2019 EXCERPTS FROM PRIOR WEEKS
BELOW:
December 29, 2019 On Vacation. No OUTLOOK but Updated International Economic Calendar here:
Happy,. Healthy, Profitable & Productive New Year to
all!
December 2331, 2019 STOCKS SHOULD COAST INTO
YEAR END Theres nothing to really interrupt
the bulls run, except a lack of volume, once Mondays first trades are out of the
way. Thats when the results of last Fridays Quadruple Witching and Index
Rebalancing will be discounted by the funds that follow those indices, slavishly. Even
with the rise of ETFs, many do follow the indices so must rebalance to account for changes
made on Fridays close.
But after that, the only draw back will be a complete lack of volume, as holidays break up
this week and next, and no one will find need to do anything drastic
So with that, a Happy Chanukah and Merry Christmas to all. And to all a good night!
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
December 1620, 2019 OVERBOUGHT MARKET INTO
THE HOMESTRETCH It felt to me like Trump intended to jerk
everyone around the whole weekend, pretending to still be debating a Phase 1
deal with the Chinese but the Chinese forced his hand with a press conference stating a
deal had been reached. Trump, more than any other person Ive ever observed, loves to
have the spotlight on himself and, even more so, with the US House debating impeachment, a
"last minute" deal with the Chinese, announced as soon as the House Judiciary
Cmte announced his impeachment, would have been a much better time to unveil a deal with
the Chinese but, alas, the Chinese had other plansnamely perking up its people &
workers, even if that wasnt Trumps plan.
Now for some good news about the mallsthe one here which was often reminiscent of a
ghost town was very busy this past weekend, with every specialty store offering either 40%
or 50% off storewide. "Everything" at a single discount. Now for the bad
newsthe mall had many slots available for seasonal kiosks that werent filled.
Many of the kiosk structures were there but coveredperhaps closed for Sabbath,
though I doubt it, since thats never been allowed in the past. The other piece of
bad news was the lack of newness in the mall. The halls lacked holiday decorations and
inside most of the specialty stores, one wouldnt have known whether it was 2019,
2017, of 2009. Gap, especially, is guilty of this, with plaid shirts, striped mittens
& scarves returning for the umpteenth year. What was different about Victorias
Secret was panties 10 for $30, instead of 7 for $28, either way, a cheaper price this year
than in years past. Without a fashion show, this year, V.S. had no need to bring back
"angel wings" so didnt. Otherwise, you wouldnt have known one year
from another. But dont let me pick on GPS & LB, alone, since the same could be
said about most of the specialty stores in the mall, whether White House Black Market,
LOFT by Ann Taylor, or Ann Taylor itself. At Kate Spade, tiny shoulder strap phone holders
remain anywhere from $198 to $398, so at 30 or 50% off, still not bargains. At Coach,
prices were 30, 40, & 50% off, plus another 20% off and, still, no one was in the
store.
Who was busy? Apple. Apple and Apple, while LUSH, once again, proved a bigger draw than
PINK (LB) or MAC, though I think many would have been satisfied to be as busy as the MAC
store was. On the flip side, Saks was dead, while Bloomingdales was busier in the
mens department than it was in shoes or womenswear. And thats something else I
observed; in past weeks, the shoe stores were the busiestespecially Steve Madden.
Not this weekend when, it appeared, sho9ppers were finally serious about buying gifts for
someone other than themselves. Meanwhile, the gaping whole Sears left at the local Simon
Property mall seems no closer to being filled than it was 8 months ago, and thats
despite SPG claiming everything is hunky dory. Meanwhile, 2 stores that were in the Sears
wing have, since, moved to a busier spoke of the malls wheel.
If its mid-month, there must be housing data, starting with the NAHB Dec Housing
Market Index, Monday, Nov Housing Starts/Building Permits on Tuesday, Wednesdays
weekly Mortgage Apps, and Thursday, NAR (Realtors) Nov Existing Home Sales but, of course,
that all pales in comparison to Fridays update to US Q3 GDP, and Quarterly Options
& Futures Expiration, which will culminate after hours, with rebalancing of the Nasdaq
100 & Semiconductor SOX Index, as well as S&P Indices. That will inform trading,
most, a week from Monday but suggests theres lots of updates Portfolio Managers will
have to consider before the week is out.
Next most important, Earnings from FedEx, Jabil Circuits, and Navistar Tuesday,
Worthington thrown in there because it' benefited-r should have-Trumps
tariffs imposed on Steel. Wednesday, reports from General Mills Herman Miller, Micron
Technology, and Paychex, which should have been Salesforce.com, but never realized the
world was passing it by, as it stuck by its payroll software and check-writing, even as
those checks became direct deposits, without the physical check. Thursday, reports are
expected from Accenture, ConAgra, Darden Restaurants, Factset, Nike, and Sanderson Farms.
Quite the microcosm of the American Economy, so a compact list that packs a punch.
Beyond those events, the items listed on Events Calendar are more company specific than
Inudstry, with just a few exceptions. The FDA surprises, considering 2 drugs on Tuesday,
from AstraZeneca and Merck, before considering another from Epizyme on Wednesday. Celgene
was, originally, on Wednesdays schedule, also, but its date was canceled, moving
EPZMs afternoon session into the morning.
In sum, Housing Data, quite a fair number of significant Earnings Reports, and Quadruple
Witch to end the weekthe last full week of the year, should make for spurts of
activity in a very overbought market. And in the end, its the overbought nature of
the market, and the Quadruple Witch which caps the last full week of the year, that may,
well, give the bulls some indigestion--even if a big weekend deal involving International
Flavors & Fragrances & Dupont gooses the first trades of the week.
.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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 only one factor in more complete due diligence.
December 0913, 2019 FOMC
TAKES A NOTHING DONE
Lets get straight to the heart of the weekthe FOMC meeting that will wrap on
Wednesday, with Jerome Powells press conference at 2:30pm et, Wednesday. The FOMC
will take a nothing done at the meeting and repeat its intent to remain
data dependent. The most recent datathe November Unemployment Report,
Friday, was reason enough for the FOMC remain on hold, even if 45K55K of the workers
within the 266K added were GM---related. Not just GM workers but the many workers employed
by GMs suppliers who were laid off as GMs strike stretched from 2, to 3, to 4
weeks, before it was settled.
Wednesday, well also get a look at Nov CPI, food, at least, getting ridiculously
expensive, even if US data isnt picking it up. And then, I paid half for this
years Thanksgiving turkey what I paid a year ago. That was a poultry illness, last
year, rather than straight line Consumer Price hikes. The US Treasury will Auction 3-yeear
Notes Monday, and 10-year Notes Tuesday. Thursday, its a small issue of reopened
30-year Bonds. Thursday, early in the morning the ECB will release the first rate & QE
decision under Christine Lagarde, wholl then follow-up the meeting with a press
conference that will be covered by Bloomberg, if not CNBC, early Thursday morning before
the market opens. Later Thursday, the Bk of Canada will release its rate decision,
its chief, Poloz, on countdown to his departure in May, announced last week. Friday,
Novembers Advance Retail Sales will be out, covering Black Friday, through the
Saturday that followed it. Also Friday, the Chicago Fed hosts its 33rd Annual
Economic Outlook Symposium, while NY Fed Pres/CEO John Williams will speak on monetary
policy, at CUNYthe City University of NY, in NYC, at 11am est.
The Earnings Calendar is a mash-up of consumer names, as well as high-end builder Toll
Bros, and Vail Resorts, Monday. Tuesday, its pretty much all consumer all the time,
DBI, for those who dont recognize the ticker, Designer Brands, previously, DSW Shoe
Warehouse, which remains its largest division. Wednesday, most will be watching Lululemon
but it may pay to key into American Eagle Outfitters & Childrens Place instead.
The former became a teen jeans favorite who will be able to discuss Black Friday and
holiday weekend sales in a way Childrens Place cant. Not only has
Childrens Place left most mall locations but it, also, has bought the IP from
Gymboree, which it will relaunch online early next year. Without any competition but
Ascenas Justice, at best, PLCE has kids almost to itself. Justice really caters to
preteen girls who, generally, object to the thought of being dressed at PLCE. Ascena is
reporting Monday but its a retailer in transitionclosing all the brands it
originally owned, dressbarn by the end of the year--to concentrate on Justice, Ann Taylor
and LOFT by Ann Taylor. Also Wednesday, Tailored Brands, the one-time Mens
Warehouse, which it still owns, Vera Bradley, and United Natural Foods, whose report long
informed the success of Whole Foods Markets but, now, as part of Amazon, it says more
about the sales of natural foods at general grocers, rather than Whole Foods, alone.
Thursday brings a flurry of tech earnings, including Adobe, Ciena, & Oracle, with
retailers CostCo and Vince, as well. CostCos comments on Black Friday and the
holiday weekend will be carefully recounted, as it sells as much electronics as almost any
retailer but Apple or Best Buy, as well as the very food that groans on American
Thanksgiving tables.
Which brings us to Events, with ACCs NY Cardiovascular & ASH, the Hematology
Annual ongoing over the weekend. Also still going, COPS25the U.N. Climate Change
Conference, continuing in Madrid Spain.
A quick look at the Monday & Tuesday schedules proves the Investment Banks are back at
it, getting in their last licks before vacations and end of year foreclose attendance at
conferences. The Tuesday, Goldman Sachs US Financial Services Conference may well be the
highlight of the weekthough not necessarily a positive highlight. Banks know
activity slows into end of year, so often adjust their outlook for the quarter at
Goldmans event. It has cut both ways, the complication, this year, the Charles
Schwabs, TD Ameritrades, and Interactive Brokers, and their competitors, that have dropped
commissions to zero. That may have started attracting RIAs to Schwab. Next,
theres Barclays Global TMT Conference, in San Francisco, starting Wednesday. And
dont miss the items at the end of each daily listing, where corporate Analyst &
Investor Meetings are listed, though the McDonalds Restaurants analyst meeting
Barrons discusses, on the 11th, is nowhere to be found on MCDs IR
site. Events that day with Cisco, Home Depot, & LendingTree were confirmed, along with
the events hosted by I-banks 1-on-1. Friday, Centene is hosting investors & analysts,
another opportunity for the revived healthcare industry.
In all, its the last full week of events for Wall Street, including the last FOMC
meeting of the year, and Christine Lagardes first at the ECB. Youll see and
hear gurus claim that winners wont be sold into year end, when taxes can be
postponed to next year if held into year end. But portfolio managers mostly mark to
market, so some may feel it makes as much sense to sell as not. There is a tendency for
small caps and the biggest losers to rise after Christmas, into year end, and the first 5
days of the New Year. All thats true but doesnt mean you have to own them,
though owning them through options is often a way to profit without risking much.
And then there are the biggest losers of the yearspecialty retailers that
arent Walmart, Target, Ross Stores or TJMaxx, and energy companies, that have been
weak most of the year. I know Apache just disappointed with its update, last week but
under $20and especially under $19, it seems like a name that could get snapped up by
a larger playerand it wouldnt have to be too large a player, at that price.
Thats an option Id look into, perhaps a LEAP, though I cant endorse any
of the small retailersno matter what Ascena, AEO, or PLCE report this week.
Retailers were built on bricks-and-mortar, and no one knows, yet, how much physical stores
must shrink before the bleeding stops. It sure doesnt look like Sears or J.C.Penney
have found the formula, and Macy*s surely hasnt either. And for a short couple of
weeks pre-- and post-Christmas, it will seem like consumers have rediscovered malls and
retail stores. That will fade in the New Year, and perhaps become even worse. Consumers
have learned they spend less if they stay out of the malls, and would rather own high-end
smartphones, pay for a Disney+, Netflix & Hulu subscription, rather than buy another
schmata. The bulls own the markets, and dont look inclined to let go.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
December 1st6th 2019 BULLS & I-BANKS LAST HURRAH! Except for Vice Chairman for Regulation &
Supervision, Randall Quarles, testifying on Wednesday, at the US House, and Thursday at
the US Senate, members of the FOMC are largely silent, this weekdespite the NY
FRBs Friday Conference, held jointly with Communulife, NYCity Health + Hospitals,
and the Robert W. Johnson Foundations Healthy Communities Conference Series: New
Sources of Place-based Capital to Improve Upstream Social Determinants of Health. Call it
the quiet period before the mid-month FOMC 2-day meeting, starting the 10th.
New ECB President Christine Lagarde is prominent, this week, testifying at Parliament,
along with participating in a ceremony marking the 10th Anniversary of the
Lisbon Treaty. The events are Sunday and overnight into Monday, US time, in Brussels.
But its also a new month, which means the usual PMIs, ISMs, US Vehicle sales from
everyone but Ford & Gm, plus Fridays November Unemployment Report. Friday will
end with Oct Consumer Credit, at 3pm, and its all pretty much over by then. The Bank
of Canada MPC is meeting, as is the Royal Bank of India, both Wednesday. On Wednesday,
Pres. Trump can attend the US House Judiciary Committee hearingseven have his
counsel question witnesses the Dems might call but he hasnt accepted that
invitation. Yet.
The Earnings Calendar lacks enormous headliners, other than Salesforce.com, Tuesday, Korn
Ferry Wednesday, along with GIII, RH (formerly Restoration Hardware), Royal Bank of
Canada, and Synopsys. Thursday promises Brown Forman, Hovnavian, Signet Jewelers, Tiffany,
TD Bank, and Ulta Beauty. Friday, Big Lots (where I just bought my annual Black Friday
red, 12-cup programmable, coffee maker for $9.99), and Genesco. An interesting mix of
companies that wont lift or bury equities, one way or another.
But get a load of the Investment Bank conferencesthe last Hurrah referred to in the
title of this piece, Monday & Tuesday, especially, then again, Thursday, with one last
flurry still to come next week but this week really the last hurrah, because traders will
take a quick look at Fridays Unemployment Report before balancing out their
portfolios for the year. If you took profits during the year, this is the week to take
losses, before everyone else is doing it after this week. OPEC & OPEC+ meet to renew
or reset production quotas but don't expect oil to do much of anything, this year.
Note Biogen will hold a webcast on Thursday, at 11am, to discuss results from a Phase 3
Aducanumb Clinical Trial, before holding a Q&A with investors, following that CTAD
data release, at 5pm est. Viacom & CBS should close their merger, Wednesday, even as
Disney World Orlando opens the Star Wars: Rise of Resistance ride, at the recently opened
(August) new Star Wars Land. And while youd think industry conferences would be
winding down. In addition to the CTAD for Clinical Trials in Alzheimers Disease,
ASH, the 61st American Society of Hematology will open its Annual Meeting on
Saturday, the 7th. Its one of the most highly anticipated meetings of the
year, in a crucial area of research.
The bulls are clearly in control, despite Fridays losses, and likely to hold on,
through this week. Sooner or later, profit takingor loss taking to offset gains from
earlier in the yearare bound to appear, before any Santa Claus rally gets underway.
For those who adhere to the strictest of market lore, the Santa Claus rally starts after
Christmas and runs though the end of the year. But the really big rally is the one that
starts after January 1st, usually involving the prior years biggest
losers and small caps. So keep an eye on the new lows list through the end of the year, to
anticipate those equities likely to rise the most, come January 2nd5th.
If youre so inclined.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
November 2430, 2019 HAPPY THANKSGIVING!
We cant say nothing is going to go on during this holiday
shortened week because thats not true. Its end of month, at end of the week,
which probably means all the activity of substance will be finished by Noonish, on
Tuesday, if not sooner. Plus, even with many traders working remotely, while trying to
pretend interest in family, the Economic Calendar is stacked with the typical end of month
Housing Data, even a speech by FOMC Chief Jerome Powell, late Monday. The location
isnt very promising, by typical standards but the Greater Providence Chamber of
Commerce Annual Dinner must have offered Powell reason to accept their invitation to
speak, since Powell can surely turn down gigs that dont appeal to him.
Tuesday, Advance Oct Retail & Wholesale Inventories, plus S&P Case Shiller Core
Logic Sept Home Price Index, FHFA Sept House Price Index, and US Oct New Home Sales.
Anyway you cut it, thats a rare Trifecta of Housing Data arriving in a single day.
Note, also, Fed Gov Lael Brainard is speaking at 1pm et, on Federal Reserve Bank Framework
Review of Monetary
Policy Strategy, Tools & Communications, at the New York Association for Business
Economics 2019 William F. Butler Award Event. At about the same time, the US Treasury will
Auction $41B 5-year Notes, a fairly big dump for longer term offerings. That amount is
more typical of 3 & 6-month Offerings. Overnight, Tuesday, China will release Oct
Industrial Profitsfor whatever that assessment is worth, given we have little
verification, of Chinese statistics. And those we do have often dont confirm the
National Statistics Bureaus release.
Wednesday, Oct Durable & Capital Goods Orders & Shipments, both probably
constrained by the GM strike which ended later in the month. Well also get a 2nd
look at Q3 GDP, and PCEthe measure of inflation the Fed has depended on since
Bernanke days. And then, Wednesday, both MBA Mortgage & Refinance Data, as well as
Natl Assn of Realtors Oct US Pending Home Sales, which often close 4 8
weeks later. EIA weekly Petroleum Data, et all, will be out Wednesday but so will the
weekly Natural Gas Report. Not long afterwards, the Treasury will Auctions $32B 7- year
Notes, on top of the 4- & 8-week Notes whose values are yet to be announced. The
Survey of Business Uncertainty isnt getting as much press as the degree of
Uncertainty businesses are expressing. Perhaps someday.
Also Wednesday, and not to be overlooked, the Feds Beige Book, in preparation of its
FOMC meeting scheduled for December 10th11th. But what the heck! Store
receipts will be calculated from every angle, including from the sky, where satellites
will pick up the crowding of parking lots at shopping centersor their lack, there
of. Stocks & SIFMA controlled markets close early Friday but no one cares. Every
self-respecting shopper will be online buying what cant wait until Cyber Monday,
after the weekend. Black Friday, more an electronics shopping event in stores, than other
items but Ill fess up to buying a new, programmable 12-cup coffee maker each and
every year. Its my own personal tradition, and often costs as little as $9.99 but
often $3 more for Red, my preference. But otherwise, I could care less about whats
on saleI just dont think I need much of anything, unless Microsoft brings back
Windows XP, with the most modern networking and internet software available anywhere, and
a speedy drivenone of which XP ever had.
Which brings us to the EARNINGS Calendar, another bonanza of retailers, including Best
Buy., Burlington Stores, Dicks Sporting Goods, Dollar Tree, and Movado, all on Tuesday.
Also that day, Abercrombie & Fitch, Analog Devices, Autodesk, Central Garden & Pet
(both a wholesaler & retailer), Dell Inc, Hormel, Hewlett-Packard, & VMware.
Wednesday John Deere will weigh in. On Monday, Agilent, Ambarella, HP Enterprise, and PVH,
which even against all odds, seems to always get the job done.
The EVENTS Calendar is too slim to spend much time on, except for some of the overseas
events. Here, in the US, industries, companies, and I-banks are mainly sitting out the
week. Thursday, Thanksgiving Day, is the biggest day for Macy*s, in terms of press
attention, as its 92nd Thanksgiving Day Parade winds down Manhattan from the
Museum of Natural History, on Central Park West, to Macy*s Herald Square. If Macy*s could
retail as well as it parades, it would be a lot more successful than its proven, of
late. With the Parade, Macy*s gives the world of kids and their parents the magic they
want. In stores, quite the opposite. M needs buyers who can cull vendor offerings, rather
than just pour on the volume. Even under a new leader, Macy*s buyers havent learned
how to do that. Instead, theyve institutionalized all their mistakes in something
called Backstagea last act of failed taste, of which theres any abundance at
Macy*s.
FridayBlack Friday--a half day for Equities, and early close for bonds, was once the
busiest shopping days of the year but no more. Cyber Monday has overtaken it, though
retailers will keep trying. Still, except for those desperate to save $300 on a big TV
from a 3rd rate brand, the joy of Black Friday was whittled down, when it moved
a start during the dinner hour, on Thanksgiving Day45pm at retailers opening
that day. With Cyber Monday discounts of offerings planned like the 2nd coming
of Black Friday, a little more of Black Fridays enthusiasm was whittled down. Some
year, Amazon is going to plan Prime Day to coincide with multi-state sales tax holidays
(this year the first weekend in August), and then youll see a blow out Black Friday
worth mentioning. Until then, the magic slips a little more each year, making for much
better Thanksgiving Days with families than were possible, pre-Internet, when stores
started opening Thanksgiving Day. Ya know who started that? Kmart, and look whats
left of them, since!
Happy Thanksgiving to one & all! And thanks to Cesar at the local Best Buy Geek Squad
who, instead of laughing me out of the store, actually put my XP Laptop into the compress
air room, and blew out the dust that was causing the fan to sound like it was on
deaths door. Its not my only one but it is the only one I really love typing
on, and the one with IBMs keyboard embedded stick mouse, which makes it so much
easier to type at lightning speed!
Happy Holidays, everyone! Don't let some profit taking catch you off guard.
ECONOMC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2019 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.
November 1822, 2019 IF
CONSUMER FINANCES ARE SO GOOD, WHY ARE RETAILERS SO BAD? The Economic Calendar promises Housing
Data, more than other items, including NAHBs Nov Housing Market Index Monday, when
the highlight may well be SIFMAs Annual Meeting, its Capital Markets Meeting,
bringing out SEC Chair Jay Clayton among the speakers. Overnight, the RBARoyal Bank
of Australiawill release Minutes of its Nov Monetary Policy Meeting, when it elected
to stand pat, to the surprise of everyone who follows such things. Tuesday, back to
housing data, with Oct Housing Starts & Building Permits, followed by NY Fed Pres/CEO
John Williams in a 1-on-1 at the SIFMA Annual Capital Markets Conference.
Overnight Tuesday, the Peoples Bank of China will set Nov 1-year & 5-year Prime &
Interbank Rates. German Oct Producer Prices could get more attention than usual, as its
recently announced GDP barely eeked out a positive result. Wednesday, two big blasts from
the past will speak, Pres. Obama & Janet Yellen are scheduled to speak at the
Greenbuild International Conference and World Business Forum, respectively. Also speaking,
the USDAs Chief Economist, R. Johansson, who will keynote the Chicago Federal
Reserve Bank "Improving Midwest Agriculture & the Environment Conference,"
perhaps shining a light on the large number of farm bankruptcies filed year to date.
Wednesday, well also get EIA Petroleum, et al, data, on its regular schedule, after
last weeks delay for Veterans Day, before the FOMC Oct 2930th
Meeting Minutes are released. Not everyone was thrilled about a 3rd,
consecutive interest rate cut but at least one former dissenter, James Bullard of the St
Louis Fed, finally felt the FOMC caught up to where hed wanted them when he
dissented twice previously for more action than the FOMC took until the 3rd
rate cut. Overnight, well see the ECBs Account of its Oct. 2324th
Monetary Policy Meeting, the last before Mario Draghi passed the baton to Christine
Lagarde. The OECD will release its Eurozone Economic Outlook, while ECB board member
Mersch is keynoting S&Ps Global European Financial Institutions Conference, a
bit of a misnomer. With just a few exceptions, all the speakers are S&P Global
employees commenting on European Financials, information probably available online,
without attending a conference in Paris, France. And because its almost exclusively
S&P speakers, it landed on the company-specific section of the calendar, instead of in
the upper half of its day, when conferences are usually placed.
Thursday, the ECB and NY FRB will jointly sponsor a "Workshop on Expectations
Surveys: A Tool for Research & Monetary Policy," which we felt compelled to
mention, since we consistently diss the U.M. Consumer Sentiment Surveys, especially the
preliminary one generally delivered mid-month, for the as few as 250 respondents its based
upon. The NARNational Association of Retailers, who met last week, presents Oct.
Existing Home Sales, shortly before Feds Mester speaks at her Cleveland Fed Joint
Meeting with the OFROffice of Financial ResearchConference on "Financial
Stability: Risks, Resilience & Policy." Then, Feds Neel Kashkari
participates in a moderated discussion with Q&A at the Minnesota Chamber of Commerce
Economic Summit. The US Treasury will, then, Auction a mere #12B reopened 10-year TIPS.
Overnight Thursday, into NYs Friday morning, the G20 Finance Ministers & Central
Bankers are scheduled to meeting in Nagoya city Japan, though if Powell is attending, the
FRB schedule doesnt say so, and ECBs new Chief, Lagarde, is scheduled to speak
in Frankfurt, at the European Banking Congress, so could only be attending G20
by video.
Friday, Chicago FRB Pres/CEO Evans opens the 14th Chicago FRB/OCC/FDIC Joint
Community Bankers Symposium, a one-day event. U.M. will deliver the very early November
final Consumer Sentiment & Expectations Survey, the school closing up shop early, for
Thanksgiving. Also expected, Markits US Nov Flash Manufacturing/Services/Composite
Purchasing Managers Index, aka PMI, and the K.C. Feds Nov Manufacturing Index.
Thats a sector still depressed but should be better now after GM workers ended their
strike in late October.
The Earnings Calendar could be a minefield, with so many retailers reporting their
results. Lets not forget, the Quarter, for most, started in August and ended in late
October. That means the Prime Day sale from Amazon, and all the competing sales
werent captured, because they occurred in mid-July. However, early August was when
most states that offer Back-to-School Sales Tax Holidays held them, two events that may,
well, have stolen sales from the tradition BTS shopping done, more conventionally, in
September. What has worked out for retailers is some of the earliest snow in history, in
the northern most states in the middle of the country and, this past weekend, with frigid
temps in plenty of placeshere in Southern Florida, our high on Sat. was 74, and on
Sunday, 64sets up nice sweater, overcoat and boot weather for retailers who may not
have to moan, as Jack Ma did about Alibabas Singles Day, that the weather was too
hot for sales of winter wear. That may, in fact, encourage retailers to be a little more
optimistic about holiday sales than they would be, otherwise.
Retailers to watch include Home Depot, Kohls, and TJMaxx on Tuesday, L Brands,
Lowes and Target on Wednesday, Macys, Nordstrom, Ross Stores, and
Williams-Sonoma on Thursday. Theres very little point watching Gap Stores on
Thursday, since it already warned and its CEO left the building. All most of its coverage
wants to know is whether the spin-out of Old Navy is still planned for early next year.
Fridays most important report is expected from FootLocker, which should benefit,
ahead, from Nikes decision to stop selling through Amazon. Yes, the point of
dropping Amazon is to retain more sales from Nike.com but FootLocker will still benefit
from the elimination of Amazon as a competitor.
Which brings us to the Events Calendar. Just as the American Heart Association Scientific
Sessions continue over the weekend, the American Academy for Cancer Research kicks off its
Cancer Immunology & Immunotherapy Meeting, even as the International Oncology
Leadership Conference commences in Antwerp Belgium. Also Sunday, Ford is introducing its
first non-2-day Mustang, the Mustang Mach-E electric SUV. At CME Groups 11th
Annual Global Leadership Conference, starting Monday, a couple of high profile former CEOs
are highlights: Lloyd Blankfein, who stepped down as Goldman Sachs CEO almost
exactly a year ago, and former PepsiCo CEO, Indra Nooyi. The event, also known as GFLC,
also promises Oprah Winfrey, and for space fans, Virgin Galactica (SPCE)s Director
Stephen Attenborough, NASA Administrator Jim Bordenstine, and Katie Couric, to name about
half the high profile speakers--SpaceX getting equal time with its Senior V.P. Tim Hughes.
Euro Finance Week starts the same day and earns its name, covering finance for more than a
handful of subsections, including Blockchain Nation, Green Finance, Sports Governance
& Finance, Football & Finance, Technology, R.E, Forum, Rick Management &
Compliance, Tax & Finance, Industry 4.0, Payments Konferenz, China Day, and more,
right down to a Sustainable Investors Summit and an Award to the Banker of the Year.
On Tuesday, CNBC will probably provide nearly wall to wall converage of its
"Evolve" event, "Transforming Companies for the Future." CEOs from
Levi Strauss & Co (LEVI), Ticketmaster (LYV), Walmart (WMT) CEO Doug McMillon,
Chipolte Mexican Grill (CMG) CEO Brian Niccol, Activision Blizzard (ATVI) CEO Bobby
Kotick, and many more will have conversations with the gamut of CNBC anchors, from Becky
Quick to Julia Boorstin, to Tyler Mathisen, and more. The event is in Los Angeles, so live
conversations, or edited clips wont land on air until after 11am, at soonest. Also
Tuesday, Stifel hosts Healthcare, Raymond James Growth & Value, Jefferies Energy,
Bradesco a CEO Forum & LatAm Conference, both of those in New York. J.D. Power and
NADA, Jointly, host an Auto Conference in L.A., where the Los Angeles Auto Show is
opening. Stephens calls its Midwest Industrial Conference "Monsters of the
Midway," the corporates participating noted by their tickers, on Tuesdays
listing. Also Tuesday, POWER-GEN International, and a host of I-bank conferences in
London, where Jefferies will host Global Healthcare, starting Wednesday.
On Wednesday, also, Barclays is hosting a Global Automotive Conference, but in NY, instead
of L.A., where the industry is meeting. Baird is hosting Government & Defense,
Berenberg West Coast Consumer & E-Commerce, and SVB Leerink its 13th Annual
POLARxPRESS bus tour.. The 14th Homeland Security Conference & Expo starts
Wednesday, in D.C. Until this year, it was called the Border Tech Expo, making this,
actually, the 1st Homeland Security Conference/Expo. As youd expect,
speakers are from the U.S. Dept of State, Dept of Energy, DHS, FAA, Dept of Treasury, TSA,
National Guard, US Secret Service, US Customs & Border Patrol, FEMA, and much more.
And, as youd also expect, many execs from ports and major cities around the country
are speakers, as well. Still, cant help but wonder whether "Border Tech"
was too inflammatory. Then note the IDTechEx Show, starting Wednesday, because its
actually 7 events rolled into one major co-located events the biggest for number of
attendees the Printed & Flexible Electronics Conference, Electric Vehicles, Wearables,
& Sensors. Every name in the supply chain and chip making is involved in one of the
several sub-conferences. And though all of that is happening in Santa Clara, CA, Qualcomm
chose to schedule its Investor Day, not there but, instead, in New York, Tuesday. Other
stock specific events of note include Akamai Edge Forum, starting Monday, overseas,
ConocoPhillips Investor Day, in Houston, Tuesday, the same day Penske Automotive
Group is meeting with Northcoast Research clients, Salesforce.com starts Dreamfoce, in San
Francisco, Samsung Global speaks at Dashin Securities Tech Conference in Seoul, and
Union Pacific Railroad meets with Wolfe Research clients at its headquarters in Omaha.
Alzheimers Disease Therapeutics: Alternatives to Amyloid, in NY, Wednesday, is an
opportunity for me to weigh in on Bristol-Myers Squibbs Alzheimers drug that
didnt work, then months later suddenly did. There is no single disease that strikes
as many seniors, or puts as heavy a strain on caregiverswhether they be the spouses
or children of adults stricken. For that reason, if theres any shred of efficacy,
and zero instances of harm, the FDA will approve the BMY drug, even if the
"efficacy" represents the slimmest of substance. Also Wednesday, Cigna CEO/Pres.
David Cordani speaks at the Economic Club of NY, for breakfast, while Salesforce.com hosts
Investors & Analysts for their annual meeting @Dreamforce. Thursday, Liberty Media is
hosting an analyst day, with many of its partially public siblings making appearances for
the Analysts. Thursday, so soon aft Cignas CEO spoke at the Economic Club of NY,
Michael Dell does, for lunch, starting at 11am.
Friday is a head scratcher: Best of IASLC, the Annual Lung Cancer Conference will be held
in San Francisco, even as Perspectives in Thoracic Oncology meets in Long Beach CA.
Friday, 2 of the biggest movies of the holiday season are slated to open: "Frozen
2," from Walt Disney, and Tom Hanks in "A Beautiful Day in the
Neighborhood," a biography of Mister RogerFred Rogersa PBS stalwart, told
through his friendship with a journalist. Tom Junod, and produced by Sonys TriStar
Pictures and Tencent Pictures, with TriStar distributing in the US. While Mr. Rogers
Neighborhood was translated into many foreign languages and ran on public TV stations
around the world, to the best of my knowledge, Asian countries werent prominent
among them. So for Tencent to be a co-producer, it seems, the surprise must be on me.
Japan must have been one of the countries that lapped up Fred Rogers.
As we slide into the countdown to Black Friday and the coming Christmas season, this could
be the last big week for I-bank conferences, until early December. It will be interesting
to see whether theres a little rush to take profits at the end of this week, before
everyone else gets that idea before Thanksgiving. Stocks have run an awful lot, ignoring
how far Hong Kong is pushing the Chinese, along with the Impeachment Hearings in D.C.,
where our President still doesnt get what it means to act Presidentialinstead
insisting he has the same right to free speech as other citizens, tweeting commentary on
the former Ukraine rep from the State Dept, even as she testifies. No matter what
Americans think of Trumpand theyre obviously very polarized in their love or
hate for himits what the rest of the world thinks that we should take a minute
and ponder. And then, while were out it, think about how little growth in earnings
were reported in Q3, and how much less is expected in Q4. All that makes me wonder why
stocks are making new all time highs almost every day, and when the big money will call
time-out. Surely, there wont be much in the retailers earnings to
celebrateeven if the off-price retailers manage to deliver..
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2019 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.
