expect when the other indices are making
new all time highs. The number of stocks leading to the upside are narrowing, and
theyve become remarkably crowded trades. And perhaps, Macrons win in France,
as expected, is news to sell.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 0105, 2017 EQUITIES HAVE BEEN FULL OF
SURPRISES! That wasnt the week I expected, last week.
The celebration of the results of the French Election was a lot more enthusiastic than I
expected, and then, earnings reinforced the optimism, almost across the board. The FOMC
may have rate rises on its mind but it appears a foregone conclusion that they wont
make a change during this weeks meeting, if for no other reason than they
havent prepared the markets for it. For the March hike, they started driving their
intent home only 2 weeks before the meeting started but they got the point across as well
as if theyd stood in town squares across America with megaphones. They havent
done that this week, though surely have Trumps tax intentions to add to their
thoughts on future hikes and unwinding the balance sheet. The problem, that for all the
enthusiasm for Trump and his tax cut intentions, GDP grew just 0.7% in Q1, and thats
despite a market rallying since early Nov.
And lets not even discuss how much of Trumps tax plan will actually make it
through Congress because wed be here all night. Id rather look at the week
ahead, anyway. On the West Coast, the biggest event will be the Milken Institute Annual
Spring Meeting, (Los Angeles CA thru 05/03). I could write an entire outlook on just the
biographies of the hundreds of speakers but, instead, will list some of the megawatt ones
who often need no introduction: Jamie Dimon (JPM), Treas. Secy Mnuchin, Secy
of Commerce Wilbur Ross, Stephen Ross (Related), Nouriel Roubini, Softbanks
Masayoshi Son, Chevron CEO Watson, World Bank Pres Jim Yong Kim, Sam Zell, Angela Ahrendts
(AAPL), Prince Fahade Al Saud, Celgene CEO, IBM, Thomas Barack (Colony Capital),
Salesforce.com, Henry Blodget, Julia Boorstein (CNBC), David Bonderman (TPG), SoFi,
FaceBook, former Pres. George W Bush, former Florida Gov. Jeb Bush, Eric Cantor, WalMart,
Apollo Global, Cisco Chairman Chambers, Blackberrys John Chen, Airbnb, Michael
Eisner, Mohamed El-Erian, CNBCs David Faber, and hundreds more. On air personalities
from CNBC, Bloomberg & Fox are invited to assure the conference gets media coverage.
And despite his former time in jail, Milken devotes the organization and funds raised for
cancer research, a disease Mike Milken personally overcame.
On the East Coast, in addition to an 2-day FOMC Meeting with the statement due at 2pm on
Tuesday, theres Deutsche Banks 42nd Annual Health Care Conference
in Boston, starting Wednesday. Think about that a moment: DB has hosted this conference
for 42 years, when many of the portfolio managers running billions are younger than that.
Deutsche includes biotechs, pharma, and even the providers and some insurers. For some
reason, Deutsche is exceptionally busy hosting, also, Extreme Services One-on-One in NY,
the same day, along with an Andean Region Conference, also starting the same day.
On the Gulf Coast, starting Monday, OTCOffshore Technology Conference is a mass
meeting in Houston for the oil industry which, ironically, is doing less offshore and more
onshore, in shale regions. Credit Suisse holds its 20th conference alongside the event,
but other I-banks will host clients & companies during OTC, to capitalize on so many
explorers & drilling CEOs being in one place at one time. So, its quite
ironic that the US Energy Association Annual Membership Meeting & Public Policy Forum
should take starting Thursday, in D.C. Did they charter a plane to get execs from Houston
to the nations capital?
Whatever you thought of last weeks Earnings Calendar, hasnt prepared you for
this weeks. Theres not only a larger number of companies reporting this week
but possibly, less substance to the Earnings Calendar than the ticker count belies. I had
to struggle to fine tickers to embolden, and even then, realized that some that qualified
wont move the market or, even, their own sector, whether they win or lose. For the
size of the list, there are very few emboldened, at all, a quick scan of those a map to
the sectors heavily represented. Aside from Apple on Tuesday afternoon, and Facebook
Wednesday afternoon, its easy to spot a number of oil companies, like Royal Dutch
Shell, Occidental Petroleum, Anandarko, Apache, and more. But didnt Chevron &
ExxonMobil already break the ice and roll out the carpet, last Friday? Heck, running
through the charts, tonight, I was shocked at where Schlumberger is tradingand the
angle of decline, even as OPEC sends out a regular stream of production cut notices, as if
talking about them can make the oil in storage shrink. Today, it was Abu Dahbis
National Oil Co cutting by (-10.0)% the amount of oil it will sell in May, after cutting
(-7.0)% for April
I also noticed a number of media companies reporting this week, even as the Digital
NewFronts will take place. For those who havent encountered NewFronts before,
its the term the IAB (Interactive Ad Bureau) is using to describe digital
"Upfronts" that seek to sell ad time and space for the future, now. The IAB,
seeing how much money has moved to online ads, has managed to make NewFronts an organized
event that involves selling space in the ether to traditional advertisers like Chevy (GM),
Gillette (PG), and the like. OF course, weve all read about the problems of in
appropriate web content attracting ads from companies that wouldnt want to be
associated with the content but I cant figure out why the advertisers think online
ads shape buying behavior at all. Even when I use Google for Search, I usually page to the
2nd or 3rd page of results, where Im more likely to get
results that Google isnt being paid for me to see. But thats just me. Media
companies reporting this week range from Gray TV to Time Warner, with Scripps & others
in between. If restaurants are your thing, Texas Roadhouse Grill reports Monday afternoon,
Yum! Wednesday morning, Cheesecake Factory that afternoon, but theyre not alone. If
drinks are more your thing Bud & AmBev both report this week, as do Altria &
Reynolds America. I could go on playing this game but youll catch on quickly by just
skimming the emboldened tickers.
Which brings us to the rest of the Economic Calendar, because the April Unemployment
Report will be released Friday, Chain Store Sales from the 9 that still report monthly are
expected on Thursday, while the BoJ releases minutes from its 3/1516 meeting
overnight Monday, when the Royal Bank of Australia is set to announce its rate
decision (05/02 local time), into our Tuesday morning, while the Norges Bank
(Norways central bank) meets overnight Wednesday (east coast time). So thats
quite a bit of Central Bank activity, even before the FOMC is let loose to roam with its
latest message, which it will do en masse by the end of the week. The Hoover
Institutions "Structural Foundation of Monetary Policy: A Policy
Conference" boasts Fed Vice Chair Stanley Fischer opening Friday, at 11:30am, and
Bullard, Evans & Rosengren panelists at 1pm, out at Stanford California. FOMC Chief
Yellen is speaking later in the day but probably wont talk policy, since her speech
is "125 Years of Womens Participation in the Economy.," which doesnt
easily lend itself to policy discussions. Feds Williams keynotes at the Shadow Open
Market Committee (SOMC) Spring Meeting, on "Reforming the Fed &
Government-Sponsored Enterprises," which might lend itself to policy more than
Yellens speech will. Ditto Fischer, Bullard, Evans & Rosengren. On Saturday, the
Hoover Institution joins the Stanford Institute for Economic Policy (SiEPR) to debate
"Has the Neutral Interest Rate Declined and How Does that Affect Fed
Decisions?" Sounds like a more promising topic to discuss rate hikes and unwinding
the balance sheet, and whether those two should alternate or happen simultaneously, which
is what the Street has been asking.
Also Saturday, Chinese & Japans FinMins & central bankers are slated to hold
a summit, on the sidelines of the ASEAN FinMins & Central Bank Governors/Deputies
Joint Meeting in Tokyo, shortly after the end of the Asian Development Bank 50th
Anniversary Celebrations, Mondays meeting jointly with U of P, at a Joint Global
Think Tank Summit, in Yokohama Japan. Mario Draghi has a speech scheduled this week at an
awards ceremony, in Lausanne Switzerland, so he might not comment on policy, either. And
whats especially odd about the flood of central banker activity is that, in many
countries, Monday is a holidayMay Day or Labour Day, almost everywhere but here, yet
not slowing any bankers down.
By now, youre probably curious about seeing the Calorie Counts on menus, that
starting Monday must be provided by any organization with 20 or more locations. What many
dont know is that the rule doesnt apply to restaurants, alone, but to bowling
allies, movie theaters or any other place serving food that has more than 20 locations.
Whether that information will change anyones eating habits remains to be seen but
that was the hope in making that information mandatory, as of Monday.
All in, Ive been surprised at the continuing enthusiasm for stocks, even as
Ill admit earnings sound better than expected by most. Still, I dont believe
Trump will get his tax cut wish list through Congress intact, not when it will,
unquestionably, raise the National Debt, and set up the Trump Organization to benefit more
than most. A billionaire who wants to eliminate the Estate Tax? Tax "S" Corps at
15%, like large corporations? Trump has no idea how to mid-wife legislation through
Congress, and wont have much patience waiting for McConnell & Ryan to do it for
him. Sooner or later, stocks will wake to realities but, until then, enjoy the ride.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 2428, 2017 GLOBAL
CELEBRATION AFTER FRENCH 1st ROUND VOTES
Global Markets are set to celebrate the fact that a moderate and pro-EU
candidate will face off against Marine LePen, as a result of the first round of French
votes in National Elections. With the other candidatesmostly throwing their support
towards the moderate, Emmanuel Marchon, the Euro will rally as well. Why US Futures are up
so much is a bit of a mystery; Trump's still president here, and that means continuing
whiplash and big promises that arent backed by actionnot to mention the
occasional misdirection, as well, like an aircraft carrier near Australia claimed on its
way to Korea.
If the French election results werent enough to celebrate, when markets open Monday
morning, then Becton Dickinson (BDX) agreeing to acquire C.R. Bard (BCR) for $24B, at a
25% premium to Fridays close, should do it. Thats $317 per share for Bard
holders, consisting of $222.93 in cash, the rest in BDX stock. For all the fear of
legislative controls on pricing, the healthcare industry remains a hotbed of activity. How
will Congress ever come to an agreement on price controls for drugs, if it cant
agree on anything else? The fears that sent pharma stocks down are overblown.
Of course, with one of the heaviest weeks of Earnings on tap, theres plenty of time
for more sobering news to cool animal spirits before the weeks out. And if Earnings
results dont do it, theres always the possibility of a partial shut down of
the Federal Government, if Congress cant manage to pass another Continuing
Resolution (CR) to fund the government past Friday at midnight, when the current funding
runs out.
The Economic Calendar is replete with housing related data and $195 billion of government
debt to auction, the heaviest week in quite a long timeironic given that its
money to fund past debts incurred, and wont help keep the government operating, if
an CR isnt passed. And while were at it, the debt ceiling came back into play,
a couple of weeks ago, and theres been no movement to lift that either, despite
Trumps plans to spend billions more on defense, new billions on infrastructure, and
more billions to build a southern border wall that plenty of people are dead set against.
All that as Trump talks up big tax cuts to come, which will put the US into deeper hock.
Go Figure! At least Congress is back from a 2-week Easter recess, Monday, which means
therell be legislators in the Capitol to vote on measures that may be put to the
floor.
So a little of the nitty gritty is in order, after presenting the Big Picture. Tuesday
S&P Case Shiller releases its Feb. House Price Index, even as the FHFA does the same,
also for Feb. US March New Home Sales will be reported Tuesday, as well, even as the
Treasury auctions $25B 2-year notes the same day. On Wednesday, the Treasury plans to
auction $15B of 2-year Floating Rate Notes (FRN), which should be an easier sell than
fixed rate 2s the day earlier. And wait, theres more: Also Wednesday, the
Treasury will auction $34B of 5-year Notes. Wednesday brings the usual weekly release of
EIAs Petroleum, Gasoline & Distillate stockpiles, but its Congress to
watch because thats when the House Financial Services Committee will discuss a
600-page Dodd-Frank Replacement Bill. Also Thursday, T-3 for end of month, and end of the
best 6 months of the year for equities, which is why "Sell in May and Go Away"
is bound to be a hotter topic as the week wears on. Then, overnight, into Thursday in the
U.S., the BoJ, Riksbank, & ECB are all out with post Monetary Policy Committee
statements, and any changes in rates or QE that may be decided or discussed. Thursday,
more housing data, in the form of the National Assn of Realtors March Pending
Home Sales, the indicator of future activity that should erase any lingering concerns
about March housing starts which slumped (-6.8)%. Then, well also see how hard it is
for the Treasury to sell $28B of 7-year Notes, at the auction scheduled for 1pm est, at
the end of a heavy week of issuance.
Just as the Street is cruising towards the end of the week, and hopefully, not still
facing a potential government shutdown, US 17Q1 (advance) GDP will be released, the first
look at a quarter that again severely disappointed, according to the Atlanta Feds
GDPNow, which has it at 0.5%, despite the NY Fed estimate still comfortably above 2.0%--at
2.7%, to be precise, according to the FRBNY Staff Nowcast found here. Its a head scratcher that even their different methodologies
doesnt sufficiently explain. I dont think either of the Fed speakers Friday
will touch on monetary policy, unless forced to during the Q&As.
Its hard to even sum up the Earnings Calendar for this week but you know Ill
try. Just about every homebuilder that hasnt reported to date will do so this week.
Also reporting, MGM, Las Vegas Sands, Penn National, & Wynn Resorts, so pretty much
that entire industry, as well. Precious metal miners also pretty much wrap it up this
week, with close to a dozen miners, including Barrick Gold, Newmont Mining, and even tiny
Eldorado Gold, well known mostly because of its ticker: EGO. Some large Biotechs are on
the agenda, as well, including Amgen, Biogen, and Celgene, along with quite a few
drillers, half the defense industry, and most of the automakersnot just Ford, GM
& Fiat Chrysler but Honda Motors & Volvo, as well, along with a number of large
vehicle retailers, like Penske & AutoNation. And if you want to know how lower middle
class borrowers are doing, you probably wont find much in the mortgage
industrys numbers but could from Discover Financial, Capital One, Synchrony, and
Ally. They all report this week, too. Then, there are airlines, including American,
Alaska, Spirit, and more, along with beverage companies that compete to be served by them,
Coke, Pepsi, Dr Pepper Snapple. And thats before I point out reports due from
Microsoft & Amazon on Thursday afternoon, or Chevron and ExxonMobil on Friday. The
best way to handle the Earnings Calendar is to start with the tickers emboldened, then fan
out from there. While the emboldened tickers are completely subjective, and would look
radically different if someone else took on the task to embolden them, its my hope
that the ones chosen are the ones that the media & analysts will focus on the most,
which gives them the power to sway their sector or the market, overall.
Which brings us Events, though clearly, the most eagerly awaited of all is next Saturday
nights White House Correspondents Association dinner, which Trump declined to
attend, making the possibilities for skewering him all the more tantalizing. Sunday
evening I read of a planned Trump rally Saturday, in the capital, which may make
navigating to the dinner more challenging than most years. Before then, some of the bigger
events include NAB, the Broadcasters Convention & Expo, and the Intl Home
Furniture Market, better known as High Point, for the North Carolina city it takes place
in. The European Society for the study of the Liver Congress would normally be as
impactful as any Liver event in the US, were it not for earnings that will likely drown
out news from Amsterdam. Ditto the Congress of Clinical Micro Biology In Infectious
Diseases, in Vienna. Healthtechs Drug Discovery Chemistry is an annual collection of
conferences, in San Diego this year. Again, earnings noise will compete. Beverage Forum
Wednesday? AFCEA Spring Intelligence Symposium? GiGse (iGaming)? Alliance for Regenerative
Medicine Cell & Gene Investor Day? Its pretty much the same no matter which
conferences I pull outno matter how big theyre slated to be. Earnings keep
looking likely to crowd out news feeds. And surely by Thursdays T-3 for End of
Month, government funding will be weighing most heavily, if Congress hasnt hammered
out and passed a CR by then.
There are a couple of annual conferences, that most dont follow but kick themselves
for forgetting about when they come around, again. One is Rutbergs Summit in London,
the other Burkenroad Reports, this year the 20th Annual Investment Conference
in New Orleans. Rutberg cant be described in a few words. Its presenters include
names as diverse as Axiata, British Telecom, Stanley Works, FedEx, Google, Turkcell, Citi,
IAGs British Airways, LOreal, ING Group, Godiva Chocolate, 21st
Century Fox, Expedia, RioTinto, Tesco, AXA, Hershey, Wyndham Hotels, Volvo Cars &
Trucks, Facebook, Autozone, Vivendi, and John Lewis, to name just a few that demonstrate
the speakers list is from everywhere, with no sector excluded. It starts Monday.
Burkenroad Reports is a Tulane University conference outgrowth of an investment newsletter
that also cant be summarized in a few words, except to say that all the presenters
meet the investment criteria of Burkenroad Reports. This years presenters are as
diverse as Crown Crafts, Pool Corp, Cal-Maine Foods, Sanderson Farms, Sharps Compliance,
Sunoco LP, and MidSouth Bancorp.