November 1115, 2019 POWELL TESTIMONY, EEI
FINANCIAL MEET, & WALMART EARNINGS You can tell the
majority of the Earnings Season is over by the number of I-bank Conferences on this
calendarthe longest calendar in weeks, ex-the Earnings Section. And it will be a
barn-burner of a week, with FOMC Chief Powell testifying at Congress, twice, After the
Bond Market takes a Veterans Day rest, on Monday, even as both the Electricity Production
and REIT industries hold separate, all hands on deck, mass analyst meetings. The former is
the 54th EEI Financial Analysts Conference, the latter NAREITworld. And if you
doubt their importance, all you need do is check the number of I-bank events taking place
at each of them. EEI started Sunday, NAREIT starts Tuesday. And, if that wasnt
enough, NARthe National Association of Realtors, via whom we get Pending Home Sales,
monthly, and SABEW, the Society of American Business Business Editors & Writers, at
which Patrick Harker is the lead off speaker, and ARDAResort Development, usually
most heavily weighted with timeshare developers, where all the top hoteliers have dived
in.
The Powell testimony should hold few surprises but were yet to see how the Street
will react to him insisting that the Economy is well, and the FOMC has time to let the 3
rate cuts work into the system, doing nothing in the meantime. Philly Feds Patrick
T. Harker will be answering audience questions @SABEW, the Society of American Business
& Economic Writers, Tuesday. Most disturbing is the first session, right out of the
gate, after welcoming comments is "Recession Coverage: How Can Business Journalists
Prepare Audiences for the Next Recession?" I read that and my thoughts immediately
leapt back to Richmond Feds Barkin comments, on 11/05She said she doesnt
see a recession imminent but does worry we could talk ourselves into recession. Yeah,
there was a lot of such talk flying around the Street but less since the FOMCs most
recent interest rate cut.
The Calendars at other websites present a conundrum, this week. Two Calendars have Charles
Evans, the Chico Fed President, speaking at the 3rd Annual Philly Fed Fintech
conference which the Philly Fed does not show as repeating this year. Then, another two
calendars we consult has Pres. Trump speaking, 11/12, on Trade & the Economy at the
Econ Club of NY. Problem is, the best known of thosethe Economic Club of NY, does
NOT show a Trump event on its website. Perhaps Trump has rented the club for a private
event, or theres another Econ Club in NY I dont know abouta range of
possibilities do exist, including a members only event the club is keeping from outsiders.
Econoday & the CME show the event on their Calendars but I just cant confirm
that happening on Tuesday, and dont blindly post what I cant verify.
A few I-bank Conferences seem obvious to watch, including UBS Global Technology
Conference, in Scottsdale AZ, Credit Suisses Healthcare Conference in the same city,
both starting Monday. Morgan Stanley hosts its 8th Global Chemicals,
Agriculture, & Packaging Conference, in Boston, starting Tuesday, the same day Citi
starts Financial Technology, and Jefferies West Coast Consumer 1x1 in San Francisco. On
Wednesday, JPMOrgan hosts Ultimate Services Investor, Sandler ONeill Partners East
Coast Financial Services, in Naples, FL, Berenberg Pain, in NY, Needham Big
Data/Infrastructure Software 1x1, and ROTH Partners New Industrials & Technology.
Given that mix, the event few may pay much attention to, initially, is Stephens,
Wednesday, hosting Nashville Investment Conference. The first assumption may be
healthcare, because its in Nashville, the 2nd might be mid & small
caps. But all that would be wrong. Stephens is hosting multiple sectors, and the largest
market cap company reporting is none other than Walmart, also reporting earnings on
Thursday.
This might feel like a good place to move onto the Earnings Calendar, and Id love to
but, then, Id miss mentioning Deutsche Banks dbAccess Gaming, Lodging, Leisure
& Restaurants 1x1, and UBS Aerospace Conference, in Palm Beach FL, along with
Wolfe Researchs Midstream Tour and JPMorgans Paris, France, Luxury &
Brands Conference and Deutsche Banks dbAccess Lithium & Battery Supply Chain
Conference, and the International Kidney Symposium, in Miami, starting Friday, or the
American Heart Associations Scientific Sessions, starting next Saturday, in
Philadelphia.
And, then, we havent really done the Economic Calendar justice, since we
havent mentioned the 11th BRICS Summit, starting Wednesday, in Brazil,
distinguished from other multiple nation cooperation associations in that it states,
outright, its a political, not an economic cooperation association. That could be
why Russias Vladimir Putin is flying such a long way to get there for 2 days. Xi of
China is attending, too, so we know Putin will have some competition in his efforts to
expand his sphere of influence. A quick scan of the Economic Calendar shows the Fed Bank
offers up more than just Powell, this week, with Vice Chairman Clarida speaking at 5:30am
et, Monday, in Switzerland, and Tuesday, both Richmonds Fed Pres. Barkin &
Philly Feds Harker speaking, as is Minneapolis Feds Kashkari late in the day.
Overnight, into Wednesday Morning, the Reserve Bank of New Zealand will release an
Interest Rate Decision, by which time it will be Wednesday, the 13th, there.
Thats the day Powell testifies at the Joint Economic Committee of Congress, while
Richmond Feds Barkin speaks on "The New Environment for Monetary Policy,"
presumably referring to policy after 3 "insurance" cuts. Also speaking
Wednesday, Dallas Fed Pres. Kaplan, in a conversation on national & global economic
issues with Douglas Holtz-Eaton, of American Action Forum, which badly fails to do his
past history justice. Also Wednesday, US Oct CPI will be released, ten Thursday, Oct
PPIFinal Demand. Clarida speaks, again, that day, on the Federal Reserves
Review of its Monetary Policy, Strategy, Tools & Communications Practices," at
the Cato Institute. Mid-day Thursday.
Also Thursday, NY Fed Pres/CEO John Williams is the lead off speaker at the San Francisco
Federal Reserves AEPCAsia Economic Policy Conference, complete with Q&A.
AEPC is shaping up to be one big conference, with economists from many regional FRB, as
well as S.F. Fed Pres. Daly, the Hong Kong Monetary Authority, the Reserve Bank of New
Zealand, Bk of Korea, Banco Centro of Brasil, and Bk of Canadas Gov. Poloz, all on
opening day. On the 2nd day, Friday, Daly and a less stunning group of speakers
will close out AEPC. Then, Friday, BoCs Lane is a panelist on Digital Currency. Data
releases will include US Oct Retail Sales, the Empire State NY FRB Manufacturing Survey,
Import/Export Prices, Oct. Industrial Production/ Capacity Utilization, US Sept Business
Inventories and, of course,Baker-Hughes weekly Rig Count
Ill also note the empty BoE Calendar. Usually, when we check the following
weeks planned schedule of announcements, speeches, economic data, etc, its
filled with items. This week, there was nothing of current economic
relevance--zippoa Lord Mayos Show (a parade connected wo the appointment of
the new Lord Mayor of London, a ceremonial position). and "Painting a Fortune: JMW
Turner and the Bank of England," an exhibit of research from the BoE archive that
"sheds light on the famous artists career and investments." The Lord
Mayos show is an annual "procession" that starts at the BoE. The position
was created in 2000 but the "show"a parade/procession, has been occurring
since the 16th century. The only other item is the display of Tuners
work, and the banks records of his transactions, including his first investment at
just 18 years of age, 3% of Consols stock. The exhibit at the BoE museum is associated
with Turner starring on the new 20 GBP note. Other than those entries, theres
nothing until 11/27, which may suggest the ECB expected to be putting out all kinds of
"fires," after the 10/31 planned Brexit, so lightened up its load in the
immediate aftermath. Certainly, neither of these items would have wound up on the Federal
Reserve Board of Governors website, were they happening here.
Stephens is hosting a couple of sub-sector dinners associated with its Nashville
Conference. On the 13th, its holding a Transportation Dinner.
Transport-related companies attending include the following tickers: ATSG, CP, DSGX, CVTI,
ECHO, FDX, FTAI, HTLD, JBHT, KNX, MRTN, NSC, RUSHA, SRI, ULH, USAK, USX, WERN, WNC, WKHS,
YRCW, as of this post, all on the 13th. The Nashville Investment Conference, which starts the same
day, and runs through the 15th, has a tremendous list of participating
companies, across multiple sectors, the biggest, as I pointed out earlier, Walmart, the
smallest market cap, perhaps, Zynga. Just dont tell Stephens where you obtained the
link within this paragraph, please.
Which lands us on Earnings, where more media companies are reporting, including Cumulus,
Qurate (HSN, QVC), and Tencent Music, Monday. Tuesday, CBS, CBS, and homebuilder D R
Horton. Wednesday, Beazer Homes and McClatchy, Thursday, Applied Materials, Dolby, and
Viacom, in addition to the aforementioned Walmart. But also on the calendar, Rockwell
Automation, Tyson Foods, Canada Goose, Cisco Systems, NetApp, and Stratasys, before
Fridays J C Penney & JD.com. Not a big list but one with some punch,
nonetheless.
All of which makes for a very busy week and the possibility of some minefields not
delivering the narrative the Street has sold itself1] The Fed has the Markets
back. 2] The slowdown has already ended, because the Fed cut rates 3x. 3] The trade war is
easingwith the Chinese claiming the US agreed to roll back some tariffs as a
condition of signing Phase 1 of a Trade Deal, Trump, on the White House lawn, Friday,
insisting thats not something hes agreed to you yet.
So, Ill point out the fact that Trump was boasting of the greatest Phase 1 deal with
China in the history of the U.S., shortly after their last meeting. Not hours later, the
Chinese said not really, they think another meeting will be necessary to finalize Phase 1
before signing it. Now, its the Chinese claiming all their terms were agreed to for
Phase 1, and Trump saying, not so fasthe hasnt agreed to roll back any tariffs
as a condition of signing Phase 1, even though he already pushed off some that were due to
be instituted on Oct. 15th. So, it sounds to me like Trump is waiting for one
more thing associated with the Phase 1 deal, while the Chinese are prepared to dig in
their heels on insisting a rollback of some tariffs, as a condition of signing the Phase 1
deala mostly agriculture deal, much as the details have been releasedand few
of them. So, if you think the market is ready to hear more China trade back and forth, and
Powell saying the FOMC is on lock-down, for awhile, pending incoming data, which would,
still, have to meet a high bar for them to cut again, then this market is for. Be my
guest, keep buying at ever higher highs, even as the Earnings outlook has softened, and
Unemployment probably has peaked, though we wont see that clearly, until all the
retail seasonal hires begin getting laid off in late December, the January. Yes, all the
technical conditions for more gains appear well set up but how many more points? How much
higher? Was it Bernard Baruch who said, something to the effect of, he made all his money
by letting others stick with stocks for the last 5% move, even as he sold out?
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar)
© Sandi Lynne 2019 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 part of more complete due diligence.
November 0408, 2019 Future
of Financials & BancAnalysts of Boston may Define the Week The Economic Calendar holds early month data, and a
number of Fedheads speaking, though not always in the usual venues, and most towards the
end of the week. We should hear Oct US Vehicle sales from foreign makers Monday, along
with Durable & Capital Goods, Orders & Shipments. Sept Factory Orders are out,
Monday, also, the GM impact likely small if any. Most of the breakdown in GM and its
supply chain occurred in October, before the strike was settled.
Tuesday there are a smatterig of elections across the country, most for governor and empty
legislative seats. Some might be even more localized.. Tuesday, count on the September
Trade Deficit, Markit Oct Services & Composite PMI, the ISM non-Manufacturing Index,
aka the Service Index, which is being watched more carefully, now, as traders and
economists keep an eye out for any slowdown. ISM has a lot more information the Street
pays attention to than PMI, including Prices Paid & the Employment Outlook. Speaking
Tuesday are Dallas Feds Kaplan and Minneapolis Feds Kashkari. Neither will be
at forums that suggest pronouncements on interest rates. NY Fed Pres. Williams, though,
may, not so much at the Wall Street Journal Workforce Conference Wednesday but, later in
the day, when he makes welcome remarks at the NY FRBs GARP Global Risk Forum. Note,
overnight Tuesday, into Wednesday morning in NY, the BoJ will release minutes of its Sept
Monetary Policy Meeting, though I think most think its status is hopeless. Kuroda spoke, a
couple of weeks ago, of the need to try something other than negative rates but, to date,
hes not made an alternate suggestion
Wednesday, well also hear about Mortgage & Refinance applications, US Q3
Productivity & Costs, and word from pieces from both the NY Times DealBook Conference
& WSJs Future of the Workforce. Wednesday, overnight, Stockholm will host the 15th
Annual Conference on Microstructure of Financial Markets, for 2 days, p lus, as morning
dawns, Thursday, the BoE results of its MPC meeting and Gov Carneys Press Conference
which will bleed into early morning Thursday hours. The IMF D.C. office is host the 19th
Jacques Polak Research Conference, the topic, "DEBT: The Good. The Bad. The
Ugly." It will last until the 8th. The Treasury will auction $19B of
30-year Bonds, Thursday, an amount that should be absorbed without a blink. Thursday,
Wired Magazine hosts its 25th Anniversary Summit, in San Francisco, which will
last until the 10th. Feds Kaplan speaks, again, at a Dallas Chamber of
Commerce Year-Ahead Summit, with Q&A, which may not yield much on where rates are
going. Later, US Sept Consumer Credit will be releaseddebt really, which should not
have risen much for the revolving credit side, since there was little in retail sales to
suggest strong hits to credit cardsother than strong sales of iPhones, most of which
are bought on plans that pay monthly to cellphone providers. After hours, Atlanta
Feds Bostic speaks monetary policy at a Money Marketeers of NY event, where he might
have more to say about his outlook for rates than weve heard from him previously.
Friday Well get the U.M. nearly worthless Preliminary November Consumer Sentiment, 7
days into the month, as if it isnt usually worthless, anyway, mid-month, based on as
few as 250 consumers surveyed. The Chicago, St Louis, & San Francisco Federal reserve
banks are hosting events Friday--San Francisco the only one that promises prominent Fed
speakers, both regional Pres. Daly & Fed Gov. Brainard at the far West conference. The
topic is Climate Change, which doesnt promise much comment on future interest
ratesboth the benefit & drawback. It will be after 10pm on the East Coast by the
time Daly closes out the West Coast event.
Which brings us to another too full schedule of Earnings announcements. I started
preparing these outlooks in the 1980s. It was a lot harder then, when there was no
internet, so extracting information on companies required Value Line & S&P
books/magazines, and none more so than Investors Business Dailys weekly chart
books which provided a wealth of information, delivered every Saturday morning. There were
so many fewer public companies, then, that as my work moved onto the internet, in the
mid-1990s, the Earnings Calendar, in particular, opened up a wealth of
knowledgeabout stocks that were new to me. Even though IPOs wax and wane,
every once in awhile my socks are rolled up and downmeaning the list can surprise
even me. That happened this week, when I stumbled upon ticker KRUS, It stands for Kura
Sushi USA Inc, with restaurants in about 5 western states. Really? Raw fish rolls went
public? August 5th, and Im first seeing it now?
Other than the number of broadcasters & hoteliers scheduled to report Earnings, the
list is long but not nearly as meaningful as its length. Afraid I dont share
financial TVs fascination with Uber. The major healthcare products distributors are
reporting this week too. I also cant help noticing ROKU reporting Wednesday, and
TiVO Thursday, Roku winding up everything TiVO was supposed to be and isnt.
Sometimes I throw in a ticker I know that most dont, like KTB in Thursday, which is
Kontour Brands, the jeans spin off from VF Corp. Of course, Thursday, Walt Disney will be
the name everyone watches, as spending on streaming service, Disney + reaches maximum
spending before launch Nov 12th. Id watch Kelly Services Wednesday, too,
because its an early warning sign on employment weakening.
Which brings us to Events, with more I-bank meetings scheduled than weve seen for a
few weeks. Barclays New Frontiers, in London, which started Sunday, brings together
business leaders, innovators, decision makers, and others to discuss the Digital
Worlds relationship with society, identifying and discussing key ethical questions
raised. And it wont be all social media since cloning DNA is one subject, British
scientists considered the vanguard after they cloned Dolly, the lamb.
At Mondays G Research, better known by its former name, Gabelli Securities,
Automotive Aftermarket Conference, auto suppliers speaking include: AZO, BYD.UN, CTB, DAN,
DCI, GNTX, GPC, LEA, MNRO, NMPAA, NAV, ORLY, PAG, RUSHA, SMP, SRI, SUP, TEN. Since the
days of computer conferences ended more than a decade ago, AWDA (Automotive Parts
Distributors), SEMA (Specialty Equipment Manufacturers, CARS (Collision, Repair &
Refinish), and AAPEX, together, probably constitute the largest event to take place in Las
Vegas, every years. Schwabs IMPACT for its advisors and suppliers includes a keynote
by Charles Schwab, and another from former US Ambassador to Greece & NAtTO Nicholas
Burns, and country star Tim McGraw, plus presidential historian/author Jon Meecham, among
many others.
Monday surprises with so many large tech events, from Adobe, FICO (Fair Isaac), Microsoft,
nVidia, Samsung, & VMW, even as Charlie Ergen, founder of DISH & Echostar is
scheduled to keynote the InCompas telco event, formerly known as CompTel.
Tuesdays key even is Bk of America Merrill Lynchs (BAML) Future of Financials,
which promises all the big name financials. About halfway through what will amount to Q4,
considering the last 10 days of the year are often wasted, their comments on how the
quarter is going could stop their rally. NYTimes DealBook Conference, the 6th,
is a hodgepodge of executives Im calling the Good, Bad, & Ugly, without
identifying which is which. Heading off the event is Andrew Ross-Sorkin, with Accenture
Strategy, Arthur O. Sullzberger, IBMs Gini Rometty, JNJs Gorsky, BAs
Muilenberg, US DoJ Asst AG, Uber, Airbnb, Kris Jenner & Kim Kardashian, Hillary
Rodham Clinton, NFLXs Reed Hastings, Valerie Jarrett (formerly of the Obama White
House, now from When We All vote), Bill Gates, Gwyneth Paltrow, and more. The same day,
also in NY, WSJ hosts Future of the Workforce, in NY, where NY Fed Reserve Pres. John
Williams keynotes, and a day later, Wireds 25th Anniversary Summit starts
in San Francisco, with speakers that include X Prize Captain of Moonshots, US Natl
Security Agency, Slack (WORK), actor Chris Evans, Director Rian Johnson, Hugo-Award
Winning author N.K. Jemisin, head of FBs Instagram, Tracee Ellis Ross, Stripe
CEO/Founder Patrick Collison, 3 described as "Youth Plaintiff & Climate
Activist" but not Greta Thronberg, Cloudflare (NET) CEO, (MSFT )s LinkedIn CEO,
Ben Horowitz (Andreessen Horowitz) and more. Also Tuesday, Bairds Global
Industrials, and Hart Energy Executive Oil Conference.
Its a little odd that the Farm Equipment Manufacturers host their Marketing &
Distribution Convention just the Auto world does but thats the case Tuesday. HSBC
hosts a Global Investment Forum Tuesday, also, in NY, even as the Restaurant Innovation
Summit meets in Cleveland, of all places. Also note, Tuesday, Intels Mobileye
Investor Summit in Jerusalem, Tuesday, in addition to ST Microelectronics Tech Tour
touching down in Boston.
Wednesday, Wolfe Research hosts an Inaugural Healthcare Conference, while the Consumer
Technology Association assembles for their Hall of Fame dinner, oddly, in NY, when most of
the industry is based farther West. As if we wont have heard enough from major banks
at Bk of Americas Conference, theres another change Thursday, at the 34th
Annual BancAnalysts Assn of Boston Conferences, which ends Friday. Once, again, all
the major banks are expected. Stifel will host Midwest Growth, a 1-on-1 which limits the
amount of information available. The Pulmonary Fibrosis Summit in San Antonio, starting
Thursday, should be where Trikafta, a novel triple combination treatment for Cystic
Fibrosis, from Vertex Pharmaceuticals. Even the FDA said the combo should be able to treat
90% of CF patients, which should make VRTX an unqualified star of the week.
IF not, theres always McDonalds Restauarants revival of little plastic
Happy Meals toys, including some of the most iconic over the decades, starting Friday, for
less than a week, or Phillips 66 (PSX) analyst meeting. Then, again Kroger meets with
analysts Tuesday, grocery war between Amazon & Walmart almost assuring destruction for
Kroger. I saw it play out in Atlanta, where a whole rotisserie chicken can be had for as
little as $3.99, when the local Public, here in So. Florida charges $7.49.
So, watching the indices making new highs last week, I wonder what all the enthusiasm is
all about. The President is totally unpredictable, Earnings were barely inline with
estimates that had been lowered several times, and the outlooks were far from encouraging,
the trade war a real drag on companies, though Trump would have us all believe its
the Federal Reserve thats been and continues to be the drag. Party on, if you care
to. Ive been trimming longs into the rally, wondering if the bulls will run out of
steam come December.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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
October 28November 01,2019 FOMC MEETING
and MORE EARNINGS Lets start with the FOMC
meeting, ending with Wednesdays meeting statement, then Powells press
conference. Theres nearly universal agreement that the Fed will cut another quarter
point, despite 2 possible dissenters, and a past dissenter who wanted more cuts, so should
be satisfied with this 3rd quick cut in succession. IF whats gone on in
the REPO market has had another to do with yield differential, then the market is
demonstratingrather than just talkingthe need for another rate cut. IF, as it
appears, another quarter point cut does little to shrink the yield differential, then it
also wont be enough. But lets at least acknowledge the Street doesnt see
another cut coming for the next 6 months, after this weeks. Just as the FOMC wraps
its latest meeting, Mario Draghi will deliver his farewell speech on the occasion of his
departure from the ECB, Christine Lagarde selected to replace him, to be installed on
November 1st.
Note a few Fed speakers scheduled after the meeting ends, notably, Vice Chairmen Quarles
& Clarida, as well as NY Fed Chief Williams, all on Friday. Friday is when the 2nd
biggest event of the week arrivesthe October Unemployment Report, last a little soft
at 135K adds but a new fiscal year for the Federal government, businesses bulking up for
the holiday season, and the last of school-related personnel being placed, and
theres reason to believe October wont be a disaster, even if theres
collateral damage from GMs strike and the related businesses laying-off workers
until the automakers parts orders start picking up, So its said, GM reports
this week, the strike over, the quarter being reported largely concluded before the strike
turned really serious and started dragging suppliers into the mix. But, as many vehicle
parts suppliers also report this week, the extent to which the now-ended strike has put
pressure on the current quarter should be revealed. Then, there are the big dealers, like
AutoNation & Penske Auto Group
Also on the Economic Calendar, this week, Wholesale Inventories, Monday, and Tuesday,
S&P Case/Shiller Aug 20-dity Home Price Index and NARs Sept Pending Home Sales
Index. Fans of Boeing should know CEO Dennis Muilenberg will testify at the US Senate
Commerce Committee Tuesday, and on Wednesday, at the US House Transportation &
Infrastructure Committee. Just as theres no doubt in my mind that Boeings
costs related to the 737 MAX grounding will compound in the months ahead, Im also
sure the FAA deserves a lot of criticism for, in effect, passing off its regulatory
obligation onto Boeing, so the fox was guarding the hen housewith thousands of lives
lost because of it, albeit overseas, which is why there hasnt been a larger outcry
at home, and why CNBC Fast Money traders were buying and touting Boeing the whole way
down.
The Earnings Calendar felt only slightly shorter to cover, this week, than last but
thats not to say theres much slighter about the reports expected. Yes, the
major money center banks are done, and lots of big tech has already reported but with
Alphabet (Google), Apple, AMD, Amgen, American Tower, Facebook, KLA Tencor, Western
Digital, and Seagate Technology, and almost all the major mall REITs reporting, just as
the latest bankruptcy was Forever 21. Well get reports from Apache, Hess, Royal
Dutch Shell, Total, Chevron, & ExxonMobil, proving the reports cued up are not
inconsequential. On the contrary, it pays to stay on your toes, as major Pharma companies
like GlaxoSmithKlein, Pfizer & Merck & Co, are reporting, along with many of the
operators, like HCA, Mohlina, Magellan, in addition to insurers and reinsurers like
MetLife, and Chubb, plus a couple of reinsurers. Top that off, some of the markets
more "boring" companies are reporting, too, including Colgate Palmolive, Clorox,
Kellogg, Kraft Heinz, and Mondelez, to name a few. Note, also, Chinese giant Alibaba, on
Friday, and some significant non-bank financials, like Intercontinental Exchange, CBOE,
and MSCI, the index company. The latter may take more heat if the trade war continues.
Last year, MSCI added many more Chinese companies to its indices, and Trump seems to have
gotten it into his head that US investorslarge and smallshould not have to be
buying Chinese companies when they invest in an domestic index fund. In addition to
Starbucks, and YUM!, reports will start dribbling in from other, smaller chains, Including
YUMs spin-off YUM China. Dont believe the indices cant be influenced by
this weeks reports, just because the major money-center banks, Intel, and Microsoft
have already weighed in. Consult the emboldened tickers on the Earnings Calendar as your
starting point.
Because of the big shift in when the Jewish Holidays fell, October conferences,
especially, fell almost completely out of synch with past schedules. Therefore, weve
found ourselves way behind in updating the events for late October & early November.
We post all week. Newly updated events appear first on the free calendar, here, and often, are added to the list below, as time allows. Last week,
we added more than a dozen events, after the Premium Events Calendar was published, last
Sunday. That could well happen again, this week.
So what about this weeks Events? Again, I-banks are mostly MIA, because of the depth
of earning season, and the FOMC meeting. Furthermore, with the American Bankers
Association hosting its Annual Conference/Expo, and Mortgage Bankers hold their Annual
Convention/Expo, quite separately, many bankers will be out of town. Also note a 3rd
weekend event, the AAI, or American Assn of Individual Investors, from whom
theres a sentiment index that some on the Street watch quite closely. Auto Finance
News is hosting, you guessed it, an Auto Finance Summit, just as some are writing about
the high rate of sub-prime delinquencies, Santander Consumer singled out for delinquencies
so early in the process, its often out some portion of the loan, that must be paid
to ABS buyers. Ill thank Barbara Rockefeller of Rockefeller Treasury Report for
pointing me towards an October 25th, 2019 blog at wolfstreet.com, that covers
the Santander lax underwriting.
Other notable events on the Event Calendar includes nearly the entire hotel industry at
BISNOW Hotel Leadership & Management Summit GlobeSt Apartments, and Air Cargo Americas
all starting Tuesday. And thats before the Cardiovascular Disease 30th in
LaJolla CA, SAEs Intl Innovations in Mobility, in Michigan, and Mega Event
Worldwide, which no one would ever know, without help, is for airline loyalty programs
worldwide. Also Tuesday, FOLIO Show, a conference & expo for magazine publishers. The
35th Annual FIA Futures & Options Expo also starts Tuesday, as does
Blockchain & Cryptocurrency, timed to coiocide with Money2020. The latter has drawn
analysts from Stephens & Wolfe Research, clients in tow. Note AT&Ts
WarnerMEdia Investor Day, Tuesday afternoon, at which it intends to flush out more about
its coming streaming service, as if Netflix needed more pressure on its shares.
AT&Ts service wont arrive until April 2020, while Disney+ is just a couple
of weeks away. If Netflix can survive Disney+, I suspect it can survive the other coming
competitors, for a few years but, long term, say 10 years down the road, Netflix either
needs to produce a plethora of content, or needs to acquire content, its choices,
domestically, very limited. Still, if NFLX was sniffing around, youd think LionsGate
Entertainment, which also owns STARZ, would have a stronger stock than it does. But think
about it, if every major and minor studio is betrothed to their own OTT service,
wheres NFLX getting content from, long term?
Wednesday, Future Farmers meets for the 92nd time, Either last year, or the
year prior, Trump showed up at FFA. Democratic candidates could be crawling all over the
place, trying to woo farmers away from the Trump campaign. Some people who know more
farmers than me say theyre fiercely proud and the $28B promised to them by Trump, to
ease the Chinese buying strike that tariffs caused will have no impact on themthat
its not the way they want to earn a living. My question is, where did Trump get the
money from? I dont remember Congress allocating $28B in farmer reparations.
Was I out that day?
Thursday, the north American Cystic Fibrosis Conference starts in Nashville. That should
be big news for Vertex, which just won FDA approval for Trikafta, a three-drug combination
that was approved for CF sufferers, at least 12 years of age, with at least one F508del
mutation, which should cover 90% of CF sufferers, the FDA said in its approval statement,
less than 2 weeks ago. Also Thursday, Apple launches its streaming video service, Apple
TV+, which will be free with the purchase of almost any new Apple product, and to Verizon
customers, for one year, if they sign up for unlimited services. Even then, at $4.99
p/month, and possibilities to throw it in as a perk with the Apple/Goldman Sachs credit
cardsay for cardholders who spend $200 per/month or more on their card, one can see
how subscribers could start piling up pretty quickly. And in the end, its subscribers
theyre all afteralbeit paying ones, ultimately.
The last event I want to mention is AWDA, starting Nov. 2nd, which precedes
SEMA & AAPEX, the large automotive aftermarket, care/crash/repair conventions, AWDA
for the Warehouse Distributors, so think General Parts Co, Interstate Batteries, and more.
But also, knowing SEMA & AAPEX start after this week, is prep for whats coming,
including the Gabelli Automotive Aftermarket Conference. Just remember, before going to
bed, next Saturday night, turn your clocks back one hour, and enjoy the extra hour
resteven as you might hate the earlier darkness, daily, not to mention the myth of
power savings that have been proved untrue, yet the change persists, 2x a year. Europe,
for the record, no longer changes its clocks, and Arizona never didjust in case
youre traveling.
There wasnt much spooky about October, so far, but that could change if the FOMC
decides it would like to see the prior interest rate cuts work through the economy, for a
few months, before adding a third. Im not saying thats whats going to
happen, because I never got the FOMC right when I used to try and predict their moves.
Im just saying, there could be a Halloween surprise, yet, for investors, that none
are prepared to handle. Since the President is still pressuring the FOMC, and some 97% of
the Market placing bets is convinced the FOMC is going to cut, it probably will. But just
think if it doesntthat would explain rates backing back up a little, and the
strength in banks, with JPMorgan Chase making more new all time highs, last week.
JPMs new highs and rates backing up could be an expression about the strength the
economy will be able to manage, if the FOMC does cut, again but wed see the same
reaction should the FOMC decline to cut again, this week, avoiding another shrink of
banks NIM.
In investing, the best defense is to prepare for all possibilities, not ignore an elephant
in the room. IF I were Powell, Id want to appear to be defying the President, and
probably believe waiting to cut right before Xmas, at Decembers meeting, would be
celebrated, too. Will Powell defy the markets and the President? Probably notif for
no other reason than an attempt to shrink the yield differential to try and ease the
strains in the REPO market, Ive read. The problem with that theory is that the yield
differential has been around for years, and the REPO market only recently started flying
off the handlesince the first of the 2 most recent interest rate cuts. Chew that for
a few minutes before deciding whether your portfolio would be best served by some
protection.
ECONOMIC: (Highlights only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
October 2125, 2019 ANOTHER EARNINGS CRUSH
Its a tamer Economic Calendar than the one weve seen for a couple of weeks.
And it appears that most of the FOMC is observing a quiet period a week prior to its own
meeting, Even though the NY Federal Reserve Bank (NYFRB) is partnering with the World Bank
Group (WB) for a Jt International Seminar on U.S. Dollar Liquidity Management &
Payment Operations, as of this moment, it offers the most compact schedule weve ever
seen for a 4-day conference, yet not a single big headliner. It will cover the transition
from LIBOR to SOFR, offers twice daily tours of the Gold Vault, will discuss US Treasury
REPOS (operations extended through Jan 2020), and Reverse REPOS. Speakers include
individuals from SWIFT, SIFMA & the US Treasury, JPMorgan, S&P, DTCC, and
especially interesting to us, US Treasury Office of Debt Management, just as the US debt
has grown by almost $1 trillion in 2019. It starts Monday, when Fed Gov. Bowman, newly
confirmed by the Senate, is in Frankfurt speaking at an ECB Conference on Gender &
Career Progressionnot exactly a place where one expects comments on interest rates.
Also Monday, Canada will be holding Parliamentary elections that may sees current PM
Trudeau exit stage right.
The marquee event of the week is the ECB Monetary Policy Committee meeting, and follow up
press conference thats destined to be Mario Draghis last as head of the ECB.
He leaves on 10/31, and Christine Lagarde, the recently departed managing director of the
IMF steps into his shoes at the ECB. Aside from the ECB meeting, the US Economic Calendar
is filled, mainly, with housing data including September Existing Home Sales on Tuesday,
New Home Sales on Thursday, along with preliminary Durable & Capital Goods Orders
& Shipments.