So, with all this on tap, there is bound to be cross-currents tossing the markets every
which way. And it doesnt get easier for the next two weeks, either, as the flood of
S&P 500 companies reporting their earnings during the coming 3 weeks will continually
mix the good, the bad, and the ugly, even as Congress will need to do the right thing for
the country, and the world, and thats not a given, as the march to a government shut
down could prove relentless without some legislators swallowing their pride and voting for
what they must, rather than what theyd rather or prefer. Just as Donald Trump
couldnt get his own party behind the Obamacare repeal & replacement bill, he
needs even more nownot just his party but some democrats, as well. And I long ago
gave up counting on the nearly impossible. Volatility is sure to return, Mondays
French election celebration a great opportunity to protect the downside.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 1721, 2017 WHAT PART of LAST WEEKS
DECLINE WAS TIED TO 3-DAY WEEKEND, ALONE? A heavy Earnings
Calendar ahead will compete with the many meetings tied to the World Bank/IMF Joint Spring
Meeting. While the meeting doesnt officially start until the 21st, the
"pre-conferences" and tied in conferences start lifting off on Tuesday. I have
provided links to the schedules where applicable, overwhelmed by the surfeit of US
officials, especially, planning on speakingsometimes 2x in one day. Even U.S.
Treasury Secretary Mnuchin is scheduled to speak twice, this week.
While most of the US Data released this week will revolve around housing, for some, a late
Personal Tax Due Date, on 4/18, pushes out when the last of the great procrastinators
could have funded their 401Ks and other retirement accounts. The usual tax day, the
15th, is a Saturday, and Monday, the 17th, is Founders Day in
D.C., another holiday, pushing the tax due date out to Tuesday, this week. Any early in
the month outflows from funds in the first half of the month, is often made up in the 2nd
half, as those funds are taken out of personal accounts & ETFs and find their way into
retirement accounts, for professional managers to invest.
And then, theres the Earnings Calendar cranking up, the number of banks reporting
reason enough to break our usual habit of sticking to only the money center banks &
largest regionals, to emphasize the point that banks still dominate. Last weeks good
earnings from JPMorgan and Citi werent greeted with celebration. Some of it may have
been the fear of staying long in advance of a 3-day weekend, in the face of a newly
aggressive US military, bombing Afghanistan & Syria, with unveiled threats about
taking care of North Korea if China doesnt.
Ive emboldened more tickers of reporting companies than usual, this week, because a
more diverse group of companies reporting represent a larger number of sectors than usual.
For instance, with Charles Schwab, Morgan Stanley, InterActive Brokers, TD Ameritrade
& E-Trade Financial reporting this week, in addition to Goldman Sachs, on top of the
reports from last week, is a full sweep of retail and Investment Bank earnings, completing
the group. A smattering of drug companies report, including Abbot and JNJ. If you watch no
other reports than the ones highlighted in bold, youd get a full sense of the state
of the economy. With all the reports ahead this week, and two weeks following of even more
reports, its hard to see exactly when the Street will celebrate improved
earningsor if Trumps flip-flopping policies will continue to weigh on the
major averages.
Events? Not much in the way of those, either, beyond the World Bank Group & IMF Joint
Spring Meetings in D.C., and other events timed to coincide with those. That has as much
to do with Earnings season in full bloom, as it does with that Joint Meetings.
My guess is that Trump proved he doesnt walk on water when the House had to table a
vote on the repeal & replace Obamacare bill. He reinforced the fact that hes no
savior when the Senate had to take the nuclear optionchange the Senate rules to
confirm Gorsuch to the Supreme Court with a simple majority, instead of the long-standing
60 votes needed in the past. Then last week, Trumps flip-flopping on Chinese
currency manipulation, NATOs usefulness, and the Import/Export Bank put even more of
Trumps plans in doubt. The fact that Trump is moderating his positions should be
cause for some to celebrate but, at the moment, thats not what happened. Proving
more flexible than he was on the campaign trail, is something else to celebrate but for
now, thats not what the Street has done. Instead, the Street sees only the
uncertainty he generates on every topic, and we all know how much the Street hates
Uncertainty. For now, that may keep stocks in check and trigger more selling if Earnings
dont deliver to expectations. That could make long the hardest place to be.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions are the authors, alone, and
should be just one factor in more complete due diligence.
April 1014, 2017 SHORT WEEK WONT LACK
ACTION Friday is a holiday, Good Friday, which is why the
major banks are reporting Thursday. That includes JPMorgan, Citigroup, PNC Financial,
& Wells Fargo. Before Thursday, the Earnings Calendar is slim, with only Delta
Airlines, Wednesday morning, as the appetizer prior to the banks the following day.
The biggest curiosity of the week revolves around major, long term debt issuance, this
week, from the US, UK, Japan & Germany. The US 30-year reopening isnt until
Wednesday. Before that, Japan will issue 30-year JGBs, Germany 10-year Bunds, and UK
30-year GILTs, all of those overnight Tuesday, into Wednesday morning in the US east. For
the UK, its the first long dated debt offered since the country invoked Article 50
of the Lisbon Treaty, triggering Brexit. If the yield is the only consideration, the US
should come out on top, since 30-years pay more than all the others, by a mile.
G7 Foreign Ministers meet starting Monday. One can only regret that the meeting
didnt take place before Trump sent 59 Tomahawks into Syria but, alas, Trumps
team probably felt he needed to act expeditiously, and forcefully, to make his point, so
no time to wait for diplomatic channels. No doubt, the phone lines were burning up.
Its unimaginable that the Trump White House warned the Soviets without, also,
notifying the US NATO allies, as well.
Friday is a holiday, the Bond Market closes early on Thursday, in advance of the Friday
holiday but the BLS schedule still shows CPI being released at 8:30am, on Friday. If a
tree falls in the forest and no one is around to hear it, has it really fallen? Oil prices
pulled back in March, as did prices at the pump, even as retailers were offering up to 70%
off, to clear winter and early Spring deliveries. So that should have kept inflation down,
except in the supermarket where fruits and vegetables for the holiday are silly
priceyespecially for "organic" products, where the news is not good.
Sunday, Walmart was forced to recall Fresh Express Organic salad after 2 bats were found
in packages. Ugh!
Its possible Chinas March CPI & PPI will get a bigger reaction that the US
versions, March PPI out Thursday in the US. While the Feds Labor Market Conditions
Index is out Monday, and Feb JOLTs, which measures quits and job turnover out Tuesday,
along with the NFIB, the two Labor market indicators have been a big shrug, on days when
theyve been released in the past. With the Atlanta Feds GDPNow now showing a
sub-1.0% Q1, my reaction to both JOLTS & LMCI is, "So what?" If anything,
the Street reacts more to the U.M. Consumer Sentiment Surveys, even the preliminary ones
mid-month, that survey all of 250 people, another "So what?" in my book, since
consumers dont often spend when theyre most upbeat. On the contrary, the more
down they are the more theyre likely to spend. See fall 2008, when consumers spent
money like thered be no tomorrow.
As for the Events Calendar, the Bk of America Merrill Lynch Auto Show coincides with the
preview days of the New York International Auto Show, graced, as well, by a J D Power
AutoForum. For some reason, Digital Dealer, for auto dealers is, instead, in Tampa the
same days. The Edison Electric Institute hosts Key Accounts Workshops, starting Sunday,
but other than that, most of the events are healthcare related, including Addiction
Medicine, Laser Surgery, Immune Profiling, World Vaccine Congress, to name a few. The
healthcare sideshow is Anthems day in a Delaware court, in its quest to undo the
block regulators put on its planned takeover of Cigna. Cigna doesnt even want to
merge with Anthem, and is suing Anthem for $13B in damages, so its hard to figure
out what Anthem intends to accomplish with its suit.
Other than those events, NAIC, the State Insurance Commissioners, and NAPCP for the
Commercial Card & Payment Industry starting Sunday & Monday respectively. The 15th
is Saturday, and Monday Founders Day in D.C., so taxes are allowed to arrive later than
usual. Patriots Day is Monday, in Boston, and the day the Boston Marathon is run,
the festivities a weekend event, despite the Christian holiday. But then, Easter &
Passover move around like the Chinese New Year, as a couple of retailers pointed out when
delivering March data, or forecasting it. That means many retailers are counting on April
making up for a weak March, though I wouldnt get my hopes up too high, given the
steep discounts offered throughout the mall.
So the week really could come down to Thursdays earnings from the banks. While none
have guided down, a couple did say that equity trading was soft, a result, no doubt, of
markets that into March ran in what seemed like only one directionup. But
thats not been the story since March 1st, or so, with Banks down
considerably from the highs set last month. That could mean theres plenty or room
for a rebound but the question is, for how long? I suspect not that long, at all. The next
big bounce in banks is probably one to sell, and ditto the rest of the market as earnings
season progresses. Theres a reason Sell in May and Go Away has been a long-standing
mantra on Wall Street. May through October are some of the weakest months of the year,
except for a bounce when Q2 earnings start getting reported in July. Plenty of time to
sell the April rally, and nibble new positions before the July one. No reason to stand
pat, unless you plan on selling calls against your positions, and using the premium to buy
puts underneath the market.
ECONOMIC: (Highlights below, only. Full International Economic Calendar is here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 03 07, 2017 DON'T
EXPECT MUCH OUT OF STOCKS THIS WEEK
Federal Reserve speakers are prominent, again, this week, though a couple will be speaking
overseas, Fed Gov. Daniel Tarullo, leaving the Fed this week, out for one last speaking
engagement before he goes. And more important than Fed speakers could be how Pres. Trump
relates to Chinas Xi Jingping, when they meet at Mar-a-Lago, Friday
A new month means the usual PMIs, ISMs, and Unemployment Reports, the latter on Friday in
the US, some not expecting the kind of blow-out February delivered, partially credited to
a warm month and pent up demand unleashed after the election. March, unlike February,
featured a couple of really wicked snow storms that engulfed the middle of the country,
straight up the East Coast. How odd is the weather, this year? Down here in Boca Raton,
the temp was just shy of 90 degrees, Saturday and, by Sunday, the humidity was so thick
you could cut it with a knife, even as the northeast was receiving another dose of snow
that could accumulate up to a foot before its done. March Motor Vehicle Sales, out
Tuesday, may not be as weak as some suspect, thanks to a month with 31 days, after one
that had only 28, and with incentives as deep as they wereincluding one dealer
advertising Buicks reduced by $10Ksales may be perky again. But, then, take the snow
states out of the month, and there wasnt a full 31 days of selling, either.
One thing that wont be a problem is the US Treasury. Other than the, as yet,
unannounced 4-week bills issued weekly, theres no activity after Mondays 3-
and 6-month Bill offerings. On the week, ex-the 4-week issue, $72B of Treasury offerings
vs $193B on the same basis, last week. FOMC Minutes of the March 1415 meeting, on
Wednesday, could reveal more discussion of unwinding the Feds enormous balance sheet
than the bond market is prepared to hear.
The Earnings Calendar has little to offer. Tuesday, A. Shulman & Canadas Hudson
Bay, rumored bidder for Neiman Marcus, after supposedly holding discussions with Macy*s.
Wednesday, Monsanto & Walgreens Boots Alliance, the latters plan to take over
Rite-Aid still stalled awaiting anti-trust approval. I think CVS & WBA have
sufficiently consolidated the retail pharmacy industry, and Rite-Aid should remain the odd
man out, after Duane Reed fell. And worse, the thought of Freds picking up what
WBA/RAD have already agreed to divest is frightfulits just not big enough to
handle that kind of acquisition, and the debt that will come with it.
Wednesday afternoon, Bed Bath & Beyond reports, along with Yum China, the still new
spin off from Yum Brands! Many used to think BBBY was in a great position, because Linens
n Things went out of business but I never did understand it buying "The
Christmas Store," a baby chain, or opening Harmon Face Values all over the place,
often just yards from an existing BBBY, which already sold the HBA Face Values sell. And
while BBBY has told analysts it will trim its 20% off coupons and catalogs, to boost
profitability, that hasnt happened, yet. I still get 6-page circulars monthly, the
inevitable coupon printed on the back. Yet, when I decided I needed a new roasting pan,
the one I liked was $49.99 at BBBY, and $13.99 at Target, the TGT one, actually, better
for me, because it weighed about a pound less. That matters when cooking a turkey that
weighs in at double digits, before the potatoes are placed around the outside edge of the
pan.
Thursday morning, earnings reports are expected from CarMax, Constellation Brands, Lamb
Weston-the ConAgra spin-outand Schnitzer Steel. To hear Barrons tell it,
KMX is suffering falling used car prices, and higher delinquencies in its finance unit.
Constellation Brands, which owns rights to sell Mexican beers in the US, must be stressing
Trumps renegotiation of NAFTA. Schnitzer Steel is in an industry targeted for large
tariffs on foreign imports, said to be dumped in the US. That afternoon, PriceSmart has
most of its stores in the islands & Latin America, where Amazon has not, yet, taken
over retail. And as a warehouse club, with a sense of treasure hunting, its more
like CostCo of BJs than any other retailer. CostCo, by the way, has the easiest
comps in the US, in April, because thats the month Amex was no longer accepted, last
year, but before Citis Visa got its marketing to COST customers in full gear. In
fact, COST could have a couple of months of easy comps ahead that might be an opportunity.
Which brings us to Events, where the Cancer Research Annual must be the least talked about
AACR meeting in history. The Street is so obsessed with the Fed, Trumps tweets, and
Republican in-fighting, which defeated Obamacare repeal & replace, that AACR abstracts
have hardly been discussed, at all. Then, again, the Congress on Alzheimers &
Parkinsons Disease hasnt been much talked about, either, its Vienna Austria
meeting perhaps too far away. ENDO, the 2017 meeting of the Endocrine Society has gotten
more attention than AACR.
Monday, OGIS for Oil & Gas Independents, in NY, will be one of the better attended
events. Ditto Bk of America/Merrill Lynchs Oil & Gas Conference in London. But
Europe also hosts MIPTV, for TV Programmers, so media will be a focus, as well. Never mind
the Cannes France location; cross-border & ocean TV deals have been done all the time.
How else did "Slumdog Millionaire" feature an American show?
SAE World Automotive Congress, in Detroit, will keep motor vehicles in the consciousness
beyond March sales data. For those watching precious medals the Denver Gold Group European
Gold Forum, in Zurich, should be noted. I suspect Aircraft Interiors, in Hamburg Germany,
will make more noise. Despite an airline about to hit the public
stageFrontierboasting some of the most interesting paint jobs on its aircraft,
it is the interiors that customers experience most, and where JetBlue distinguished
itself, initially, with back of seat TV screens, content provided by the always
imperfectly transmitted DirecTV. Raymond James is hosting Commercial Aviation, this
Wednesday, in NY. That surprised us a bit because Aircraft Interiors usually draws most of
the industry to Germany. We admit to our failings, when we cant find an event on an
I-bank calendar and Barclays Generic Pharmaceuticals & Biosimilar Symposium in NY, is
not on Barclays calendar but the particular source on that event is too reliable to
doubt. Speaking of Healthcare, Needham & Co holds a Healthcare Conference Tuesday
& Wednesday. Also in healthcare, Stem Cell Research & Regenerative Medicine starts
Wednesday, with Diabetes the Pre-Conference, in Boston, Tuesday. In fact, no matter how
much I try to give equal time to other sectors, it just seems like there are more
healthcare-related events, always. Whether its I-bank Therapeutics days, or
Anesthesiology & Acute Pain Medicine, Addiction Medicine, or ERS, European Congress of
Sleep & Breathing Research, and those are all on Thursday, or start that day.
Hong Kong is where Sothebys chose to auction its 59+ carat flawless Pink Star
Diamond, Tuesday. Landing something that unique creates a halo effect. Of less interest,
perhaps, the Farm Equipment Manufacturers Supply Chain Summit in Little Rock AR, starting
Wednesday. A friend of mine just told me how important tax reform would be for farmers,
and then proceeded to tell me how his family lost their farm when they had to sell most of
it to pay off estate taxes. One thing is for sure, farmers are hurting, this year, and
thats never good for the equipment manufacturers.
With Q1 put to bed, its just 10 days until some important earnings start coming out,
which means its also time for earnings warnings. I was surprised that financials
sold off so strongly, Friday, including JPMorgan which will be one of the first to report,
on April 13th. Citigroup and Delta Airlines might report the same day, along with PNC
Financial and Wells Fargo, which I havent confirmed, as yet; Im just stating
what should happen, based on historical precedent. Some if not all would normally report
on the 14th, instead but thats Good Friday and a holiday, before Easter
Sunday, on the 16th. So brace for some warnings, and dont expect the
market to do much of anything. There are a lot of managers waiting for stocks to give them
a chance to get in. That will limit the downside but dont expect much to the upside
until after this week is over. With end of quarter always comes some portfolio
repositioning, which often provides a leg up to the finished quarters worst
performers, and those expected to perform the best during earnings season. Unless you have
an inside edgea legal inside edgepick your places very carefully.
ECONOMIC: (Highlights only below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 2731, 2017 TRUMP DOES NOT WALK ON
WATER, AFTERALL! Former Pres. Obama and the Democrats must be
jubilant about ACHA, the Republican repeal and replacement of ObamaCare went down in
flameswithout risk of a vote that even the Republicans knew would fail. OF course,
stocks will get hit Monday morning, at least to start, because it puts the entire Trump
agenda into question. Lets not forget the $337B over 10 years the ACHA was supposed
to save was, supposedly, essential to tax reform, and had to be enacted first, before tax
reform could be attempted. Well, forget all that, which Trump never sounded convincing
saying, anyway. Republicans are, now, going to attempt tax reform as if the Freedom
Caucus, which was instrumental in shutting down the government, a few years ago, are going
suddenly let the National Debt explode. And if the Dems are smart, they'll let the
Republicans blow up all Trumps plans without any Democratic interference.
Speaking of the national debt, the US Treasury is offering $193B more of it, this week,
more than twice last weeks offerings. How will that go? Well, perhaps, not that
badly, until the $26B 7-year issue is encountered, Wednesday, a manageable amount,
particularly given negative rates in much of the rest of the developed world. And
dont look now but Fed speakers will be crawling all over the world, this week,
starting with Evans in the wee hours of Monday, in Madrid, and then later that day at a
different conference. Data includes the Case/Shiller 20-city Jan Home Price Index,
Tuesday, then Natl Association of Realtors offer Feb Pending Home Sales Wednesday,
same day EIA releases weekly Petroleum stats, and a day before UKs Prime Minister
May will, finally, invoke Article 50 of the Lisbon Treaty, kicking off negotiations with
the EU on the UKs exit from the EU. As May said, after last weeks terrorist
attacks at the Parliament, no matter what, there has to be a security pact, no matter what
else they cant agree on.
And make no mistake, despite the swarming Fed speakers this week, what May will trigger
Wednesday, and her terms for post-Brexit regulation in the UK, is probably more important
than anything else, in the coming week. And that may well be why money center banks were
hit, last week. Most of them have their "European" headquarters in London, and
its possible that wont be acceptable to the Europeans, who dont want see
trades from the continent continued to be cleared in an island that was first defect. All
last week there were articles about banks considering Ireland as an alternative, which
sounds like anything but London, rather than a move to Europe. For what its worth,
most of the Fed speakers probably wont discuss their outlook for rates, but some
will. Be afraid that some will join Evans in calling for, possibly, 3 more hikes this
year, assuming the data holds up. And, at least, for the doves, the sole dissenter against
the last rate hike, Neel Too Big To Fail Kashkari also speaks this week, if not until
Friday.
There are also 2 consumer sentiment surveys out this week, the Conference Boards on
Tuesday, and Fridays final U.M. March version, Recall the wicked snow storms and
tornadoes that all but paralyzed different parts of the country, in March, and dont
be surprised if sentiment backs off some more. Recall, it was the first day of spring when
New Englanders woke up to feet of snow outside. Consumers actually spend more when
theyre most unhappy, so dont be misled into thinking that worse sentiment is
bad for restaurants, retailers, and "non-store" retailersas the government
bean counters like to call internet retailers. Then, again, as of April, the ECB starts
trimming its QE to Euro60B from Euro80B, monthly, while recent strength in the yen may or
may not have been related to end of year repatriation. Barbara Rockefeller of Rockefeller
Treasury Services long questioned yen strength in March correlated with fiscal year end
but this year said it doesnt really seem to be a big influence. What if it was, the
very year she threw in the towel on the observation? Wouldnt the yen, now, back
down, some?
The Earnings Calendar is finally slimming down, though not totally devoid of interest. I
highlighted GIII on Monday morning, because Walmart is its biggest customer. WMT is,
allegedly, making another big push into apparel, for which GIII is one of the companies
itll turn toespecially for leather jackets for spring. Monday afternoon,
RedHat & Synnex caught my eye, the latter one of the biggest VARs, more familiar
to consumers when it operated Tiger & CompUSA, after the latters bankruptcy. It
didnt take either of those names when it discontinued its consumer push because it
didnt have to for its Enterprise customers. Tuesday, Carnival Cruiselines, Darden
Restaurants, and spice distributor McCormick caught my eye, as well as FDS & INFO (IHS
Markit), because Wall Street loves to navel gaze. Wednesday, Paychex in the morning, and
Worthington, a steel company in the afternoon. Thursday, Dell Technologies, the stub for
VMware was it, and newly public J.Jill, though how J. Jill pulled off an IPO given
sentiment on retailers remains quite mysterious. Friday, Bank of China & Blackberry,
neither emboldened because they dont really mean squat for any other stocks or an
index.
Im underwhelmed by the Events planned this week, though Scotiabanks Howard
Weil Annual Energy Conference, in New Orleans, could be the star. Im actually
partial to buying multiple months out calls on Chevron, my favored play in the oil patch,
since oil tends to rise into Mays air conditioning & summer driving
seasoneven when the commodity is collapsing. And if you dont mind paying the
premium, calls out to Jan. are a possibility but I prefer to wait on those until after
September. It takes a big hurricane heading for the Gulf of Mexico to raise oil prices,
reliably, in summer months, after the driving season has already been discounted. Monday,
CinemaCon for theater owners, and content purveyors is often one of the noisiest events of
the season. Trailers and previews of summer blockbusterseven fall upcoming
blockbustersare shown to the National Association of Theater Owners, NATO, believe
it of not.
Ill throw some shade on Mondays Payments, in Orlando, & IWCE-MRT Wireless
Communications Expo in Las Vegas but Samsungs release of Galaxy S8, Wednesday, could
mean more. William Blairs Cancer Immunotherapy Conference could benefit from the NY
location, given how many analysts and hedge funds are based within 50 miles. If you enjoy
trading tight sectors, the Jefferies Animal Health Summit, also in NY, Thursday, may be
your cup of tea. RBC Capital is hosting a Forest Products Investor Day in Toronto,
Wednesday but dont be put off by the Canadian location. Theres a potential
fight brewing between US & Canadian timber producers, just as the US homebuilding
industry gears up full speed for the spring & summer building and buying season.
For Northeast events, its probably Thursdays SEMIs (Equipment) annual
Wafers to Wall StreetIndustry Cycles & the New Normal, albeit in Massachusetts
but coming straight off Micron Techs blow-out earnings report, and with Cypress Semi
hosting an analyst meeting, Tuesday afternoon, and Intel its "Leading at the Edge, a
Technology & Manufacturing Day," also Tuesday, Semis should not be
overlookedthey led to the upside and arent far from their all time highs but
if stocks are going to suffer more damage after Trumps failure on healthcare, the
SOX may be the clue to how deep that pullback will be. Friday, SNAXPO for snack makers is
the headline event, even though it appears only PepsiCo has managed to overcome any health
kick the US goes on early every year. With March Madness well underway, its salty
snacks, beer, soda, and pizza delivery that usually benefits most.
The big Kahuna of events starts next Saturday, AACRthe American Association of
Cancer Research Annual Meeting, in the nations capital, just in time for cherry
blossom blooms. Thats even as the FDA is expected to vote, Wednesday, on
Genentechs BLA 761064, for a duo of biologic drugs combined for injection, to fight
follicular lymphoma, as a first line treatment. The bears have waited ever more anxiously
for the Trump rally to break, and it seems it has. But dont doubt the bulls intent
to buy the dipan undercut of 2300 in the S&P perhaps the signal theyre
waiting for. For a tell, watch JNJ. That stock was one of the hottest in March, taking off
even as 3 juries found against it for tens of millions of damages, in both metal hip and
talcum powder cases. Of course, JNJ will appeal but the way it took off to the moon was
quite surprising, given how poorly the stock performed after its last earnings report.
When they cream JNJ, and it wont go down more, that might be a signal to buy.
Meantime, oil has lost a lot and oil stocks havent, this round. Buying June calls on
Chevron appeal most, if oil dips to $46. Implied in that comment is a suspicion that oil
has more gains to surrender, still, even if the Production Cut Monitoring Committee
Meeting in Kuwait did end with a proposal to extend the OPEC & non-OPEC Production
Cuts for another 6 months.
And just in case you missed it, the SEC voted to eliminate T-3 settlements by shortening
them by one day to T-2, as of September 5th, of this year. Now, all they need
to do is shortening the time for reporting short interesteliminating the long lag
before those are reported to the public.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© 2017 Sandi Lynne Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions are the authors, alone, and
should be just one factor in more complete due diligence.
March 2024, 2017 CONSOLIDATION COULD CARRY TO THE END
OF THE MONTH The Fed may have lengthened the quiet period in
advance of meetings but Fed heads are speaking everywhere, this week, in the aftermath of
a quarter point hike that was widely telegraphed since early this month. Evans gets things
started, Monday, George & Mester Tuesday, FOMC Chief & Neel Kashkari on Thursday,
along with Kaplan at a separate event, plus on Friday NYs Dudley, Evans, Bullard,
and Williams. Well see if theres a unified message to come out of them, ex-the
dissenter, Kashkari. Also on deck, this week, FHFA Jan House Price Index & NAR Feb
Existing Home Sales, Wednesday, then Feb New Home Sales on Thursday. The Senate Judiciary
Cmte holds hearings on Supreme Court nominee Neil Gorsuch, Monday, along with a House
Intelligence Cmte meeting that day, to query FBI director James Comey on Pres.
Trumps allegations of Trump Tower being bugged by the Obama administration, during
the election season. The latter was roundly denied all around but the White House claims
it will submit proof. "Alternate Facts," I suspect.
The Earnings Calendar winds down with mostly the 2nd string reporting. In fact,
some of the most interesting of the reports wont even be from American companies but
instead from Chinese telecoms, BMW, Petrobras, CNOOC, and Tencent. But Francescas, General
Mills, Lands End, and Lennar will lead off Tuesday morning, with Fedex, Nike, and
Silver Wheaton, in the afternoon. Thursday, Id not ConAgra and Ping An Insurance.
Thursday afternoon, GameStop, KBHome, Micron Technology, and Oxford Industries caught my
eye, while Friday, its Finish Line, which has fairly consistently lags FootLocker.
Which brings us to the Event Calendar, if you can tear your eyes away from the NCAA
Basketball game of the day. The first trades after the Quadruple Options & Futures
Expirations are usually head fakes in the wrong direction. Once the Street can turns back
to the Calendar, theres no single defining event of the week. CAGE? Consumer Analyst
Group of Europe? NYSSA Insurance? Tuesdays a big day, with Wells Fargos Asset
Managers, Brokers & Exchanges Forum, Goldmans Houston Chemical Intensity, Telsey
Advisorys 9th Annual Consumer Conference, NAREIM for the Natl
Assn of Real Estate Executive Leadership Retreat, and Solar Power Finance &
Investment catch the eye, while both OpCos Annual Healthcare Conference and Morgan
Stanleys Healthcare Corporate Access seem too similar to a long list of healthcare
conferences already completed. Id rather trade the medical society meetings
directly, especially Leerink Patners Biotech Mountain Meeting or Cancer
Immunotherapy, or later in the weeks AAGP Geriatric Mental Health Care, depression
at the root of much of the opioid addiction problem in this country, a fact few bother to
acknowledge. Also notable Thursdays Lung Science Conference and Hinmans Dental
Meeting, or European Biosimilar Medicines, and thr 15th Lung Scienve
Conference.
On Wednesday, Im particularly partial to the Hunter Hotel Investment Conference, an
annual Atlanta event, not as big on the Natl Investment Center for Senior Housing
& Care Industry, an event I think will grows in importance as boomers age but not yet.
I have higher hopes for Gabellis Specialty Chemical Conference, that day,
PIDAs Global Pet Expo no longer a large enough public group to matter much.
As for stocks, I dont see a catalyst to drive the major averages higher, still.
Rather, with earnings warnings season creeping closer, Id rather hedge the downside,
and not expect too much to the upside. The last FOMC meeting and rate hike was so well
telegraphed even I predicted it a week before the meeting. Markets still need a period of
digestion. And that may be the story for the rest of the month.
ECONOMIC: (Highlights, only, here. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 1317, 2017 IS THIS TIME REALLY DIFFERENT?
Three steps and a stumble has always been the watchword on Fed rate hikes but
its rare that the first two arrive a year apart, and rates havent started at
zero, previously. Its hard to argue the Fed hasnt realized its stated goal of
full employment and economic growth with price stability, even if the details behind that
4.7% Unemployment Rate arent nearly as bullish as the headlines. But its also
was easy enough to guess has much the FOMC Chief Yellen & Co. want to get rates hikes
in when they can, before Brexits Article 50 of the Lisbon Treaty is announced, and
before French elections start in April. For all the hoopla about back to back strong
employment numbers to start of 2017, GDPNow is suggesting the economy is growing at the
same old, same old, pitiful sub-20% rate, despite all Trumps promises and bluster.
But the need to get hikes in when they could was exactly why I said, last week, that I
expected the FOMC to raise rates this week, back when the odds of that happening was still
in the neighborhood of 26%. What the Fed did wrong last year was wait until Brexit won
out, in June, which eliminated hikes in the summer, while fall was eliminated by an ugly
political season, that got even uglier as the election neared, last November.
Trumps 2018 budget is due out any minute, as the CBO scoring of Ryan/Republicans/
Trumps Obamacare replacement bill. Both could be out early this week though I
suspect Trump isnt submitting his 2018 budget until the CBO has scored the American
Healthcare Act, which I think we should all call "Republicare." This one the
Republicans will own, completely.
But the Fed isnt the only central bank on the schedule. The BoJ meets Thursday
(overnight Wednesday, in the US), as does the BoE, though Carneys post-meeting press
conference will take place just as CNBC opens the 7am hour. But thats not all,
theres also the Swiss National Bank & Norways central bank meeting
overnight Wednesday, into the US Thursday morning, the day after the FOMC
haswere all sureraised rates. And the Economic Calendar isnt
without some items of interest, including the Labor Market Conditions Index, Monday,
Tuesdays NFIB March Small Business Optimism Index and Feb PPIFinal Demand,
Wednesdays Feb CPI & Retail Sales, along with the NAHB March Housing Market
Index. That should be a puzzle as weather in the north east ranged from high 60s to
preparing for a blizzard. Its ironic that the G20 Finance Ministers & Central
Bankers are supposed to meet in Germany, starting Friday, which just happens to be Saint
Patricks Day, besides, one of the most bullish days of the year, historically. Of
course, with a Quadruple Expiration that day, with quarterly futures & options
settling, and S&P rebalancing, based on Fridays closing prices, there are no
assurances that St Pat will prevail. Also later in the week, Thursdays Feb Housing
Starts & Building Permits, plus JOLTS, a measure of job turnover & quits, quits
seen as an optimistic sign from workers who have to be confident about obtaining a new
job, to quit the one theyre already in.
Anyone who isnt interested in the early rounds of March Madnessthe NCAA
mens basketball championship, could always go to the movies and see "Betting on
Zero," a documentary about Bill Ackmans/Pershing Squares bet against
Herbalife (HLF), which opens next weekend. While Carl Icahn & HLF CEO Michael Johnson
wouldnt sit for interviews, for the film, there was plenty of archival footage the
filmmaker could use, much of it from CNBC.
The Earnings Calendar is more voluminous than it should be, at this stage in the season
but little of it will move markets. Ive got Hostess (TWNK) highlighted because
Im its most devoted fan, and cant have my morning coffee without a chocolate
Hostess Cupcakeexcept when Im in NY and one of the massive chocolate
croissants will do, instead. HD Supply, caught my eye Tuesday morning, along with Jabil
Circuit, Oracle & Williams-Sonoma Wednesday afternoon, along with Dollar General
Thursday morning, and Adobe and Calares (formerly Brown Shoe), Thursday afternoon, along
with Tiffany Friday morning. Aside from that, you have to be more familiar with small
biotechs, than I am, to go fishing amongst those reporting.
The Events Calendar promises Dialysis, Gerontology, Diabetes/Hypertension & Metabolic
Syndrome, Womeons Cancer, Next Gen Immuno-Oncology, a Japanese and Taiwanese Human
Genome Meetings, AAOS Orthopaedic Surgeons hold an Annual meeting, along with Clinical
Pharmacology Therapeutics, Pain Medicine, Thoracic Cancers, and the really big one,
starting Friday, Cardiology. And thats even as the ROTH Conference will include some
healthcare, while Exane BNP Paribas hosts Healthcare in Paris, Barclays hosts Global
Healthcare, starting Tuesday, with AAOS where the most companies will host analyst
meetings. Oddly, Amgen, not known as a cardiology company, even as Repatha (AMGN) &
Praluent (SNY/REGN) get off to a slow start, is hosting analysts at ACC, the Cardiology
Annual Scientific Sessions, because its latest post-approval test results show its super
statin, Repatha, does, indeed, prevent heart attacks and strokes.
Other events of interst include JPMorgans Aviation, Transportation & Industrials
Conference, in NY, starting Monday, when Seatrade Cruise Global kicks off. Barrons
anticipated Seatrade by writing bullishly about Norwegian CruiseLines but with only 3
tickers to choose from, and prospects for them all looking up, terror attacks in Paris
& Belgium get farther away in the rearview mirror, its the tight event
thats easier to trade than most. Bk of America Merrill Lynchs Consumer &
Retail Technology Conference, starting Tuesday, along with Barclays Global
Healthcare, has competition from Longbow Researchs Construction, Basic Materials
& Building Productions, and Barclays Emerging Payments Forum, while
CanaccordGenuity hosts a Musculoskeletal Conference, in San Diego, to coincide with
AAOSthe aforementioned Orthopaedic Surgeons Annual meeting.