The Earnings Calendar includes many airlines, lots of small banks we dont cover,
some of the bigger biotechs, Discover Financial, Capital One Finanical, and Visa, for a
read on consumers. I A&D, General Dynamics, Raytheon, Lockheed Martin, and Northrup
Grumman all report, along with Microsoft Wednesday, and Amazon Thursday, when Mohawk, the
flooring company will weight in, along with Stanley Black & Decker, along with
Comcast, in advance of reports from Charter Communications & Verizon, the latter two
reporting Friday. Several Railroads are reporting, also, though its companies like
McDonalds Restaurants, Tuesday, and 3M Thursday, to keep in the back of your minds
because theyre both Dow stocks, and the Dow was the laggard last week. If
theres too much confidence in one stock, that may be McD. On the reverse, 3M has
disappointed over a few quarters, a repeat anyones guess. Also keep in mind Boeing,
Wednesday, another Dow stock that risks more disappointment. Theres an attitude that
with only 2 major commercial airline manufacturersBoeing & Airbusto choose
from, Boeing will once again soar once the 737 MAX is recertified but that doesnt
tell the whole story. Its costs to make good to clients whove had to trim their
schedule due to the MAX being out of service keeps rising daily, as the plane remains on
the ground. Plus, it may be building planes while the MAX is grounded but it cant
collect since it cant deliver them, and its possible airlines with grounded
planes have stopped paying for those, as well.
Its curious to me that two long rumored acquisition targetsCitrix Services
& LogMeInboth report Thursday, and remain independent. A few homebuilders
report, this week, along with Whirlpool, that supplies most of buyers, as does
Sherwin-Williams, like WHR, reporting Tuesday when Pulte Homes will, as well.
If your favorite newspaper features articles on next springs colors and furnishings,
thats because the High Point Furniture Market started meeting this weekend. Mobile
World Congress, in Los Angeles, starting Tuesday, seems like less of a deal than Vanity
Fairs New Establishment Summit in L.A., starting Monday. It sounds an awful lot like
Old Establishment, based on the speakers. They include, aside from Vanity Fair reps,
USCs Annenberg Center, Katie Couris, Viacoms Bob Baksih, Disneys Robert
Iger and Jon Favreaux, NBS Lester Holt, Greycrofts Alan Patricofyou with
me on "old" establishment? But, also, Facebooks Sheryl Sandberg,
Discoverys David Zaslaw, CNBCs Julia Boorstein, RuPaul, Coinbase, Peleton.
Fortunes MPWits International version of Most Powerful Women promises a really
stellar cast of speakers, including Kohls CEO Michelle Gass, ULTA Beautys CEO
Mary Dillon, Morgan Stanleys Carla Harris, Lockheed Martins CEO Marilyn
Hewson, Brandeis University Professor Anita Hill, and that doesnt even scratch the
surface. The rest is
here. The HDA for Pharmaceutical Distributors
meeting is focused on Traceabilitysomething Im sure those least guilty in the
opioid distribution chain wish they could prove they arent responsible for all the
drugs that wound up doing harm. BIO Investor, starting Tuesday, leans towards smaller
names but draws a big crowd, along with some smaller I-banks that host conferences at
nearby hotels, taking advantage of all the biotechs & investors hanging out together.
Business Aviation is in Las Vegas, while Aerospace & Defense is in Dallas. The latter,
too, draws I-banks who want in on the act, UBS hosting the reception, Hart Energy hosting
a parallel event.
The Tokyo Motor Show starts in the 23rd, subtitled "Open Future."
Its hosted by the Japan Automobile Manufacturers Assn, the press days the 23rd
& 24th, and not where non-Japanese manufacturers debut their hot new line
of cars. While American manufacturers compete with the locals & makers of vehicles
from every other country in the world, trying to sell to the Chinese, non-Japanese
automakers recognize the dominance of Japanese companies in Japan, and arent trying
to dislodge them. And even then, the problem is the Japanese sales tax hike, postponed for
a couple of years, was instituted on 10/01/2019, which probably pulled forward sales, and
will hurt end of year sales.
Friday, the American College of Gastroenterology starts its Annual Scientific Meeting
& Expo, even as the Cleveland Clinic opens its Sleep Disorders Center. With another
big week of earnings the week after this one, it will be awhile before I-bank conferences
return in great numbers but when they do, itll make your head spin because
theyll be so numerous, rushing to get into the act before the holidays start drawing
PMs out of town.
If you missed it, Trump has backed down, saying the G7 will look for a new location,
rather than hold its June 2020 meeting at his Doral Hotel & Golf Course, Id say
thats good news for the G7, since the property is so big, its a nightmare to
secure. And with planes constantly flying overhead, to get to Miami International Airport,
preventing a terrorist strike would be nearly impossible. I got married there, pre-Trump
ownership, so Im very familiar with the property. Its so large, with so many
buildings, that no sooner does renovation of a building finish, than it winds up on the
list of buildings to be renovated next. The proximity to the airport is exactly what makes
it so ill-suited to a meeting with all the leaders of the 7 major economies in the
worldex-China. The funniest part of the whole affair is how foolish Mick Mulvaney
looks for defending the Dorals selection so fiercely. Then again, no more ridiculous
than the major indices, ex-the DJIA, flirting with new all time highs on Trumps word
that he has a phase one deal with Chinathough nothings in writing, and none of
the terms are detailed, beyond the purchase of more ag products than US farmers can
produce. It that doesnt define a market determined to rise on any whiff of what
could be good news, I dont know what does.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne, 2019 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.
October 1418, 2019 EARNINGS
SEASON RETURNS to a VERY CROWDED ECONOMIC CALENDAR Its hard to imagine a bigger week. The Earnings
Crush of Financials reporting has arrived again. The NY Federal Reserve is hosting its 42nd
Central Banking Series, "The New NormalNavigating a Low-Rate Environment in an
Uncertain World" which starts on the 14th, and runs through the 18th.
Not just US Central Bankers but a few from overseas are speaking as well as
JPMorgans CEO, Jamie Dimon, and even, Bridgewaters Ray Dalio. But thats
not all!
The IMF and World Bank Group are holding their Annual Fall Meetings, separately, then
jointly, wrapping it up on the 20th. Again, Central Bankers gathering there,
along with their Press Briefings, individually, and together, along with the G20 & G24
who are planning press briefings, also. Just to be clear, the Joint World Bank Group/IMF
(Intl Monetary Fund) Joint Fall Meeting doesnt see an opening keynote until
the 17th, because each of those institutions hold their own fall meeting,
separately, before the Joint Meeting begins. And the Joint Meeting itself goes on for 4
days, through the 20th but most of the poobahs attending leave after the Per Jacobsson
lecture, this year to be delivered by former BoE Gov Mervyn King. And if the organizations
named, so far, arent sufficient, with their several times a day press conferences,
JPMorgan, Citi and UBS host I-bank "seminars," for investors, concurrent with
those meetings. The IIFInternational Institute of Finance hosts its own concurrent
meeting but in NY. And so its said, both the World Bank Grp & IMF have new
leaders, the latter because Christine Lagarde, the former managing director, takes over
the ECB on Nov. 1st. Her replacement at the IMF is Kristialina Georgieva, who
started October 1st, and is a Bulgarian economist, the first time the managing
director isnt from one of the G-7 countries. The new World Bank Group chief is David
Malpass, a one-time (or long-time) economist at the late Bear Stearns. He was hand chosen
by Pres. Trump and his advisors.
And then, if that werent enough the Dallas Kansas City Federal Reserve Banks host a
joint conference on "Energy & the Economy: Markets in Transition, at which both
will speak. At the risk of sounding like an infomercial, but wait theres more: Fed
Governor Brainard will speak on the Future of Money in the Digital Age, Wednesday, at a
Joint Peterson Institute/Princeton University Center for Finance event, Wednesday, and the
chairwoman of the FDIC will open its 9th FDIC Consumer Research Conference, on
Thursday. But wait, theres even more.
Super Dove St. Louis Fed Pres. opines on "Monetary Policy Options," @2019
Monetary & Financial Policy Conference, in London, with a Q&A, in London at 4:25am
Tuesday morning, or as we prefer, Monday overnight. Can you see why a Fed speaker would
have to go overseas, because the IMF & World Bank meeting in D.C., the 42nd
NY FRB Central Banking Series, and Dallas & K.C. Fed Conferences isnt quite
enough? Me neither but thats what hes doing. And so its said Fed
President Evans is also speaking, Wednesday & Thursday, while the NY Fed Chief John
Williams will keynote the Managed Funds Assn Outlook Conference, Thursday, in NY,
and Fed Vice Chairman Clarida is discussing "US Economic Outlook and Monetary
Policy," Friday, at the CFA Institute Fixed Income Management Conference, 2019.
Williams is participating in a fireside chat at the NY FRB 42nd Central Banking
Series Conference, as well, Tuesday.
And with all that on the Economic Calendar, wed be remiss if we didnt point
out some Economic data coming, though Monday is a holiday for data, though hot for
Equities, which trade regular hours, despite the bond market being closed for Columbus
Day. Tuesdays tariff increases were suspended last Friday, when Trump announced a
partial deal with the Chinese, after saying he wouldnt accept a partial deal. Trump
is perhaps the greatest flip flopper in Presidential history, and that may be one of the
nicest things we can say about him. Tuesday, the NY Fed releases the Empire State
Manufacturing Survey, not that theres much manufacturing in the state, anymore.
Wednesday, look for MBA Mortgages & Refinance Applications, US Sept Retail Sales,
August Business Inventories, Natl Assn of Home Builders Oct Housing Market
Index, and at 2pm, the Feds Beige Book. Thursday, in addition to the usual weekly
Jobless Claims, well see the Philly Fed Oct Business Outlook Survey, Sept Industrial
Production/Capacity Utilization, and the EIA weekly Petroleum/Gasolne/Distillates Report,
delayed one day by the Columbus Day holiday.
So the fact that nearly every money center bank in the country is reporting earnings, this
week, a short week at that,. those reports shouldnt take a back seat to the rest of
the weeks activity. We have Charles Schwab reporting but its business update on
Friday, which doesnt make much sense but thats the scheduling, as best we
could confirm it. The mass market brokers are of particular interest after they all
announced elimination of commissions for trades of US stocks, ETFs, and options traded
online. Schwab is the only one with an expanded business in wealth management, compared to
E-Trade & Interactive Brokers but still, all of them will have to adjust forward
guidance, given the surrender of trading commissions. Also, we could NOT confirm Goldman
Sachs report on Tuesday. It usually reports a week after its fellow brokers so I
wouldn't count on that occurring Tuesday, either, even though the providers who list it
then are usually very reliable.
One could assume the week is all about financials, and they do dominate but theyre
not the sum total of the earnings reports coming. For instance, Tuesday, alone,
theres also JB Hunt, a trucker, Omnicom, the massive ad agency, Prologis, REIT owner
of warehouse spaces, United Airlines, and United Health. Wednesday, non-banking reporting
are expected from Abbot Labs, ASML, the chip designer, cell tower operator Crown Castle
Intl, IBM, Kinder Morgan, Netflix, Steel Dynamics, and United Rentals.
Thursdays notable non-financial earnings are expected from General Parts, Honeywell,
Intuitive Surgical, Philip Morris International,, PPG, the paint company, Snap-On, &
chipmaker TaiwanSemi Microelectronics. With the ramp to 5G wireless networks, and the many
devices that will require new chips, modems & routers to handle 5G, TSM which makes
private label chips for its fabless chip clients, the road ahead looks paved with coins,
if not gold, ahead. Friday, non-financial reports are expected from Coca-Cola, Gentex (the
dimming rearview mirror company), Kansas City Southern, a railway, Manpower, the
employment company, Schlumberger, the oil service company, and Sensient, the fragrance
& spice company. All in, a huge and significant list of reporters, in a week filled
with financial companies reporting en masse.
Which brings us to the Event Calendar, the Edison Electric Institute meeting underway
Sunday, the part about "Mutual Assistance" something here, in South Florida, we
know well, since it is only with neighboring states sending in their electric utility
workers to help that can be credited with restoring services within 7days of a
storm-related outage. The AGAAmerican Gas AssociationExecutive Conference
starts Monday. Its natural to look at MIPcon, the Entertainment Content Market, in
Cannes FR, and assume it has little to do with US markets but that would be wrong. US TV
Shows often originate overseas, while US Shows are sometimes adapted to foreign markets.
And the keynote list, alone, establishes how influential US companies are. The featured
speakers are from Amazon Studios, RuPaul Charles (Drag Race), Darren Star (Sex & the
City), Twitter, AT&Ts WarnerMedia Entertainment DTC Robert Greenblatt. Also, for
those who dont think 4K or 5K is enough, Sony will introduce a Bravia TV with 8K
resolution.
One of the larger of the weeks events, other than the events mentioned on the
Economic Calendar is G2E or Global Gaming Expo in Las Vegas. Now, with many states passing
mobile gaming laws, its a very different world than it used to be when Las Vegas
Sports Book was the sole, legal, option for betting on sports events. NAB, the National
Association of Broadcasters is meeting in NY, starting Wednesday, co-locating with
AESthe Audio Engineering Society Convention. But as should be obvious, with a quick
glance at the Events schedule, Investment Bank events are mainly surrounding the IMF/World
Bank Grp event, rather than heavily on the schedule. Wednesday offers a few, I-bank events
unrelated to any of the economic events on the schedule but domestic I-Bank events will be
mostly MIA until the bulk of Earnings season is over. Then, therell be one last mad
dash to host events before the holiday season closes in.
Over the weekend, Boeing board decided to separate the CEO & Chairman roles,
Mullenberg remaining as CEO/President and a board member, lead independent director on the
board, David Calhoun, becoming chairman. Many think Mullenberg should be shown the door,
altogether, the 737 MAX grounding a black eye from which he wont
recoverespecially as the bill for the grounding continues adding up. Also notable, a
judge, Friday, agreed that Trump had no right to divert funds allocated by Congress to his
build-a-southern border wall" project. Where was Congress on that issue? It
should have been an item of impeachment, since Trump, representing the legislative branch
overrode Congress allocation of funding. And just as the President cant write
all kinds of laws by "executive order," it cant constantly declare
"National Emergencies" where there are none.
Itll be the longest short week in history, except for equity traders who will get no
day off for Columbus Day. Fridays rip roaring rally on the partial"phase
1"trade deal with China is likely to look a whole lot smaller, in retrospect,
in the coming weeks. Still, the suspension of additional tariffs that were due to be
assessed Tuesday is a welcome relief to businesses & consumers, who are already paying
the price for "tariff man," the self-proclaimed fan in chief of tariffs,
otherwise known, in polite circles, as the flip-flopping President who, it seems, can do
nothing to deter his rabid fans. Thats something it might pay the Democratic
candidates for his job debating on Tuesday night, on CNN. Good luck maneuvering through
this week which is looking like a week to remember, no matter how you slice it. A better
buying opportunity is sure to arrive sometime this month.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
October 0711, 2019 EARNINGS WARNINGS COULD
SUPPORT THE BEARS Gotta give a hand to the Bulls,
who pulled the averages out of the abyssperhaps because both Trump & Kudlow
expressed optimism about this weeks trade talks with the Chinese, in D.C. Trump, on
the other hand, just doesnt get what being the President of the United States means.
After US House Impeachment proceedings were initiated, he invited the Chinese to
investigate Joe Biden and his son, Hunter, also, claiming its about corruption,
wherever its found. Coming from a President many find corrupt, himself, that sounded
rich. But, like Michael Jackson, who just couldnt understand why anyone would object
to him sleeping with little boys, Trump just doesnt get what how the
President of the United States is supposed to conduct himself. And thats a shame for
the U.S.
Even with PPI, CPI, and JOLTS on the Economic Calendar this week, 2 other items stand out
more. First, the Jewish High Holy Day of Yom Kippur, which starts at sundown on Tuesday,
the 8th, and runs until sundown on Wednesday, the 9th. Even the most
casual of Jews acknowledge Yom Kippurthe Day of Atonementin some way, even if
its merely lighting memorial candles for lost, close relatives. You wont find
most Jews in supermarkets, restaurants, or trading on Wednesday, until after Sundown.
The second item that stands out on the Economic Calendar, is the number of Central Bankers
speaking this week. Fed Chairman Powell & K.C. George President George, obviously,
werent cognizant of the Jewish Holiday when scheduling the Fed Listens event in
Kansas City, Wednesday, which the two will co-host. Then, again, only the Jackson Hole
Economic Summit can rival the list of speakers at the 61st NABENational
Association of Business Economics Annual Meeting. The event is star-studded as few non-FRB
events areEconomists, possibly, enjoying a period of celebrity unmatched at any
other time in history. On the 6th, K.C. Fed Pres George speaks, as does Arthur
Laffer (of the Laffer Curve), and David Kotok of Cumberland Advisors, whos
well-known for running Camp Kotok mid-summer, by invitation-only. On the 7th,
Ed Lazeara former White House NEC leader, Ellen ZentnerMorgan Stanleys
Chief US Economist, and Christine Romer of UCal Berkeley all speak @NABE. On the 8th,
in addition to Goldman Sachs Jeff Curie, (on Oil & Gas), FOMC Chief Jerome
Powell will speak (at 2:30pm). Also on the 8th, Richard Curtin, the long-time
compiler of the University of Michigans Consumer Sentiment Surveys, in which Wall
Street puts much more significance than this long-time consumer observer does. The U.M.
Interim Surveys, mid-month, may be based on fewer than 250 respondents, though they aim
for 500. The final monthly survey is based on up to 2,500 respondents. However, the
problem is consumers sometimes fib, and other times, go shopping exactly when they feel
the worst. Other times, they feel so bad they dont shop at all. Knowing when that
line is crossed is art more than science, making surveys of so few consumers all but
worthless. Then, there are parents who must shop, even when their hearts and wallets
arent in it, at alllike for new shoes, because the kids have outgrown or
shredded their old ones.
Also prominently speaking, this week, is the Bk of Englands Governor Carney,
including at a Tokyo Summit on Climate-related Financial Disclosures, an issue US SEC
filings may soon have to include. Overnight, Tuesday, the BoE will publish the Financial
Policy Summary & Record of the Monetary Policy Committee Sept Meeting. Hard to imagine
there wont be more on Brexit in that document. Also this week, the Nobel Prize
winners will be announced, the schedule we couldnt find last week, finally posted
for this week, and duly noted on the Economic Calendar. Of one thing Im sure, Trump
will not be named the winner of the Peace Prize, as he hoped to be last year,
strong-arming Japan PM Abe to nominate him. ECBs Lane is a panelist at the ECB
Conference on Monetary Policy, subtitled bridging science & practice.
Powell pops up again, this week, making brief remarks before the premiere screening of the
KUED film, "Marriner Eccles: Father of the Modern Federal Reserve," taking place
Monday, in Salt Lake city UT. On Wednesday, the ECB publishes its account of the Sept
1112 Governing Council MPC Meeting.
Minneapolis Feds Kashkari is, also, prominent this week, first at NAFOA (Native
American Finance Officers Association), for their Annual Finance & Tribal Economies
Conference, participating in a fireside chat on what his Fed has done in Native American
areas, Monday. Tuesday, he speaks at a Town Hall at St Cloud State University. Then,
Thursday, he participates in another fireside chat with Q&A on the Federal Reserve,
the economy & markets at a Yahoo Finance All Markets Summit, in NY. Thursday is the
day the Chinese delegation, led by Premier Liu, arrives in D.C. for trade negotiations.
Also Thursday, Feds Mester participates in a fireside chat w/Q&A @John Carrol
University, in Ohio. Then, theres ECBs Lane, again, at a CEPR Research &
Policy Network Workshop, occurring late in the evening, in Frankfurt, Germany. Then
Friday, theres Kashkari, again, for a fireside chat at the Council of Foreign
Relations, w/Q&A, at an 8am breakfast. Also, Friday, Feds Rosengren & Kaplan
speak, separately, even as the Federal Reserve Bank in D.C. opens its doors to students,
on "Exploring Careers in Economics."
Which brings us to the Earnings Calendar, as slim as any, ever, in any quarter. The
highlight is Delta Airlines, Thursday, Dominos Pizza Tuesday, the same day Helen of
Troy Ltd (HELE) Reports. HELE was originally scheduled to report and hold its conference
call, after the close on the 8th. Perhaps because of the Jewish Holiday, it
switched the timing to pre-market, on the 8th. Fastenal, Friday, could suffer from the
slowdown of 737 MAX plane building, at Boeing. As those who remember Rosie the Riveter
know, it takes a lot of bolts to build an airplane.
Which brings us to the Events Calendar where NABE remains the Even of the Week. But, a nod
to AAAEs North American Airports Conference, and Edison Electric Institutes
Key Accounts Workshop, starting Sunday, when the aforementioned NAFOA starts, along with
ABAs A.I. in Banking, and SNAC Intl Executive Leadership Forum, Pepsi setting
the stage for some snack winners. The American Trucking Association Management Conference
and Expo, ATA MC&E started earlier this weekend but Wolfe Research wont get
around to its Trucking Forum until Monday. Note Microsoft, IBM & Oracle are all
hosting separate customer events, this week, while Mondays biggest even is the
elimination of commissions on US stock & ETF trades at all the discount brokers except
Fidelity, for now. Interactive Brokers was first to drop commissions 2 weeks ago but the
hammer didnt fall at E-Trade & TD Ameritrade until Charles Schwab dropped
commissions last week.
It shouldnt surprise that John Deere, Mondelez & Tyson are speakers at the Wall
Street Journals Global Food Forum but just as the aforementoned big tech companies
all holding customer events simultaneously, its a little surprising that Arm,
Hitachi, and NXP Semiconductor are all hosting Tech User events, Tuesday. Thats 6
large tech companies picking the same week for their customer events, which makes it
difficult for a dual customer to attend more than one. Hormel, which sounds like a perfect
fit for the WSJ event, instead, is hosting its Investor Day on Thursday.
WASET the World Academy of Science of Engineering & Technology, starting Tuesday,
covers Biomedical tech & Biomechanics but, also, Aerospace, Avionics, &
Aeronautics, Aeroponically Grown Food, Biomaterials, Veterinary Medicine, Art &
Design, Animal Genetics, Auditory Brainstem Transplants, Food Engineering, and so many
other topics it would be impossible to list them all. Over 2 dozen subconferences,
including an Anti-Fashion & Styles Conference, so its said.
Last week, the Nasdaq Comp was the only index to finish higher but the other major indices
slashed their losses with Fridays celebration of a meh September Unemployment
Report. Fridays rally snowballed into the close, and exhibited more fear of missing
out, than fear of losing, as if someone was afraid that if they waited until late in the
month, the train would have already left the station. Its that fear of missing out
on the next rally thats characterized the past 9 months of tradingwhich quite
honestly, scares the beheezus out of me. We have an unstable leader in the White House,
who has no sense of decorum, and has picked a fight with our friends and enemies alike,
while praising the worlds most fearsome dictators to the rafters. Given
Octobers well-deserved reputation for scary sell-offs, that are rescued sometime
between the 25th and 31st, its foolhardy to believe the
downside we saw, early last week, is the last of the selling. Its the kind of market
thats better for selling puts on stocks you really want to own at lower prices,
rather than buying stocks, straight out. Ill note the strength in homebuilders
charts, which are usually a better sell, this time of year, than a buy. Other charts that
stood out include Apple, which broke out above resistance, and Edwards LifeSciences, that
surged to a new high, even as Texas Instruments looks poised to break out like Apple. PG
also looks like it wants to go higher, though its become a fairly expensive stock,
as it is.
If I was a betting personwhich Im not, Id bet on more swoons before the
month endsperhaps another early exit from the Chinese negotiators, like we saw last
month, when their trip to farm country was canceledby Treasury Secretary Mnuchin, to
hear him tell it, 5 days after they left. And bear in mind, if youre eager to buy
stocks, right now, recall that impeachment proceedings are ongoing, and likely to reveal
more unsavory goings on in the White House. I wouldnt say you should sell everything
here, because the bulls have repeatedly proved themselves persistent. But I see no reason
to jump in to buy, at the moment either. Its earnings warnings season, if you see
nothing else to deter to.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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.
September 30Oct 04, 2019 QUARTER ENDS,
OCTOBER SPOOKS, & CENTRAL BANKERS EVERYWHERE
Central Bankers seem to be out in force again, along with US House subpoenas as the
Democrats seek to wrap up the impeachment proceedings with speed, so as not to poison the
2020 election against their team. Heres what puzzles me: Why didnt Congress
speak up about impeaching when Trump diverted funds Congress duly authorized to other
military purposes billions towards building his wall? Didnt he usurp Congress
power of the purse, then?
As if it werent enough for our current central bankers to be speaking, starting
Tuesday, at the Federal Reserve Bank in D.C., starting Tuesday, when Fed Vice Chairman
Clarida makes introductory remarks, the St. Louis Fed is hosting a conference that day
too, that promises Fed Pres. Bullard, new Fed Governor Bowman, and FDIC Chairwoman Jelena
McWilliams, and on the 2nd day, a keynote from Fed Pres. Harker, Wednesday.
Later that day, at UCal, Sa Diego, NY Fed Pres/CEPO John Williams will speak. Hes
the one Fed President we can count on to tow Chairman Powells line, and emphasize
data dependence. Later that night, Fed President Evans speaks alongside ECBs V.
President, de Guindos, at the Global Interdependence Center (GIC) Central Banking Series
in Madrid Spain, at 3:45am. eastern time. Along the way, Wednesday, we may hear September
Vehicle sales, even from Ford & GM, who announce sales, now, only quarterly.
Thursdays Central Bank speakers include Vice Chairman Quarles on "Financial
Stability at 10 Years, and Fed President Mester, on inflations implications for
monetary policy. Even more interesting, to us, is the fact that her speech at the Hutchins
Center of the Brookings Institution, includes, also, former Fed Chairpeople Janet Yellen
& Ben Bernanke, along with Olivier Blanchard, the conference "Whats (not)
Up with Inflation." Given the berating Powell and his fellow board members has taken
from President Trump, you have to wonder if Janet Yellen isnt comfortable with the
fact that she was passed over in favor of Jerome Powell. Surely, the past Chairpeople have
to be relieved that Trump is a complication they dont have to deal with. That
evening, Fed Vice Chair Clarida speaks at the Wall Street Journals Future of
Markets, about the same time the French-American Chamber of Commerce Foundation Gala gets
underway. For the most part, that organizations main mission is to promote French
Apparel, Cosmetics, Accessories and shoes, which turns out to be mainly luxury goods sold
in the US.
Fridays September Unemployment Report is the day stocks may spend the week marking
time until, awaiting that number. Last month returned a weak number which the Street
largely shrugged off. In fact, while stocks did finish off small, for the week but seemed
to shrug off Irans attacks on Saudi Arabian oil assets, and the Houses plans
to impeach the president, and even more significantly, the presidents attempt to use
his position to get Ukraine to investigate the son of a political rival. The thing about
our current president is that nothing he does surprises anyway, anymore, and even with
farmers getting the short stick most obviously, in the trade fight with China, his base of
support seems unwavering. Its quite incredible, donchya think?
And after the September Unemployment Report, there are more Fed speakers, including
Rosengren at the Federal Reserve Bank of Boston 63rd Economic Conference,
"A House Divided: Geographic Disparities in 21st Century America," and
Feds Bostic, on the economy, with Q&A, at the 40th Tulane Business
Forum, the URL to stream any of the speeches duly noted for each conference, where such
broadcast is available. Later, in the afternoon, Powell will open a Fed Listens on
Perspectives on Maximum Employment & Price Stability, so be followed, ten minutes
later, by Fed Gov Brainard on "Gauging Maximum Employment in a Changing Labor
Market,", followed by Fed Vice Chair Quarles on "The Importance of Price
Stability & Low Inflation in Todays Economy," which is ironic, since the
Fed has tried, for 10 years, to boost inflation to 2.0%, even as its preferred measure of
inflation, PCE, came in at 1.4% late last week when final Q2 GDP was announced. Anyway you
slice it, there are, perhaps, too many central bankers speaking this week, and
theyre no on the same page.
The Earnings Calendar is slim with just a few highlights, McCormick is often seen as a
proxy for the number of restaurants opened across the country. The more commercial
kitchens, the more spices needed to perk up the food. United Natural Foods has usually
been seen as a proxy for Whole Foods but, today, more supermarkets are beefing up their
Natural & Organic Foods sectionsjust ask Beyond Meat & Impossible Foods, the
former the most visible proxy for vegan and vegetarian adherents, if not Natural or
Organic foods. Today, I still wonder whos eating all those Beyond & Impossible
burgers, since this non-beef eater has no desirelet alone yearning--to eat either.
Perhaps therell be more about restaurant chains at Restaurant Point East, in Austin,
TX, starting Sunday.
Other notable earnings reports will come from Bed Bath & Beyond, a quickly shrinking
retailer, Lennar, and Paychex, Wednesday, and Constellation Brands, CostCo & PepsiCo
Thursday. All in, a snapshot across a few sectors that could lift or slam stocks,
depending on the performance of these companies in their most recent quarter.
Which brings us to the Events Calendar. TCT, is often a boost to Edwards LifeSciences, who
was first to get a valve replacement approved via transcatheter delivery. Ultimately,
Medtronic developed more valve sizes, that settled a pressing issue, and wound up a
licensee of EWs method but its still EW that tends to react most, at TCT.
Cancer Immunotherapy, in Paris, France, is another hot topic in healthcare, with many
drugs working towards FDA approval but few attaining that status, yet. vb2019 and ID Week
(Infectious Disease) both start Wednesday but vb2019 is for digital viruses, so by
definition, involves digital security companies that thwart virus and malware attacks. ID
Week, on the other hand, is for infectious diseases in humans. Monday & Tuesday are
notably light because of Rosh Hashana. Even the least observant Jews observe Rosh Hashana
and Yom Kippur (next week), in some way, even if they dont go to a place of worship.
But I-banks pick up the pace by Wednesday, with Cantor Fitz & Barclays concentrating
on Healthcare, Credit Suisse Minerals, & Wolfe Research Utilities & Energy. The
Cell & Gene Meeting on the Mesa is an annual, that often gets PMs more excited
about Biotechs which have mostly suffered, this year, along with healthcare, as Congress
seems intent on bringing down drug prices.
Thursday, Wells Fargo is hosting a guided tour though the NACS Show. Not only does that
show start on the first, Tuesday, but how could clients need a host to get through the
show? Exhibitors are either chains of convenience stores, looking for franchisees, or
suppliers, like Pepsi, Coca-Cola, Hersheys, Nestle, Hostess Brands, and yes, both
cigarette & vaping companies, the latter under severe fire, even though some 80% of
those sickest indicate theyre not using tobacco vaping products, alone, or at all,
but instead, are using black market CBD & THC warming products. One of the most
interesting events of the day may not be B RileyFBRs Annual Consumer & media, or
Berenbergs US Stockpicker but, instead, HITS: Hollywood Innovation & Technology
Summit, since all the coming Netflix competitor streaming companies are changing the face
of Hollywood Innovation. Of course, to hear CNBC tell it, youd think the only events
this week are the release of Apples new 10.2 inch iPad, Monday, Clorox
Companys Analyst Day (Highlighting New Corporate Strategy), Wednesday, or perhaps,
the many corporate events Thursday, involving Amazon, CBS, HP Inc, Intuit, or perhaps IBEX
Boat Builders.
With the Quarter ending Monday, and the September Unemployment Report out Friday, and
members of the US House dragging in whoever they can, related to Trump & the Ukraine
phone call, it will be very hard for stocks to hold near where they are, let alone rise.
And given were entering October, a notoriously rocky month for stocks, it wont
be surprising if stocks sell off a bit. And dont expect it to get easier, next week,
either. Not only should earnings warnings be expected, during the coming 2 weeks but
therell be more Fed speakers galore, next week, too. The National Association of
Business Economists meeting starts next Saturday. That assures that the next Outlook
is as filled with Fed Reserve speakers as this one is. The downside could work out to be
the easiest path for stocks.
ECONOMIC: (Highlights, only, below. Full International
Economic Calendar here)
© Sandi Lynne 2019 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.
September 2327, 2019 TOUGH to LIMIT PRESSURE TO
CONSOLIDATION at END of QUARTER Central Bankers,
ex-Jerome Powell, are out in full force this week. Even the ECBs Mario Draghi,
whos seemed like a missing person, of late, will be speaking at events this week.
After three FOMC members dissented at last weeks meeting, 2 against a rate cut, one
in favor of a cut twice the size of the 25bps delivered, its possible the rest of
the FOMC speakers will explain what brought them to agree with the cut delivered.
Interestingly, NY Feds Williams will speak at the US Treasury Market Conference,
Monday, jointly sponsored by the US Treasury, the Board of Governors of the Federal
Reserve Bank, the SEC & CFTC. With main Fed Bank enlisting the NY Fed, last week, to
pump out liquidity and all the stops, so overnight rates were dragged back into the range
designated after the most recent rate cut1.75%--2.0%, At one point, overnight rates
soared near 10%, last week, so the NY Feds fire squad had its work cut out to rein
them back in.
What will be different, this week, is the United Nations back in session, with
Mondays Climate Action Summit. We can all be sure that Pres. Trump wont be
showing up for that. I was a little surprised that he didnt try and stop the
testimony by the teenage, Norwegian activist who spoke before Congress last week. Perhaps,
if Trumps winter White House, Mar-a-Lago, on the Island of Palm Beach, winds up
underwater, one day, the realty of climate change will hit him.