Come Wednesday, it will be all about the FOMC Statement, and Yellens press
conference, along with the SEPs--each members forecast for the economy & rates,
with a possibility some will move from 3 hikes this year to four, though I dont
think Yellen will, yet. The Trump administration hasnt done anything, yet but summon
corporate CEOs to White House meetings, and bungle the first attempt to ban immigrants
from Muslim countries for 90 days. The raw Ryan Republicare replacement for Obamacare
doesnt look like its going to flyno matter how good a negotiator Trump
thinks he is. Meanwhile, the Atlanta Feds GDPNow has come down dramatically, now at
almost 1/3rd of where it started in its forecast for 17Q1 GDP. The NY
Feds version is still up there at 3.2% (FRBNY Staff Nowcast) but likely to come down significantly, also, this week, especially
if the nor-easter dumps a blizzard on the north east, just as it was looking like spring
had sprung, up there. The St Louis Fed cite the Atlanta Feds GDP very precisely, at
1.2457%. Thats barely better than the last 2 years, though GDP, admittedly, printed
at 1.1% in 2016Q1, and in 2015Q1, fell at a rate of (-0.2)%. Even if the Atlanta
Feds GDP Nowcast is accurate, it still beats the 2 prior years.
Get past the FOMC meeting, Wednesday, and the Quadruple Options & Futures Expiration
will be controlling stocks, rather than any earnings, events, or economic data. St
Patricks Day is, traditionally, a bullish holiday but occurring on a BIG Expiration,
coinciding with S&P Rebalance & Qtrly Options & Futures Expiring, traditions
could be upset. Historically, the bullish day is the Tuesday before the Quad expiration,
sometimes even Wednesday but with the FOMC a major distraction until Yellens press
conference endsusually around 3:35pmstocks wont be driven by the rate
hike thats already anticipated, or even the fact that one of two SEP outliers could
switch from 3 hikes this year, to 4. And if truth be known, its not the meeting
statement but the forecasts and, even more so, the minutes out 3 weeks after the meeting
that the Street will find most revealing.
I would normally cite chart levels, about here, after the consolidation Id been
expecting finally showed up, last week but, alas, my data provider has been off line since
last Wednesday, and I simply dont trust my back-up systems for making big calls.
Believe or not, even as the Earnings Calendar remains busier than it should be, Q1 is
drawing to a close and it wont be long, now, before companies other than retailers
start issuing warnings. Personally, I dont see any urgency to buy this first dip,
yet.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors, alone,
and should be just one factor in more complete due diligence.
March 0610, 2017 LONG WEEK WAITING FOR FOMC NEXT
WEEK This could feel like an exceptional long week, waiting for
Fridays February Unemployment Report, before the FOMC meeting, the week afterwards.
That, also, means the ECB meeting, Thursday will take on added importance, especially
after last weeks news that the Eurozone grew faster than expected. Meanwhile,
Sundays press comments by China Premier Xi, before the NPCNational
Peoples Congress, held no surprises. None.
One of the highlights of the Economic Calendar, while waiting for the ECB &
Fridays US Unemployment Report may well be the US Jan. International Trade Deficit,
on Tuesday, along with the Trade Balance released by Germany, well earlier than the US
markets open, on Friday morning. Germany, one should recall, has been accused of
holding down the value of the Euro, to benefit from trade, according to US Pres. Trump.
And itll probably pay to watch the Treasury Auctions, this week, whether the 3-year,
on Tuesday, the 10-year on Wednesday, or Thursdays 30-year. $12B of 30-year bonds
shouldnt be a challenge to sell but with rates set to rise, a week after the
auction, its not a lay-up, either, and dealers could get stuck holding the bag.
Theres a fairly voluminous Earnings Calendar, even so late into the Earnings Season,
which may not turn out as important as some of the analyst meetings scheduled for the
week. In particular, Tuesdays Chevron and IBM analyst meetings, Amex & GE
Wednesday analyst meetings, before Fridays United Technologies meets with
Analysts, rounding out a handful of DJIA companies whove scheduled meetings with
institutional investors and analysts. There isnt a single company reporting
earnings, this week, with equal cloutor even a fraction of the clout.
The Events Calendar cranks up, as is typical when Earnings season tails off. One of the
biggest events of the week is AAAI, the American Academy of Allergy, Asthma &
Immunology, taking place in Atlanta, and already underway. Whats curious about the
event is how little it has been previewed, by analysts. Ditto the 75th American
Academy of Dermatology, also underway, in Orlando. The lack of pre-event buzz is quite
surprising, compared to past years. One wouldnt think NABEThe National
Association of Business Economists would be that big a deal but NABE, for years, has been
a high profile event for top notch speakers, this year no exception. In some circles, the
speakers are so well known their last name is all thats necessary for
identification. Hubbard, Furman, Levy, Stiglitz, Stockton, and Zandi, along with Neel
Kashkari, the President of the Federal Reserve Bank of Minneapolis, wholl be
speaking Monday, at 3pm, though Too Big to Fail doesnt seem to be in any way related
to his planned speech, a rare departure from his usual thrust.
The biggest events of the week are likely a few core investment bank events, starting
Monday, with Deutsche Banks 25th Annual Media, Internet & Telecom
Conference, in Palm Beach, Florida. Getting there must not have been easy, with Pres.
Trump popping in and out of Mar-a-Lago, and all the air restrictions in place each time he
arrives or leaves. Also Monday, CERA Week, now an IHS Markit event is one of the bigger
energy events of the winter. Cowens 27th Annual Health Care conference
is, likewise, eagerly awaited. Tuesday, note RBCs Financial Institutions Conference
in NY, and Evercore ISIs Energy/Power Summit, not accidentally in Houston, during
CERA Week. Also Tuesday, the Digital Hollywood Media Summit, in NY, could be one of the
biggest and best attended events of the season. Think of how easily Cannes attracts every
celebrity, and thats Digital Hollywood in NY, mosquito paper for media CEOs and
programmers, with big wattage names all speakers. It appears Wells Fargo is the only
I-bank setting up at Satellite 2017, which starts Monday, in D.C. When I saw the American
Coal Council Spring Coal Forum on the schedule for Tuesday, I wondered how many attendees
it might have drawn if not for Donald Trumps decision to open coal markets by
eliminating some of the costly scrubbing technology the Obama EPA had ordered mandatory on
coal fired power plants, causing some to plan to mothball coal power plants. Raymond
James' 38th Institutional Investor Conference starts Sunday, and runs through the 8th,
with a hodgepodge of presenters that can't be pigeonholed. They range from Callaway Golf
to CME, to Allergan, Mobileye, Moody's, MSC Industrial Supply, Delta Airlines, PulteGroup,
Natus Medical, Aflac, Vocera, SS&C, Chegg, Malibu Boats, MAXIMUS, Alexion
Pharmaceutical, Iridium, TD Ameritrade, IPG Photonics, Mobile Iron, Masco, Home Depot,
Weyerhaewuser, Catalent, Union Pacific, Newtek Business Services, Impax Labs--you name it.
There doesn't seem to be any particular sector or market cap either excluded or included.
It covers the gamut, and runs for more days than most conferences. .
On Wednesday, the headline I-bank event is UBS Global Consumer & Retail
Conference, in Boston, though dont dismiss, out of hand, the Mitsubishi Tech Tour on
the West Coast, starting Monday but running through Thursday, as it moves from Seattle to
Silicon Valley, and involves Amazon, Microsoft, Zilloa, Ambarella, Google/Alphabet,
Applied Materials, Broadcom, Cisco, Electronic Arts, facebook, Intel, Netflix, nVidia,
Salesforce.com, Visa, VMware, Workday, and more, as the schedule below details. And
thats with Google holding Cloud Next, in San Francisco, starting Wednesday, as well.
Likewise, not Thursdays FirstEnergy East Coast Energy Symposium, in NY, plus
Susquehannas Chemical Conference, in Boston, as well as its Annual Semi, Storage
& Tech Summit, in NY.
And while were at it, even as Obamacare seems on death row, the 2017 Medicare
Marketing & Sales Summit starts Monday, in Orlando, while AHIP, for American Health
Insurance Plans starts their National Policy Conference & Health Insurance Exchanges
Forum, in D.C. on Wednesday. Theres no other way to put itboth events strike
me as awkward, for lack of a better word, at the moment. And thats even in the face
of a DoJ that blocked 2 healthcare mega mergers that the outspoken President hasnt
tweeted to reverse, as yet. Note the weekends Wall Street Journal article about the
lack of appointees to the FTC and DoJ, which it concludes, is reason enough to suspect
some mega mergers still awaiting approval, including AT&Ts takeover of Time
Warner, must wait longer. Meanwhile, CenturyLink Telecoms merger with Level3 seems
poised to fly through, with the shareholders vote coincident with the FOMCs
mid-month meeting, ballots now in shareholder hands.
And with that, another week of consolidation should be ahead, with no good reason for
stocks to add to recent gains, immediately. Trump doesnt seem ready to submit his
budget plan, imminently, while the replacement for Obamacare doesnt appear ready to
drop, either, at the moment. Ill point out, though, that while most think the FOMC
December rate hike was taken in stride, without any undo pressure on stocks, thats
not wholly true. Stocks, instead, spent weeks consolidating post-Election gains, before
they took another step up in January, before really getting into orbit, last week, after
Trumps appearance before the Joint session of Congress. . Even though stocks seemed
to all but ignore, last week, Yellen & Cos plain spoken warning that rates are
going to rise, at the March meeting, I expect another bout of consolidation around the
March 15th meeting announcement and, perhaps, even a little more profit-taking
than weve seen to date, since the post-Election rally got underway. Stocks seem set
up perfectly for call overwrites, to take advantage of a rally that will rest for weeks,
at least, in the most benign scenario. In a less benign scenario, profit-taking could
finally pick up steam, especially as earnings warnings start creeping in towards the end
of March.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar, here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 27March 03, 2017 TUESDAY,
Pres. Trump Addresses Joint Session of Congress (US Capitol). Yellen and FOMC Members
Blanket Fridays Inflation & Monetary Policy Forum, too! Is there some irony that the most flamboyant and
largest crewes wrap up Mardi Gras, Tuesday, as the entertainment President, Trump, takes
the podium to address a joint session of Congress? Will there be Lent, thereafter, a
fasting from Twitter and self-congratulations, until Trump, Mnuchin, Navarro, &
Congressman Ryan can patch together a "replacement for Obamacare," required
were told, for them to, then, proceed to tax cuts? In other words, will Trump use
Twitter less and get down to real business, rather than the showy summons to the White
House of powerful corporate chieftans and world leaders, alike?
One thing for sure; Wall Street wants substance from Trump, and not just more hyperbolic
praise for everything he claims hell get to, while calling anything and everything
related to past administrations a "disaster." The Street simply wont be
sucked in, anymore, by Trumps claims to "phenomenal" or "the
greatest" plans, rather than the plan, itself. And of course, one cant think of
the US biggest Mardi Gras celebration without thinking, too, of Santaria & voodoo, if
for no other reason than those subjects are frequent fulcrums in TV crime shows, NCIS
Nolo, in particular. Another connection to Trump? His voodoo plan to raise spending for
illegal immigrant capture, better immigrant vetting, to put the US nuclear arsenal
"on top," and wiser but still more spending on the military, yet simultaneously,
lower the Federal Deficit & debt? No lesser economist than Larry Summers has called
Trumps plan voodoo economics.
Why is the BLS releasing the February Employment Report on March 10th, instead
of March 3rd? Thats quite unusual, unless it has something to do with the
FY 2016 Annual Regional & State Unemployment Report at 10am on 2/28. Still, in an age
of computers, the late release puzzles. .
FOMC members, now blacked out for an extra 3 days prior to meetings, obviously want to get
in as many opportunities as possible, before the gag starts next Saturday. Kaplan kicks it
off Monday, as a panelist with Q&A in Norman Oklahoma. Feds George, Billiams
& Bullard speak Tuesday, though we know attention will be focused on Pres.
Trumps appearance before a Joint Session of Congress, that nightthe night the
Street wants to hear more details on tax cuts and his budget, rather than additional
hyperbole.
Friday, is the big day, with three FOMC Members speaking--V Chair Fischer, plus Chicago
Fed Pres Evans & Richmond Fed Pres Lacker, discussing the 2017 report on inflation
expectations & dynamics, prepared by Stephen Cecchetti (Brandeis), Michael Feroli
(JPMorgan), Peter Hooper (Deutsche Bank), Anil Kashyap (U of Chicago), Kermit Schoenholtz
(NYU Stern School). Fischer keynotes, so speaks first. Evans & Lacker at 10:15am, in a
discussion moderated by the Dallas Feds Kaplan, and clearly, an event at which the
Fed could drive home the probability of a March rate hike, given the entire conference
revolves around a discussion of a report on this years inflation expectations &
inflation dynamics. The conference brings together academics, market economists &
policy makers, just 11 days before the next FOMC meeting starts, at a time when
Unemployment at 4.7% leaves only inflation below the FOMCs target. Other speakers
include the Bank for International Settlements (better known as BIS), and, as yet
unconfirmed, BoJs Hiroshi Nakaso, #2 to Kuroda. (See Eco Calendar for link to the
conference) And, then, Janet Yellen, herself, will speak on Friday, in Chicago, so more
than a minor opportunity for March to be driven home as a "live" meeting.
So its said, I expect the FOMC to raise rates in March, if for no other reason than
I believe it plans to raise when it can, since there are so many months when it may not be
able tolike in May, and possibly June, after the French run-off election, a run-off
a near certainty. I think they might have regretted not getting to it before last
years Brexit vote upset their plans, keeping them on hold until December. But, of
course, that overlooks, for the moment, PM Mays plan to invoke Article 50, in March,
with the effects of that unknown, even though the time frame has been long telegraphed,
the month if not the exact day, and as we saw after the Brexit vote, itself, last June,
the immediate reaction may not be the lasting one. Not only did equity & currency
markets recover fast but the UK economy doesnt appear to have been dinged, since.
So, barring an extreme reaction to Article 50 finally being put on the table, perhaps even
earlier in March than the FOMC mid-month meeting, I still think the FOMC moves, despite
how much it hates surprising markets, which currently price in slim chance of that. And
know that I have a perfect record on the FOMCperfectly and inarguably wrong, at
every turn. The FOMC has never done what I thought they would, when a change or tweak to
policy was on the table. All of these Feds speakers are just getting in their appearances
before the newly initiated Black-Out period, of 2 Saturdays before the meeting, a full 10
days, instead of the week it used to be, so plenty of time for Yellen & Co to drive
home a change in rates in March, if they so desire. Of course, if they do no such thing,
markets could really rock to end the week, celebrating a Fed still on hold. And who knows?
The markets could need some soothing, depending on how Trump handles his speaking turn on
Tuesday. Note, also, Treasury Secretary Mnuchins first FSOC conference, Thursday.
Discussion will center on setting out criteria for non-bank SIFI designations, the lack of
criteria criticized by the court when MetLife was able to shake off the designation. That
could tee up a rally for Friday, if the FOMC Members speaking to drive home a rate hike in
March.
Other than the FOMC speakers & Trump, the other biggest events of the week will
include February Motor Vehicle Sales, Wednesday, and the Feds Beige Book, later that
day. Jan Personal Income & Expenditures includes a version of PCE, as well as the
national savings rate. Curiously, Jan wages didnt rise as much as one would have
expected in a month that included bonuses & 18 states initiating minimum wage boosts.
PI & E might fill the gap. Normally, wed all expect the February Unemployment
Report to be released Friday but for mysterious reasons, the BLS is holding that report
until March 10th. Challenger, evidently, didnt get the memo, since
its still going to release its Feb. Lay-off report on Thursday. Perhaps the BLS will
be too busy preparing the 2016 Annual Employment Revisions & Report to deal with Feb
this week, Tuesday, along with the 2nd crack at 16Q4 GDP, and S&P
Case/Shiller Dec 20-city Home Price Index. Monday, well get Jan Durable Goods Orders
& Shipments, as well as Jan Pending Home Sales but with half the country blanketed
under feet of snow, therell be large portions of the country that werent
holding open houses for shoppers. The Bank of Canada monetary policy committee will
release its decision on rates, Wednesday, which is more side show than main event, for
this week. The EIA weekly Petroleum Report is likely to trump BoC.
Big industry and investment bank events this week include the Mobile World Congress,
already underway in Barcelona. Samsung isnt releasing the Galaxy S8 until late in
March, while Apple, of course, is not even there. Neither is Verizon, for that matter,
because MWC is a GSM conference, and VZ, alone, doesnt use GSM. Morgan Stanley hosts
a European TMT even to coincide with MWC, even as it hosts another in San Francisco,
starting Monday. Also already underway, NGA, the National Governors Winter Meeting, with
Trump hosting them for a White House dinner Sunday night, the reason he wont be able
to watch the Oscars as intently as he usually doeshow will Twitter survive?