Alongside the U.N.s annual sessions, the Foreign Policy Assn meeting, Wed.,
timed to coincide features Lt Gen Veralinn Jamieson (US Air Force Deputy Chief of Staff
for Intelligence, Surveillance, Reconnaisance & Cyber Effects Ops), and speakers from
GS, JPM, World Bank Grp, Squire Patton Boggs, FT US Eco Editor, Lawrence Summers, and more
Fed Pres Bullard offers the welcome remarks at The Fed Reserve Bank of St Louis Conference, "Banking & the
Economy: A forum for Minority Bankers," co-sponsored by every FRB but NY &
Dallas. Other speakers include Liberty Bank CEO McDonald, SDS Global Enterprises Pres Dr
Shirley Davis, Capital One (COF) Deputy Chief Information Security Officer, Commonwealth
Business Bank, DirectorCorps, Industrial Bank St Louis FRB Memphis Branch, Abascus Federal
Savings Bank, Citizens Financial Grp, Natl Bankers Assn, JPMorgan Chase, Fed
Reserve System Chief Information Security Officer, his counterpart at MasterCard, and
similar from LinkedIn, Simmons Bank, and many back office workers & researchers from
the St Louis Fed, Atlanta Fed, K.C. Fed, Louisville branch of the St Louis Fed, and
others. Dallas is hosing its own event, on Trade & Immigration, which explains why it
begged out of the St Louis FRB event.
Housing data stars, this week, with the FHFA July House Price Index, and the S&P
Case-Shiller 20-city Home Price Index due Tuesday, along with Aug New Home Sales on
Wednesday, before Thursdays Natl Assn of Realtors Aug Pending Home
Sales. Also Thursday, we get the final look at Q2 GDP, which includes, among other
subsections, Business Investment and PCEthe consumer version of inflation the FOMC
has preferred since the days of Ben Bernanke. Overseas, Thursday, Mario Draghi will open
the 4th ESRB Annual Conference. That stands for the European Systemic Risk
Board, at which BoEs Cunliffe is, also, a speaker, while the ECBs Enria will
keynote with "Future of Stress Testing." As if to make a lie of Jerome
Powells comments, at last weeks post-FOMC meeting press conference, at which
he denied the Fed Reserve has any place in politics or policy, Fed Pres Kaplan opens the
Dallas Feds "Forging a New Path in North American Trade &
Immigration," with Q&A.
Later Thursday, Fed Gov. Clarida will speak at the Fed Reserve Bank of San Francisco, on
"The Federal Reserves Review of its Monetary Policy Strategy." But you
could peruse any day this week, and find a handful of central bank speakers, on both sides
of the Atlantic, when the one entry that might influence stocks, the most, is the fact
that Friday is the last day under T-1 to trade for the month and the quarter. It is the
Shadow Open Market Committees Fall 2019 Meeting, Friday, where Fed Pres. Harker who
tackles another angle in answer to the President, will speak on "Strategies for
Promoting the Feds Independence & Accountability."
Its a week that can made our head spin, as we pulled out event after event, for the
Economic Calendar, never mind the few high profile companies reporting, this week, that
includes AutoZone, the former BlackBerry, now BB, CarMax, Jabill Circuits, Nike, and
Synnexthe latter a large reseller of computers and servers, a VAR, as theyre
called, a value-added reseller who knows more about which companies are adding IT workers
than, perhaps, any company but Dell Inc or Hewlett-Packard Inc. The companies reporting
Tuesday, along, cut across the economy more than sufficiently, and could set the tone for
the entire 3rd quarter earnings season. Wednesday, K.B. Homes and steel
manufacturer Worthington Industries. Thursday, Accenture, ConAgra, FactSet, Micron
Technology, and Vail Resorts round out the weeks reports, again more insight into
the economy, FactSet binoculars on the Street, itself, Vail a window into how the well off
are spending their moneywhether theyre already buying season ski passes, or
condos on Vail Mountain. For a short list of reporters, most of them Tuesday through
Thursday, one could do worse picking out a list of companies who can best illustrate where
the consumer & businesses are, right now, economically and sentiment-wise.
Which brings us to the Events Calendar, which winds down towards the end of the week, as
the Jewish Holidaysspecifically, the Jewish New Year--start Sunday, at sundown, and
run through Tuesday, at sundown, except for those not either Orthodox or Conservative,
which celebrate the Jewish New Year only through Monday, at sundown. But eight days later,
starting on October 8th, at sundown, the highest holy day in the Jewish
religion begins, Yom Kippur, the day of atonement. On that day, starting at sundown, Jews
start fasting, and dont eat or drink again, until the following day, Wednesday,
October 9th, at sundown. So, not only does this weeks calendar wind down,
towards the end of the week but the week of October 6th, will be light, as
wellDaylight Savings Time arriving on the 6th, also, despite years of
protests, scientists proving the semi-annual clock changes dont save a dime in
electricity but do put kids are risk, walking home from the school bus in total darkness.
As a rule, we start each days Event calendar with the I-bank Conference that will
attract the most attention, if there is one. After listing domestic I-bank conferences, we
list domestic industry conferences, then foreign ones, starting with London, because of
the language ease, moving east towards the Asian countries last, before providing a list
of company-specific events, in alphabetical order. When I diverge, its because of
who is presenting, and the news expected. So, last week, JPMorgans 10th
U.S. All Stars Conference, in London, was the 3rd item listed on Tuesday, while this week,
Bk of America Merrill Lynchs 24th Annual Financials CEO Conference leads
off Tuesday, because of the global nature of both banks & insurers, wholl be
presenting. Yes, its in London, so ordinarily would be the first non-domestic event
listed, after all the domestic events but as it was last week, for JPM, most of the
presenters have sufficient US presence to warrant its placement at the top of
Tuesdays list, and note BoE's Gerkin speaking before we open on Tuesday, at BAML's
24th Financial CEO Conference.. But its not only I-bank conferences that prove
prominently newsworthy; The Lodging Conference, in Phoenix, starting Monday, features
every hotel company one can think of, and should turn out to be pre-Q3 earnings
announcements. Yes, therell still be a full week of Q3 to go, but in hotels,. Unlike
in software, theres not generally an end of the month, or quarter, last second
clinched deal that can clinch the quarter for hotelsunless a hurricane brings in
busloads of FEMA workers to sort out the damage, and even then, a hotel or two, or half a
dozen, in a particular region, can save the quarter for a hotel company.
Conferences, like ROTHs 7th Annual Solar & Storage Symposium, timed
to coincide with Solar Power International, both in Salt Lake City, Utah, can pick up
extra attention because of the affiliation. But go down the Events Calendar, and its
hard to ignore how many conferences & expos there areI-bank or not. A list
like Mondays suggests theres some rush to squeeze in events before the next
Earnings Season begins, when portfolio managers become more reluctant to leave town, even
though they know the value of face-to-face meetings with management, the ability to gauge
the confidence management has in their comments, or how tired an IR rep looksperhaps
because closing the quarter has them stressed out. Somewhat lost in Mondays list.
However, is the AGA/IEEE/INGAA Joint Security Conference, which includes several committee
meetings and related events. Normally, the American Gas Association would be one of the
more significant events but not this week. Ill also flag Wells Fargos Consumer
Conference & Beauty Forum, Wednesday, timed perfectly to capture the back-to-school
shopping season that, for all intents and purposes, is done, for 2019.
As irony would have it , Alibaba (BABA) is hosting an Investor Day, or 2 days, really,
starting Monday, in China. Altaba (AABA), the former Yahoo investments that werent
sold when the main Yahoo web assets were to Verizon (in July 2016), is being liquidated,
Monday when checks for $51.50 p/share goes out to AABA shareholders, the pre-Dissolution
liquidating distribution. For the record, Verizon got rid of Yahoo mail, which went to
AT&T. In what universe would Verizon do the same, today? So its said, a good
portion of the specific corporate events listed, this week, are related to SIBOS, the
conference organized by SWIFT, the secure payment & messaging system used by central
banks, and the largest international banks to transfer funds around the world. You might
recall when someone lifted funds that belonged to Pakistan, by hacking into the SWIFT
system.
But having said all this, note that Monday is the first day of trading, post-Quadruple
Expiration, and the S&P rebalance, while, by Friday, markets will be facing the end of
the month and quarter, especially given that the actual last day of the month/quarter, a
week from tomorrow, is a Jewish holiday, that will seriously cut into trading volume. That
will make Friday seem like end of month, which it is for anyone booking to market with
T-1. So expect volume spikes on both Monday & Friday, and some downside pressure on
stocks, into quarters end, as profits are booked, and funds raised are not
immediately redployed, with the worst month of the year, October, yet to arrive. Do not be
afraid to take profitsother PMs will.
ECONOMIC: (Hghlights, only, below.
Ful International Economic Calendar here)
© Sandi Lynne 2019 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.
September 1620, 2019 WHAT IF THE FED
DISAPPOINTS? Im not really sure why one and all is
convinced the Fed will cut rates, again, this week. Granted, the August Employment Report
was weak, the Manufacturing sector appears to have slowed, considerably, but it seems fair
to accuse Trumps trade war for that result, and move on. Another quarter point cut
in rates wont solve anythingand probably wont spur any more borrowing
than is already occurring. And the one rate thats fallen considerablymortgage
rateshasnt spurred as much housing activity than most would have expected,
because rates have hit rock bottom a number of times, over the past 7 years, and most who
wanted to refinance have probably already have done so. My next door neighbor, here only 2
years, is refinancing because he had too little to put down, originally, so was forced to
buy mortgage insurance in order to get a loan. His monthly nut will fall by a little over
$200 a month but thats all the mortgage insurance premium, his interest rate,
otherwise, no lower than hes paying now. And the only reason he can afford to
refinance without mortgage insurance is because the software company he works for was
bought out by a P.E. for cash, forcing him to cash out his stock options.
New Yorkers will be in a sour mood, this week, as the new United Nations General Assembly
is dead ahead, Tuesday "opening day" for the assembly but not for heads of
state, who arrive later. Also this week, The Empire State (NY Fed) Sept Manufacturing
Survey, and Tuesday, US Aug Industrial Production/Capacity Utilization, plus NAHBs
(Builders) Housing Market Index, a sentiment index that, if it reflects anything at all,
reflects traffic into builders communities. Wednesday, well get Aug Housing
Starts & Building Permits, EIA weekly Petroleum/Gasoline & Distillates data,
Facebook Google & Twitter testimony at the Senate Banking Committee, on whether
theyre doing enough to prevent or remove violent or inappropriate content, and the
FOMC meeting decision, referenced in our title.
There are a few strong voices opposed to any more immediate rate cuts, defying a President
whos demanding them. Of course, a President who owns a real estate-related company
would demand rate cuts, because interest rates impact the profitability of his company,
even as hes managed to add another $1 Trillion dollars to the USs already
crushing debt load. Is he envious of the negative rates European countries are paying? Of
course he is but low rates have been crushing seniors for years, so even lower rates will
make it even worse. And, given how unconvincing Powells last press conference and
explanation for the July rate cut ("mid-cycle adjustment") stuck us, whats
he gonna say this time? Just taking back the 2 late 2018 rate increases that,
retrospectively, turned out to be a bad idea? And much as Id love to see Powell
& company defy the president and hold ammo this meeting, thats unlikely to
happen because he knows, as we all do, that Trump will try to fire Powell, and cause a
constitutional crisis in the process. Given funds allocated by Congress were diverted to
Trumps border wall, and the number of executive orders hes issued eschewing
Congressional power, Im surprised there hasnt, already, been a Constitutional
crisis, and how much Congress has let Trump get away with.
Thursday, well get the Philly FedOutlook, US Q2 Current Account, Aug Existing Home
Sales, and an Auction of 10-year TIPS. Elsewhere, Vice President Mike Pence and SEC
Chairman Jay Clayton will be among the speakers at CNBCs Delivering Alpha
Conference, in NY, along with leading investors like Jim Chanos, Nelson Peltz, PG CEO
David Taylor, Leon Cooperman, and high level execs (some founders) from Ares Mngmnt,
RockCreek Grp, JPM Asset Mnmgnt, Apollo Global Mngmnt, PIMCO CEO, State Street Global
Advisors, Marathon Asset Mngmnt, and more. On the 19th, long before the US opens, the BoJ
will weigh in on Rates, and perhaps, more stimulus. Later that day, the SNB, Norges Bank,
& BoE wil also weigh in on rates--all just hours after the FOMC has unveiled its
latest decision. A big day, by any stretch of the imagination.
Personally, I like NY Fed Pres. John Williams topic, Friday, in Zurich, since hell
discuss the Lower Bound on Interest Rates" but, of course, the Quadruple Witch
will rule the day, and probably late Thursday, also, as Quarterly Options, Index &
Futures Expire, Friday, the Indices rebalanced, as they are, after Fridays Close.
Also Friday afternoon, Z1---the Feds Q2 Financial Accounts of the U.S., which
includes Household Net Worthany rise for which Trump will take credit.
Earnings are slim and far between, which will have the effect of elevating most the coming
reports to an importance they wouldnt have in a more crowded weekFedEx
excluded. FDX would be closely followed no matter when its report arrived, as PMs
look for how big an impact Amazons newly issued fleet of delivery trucks has had on
FDX. Dont know about your neighborhood but, around here, I see Prime trucks with the
smiling arrow zipping in and out of traces a few times a day. That hasn't eliminated the
number of P.O., FedEx or UPS trucks I see zipping around my neighborhood, by any means,
but it would be hard to miss all those smiling arrow Amazon trucks, too. As for other
reports, Chewy is noted because its newly public while Adobe, IMO, is one of the
most overvalued stocks out there. Not that it isnt a crucial cog in the internet
wheel, or profitable, it is both, and a little hard to believe it wasnt scooped up
by a major player years ago, but at its current valuation, I cant imagine any
company ponying up now
Which brings us to the Events Calendar, Goldman Sachs 27th Annual
Communacopia Conference, starting Tuesday, the biggest of the I-bank conferences, and a
reason not as many others are scheduled, as there were last week. JPMorgan is hosting its
10th U.S. All Stars Conference, starting the same day, in London, but is
mentioned early on Tuesday because its top US companies presenting, and starting
earlier than out markets open, leaving plenty of time for analyst comments before our
markets open. Wednesday, Jefferies is hosting Consumer Investor Relations, while Thursday,
Credit Suisse hosts a similar eventa Consumer IR 1-on-1 Conference, through Friday.
The C-S event includes a number of Cannabis companies, which remains quite unusual, still,
except when cannabis is the prime focus of an event. Tuesday through Thursday are heavily
populated by I-bank events but I still expect Communacopia and JPMs U.S. All Stars
to dominate the conversation.
Speaking of JPMorgan, it made a new all time high last week. About 2 weeks ago, the stock
was under $107 p/sh, and last week crested $120 per sharethats quite a
comeback, no? Also, note Friday, that the movie version of "Downton Abbey" is
opening, picking up where the BBC TV program ended, distributed in the US by
Comcasts Focus Features. I never, personally, saw the show, because Im not
into period pieces. And its rare for me to get involved in a TV program, of the
appointment-TV kind, other than "60 Minutes," or "CBS Sunday Morning."
So it was a surprise to me when so many of my neighbors and friends mentioned not being
able to wait for "Downton Abbey," to openfriends and neighbors, I might
add, who are more likely to talk about the "Housewives" reality shows, if they
mention TV at all. When I had 3 tennis, ski & swim stores in NY & Long Island,
there was no time for TV, at all. I spent my evenings working, then transported stock
between stores and the warehousean apartment in Great Neck NY. Anyway, of all the
movies opened this summer and coming for the holidays, Abbey was not one I expected to be
met with so much anticipation.
Which wraps up this week, except to repeat, "What if the Fed Disappoints?" I
think Powell can make a better case for standing patthough I NEVER get the Fed
right, so my position is probably totally off base. Another 25bps rate cut is surely on
its way. But what if???????????
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar, here)
© Sandi Lynne 2019 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.
September 0913, 2019 THEY
FELL for it AGAIN!
Between the destruction on the Bahamas, and the anniversary of
9/11, its difficult to look at the week ahead with much optimismespecially
since its quite hard to believe that equity traders, once again, fell for
Trumps suggestion that the trade war is making progress. Granted, the fact that a
Chinese ministry has confirmed the coming October talks make them see more legitimate,
against the several lies Pres. Trump has told about trade negotiations with China. But
still, given a capricious President who doesnt understand the nuances of other
cultures, its hard to believe that the coming talks will make more progress than
those in the past.
Note, also, that Congress reconvenes, Monday, which is often a source of additional D.C.
tensionsespecially as some Democrats are pushing for impeachment proceedings.
Incoming Data includes July Consumer Credit, Monday, JOLTS on Tuesday, when Atlanta Fed
Pres Bostic will also, speak, then Wednesday, PPI, a FINRA Conference, July Wholesale
Trade, and EIA Petroelum/Gasoline & Distillates Report, back on schedule after last
weeks holiday delayed the report.
Thursday morning, in the wee hours, well hear if Draghi & Company is going to
lower rates even deeper into negative territory, while boosting QE, the press conference
after the meeting prior to when US markets open, Thursday. ECB staff will, also, update
their Macroeconomic Projections for the Euro area, just as US FOMC members will, the week
after this one, when they meet, again. Also Thursday, Aug CPI, and the Senate Banking
Committee holds a hearing on Insurance Company Supervision. Friday, well get Aug
Retail Sales & Business Inventories, as well as U. Michigans preliminary Sept
Consumer Sentiment, a poll of 500 people which hardly seems worth the listing on any
Economic Calendar. Im not sure why the head of the FDIC, Jelena McWilliams will
transmit her speech to a Joint Stanford/Journal of Financial Services Research Conference
from Univ. of Stanford, when the meeting is being held in Arlington VA, but perhaps the
FDIC reversed her location, and the city in which the conference will be held.
Ill note the anniversary of 9/11, a part of me hoping that the President
doesnt, since he seems incapable of doing so without injecting braggadocio
thats completely uncalled for. As the NY Times pointed out last week Trump has
variously claimed to have been on the ground, at the World Trade Center, participating in
the recovery, at other times claimed he watched the activity via his gold telescope from
Trump Tower.
The Earnings Calendar winds down, with retailers dominating the list, along with HD
Supply, and Broadcom. OXM, for those who dont know, is Oxford Industries, an apparel
manufacturer whose brands include Tommy Bahamaan opportunity to help support the
islands from which the brand drew its name, no? The week also promises New York Fashion
Week, now mainly moved to Lincoln Center and the Piers on the west side of the city.
Investment Bank events return in force, Morgan Stanleys 17th Global
Healthcare Conference probably the largest, Monday, though Tuesdays Deutsche Bank
Technology Conference, out in Vegas, could be a close competitor. Note, also, Barclays
Global Financial Services and Credit Suisses Basic Materials, also Monday, along
with a re/code Conference, for which the National Retail Federation (NRF) is the
co-sponsor. Meanwhile, PCB Design, out in Santa Clara, revs up chip talk, just as Apple
prepares to introduce new products, on Tuesday--many betting it wont just be
iPhones, this time. Some hope it will, finally, reveal a launch date for its Apple TV
Streaming Service, for which stars like Jennifer Anison have signed up.
I-banks are not confining themselves to US events, as the Events Calendar makes clear. On
Monday, UBS will host Business Services, Leisure & Transport, in London, where Credit
Suisse is hosting, separately Global Steel & Mining.
In addition to DBs Tech Conference, Tuesday, RBC Markets is hosting Global
Industrials, Bk of America Merrill Lynch Global Real Estate, Wells Fargo Securities
8th Net Lease REIT Conference. In Indianapolis, FTR is the annual Forecasting
Transportation Conference that usually moves transport-related companies. In Canada,
Tuesday, BMO will host its 20th Annual Media & Telecom Conference, Peters
& Co Ltd its 2019 Energy Conference. Farther East, JPMorgan will host, in London,
Pan-European Small/Mid Cap Conference, and Jefferies Specialty
Pharma Leadership Summit, & Raymond James North American Equities, even as BBVA hosts
Iberian Day, all in London.
And so it goes for the rest of the week, Wednesday, Morgan Stanleys 7th
Annual Laguna (Industrials) Conference is the largest event Wednesday, but we
shouldnt ignore BMO Capitals 19th Annual Back-to-School Technology
& Business Services Conference, Jefferies Automotive Technology & Commercial
Mobility Summit, and SVB Leerinks West Coast Biopharma Summit. Commercial events
worth noting, Wednesday, also, include Boston Biotech Week, and the several
sub-conferences, Multifamily Housing council Fall Board of Directors & Advisory
Committee Meeting, IPAA for Independent Oil Companies, and All Things Organica
Natural Products Show, just as the fight over calling liquid products from soy, almond,
and other plans "milk."
Overseas Wednesday, Berenberg hosts Food Ingredients and Chemicals, even as Carriers World
and the Retina Sciety meet in London, Phama Sciences meets in Glasglow, Kepler Cheuvreux
host its annual Autumn Conference in Paris, Seatrade Marine Interiors Cruise & Ferry
meets in Hamburg DE, and Pareto Securities hosts its 26th Oil & Gas
Offshore Conference. Youd think the schedule would start winding down on Thursday
but it doesnt, much. Raymond James will host The Connected Consumer, Jefferies
Fitness & Wellness, Credit Suisse Women in Finance: Perspectives on Leadership, in NY,
and European Industrials in London, where Citi will host Argentina Day. Note, too,
MasterCards Investment Community Meeting, & STM Microelectronics
Developers Conference, even as US Bancorp hosts an Investor Day, too.
Friday, its all industrial events, including the Heart Failure Society, in
Philadelphia, Ovarian Cancer Research in Atlanta, MSKMemorial Sloan Kettering its 2nd
Symposium on Interventional Cancer Pain. In NY, and London Fashion Week, in London,
obviously, even as IBC2019 is the largest Broadcast Content, Media, Entertainment, &
Technology Event outside Broadcast Asia. Thats in Amsterdam, while Credit Suisse
hosts Australia Corporate Day in Tokyo. I-banks are rushing to get in their most
well-attended conferences before the Jewish holidays start on September 29th.
Meanwhile, for sheer fun, on the 14th, Target hosts a retrospective of its 20
years of Product Collaborations with designers from around the world. You could try your
neighborhood target but will probably be luckier online. Either way, the hundreds of items
on offer at reasonable prices should bring throngs of shoppers into its storesthough
only some of those will actually have pieces from the collection available for pick up and
purchase.
Given the President of the United States is so capricious, and flip flops on his positions
regularly, its quite amazing to me that stocks mounted the kind of rally they did,
Friday, especially, on plans for a trade talks on an unspecified dateeven if the
Chinese did confirm the plan. Trump thrives in chaos and could change his mind a dozen
times between now and then, yet Equity Traders seem determined to look on the bright
sideno matter how insane that might strike me. But even given that, the financials,
especially, have soared and crashed so regularly, you could do worse than sell the rips in
that group, then buy the dips. JPMorgan, alone, has traded in a better than 10 point range
on the rips and dips, and you could do worse picking JPM over other financial choices.
MasterCards Investor Meeting is less sure a bet. Its hardly undiscovered, and
really hasnt range tradedmore a one way street up. Be careful out there. A
President who thrives on chaos cannot be trusted, as if you didnt know that,
already.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne, 2019 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.
September 0206, 2019 Whew!!! THAT WAS
CLOSE! IT appears Dorians impact on Southern
Florida will be glancing, at worst, though this is one storm weve been preparing
for, for over a week, and its path keeps zigging and zagging. Therefore, the so-called
"error cone" continues to include our location. And if past is prologue, which
it seems to be with FPL, unlike fund returns, if the power goes out, well be out for
at least a week. Makes me wonder where FPL (NEE) spent the $20B its customers have paid
since 2006.
If you didnt know Mario Draghis term atop the ECB was done October 31st,
and didnt know Christine Lagarde was his replacement, you might be forgiven for
thinking de Guindos, the V.P. of the ECB, was auditioning for Draghis position,
given the number of times hes speaking, or presiding over a panel at a conference,
this week. Seems hes everywhere. Also notable, Merschs hearing on his
nomination to be Vice Chair of the ECB Supervisory Board, Wednesday. In that position,
hell be supervising US banks doing business in the ECBs region of control,
which is all of the European continent but not the UK, Ireland, & Scotland.
Some Economic Calendars list Minneapolis Fed Pres Neel Kashkari s hosting a Town Hall on
Sept 5th but we discovered thats not whats happening. The Minneapolis Fed will
host a Town Hall, at 7pm on 09/05, but its with one of its economists, Rob
Grunewald, speaking for the Fed, on "Investing in Minnesotas workforce
infrastructure: Early care & education as economic development" (Minneapolis).
So what is on our Economic Calendar? August Vehicle Sales, though neither Ford nor GM
announced monthly sales, anymore. Well get the PMIs & ISMs, all leading up to
Fridays August Unemployment Report, and Powells speech from Switzerland, on
the "Economic Outlook and Monetary Policy," which will be streamed at the link
provided, or at the Federal Reserve Banks D.C. Hdqtrs.
Before then this 4-day work week includes a busy Wednesday, with the Feds Beige
Book, the NY Feds John Williams keynoting "Real Return XIII: The
Inflation-Linked Products Conference, in NY. Also speaking, Fed Gov. Bowman and St Louis
Feds Bullard at his Fed Banks Fed Listens event. Later in the day, after the
Beige Book, Fed Pres Evans opens "Forging a New Path for North American Trade: The
Auto Sector," at the Chicago Feds Detroit branch, which will last through the 5th.
August data will be the feature of many overseas countries Economic Calendar, also.
Focus has been on the UK, creeping into Brexit, on 10/31, and now, Germany, which posted
some weak July data the EU cant afford to continue.
Earnings are still dominated by Retailers, again, but thats not all, since Navistar,
Palo Alto Networks, Ciena, Meredith, and Hovnavian report. And among retailers, none are
more eagerlyperhaps nervouslyawaited than Lululemon, especially after Ulta
Beauty, last week, posted a rare disappointing outlook. For retailers on a roll, the
question is, always, when will they stumble? LULU has been on a roll since it recovered
from a spate of manufacturing misses but like all things fashionable, fads end, at some
point. Remember Fila and Ellesse? Few do but in the mid-1980s, they were the
sportingwear brands to beat. Today, theyre owned by Korean companies that were able
to pick up the brands on the cheap, their dominance long gone, Nike the one to beat. And
if you watched any US Open tennis, this past week, you know Nike gear and its swoosh are
everywhere. Nike, however, stopped renting a booth at the US Open years agoperhaps a
decade ago, despite collaborative lines with Roger Federer & Rafael Nadal, the #1
& 2 players in the sport, for years. Roger is now with Fast Retailing, Rafa still with
his trademark bull horns, at Nike. Also with Nike, collaborating on her own line, Serena
Williams, back from a difficult and nearly deadly child birth making a serious run for her
24th title in a major.
Which brings us to the Event Calendar, which stands out for the number of Investment Bank
events taking place in the US, even though we all know plenty of traders will delay
returning to New York until after this week. Of course, those with kids in public school
have no choice, school resumes on Tuesday, everywhere but Eastern Florida, which canceled
classes last week, even though it didnt appear then, that Hurricane Dorian would
make a direct hit. (With 185 mph sustained winds, and 225 mph gusts, hurricane sounds so
much less serious than cyclone, which is generally reserved for storms that originate in
the Pacific Ocean.) So what stands out within all the I-bank conferences? Barclays Global
Consumer Staples, does, because of the strength in that groups charts. With yields
higher than Treasuries, its been a favorite since July. Deutsche Banks
Aircraft Finance & Leasing Conference is another highlight, given the airlines pushing
out when the Boeing 737 Max will return to their schedules. Barclays CEO EnergyPower
Conference is another, notable event, along with UBSs Chemicals, Barclays
Media & Telecom, and we only just finished up Tuesday.
Wednesday, Goldman Sachs Global Retailing Conference, Citis Biotech, Wells
Fargos Healthcare, and Bairds Global Healthcare will all be well
attendedeven if thats via webcasts, rather than portfolio managers attending,
in person. Also note, Cowens Global Transportation, Citi Global Technology, D.A.
Davidsons Technology, and KBWs Insurance Conference. Citi, very busy this
week, is also hosting a GEM Conference, Global Emerging Markets, for those whose brains
are still checked out. Whats surprising, is how many overseas conferences these same
names are hosting this week, too. The I-banks are everywhere, Wednesday the busiest day
for them, locally plus overseas. By all means, study the rest of the Event Calendar,
because its an exceptionally busy week and unlike some years, the Jewish Holidays
(Rosh Hashana 09/29, Yom Kippur 10/08, about as late as theyve ever been.)
arent until the end of the month, which shifted lots of scheduled events into slots
earlier in the month. What surprised me about the stock charts I havent looked at in
a few days, was the strength in four retailers, notably Target and Walmart, as well as TJ
MAxx & Ross Stores. Even then, smaller names like Zumiez have charts a lot less awful
than I expected. ZUMZ reports this week, Thursday, though, and I have no sense of what
its report will look like. So please dont interpret the mention as an
endorsement. It tends to do well for Back to School shopping, and is a summer retailer,
given the skateboards and surfboard apparel it sells but with many mall stores, its
surely suffering a lack of traffic, like the rest of retail.
So, tell me what Trumps next tweet will be, and I can tell you what stocks are
likely to do. Otherwise, Im firmly in the downtrend camp, amazed at the
Streets bullish response to every Trump Tweet claiming the Chinese either
called him, or are desperate for a trade deal. The Chinese have called him out as a liar,
point blank denying they called, as Trump alleged, while in Biarritz France for G7. And
since Orientals tend to think in 100 year blocks. Whether Trump is kicked out of office in
2020 or gets a 2nd term, and has 5 more years matters little to Xi, whose
leader for life. He might even dial up his resistance to a deal, if the Democrats manage
to nominate a candidate he finds more palatable and malleable.
So, first, expect volume to be fairly low, as PMs continue to remain out of town.
And watch out for the downside. September is notorious for being a bad month for stocks,
and there are more than a few statistic mongers who say September is even worse after a
treacherous August. PMs with first half gains may just decide to sit out this month,
hoping for more downside so they can pick up stocks on the cheap, in Octoberlate
October, if history is any guide.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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 2630, 2019 CONSOLIDATIONEVEN a COUPLE of HUNDRED POINTS RALLY BEFORE
DOWNSIDE REUMES A family
emergency keeps me from completing the Outlook, this week. I believe stocks could see a
bit of a rebound off last weeks slam but more in the order of short covering in
advance of a long, holiday weekend, rather than a desire to load up on stocks, now,
cheaper. The path of least resistance, at the moment, remains down, especially this time
of year, into whats often the worst months of the year. So below, the Outlook that
was in progress before my mom went into the hospital, and before she signed herself out,
just presuming Id move into her house to take care of her, Sunday and nights, until
shes better.
Equity markets erased losses of as much as (-121) in the DJIA on Friday morning, after
Powells Jackson Hole speech, becoming neutral, if anything. Then Trump started
bashing Powell again, and with all the stupidity and crassness hes become infamous
for, questioned in a tweet whether the USs worst enemy isnt Powell rather than
Xi (of China), and before you could say supercalifragilisticexpialidocious ({©}
"Mary Poppins"), the DJIA was down more than (-400) points the S&P down
(-55.58). The Fed and markets know its Trumps trade war causing corporate
hesitation despite very low rates and Trump, afraid of getting blamed, is completely
underestimating the American people by hoping to convince us that its interest rates
set by the Fed, not his trade war, thats slowing the US economy, responsible for
some of the slowing globally, and probably going to push the US and the rest of the world
into recession. Trump can tweet all he wants to make Powell & the FOMC his scapegoat
but wethe American peopole--are not stupid enough to believe him.
Stanford U, U of Chicago Booth School of Business, and the FRB Atlanta publish a Survey of
Business Uncertainty, monthly, published by the Atlanta Fed. The next one is out this
week, at 11am et, on the 28th. A full explanation of the Survey is at Econoday here.
EARNINGS: Hows this for hot news? I went to check when Autodesk is reporting its
quarter and was met with an ad to buy its software for 20% for the last 4 days of August.
Any quarter reported should have ended before the last 4 days in August, so its
probably not a last ditch effort to "make" the quarter but, now, I wonder how
often ADSK runs such end of month promotions? And for how many days? Also FYI, for the
first time, this back to school season, my local Target store was selling Dell
Technologies laptops and a desktop. DBI is Designer Brands formerly DSW reporting Thurs,
NCI Bldg Systems & PlyGem merged to form Cornerstone Building Products CNR NOT
reporting this week but listed by some systems including Thomson Reuters. Reported 08/07.
One of the Tennis Worlds 4 Slams, and the biggest tennis tournament in the US, the
U.S. Open, debuts on Monday, through September 8th. However, sharp-eyed tennis
fans could have caught the qualifying matches, as well, some of which were broadcast by
Walt Disneys ESPN and/or ESPN 2, as the tournament will be most of the next 2 weeks.
Ralph Lauren outfits the officials and volunteers, like ball girls & boys, while
Tennis Channel plays repeats of matches all week. Discovery broadcasts in 68 European
countries on Eurosport; Tencent broadcasts in China, beside CCTV, JPMorgans Chase,
Daimlers Mercedes-Benz, IBM and American Express are exclusive sponsors, which means
MasterCard & Visa are not accepted at Flushing Meadow Park (NY, the site of the 1964
Worlds Fair), though Naomi Osaka, vying for #1 or #2 in the world, prominently
displays the MA logo on her visors and elsewhere. Under Armour (UAA) is one of the few
athletic companies allowed to sell U S Open apparel on the grounds, other than Ralph
Lauren, and has some of the best designed shirts of anyone, RL designing "Pony"
shirts rather than the detailed NYC buildings & Tennis-specific designs UAA puts out
(Though their polyester shirts pill, over the years, the designs are so terrific, I
forgive them.). Sky (CMCSA) and Fox Sports carve up other parts of the world, like India,
Australia, and the Caribbean, while WOWOW is Japans satellite broadcaster. Emirates
Airlines is the official airline, not just for the tournament but for the entire tour, the
whole year round. Theres much drama in the sport, this year, as Serena Williams
tries to comeback from a difficult pregnancy and post-birth scare, accused of cheating
with her coach at last years US Openher fight with the referee over that
accusation lacked "Dallas" or "Dynasty" hair pulling and drag into the
pool but was loud and acrimonious enough to rob Osaka the joy of winning. Andy Murray, who
all the top players bid tearfull farewells, a couple of years ago, when it appeared his
hip ended his career, consulted with the Bryan Brothers surgeon, had the same
surgery as one of them, and is making his bid for his first, singles championship in a
major in almost 16 months. Fifteen year old Coco Gauff is the youngest player entered and
a talent to behold, just as Boris Becker was at Wimbledon in 1984 or 85, and the
best American youngster since Jennifer Capriati, whose dad owns a sports bar in Delray
Beach FL. (She just beat current #1 female, Ashley Barti in a Winston-Salem exhibition,
taking a tie-breaker 10-8.) Meantime, the dominant male players are all over 30in
the case of Roger Federer, well over 30 as hes about to turn 39, and still a top 4
player, many younger top 15 players of the belief that the 4 old guys refusal to
retire has cost them many a title. But Rafael Nadal won his 12th French Open
this spring, and would win more tournaments if his body only kept up with his head and
desire. If you have the time, Sunday the 25th is Kids Day at Flushing Meadow,
and free, providing a wonderful opportunity to participate in planned events for kids or a
mere walk around the grounds to see the pros practicing. You wouldnt believe
how beautiful a park in Queens could look, if you havent been to the Open. (Remind
deBlasios tourism agency to send me that check for promoting the Open! LOL! Only
writing all this down made me realize the Open is nearly as commercial as a stroll through
a Disney or Universal park. )
Daiwa Research Tour on the West Coast covers IT, consumer, & Healthcare companies.
TUESDAY, 08/27, Jefferies Semis, IT Hardware & Communications Infrastructure 1x1
Summit in Chicago confirmations from GLW, CSCO, CEVA, GLW, CSCO, Akoustis Tech, GSI Tech,
ASML, Adtran (ADTN), AVX, LSSC, Radware, QUIK, Everspin (MRAM), STM, FORM, Photon Control,
NXPI, AMDEverspin, Omeros Corp, Calix, Adesto, confirmed. And now would be an opportune
time for me to explain why certain events are listed more than once. Every time an event
is listed, it means I searched out participants. Sometimes I find a couple but,
increasingly, lately, I find more if I wait until the last minute. Other times, especially
for overseas events, I find so little information I go back to the prior years
event, and provide previous confirmed corporates, as guidance. Likewise, if Im
entering an event on this weeks outlook, and see several entries for a single event,
I might conclude Ive already done my darnedest to search out participants, and more
time should not be devoted.
ECONOMIC: (Highlights, only, below. Full
International Economic Calendar here)
:
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the author's,
alone, and should be just one factor in more complete due diligence.
August 1923, 2019 K.C. Fed Jackson Hole Symposium The highlight of the week should be the K.C. Feds Jackson
Hole Economic Symposium, we know Powell is speaking on the 23rd, at 10am, and
the RBAs (Aussie) Lowe on the 24th but to learn more, one had to wait
until after the event began, on the 22nd, which is when the Agenda is released.
Esther George, the Pres of the K.C. Fed Reserve, by the way, was one of the 2 dissenters
to the "mid-cycle adjustment" rate cut on July 31st. She is likely to open the
event on the 22nd. The ECBs Couere, Lane & Lautenschlager are
panelists on Thursday, according to the ECBs weekly schedule on its website.
The G7 Heads of State Summit is about "Inequality," a subject Trump doesnt
seem to know much about, or have any sympathy for. Empathy is not his strong suit in the
best of times but surely not on the subject of Inequality, when he just ordered ICE to
base entry on a means test. Wonder if his ancestors would have been admitted had there
been a means test, back then? The G7 Presidency lies with France (Macron presiding); until
January 1st, 2020, when the US takes over. Attendees include: Pres. Trump,
Germanys Merkel, Italian P.M. Conte, Japans P.M. Abe, UKs P.M. Johnson,
and Canadas Trudeau. The shindig is in Biarritz France, thru 26th. A nice
place to ski in early or late winter.
Some may wonder whether scheduling the G7 Summit starting the last day of the K.C. Fed
Economic Summit, in Jackson Hole, causes divided loyalties. The answer is no.
The G7 Summit is for heads of state, the K.C. Symposium for Economists, who may be
academics, central bankers, or similar. The irony is that the leader of the most
influential central bank in the world, the US Federal Reserve Bank chief Jerome Powell,
may be the only participant who isnt an economistother than some journalists
invited to attend. At G7, its all heads of state, plus the leaders of the EU
Commission & European Council who are invited as guests, to observe, only, As it is,
the EU is well represented, anyway, with the leaders of France, Italy, and Germany, EU
members who are, also, members of the G7. For that matter, the U.K. is also an EU
memberat least until October 31st.
Beyond those meetings, Wednesday, the FOMC will release its Minutes of the July 3031st
meeting, at which the Fed cut rates 25bps, with 2 dissenters. I think what most want to
read is any insight into whether any members advocated for half a point cut (50bps),
instead of the quarter of a point delivered, and if so, how many. Fed Vice Chairman for
Supervision, Quarles, is speaking but its at a Community Development Anniversary
Event, so not likely a place or topic appropriate to discuss Fed policy on "mid-cycle
adjustments," as Powell preferred to call the rate cut. Also this week, July Existing
Home Sales on Wednesday, and New Home Sales on Friday. Also, note, overnight into the
20th, a new Monthly Lending Rate China is starting to unveil, for the first time, this
week, then on the 20th of each month, thereafter. I learned of this through Rockefeller
Strategic Currency Briefing, without which, I probably would have missed it, since I
didn't see it on NYTimes.com, Reuters, or CNBC, either Sunday night or Monday morning.
Write Barbara Rockefeller for a trial and/or access to past daily Treasury newsletters at,
ber@rts-forex.com
Retailers are heavily represented on the Earnings Calendar. Most wont be as bad as
Macys was, but few will be winners, either. Then, again, weather hit retailers that
should have been enjoying springlike Home Depot, Tuesday and Lowes Wednesday.
The wet weather and floods that kept farmers from planting probably interrupted spring
garden planting, too. On the other hand, some retailers, like Nordstrom, TJMaxx, Ross
Stores, and Target, may have benefited from Back-to-School (BTS) shopping, and in
particular, the Sales Tax Holiday celebrated in 11 states the first weekend in August,
after the end of the quarter being reported, Q2 but timed to provide some optimism for the
BTS season. I was in TGT to observe BTS shopping on 2 of the 5 Sales Tax Holiday shopping
days in early August (Southern Florida) and the place was jammed. TGT was well organized
with class supply lists for hundreds of nearby school teachers/classes, each of its stores
equally equipped for the schools near those stores. PLUS, I had to buy a new phone system
and found the best price for the system I settled on at OfficeDepot/OfficeMaxeven
better than Amazon. However, all the school supplies I spotted at ODP, which Id
already noted at TGT, were as much as 50% more at ODP than they were at TGT. If I
wasnt certain Id done thorough due diligence, I would have doubted my findings
of the best price for the phones at ODP.
Aside from retailers, Monday brings earnings reports from Chinas Baidu, Sina &
Weibo, plus Estee Lauder. Tuesday, reports from non-retailers are expected from BHP
Billiton, , Madison Square Garden, Medtronic, ScanSource, and Toll Bros. ScanSources
bar codes and scanners should be booming with al the online sales. Thursday, RBC and CIBC
of Canada report, along with Hormel, Hewlett-Packard, Intuit & VMware. Last
weeks rumor du jour was VMW making a bid for Pivotal, another division of Dell Inc.
Friday, its FootLocker Im most interested in hearing from since I was shocked
when it last reported a quarter so much worse than it looked like it should have enjoyed,
based on traffic and sales in our local mall. FL wont have benefited from the BTS
Sales Tax Holidays to the extent one might presume, because so many sneakers, today,
exceed the limits set by each state. Here, Florida raised the limit to $60 from its many
year $50 limit but even that isnt enough to encompass as many sneakers as one might
assume.
Typically, when an Earnings Season ends, I-bank conferences pick up but its the end
of summer, with Labor Day Weekend and school in northern states soon to resume, so I-banks
are mostly overseas, if theyre hosting clients, at all. In fact, the Canadian
Security Traders Assn Conference, in Quebec, finishing up Sunday, was a bit
surprising only because schools in the northern territories are on similar schedules to
those in the US. On the other hand, eTail East, in Boston, seems very ill-timed, not just
because the time of year is prime for BTS shopping but because the largest apparel &
shoe show wrapped in Las Vegas, on the 14th. What buyer is going to want to be
away again, so soon?
On the flip side, Digital Dealer 27, in Las Vegas, starting Sunday, is timed during older
model clearance season, as Auto dealers here are desperate to clear not just 2019 models
but 2018s, as well. Tuesday, NextGen Automotive Manufacturing/8th
Lightweight Materials Summit starts in Detroit, Wednesday, AV19 is on Autonomous Cars,
also in Detroit, plus Automotive Cockpit HMI (Human-Machine Interaction) also in Detroit,
the same day, making for a concentration of automotive-related conferences during this
week. GATSThe Great American Trucking Show, in Dallas, starting Thursday, promises
the biggest samples of any show, anywhereno matter the time of year.
Wednesday, Raymond James hosts a SMID Cap Growth Conference in Chicago, and supposedly, a
Bank of America Merrill Lynch an Energy Bus-less Tour though we could only find 2 names
confirmed for BAMLs event, making us suspicious of whether its a current
event.
Healthtech hosts whats often the largest conference in number of attendees because
its not a single conference, at all, but several conferences held from Tuesday
through Thursday, simultaneously. And while on the subject of healthcare, TSE is Total
Store Expo hosted by NACDS, Chain Drug Stores. Walgreens and CVS has, sometimes, held
auditions there, for new products but neither showed such meetings on their IR sites, as
of last Thursday morning.
So with, FOMC Minutes out Wednesday, the K. C. Fed Economic Symposium opening on Thursday,
and the agenda not available until the event starts, there are enough earnings to occupy
traders waiting until Powells speech on Friday. The question before that is whether
any retailers can deliver reports worth celebrating for more than a few hours. I seriously
doubt it, though would note that Amazon & FedEx have often taken off starting in late
August, anticipating the holiday online shopping season. With FedEx dropping Amazon, it
will be tough for FDX to replace AMZNs business, this shopping season, unless other
retailers with whom it has contracts boom online.
After Jackson Hole, Trump will be in France, tweeting off hours, as the Democrats seize on
his "causing a recession." The Street has been working for days to convince
traders that the Fed Chief wont deliver what the Street wantspromises of more
rate cuts. And he cant, because I believe the FOMC members wont make up their
minds about what action to take at their next meeting, in mid-September, until
theyve seen what the data looks like by then.
On the other hand, G7 is UK Prime Minister Boris Johnsons best shot at endearing
himself to the other European heads of state, and perhaps opening any discussion of
concessions that will avoid a hard Brexit, on 10/31.
All of which is to say the week sort of wont start until Wednesday afternoon, when
the minutes are released, at the earliest, and perhaps not until Thursday, when the
Jackson Hole Economic Symposium Agenda is released. Retailers will be a tough buy, no
matter what they report. Almost all lease more brick and mortar space than their future
needs are likely to warrant. Theres probably no sector in worse shape, right now,
justifiably. Dont be fooled by a good reportno matter who delivers it! (Yeah,
I prefer TJXs business to any other retailers but, even then, Id be
cautious. Once someone gets used to NOT shopping, its like a dietthe more you
adhere to the plan, the better one feels about themselves, and the more visible the
results. As new credit card bills arrive with small balances, not shopping is very
self-reinforcing. I hear such conversations all the time.)
ECONOMIC: (Highlights, only, below, Complete International Economic Calendar here)
© Sandi Lynne 2019 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 1216, 2019 STILL A CHANCE of THE
BOTTOM FALLING OUT How late are we into summer?
Public schools reopen Monday in the Southincluding in Florida, Texas, and many other
Southern states. From here until late October, markets have, traditionally, had trouble
keeping the bulls happy. And it doesnt help when a President is bashing his Central
Bank, fanning the flames of racism, and bailing out farmers but none of the other
industries destroyed by the trade war he started and nurtures. Is it any wonder gold has
broken out?
The Economic Calendar is a bit light, with US July CPI out Tuesday, July Retail Sales on
Thursday, then Housing Starts & Building Permits for July on Friday. And if that
werent enough, Thursday is the 15th, and a potential deadline for many
hedge funds redemption requests, if investors want their money back at the end of the
third quarteror even, by the end of the year, depending on the rules of any given
hedge fund.
Otherwise, most of the data on the Economic Calendar is more sentiment than actual,
verifiable data, whether NFIB, a small business Optimism Index, NAHBs Housing Market
Index, or U.M.s preliminary August Consumer Sentiment. The outliers are on
ThursdayQ2 Productivity & Costs, July Industrial Production/ Capacity
Utilization, and June Business Inventories at Manufacturers, Wholesalers and Retailers.
Growth in Productivity has been the missing link thats kept companies hiring more
workers. But at least theres something to look forward to, beyond Central Bank
meetingsthe Kansas City Feds Jackson Hole Economic Symposium, still more than
a week away, starting the 22nd, but a place at which plenty of Central Bankers
are likely to be speakersif past is prologue, at any rate. The actual Agenda
wont be released until after the event has started. Still, tune into Bloomberg, NY
Times, Wall Street Journal, and CNBC for rumored invitees and rumored scheduling, since
one can only attend if invited and the K.C. Fed keeps a tight lid on its plans, in an
effort to keep the event a significant contribution to Economic Theory rather than another
media circus like Allen & companys Annual Media event.
The Earnings Calendar is still flush with the volume of expected reports but significant
for just a handful of expected releases. Wednesday promises Agilent, Cisco Systems, and
Macys. Thursday, Applied Materials, JCPenney, nVidia, Tapestry (formerly known as
Coach), and Walmart. Friday brings Deere and, I assure you, $28B in payments to farmers
from the US Government, in reparation for Trumps Trade War, isnt reason enough
for said farmers to order new heavy equipmentespecially when fields were flooded
during optimal planting weeks. Whatever Applied Materials reports, Citis upcoming
Pan-Asia Semiconductor Trip will round out the outlook. Citi is taking clients to visit
Taiwan Semiconductor, Mediatek, Novatek, ASEH, Chipbond, Vanguard, Unimiron, Kinsus, ZDT,
GWC, Win Semi, in Taipei. From there, on the 13th visits Samsung Electronics,
SK Hynix, LG Display, Wonik IPS, SK Materials, Soulbrain. On the 14th, in
Tokyo, visiting Tokyo electron, HOYA, DISCO, Shin-Etsu Chemical, Sony, Renasas
Electronics, Advantest, SUMCO. The 16th was TBA but probably a travel day home.
If you do a quick scan of the Event Calendar below, youll see quite a few I-bank
names popping up againconfirming the fact that most of the analystsexcept
those covering retail, apparel & shoeshave started to move on. Even then, MAGIC
starts this week, along with something, now, called NY Now, which was previously the New
York International Gift Fair, often appearing as NYIGF, dropped in favor of NY NOW. Still
its a table top, gift ware & Housewares show at its heart, and includes
Ex*Tracts for scents that show up in perfumes, candles, and even detergents. Accompanying
NY NOW & Las Vegas located MAGIC are a slug of affiliated shows, conferences, and
expos, that can fill any analysts calendar. Off-price is getting a head start on the
other MAGIC-related shows, opening a day in advance of any other. And dont bother
looking for World Shoe, though NSRA for Shore Retailers and FN Platform still meet at
MAGIC but the new owner doesnt use World Shoe or, even MAGIC, at this point. But
find me a retailer or manufacturer attending and youll find a business person who
still refers to whats going on in Las Vegas as MAGIC.
But its the I-bank events that bear watching, since theres a mini-flurry this
week that should be noted. The biggest is EnerComs The Oil & Gas Conference,
running the 11th through 14th. All you might want to know about the
Denver even is
here. KeyBanc is hosting a Technology
Leadership Forum, started Sunday, in Vail Colorado, and transitioning to using
initialsKBCM-for KeyBanc Capital Marketsin case you encounter that set of
initials. BTIG is hosting Biotechnology on Monday, when Cowen hosts its 3rd
Annual Communications Infrastructure Summit, and Wells Fargo its Technology Services
Forum, in Newport, R.I. Gurneys Newport Resort is reason enough to attend the Wells
event.
On Tuesday, JPMorgan is hosting an Auto Conference, in New Yorka city, ironically,
starting to do its best to ban autos from mid-town (Makes me wonder why Bloomberg
didnt think of thator fining cars entering or driving through Manhattan.). SVB
Leerinkthe new name for Silicon Valleys division that bought out Leerink
Partners, is hosting a bus tour through the "Heart of Healthcare Facilities," in
Nashville TN. Wedbush is hosting PacGrown Healthcare, while Wolfe Research is setting up
at EnerCom and hosting an E&P Summit with attendees and clients wholl already be
in Denver, anyway. Susquehanna is hosting Energy & Industrials, in NY, and D.A.
Davidson a West Coast Bank Tour, the details for which Ill be happy to send to
anyone who needs them. Raymond James is hosting Park City Telecom Summit, in Utah, while
Goldman Sachs is hosting some form of Power, Utilities, MLPs & Pipelines, it would
appear from the 3 confirmed attendees we foundfewer than the subsectors mentioned in
the events name.
Wednesday, Bk of America Merrill Lynch is hosting an A.I. Conference, with many private
companies speaking. Citi is hosting a 1x1 for Midstream/Energy Infrastructure, and Raymond
James Aspen Energy Summit, in Aspen, as the name implies but could well have invited many
of the EnerCom attendees. The Heikkinen Energy Conference is new to us but on
Schlumbergers IR schedule. Id also take not of GMAthe Grocery
Manufacturer Assn--Leadership Forum, also starting Wednesday, given how many farmers
elected to ski planting this past spring. Also, note the Hotel Data Conference hosted by
Hotel News & STRthe latter formerly Smith Travel Research. So its said,
Intellisight from the CEA Society of Minnesota is what used to be InvestMN. It remains
about companies with headquarters campuses in Minnesota, so I dont know why
the change but change it did.
Thursday, Oppenheimer is hosting Midwest Corporate Access Day, even as Canadian Security
Traders Association are attending their 26th conference, in Quebec. Friday,
Jefferies hosts Technology Disruption Across Consumer Summit, in Hong Kong but thats
all weve got on that one.
So, as the Earnings Calendar slithers towards retailers dominating the schedule, Back to
School shopping is over for the first wave, in the south, and will take a short hiatus
until kids in schools farther north stare down Labor Day weekend. Before that well
have the focus switch to Jackson Hole but, until then, the market is the star of the
showand that show is getting too scary for many retail investors, and those
professionals looking to protect their Year-to-Date gains. Thats often a combination
that causes funds to flow out of stocksa condition that may well endure until the
latter half of October. Be forewarned.
ECONOMIC: (Highlights, only below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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 0509, 2019 ANOTHER
EARNINGS SLAM & REACTION TO MORE POTENIAL TARIFFS While it may feel like all the important companies have
reported earnings, so the season should be winding down, that isnt the case, at all.
Theres another Earnings slam this week, with hospitality & media companies, in
particular, dominating the names that stand out. Of course, fresh off this weekends
big Back-to-School Sales Tax Holiday, retailers will have to weigh sell through against
reorders, with additional tariffs coming Sept 1st, on those $300B in Chinese
items that escaped tariffs until now. That means it will hurt retailers and toy, apparel
& shoe manufacturers, just as their deliveries of Holiday goods are due to hit US
ports. Granted, the Tariffs of the past werent assess on goods in transit, so
theres a chance most of what was ordered for Holiday will arrive unscathed but even
that is little comfort. Strong sales require fresh orders to fill the racks & shelves
cleaned out, so tariffs will catch up sooner or later, unless theyre withdrawn
before theyre assessed. Its not impossibleTrump threatened fresh tariffs
as of July 1st, if Xi didnt agree to meet with him at the G20 in Japan.
They met, and those tariffs never appeared. But as long as Trump is under the mistaken
impression that its the Chinese paying the tariffs, hell boast about being
Tariff Man and follow through with the new tariffs. An analyst, or two, last week, posited
that a company like Walmart could force its suppliers to eat the new tariffs but I
wouldnt count on that indefinitely. While manufacturers may be forced to uphold
prices for contracts already signed, sooner or later new contracts will reflect the higher
costs, and WMT shoppers will pay the price, just like the customers of other retailers
will be forced to do, as well.
And one other thing: I thought Powell was totally unconvincing trying to claim the
mid-cycle adjustment in rates was due to continuing low inflation and global trade
tensions. I think he needed to it give to Trump as directly as Trump has been
heckling him, and say: As long as the President intends to damage business confidence and
investment by threatening additional or higher tariffs, the FOMC board will re-examine its
policies and decide if more accommodation is necessary. Did Trump toss out the Sept 1st
tariffs because the FOMC cut only 25bps? Possibly but he could have waited to say so, or
more quietly entered his plan into the Federal Register, instead of criticizing the too
small rate cut and tweeting about new tariffs moments later.
If retailers werent facing enough stress with the newly threatened tariffs, we take
this opportunity to point out RayJays CECL Conference, on the 6th, which
we believe refers to Current Expected Credit Losses, on which the FASB (Financial
Accounting Standards Board) has released new guidelines for banks & finance companies,
weighing in with ASU No.2018-19, codification topic 326. Its a new way of valuing
potential future credit losses directed at banks, savings associations, credit unions and
financial holding companies, regardless of size, that file regulatory reports that conform
to US GAAP. And it applies to all debt instruments whether held to maturity or for
investment, and to all trade receivables, like the receivables apparel or shoe
manufacturers might hold against goods shipped from their suppliers or to their retail
customers. It is likely to limit the amount of credit extended to shakier retailers,
whether JCP & Sears, or the latest rumored troubled retailer, Forever 21.
We stand corrected: Florida, for the first time, this year, is allowing computers (not
smartphones) that cost up to $1K tax free as part of its Back-to-School Sales Tax Holiday.
New Gov. DeSantis also raised the limit on sneakers to $60 from $50 but left all other
supplies at $15. (A friend with 4 kids has them line up to buy their own, for $15 each,
then has the ones finished scurry to the back of the line to pay again, for more stuff.
Her school lists for each kid was over $200.)
The Economic Calendar promises some interesting Chinese data, including Caixins July
Services & Composite PMI, overnight Sunday, then overnight Thursday into US Friday
morning, Chinas PPI & CPI, along with New Yuan Loans & Aggregate Financing,
plus the BoP Q2 Current Account. The UKs Data dump will, also, be Thursday night,
into our wee hours on Friday morning. Canadas Jul Unemployment
Rate/Change/Participation etc is out early Friday morning.
AS for US Data, its a bit of a slow week. Monday, its the Markit July US
Services & Composite PMI, plus the ISM non-Manufacturing Index, too. Tuesday, June
JOLTSJob Openings & Turnover, kind of moldy data which hasnt changed
significantly in 2 months. Regional FedChiefs Harker & Bullard are speaking at
separate events Tuesday, also. Wednesday its Feds Evans on the US Economy at his own
Fed Bank so perhaps expounding on the economy. More interesting that day could be the
Federal Trade Commission hearings on video game loot boxes and they way theyre
"hooking kids on spending their allowance." Just the portion in quotes tells you
everything you need to know about what the FTC thinks about loot boxes. Though Activision
Blizzard & Take-Two Interactive report this week, it would be wise to bear in mind the
hearings.
Also Wednesday, the New York Federal Reserve Releases its Regional Household Debt &
Credit Snapshots (credit cards, auto loans, mortgages, student loans, delinquencies for
NYC & other state metro areas, Fairfield CT & Northern New Jersey). The problem
with the Feds latest rate cut is how many borrowers were able to refinance their
mortgages or other loans at low, low rates over the past 5 years. Mortgage rates may have
fallen recently but thats only put them back where they were in 2016 and later.
Thats why a 25bps rate cut, or even 50bps, wont make that big a difference.
Im probably the only one who never refinanced a, relatively, high cost loan when 30
year mortgages were down near 3.78% but, then, I did one betterI paid off a 30 year
mortgage in 14 years, eliminating a slug of interest Id have to have paid,
otherwise. On the other hand, NY real estate has been week since the 2017 Tax & Jobs
Act capped the amount of real estate taxes that can be deducted on Federal Tax Returns to
$10K, which may put some homeowners in a bind even paying their taxes. Thats often
encouraged homeowners to turn to the home equity ATM to pay bills beyond their means,
though as housing values slip, that could make it hard for people to manage additional
loans.
Thursday, in addition to weekly Jobless claims, well get June Wholesale
TradeInventory & Sales, s well as July Chain Store Sales, from the 9 who still
report that and from some who report that information only quarterly, though most of those
wait until the week after to weigh in. Friday, the IEA will issue its Monthly Report on
Energy, before US PPI is released at 8:30am, and the Rig Count at 1pm in the afternoon.
The Earnings Calendar is duly emboldened to highlight the number of hospitality &
media companies reporting, this week, along with the occasional biotech, healthcare
supplier, insurer, and semiconductor name. And by hospitality we dont mean just
hotels, though are those, and casinos but, also, restaurants, especially some of the
smaller chains. And by Media, we dont just mean TV networks but, also, radio &
newspapers, and some internet companies, though its Viacom & CBS most are
waiting to hear from (Thursday), since many an analysts has posited that they will
announce their merger, Thursday, since both are reporting that day.
Which brings us to the Events Calendar, which isnt busy with too many I-banks, given
summer holidays but a few are creeping back in. Sunday, is one of the biggest Meat events
of the year, in Orlando. Two other notable events continuing over the weekend, State
Insurance Commissioners meeting at NAIC Summer, and GBTA the Global Business Travel
Professional event, that runs through Wednesday. Odd as it seems Stephens Building
Materials Plane Trip is starting Sunday. Speaking of Restaurants, The National Food
Service Loss Prevention & Security Association gets underway in Nashville, along with
the FAME, MODA & MRKT Fashion shows in NY, just as many buyers and manufacturers will
be packing to make their way to Las Vegas, in a week, for MAGIC.
Monday, Flash Memory & American Solar are the headline events, though for some,
Immuno-Oncology & Stem Cell World Congress, in Boston, will be the headliners. On
Tuesday, UBS is hosting Financial Services, in Chicago, and Oppenheimer its 22nd
Annual Technology, Internet & Communications Conference, even as Jefferies hosts
Global Industrials, and UBS Genomics in Park City UT. The Annual Space & Missile
Defense Conference will be in Huntsville AL.
Wednesday, SVB Leerink Spotlight Series is on Rare & Genetic Disease, in Boston, while
CanaccordGenuity is there, also, for its 38th Annual Growth Conference. Also on
the 7th, NAM CMA is the National Association of Manufactures Council of
Manufacturing Associations Conference, Strategies for the Future. Unfortunately, it
didnt name what it claimed were "world-class speakers," but were
quite sure the latest threatened tariffs will be a prime topic of conversation. Some
within the Council have already been hit with Steel & Aluminum tariffs.
Thursday, Jefferies is hosting its Financials Investor Relations 1x1 Summit in NY, which
sounds like UBS Tuesday event, which is in Chicago but theyre separate.
Thursday, Citi is hosting Insurance 1:1 Forum, while Anadarko shareholders will vote on
Occidental Petroleums takeover offer. The second cardiology event of the week is
really about the radiologists who scan hearts for tracking disease, more than the
cardiologists, themselves. Friday, the Am Orthopaedic Society for Sports Medicine Annual
Meeting starts in Chicago, while Gynecological Surgical Fellows meet for a boot camp in
Austin TX.
Saturday, what used to be called the New York International Gift Show is opening, somewhat
newly named New York NOW, which is totally unsatisfying to me. Many of the manufacturers
who used to exhibitors at New York Now, disappeared in the 90s or 2001. Out in
Vegas, the first of the shows connected to MAGIC opens, Off-Price Apparel, an event that
has become more an eBay and Amazon seller event, rather than a Burlington, TJMaxx or Ross
Stores event, because theybig off-price retailers dont need to make deals in Vegas
with any apparel suppliers. Rather, suppliers come to them, or see their New York buyers.
BURL, TJX & ROST go to Vegas to shmooze and see new, small and upcoming manufacturers
that they ought to know about, if not keep an eye on. And it doesnt hurt to get a
feel for the colors and styles that seem most prevalent in Vegas where lots of California,
Hawaiian and Asian manufacturers may make a rare appearance. With new Tariffs now looming,
its Vietnam, Laos, and other smaller Asian countries benefiting.
There was nothing in the weekend charts to suggest the selling is done, yet. And there has
to be a good reason to buywhich TINA isnt until prices become more attractive,
still.
ECONOMIC: (Highlights, below, focused
on US. Full International Economic Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed re the authors,
alone, and should be just one factor in more complete due diligence.
July 29August 02, 2019 FOMC
TO CUT OR NOT TO CUT? BACKED INTO A WALL
For some, its a question of a quarter point cut or a half point cut.
For others, its why cut at all? As a reminder, I am NEVER write about the FOMC but
feel Powell has backed into himself into a wall, the only way out, this week, a quarter
point cut, at least. Hes justified it by saying hes interested in assuring the
expansion lasts more years, given weaker global data and signs of some slowing in the US
too. So, despite at least 3 members lined up against a rate cut, the FOMC is likely to
deliver one, this week, which leaves the biggest mystery the post-meeting comments.
Id like to think Powell has the nerve to return to data dependence, at the very
least, if not say flat out the committee will be patient, again from here.
Forget the second busiest week of Earnings releases by volume. Forget all the data to
come, including Fridays July Unemployment Report. After all, itll arrive after
the FOMC has already released its rate decision and post-meeting comments, so data can
only confirm the FOMC was correct if it cutof make people question whether it was
Trumps taunts, after all, that caused the FOMC to cut. But either way, Friday will
be after the FOMC decision, so nearly immaterial to the markets, this week. Well
note the BoJ is also meeting this week, with its decision in the week hours of New
Yorks Tuesday. The BoE is meeting, too, its decision following the FOMCs
decision, with BoE Gov. Carneys post-meeting press conference in the early hours
before the US 0pens Thursday.
I know I said Forget Earnings, just a paragraph ago but, of course, thats hard to do
with Apple reporting Tuesday. But that just scratches the surface with Illumina, NXP
Semiconductor Sanmina, Voradano Realty Trust, Armstrong World, & Beyond Meat reporting
Monday. Tuesday, in addition to Apple, AMD, Akamai, Allstate, Altria, ConocoPhillips,
Cummins, Danaher, Eaton, Ecolab, HCA, MasterCard, Merck, Penske automotive, Pfizer, Waters
Corp, Wellcare Group, and Yum China, just a few other Tuesday reports. Wednesday, American
Tower, Apache, Automatic Data Processing, Avalon Bay, Cheesecake Factory, CME, Churchill
Downs, DdinEquity, Enterprise Products, Equinix, Ethan Allen, General Electric, Humana,
Hyatt, Lam Research, MetLife, MolsenCoors, Prudential Financial, Qualcomm,
Scotts-Miracle-Gro, Taloy Morrison Homes, Twillo, Western Digital, some of
Wednesdays standouts.
Thursday, reports are expected from AmerisourceBergen Brunswick, ADM, Beazer Homes, Cigna,
Clorox, Corteva (the ag business spun-out from DowDuPont), DaVita, General Motors, Hanes
Brands, the Hartford Insurance, Holly Frontier, Ingredion, Intercontental Exchange NYSE,
Kelloggs, Mettler-Toledo, MSCI, Pinterest, Post Holdings, Remax (facting a
Realogy/Amazon partnership), S&P Global Intelligence, US Steel, Verizon, Wayfair,
William Lyons Homes, XPO Logistics, and YUM Brands. Which brings us to Friday, when the
most important earnings will come from ExxonMobil & Chevron but, also, Cinemark
Holdings, a movie theater owner, Seagate Technology, and Berkshire Hathaway.
As for Events, I-banks are mostly on holiday for the summer, with a few exceptions
well note as they arise. This week, on Tuesday, Wells Fargo is hosting Biotech
Corporate Access in Boston, and then, on Thursday, repeating it in San Francisco. KBW
Tuesday is hosting a Community Bank Investor Conference, and Sprott a Natural Resource
Symposium, its affinity for gold, apparently, paying off this year. Credit Suisse is
hosting its 13th Annual Midsummer LatAm Equities Conference, in New York,
starting Wednesday.