Tuesday, Citi hosts an Asset management, Broker Dealer & Market Structure Conference,
in NY, while JPMorgan is in London host "Investment Companies," which should
overlap. Evercore ISI will host its annual Industrials Conference. On Wednesday, JPMorgan
will host Gaming, Lodging, Restaurant & Leisure Management Access, just as hoteliers
finish up reporting, this week, including LaQuinta & Extended Stay. Bk of America
Merrill Lynch will host Global Agriculture & Chemicals, starting Wednesday, in Ft
Lauderdale, a place thats hot like summer, this week, after a short but pleasant
winter that was gone too soon, down here. Piper is staying in New York for its Annual
Energy Conference, where Morgan Stanley, likewise, is hosting MLP/Diversified Natural Gas,
Utilities & Clean Tech. Let it be known the world of Clean Tech will be mostly in
Tokyo, where Smart Energy week will take place. But otherwise, Energy will be heavily
covered, not just in NY but in Dallas, where EnerCom is hosting its annual Investment
Conference, while M.I.T. hosts an annual Energy Conference in Cambridge MA, starting
Friday. M.I.T. covers everything from oil & gas, to solar & automobiles, including
the IEA Secretary General, and execs from Natl Grid, Schneider Electric, General
Motors, GE Ventures, Chevron Nigeria Ltd, EDF Renewable Energy, Ford Motor, Canadian
Solar, and so much more. Also Wednesday, Wells Fargo is going to host its 20th
Annual Real Estate Securities Conference, in NY,. NY will be home to Mitsubishi UFGs
Property REIT Corporate Access Day, even as NAREIM, for Real Estate management Executive
Officers is schedule to begin a retreat, the same day, in San Diego.
One of the biggest events of the week is the Commodity Classic, which starts March 2nd,
in San Antonio TX. Its put on by several seed National Associations, i.e. for Corn
& Soybeans, Wheat Growers, Natl Sorghum Producers, and many other farm crop
products. The event includes just whod expect:: Dow AgroScience, DuPont Pioneer,
Syngenta, BASF, USDA, Bayer CropScience, Monsantos SmartStax Corn, John Deere,
Penton Farm Progress, United Soybean Board/Soy Checkoff, Adm, FMC Corp, Am. Coalition for
Ethanol, National Biodiesel Board, EMD Crop BioScience, Corn Growers Assn Awards
Banquet, Genuity, StollerUSA, Egg Board, US Poultry & Egg Export Council, Kinze
Manufacturing, and so many more. BIG farm eventperhaps the biggest of the year,
"Farmer-led, farmer-focused."
Normally, the Street would be flooding the street with research notes in advance of
Fridays AAAI allergy, Asthma & Immunology but theres not been as much as
in some years past. Dermatologists also meet next weekend, starting with a Psoriasis
specialty sub-meeting Thursday, before the Academy of Dermatologists opens their doors,
Friday, for the full conference.
There are a few notable analysts meetings, this week, including JPMorgan Chase & Co
Tuesday, along with Target that day, after it reports Q4 earnings. Wednesday, ExxonMobil,
Hershey, Honeywell & McDonalds meet with analysts. So does Mylan but
theres no reason to expect its CEO to have grown less tone-deaf since her
Congressional testimony and the announcement of its own "generic" EpiPen at half
the cost of its regular EpiPen, whose price was boosted from $50 for a pair of
pre-filled syringes, to $900 for 2. And so its said, Nintendos new Switch
debuts Friday, also. There hasnt been much buzz about that, either though perhaps
there will be, during GDC, which starts Monday. At the very least, Nintendo should have
demo Switchs around for gamers to test, at the event, given the global launch is
dead ahead.
Which brings us to Earnings, about which we can start by saying Liberty Media/Interactive,
SIRI XM Radio, QVC, and every other division will dominate, on Tuesday. I dont know
how investors or analysts keep all the Liberties straight. Malone, clearly, isnt
interested in streamlining. Monday, nods to American Wood Work, Armstrong Worldwide, and
Sothebys pop n the morning, that afternoon a diverse group that ranges from Ensco,
to FreightCar America, a couple of small restaurant chains, Kindred Healthcare, Priceline,
and Western Refining. Tuesday, AutoZone, the Canadian banks BMO & Bk of Nova Scotia,
Frontline Ltd, and Target, if they can get a word in edgewise, around Liberty, in the
morning. That afternoon, Ambarella, AMC Entertainment, Big Five Sporting Goods, Chicago
Bridge & Iron, Darling Ingredients, Palo Alto Networks, Ross Stores, and
Salesforce.com, are just some of those reporting.
Wednesday morning, American Eagle Outfitters, Best Buy, Dollar Tree, Lowes, and
suddenly popular Tribune report before the open, Luxottica mid-day, and that afternoon,
Broadcom, MBIA, Monster Beverage, and Shake Shack are a few of the names that stood out.
Thursday morning, Abercrombie & Fitch, Anheuser Busch, Barnes & Noble, Burlington
Stores (No longer the "coat factory," evidently), Carols Restaurants,
JD.com, Joy Global, Kroger, Noodles & Co, Stage Stores, and TD Bank. Thursday
afternoon, expect AutoDesk, CostCo Warehouse Clubs, The Habit Restaurants, Marvel
Technology, and Wingstop. Friday promises a slim schedule in which Big Lots and Revlon
stood out for me, since consumer discretionary is my specialty. But I havent really
done the Earnings Calendar justice. Perhaps because last week was a 4-day week, this
weeks earnings calendar is far more voluminous than one would expect, this late in
Earnings Season, when the vast majority of the S&P 500 has already reported.
So, with all that said, the bulls have to wonder whether they can depend on Trump saying
something of substance, Tuesday, because if he doesn't, the market could struggle. If he
disappoints, then add in the possibility that all those Fed speakers could talk up a March
rate hike, and stocks could really get a rethink, and rediscover the downside. And one
almost has to count on Trump disappointing, because hes still campaigningstill
trying to convince the world that hes got what it takes, and he actually won the
general ballot count (Hillary garnered 2.9m more votes than he did but not in the states
that counted for Electoral College), if one disqualifies all the fraudulent votes that
only hes convinced occurred. Take a look at a chart of any of the major indices, and
the moving averages that are far below current prices. That suggests a market vulnerable
to disappointment, which I dont think can be dismissed out of hand, this week.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 2024, 2017 CONSOLIDATION
DUE FOMC Minutes of the Jan
31Feb 01 meeting would, normally, be the weeks highlight but I doubt that,
this week. Unless the minutes include a lot more discussion about, possibly, raising rates
in March, or beginning to unwind the Feds balance sheet, I doubt the minutes will
offer much guidance or market moving details. Then, again, if the minutes raise the
likelihood of a rate hike at next months meeting, or suggest members are itching to
begin setting terms for unwinding some of the balance sheet holdings, the market should
wake up from its complacency. In fact, the most remarkable facet of the current market is
the utter complacency with which the Street is handling, or dare I say, cherry picking
which Trump personality it chooses to ignore and which to notice. Whether one viewed
Fridays press conference, or caught snippets of his campaign rally, in Florida,
Sunday, its fairly difficult to merely ignore Trump. He scares me to my core if for
nothing else but his lack of impulse control, which allows him to shoot of his mouth as if
he were in a locker room, rather than the world stage. Like Kellyanne Conway, just weeks
ago, talking about Bowling Green, Sunday Trump referenced terrorism in Sweden that
hasnt occurred.
Of course, if Yellen wants a March rate hike to be taken more seriously, she has some
troops out and about, this week, who can reinforce the point. Tuesdays "Getting
to Knew the Fed," at Boise State University, would be Williams chance, if
Kashkari & Harker dont beat him to it, earlier Tuesday. Wednesday, Kaplan is
scheduled in Dallas, then Friday, Lockhart could look ahead as well as look back on his 10
years at the Federal Reserve Bank of Atlanta. And Fed Gov. Powell could get the job done,
Wednesday, at the Forecasters Club of New York, where hes scheduled to discuss his
economic outlook & monetary policy, replete with a Q&A session, which is another
feature of the earlier speakers schedule, as well. Wednesday, the National
Association of Realtors will release January Existing Home Sales, then Friday,
Januarys New Home Sales. Thursday, the FHFA releases its December House Price Index,
even as the EIA announces weekly Crude and Natural Gas stats, the former delayed by
Mondays Presidents Day Holiday.
In fact it may not be data but Treasury auctions that attract attention, given that the
schedule includes a nibble of 2-year Floating Rate Notes but, also, on Thursday, $28B of
7-year Notes. I wouldnt commit to 7-year notes, this week, if I felt I had a better
chance of obtaining a higher yield, shortly. All in, the US Treasury will be offering up
$172B in various notes & bills, in a 4-day week, no less. Then, again, the UKs
auction of 10 year Gilts, before our market opens Thursday might be interesting, as well.
How well the auction goes may hinge on Tuesdays preliminary 16Q4 GDP, out that day.
BoEs Carney has admitted that the Brexit vote didnt cause as much disruption
as feared, so far, but there are some signs of uncertainty, particularly in housing.
The Earnings Calendar offers a fair weighting of lower tier energy names, including
drillers, as well as hotels, restaurants, large & small retailers, foreign banks,
homebuilders, and the realtors that sell their homes. But with Home Depot, Macy*s, and
Walmart reporting Tuesday, I suspect theyll attract the most camera time because
most of the other groups named are sending in the second string, the starting line up
already finished reporting. Wednesday, reports are expected from Chicos Fas in the
morning, L Brands in the afternoon, along with Sina, Tesla, Transocean, plus Weibo.
Thursday morning, reports are expected from AMC Channels, Apache, Barclays, Repsol, Felcor
Lodging, Glencore, Sanderson Farms, and representing retail, Gildan & Kohls.
That afternoon, Baidu, Gap Stores, Herbalife, Hewlett-Packard Enterprise, IMAX, and
Nordstrom stand out. Then, Friday, FootLocker, JCPenney, Magna International, Royal Bank
of Canada, and the Scotland counterpart. For all intents and purposes, the Earnings season
all but wraps, this week,
That brings us to the Events Calendar, where CAGNY (Consumer Analysts of New York) stands
out, in particular. CAGNY always flashes like a neon sign on a back road motel but with
Kraft Heinz already withdrawing the offer it made to Unilever, last week, and the most
unusual Johnson & Johnson presenting there, as well, CAGNY promises added wattage this
week. Out in Las Vegas, MAGIC is the headliner, with its many sub-shows, like Off-Price,
Fashion Fabric & Sourcing, not to mention World Shoe the largest of the concurrent
shows. Well, of course, the BATBorder Adjustment Taxgets a seminar out there
but, as a former retailer, I think all the hand wringing about it is overdone. Im
not an advocate of the BAT but neither do I see it was the end of the world. Better
retailers should find a way to make their retail prices stick, rather than triple the cost
and offer 40% off a day after the merchandise arrives. For the record, Stephens & Citi
have announced hosted meetings at MAGIC but even firms that havent announced formal
events will be out there with clients, to walk the convention center.
International Petroleum Week will be held in London, starting Tuesday. Wednesday, Barclays
Industrial Select Conference, Macquaries Gold Explorers Corporate Day, in Toronto,
and RBC Capitals Global Healthcare Conference will compete with the shiny new
eventIQPCs Autonomous Cars, in San Francisco, also starting Wednesday, while
both NASS & ACTRIMS could outshine all but cars. NASS is for Spinal Surgeons, while
ACTRIMS is for Multiple Sclerosis. Macquarie repeats Gold Explorers in New York, Thursday,
with the US Dept of Agriculture will open the doors on its annual Agricultural Outlook
Forum. Thats in Arlington VA, while INTL FCStone is also hosting Ag & Econ
Outlook, in Vegas. Then, again, on that day, most healthcare could steal the show, with
ASCO-SITC Clinical Immuno-Oncology, Houston hosting an annual Aortic Symposia, and the
International Society for the Study of Womens Sexual Health, all opening
conferences. I didnt bring up Healthtechs Molecular Medicine Tri-Con, which
started Sunday, only because its such a huge event, with so many tracks, its
almost too big to handle. Im partial to the more specific conferences, where
its easier to identify a company, or two, that could stand out. And Thursday, the
FDAs meeting to consider approval for Claret Medicals Sentinel Cerebral
Protection System (CPS) adds some focus on the Aorta, because its meant to capture
& extract any clots or other debris that might occur during TAVRTranscather
Aortic Valve ReplacementSurgery, which narrows the field to Edwards LifeSciences
& Medtronic, the latter, as coincidence would have it, also reporting earnings,
Tuesday. MDT pays EW a royalty, as a result of court judgment that found MDT did infringe
on EWs patented technology but did so with transcatheter devices that were different
and necessary sizes. If Insurers are of interest, then note NYSSAs Annual Insurance
Company CIO Conference, because Aflac, Hanover Insurance Group, MetLife, Munich Re, and
Prudential will be speaking. Even Goldman Sachs Asset Management division will be
part of a CIO Roundtable, at NYSSA.
Maybe it was just the market doing what it does in advance of a 3-day weekend. Or, maybe
it was something else but, after looking at the charts, tonight, I strongly suspect stocks
are due for consolidation, if not some profit-taking. I am not ringing the bell at the
top, by any means. There were many times, in the past month, it wouldnt have been
outlandish to call for a top but I didnt have strong conviction, so didnt
mention it. This time feels differentthe absurdity of stock indices ramping to new,
successive, all time highs, simultaneously, on another of Trumps hyperbolic
promises, the most recent on tax cuts. With so much Treasury debt on offer, and the
possibility that FOMC members will be out talking up a March rate hike, fresh off
Trumps latest alternate facts, on Sweden, its hard to believe the Street can
remain so taken with promises on taxes, from a man who, often, sounds unhinged. And given
that Trumps promises are sure to increase the national debt, just as the FOMC seems
intent on accelerating its pace of hikes, the bond "vigilantes" wholl be
pointing out the greater cost of larger deficits financed at higher rates are just one of
the issues the Street will have to confront. Meanwhile, for traders wondering if retailers
are cheap enough to buy in advance of earnings which are rarely as bad as the worst fears,
Id say dont do it. The only chain with a strong presentation of spring
merchandise is Forever 21, and thats just sad. There is no reason for shoppers to
come into malls, and theyll be disappointed if they do.
ECONOMIC: (Highlights, only, below. Full International
Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary
should be construed as a recommendation to buy or sell any security. The opinions
expressed are the authors, alone, and should be just one factor in more complete due
diligence.
February 1317, 2017 YELLEN VISITS THE
HILL It takes weeks to
put together the 3 calendars we highlight, weekly, and this one is a little longer than
usual. Yet, I could have saved myself the trouble and gone with the headline, and ended it
there. Yes, Japans leader, P.M. Abe, will be departing, and Canadas &
Israels leaders arriving but, in the end, its Yellens testimony on the
Hill that will determine how the week goes, and in particular, whether she emphasizes the
fact that every meeting is a "live" meeting, which puts March on the table for a
rate hike. Of course, a close reading of the most recent FOMC minutes and the last
statement (The Feb 1st ending meeting minutes wont be published until
2/22) makes clear that, aside from an uptick in sentiment, nothing about the economy had
really changed, since election day. Yet, with a press conference attached to the March
meeting, its already set up to be a "live" meeting.
Granted, the January Employment Report was stronger than anyone expected but, then, the
recent snow storms will set back momentum. The biggest cities on the East coast came to a
grinding halt, which is never good for the domestic economy. And corporate earnings are,
surely, demonstrating better growth from sectors that lagged, even as energy companies
should be ending their string of negative reports, with reports that will come in April,
covering Jan. through March. And, if Yellen wants some support for positioning March as a
"live" meeting, she has enough deputies speaking, this week, to help make the
point.
Having established Yellen as the voice of the week, its worth noting that Jan PPI
(Tues), CPI & Retail Sales (both Wed.) will be released, along with NAHBs Feb
Housing Market Index which, as Ive already pointed out, could have ground to halt
thanks to snow. Down here, in Florida, were benefiting from the bad weather up
north, while enjoying the best "winter" weather in five years. Were
enjoying temps in the 70s during the day, and very little humidity, and managing low
to mid-60s at night, the perfect conditions some move here to enjoy, though we
rarely see it this good. For lower income consumers, the IRS starting to send out refunds
for returns that included child & earned income credits, which are being subjected to
closer scrutiny this year, in an effort to trip up fraudsters. The timing of tax refunds
are often cited by retailers as an excuse for strength or weakness in late January and
early February sales.
Away from the US, OPEC releases its Monthly Report, before markets open Monday, while that
night, China will release Jan CPI & PPI. The Lunar holiday fell in late Jan., this
year, which will skew the numbers, as it always does. Therefore, there wont be any
conclusions made about the early part of Chinas year until February is, also, out
because analysts & economists much prefer to use Jan/Feb blended data, to account for
the annual differences in when the Lunar New Year actually arrives. This year it was Jan
28th but its been as late as today, in some years.
What popped out from assembling the Earnings Calendar was the number of hotels, miners,
Retail Shopping REITs, shippers, and media, though in the latter category, Discovery and
its many tickers, combined with Liberty, and its many publicly traded appendages,
constitute an entire category of their own, scheduled to report Tuesday & Wednesday,
respectively. I also noticed a few shippers on the calendar, along with some big names
like T-Mobile, Applied Materials, Cisco, PepsiCo, along with competing beverage companies,
Dr. Pepper Snapple, Heineken, and Molson Coors. Just pulling out some names, whose tickers
are highlighted lead me to Rolls-Royce, Bunge & CF Industries, Dennys &
Wendys, along with Restaurant Brands International. Hotels include Wyndham, Choice
Hotels, Hilton, Hyatt, and both Caesars & MGM. Friday, Fannie Mae is scheduled
to report, though a decision on the fate of the GSEs doesnt appear to be a
priority for the Trump administration.