This past weekend was Camp visiting weekend, and next weekend, most of the states offering
Back-to-School Sales Tax Holidays will be offering them Friday through Sunday. Tuesday, so
its said, Cheesecake Factory hosts is annual half price Cheesecake day, when you can
order any slice of cheesecake for half price with an entrée. I cannot get anyone to go
with me so I can order Godiva Chocolate Cheesecake because Im the only one in my
circle who doesnt watch her waist. Or hips. And speaking of camps, Cumberland
Advisors Camp Kotok, named for David Kotok, we believe, will be hosting its annual
fishing and economics invitational, next weekend, in Leeds, Maine. And somewhat
ironically, in a season when Beyond Meat has been the hottest IPO of the season, reporting
this week, too, The Intl Congress of Meat Science & Technology + Reciprocal Meat
meets starting Friday, too. And by meat science, they dont mean meat
made from green peas and other vegetables but, rather, derived from cows, steer, and other
meat. Though I did notice, this weekend, 2 other vegetable based faux meat products are,
suddenly, being advertised on TV, Pinnacle Foods Gardein one of the brands
advertised, ConAgra having bought Pinnacle Foods in a nearly $11B deal that closed last
fall. Tyson Foods, which sold off its stake in Beyond Meat, promised analysts, on its
recent conference call, that it was prepared to start marketing its protein alternatives,
too. I dont eat meat and cant understand why someone who doesnt eat meat
would be so desperate to eat a burger that theyd eat a vegetable one that tastes
like meat and bleeds like it too. The bleeding is one of the reasons I gave up meat.
So, despite all the items on Earnings and an Unemployment Report pending, this week,
its really the FOMC meeting decision and statement that will drive stocks.
Typically, stocks sell off after the FOMC meets, even when the committee delivers exactly
what the Street has been hoping for. Bear that in mind if youre tempted to buy a
post-meeting or earlier dip.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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 2226, 2019 ANOTHER WEEK of
CONSOLIDATION AS EARNINGS DELUGE HITS While Secy
of State Pompeo will meet with his Mexican counterpart in Mexico City, starting Sunday, I
dont suppose Pres. Trump will be very pleased when Russian Foreign Minister Lavrov
meets with Cubas Pres. Canel, in Havana, starting Tuesday.
Meanwhile, closer to home, therell be a bit of housing data out, starting Tuesday,
with FHFAs May House Price Index, and June Existing Home Sales. Wednesday, June New
Home Sale, while the former Special Counsel, Robert Mueller III will endure back to back
sessions at the US House with Judiciary & Intelligence. I imagine he will read from
the text of his report, rather than contribute anything new, even as Cmte Chair Nadler
wants him to read from his text, those items that make Trump sound like the scoundrel the
Dems believe him to be.
The ECB will meet on rates, on the 25th, Draghis press conference to be
heard very early Thursday morning, prior to the market opening. Many believe Draghi will
either lower rates or add more stimulusbut somehow set up Europe to be more
energetic, economically, than its been in the past half year. And if the US is going
to cut at the end of the month, perhaps it makes sense to the leader soon leaving to goose
the EU, a bit, rather than allow the US to pull even farther ahead.
Were also going to get the first guesstimate of Q2 GDP, which will be far weaker tan
the 3.1% annualized growth reported for Q1. Even Q1 sounds like a stretch, at 3.1%, given
how weak Q1s have been for the past 6 years. Note, also, APEC is meeting starting Tuesday,
and ASEAN starting next Saturday. Those are organizations that by their very regional
nature exclude the US. Time was the US might have been invited to observe but not under
Pres. Trump.
Which brings us to Earnings, which are the be all and end all for the week. We wont
detail the reports coming, here, since weve taken pains to emboldened those names
you shouldnt miss but wed be remiss if we didnt mention a few. I.e.
AutoNation Tuesday, along with Chipotle Mexican Grill, Coca-Cola, Harley-Davidson, Hasbro,
JetBlue, KeyCorp, Lockheed Martin, Paccar, Pulte Homes Quest Diagnostics,
Sherwin-Williams, Snap Inc, Stanley Works, Travelers, UBS, United Technologies, and Visa,
all Tuesday. Thursday, at the least, we should point out 3M, Alphabet (GOOGL), Amazon,
ABInBev, Anheuers-Busich, Boston Beer, Comcast, Hershey, Intel, Invesco, Mattel, Mohawk
Flooring, Newmont Mining, Nokia, Raythheon, Republic Services, Sleep Number Beds,
Southwest Airlines, Starbucks, Stryker, Taubman Centers, Temper Pedic, Valero, Verisign,
Visteon, Waste Management, and Wyndham Hotels. And thats just the briefest of
highlights for the week. Before we eeven tough on Friday, when Charter Communications,
Colgate Palmolive, Goodyear Tire, ITW, Lear, McDonalds, Twitter, Yandex & Zimmer
Biomet all report, plus more.
The big earnings list explains the light Events Calendar. Ill note VOICE on the 22nd,
Amazons Alexa the Diamond Sponsor because the event is about Voice as the
computer-human interface.the next frontier, if you will. Only Elon Musk is working
on brain waves as the interface, for now, perhaps because it requires a chip installed in
the brain. For the rest of us, Voice as a substitute for a keyboard is advance, enough.
New York will be home to Mens Fashion week, while the NRFs Deep Dive NXT in
Las Vegas is more about technology that supports retailers, rather than retail, itself.
Theres a Cannabis Summit in San Jose, which is the epi-center of tech but not
usually weed. Tuesdays Casino Marketing & Technology Summit will see some
scrambling of players, as Caesars is being bought by the smaller Eldorado Resorts.
The big event is the American Society of Retina Specialists Annual, which doesnt
start until next Friday. Likewise, the International Congress on Lung Cancer doesnt
start until Thursday. Also Thursday, The American Academy of Dermatology Summer Meeting.
Those are the biggest events, while I-banks are mostly silent, given the heavy Earnings
Calendar, which will distract most portfolio managers, whether in real time, or when the
replays are dialed into later in the day.
That makes Earnings what should be given full attention. And no matter how they roll,
its another week of consolidation that should be seen, not just this week but a week
afterwards, as well. Ready for millions of shares to trade and go nowhere? Especially with
the Fed meeting still another week out.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© 2019 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.
July 1519, 2019 NOT
JUST BANK EARNINGS While the media
will be trying to fan a debate between those who believe the Fed will cut by half a point
in 2 weeks, and those who believe it will be only a quarter of a point, Id maintain
there is no debate. The FOMC is going to go with a quarter point, partially persuaded by
the outlooks from banks reporting, this week, which will take into account lower net
interest marginNIM to the tradebecause the FOMC is widely expected to cut by a
quarter point. Think about it: an interest rate cut hurts savers and banks, especially,
and not something usually done when unemployment is at 3.6%, and stocks are making new all
time highs. Furthermore, if Powell is hoping a quarter point cut will silence the
President, hes going to be rudely awakened to the foolishness of that thought.
Powell, it turns out, is speaking in France, Tuesday, at Bretton Woods 75 Years Later:
Thinking About the Next 75, in Paris. His topic is, "Aspects of Monetary Policy in
the Post-Crisis Era." The conference is a joint undertaking of the ECB and Banque de
France. Powell wont be alone, with BoE Gov.Carney and World Banks freshly
minted President, David Malpass, speaking there, too, as well as the IMF Managing
Director, David Lipton, Carmen Reinhart, Jean-Claude Trichet, and the French Minister for
Economy & Finance. Most of them are all on their way to the G7 Finance Ministers &
Central Bank Governors meeting, also in France, the 17th & 18th.
ECBs Draghi & Coeure are also attending.
But therell be plenty of Fed speakers at home, too. Monday, the NY Fed Pres/CEO
Williams keynotes SIFMAs "LIBOR: Transition Briefing: The Transition to
Alternative Reference Rates," a half day workshop. Feds Evans will speak at
CNBCs @Work Series, in Chicago, late in the day, while Feds Bostic kicks off
Tuesday, at another Fed Listens Event, in Augusta GA. Between those Tuesday speakers,
Facebook will appear at the Senate, which is holding hearings on its proposed Libra
cryptocurrency. At the US Judiciarys Antitrust Subcommittee, representatives from
Facebook, Alphabets Google, Amazon & Apple will defend themselves against
charges that their dominance impacts not just online platforms but stifles innovation
& entrepreneurship, besides. Congress will quite the attraction this week: former
Special Counsel, Robert Mueller III is scheduled to testify, Wednesday, even after his
press conference was intended to be the last word from him on his investigation.
And thats not all, for the Economic Calendar. Overnight, Sunday, Chinas
Statistics Bureau will dump a ton of June data, including New Home Sales, Fixed Asset
Investment, Industrial Production, Retail Sales, Jobless Rate, and both Q2 and YTD GDP.
The BIG slowdown Trump keeps insisting his tariffs are causing are sure to be nowhere in
sight. The Chinese would never give him the satisfaction, and surely dont want the
populace to worry that anythings wrong. US data includes surveys, like the Empire
State Manufacturing one, Monday, and the Philly Feds version on Thursday. Well
also get US June Retail Sales, Business Inventoriesfor wholesalers, retailers, and
manufacturers, NAHBs July Housing market Index, June Housing Starts & Building
Permits, the Feds Beige Book Wednesday, Also Thursday, NY Fed Pres/CEO Williams is
back to keynote CEBRAthe Central Bank Research Association Annual Meeting in NY,
co-sponsored by Columbia University, and the NY Fed. Fed dove Bullard is speaking Friday,
as are Feds Rosengren and the BoJs Kuroda on Friday.
Other items of note on the Economic Calendar include the Apollo 50th
Anniversary Gala, on Tuesday night, with Ciscos Webex connecting the host NASA
center in Florida, Mission Control in Houston, and the satellite Tracking Agency in
Australia, without whom the many Apollo missions could not have succeeded. Also that
night, a data dump from the UK, which will make clear how the drawn out Brexit
negotiations are impacting the countrys economy. Today, as Roger Federer & Novac
Djokovic battled it out for Wimbledon Champion, not only were Kate & William there but
so, too, was Prime Minister May, sitting in the royal box. I believe anyone who saw the
first walk on the moon will never forget where they were when they saw it. Also on the
Economic Calendar, Tankan Surveys for Japan, and ZEWs for the Eurozone &
Germany.
If all of this sounds exhausting, get a load of the Earnings Calendar. Unlike when Q4 was
reported, and the first week of Earnings came from 16 banks an just about no one else,
this week, even those companies like Goldman Sachs & Microsoft, which usually report
the 2nd big week are, instead, reporting this week. Citi is first out of the
gate, on Monday but, even Wells Fargo, usually a Friday reporter is, instead, reporting
Tuesday this week, along with JPMorgan, CSX, Goldman Sachs, Johnson & Johnson, and
United Airlines. With a competing and larger oil refinery deciding to shut down, after a
major fire, UAL is looking prettier all the time. Normally, other Tuesday reporters like
Canadian Pacific Railroad, and Cintas would be no match for the banks reporting that day
but CTAS is a good read on factory activity.
Wednesday, well hear from Bk of America, Bank of NY Mellon, Kinder Morgan, Netflix,
Omnicom, PNC Financial, & US Bank but of exceptional interest is IBMs first
report since closing on Red Hat last week, which will inform its outlook. Thursday,
reports are coming from Alliance
Data Systems, .Ally Financial, BB&T (soon to be renamed the unfortunate Truist, when
its merger with SunTrust closes), Blackstone, Capital One Financial, newly public
Chewy.com, Danaher, E Trade Financial, Honeywell, Microsoft, Morgan Stanley, homebuilder
NVR, Philip Morris International, Pook Corp, paint company PPG, SAP, Skechers, Snap-On,
SunTrust, Union Pacific, and United Health. Friday, American Express, Autoliv, BlackRock,
Charles Schwab, Citizens Financial, Cleveland Cliffs, Gentex, Kansas City Southern,
Manpower, Regions Financial, Schlumberger, Sensient, State Street, and Synchrony
Financial.
My heart be still but if no one else were reporting for the rest of the month, wed
have a pretty broad view of the market, overall. Again, Its financials that may
disappoint the most. Not only might trading be weaker than usual but bank outlooks
cant be strong, given they have lower rates to look forward to, just as theyre
finishing the first six months of better rates than theyve enjoyed for 10 years. So,
not only might Q2 reports disappoint but Q3 & 2H outlooks are sure to be weaker than
they were last year. But heck! Who cares?
So its said, and with all due respect to the guys who risked their lives going into
space, NASA is pulling out all the stops for the Apollo 50th Anniversary Gala,
on the 16th, at the NASA Kennedy Space Center in Florida. In addition to 500 guests at the
space center, there will be astronauts Mike Collins (Apollo 11), Charles Duke (Apollo 16),
Rusty Scweickart (Apollo 9), Gerry Griffin (Apollo flight director at Mission Control for
3 lunar missions), and hooked up by Cisco Webex (teleconference) will be the USS hornet
& the Satellite Trackers in Canberra Australia, 3 members of their crew, who kept
Apollo communications connected to Florida and the Houston Space Center. The USS Hornet
crew is who rescued the Apollo 11 astronauts after they splashed down in the Pacific
Ocean, on 7/24, 1969. Included in that crew is Sgt Joe Holt who provided security to Pres.
Richard Nixon, as he watched splashdown aboard the Hornet, before helicoptering off.
Weve also be told, on the QT, that Webex will connect the Intl Space Station
to the festivities, as well.
CEBRA, Columbia U SIPA (School of Intl & Public Affairs), & NY Fed Reserve
co-sponsor the Annual meeting. NY Feds John Williams keynotes on Monetary Policy.
Also speaking: Greg IP (WSJ), IBM, profs from Harvard, Brookings institution, Stanford U,
Columbia Um Fed Banks of St. Louis, Cleveland, & San Francisco, SNB, ECB, Bundesbank,
IMF, Norges Bank, BoJs Kuroda, Bk of Israel and many more. Larry Summers & Ben
Bernanke will participate on panels organized by the IMF on Monetary Policy in the New
Normal, Fri, starting at 9am. About half the governors of the Central Bk of Ireland will
participate in panels on Understanding Market Based Finance & Non-Bank Financial
Institutions, one topic of which is Empirical Network Contagion for US Financial
Institutions. Economists Carmen Reinhart & Ken Rogoff participate in the Evolution of
Monetary Policy Frameworks: Past, Present & Future, Exchange Arrangements entering the
21st Century: Which anchor will hold? When you navigate to the link provided
for the CEBRA meeting, click on the program link, then be sure to get to subsequent pages.
Initially, it looked like there was only a partial page and nothing else. Paging down
several times took us to the subsequent pages. CEBRA may have a more impressive group of
participants than G7s FinMins & Central Bankers in Franceespecially given
anyone can link to the streams from CEBRA, which they cant do for G7.
The Allen & Co conference wraps Sunday, so be looking out for the next deal. Some
think the buy is what remains of Fox, while I keep looking at LionsGate and think
its just too cheap for words, given its library, and the number of companies hungry
for content to feed their planned streaming services. Im scratching my head over
ALPAAirline Pilots Assn Air Safety Forum in D.C., starting M,onday, while the
APSCONAirborne Public Safety Assn meetings in Omaha, and thats before I
even contemplate anyone other than Berkshire Hathaway meeting in Omaha, in the summer, or
any other time of year. For that matter, why would the Sports Medicine division of the
Orthopaedic Assn meet in Boston, while APMAPodiatristsmeet in Salt Lake
city? Well, OK, that one I can more easily understanddoctors dont consider
Podiatrists as well educated, anymore than they think chiropractors are doctors.
But forget all that, and all the other Events, for that matter. National Dental Assn
meeting start Wednesday, in D.C., while they Academy of General Dentistry meets starting
the next day, in Uncasville, CT (Mohegan Sun). The 15th & 16th
are Amazon Prime Days, so the 1417th are Walmart Deal Days, the 15th
eBay Deal Day, and Targets competing Deal Days on the 15th & 16th,
but really all week, if you want to pre-book a deal with a Target Red Card. So forget all
the other events, and maybe forget all the Earnings, too. Likewise, Nordstrom starts its
Anniversary Sale on the 19th, which runs though August 4thjust
long enough to capture Sales Tax Holidays in 11 states on 08/0208/04, alone. To hear
CNBC tell it, theres likely to be nothing but Amazon to watch all week, wager
whether its servers can handle the surge of customers, and whether any of the competing
deals, in the end, were competition, at all. I cant wait for the estimates of how
many billions AMZN booked in sales. Last year, in a single day11/11, Singles
Day--Alibaba booked $11B in sales, while AMZN will never say how much it booked. It
doesnt even like providing quarterly sales and wouldnt if the SEC didnt
force it to.
Meanwhile, another Monday, another Healthcare deal, This time, Gilead Sciences is
expanding its stake in Galapagos NV (GLPG), with an agreement that includes a $3.95B
upfront payment & and additional $1.1B investment into GLPG. It gives GILD
"access to all current & future compounds in Galapagos rich pipeline while
Galapagos is able to expand its research activities and build commercial
infrastructure," GILD CEO Daniel ODay said in a statement. GILDs latest
investment, at 140.59 euros ($158.43) p/share boosts GILDs stake in GLPG to 22% from
12.3%; at a 10% premium to Fridays close. The original deal, in 2015, gave GILD
access to filgotinib, an experimental compound getting good buzz in rheumatoid arthritis
& inflammatory bowel disease, whose submittal to the FDA for approval is expected
before year end. Simultaneously, future development costs for filgotinib will be shared
equally, replacing the 80/20 split provided by the earlier deal.
How long can the bulls keep pushing stocks to new highs? Well, the summer rally usually
peaks the first or 2nd week of August, which is just in time to capture one
more flurry to the upside, after the FOMC cuts rates at their meeting, at the end of the
month. Its financials that may be the odd men out, this earnings period, which is
why Id take profits on any additional gains they can manage. About the only group
whose results have utter despair written all over them are retailers, and that still
doesnt make them a buy. I find the market exceptionally expensive. How bout
you?
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 0812, 2019 JEROME
POWELL, STAR OF THE WEEK
Fed Chief Powell opens the Federal Reserve Boards
Conference on Stress Testing: A Discussion & Review, Tuesday. Then Wednesday &
Thursday, hes offering his semiannual testimony in Congress, Wed. to the House
Financial Services Committee, and Thursday at the Senate Banking Committee. To those
expecting him to all but promise a rate cut in July, hell be disappointing.
Hell acknowledge last Fridays stronger than expected employment report when
224K workers were added, in payback for Mays weak 72K, but offer that as proof that
the data has been conflictingtoo conflicting to conclude his monetary policy
committee must commit to a rate cut at the end of the month. Surely, at least one
Republican will ask whether the December 2018 hike was one too many. Just as surely, a
Democrat will ask whether he feels pressured by the President whos broken form on
the FOMC, like he has on so much else, in an attempt to pressure the FOMC to cut rates. By
now, Powell should be well prepared for both questions.
While Powell will be the most prominent of Fed speakers, he wont be alone. Vice
Chairman for Supervision, Randall Quarles is, also, speaking at the Fed Board Stress
Testing Conference, Tuesday, while lone dissenter, St Louis Feds Bullard, speaks
both Tuesday & Wednesday at the OMFIF Foundation Forum on Monetary Policy, Bostic is
speaking at OMFIF Tuesday, also. Then Thursday, Barkin, Bostic, Williams, Quarles, again,
and Kashkari all speak after assorted events around the country, as detailed in the
Economic Calendar below. They are, respectively, from the Richmond Fed, the Atlanta Fed.
NY Fed, and Minneapolis Fed, skipping Quarlies already detailed. Thats a lot of Fed
speaks in a week, let alone a day, since many of them are speaking Thursday, mostly. And
there is some data of interest to Fedheads, this week, especially June CPI on Thursday,
and PPI on Friday.
Other Economic items of interest pale in comparison to Powell & Co., and the inflation
data named. Having said that, doesnt dismiss data expected from other countries.
I.e. Chinas June CPI & PPI, expected overnight, Tuesday, a Bank of Canada rate
setting meeting that will end on Wednesday, hours before the FOMC releases Minutes of its
June 18th19th Meeting. Overnight, Wednesday, the Bk of England
will release its Semiannual Financial Stability Report, followed by the Minutes of its MPC
Meeting of June 5th6th. For the US, there could be more on how
close the FOMC was to lowering rates, when it last met, while the BoE is barely hanging
on, awaiting the terms of Brexit to be finalized. While theres consensus, across the
pond, that a non-deal Brexit would be very bad for the Brits, it doesnt appear that
all the MPs agree with that opinion. Rather, some believe a "hard" Brexit
poses no great risk and might even free the Brits from having to make a
"divorce" payment to the EU.
The Earnings Calendar wont shake anyone up, but surely therell be most
interest in LEVI (Levi Strauss), so soon after its IPO, PepsiCo, and even
LNNLindsay, since its sprinkler heads are a fixture of lawns around new homes, and
restorations of lawns ripped up by snow plows and weather damage. Delta, reporting
Thursday, has already released its Quarters vital stats in the form of monthly data.
Owning a refiner when the largest one on the East Coast is closing puts it in a uniquely
advantageous position. Fastenal could be impacted by Boeings grounded 737 MAX jets
though production has been reduced, rather than halted, altogether. Yarenai is one of the
cheapest Chinese companies which wont, necessarily, make it that much more
attractive after earnings.
SEMICON could be the most well covered semi-equipment event in a long time, as Trump
lifted the Huawei ban, though no one knows for how long. Citi and others are offering
hosted meetings at Semicon, which is typical for the event. Also expected, this week, is
the Allen & Company Annual invitation-only Sun Valley Conference. While tech &
media execs are the most prominent invites, word is Warren Buffett is a guest, this year,
too, while the head of Viacompossibly the head of a combined Viacom & CBS, Bob
Bakish, was "snubbed," as Variety & BuzzFeed put it. Shari Redstone, on the
other hand, who controls both firms and wants them to merger won an invite. We estimate it
will take place from the 10th through the weekend but are willing to be wrong.
Its not like were invited, or anything. Weve seen discussion of the
event on Variety, BuzzFeed, Bloomberg, and the NYTimes but no one provided the exact
dates. Given that CNBC and Bloomberg both employ writers/anchors who were invited, and
both set up interview chairs in front of the host hotel, even when not invited,
therell be coverage of the event and attendees, whether Allen & Co intends for
that to happen or not. Wed guess theyd be disappointed if no one cared.
If thats not enough to distract, theres Miami Swim Week, this week,
AHSthe American Headache Society meeting, starting Thursday, with 3 new migraine
drugs winning FDA marketing rights this year. Wednesday, New York is hosting a ticker-tape
parade to honor the US National Soccer team, which just won the FIFA World Cup, on Sunday,
then Friday, Formula E-Prix starts in Brooklyn. Sounds like a crazy week to be in NY.
Since stocks made new highs despite widespread awareness that the Q2 Earnings Season will
disappoint, and is already counting on a rate cut, at the end of the month, whats
left for stocks to rise on? I ask because I genuinely dont knowand just
dont feel the love traders are showing stocks, which Barrons claims is the
Street already building in a 2020 Trump win of a 2nd term. Ya think? Im
open to better theories. And I would watch CPI since it seems that everything in the
supermarket costs a heck of a lot more than it used to. And wouldnt that be the
greatest irony of allif inflation finally showed up just when the Street was
counting on rates being cut! I realize the FOMC prefers to look at PCE rather than plain
vanilla CPI but still, wouldnt that be a hoot, if inflation finally took a stand?
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 0105, 2019 HOLIDAY WEEK SHOULDNT AMOUNT TO MUCH Pres.
Trump delivered even more than the Street was expecting from the rapid fire speed dating
with world leaders he conducted at the G20 meeting in Osaka, Japan. Not only did he and
Chinas Xi agree to continue talks but, unexpectedly, Trump agree to lift the ban on
sales to Huawei. That should have semiconductor stocks celebratingshort lived though
that celebration may be. In shortened weeks, everyone wants to get out of town, so even a
sell off Tuesday, before Wednesdays shortened session thats recovered Friday
wouldnt surprise. Thursday, as no one need remind anyone, is July 4th, a
US holiday across the board. Apple also may see a brief celebration of Trumps
dialing down the rhetoric on Huawei & China but, the damage is already done. How fast
do you think QCOM is going to ship 5G chips out the door before Trump flip-flops, again?
And flip-flop he will, getting impatient for decisions to be made as fast as he did as CEO
of a construction company whos, evidently, forgotten how long the permitting process
can take, especially in citys, like NY, where he built so many of his buildings (no,
that wasnt the word I was going to use but what did come to mind didnt fit
perfectly, either.)
So, enjoy the week, and whatever rise the bulls can manage. Just remember, its all
going away as soon as Trump gets impatient with progress in the Chinese talksor if
Powell & Co fail to lower rates when they meet at the end of July, given the easing in
trade tensions. Any worries about Friday's June Unemployment Report? We'll know soon
enough
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 2428, 2019 CCAR, RUSSELL INDICES
REBALANCED & RECONSTITUTED Oh My! Last Friday,
after the close, Fed Stress Tests for the MegaBanks were released. Never has such a costly
(to the banks) test received such a shrug of shoulders. And perhaps that was the very idea
behind releasing the results on Friday, after the close, instead of Thursday, into the
S&P & Russell Indices Rebalance-Reconstitution, as it will be this week, after
Thursdays close. The CCAR testsComprehensive tests of Capital Adequacy is the
test which determines how much dividends and buybacks can be adjusted. The Fed discusses
with the banks the CCAR results prior to their release, allowing the banks to jump the
gunannouncing new or raised buybacks and/or dividend increase plans before the CCARs
were even out.. Well soon learn if that will be the case, again, or whether the Fed,
somehow, embargoes discussion of the resultsorders the banks to keep their plans
secret until after the CCAR release, at 4:30pm et.
So, in addition to the CCAR, Dow Jones S&P Indices & Russell Indices to be
Rebalanced & Reconstituted, respectively, it means its not just Months
End, and Quarters End but, also, Half Years End, which is when Portfolio
Managers tinker with their holdingseven lighten up on equities, altogether, because
most know, June through mid-October is often a terrible time to stay invested in
stocks- possible rate cut in the period notwithstanding. One thing we can say with
near certainty is that volume will be the one aspect that wont be lacking, this
week. Plus, Reuters says Eldorado Resorts may have closed a deal to buy Caesars for
$18B cash. Theres nothing like another takeover to get the bulls juices
running. And to top it off, the week is flush with housing data, Case/Shillers
20-city April Home Price Index, FHFA April House Price Data, and May New Home Sales all
out on Tuesday. Fast Forward to Thursday, and the Natl Assn of Realtors will
release May Pending Home Sales. Also Thursday, the final look at Q1 GDP, along with
Business Investment and Consumer PCEthe data the Fed watches most closely. Plus, we
have a number of Fedheads speaking this week, including NY Feds Williams Tuesday,
hours before FOMC Chief Powell will be speaking at the Council of Foreign Relations,
specifically, on Challenges Facing the US Economic Outlook & Monetary Policy Review.
Hours later, the lone dissenter, tee Feds Bullard, will offer brief opening remarks
in introducing Carmen Reinhart whos delivering the Homer Jones Memorial Lecture,
with Q&A, at the St Louis Fed, which he heads up.
If you havent heard, there are 24 declared Democratic 2020 presidential candidates
vying for attention and funding. The first Dem debate is on the 26th, with 10
of the 20 who "qualified" by either raising enough money from enough people, or
placing high enough in polls to enter the debates NBC is broadcasting from Miami Florida.
On the 27th, the 0ther 10 "qualifying" hopefuls will debate, in
Miami, for broadcast, both days, beyond NBC TV, also on Telemundo, MSNBC, YouTube &
Facebook. Given how the press follows Trumps every breath & tweet, let us hope
the candidates actually get more press than the tweets Trump will spew, in all likelihood,
minute by minute during the debates.
The Earnings Calendar is extremely compact but not without interest. Tuesday, Id
posit, every company reporting has much to tell us. Start with Aerovironment which makes
parts of Boeing, and drones, FactSet, a read on Wall Street, FedEx, Lennar, Micron
Technology, and Synnex, the last one of the major PC & Mobile device suppliers to
enterprisesa VAR, or Value-Added-Reseller, that bought and closed CompUSA, among
other failed tech distributors. Whats most notable about Wednesday, to me, is not
General Mills, IHS Markit, K B Homes, Paychex, Rite Aid or Schnitzer Steel but Pier 1,
whose stock price might look shocking to some who arent away that it recently
executed a reverse split, which generally means the stock is in a death spiral from which
it wont be able to pull itself. Thursday, reports are expected from Accenture,
ConAgra, Herman Miller, McCormick (spices), Nike, and Walgreens Boots Alliance. For most,
Nikes comments on tariffs will be the highlight of the week. Friday Constellation
Brands is expected to report results, although not yet from CBD infused products.
Then, there are the Events, which are winding down into summer holidays in July &
AugustJuly just one week away. One event to take not of, UBAthe Utah Bankers
Association, might seem insignificant but isnt. Started Sunday, UBA includes
Industrial Banks, Utah home to the most credit card & industrial bank headquarters.
Just as Delaware is the corporate capital of the US, Utah is the Industrial bank
headquarters of the country, and will fight fiercely to make sure cryptocurrencies
wont usurp its position in the payment processing world. Also starting Sunday, NASFT
for Fancy Foods, for years more about flavored waters & alcoholic beverages than much
else but, surely, starting as soon as this year, CBD infused food and plant derived
products.
Paris, where the Air Show was finishing up, this past weekend, by welcoming the public, is
hosting Mens Couture Fashion Week, which will be prominent in newspapers this week.
Womens immediately follow Mens, so the sex will change but not the fashionable
names. Speaking of Europe, the Consumer Technology Assn (CTA) CEOs are gathering for
their annual summer retreat in Prague, in the Czech Republic.
Citi is hosting Asia Internet Corporate Days in NY. It will be interesting to see how
chilly the reception is, given those who claim nationalistic pride has caused Chinese
consumers to turn inward for their devices, away from the US which they see as starting
the tariff war. If you were going to host a Cloud Computing Expo, Santa Clara would surely
be at the top of the list of cities in which to host it. So it is, Monday. But, as Monday
makes clear, most of the I-bank action is moved to Asia, where school ending and camp
beginning, or July 4th is of no concern to anyone. ICANN, for those who think
it sounds familiar but cant remember why is the Internet Corporation for Assigning
Names which governs the backbone of the internetall the named domains, and
dot.whathaveyous which seem to be sprouting like weeds all over the place.
RetailX is an umbrella for a series of retail-related conferences that covers online
commerce (IRCE Internet Retailer), GlobalShop, which was often more store environment than
shopping, per se, now claims its the largest RFID & E-Commerce trade
show, though its attendees, if theyre online stores, do not need the accoutrements
of a store. But, among its keynote speakers are Walmarts Sr VP of Digital Consumer
Brands, and a strategic advisor to Airbnb. Oppenheimer is so enamored with life
sciences/biotech, that its hosting a traveling conference, this week, which starts
in Stanford Tuesday, moves to Montauk Wednesday, and wraps up there Thursday. Wednesday
will host a flurry of I-bank conferences, beyond OpCo, including 2 from JPMorgan, one from
Stephens, one from Wells Fargo, and another from SunTrust. SunTrust RHtoying with
using, simply, STRHis hosting Clinical Day, which literally takes clients into the
Clinic to hear from doctors at various medical schools heading up studies at those
locations or their hospitals, mostly in hematology. Wells Fargos Bricks to Clicks
Digital Conference "starts" on the 26th but thats only a
reception & registration. The event really takes place on the 27th, with
private companies like Rent the Runway & Warby Parker, plus public ones: Carbana
(CVNA), FarFetch (FTCH), Stitch Fix (SFX), and Zalando (ZAL.DE). Still, none of the I-bank
conferences are likely to override either the CCAR results, or the Index rebalances/
reconstitutions in the noise department.
Youll note theres not a bank delivering earnings, this week, yet banks will be
in focus before Friday, especially if they jump the gun on CCAR result releases by
announcing changes to their dividends and/or buybacks. And while theres plenty of
historical data to support enthusiasm for stocks at rate cuts first get underway, I think
the bulls who have pushed stocks to new all time highs are smoking something they should
distribute more widely to the masses. Somehow, Im not feeling it, and wonder how
stocks at new all time highs will look when tepid earnings are delivered with tepid
outlooksthe threat of still more tariffs still hanging over the economy. And, as
someone once said, "Its the Economy, stupip!"
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 1721, 2019 FED FAR FROM READY TO CUT
Despite a coming FOMC Meeting, its really the ECB thats busier than the
FOMC, hosting an annual Forum on Central Banking20 years of European Economic &
Monetary Union, in Sintra, Portugal. Attending are the Central Bank heads from Ireland,
the BoE, and even Janet Yellen & Larry Summersthe latter on the rate cut
bandwagon, suddenly. The Bk of England is meeting on rates but we know there's going to be
nothing done there, because of still unsettled Brexit, not ot mention the lack of a Prime
Minister.
I am never right about the FOMC but here goesWednesday, I expect the FOMC to say
what everyone expectsthat it is watching and evaluating the incoming data closely,
and if its necessary, it will cut rates if the need should arise. But I dont expect
a promise of a rate cut, because the data isnt, yet, negative enough to require the
cut. The last Unemployment Report, with job adds falling over 100K shy of expectations,
wasnt the first time to disappoint. In fact, the more than 75K jobs added were a
heck of a lot better than the 33K added one month in recent history. Aside from
employmentwhich many would argue already reached the commonly believed "full
employment" level, anyway, the data hasnt just been weak enough to justify a
rate cutPres. Trumps insistence, aside. In fact, the Service side of the
economythe largest portion of economic output, has strengthened, rather than
weakened, in recent months.