New York Fashion week has kicked off, which will add gridlock to snow woes. Other big
events include the Westminster Dog Show, through Wednesday though I insist to anyone
planning on tuning in to the final judging that they rent "Best in Show," to
view immediately after the top ribbon is draped around the winning dog. The two are so
much more enjoyable together, than they are separately. Credit Suisses Annual Energy
Summit in Vail, is always a favorite I-bank conference. The BIO CEO & Investor
Conference, also starting Monday, is the nexus of a handful of other conferences built
around it. Those will be hosted by SunTrust Robinson Humphrey, Roth Capital, Leerink, and
more. Likewise, the RSA Conference, now a Dell event, starting Monday, is the basis for
several "hosted meeting" events from I-banks, including IDC, Stephens, and Citi.
NASSCOMSoftware & services Association India Leadership Forum, in Mumbai, India,
starting Wednesday, as well as Outsourcing World, closer to home, in San Antonio Texas
Saturday, are bound to have H1-B visas top of their mind. The tech industry cant
even imagine what outsourcing would look like without the mostly Indian tech workers that
staff all the support positions outsourcing creates.
Goldman Sachs is hosting its annual Technology & Internet Conference, in San
Francisco, starting Tuesday, though Im skeptical about its impact, this year. Other
major I-bank events include Bk of America Merrill Lynchs 2017 Insurance Conference,
in NY, starting Wednesday, as well as Leerinks 6th Global Healthcare
Conference, the same days, in the same city, while BB&T hosts its Annual Logistics
& Transportation Conference, in Coral Gables FL, starting the same day.
Big healthcare medical society meetings includes DDI, or Digestive Disease Institute Week,
and the associated sub-sections meeting concurrently, starting Tuesday, down here in Boca,
NASS, from the North American Spine Society, in D.C., also starting Wednesday, and the
AAAS, Association for the Advancement of Science, which has become more and more a biotech
event, as the years have gone on. It starts Thursday. Friday, the TOTY, or Toy of the Year
Awards open the NY Intl Toy Fair, around which both Hasbro & Mattel will host
analyst events, streamed live, to debut their upcoming back to school and holiday 17
toys, more and more, dependent on the upcoming film calendar. Toy Fair doesnt
officially open until Saturday but with the TOTYs on Friday, along with HAS &
MATs events, the Toy world will overtake NY City, just as the fashion cogniscenti
are exiting, assuming there are no additional snow events, like the one that caused
cancellation of 3800 flights, last week.
Stocks got another tail wind thanks to Trumps mere mention of tax reform to come in
the weeks ahead. The reforms, of course, will be "phenomenal," as opposed to
anything the Dems have ever done, which are all "disasters." That the Street is
so willing to buy into his hyperbole, astounds. Anyone who does the math must realize the
Government will have to ramp up its debt issuance, just as the biggest buyerthe
Federal Reserveis due to stop re-investing proceeds from maturing debt on its books.
Of course, the thinking goes, the world will be more than willing to buy US debt, given
the higher rates on offer here, compared to anywhere else in the Western world but I still
dont see how unwinding $4Trillion dollars of Fed holdings can meet up with greater
issuance, even as rates continue to rise to unwind the extraordinary support the economy
received in the throes of the "great recession." And while its true that
stock usually rise early in a tightening cycle, theres no saying when the multiples
stocks will soon reach are mismatched with higher ratesor put another way, at what
multiple will stocks stop rising, and at what rate will stocks stumbleperhaps in a
ugly panic thats clearly not built into current low levels of VIX? I dont
think thats this weeks business but at the rate stocks are accelerating ever
higher, it may not be that far away, either. Unlike her predecessors, Yellen may just take
the punch bowl away, especially given her term as head of the Fed ends in about a year.
Its possible that puts stocks on a count down too few are thinking about, right now.
.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 0610, 2017 STILL NO DOUBTS ABOUT
PRESIDENT TRUMP? Pres. Trump is proving the wild card that
Wall Street is still ignoring. Sure, financials surged, Friday, on a strong Jan.
Unemployment Report, whose details were not as good as the headline addition of 227K jobs
in January. There was, to start, 39K job gains subtracted from the prior two months (Nov.
revisions featured 40K fewer jobs added than announced but Dec. up by 1K), more evidence
of stagnant wages, despite 17 states raising their minimum wage, on Jan. 1st,
and U6 not making much progress, as part-time workers arent, either. Therell
be more on jobs, this week, with the Labor Market Conditions Index, on Monday, and JOLTS,
Tuesday, which measures job turnover & people quitting, the latter a sign of
confidence in the ability to obtain a different job.
Fridays mixed job report followed Wednesdays FOMC statement that revealed no
surprises: The FOMC doesnt see the economy much different than its been, except in
measures of business & consumer confidence. Left unsaid was the confidence pinned to
anticipation of what Trump says hes going to do with taxes and regulations, rather
than anything hes done, so far. In the meantime, Trump is picking fights with
allies, and defended Russias Putin after a reporter called him a murderer, Trump
going on to say that the US isnt innocent, either. Which court, do you think, is
recipient of the first filing from someone whose family was collateral damage in a bombing
in Iraq, Iran, or Afghanistan? Whats sad is that theres really no one but
Trumps daughter or her husband to try to rein in Trump, his top advisor, Bannon, a
probable wing nut on his own, and not much of a diplomat. Even if the Secret Service winds
up taking away Trumps ability to tweet at 3am, as they took away Obamas
Blackberry, in his early days in the White House, theres really no way to stop
Trumps impulsive, instant responses to questions.
One other item on the Economic Calendar is, usually, worth notingthe Dec. Consumer
Credit release, Tuesday afternoon, which is really an account of how much deeper into debt
Americans dived, in December. However, even that report should lack punch, this time,
given earnings reports already published by credit card issuers and banks that are
conduits for student loans. The financial companies have already provided more detail than
the monthly publication does. The Trade Deficit, out the same day, will surprise no one,
and provide an excuse for Trump to pronounce the U.S. "A disaster," or exclaim
"theyre killing us," perhaps both, yet another time. Cant help but
wonder what Japans Prime Minister will be thinking as his car approaches the White
House for Fridays meeting with Trump. Abe understands enough English to know what
Trump is saying but, perhaps, will use the interpreter for cover to calm his anger before
replying to any wild comment from the president.
The Earnings Calendar is long but lacks the headline reports that could take the markets
down, or push them up. By Friday, Id think, the UKs NIESR (national statistics
agency) GDP for Jan. would be more significant. As P.M. May advances towards triggering
Article 50, with Parliaments OK, now, the BoE has stopped thinking it will be as
deeply negative for the UK as it did, originally but recent housing and consumption data
suggest it still could. With regards to the tickers highlighted in this weeks
Earnings Calendar, its all relativethe emboldened tickers should attract more
attention than the rest, though some of them, clearly, wouldnt, if scheduled for a
different week. CVS, Humana and Wellcare Group stand out because of the approaching repeal
of Obamacare, while media companies, major international oil companies, and food plus
restaurants also caught my eye. By next week, retailers will start trickling out before
their flood of reports, the rest of the month. This week, Michael Kors is a headliner,
along with General Motors, Nissan & Toyota Motors. AGCO, ADM, Kellogg, Tyson &
Pilgrims Pride are all highlighted, as is Sysco, which delivers a lot of food
products to retailers. Throw in reports from Mondelez, Whole Foods Market, Coca-Cola,
Buffalo Wild Wings, Panera Bread & YUM! Brands, along with the first ever report from
recently separated Yum China, and therell be more information on consumers than just
their debt, this week. In media, Gannett, Time Warner, Walt Disney, News Corp, &
Viacom will cover the sector well.
The I-banks are seeping back onto the schedule, with Credit Suisses 18th
Annual Financial Services Conference, starting Monday, CanaccordGenuitys Rare
Disease & Boipharma 1x1 Tuesday, and Cowen Groups 38th Annual
Aerospace/Defense & Industrials starting Wednesday. BMO Financial hosts Financial
Services, also, Thursday, a few miles away from home, in Boca Raton. Personally, I imagine
some would prefer to be a fly on the wall of HSBCs Mexico CEO/CFO Roundtable, in
Mexico City, starting Wednesday. Still others would rather take a front row seat at NY
Fashion Week, starting Thursday, though attendance via live streams, on any computer, has
been SOP, for most designers, for the past few years. What they added in the past 2 years
was instant orderingstraight off the runway.
All in, it will be a busy week for news but the wild cardfor the next four
yearsremains the very undiplomatic occupant of the White House. Sooner or later the
Street has to realize that Trump is a loose canon, whose plan to reduce taxes &
regulation comes with a lot of other baggage that could, seriously, hurt the economy. When
that happens, stocks will not only stop their advance but could take a bad tumble, too.
Even Fridays big gains fail to impressit was almost exclusively in the
financials, which was strange because the FOMC statement didnt put March on the
table for the next rate hike, and thats whats been driving them higher, since
the election. If it was Trumps diss of Dodd-Frank that spurred animal spirits in the
financials, then thats not, necessarily, good news, either. SIFIs have spent a
fortune staffing up for compliance with Dodd-Frank, and cant be pleased to know it
was all for naught, especially when some features of the law make their counter-parties
stronger, so reduce risk. Is the President who campaigned on dismantling Wall Street going
to hand them the keys to the kingdom, now, and disappoint the very base that elected him,
some explicitly for the pain hed inflict on Wall Streetas opposed to Clinton,
who took hundreds of thousands in speaking fees from the Street, as he repeatedly brought
up? Not to mention how many times Trump seems to change his mind. What if all his talk of
dismantling Dodd-Frank is just bluster? What if Republicans finally revolt, and refuse to
go along with Trumps newly stated intent to undo Dodd-Frank? In at least one
scenario I can imagine, Republicans start ring fencing Trump, and refuse to go along with
his plan to defang Dodd-Frank, given their constituents blame Wall Street for the
"great" recession.
ECONOMIC: (Highlights, only, below. Full International Calendar is here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 30February 03, 2017 EARNINGS, DATA &
FOMC Oh Boy! With China and most of the Orient,
ex-Japan, closed for the week, it still wont be a slow week. Data, a deluge of
Earnings, and Central Bankers will assure no one misses China or Hong Kong, as Lunar
Celebrations mean as little here, as Thanksgiving Day does, over there. Lets start
with the US Calendar because its chock a-block, with Dec. Personal Income/Spending,
PCE & Savings Rate to start Monday, along with the Dec. Pending Home Sales Index,
before the 2-day FOMC Meeting starts on Tuesday. Overnight, Monday, well receive
Japanese Data, the BoJ Meeting Statement and any Rate or QE changes, along with Eurozone
16Q4 GDP and the Dec. Unemployment Rate, along with Jan. CPI. , and European speakers that
include EDBs Draghi, along with EU Commission VP Dombrovskis, & ECB Board member
Mersch, at the ECB/European Vcomission Joint Conference. At an "Innovation &
Regulation in the World of Tomorrow" panel ECBs Coeure, European Security
Markets Authority leader Maijoor, & LSE CEO Rolet.are panelists.
Wednesday, automakers will release January Vehicle Sales, and ADP will update its Jan
Private Sector Employment Report, before the EIA releases weekly Crude, Distillate &
Gasoline stockpiles, and the FOMC Meeting statement is released, at 2pm eastern time.
Wednesday, overnight, the BoE monetary policy committee will set rates, plus Bond & QE
targets, and release its Inflation Report, the latter the subject of BoE Gov.
Carneys press conference that will occur, not long before markets open on Thursday.
The nine Chain Stores that still report monthly sales will weigh in on Thursday morning,
along with a few retailers that may feel compelled to report their preliminary quarterly
numbers, as most retailers end their quarter at the end of January, then report earnings
in February. The Bk of Japan will release Minutes of its Dec 1920, 2016 Meeting,
overnight Thursday, before Wall Street wakes up in anticipation of the January
Unemployment Report, out Friday morning. The BLS will, also, release its benchmark
revisions to the monthly Unemployment Reports for a full year. before the Feds Evans
speaks on current economic conditions & monetary Policy, at the Prairie State College
Economic Breakfast, in Olympia Fields IL.
Earnings start slowly on Monday, before reaching crescendo on Wednesday and Thursday.
Lets cut to the chase, Aetna, ExxonMobil, HCA, ManPower, Mastercard, Nasdaq,
Ninetendo, Pfizer, Simon Property, Sprint, Thermo Fisher Scientific, UnderArmour, UPS, and
Valero report Tuesday morning, while in the afternoon, Advanced Micro Devices, Apache,
Apple, Arconic, Chubb, Deutsche Bank, Electronic Arts, and US Steel report. If Arconic
doesnt ring a bell, then you havent followed Alcoas split into 2
companies, and failed to notice it wasnt first to report results, 2 weeks ago. There
are more companies reporting Tuesday but, then, you can check the calendar yourself, and
see which tickers are highlighted, based on what we think the media will talk most about,
on any given day.
Wednesday morning could feel like a lull, with Anthem, Johnson Controls, Marathon
Petroleum, Meritage Homes, Roche Holdings, and USG, among the reporters. In the afternnon,
the names that caught our eye include Allstate, Avalon Bay Communities, Edwards
LifeSciences, FaceBook, Metlife, Murphy USA, and NXP Semiconductors report. On Thursday
morning, reports from Autoliv, Canadian media & telecom BCE, Cigna, CME,
ConocoPhillips, Daimler, Deutsche Bank, Eaton, Estee Lauder, Group One Automotive, Kelly
Services, M/I Homes, Ralph Lauren, Royal Dutch Shell, and Vodafone are just some of those
expected. Thursday afternoon, the schedule is slimmer but includes Amazon, Amgen,
Apartment Investment, Chipotle Mexican Grill, FireEye, Fortinet, Hanes Brands, The
Hartford & Visa are expected to report. On Friday, AutoNation, Clorox, Hershey, Honda
Motor, Madison Square Garden, Phillips 66, and Weyerhauser report, to end an active week
that could see traders pulled this way and that.
The stock break-out I didnt expect until the week after this weeks earnings
releases, at the earliest, instead arrived last week, with the much talked about Dow 20K
attained and held. A market that has been ahead of itselfand well ahead of earnings
or legislative reformsrushed ahead of fundamentals, again, to make new highs last
week, ignoring the border wars Trump has been waging, the ban on immigrants from Muslim
countries, over the weekend, creating chaos at airports nationwide, while at least 4
judges halted his ban. That didnt take long, did it? Just 8 days in office and,
already, the courts are blocking Trumps most rash executive orders. While Paul Ryan
pays lip service to being on the same page with the President, scuttlebutt has it they
cant stand each other, and Id like to think many other Republican members of
Congress are, privately, cringing in their seats. What Trump seems to want most of all is
attention. His elevation to the leader of the free world doesnt seem to be
enoughhes tweeting in every quiet moment to make sure no one forgets hes
in charge, and hes going to kick Obamas legacy out the door as fast as humanly
possible. Living in the White House while wife Melania is in NY, one wonders how long
its been since hes slept in a bed alone.
A quick nod to the Events Calendar, again, mostly devoid of I-bank conferences, in
deference to the heavy Earnings Calendar but plenty of industry events to offset.
SPIEs Photonics West, is already underway, as is the ASCO/ECCO Joint Cancer
Congress, along with the 14th Review: Clinical Hematology & Oncology
Congress. Starting Sunday, Hawaii Dermatology, itself an irony. Dermatologists want
everyone out of the sun, nearly impossible in Hawaii, as it is, here, in Florida. A mere
walk across a parking lot from grocery to car is a walk in the sun. ICSC (Shopping
Centers) meeting in Whistler, British Columbia, with the Screen Actors Guild (SAG) Awards
on Turner channels Sunday night.
Noble Financial hosts NobleCon, starting Monday, Described as an Annual Small Cap &
Emerging Growth Investor Conference, small is a gross understatement. Stephens hosts a
Bank Field Trip to Houston & Dallas, while the annual Health Benefits Conference &
Expo will beheld in Clearwater, FL, even as Trump & his partys determination to
repeal Obamacare, meets up with the deadline to sign up, Tuesday. Also Monday, Enigma, for
Emerging (Digital) Threats & Novel Attacks, just as companies like FireEye &
Fortinet are scheduled to report earnings. Also meeting, starting the same day, Smart
Data, Industrial Transportation League, AHR (for heating & airconditioning), Advanced
Automotive & Stationary Battery, in Germany, and the Pet Industry.
Tuesday, ScotiaBank, which owns Howard Weil, starts a roadshow in Montreal, before moving
to Toronto, then NY. DesignCon, one of the biggest chip & circuit board events of the
year starts in Santa Clara, of course. Feed, Pork, and Pet Food are the subject of other
Tuesday events, along with Energy Mexico, and 3D BioPrinting.
Come Wednesday, well all hold are collective breath, waiting for the 2pm FOMC
statement but no change in rates or the outlook for 3 rate hikes, this year, are expected.
That doesnt mean the FOMC statement has to be a snooze but, then, it probably
wont surprise too much. After briefly exceeding 3.0% in 16Q3, GDP was, again, back
under 2.0% in the most recent update, last Friday, the first look at 16Q4. Thats the
kind of slow growth that weighs against 3 rate hikes, this year, rather than supporting
the Feds, dot.plot of most likely moves. And economists were well above where the
initial read on GDP came in, just as retail sales, over the holidays, were not nearly as
robust as assumed.
Other events scheduled for Wednesday include more animal-related events including
Cattlemens Beef Association and Farming for the Future, in State College
Pennsylvania. FIG Partners will host its 8th Annual West Coast CEO Forum but,
again, its healthcare that dominates: Theres the 19th Intl
Conference on Dialysis: Advances in Kidney Disease (Las Vegas), SCMR Scientific Sessions:
Cardiovascular Magnetic Resonance (D.C.), and Pri-Med South (Ft Lauderdale), and the
European Society of Sexual Medicine (Nice, France). TD Ameritrade, on Wednesday, starts
its LINC Conference, with advisors, in San Diego. By Saturday, a new crop of
healthcare-related events crank open their doors, including Home Care 100 (Amelia Island
FL), SLAS for Laboratory Automation & Screening (D.C.), as well as ISET, International
Endovascular Symposium on Clinical Interventional Cardiology, even as School Mental Health
begins this Friday, subtitled "Treating Students K-12 which, I hear, should really be
treating teachers of K-12," given the pressure teachers are under as more
states eliminate tenure, and demand even more paperwork and standardized teaching,
critical thinking falling by the wayside, as memorization replaces deductive reasoning.
At some point, Wall Street is going to take the "border tax" and scrapping of
trade deals as negative for businesses that have become multi-national in the past 30
years. Why that has not, yet, become a sticking point for the Street puzzles me. How can
the same group that believes in tax relief coming down the pike, despite no bill to launch
that change, not see how serious Trump is about taxing imported parts and goods? Trump and
his cadre believes that slightly higher prices will result for consumers but that will be
offset by economic growth that will bring about higher wages. Ya think? As if retailers
didnt have enough pressuring them, now, with mall traffic disappearing, higher
prices will only add to their woes and depress margins more, as consumers turn their noses
up at anything that isnt at least 40% off. The first 100 days? I would think, at the
rate of outrage hes doling out, Trump could blow the honeymoon that much faster than
most new Presidents, maybe in 30 days?
ECONOMIC: (Highlights, below. The
Full International Econonic Calendar is here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 2327, 2017 ALL
ABOUT EARNINGS FOR THE NEXT TWO WEEKS
US Central bankers are taking some time off, while European Central Bank
members are everywhere. And while it appears the next two weeks could be all about
Earnings Season in the US, we may have to eat our words if the new President &
Congress surprise the Street by getting something done this soon.
Data includes Dec Existing Home Sales Tuesday, FHFA Nov House Price Index Wednesday,
Thursday the US International Trade Deficit, and Dec New Home Sales, all before
Fridays 16Q4 Advance GDP, and Dec Durable Goods Orders & Shipments. The Economic
Calendar would be more important if it werent for Q4 Earnings and the forward
looking nature of markets, that make pre-Trump data secondary, now.
By Friday, when UK Prime Minister May meets with Trump, well be losing China for
nearly a week, as the Lunar New Year, next Saturday, leads so a near East Asian cessation
of nearly all other activities. And while both the BoEs Carney (Tuesday), &
ECBs Draghi (tonight, Sunday) are scheduled speakers, there doesnt appear to
be any reason to expect either of them to comment on rates, given the nature of the events
theyre appearing at.
Because of the heavy Earnings Calendar, I-bank Conferences on all but on hiatus, for this
week and next. CIBC is an exception, hosting its Whistler Conference, starting Wednesday,
even as Morningstar announces the US Fund Managers of the year 2016, that day, and
BB&T hosts Senior Living, Housing & Charter School Investor Symposium, also the
same day. NADA 100, the Auto Dealers will meet starting Thursday, which brings about the
concurrent JD Power Automotive Summit, and "Automotive News" Retail Forum, all
in New Orleans. Otherwise, the weeks events are heavily dominated by more healthcare
related events, including Cardio-Thoracic Surgeons, Rheumatology, Critical Care, Cancer
Research Nuclear Medicine and Molecular Imaging, Intl Headache Academy, Pi3K Pahways
in Immunology, Growth Disorders & Cancer, Diabetes, Obesity & Adipose Tissue
Biology, Biobetters & NextGen Biologics, and all those are already underway as I
write, on Sunday. Monday, Precision Medicine World Conference starts in California, while
Wednesday, the Yankee Dental Congress starts in Boston. Then Thursday AAO Cataract
Surgery, European Generic Assn, British Obesity & Metaboloic Surgery, and by
next Friday, a 14th Review Clincial Hematology & Oncology Congress, the
ASCO/ECCO Joint Cancer Congress (in Amsterdam), then Saturday, Highlights from ASH
(Hematology), AGA Advances in Gastroenterology & Hepatology, a tremendous number of
events for a single week.
Meanwhile, the Press will be more impressed with Mens Haute Couture Week, wrapping
up, and Womens just getting underway in Paris, when its not following
Trumps every breadth. His war with the press has only intensified, his advisor,
Maryanne Conway disputing the fact that Trumps inauguration drew fewer on-site
spectators than Obama's. She calls it "Alternate Facts," which is not what any
parent wants to teach their kids. Had she said, it was cold and rainy, that would have
been one thing but to discuss Trumps "bigger crowds" in her
"alternate facts," does nothing but assure that fact-checkers will have
continued employment for the next 4 years, at least.
Two other events worth pointing out are IREIs VIPVision, Insights &
Perspective Americas (Tuesday), and before that, Tour dAlis, the Americas Lodging
Investment Summit, the latter in Los Angeles, the former in Carlsbad CA, so at least on
the same coast. For all the touts of REITs as they gained their own, 11th,
S&P index, in September, the sector has struggled, a bit, as rates have rocketed
higher. Barrons, this week, thinks some REITs deserve investment this week, in the
print issue. RILA, retail leadership event points out one reason some mall REITs have not
performed: Retailers are closing stores to shrink their base to the most profitable
locations. And sports are somewhat prominent, as the Australian Open enters its 2nd
& final week, when the PGA Me3rchandise Show & Demo Day start in Orlando,
Wednesday, even as SIA Snow Sports & Demo, take place in Denver, both starting
Wednesday. Surf Expo starts Thursday, while Imprinted Sportswear, which meshes well with
all the sports expos, is already underway.
Which brings us to the Earnings Calendar, from which most of the regional and state banks
have been removed, as is our way of doing things, because we cover, only, the big money
center banks and biggest regionals, offering foreign banks with ADRs a bigger opportunity
to land on the Calendar than any smaller US ones. Or even Bigger US ones. The Earnings
Calendar is dominated by transportation, including Rails, Boeing, & Airlines, as well
as defense companies, a few oil related names, and major tech companies, especially
Alibaba, Alphabet (still better known as Google), Intel, eBay, Lam Research, Qualcomm, and
PayPal. For the Dow Jones Industrials, 3Ms report, Tuesday morning, could have the
biggest influence. But pharmaceutical companies are well represented, also, along with
McDonalds, Travelers, builders D R Horton & Pulte Homes, both Fiat Chrysler
& Ford, before American Airlines, Chevron & Colgate-Palmolive join General
Dynamics, Honeywell, and NextEra wrap up the week of Friday, with UBS.
Those tickers emboldened on the Earnings Calendar are totally subjective. Three other
analysts would come up with different tickers to highlight, while another dozen would come
up with still others. But I think we can all agree some, like Alphabet, Microsof,t &
Starbucks on Thursday afternoon, simultaneous with Caterpillar, Celgene, Comcast, Dow
Chemical, Mead Johnson, Raytheon, Royal Caribbean Cruiselines, Sherwin-Williams, Southwest
Airlines, Stanley Works, ST Microelectronics, and Whirlpool would make for a big
afternoon, even if there werent dozens of other companies expected to report after
hours the same day. The Martin Luther King Jr holiday, last week, seemed to push out some
earnings reports to this week but the deluge is yet to come next week, even as the Street
has one eye on Washington, awaiting something big from either Congress or the White House.
All in, the markets have been consolidating the big post-election rally, and should be
trapped not very far away for another 2 weeks, at least. Generally, stocks do little to
nothing during the first 3 weeks of earnings season, then celebrate between the 4th
& 5th week, as reported earnings were neither as bad as feared, and the
outlooks prove less negative than worries had it. The problem, right now, is the strength
of the dollar, that has to trip up multinationals outlooks, a little, even as no
company can, yet, price in a lower tax rate. About the only thing we can say for sure,
right now, is that it looks like estimates have come down far enough for few companies to
disappoint. But it doesnt appear, either, than the outlooks are going to be strong
enough for estimates for 2017 to rise enough to spark a new leg of the rally, yet. And
dont overlook the fact that end of month will play a roll in trading, as well, as
the week wears on.
ECONOMIC: (Highlights, only, below. Full International Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 1620, 2017 ANOTHER WEEK OF FINANCIALS
DOMINATING EARNINGS There are Fed speakers out and
about, including NY Feds William Dudley at the National Retail Federation (NRF) Big
Show, at the Javits Center, Lael Brainard at Brookings, Feds Williams at the
Sacramento Business Review Economic Forecast meeting, FOMC Chief Yellen at the
Commonwealth Club of San Francisco, in addition to a Town Hall meeting with Educators, the
2nd in a series, and late Thursday, delivers a speech, "The Economic
Outlook and the Conduct of Monetary Policy," at the Stanford insgtitute for Economic
Policy research, at Stanford University. The Fed will release its New Beige Book,
Wednesday. It keeps the region-specific input but seeks to raise the standardization of
anecdotal data across districts, especially in areas of Employment & Wages, Prices
& Overall Activity. Dec CPI Thursday, along with NAHBs Jan Housing Market Index
and Dec. Industrial Production/Capacity Utilization.
More important, perhaps, will be UK Prime Ministers first major speech on Brexit
plans, Tuesday. Since the reaction to Brexit was expected to be cataclysmic for the UK,
setting off the BoE rate cut in July, but the economy has hummed along quite nicely,
outside house sales in London. The abstract idea of Brexit, with Mays speech, may be
moving towards to reality, with all the implications once feared. She leaves for the World
Economic Forum, after her UK speech. Likewise, the Bank of Canada is hosting a monetary
policy meeting, Wednesday, which will be followed by BoC Chief Polozs press
conference, to be followed by the ECBs MPC meeting overnight Thursday, with
Draghis press conference just 90 minutes before the US markets open, later that day.
"Too Big To Fail" Neel Kashkari is speaking on Wednesday but not on the banks,
for a change up. Feds Harker will discuss the Economic Outlook Friday, at the New
Jersey Bankers Assn 6th Annual New Jersey Economic Leadership Forum, all
the US central bankers hosting Q&As with media present, except Yellens
Town Hall with educators. Therefore, theres opportunity for wild cards from any of
them. Of course, truth be known, Trump is being inaugurated as the 45th
President of the United States, Friday morning, the shock of his election win still a sore
spot for many voters, and Congresspeople, as well. At least some us await the Secret
Service either shutting down or filtering his tweets, if he cant make that decision,
himself. Surely, even his most ardent supporters must wish, occasionally, that hell
start acting more "presidential" in the future. Then, again, OPEC & non-OPEC
Crude producers monitors meet for the 1st time, next Saturday, with media
talk this past weekend filled with rumors that the Saudis are ready to give up the
embargo, either in May, when its set to end, or sooner.
Of course, rich folk who arent at Trumps Inauguration will probably be found
still hanging around Davos-Klosers, for the last day of the World Economic Forum. For
those who want more on the WEF, see the
Agenda. As youve probably heard,
Chinas Pres. Xi Jinping, is speaking, a first for a Chinese Leader. The Pre-Meeting
Press Conferences have already taken place, by the time weve posted. US VP Joe Biden
spoke on MLK Jr day, also pre-conference. For a look at just the speakers, youll be
taken to a page of photographs with just each name underneath. Each photo has to be
opened, individually, to get bio on a speaker. I.e. Stephen J. Adler, the Pres. &
Editor-in-Chief of Thomson Reuters. A few youll know (or should) almost immediately,
like GMs CEO Mary Barra, Dow Jones/WSJs Gerard Baker, Henry Blodget, Sergey
Brin (Google/ Alphabet), Lonnie Bunch (founding Dir. of Smithsonians Natl
Museum of African American History & Culture), Eric Canter, cartoonist Patrick
Chappatte, Erik Brynjolfsson (Dir. Of MIT Inititiative on the Digital Economy/Prof. MIT
Sloan School), David Cote (HON), Ray Dalio, Matt Damon, Angus Deaton (2015 Nobel Laureate
in economics), CNBCs Sara Eisen, JPMs Asset Mngmnt CEO Mary Callahan Erdoes,
former CEO/Pres of Saudi Aramco Khalid Al-Falih, BLKs Laurence Fink, Pulitzer Prize
winning journalist Thomas Friedman, Bill Gates III, Carolos Ghosn, TIME Editor-in-Chief
Nancy Gibbs, National Geographic Magazine & News editor-in-chief Susan Goldberg, UK
Chancellor of the Exchequer Philip Hammond, Mio founder Jake Horowitz, Arianna Huffington,
QCOMs Paul E Jacobs, Ant Financial Services Groups CEO Eric Jing, former Swiss
Natl Bank head Thomas J Jordan, Saudi Arabian Minister of Foreign Affairs Adel bin
Ahmed Al jubeir, Bloombergs Tom Keene, US Secy of State John F. Kerry, IMF
Dir. Christine Lagarde, Publicis Groupe SAs Maruice Levy, DOW CEO/Pres/CB Andrew N
Liveris, BABAs Jack Ma, Pres. Intl Cmte of the Red cross Peter Maurer, UK PM
Theresa May, SAPs Bill McDermott, WMT CEO Doug McMillon, songstress Shakira,
BACs Brian Moynihan, Exec Dir of Greenpeace Intl Jennifer Morgan, TIMEs
Alan Murray, Malaysias Minster of Intl Trade & Industry Mustapa Mohamed,
MSFTs Satya Nadella, Hitachi Exec CB Hiroaki Nakanishi, Saudi Aramco Pres/CEO Amin
Nasser, Centene Corp CEO/CB Michael F. Neidorff, CNBC Africa Editor-in-Chief Bronwyn
Nielsen, BLK Vice Chair Barbara Novick, and thats just scratching the surface
through the "ns." I havent even gotten to Carmen M Reinhart, Chuck
Robbins, Kenneth Rogoff, Ginni Rometty, Nouriel Roubini, David M .Rubenstein, Netherlands
PM Mark Rutte, Sheryl Sandberg, Anthony Scramucci, Wolfgang Schauble, Sir Martin Sorrell,
BCS Jes Staley, Joseph E Stiglitz, Laura DAndrea Tyson, Axel a Weber, actor
Forest Whitaker, Meg Whitman, or so many others, too many others to do the list justice.
Cambridge House CanTech Conference features a keynote by Edward Snowden, on the 18th.
His still a wanted man in the US, for stealing records from the NSA, so it strikes me as
quite brazen for Canadian Cambridge House to invite him to keynote. I tried to identify
when he was invited to speak, to see if it was an anti-American ploy in reaction to
Trumps desire to tear up NAFTAthe North American Free Trade Agreement that
allows Mexican & Canadian goods to flow freely into and through the US on their way
elsewhere in North America. Then, again, perhaps it was prescient that Snowden took up
residence in Moscow. Trump seems determined to befriend Putin. .
The Earnings Calendar is filled with financials, again, most notably Morgan Stanley,
Goldman Sachs, Northern Trust, TD Ameritrade, US Bank, Sallie Mae, Bk of New York Mellon,
BB&T, KeyCorp, Citizens Financial Group, SunTrust & Synchrony Financial, along
with many smaller and more regional banks we dont cover. Also Reporting, United
Health, rail CSX, Canadian Pacific Railroad, Kinder Morgan, Netflix, Check Point Systems,
PPG, Union Pacific rail, American Express, IBM, GE, Kansas City Southern (rail), and
Schlumberger. All in, a light calendar with a powerful punch, especially for those
dreaming of Dow 20K.
The Event calendar promises a lighter investment bank schedule, in deference to the
Earnings season cranking up. Healthcare related meetings, mostly the medical society
persuasion, includes State of the Brain, underway in Keystone CO, Winter Clinical
Dermatology, also underway but in Hawaii, which is ironic if you think of how many times
dermatologists council to stay out of the sun, Oncology Update: Advances &
Controversies, Plant & Animal Genome, and thats just the ones still meeting
Sunday. Retina starts Monday, when Jefferies will host a Dental Summit. ASCOs
Gastrointestinal Cancers Symposium starts Thursday, along with Society of Cancer Research
Nuclear Medicine & Molecular Imaging Mid-Winter Meeting, and NADL for Dental Labs
Vision 21, along with Pi3K Pathways in Immunology, Growth Disorders & Cancer, the
Cardiovascular Research Foundation CHIPComplex High-Risk Patients and the
International Headache Academy, the last 2 starting Friday, before next Saturdays
Society of Cardio-Thoracic Surgeons Annual Meeting, concurrent with AATS Tech-Con, plus
SCCM for Critical Care & the Winter Rheumatology Symposium.