And given that mortgage rates have been easing down, its quite possible even the
housing data out this week will be improved, as well. Monday, the NAHB sentiment data is
outthe June Housing Market Index. Tuesday, May Housing Starts/Building Permits, and
Friday, May Existing Home Sales. And, if you really want to know the most important data
out this week, it might well be the Stress Test Results of the eleven largest banks,
Friday, after the closejust before the FTSE Russell Company releases the Final Adds
& Deletes for Russell Indices that will be reconstituted after the close on the 28ththe
same day the Fed Reserve will release the CCAR results, which determine the amount of
dividends & buybacks the megabanks can conduct over the next year. Of course, it pays
to remember that under Powell, the FOMC has become a kinder, gentler regulatory, who not
only has let a number of banks off the Stress Test/CCAR test hook but also seeks less to
trip up the banks than assure theyre prepared to weather the next economic storm.
Other than all the above, and despite Fed Gov Brainard and Fed Pres. Mester talking 2x, it
should be a very quiet week. The Earnings Calendar is nearly dried up. A couple of big
tech companies are scheduled to report, including Adobe, Jabil Circuit, and Oracle, along
with Korn Ferry, which would be one of the first companies to see a drop off in hiring, if
theres one on the horizon. To round out the reports, Darden Restaurants, and Kroger,
with CarMax wrapping up the week on Friday. Its worth mentioning that former parent,
AutoNation declared its intent to expand into used cars, encroaching on KMXs
business but, so far, KMX seems to have nothing to worry about, other than the collapse in
sales of sedans, which has long been the bread and butter for KMX.
As for events, the weeks biggest curiosity is supposed to be Facebook introducing
its cryptocurrency this week. Backers, who each invested a meager $10m to support the
effort (cause FB needs the money, right?), include Visa, Uber, MasterCard, PayPal &
Stripe, according to the WSJ. Some will act as "nodes," its reported, that
verify and document transactions using the currency, marketed as a "stablecoin,"
whose value is tied to a basket of government currencies, to escape the wild swings
Bitcoins pricing sees. Some supporters, its said, worry Libra could be used to
launder money or finance terrorism, a problem seen in other cryptocurrencies. FB is
expected to publish a white paper on Libra, this week, to detail the concept more
completely.
The Event Calendar otherwise slows, as summer, which officially arrives on the 21st,
sends traders & portfolio managers on vacation. Sunday AAAE Aviation Conference kicks
off in Boston, while Monday, Marine Money Week gets underway in NY, Jefferies a co-host
with Capital Link. Speaking of AN & KMX, Independent & Minority Auto Dealers meet,
NIADA, in Vegas, for one of the bigger conventions of the week, who must be thrilled that
rates are backing off again. Not that they will, necessarily, offer lower rates to their
customers but because it makes it easier for them to round up the financing they need to
be able to offer to customers, and to stock their showrooms. Speaking of airports, the
Paris Air Show kicks off Monday, too. So does ICSCShopping Centers Strategic
Leadership Summit, in D.C.
JPMorgan is hosting its Annual Energy Conference, starting Tuesday. Jefferies hosts
Consumer IR the same day, while Oppenheimer host Consumer Growth & E-Commerce, in
Nantucket MA & Boston, respectively. Thats a lot of Consumer companies
reporting, many retailers who are struggling to figure out the new retail, for many,
closing stores. Credit Suisses 4th Annual US West Coast Yankee Bank
Conference + IR Day, is the most misleading conference name in history because the banks
appearing are about as far from Yankee as could betheyre European banks. JEFF
& OpCo arent the only nearly duplicate conferences. Raymond James, starting
Tuesday, is hosting Life Sciences & MedTech, while Wednesday, JMP Securities is
hosting Life Sciences. Meanwhile, Stephens Cloud Communications Bus Tour may be one
of the more tradable events, because its so finite: FIVN, TWLO, VG & ZM on the
agenda. Speaking of misleading Conference names, theres Pioer Jaffrays
Heartland Summit. At one time, it featured companies based in the heartland, Minneapolis,
to be exact but, this year, the only companies we could confirm were biotechs, none of
them based in Minneapolis or anywhere else in the Heartland. Speaking of biotechs, Merck
& Co is hosting an Investor Day Thursday, but its Tysons Investor Day,
Thursday, worth keeping an eye onespecially if you own the recent IPO, BYND (Beyond
Meat) because TSN is sure to detail its roll-out of meat substitute chicken nuggets and
other products. Im personally curious about who Beyond Meat and other non-meat
similars are aimed out. I havent eaten beef or lamb in over 50 years and have no
interest in tasting a fake burger, which I havent missed, at all. So just curious.
So lets generously call last week a consolidation weekan outcome that would be
a gift this week since that rarely happens when the FOMC doesnt deliver exactly what
the market wantsa promise of a rate cut at the July FOMC meeting. And while Im
NEVER right about the FOMC, I just dont see anything in the data that would justify
a cut, or a concrete promise of one in July. And the one thing we know about the FOMC
its that it reacts with a lag, even as its rate moves cause the economy to react
with a lag. That means the economy is likely to be far softer before the FOMC institutes a
rate cut.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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.
Storms have been wreaking havoc on our communications
and work schedule: this was updated late 06/09, and early 06/10. Also check the free
calendar for items posted there that didn't make it here, due to power and/or internet
connections failing in storms.
June 1014, 2019 Boy! DID WE EVER BLOW IT LAST WEEK!!!! Youll note, Fed speakers are MIA, this week, in a
quiet period before the FOMC Meeting starting on the 18th. Chairman
Powells press conference will be on the 19th, at 2:30pm. Ive read
that he and Treas. Secy Mnuchin are attending the G20 Finance Ministers &
Central Bank Governors Meeting, in Fukuoka Japannot that the FOMC Calendar
says so. On the contrary, the FOMC Board of Governors claim no speeches or meetings this
week but the NYTimes.com featured a picture of the 2 Americans in Japan with other
leaders. ECBs Draghi & Coeure + BoEs Carney are also attending the G20
FinMins & Central Bankers Mtg, featured on their respective central bank calendars. In
addition, the US & Japan are scheduled for trade talks, Monday & Tuesday, though I
was shocked to learn theres a dispute there, at all. Arent Japans Abe
& Trump golf buddies?
And thats not all: US May PPI and CPI are due on Tuesday & Wednesday,
respectively, along with May Retail Sales Friday, in addition to Industrial Production
& Capacity Industrialization. In addition to the US data, well get the UKs
A1 GDP, Trade Balance and other significant data, in addition to similar data from China,
that includes May Foreign Direct Investment, Vehicle Sales, CPI & PPI Monday &
Tuesday, respectively. The Swiss National Bank monetary policy committee will announced
its interest & deposit rate decision, in the wee hours of Thursday morning, east coast
time. While ECB Pres Draghi, and co-officers on their MPC will be busy with CESEE,
encountered on the Eco Calendar, on Wednesday, which refers to central, eastern &
south-eastern European countries, the subject of an ECB organized conference, at the ECB
headquarters, in Frankfurt, Germany. When all is said and done, though, its the IEA
monthly energy report that may move markets more.
And, alas, there are lots of big events on this week weeks calendar, beyond those
events. First of those is EEIEdison Electric Institute--Feel the Power. Keynotes
include the former House leader, Paul Ryan, the founder/CEO of Girls Who Code, Reshma
Saujan on closing the Gender Gap, US Secy of Energy Rick Perry, IHS Cambridge Energy
founder Daniel Yergin, Duke Energy CEO Lynn Good, Exelon CEO Crhis Crane, Xcel Energy CEO
Ben Fawke, Chef and humanitarian Jose Andres, Sugar Rays Mark McGrath, former
Journey lead singer, Steve Augeri, Berlin lead singer, Terri Nunn, and Kool and the Gang
veteran Skip Martin, plus AEP CEO/Pres/Chairman Nick Akins on drums with West Quave and
the Live 61 Band. There are tracks in Clean Energy, Customer Experience, Smarter
Infrastructure, & Whats Next, but wholl notice given the line up of
keynotes and special guests? The American Gas Association, AGA, hosts a Technology
Advisory Committee (TAC) Meeting at the event, which is a mass power producers
event.
Some will say Stifels Cross-Sector Insights Conference is a leading event but
its hard to pin a tail on that donkeyCross-Sector is an excuse to pull in
corporates from every sector, at will, without regard to market cap, region, or any other
criteria that other conferences may rely upon. In NY, starting the same day (Monday)? HSBC
GEMSGlobal Emerging Markets Investor Forum in NY doesnt include an abundance
of US-traded tickers, and even when it does, HSBC offers the home-country ticker instead.
Emerging Markets Banks stand out as a large group, but then, theres AB InBev, ASML,
CEMEX, both China Telecom & China Unicom, plus Despergar.com (DESP), Globant S.A.
(GLOB), Interactive Asia Group Ltd (ICLK), Jianpu Technology Inc (NYSE ADR: JT), Make My
Trip (MMYT). PPDAI Group Inc (ADR: PPDF), Quotoutiao Inc (ADR: QTT), and troubled miner
VALE.
Morgan Stanley is hosting Financials, for the 11th time, and Barclays MediaComm
Visionary, another NY summit, Visionary" a term that should severely limit the number
of speakers but, evidently, doesnt much. The biggest event in terms of suit and tie
attendees is, undoubtedly, Goldman Sachs 40th Global Healthcare
Conference, in Rancho Palos Verdes, CA. Wells Fargo is out west, too, for West Coast
Energy but THE event of the west coast is, undoubtedly for some, E3the Electronic
Entertainment Expo, an event that, in my mind, should some day merge with Licensing, which
recently wrapped. At E3, eSports is a hot topic, as it is at Varietys TV Summit
(L.A. Wednesday, and then in the UK, right afterwards). It is, also, at East Coast Gaming
Congress & NexGen Gaming (aka eSports), starting Wednesday. So its said, The
E-League "Gears of War 5" Documentary, due to debut on TBS network, on the 14th,
is a collaboration between AT&Ts Turner division and Microsofts Xbox
Studios, producing a 6-part series that IMG helped put together by getting WarnerMedia
(Turner a subdivision) together with ELeague, which is an IMG brainchild. The 1st
Gears 5 eSports tournament isnt until July
Overseas, its JPMorgan that will rule, with what its calling Industrials Week
in the UK. In truth, thats an umbrella for a few subconferences taking place, this
week, in the UK, that includes, on the 11th, European Automotive; on the 12th,
European Materials, both in London, and on the 13th14th,
European Capital Goods CEO, instead of in London, in Surrey, UK, to wrap up the week. Also
in London, the NASDAQ 40th Investor Conference, which highlights some leading
American companies to UK/European Investors.
As for Earnings, more consumer facing names, the most significant of which are Lululemon
& Oxford Industrials, both reporting Wednesday. Non-consumer names include HD Supply,
the former wholesale division of Home Depot, and Broadcom, (AVGO), which took the ticker
of one of its large merger partners.
With Trump suspending, indefinitely, the threatened tariffs on Mexico, which were slated
to go into effect on Monday, the 10th, theres reason for stocks to
celebrate, which futures suggest theyre apt to at the outset, Monday. Thats
when traders will have their first chance to react to the FTSE Russell preliminary
additions & deletions from the Russell Indices. But after the week of fireworks stocks
shot off last week, the upside would seem the more difficult direction. But then, I
expected Trump to back off Mexican tariffs at the last minute, therefore anticipating
stocks probing lower levels until the end of last week. Instead, Wall Street threw a party
the likes of which isnt often seen. Expecting a repeat this week could well be
asking too much, though a celebration, in light of the merger of Raytheon, with United
Technologies' aerospace division, seems required by those who see renewed M&A
activity.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 0307, 2019 FRESH APPLE NEWS FOR CNBC TO BORE US WITH Maybe its just me but it seems like
CNBC has a very limited conversational stream. Theres Apple, Uber, and Lyft. Even
when Trump is riling China and, more recently, Mexico, CNBC is the Apple Uber, & Lyft
channel the way Fox News is the Trump Channel. Granted, Apple has often been the largest
market cap company in the US so influential to how the S&P 500 moves but, still,
Ill be grateful for Apples WWDC, this week, and fresh news, rather than
rehashed opinions from their "Fast Money" traders. WWDC19 starts Monday, a day
when many of the players @ASCO have, also, scheduled cance3r pipeline Analyst Meetings
that will be webcast. One other analyst meeting is worthy of mention; thats
Prudential Financials. Wednesday. The insurers have not suffered a setback the money
center banks did while rates have been falling. Thats curious. Likewise, both Capri
Holdings & CVS Health are meeting with Analysts Tuesday. Capri, until the end of last
year, was known (better known) as KorsMichael Kors but changed as it closed on the
acquisitions of Jimmy Choo & Versace. Also that day, Goldman Sachs is opening its
headquarters to clients of Wolfe Research. Outsiders get all starry eyed at GS
Headquarters, while Analysts are lining up behind CVS.
Now to the Economic Calendar, because Fed speakers are frequent, again, this week, after
the Memorial Week off, last week. Simultaneously, Trump is headed for the UK and France,
for state visits and to honor the anniversary of D-Day. Unfortunately, that wont
stop Trumps tweeting, which means any number of Democrats will be hanging on with
baited breath, waiting for embarrassing moments. Fed Chief Powell speaks Tuesday, to open
the Chicago Federal Reserve Conference on the Fed Framework for Monetary Policy,
Strategies & Communicationsa bid topic for the Fed Board, at the moment. In
addition to Powell, Fed Gov Brainard is a panelists and Kaplan a dinner speaker at the Fed
Conference in Chicago. Fed Vice Chair Clarida opens Day 2 of the Fed Conference on
Monetary Policy. Likewise, the transition away from using Libor to set consumer rates is a
to9pic of interest on both sides of the Atlantic. Fed Vice Chairman for Supervision,
Quarles has the stateside duties. Fed Gov. Bowman testifies at the Senate Banking Cmte but
I dont expect any wild fireworks. Ditto BoJ Chief Kurodas & BoEs
Chief Carney appearances at the Institute of Intl Finance (IFF) Spring Membership
meeting, taking place in Tokyo.
Its also a new month which means a data deluge in both the US & Canada. Both
countries release May Unemployment data on Friday. ADP will release its private sector
Employment Report for both countries, before those reports. Analysts will be watching for
a sudden spike in applications., Feds Bostic speaks about affordability at an
Atlanta Regional Housing forum, just in time for mortgage rates to print sub-4.0%, raising
affordability. Wednesday is the 30th anniversary of the Tianmen Square
uprising. Its a day many of us expected to change China but, instead, has been
erased from Chinese history. Also expected, both PMIs & ISMs, along April
Intl Trade Deficit, and US Q1 Productivity & Costs. G7 Meets later in the week,
as well as the G20 Finance Ministers & Central Bank Governors, though theres no
confirmation that Powell plans on attending. Unemployment Friday is the biggy, along with
FTSE Russells preliminary changes to its indices, which will be announced after the
close Friday, based on May 10th closing prices. Analysts have already been
handicapping the additions & deletions.
Earnings are a mix of retailers, and others, including Ambarella, Navistar &
Salesforce.com, Tuesday, Brown Forman Wednesday, along with Unifi, Wednesday, the Ciena,
Hovnavian, and Vail Resorts, Thursday. The biggest names in retail reporting include
Calares, formelry Brown Show, which must be losing some business with the closing of
Payless Shoes. Tiffany is a near obsession for some, reporting Tuesday, which downscale
competitor, Signet reporting Thursday.
Which brings us to Events. How serious has the African Swine Fever become, even though
its mainly in China? The World Pork Expo, originally scheduled for June 5th
in Des Moines, Iowa, has been canceled out of the utmost caution, for the first time in
over 4 decades, due to the international nature of attendees & contestants. While we
celebrate the protections taken to preserve the US pork supply chain, its a lost
opportunity for TSN, HRL, SAFM, BOBE, PPC, ZTS, and others normally involved.
NYUs 41st Intl Hospitality Industry Investment Conference, Jun 2nd
to 4th, is huge. In addition to every hotel company, and half the REIT Index,
I-bankers and analysts from Deutsche Bank. Goldman Sachs, Morgan Stanley, JPMorgan &
Credit Suisse are speakers, along with the Governor of Puerto Rico, and
actor/restauranteur Robert De Niro Jr (Nobu) and his partners, including Chef Nobu
Matsuhisa. Another feature we believe is new, are concurrent workshops, which easily
explains the enlarged list of speakers. And expect it to be widely covered by CNBC, since
both Kelly Evans & Andrew Ross Sorkin are moderators of panels. While wed expect
to see Smith Travel, now using STR, only, Apollos co-chair of Hotels/Leisure is not
typical, and neither is Google Travel, side by side with Expedia (EXPE). Overlapping this
event, is Goldman Sachs Lodging, Gaming, Restaurant, & Leisure Conference, also
in NY, wholl draw on many of the NYU attendees as well as Sysco, Hertz, Six Flags
and other hospitality companies not expected at NYU. On the other hand, PegaWORLD, from
PegaSystems, a widely used hotel reservation & restaurant software, is hosting its
annual DevCon in Las Vegas, on overlapping days. Probably booked long before it knew many
customer CEOs would be attending the NYU & GS shindigs.
SaaStock EastCoast in NY is for SaaS founders, top execs and investors, though details
were lacking when we tried to update. HubSpot & Zendesk are the sum total of public
participants.
Tuesday is again the day that proves how many I-banks are striving to get in all the face
time they can with clients and prospective ones. Almost all of them are hosting meetings
@NAREITs REITweek, also starting Monday, in NY, with its Investment Symposium, a
pre-NAREIT event for analysts. Bk of America Merrill Lynch is the next biggest Conference
of the week, though in California, which will put some of the presentations after Wall
Street closes. Sandler ONeill Global Exchange & Brokerage Conference is a well
attended annual event. Still, Im just touching the surface. Almost 90% of
Tuesdays events are I-bank events, which is unusual on the face of it. Licensing
Expo, Tuesday, is now bigger than E3 and other one-time highly anticipated events. For
Mattel & Hasbro, its become raison detre, though most of their deals are
done back at their NY Showrooms, and Licensing moved from NY to Las Vegas, a couple of
years ago.
Of course, we can all wonder whether CNBC will be able to pull its anchors & reporters
away from Apples WWDC 19 (Worldwide Developer Conference), long enough to
acknowledge these other events. Many weeks, it seems, CNBC has a one- or few-track mind,
and thats focused on Apple, Facebook. & Uber, topics that make my eyes glaze
over, at this point. WWDC has always been about software, not hardware but the integration
of the two has become essential to AAPLs results, so it would be foolhardy to expect
it to focus exclusively on software. In fact, many are expecting updates on Apple
TVsomething weve heard about for over a decade without much coming to
fruition.
The Trend appears to have changed. Bulls are cowering in hiding. Bears are flexing their
muscles and wont see anything in the charts to dissuade them from continuing their
full court press. Some will say that stocks are getting near attractive levels. Really???
I dont think so, and wont until they successfully test the December lows.
Were not near there yet. And theres no reason to be a hero.
ECONOMIC: (Highlights, below, only. Full International Economic Calendar here)
© Sandi Lynne 2019 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 2731, 2019 UNWISE
to EXPECT MUCH of a RECOVERY
Central Bankers are quieter this week than theyve been in a few, despite the Bank of
Canada meeting and announcing a rate decision on Wednesday, likely in the morning.
BoJs Kuroda spoke Sunday and will, again, overnight Tuesday, Fed Vice Chairman
Clarida speaks Thursday, as does NY Feds Williams Friday but, otherwise, none of the
recent deluge. Of course, with both the Case-Shiller 20-City March Home Price Index
Tuesday, and FHFAs HPI version the same day, and Thursdays NAR Pending Home
Sales for April, attention will be paid to house prices and sales. Then, Thursday, another
look at Q1 GDP, followed by Fridays April Personal Income & Outlays, both of
which have a PCE componentthe FOMCs preference for PCE diffusion index over
CPI made clear. Im not particularly fond of either the Conference Boards
Consumer Sentiment reading (Tues.) or U of Michigans (Fri.) but consumers too often
say what they think the inquirer wants to hear rather than what they really feel. Other
times, consumers do what their mood suggests they wontlike when they shopped
til they dropped after 9/11, when everyone thought theyd hole up in their
homes and never step outand that was before consumers shopped until they dropped
online, without ever stepping out of their houses. That last makes it harder than ever to
match sentiment with activity.
The Earnings Calendar is remarkable, this week, for the number of retailers reporting, and
within that group, 3 whose name and/or ticker has changed in the past year, if not the
past few months or weeks. For instance, the former DSW Shoe Warehouse operator, is now
Designer Brands (DBI), reporting Thursday, whos name change arose from its purchase
of Vince Camuto and other brands, thats driven it more deeply into the design and
manufacture of shoes. The former New York & Company ticker, (NWY), is now (RTW),
Wednesday, which stands for Ready to Wear, for those who dont follow apparel
manufacturers, which is the origination. Last, Capri Holdings Ltd, was formerly Michael
Kors, with ticker (KORS), reporting the same day, but now (CPRI). KORS made the change
after buying Versace & Jimmy Choo. Its getting to the point where well
need either footnotes or a legend to decipher the Earnings Calendar, which to casual
observers, is now Greek. And honestly, we cant say the change in names and/or
tickers has, necessarily, improved results for all the reporters. Before Kors morphed into
Capri, competitor Coach became Tapestry, to recognize its added brandsStuart
Weitzman & Kate Spade New York. Many of us didnt love Tapestry, at the time the
change was announced but it strikes me as more appealing, now, than Capri Holdings, even
though I do have fond memories of the Casino & risotte on the Isle of Capri. Kors said
the island "
has been recognized as an iconic, glamorous and luxury destination.
The islands spectacular 3-rock formation, formed over 200 million years ago, is
symbolic of the timeless heritage and strong foundation that is at the core of each of the
three founder-led brands." That, of course, refers to Kors, Choo & Versace.
In addition to the many retailers reporting, Dell Technologies, Marvell Technologies, Tech
Data, and VMware will, also, report (all Thursday), along with SaaS company Workday
(Tues.), and Chinas electric car maker Nio, also Tuesday. Note, too, a couple of
Canadian banks weighing, Bk of Nova Scotia Tuesday, and BMO on Wednesday. The highest
hopes lie with CostCo Warehouse Stores, with less high hopes but still optimism for Canada
Goose (Wed.) and Burlington Stores and Ulta Salon & Beauty (both Thurs.) Of course,
the higher the hopes, the bigger the fall if they disappoint, the quarter GOOS is
reporting one in which all its fall/winter shipments are paid but not much new is ordered.
The Events Calendar shows some respect for traders tendency to extend long weekends
beyond the agreed number of days, often turning them into an entire week out of town.
Still, Deutsche Banks Global Financial Services, starting Tuesday, along with
KeyBancs Industrial & Basic Materials Conferences should be noted. Likewise,
Bernsteins Strategic Decisions CEO Conference, in NY, which features a diverse group
of companies like Albermarle and Las Vegas Sands, from Walmart, and Medtronic to Williams
Co, to General Dynamics & Lockheed Martin, to Estee Lauder & Citigoups CEO
Michael Corbat, plus Home Depot and Boeings Dennis Mullenberg, which I think
its fair to say, will be one of the highlights. Cowen & Cos 47th
Annual Technology, Media & Telecom Conference, also in NY, and like Bernstein,
starting Wednesday, gets the nod because its survived 47 years, which aint
chopped liver! And talk about an eclectic group of presenters that doesnt even have
location to justify their presentations, the 16th Annual Craig-Hallum
Institutional Investor Conference first the bill. It promises First internet Bancorp,
Famous Daves of America, Upland Software, Misonix, QuinStreet, NeoGenomics, Akoustis
Technologies, Everi Holdings, Leaf Group, DiaMedica Therapeutics, Spartan Motors, Skykline
Champion, SMTC Corp, ACM Research, nLIGHT Inc, BioScrip, PDF Solutions, Ultra Clean,
LivePErson, 8x8, TrueCar, eHealth, Zix Corp, Mark Capital One, Boingo Wireless, Plug
Power, Silicon Motion, and about 100 more companies confirmed. Some, like Extreme
Networks, will be dual presenters, EXTR at both Craig-Hallum & Dowen.
Unlike prior weeks, when Tuesday was a flood of I-bank conferences, this week, because of
the Monday holiday, its Wednesday before the I-banks crank it up full steam.
Jefferies is hosting Japanese It, Internet & Services companies in NY, while UBS is
doing the same for the Best of Europe, in a 1-on-1 format. Note, too, that Book Expo
America is in NY, starting Wednesday, which means so is BlogWorld & the New Media
Expo. Usually, I obtain a long list of authors hosting talks and book signings but
the BEA website was so overwhelming, this year, I could hardly get it to load, let alone
reveal details. Observe, too, that it wasnt a holiday in France, where the French
Open got underway, Sunday (to squeeze out an extra day of ticket sales, instead of
starting Monday), and where SocGen is hosting its annual Nice Conference, which starts
Tuesday. And so its said, ASCOthe American Society of Clinical
OncologyAnnual Meeting gets underway, in Chicago, starting Friday, so expect
analysts to line up behind their favorite biotech and/or pharmaceutical.
MoffettNathanson is hosting Payments, Processors & IT Services (Wed.) on the heels of
Global Payments (GPN) speaking up for Total System Services. (TSS) You might recall I
mentioned PayPal, Square, and other processors being bait for larger
playersespecially ones like Capital One, who like to control every aspect of a
transaction. I got the group right but the principals wrong, for now. I still think
neither Square nor PayPal remain independent, because owning the network is so lucrative,
as the multiples on Visa & MasterCard prove.
Stocks were whacked fairly hard, last week but theres little reason to expect too
much of a rebound this week. He carries a big stick one day, and a carrot the next, as he
did first banning Huawei, then giving it some time to transition, and finally saying it
can be part of a China trade agreement, proving nothing if not unpredictable. Weve
all heard how markets hate uncertainty, and the chief of chaos sits in the White House
now, and tweets out whatever comes to mind, without a thought to consequences. I
dont doubt that a trade deal with China will, ultimately, be reached but what
markets will be battered with in the meantime remains unknown but unlikely to be smooth.
Should markets bounce, Id expect those who still held out hope for a continuation of
the bull market to lighten up on stocks. Its a bad time of year to own stocks, made
worse by the uncertainty Trump creates.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 2024, 2019 USE CAUTION IN FRONT of a POSSIBLE 3-DAY WEEKEND TWEET STORM Central bankers are everywhere, this week. Atlanta Feds
24th Financial Markets Conference is presented by its Center for Financial
Innovation & Stability and subtitled, "Mapping the Financial Frontier. What does
the Next Decade Hold?" Atlanta Fed Pres. Raphael Bostic is a speaker, as one would
expect but so is Jerome Powell, on the 20th, at 7pm et. Others speaking range
from Simon Johnson of MIT, to speakers from Chicago Booth School, Stanford U, US Census
Bureau, Freddie Mac, Moodys Analytics, BofAMLs Ethan Harris, and Kevin Warsh,
currently from the Hoover Institution. @Stanford. NY Chicago Fed Pres. Evans will wrap
that conference the next day.
Fed Bank Pres. Williams and Fed Vice Chairman Clarida participate at a
"FedListens," rooundtable on monetary policy strategy, tools and communications
practices"the latter a heavily discussed internal debate at the Fed Board.
Boston Fed Pres. Rosengren is speaking at a luncheon at the Economic Club of NY, Tuesday,
his topic undisclosed, but probably not groundbreaking. St. Louis Fed Pres. Bullard will
speak in Hong Kong, 1am et, on Wednesday (or overnight Tuesday, as I prefer), on the US
Economic Outlook & Monetary Policy, with Q&A. Hours after he speaks, ECB Chief
Draghi will speak at the ECB Collquium: "Monetary Policy in an incomplete Monetary
Union," a topic the ECB seems to be getting more serious about. But with 750 members
of the EU Parliament to be voted on from the 23rd, through the 26thincluding
in the UK, because of delayed Brexitwhether pro-Euro members will hold sway remains
the burning question. More and more, it seems, nationalism is seeping into the
conversation, and pro-Euro countries are a little harder to find. At the same ECB
Colloquium (@the ECB, in Frankfurt), which is to honor ECB chief economist, Peter Praet,
Praet will speak, too, on "Challenges to the single monetary policy and ways
forward."
Wednesday, Fed Presidents Bostic & Kaplan speak at the Joint Atlanta & Dallas
Feds "Technology-Enabled Disruption: Implications for Business, Labor Markets
& Monetary Policy," being held in Dallas, through the 23rd. At 2pm,
that day, the FOMC Minutes of the meeting that ended May 1st will be released,
though will less mystery surrounding the conversations, given every voting member has
endorsed "patience," on rates. Half a day later, the ECB will release both its
Financial Stability Review, and the Account of Monetary Policy of the April 9th10th
Meeting. Almost simultaneously, Draghi speaks again, at the 81st Plenary
Meeting of the Group of 20, in Madrid Spain. His V.P., de Guindos, is speaking at AFME
(Assn for Financial Markets in Europe) on Opportunities for European Banking &
Capital Markets. Then, Thursday, S.F. Fed Pres. Daly & Richmond Fed Pres. Barkin, join
Bostic & Kaplan for a panel at the Atlanta/Dallas Fed Banks Joint Conference on
Technology-Enabled Disruption (noon, Dallas). Thats a lot of central bank speakers
on the slide into a the long Memorial Day weekend, which officially kicks off summer and
the great escape from offices everywhere. Only the bond markets close early Friday, at 2pm
et. Equities are scheduled to trade regular hours, until 4pm et, though it should be like
watching paint dry, if youre looking at your quote systems after the treasury market
closes.
Outside central bankers, and central bank meeting minutes, what stands out on the Economic
Calendar is a light week for Treasury issuance, and Existing Home Sales, Tuesday, and New
Home Sales Thursday. Friday morning, the week will wrap with April Durable Goods Orders
& Shipments, which includes Capital Goods Orders & Shipments.
The Earnings Calendar is a crush of consumer namesretailers, especially, as is
easily gleaned from a quick scan of the emboldened tickers below. While many might assume
it was a strong quarter for Home Depot & Lowes, its quite possible that
floods in the middle of the country, and late snow storms seriously delayed the spring
planting season. Furthermore, a relative had to buy a new fridge, and it seems to me
prices havent changed in the 8 years since I bought my French door one (which cut my
electric bill by $40 a month, inspiring me to replace all my appliances, over the
following 8 months.. None of the successive purchases made as big a difference to my power
consumption except the water heater, which in combo with the new dishwasher, cut another
$80 a month off my monthly electric bill.) Yes, today, you can buy much more upgraded
models that cost more than 3 times as much as my early French door fridgeincluding
models with inner and outer doors, so someone who wants to choose a soda can or water
bottle doesnt have to open a fridge at allonly the outer door. But. From the
bottom to about half way up the ladder, prices have been in the same place for 10 years,
despite tariffs on some metals for a year. Home Depot & Lowes sell appliances
too, along with Best buy, also reporting this week, and probably benefited from the
closure of so many Sears stores, in the past year but spring planting season didnt
get underway for the home improvement retailers, until the current quarter, and for people
like me, painting the house in the next month (depending on rain days), therell be
no planting until much later in the season. Id imagine all the floods seen this past
spring delayed a lot of exterior painting projects too.
Then, there are the department stores, including JCPenney, Kohls, Nordstrom, from
whom I dont expect rousing results. In fact, I think JCP needs to prove it can
survive. Period. Some hope Kohls relationship with Amazon, has boosted its sales.
After all, the two just announced expansion of the pick up and drop off Amazon packages
relationship to the rest of the KSS stores that werent involved in the test. But at
least some analysts claim the relationship hasnt benefited KSS as much as some hope,
while others say the same relationship with AMZNs owned Whole Foods has meant
nothing to Whole Foods because people picking up or sending back packages there dont
spend more than 5 minutes in the store. If thats true at KSS, one can wonder how the
relationship is benefiting KSS, unless cash is changing hands. On selected other retailers
I do have an opinion.
Urban Outfitterss reports Earnings on Tuesday, which probably wont account for
the tremendous amount of goods its Anthropologie division is shipping to Nordstroms
home department. I dont know during which quarter the shipments fell, or were
paid for but I couldnt help but notice what a large percentage Anthro home goods can
be seen at JWNeven acknowledging how small a portion of Nordstroms overall
floor space its home department occupiesspace thats grown since Anthro goods
were added to the mix, even though an Anthropologie store, here (Boca Raton FL, at Town
Center [SPG] mall), is a mere 100 yards away. Not many seem to notice because the
Anthropologie store, here, has been a mistake from the beginning, available to be entered,
only, by walking outside the mall, even though theres a large window in the mall
that could have easily included a doorway. Last Tuesday, the high temperature was 104
degrees, already, so imagine how many customers are motivated to walk outside the mall.
And even though I dont know when the shipments & payments took place, they
either fell during the quarter being reported, or will inform the outlook, so URBN could
have significant upside that analysts arent yet talking about.