In addition to the usual abundance of medical society meetings, energy is notable,
including Seaport Securities (formerly Global Hunter Securities) SoCal Energy 1x1, Argus
Medias Americas Crude Summit, both starting Tuesday, Peters & Co Winter Energy
Conference (Alberta Canada), RBC Capital Markets Private Company Energy Conference,
Of course, the biggest conference, outside Davos Switzerland, may be the NRFs Big
Show in NY, though NATPE for TV Programming Execs occurs on the tail end of the TV Critics
Winter Tour, while A3 Robotics Industry Business Forum, even as both Raymond James &
TD Securities host Metals & Mining events, respectively, both starting Wednesday.
There are a few AirFinance events in Dublin Ireland, with different sponsors but purposely
held concurrently and/or sequentially. For those worried about the message from last
weeks Dec. Retail Sales & retailers updates, theyre not done yet:
Tiffany releases a holiday sales update on Tuesday, while Ascena Retail Group hosts an
Investor Day in NY. I used to call Ascena one of the billion dollar retailers that no one
follows but, now, I kind of which it was the billion dollar retailer I no longer have to
follow. Grown through acquisitions, its last acquisition, of Ann Inc (Ann Taylor
& LOFT by Ann Taylor) seems like the worst timed acquisition since ExxonMobil bought
XTO, a natural gas company. Worse, a year on after the deal, Ann Taylors offerings
look worse than ever, the mustard chosen for what we retailers used to call Cruise (late
Jan into Feb), just horrific. I bought my mom a few cardigans Saturday, reduced by 50% and
more, then 60% off the lowest price marked, taking home supposedly $176 worth of sweaters,
at retail, for $40 altogether. One even had a frill alongside the button placket, which
got moms hoped for response: "fancy." The mall, though, soft, an art
festival in the parking lot surely just one of the distractions that kept consumers out of
stores, temps near 76, with sun and a nice breeze, plus rare light humidity, surely
another.
Then, again, why go into a store if youre had an experience like I did at Best Buy,
selling me an $8.50 cable for $42, and it wasnt even the correct cable? In fact,
instead, they tried to sell me a $199 box, when all I needed was a Display Port to DVI
cable, obtained from CableWarehouse.com, for $8.47 plus $3.29 for mailing. Both the Geek
Squad member and chief tech in computers ignoring the fact that I stated Id just
bought a new laptop, with Win10 Pro, never asking if it has a display port (they all do
now, with Win10 Pro). I didnt intend to go on line for the cable but didnt,
either, expect the Geek Squad to try and sell me something for $199 I knew I didnt
need, and for 4x what I could have paid for it online. Without the Geek Squad knowing
anything, theres little to no reason to enter a Best Buy ever again.
So, unless the Beige Book is a lot more uniformly bullish than the district by district
flip flops between descriptions of districts as better or worse, the consolidation of the
post-election rally should continue. In fact, historically, stocks mark time or pull back
a bit, during the first few weeks of earnings season, before celebrating, in February, the
earnings releases that werent as bad as feared. What may disappoint is outlooks,
because its really hard to know what the future holds, with Trump making some truly
outrageous promises of corporate & middle class tax cuts, as well as medical insurance
for everyone, to replace Obamacare, but also boosting the dollar along with stocks, while
threatening a border tax on imported parts and goods as big as vehicles, that will crush
most retailers. In fact, one wonders how Gildan made the decision to pay $88m for American
Apparels brand (up from the $66m stalking horse bid) but abandon its factories, when
the US is such a big market for its tees and fleece, and American Apparel manufactured in
California. Granted, Gildan is a Canadian company but given the importance of US sales, I
wondered why Trump wasnt all over the company, after the bankruptcy judge approved
GILs bid and the notice to employees that theyre losing their jobs, except for
300 workers in one of AAs factories which was bought by Broncs Inc.
I usually say "fasten your seatbelts" in advance of Earnings Season but this
year, instead, you need to buckle up and wear a neck brace in advance of four years of
Trump heckling CEOs, and telling the world how successful and rich he is. Meantime, expect
Dow 20K to remain elusive unless IBM has done the remarkableand actually grown
revenues for the first Quarter in years.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2017 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence
January 0913, 2017 THE RUBBER FINALLY HITS THE
ROAD The Economic Calendar is filled with Fed speakers, who it appears,
are in synch either agreeing that the dot.plots 3 projected rate hikes for this year
sounds about right, or is possible. Like everyone else, the Fed is waiting to see which of
Trumps plans get put into law. Big Data, though, waits for Friday, with Dec PPI
& Retail Sales are announced. As if there wasnt, already, some difficulty
getting the market pace back on plan, this week is the lead up to yet, another, 3-day
weekend, as Martin Luther King Jrs birthday will be celebrated on the 16th.
Markets will have much more than a 3-day weekend on its mind, by Friday. Early Thursday
morning, prior to US Markets opening, the ECB will release minutes of its last meeting,
while the BoE will release its meeting statement, prior to Gov. Carneys press
conference. Then, Friday, markets are blessed with earnings releases from Bk of America,
BlackRock, JPMorgan, PNC Financial, & Wells Fargo. While the money center banks had
good things to say about equity & other trading, at a Dec. Financials Conference, the
surge in US rates is a mixed blessing for banks, even as Wells Fargo will be weighed down
by the upshot of its phony account scandalfines paid, as well as business lost since
the settlement with Justice was announced. For the rest, trading has picked up but there
will, surely, be negative adjustments to loans on their books, relative to current rates,
plus pressure from the debt they issued, much of it with floating rates. Yet, if
theres any group Id like to see kick off earnings, this Quarter its
banks, for sure, since theyve seen the most instantaneous repercussions to the
revival of animal spirits in stock markets. From Infosys, Friday, we should also hear
comments on how an outsource company based in India plans on dealing with Trumps
move it to America tactics, even as there is an expected tightening of the visa its
workers need to come stateside
The Events Calendar promises a events so big that investment banks are hosting events at
them, to take advantage of the convenience of so many industry CEOs in one place.
Start, Monday, with JPMorgans renowned Healthcare Conference, to which Leerink &
EBD Group tie their fortunes. Also Monday, the ICR Conferenceformerly
ICRxChangeis so big, Citi & Stephens host parallel meetings during the event,
which includes presentations by several dozen retailers, several dozen restaurants, and
some apparel manufacturers. Given last weeks retail warnings, close-ups are just
what the analysts want. And lets not forget that disappointing holiday sales is the
set up for estimates lowered so much that by February, when retailers report their
results, theyre rarely as bad as worst fears. How is that possible, you might ask?
Take Best Buy, which no longer announces Holiday Sales, in deference to how important
January is to its business, the company announced with its Dec. earnings release. (Signet,
owner of Zales & Kay Jewelers will provide a holiday sales update, this week, on
Wednesday. Tiffany wont get around to its holiday sales update until the 17th.)
I dont know what BBY is expecting out of January but the store was dead, today
(Sunday), with only one register open, and yet, they made me snake through a gauntlet of
hanging merchandise and ropes, to get my small purchase paid for. And the mall was quiet,
over the weekend, despite storms in the morning, Saturday, and unusually cold weather, for
here, on Sunday, even as parts of the East Coast was snowed in. But what seems to satisfy
analysts in Feb. when Q4 earnings are released, is retailers who managed to clear out
winter inventory, to start the spring clean. If they cant get earnings, then a fresh
start for the new quarter will suffice, more store closures a sure winning strategy, too.
Monday, The Commercial Real Estate Finance Council Conference (CREFC), meets in Miami,
which, also, brought about UBSs reception, and other, quieter events from Citi &
Bk of America Merrill Lynch. UBS MLP conference may not be as impactful as
JPMs Healthcare or ICR but surely of interest, given the renewed interest in energy,
after a monster run, last year, from the February 16 lows. Energy, however, is a
theme that runs through the week, with TD Securities hosting Global Energy in London,
Monday, Seaport Globals SoCal Energy 1x1, US Capital Advisors E&P Corporate
Access Day in Houston, Thursday, when Platts hosts its 15th Annual natural Gas
Storage Outlook, in Houston, also, and Evercore ISI hosts Utility CEO Retreat, even as the
Street will await EIAs Wednesday crude status release, and Baker-Hughes Rig
Count on Friday. Just as crude prices are pressuring gasoline higher, many drivers
encountered even higher prices at the pump, thanks to higher state gasoline sales taxes.
Pity the homeowners in the Northeast who still heat their homes with oil, instead of
natural gas, though the latter has put up quite a run, itself, in the past year.
Tuesday, Deutsche Bank hosts its Global Auto Industry Conference, coincident with NAIAS,
better known as the Detroit International Auto Show. IHS, Automotive News, and other
events are planned around the main event, though IHS is not until Wednesday. The National
Association of Home Builders, NAHB, openings the International Builders Show, Tuesday,
around which many other shows pivot, including Kitchen/Bath Industry, Flooring, and man
other specialty sub-shows.
Fresh off another boring Golden Globes Awards show, the TV Critics Winter Press Tour gets
to the bigger names, this week, Disneys ABC on Tuesday, when the disappointing
opening of
"Rogue One: A Star Wars Story" in China, the last country to be able to see the
monstrously popular film. Lions Gate Entertainment (LGF.A) hosts an Investor Day, at Starz
offices, in Englewood Colorado, Tuesday, while Fox hosts the critics winter tour
Wednesday, FX Thursday.
And if all this werent enough, theres data out of China this week, including
Dec. Foreign Direct Investment, out before markets open Monday, Dec CPI & PPI, either
overnight Monday or Tuesday, plus Chinas Trade Balance overnight into Thursday or
Friday,, in the U.S.
But then, as I mentioned, Friday, despite all the banks reporting, could be a short day
for markets--not because any US market is closing early, none are but because its
attached to another 3 day weekend, and the earnings reports expected will all be out
before the market opens. Some are predicting a pullback after Trumps inauguration
but, really, jump ahead to the earnings reports expected that week, and the inauguration
just happens to fall in one of the biggest weeks for earnings of the quarterdespite
the 4-day week. Watch, also, what gold has been doing, suddenly hot again, perhaps
foretelling inflation catching up after years in hiding. Markets can add to recent gains
into the bank earnings, Friday but after that, a dose of reality is bound to hit. If it
doesnt come from earnings, it could from a Republican Congress so hellbent on
"sticking it to Obama," it took the President Elect to point out how poorly
defanging the House Ethics watchdog would be perceived. Then, of course, keep an eye on
the Senate confirmation hearings, because the coming President promised to drain the swamp
and, instead, has added more of the same, with his appointees. Just another reason reality
could soon hit home, if another tweet doesnt do it. By weeks end, it might be
wise to protect the downside.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© 2017 Sandi Lynne Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 0206, 2017 MORE CONSOLIDATION WHILE THE DATA STREAMS OUT The week
may consist of only 4 business days but it will be filled with more than a weeks
worth of events. Tuesday, the US Treasury Auctions $127B in various short term maturities,
then sits out the rest of the week. That doesnt happen often, if at all, as a rule.
Friday brings the December Unemployment Report which could be upset by snow storms that
might have closed some state Unemployment Offices, even as the reporting week led into
Christmas week, a time when people put off applying until the New Year. As with any first
week of the month, theres, also, Wednesdays Dec. US Motor Vehicle Sales,
Thursdays Chain Stores Sales & Challenger Job Cut announcement, and the EIA
weekly Petroleum Stats, delayed by Mondays Holiday. Fridays also the day for
the AEA/NABE Joint Annual Meeting sessions that includes some US Regional Fed Reserve
presidents. Its worth mentioning that only nine chain retailers still report monthly
sales but more than that will report Holiday Sales, over the next 2 weeks. Those are
variously defined as Black Friday through New Years Eve, or the week of Black Friday
through New Years Eve, depending on the company. On, yeah! If the Electoral College
wasnt enough to convince Americans that the Tweeter in Chief is about to become the
next US President, then Congress will convene a joint session Friday to affirm that vote.
Minutes of the FOMC December meeting should have no impact.
The EVENT Calendar is a handful of truly large events, even though some are organized by
industry, rather than I-banks. CES is a case in point, and starts on the 5th. CES Unveiled
previews the Consumer Electronics Show for media & industry analysts from 150
countries. Among the early press conferences, after Fiat Chrysler kicks it off, includes
the launch of "Honor" brand smartphones, Qualcomm product launches (by
invitation only), Tech Trends to Watch, Exploring the Global Tech Industry, and more. From
the 3rd, until the doors open on the 5th, CES will be a massive
series of press conferences. Pre-CES day #2 of press conferences from LG Electronics,
Luraco Tech (Massage Chairs), Monster music Products, Intelligent Transportation Sysrems,
Bing TV-Internet TV, Media & The Hollywood Connection, AI & Audience Intelligence,
Analytics & Ads, Insider View of Mobility, Trends to Watch, Panasonic News conference,
Ultra D "Glasses-free 3D," Exploring Mobility choices, Home Entertainment
Landscape, Multi-Screen Strategies for InternetTV-Tech & Content, Fiber Broadband,
Connected Health, VR-AR Think Tank, Hisense News Conference, Toyota News Conference,
Pokemon GOthe Phenomenon of AR Gets Real, WAZE Exec 1-1, Google Shopping=High
Quality Content Counts, Casio America News Conference, Narrowing the distance between
Silicon Valley & Detroit, and more.
The most unexpected press event @CES is, probably, AIG Presents, to "announce the
findings of its latest Internet of Things Study, which looks at the sharing economy and
building digital trust to facilitate the data sharing necessary to drive it," at
3:30pm pac, on the 4th.
AEA: The American Economic Assn Annual Meeting (Chicago on the 6th8th)
is jointly held with 56 other organizations, the biggest one of which is NABE. Its
usually a newsworthy event though, this year, there are fewer heads of central banks than
in many past years. As of my last check, the most high profile of the session chairs is
Olivier Blanchard, now at the Peterson institute. Altogether, so many related disciplines
(or feeder universities) attend and host meetings at this, many holding, exclusively,
receptions, as does the Harvard University Dept of Economics & its business school,
along with other heavyweight universities and business schools, as well as the ECB &
the Natl Central Banks of the Eurosystem. With World Bank keynotes, followed by a
session on Ag & Applied Economics, from the USDA, see the Economic Calendar for
whos speaking which day.
The other major industry event is NAIAS North American International Auto Show, aka the
Detroit Auto Show, runs through the 22nd, but its the press conferences
and media events that take place the 1st 2 days, before it opens to the public,
that make all the news. More and more, the overlap between Detroit & CES has become
apparent, with Fiat Chrysler leading off the CES pre-even keynotes, with many other
automakers vying for technological cred, and autonomous vehicles. The I-Banks will be
crawling all over CES with clients, even as tech firms will be prowling NAIAS. Citi,
taking advantage of the presence of tech firms in Vegas, that firm hosts Global Internet,
Media & Telecommunications, starting Tuesday. Wolfe Research is hosting Refiners, in
Boston, with ALJ, DK, HFC, MPC, PARR PBF, PSX, WNR, and VLO.
Thursday, Goldman Sachs hosts Healthcare CEOs Unscripted: A view from the top, in Boston.
Goldmans also in Orlando for Global Energy. TV Critics start their Winter Press
Tour, hosted by DirecTV, now an AT&T (T) division. Finally, on Friday, the American
Farm Bureau Federation kicks off its Annual meeting, in Phoenix, though some of the USDA
will be speaking at AEA/NABE.
Lets acknowledge the probability of the appearance of the sellers, who held off
executing exits last year, in anticipation of a, possibly, lower tax rate in 2017, under
Trump. The first couple of days of the year are not often off to the races. Instead, a
couple of days of selling that finally reverses on the 5th or 6th
would be more typical. But the data will count. Until now, the post-Election rally was all
about what a Republican White House & Congress could do, with a tax cutting President
in office. Back to business after an extra day off, the data has to support the growth
assumptions being made, until now. Then, the experts have gotten remarkably bullish about
holiday sales, predicting an increase of 4.9%. The problem with that theory is the number
of stores that went to 50%, 60%, & 70% off before Christmas, leaving nothing but
margin crushing promotions to bring customers in the door, who were, then, a hard sale. If
there wasnt an extra 30% off merchandise already half off, no sales took place. 50%
of 60% off merchandise already half price were commonplace. We all know a number of
retailers started building into "original" retail prices the first 20% off but
50% or 60% off still eliminates profitsand, so its said, suppresses top line
sales and, therefore, growth. The consolidation that began the last year of last year
should continue in the early days of this year, but could end by weeks end. Then
again, Congress shows up on Wednesday, and if the Republican leadership submits any
business favorable bill for approval and mark up, thta would end the consolidation,
sooner.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here) EXCERPTS OF PRIOR, 2016 OUTLOOKS HERE
© Sandi Lynne 20162017 Nothing contained in this commentary should be construed as
a recommendation to buy or sell any security. The opinions expressed are the
authors, alone, and should just one factor in more complete due diligence.