Im not equally stoked about JWNs earnings. The full-price Nordstrom store
never seems to have enough merchandise to blow the cover off the ball, unless the Rack
division and online sales are going to get the job done. On the other hand, I have more
confidence in Nordstroms margins than I do, say Macy*s, because theres no
department store in the world that uses more restraint in markdowns than
Nordstromand that includes European retailers who are only allowed to offer
disconti when the govt says so. On the reverse side of that coin, is the
editing skills of JWNs buyers, for its full-price store. Planning on buying my mom
dark chocolate dipped fresh strawberries for Mothers Day, I was on the way to the
ladies room via Nordstroms dress dept, and couldnt resist a little capelet
with 5" crocheted sleeve "hems" for $49. As illustration, the same garment
at, say Bloomingdales, would be marked at $98, then discounted by 40%, if not more.
At Nordstrom, it looks like a steal for the legitimate, retail price, so even a cynic like
me could forget dipped strawberries in a flash of impulse.
The retailer that may more important than the others, this week, is Target, Wednesday,
whose last report pleased in good part because so little was expected. Now that Walmart
topped the Street handily, there might be higher expectations building on TGT, which can
be dangerous. I never saw evidence, in Q4, to bear out the please report it delivered, and
have yet to see anyone park in the "pick-up" section to retrieve goods
pre-ordered. Furthermore, the one time I attempted to order and pick-up, I was told
12-packs of soda arent available for that service, which may be 75% of what I buy at
TGT, when its on sale, only. Beyond TGT, keep an eye out for TJMaxx, Tuesday, and
both Best Buy & Ross Stores, Thursday, which have done so much to install confidence,
in recent quarters, though I cant imagine what anyone needs to go to Best Buy for,
and worry that the mass closures of Office Depot/Office Max stores, with the clearance
sales that accompany stores closing, hurt BBYs sales in any office equipment. On the
other hand, like LOW & HD, BBY may have benefited from Sears closures. If not, it will
in the future.
Other Earnings Reports are coming from Intl Game Technology, Monday, Toll Brothers
on Tuesday, Analog Devices, Ctrip, NetApp, and Synopsis Wednesday, followed by
Hewlett-Packard Enterprise, HP Corp, Intuit, Lenovo, and Medtronic, on Thursday. Im
bullish on VF Corp, after a frigid, snowy winter, and worry more that The North Face
couldnt fulfill all the reorders retailers may have submitted. I still believe
FootLocker is a destination store both in the mall and online, and dont think Nike
will put it out of business selling directly to consumers. On the contrary, if a service
person or their family want sneakers, its FL that has long advertised a standing
discount for them. Plus, FL can increase purchases with adidas, Reebok, Puma, and other
brands, if NKE is stepping on its toes, too much. In fact, I remember a time NKE
couldnt sell me its sneakers for my stores, because I was renting additional storage
to stock all the Reebok high tops my customers demanded, in 9 colors.
Which brings us to the Event Calendar, which is a gold mine. Start with the EPG
(Electrical Products Group) Annual Spring Meeting which started Sunday, as I wrote.
Its a mass analyst meeting for companies connected to the group, from 3M to W.W.
Grainger, with even more companies participating than those listed on the main schedule.
Likewise, ICSC RECon is a mass meeting for Retail Real Estatethe very group that
rents to all the retailers reporting results, this week. That started Sunday, too. Then
Tuesday, the AGA (American Gas Assn) Financial Forum starts, a mass analyst meeting
for Utilities that use natural gas, and the gas producers that supply them. All 3 of these
events have analysts hosting companies and their clients. If it was just those 3 events,
this week would be huge but theres even more, including the National Restaurant
Association annual spring meeting. And the AAPG (American Petroleum Geologists) Annual
Meeting, also.
And, because I-bank analysts not involved in those events need to get a last face-to-face
with clients, before the summer exodus, the number of I-bank Conferences remains large, as
its been for the past 3 weeks. Notable among thembeyond those set at the
aforementioned events, include UBS Global Healthcare and UBS Global Oil &
Gas Conferences, in New York & Austin TX, respectively. Barclays is hosting Emerging
Payments in NY, starting Tuesday, where many of the participants arent public.
Starting the same day, SunTrust is hosting its 20th Annual Financial Services
Conference, and RBC Capital its own Global Healthcare Conference, both in New York.
Macquarie is hosting TMT Corporate Day, also in NY, the same day, while Wells Faro is
hosting an IT Boot Camp, whatever that is. Wednesday, Wells Fargo hosts Financial
Services, while B.RileyFBR starts its 284 company Annual Investor Conference, most of the
presenters very smallsmaller than we usually discuss. Capital Link is hosting its 18th
Annual Closed End Funds & ETFs Forum in NY, Wednesday, while Morgan Stanley is hosting
ChemTech, that day in London, and Citis hosting Chemicals in the same city, the same
day. Goldman Sachs knows a Hamptons weekend approaching when it sees one, so is off in
Hong Kong for its 5th Annual TechNet AsiaPacific, that day. Barrington
Research, perhaps known, of late, more for activism than traditional I-banking is hosting
its 13th Spring Investment Conference, starting Thursday. Barrington presenters
are even smaller than the previously mentioned small caps.
JPMorgan, which hosted a big TMC meeting in the states, last week, is in London for
European Technology, Media ^ Telecoms CEOs. Most of the rest of the I-banks, are decamping
for Asia, the rest of the week, with Citi planting itself in Hong Kong, Korea, and China,
starting Tuesday.
WSJs Future of Everything Festival is notable for the number of speakers named for a
single day event, which by my count, provides about 7 minutes for each. They range from
Disney Medias James Pitaro, to Olivia Wilde, Waze, Iconix, Ted Banna (Father of
401[k]), former CVS/AET CEO, Warby Parkers Neil Blumenthal, Eileen Fisher, Jennifer
Fleiss (RentTheRunway), Match Grps Mandy Ginsberg, IEX Grps Brad Katsuyama,
Ted Leonsis, Steve Ross (Related Cos), and thats just a taste which, surely,
illustrates my point.
For many, a Loyalty Expo brings to mind casinos, Caesars the one-time near inventory
of Loyalty programs but the one that starts Monday has more hotels, retailers &
restaurantsin fact, not a casino among them. Likewise, "Collision
Technology" starting on that day has nothing to do with car crashes but, rather,
technology, with speakers as diverse as Canadian P.M. Justin Trudeau and Re/codes
Kara Swisher, along with comedian Seth Rogen, Union Square Ventures, Oculus VR, US Dept of
Health, GE, Microsoft Exec VP Peggy Johnson, and many more.
Parks Associates Connections offers as many homebuilders as communications companies, as
well as alarm companies, KB Home the keynote. If it were up to me, and I had not family
obligations locally, Id be jetting over to Nice for a weekend at the beach, cause
its a week when all the action will be in Monte Carlo, at the Formula 1 Grand Prix
de Monte Carlo, currently owned by Liberty Media, and publicly traded (FWONA). The race
helps clear out Nice beaches, many named after some of the most famous beaches in
the US, like Jones Beach & West 1.
I doubt bulls are going to be brave enough to boost stocks significantly, before a 3-day
weekend during which no one knows what kind of tweet storm Trump can conjure. As it is,
Im seriously worried that hes backing the Chinese into a wall from which he
leaves them no way to save face, as Ive said previously. One chart that did catch my
eye, this weekend, though, was Hartford Financial (HIG), because its breaking from
the rest of financials, rising even when the banks are falling, and outperforming
competitors. If somethings up with HIG, Id sure like to knowif you know.
Meanwhile, I keep looking at MasterCard, Visa, Discovery Financial Services, PayPal, and
Square, and cant help feeling that a deal is coming within that group, Capital One,
perhaps, a buyer. The thing about Capital One, is that it keeps its defaults minuscule,
because a large proportion of its cardholders are still at the $500 credit limit they
start at. Yes, I know people with $50K credit limits but COF has been tighter with credit
limits than any other bank Ive ever researched. COF, though, remains a distant
follower to JPMorgan, Citi, Bank of America, and other competitors, a position its
not comfortable maintaining. Therefore, I think its most likely to make a move,
unless PYPL goes for SQ. A deal is more likely than the stocks seem to suggest, perhaps
because nothing is imminent. Still, its a group Id watch very carefully, for
hints in volume or options of a deal coming down.
Happy , healthy holiday, to all.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar, here)
© Sandi Lynne 2019 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 1317, 2019 AVOIDING A SELLING PANIC WILL BE GIFT How do you know Earnings season is all but over,
for most traders? The Events Calendar kicks into a higher gear, as it did last week. And
how do you know that, in addition to Earnings season being about over, a long summer break
is fast approaching? Other than gasoline/crude prices rising, its a schedule like
this weeks, where Tuesday is the best demonstration of how insanely packed the
I-bank conference schedule has become! And ironically, after last weeks volatility,
and last minute saves before the markets closed, especially on Friday, even those content
to listen into webcast presentations from the comfort of their own desks, really
dont want to be pulled away from their quote and chart screens, to examine the
charts accompanying presentations from even the most august events, like JPMorgans
47th Annual TMC Conference.
JPMorgans 47th Annual TMC Conference includes these confirmed presenters,
and probably more: CDW, CAMP, MDC, CTL, ST, IBM, FFIV, MSFT, WEX, ADTN, QRVO, PROS,
(BNFT), VIA.B, IPG, CRTO, LAMR, ALTR, MDSO, SBAC, UNIT, EVER, W, TRUE, I, EVOP, TWLO,
AEIS, OUT, WK, EGHT, CREE, AVLR, DLB, AMCX, NEWR, LOGM, Tenable, WWE (Gargano fireside
chat), AAXN, GDDY, SWCH, GDDY, BR, DISCK, (CEO David Zaslav keynote), FTNT, CONE, BKNG,
TTMI, FIVN, BAND, JBL, KN, CHTR, CCOI, PAYC, MXL, GDOT, SEDG, LRCX, FLT, PS, FTCH, NYT,
GLW, MDSO, CY, VZ, WIFI, T. American Towers (AMT) IR website would NOT load
presentations or press releases. AMD doesnt show this event on its IR site, as of
05/12, perhaps because it just held an analyst conference, on May 1st, to
celebrate 50 years in business. The odd thing about the presenters, is how many of them
waited until after the market close on the 10th, to confirm their appearance at
JPM, and in one case, not until Sunday, 05/12. Meanwhile, others announced participation
so many months ago, their press release hit too many months ago to pop up in a current
search. We checked a few companies, individually, like Alphabet (GOOG) but did not find an
announcement regarding participation in this, or any other, I-bank conference since Morgan
Stanleys Feb conference. Then, again, many of JPMs Media presenters will pull
double duty at the MoffettNathanson Media Conference,
The (now) Annual Center for Inflation Conference ---Inflation Drivers
& Dynamics--starts at the Cleveland Federal Reserve Bank, on the 15th, and
runs through 17th. As recently as Wednesday, there was no agenda to be found,
and even the e-mail addresses offered on the Cleveland Feds Center for Inflation
Research website offered non-existent mailboxes. That stinks, and its the only Fed
Bank Conference at which weve encountered that problem researching. Usually, we can
pull up the entire agenda and sort by speakers. Cleveland does it differentlyineptly
and offensively, as if it doesnt realize our tax dollars are paying for that bank
and its conference.
May 1517, 2019.
Fed bank speakers will be heard, even if not from the Cleveland Fed. Sunday, San Francisco
Fed Pres Daly delivered the Syracuse University commencement address. Monday, its a
twofer, with Rosengren & Vice Chairman for supervision, Clarida speaking at a New
England FedListens event. Much later, in the wee hours of Tuesday, NY Fed Pres. Williams
is a panelist on Past-Lessons Learned from an Evolving International Monetary
System," at a joint Swiss National Bank and IMF High-Level Conference @Past, Present
& Future of the International Monetary System, in Zurich, a quarter after 3am, eastern
time. Tuesday, Fed Pres George speaks at the Economic Club of Minnesota. Wednesday, Fed
Pres Barkin takes part in a discussion at the New York Association for Business Economics,
even as Vice Chair Clarida testifies at the Senate Banking Cmte, at 9:30am et. Hes
in charge of bank supervision, so square that with the committee hes before, and you
get the gist. Thursday, Fed Gov Brainard talks about the economic outlook and monetary
policy outlook at the National Tax Association 49th Symposium in D.C. Friday,
NY Fed Pres Williams is speaking again, at the Community League of the Heights, even as
Clarida speaks again, at another FedListens, this time on Education, Employment &
Monetary Policy in the 3rd District, at the Federal Reserve Bank of
Philadelphia. Then Williams speaks, again, at Equitable Growth Meeting in Chinatown, at
2pm. Even Saturday offers up a Fed speaker, Dallas Feds Kaplan whos delivering
the keynote at SABEW, a society for Business Editors & Writers, holding their annual
meeting.
Of course, as interesting as all that may be, its probable data from China will be
more influential, if the FedHeads havent changed their tunes. Tuesday, especially,
Fixed Asset Investment, Industrial Production, Retail Sales & Property Investment will
provide clues to how badly US tariffs are hurting Chinas economy. Of course, we
could say the same for US data, including Aoril Retail Sales, and Industrial Production
& Capacity Utilization, along with EIA Crude data. NAHBs May Housing Market
Index is out Wednesday. Though weather has wreaked havoc on some big states, like Texas,
lower mortgage rates should have continued to boost buyer traffic at builders new
communities. April Housing Starts & Building Permits will be backward looking,
Thursday, compared to the builders own sentiment, Wednesday.
The Earnings Calendar has some potential blow-ups in store. Ralph Lauren Polo reports
Tuesday, along with Agilent, Amdocs, Tencent Holdings, and pot company Tilray. Wednesday,
reports are expected from Alibaba, The Childrens Place, Cisco Systems, FarFetch,
Flowers Industries, Jack in the Box, Macys, and NetEase. Thursday promises Applied
Materials, Baidu, Nice Syste3ms, nVidia, Pnterest (its first report as a public company),
and Walmart. Friday, theres Deere. Of them all, I fear most the report from Macy*s
which had better be ringing the register online since its not doing so in stores. In
fact, Ive never seen fewer Macy*s shopping bags in the mall than I have the last 5
times Ive paid a visit. Walmart is still as filthy as ever, around here, which makes
me wonder where the analysts have been that has so impressed them with improvements. And
worse, its so busy pushing its own "house" versions of brand name
products, it barely has any brand name products on its shelves.
Which brings us to the Events Calendar, where Monday and Tuesday are insanely packed with
I-bank events. JPMorgans TMC will be the headliner starting Tuesday, but
MoffettNathansons Media & Communications Conference will double down on many of
JPMs presenters. There should be strong interest in JPMs Homebulding &
Building Products Conference, also starting Tuesday, with Wells Fargos Tuesday
Gaming, Hospitality & Leisure Conference bolstering the comments made at
Instinets nearly identical conference, which starts Monday. Normally, China
Conferences are prevalent during the US Memorial Day week but, this week, Credit Suisse
hosts its Annual China Conference in Shenzhen, starting Wednesday, which is when Macquarie
opens Greater China, also in Shenzhen, even as HSBC starts its 6th Annual China
Conference, also in Shenzhen. Does that strike anyone else a bit odd?
If you want to know whats really going on this week, you can consult either the
Events Calendar, or isolate the Earnings Calendar to the two handfuls of tickers
emboldened there. Unless all the Fed speakers are going to sing a new tune, there
wont be much to hear from them, this week. But the handful of earnings reporters
weve highlighted, and the far too busy Events Calendar hold the key, beyond the
trade warwhich its time to call the tiff with China. And so its said,
theres little reason to jump in and buy shares, here, unless youre convinced
the US-China Trade Agreement is going to be hammered out, right away. I dont think
thats about to happen. Rather, its more likely the Chinese will answer
Trumps raised tariffs with punitive measures of their own. Trump, whos
culturally ignorant, doesnt realize that pushing China against the wall will get him
the opposite of what he seeks. And Trump will push because he enjoys bullying
peoplewomen especially but men, too.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 factor in more complete due diligence.
May 0610, 2019 ANOTHER
WEEK OF CONSOLIDATION WEEK WOULD BE A GIFT Its
another week of too many Earnings Reports, albeit of lower impact, peppered with Fed
speakers, especially starting Thursday, and rush of I-bank conferences, Tuesday a prime
example. Id like to expound endlessly on the coming week but torrential rains,
perhaps, waterlogged my energy, leaving me shy of the task.
Federal Reserve Board Workshop on Monetary & Financial History, which starts on the 6th,
has no brand name Fed speakers. Most are university professors, with a couple from the
FDIC. The Keynote, at 5pm on the 7th, is William Goetzmann of Yale Univ, his
subject "Money Changes Everything." Even those speakers from the Fed Reserve are
background people not commonly known, even in the financial industry. Similarly, the
ECBs An innovative Single Market for the Euro mostly lacks high profile speakers,
though ECB Executive Board Member Sabine Lautenschlager is a speaker. Otherwise, speakers
hail from European banks, SWIFT, the Payment Council, and even IKEA.
Satellite 2019 (D.C. thru 9th) bills itself for Government, Broadcast,
Broadband, Innovation & Mobility. Jefferies holding meetings there, just as Raymond
James will wet up at Waste Expo.
IndEx Industrial Exchange (Miami Beach thru 8th) subtitled "value Creation
Reimagined," and aims to connect industrials execs, Private Equity Investors &
Technolgoy. Oddly, both Wells Fargo & Oppenheimer are hosting Industrials at home,
JPMorgan in China.
On the 7th, former White House Communications Director, for 8 days, Anthony
Scaramucci, hosts another SALTSkybridge Alts Conference, in Las Vegas. Among the
speakers, former UN Ambassador Nikki Haley, Steve Case, Gen John Kelly, HUD Secy Dr.
Ben Carson, Re/Codes Kara Swisher, Mark Cuban, Carlyle founder David Rubenstein,
Valerie Jarrett (Obama Secy), Mark Cuban, Dr. Nouriel Roubini, Sam Zell, Marc
Loasry, Dr. Peter Diamandis (X-Prize), Gen. David Patraeus, and too many more to name them
all. CNBC is usually a partner, so expect widespread coverage of the event. The Sohn
Conference is also this week, Once again, Value Investors the stars, many of which who
have redeemed themselves in the past half year.
I think the markets will get lucky to eke out another consolidation week, after Trump's
surprise threat to raise tariffs on Chinese goods, again, if a deal is not reached by this
Friday, 05/10. So far, we've see no signs that traders are eager to sell, but Trump could
be the inducement. And, its the downside that few are prepared to see, and
that makes it the trade to keep an eye out for.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 29May 03, 2019 EARNINGS
+ FOMC MEETING This is,
unquestionably, the busiest week for earnings, of the quarter, in terms of the sheer
number of reports scheduled. The importance of the reports may be inverse to the number of
reporters, but there remains some significant companies to report, with potential to
influence the equity markets.
Ordinarily, the FOMC meeting, mid-week, would be the pivotal event of the week but we
doubt thats the case, this week. Granted, Fridays 3.2% print for GDP was a big
surprise, and belies the flip-flop FOMC Chief Powell took in January. Then, again, few
were impressed with the details of the report, and the headline number left me doubting
the bean counters can count. March would have been one heck of a month for Q1 GDP to have
played out as advertised, especially since the government was closed until January 22nd.
For more on personal views from FOMC members, other than Jerome Powells, a
surprising percentage of FOMC members will be speaking Friday, most at the Stanford
Universitys Hoover Institution conference on Monetary Policy. In fact, on Friday,
Bullard, Daly, Kaplan, & Mester will be panelists, together, on "Monetary
Strategies in Practice."
Speaking of that shutdown, on Monday, the government will report Feb final and March
preliminary Personal Income & Outlays, a report that has individuals savings
rates & PCE embedded. Two months arent usually reported together but delayed
data gathering after the shutdown results in two reports being delivered at the same time.
ECI on Tuesday is one to watch, given wages on the low end rising towards $15 per hour,
and benefits being lathered on to keep employees in place, at a time when labor markets
are tight. Tuesday, also, promises Case-Shillers 20-city House Price Data and
Realtors March Pending Home Sales. There was some fairly horrendous weather across
much of the country, in March, yet the data thats been released, so far, proves that
mortgage rates slipping back down was a magic elixir to housing activity.
Mid-week, PMI & ISM data is on tap, hours before the FOMC statement &
Powells press conference. April Motor Vehicle sales data, Thursday & Friday will
be mostly foreign makers, service GM & Ford no longer report monthly. After Ford
reported a surprise upside, last week, anticipation may be building towards a set-up for
GM disappointing, this week. Not saying it will happen, just pointing out it could. Then
Friday, the April Unemployment Report will be released, with most economists expecting the
rate of Unemployment to fall to 3.6% from 3.8%.
Of the Earnings reports scheduled, none loom larger than Alphabets Google, on
Monday, and Apple on Tuesday. Yes, there are others on the schedule but given their
influence on the NDX & Compq, those two are the wall the Street must walk through.
After them, check out any and all the emboldened tickers we highlighted, because
theres no doubt that AMD, Akamai, Amgen, BP, Charter Communications, Chubb, Cummins,
Eaton, GE, GM, HCA, Lab Corp, MasterCard, McDonalds, Merck Mondelez, Oshkosh,
Paccar, Pfizer, Ryder, Seagate Tech, Simon Property, Taubman Centers, Twillo, WellCare
Group & Welltower are all significant reports, and thats just some of the
tickers highlighted, for Tuesday, alone. Be my guest and peruse the rest of the Earnings
Calendar for many more influential reports.
The Events Calendar is less impressive, as might be expected during a week when so many
earnings reports are scheduled for release. Not only that but Japan is celebrating Golden
Week, for the week, and will watch one emperor abdicate, as his son is elevated, giving
Asian countries plenty to watch besides US Equity markets. Meantime, May Day is celebrated
in most Western countries plus Russia, and in a lot of South & Latin American
countries, too. Like Mexico, which makes up 98% of Banco Santanders Cinco de Mayo
Conference, on the 2nd, in NY. As for corporate events of note, outside
earnings, note Facebooks developers conference, F8, Tuesday, and Berfkshie
Hathaways Woodstock for Capitalists, starting Friday. Saturday is the day Buffett &
Munger will subject themselves to 69 hours of questioning from shareholders, holding
court at the Omaha Convention Center.
Which brings us back to markets that remained remarkably compartmentalized, last week.
While 3M, most notably, soured the DJIA, it did not stop the S&P & Nasdaq Comp
from making new highs. Even with Intels blown outlook, Semis were surprisingly
resilient. That was most telling to me, about last week, and reason to give the nod to the
bulls, even if theres more consolidation, over the next 2 weeks, before markets
celebrate making it through another earnings season, with the bull market intact, as they
typically do. Still, theres a reason "sell in May" is so well regarded as
the prudent thing to do. Markets perform so much better from November through April, than
they do in May through October. Statistically, thats numerical fact. So whaddya
going to do about it?
ECONOMIC: (Highlights, only, below. Full international Economic Calendar here)
© Sandi Lynne 2019 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 2226, 2019 ALL
ABOUT EARNINGS Theres
some Housing Data due this week, including March Existing Home Sales from the Natl
Assn of Realtors, Monday, FHFA Feb House Price Index & March New Home Sales,
both Tuesday. Theres a good possibility that the Mortgage Applications data oout
Wednesday will be impacted by last weeks holidays. Friday, especially, people
preparing for Passover or Easter were unlikely to have been out bidding on houses, and
likely had much more on their minds than applying to refinance their mortgage. Bear in
mind, most of the Western World, ex-the US, will be closed Monday for Easter Monday.
Pres. Trump, fresh off reacting to the full Mueller report with weekend tweet storms will
be out Wednesday, with the 1st Lady, addressing the Rx Drug Abuse & Heroin
Summit in Atlanta, and then Thursday, Trump will address the NRA, one group recent
Democratic Presidents werent wont to do. Theres never been a President so
closely followed by the press, which lies in wait for the next faux pas to come out of
him, or those close to him, like Giuliani, Sunday, stating theres nothing wrong with
taking stolen information from the Russians, a position from which he immediately
backtracked, saying its not something he, as a lawyer would recommend or do, or
advise his client to do. Ah huh!
Also this week, the Bank of Canada, & Bk of Japan will weigh in with rate decisions,
the BoJ possibly adding more QE, to get its economy really moving. Swedens Riskbank,
also, holds a Monetary Policy Meeting. Even more important, will be Thursdays March
Durable Goods Orders & Shipments, which includes Capital Goods Orders & Shipments,
Boeings grounded 737 MAX, perhaps, already impacting shipments. Then, Friday, US Q1
GDP will be released, estimates ranging from 1.7% to 2.2%, anything in that range stronger
than it was looking in March.
As befits a post-holiday week and one of the heaviest Earnings Calendars of the quarter,
I-bank conferences are nearly non-existent. Those that will take place will be mostly in
Asia. On Tuesday, the 23rd, VentureBeat hosts its GamesBeat Summit (Los Angeles
CA thru 24th), with every game designer & publisher scheduled to speak,
along with Wedbushs Michael Pachter. Notably, both Microsoft and Sony discussed
their new consoles, last week. Microsofts Xbox One S is set to debut on 05/07, for
$249.99, without a slot to accept discs. For $50 more, one can buy it with a slot for
discs, though MSFT has announced its future releases will all be streamed for download.
Sonys next console, on the other hand, will accept discs, including legacy discs
from PS4, though the console will not debut until 2020. Either way, the used game disc
business that for so long provided the bulk of GameStops profits is quickly reaching
the end of the road. Even gamers have become comfortable having their games stored on hard
drives, the Xbox One S to debut with a 1tb drive.
Other than GamesBeat, the biggest event of the coming week is likely the debut of
"Avengers" Endgame," from Disneys Marvel, said to be the final film
in the series. Anyone else doubt that resolution is going to last for more than a few
years? And the other burning question is whether Sarah Huckabee Sanders shows at next
Saturdays White House Correspondents dinner, which was a disaster last year, both
for the WH Correspondents, many of whom did not find the main entertainment funny, and for
Sanders, who was roasted, personally, which was widely criticized.
Which brings us back to the weeks main CalendarEarnings. Monday starts off
slowly, which allowed us to highlight some stocks that might not, otherwise, be
highlighted. Tuesday, the schedule picks up steam with an array of industries, including
rails (CP), beverages (KO), consumer discretionary (HOG & HAS), metals (KALU, &
NUE), defense (LMT & UTX), homebuilding (MTH & PHM), utilities (NEE), consumer
non-durables (PG), employment (RHI), building supply (SHW), social media (SNAP &
TWTR), custody banking (STT), medical devices (SYK), brokerage (AMTD), semiconductors
(TXN), materials (VMI), communications (VZ), and water (WAT).
We could go through each day of the week highlighting the selection of industries featured
the rest of the week, and it would be more of the same, as our emboldened tickers make
clear. But there are a few that require special attention, like Wednesdays Boeing,
Caterpillar, Chipotle Mexican Grill, General Dynamics, Lam Research, Microsoft, Nasdaq
Exchange, Norfolk Southern Railroad, Northrop Grumman, PayPal, SAP SE, ServiceNow, Spirit
Airlines, Stanley Works, Tesla, Thermo Fisher Scientific, Visa, & Xilinx.
Thursday, we couldnt help but notice 3M, healthcare companies lkike Abbvie, Alexion,
Baxter, Bristol-Myers Squibb, and healthcare infotech Cerner, Amazon.com, Borg Warner,
Capital One Financial, Colombia Sportsware, Comcast, D.R.Horton, Discover Financial
Services, Ford Motors, Freeport McMoRan, ITW, Illumina, Intel, LogMeIn (mentioned in
Barrons, as a takeover, because it blew last Qtrs earnings), March &
McLennan, Mattel, Mohawk Industries, Newmont Mining, Penske Automotive Group, Raytheon,
Reliance Steel, Starbucks, Silicon Valley Banc-shares (which recently closed on Leerink
Ptnrs), UBS, United Parcel Services, Valero, Verisign, Visteon, Waste Management, and
Yandex.
Friday, Chevron, ExxonMobil & Total would be enough but add in American Airlines,
Archer Daniel Midland, Autoliv, AutoNation, Colgate-Palmolive, Deutsche Bank, Helen of
Troy (which I always expected Jarden to make a run at before Newell fell on its face
biting off more than it could chew), Lear, LyondellBasell, and Zimmer Biomet.
All in, if the markets can survive this week of Earnings, it will hold up to almost
anything. That doesnt preclude a drawdown of any kind, as traders look to juggle
their holdings to move with sectors rising and lighten up on those falling. But the market
may well pull back a little or continue consolidating as it holds its breath for the next
3 weeks of Earnings season, before deciding whether to get fully invested, again, or not.
It sure feels like time for a little caution.
ECONOMIC: (Highlgihts, only, below. Complete International Economic Calendar here)
(c) Sandi Lynne 2019 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 1519, 2019 A CRUSH OF
EARNINGS IN A SHORT WEEK
There are a few Fed speakers in the first half of the week but its really the
Earnings Calendar that will dominate the week. First, the Fed speakers, led off by Charles
Evans, of the Chicago Fed, wholl spend around an hour on CNBCs Squawk Box,
Monday. He speaks, again, later in the day, at the New York Association for Business
Economic, with more Q&A. Also Monday, Boston Fed Chief Rosengren delivers the 33rd
Cornelson Distinguished Lecture @ Davidson College, in Nortth Carolina. For the record, US
Federal Tax Returns are due at Midnight, Monday. So, on the one hand you have people
writing their final check to the IRS for last years taxes but on the other hand, you
have people making their last minute deposits into retirement accounts, that qualify for
write-off on the 2018 taxes due at midnight, Monday.
Tuesday, Dallas Feds Robert Kaplan is participating in a Q&A @Dallas Community
forum, in El Paso Texas. Wednesday, St. Louis Feds James Bullard delivers the 28th
Annual Hyman P. Minsky Lecture @ The Levy Economics Institute (@Bard College) Annual
Conference, subtitled: Financial Stability, Economic Policy & Economic Nationalism.
The other speaker that caught my eye at the Bard College event is Lakshman Achuthan,
co-founder of the Economic Cycle Research Institute, which calls the beginnings & ends
of recessions, albeit, all too often, with a lag of many months. Philadelphia Fed Pres.
Patrick Harker also speaks Wednesday, on the economic outlook with Q&A, at the Greater
Vineland Chamber of Commerce (Vineland, NJ). And if the aforementioned were not enough,
the Feds Beige Book is due out Wednesday, also, at 2pm. Thursday, "A
Conversation with Fed. Pres. Bostic," (Atlanta Federal Reserve Bank) is the star at
an Economic Roundtable & Tour of the Atlanta Fed brand in Jacksonville, Florida. A
full slate, for a 4-day week, with markets closed on Good Friday, the 19th,
which is also when the 8-day Jewish Holiday of Passover begins, at sundown. And its
a full slate of doves, even before the Chairman flipped his switch to ultra dove.
Not for nothing, some of the other notable Economic data includes US-Japan talks in D.C.,
starting Monday, which I hope does NOT mean another opportunity for Trump to offend an
ally. Also out this week, March Industrial Production/Capacity Utilization, NAHBs
April Housing Market Index, both Tuesday. Wed., the March International Trade Deficit, Feb
Wholesale Trade (we believe its Feb.). Thursday, March Retail Sales and the
Philadelphia Fed Business Outlook Survey, plus Feb (we believe) Business Inventories.
As for Events, continuing Sunday, is AREAA Global & Luxury Summit, which stands for
the Asian American Real Estate Assn of America, meeting in Beverly Hills, CA, natch.
SIRS, on Schizophrenia, is just one of the pscyhopharmcology drugs advertised on TV nearly
as often as insulin. Quarks & Cosmos, with Physicists (APS), is a bit above our head,
though both ECCMID for Clinical Microbiology & Infectious Diseases and EASL, the
International :Liver Disease Conference both seem timely, with Hepatitis A cropping up in
Florida, and expanding exponentially, now that people know which symptoms should drive
them straight to the doctor. Both, however, are across the pond, in Amsterdam &
Vienna, respectively.
Both the Car Rental Show in Las Vegas & World Vaccine Congress in D.C. started Sunday,
as I write. For a reported one billion people, globally, though, Sunday is all about the 8th
& final season of HBOs "Game of Thrones," launches. Monday, Tax Day,
the Commercial Card & Payment Industry meets in Miami, while ASA, Aging in America
Conference, starts in New Orleans. IMNs Residential Mortgage Serving Rights will
meet in NY, GE, belatedly, just settling its mortgage wrong doing last Friday, for over
$1B. Meanwhile, the New York International Auto Show meets in New York, extending into
Easter weekend, with J.D. Power hosting a forum at the show. IHS Markit hosts its
Automotive Industry Briefing at the show, Thursday. A couple of I-Banks will also host
clients in affiliation with the NY Auto Show, at one time, a New Years weekend show.
Somewhat ironically, GMP Securities hosts a Cannabis Conference in Toronto, Tuesday, while
Jefferies does the same, in NY, on Wednesday, when 2018 Federal Taxes are due in
Massachusetts & Maine. Honestly, I thought 2018 taxes werent due until Tuesday,
because D.C. will celebrate Founders Day on Monday but a recent re-check of the IRS
2018 tax site proved me wrong about that. While Founders Day (Patriots Day in
Massachusetts) did postpone the due date for taxes a couple of times in the past, this
year, it appears, thats only being observed, tax-wise, in Maine & Massachusetts,
the latter hosting its annual Marathon that day.
Which brings us to the star of our week: Earnings. With Citi & Goldman Sachs Monday,
Bank of America, and Black Rock Tuesday, there are still some very high profile financials
to report, including Bank of NY Mellon, Morgan Stanley, and US Bank, along with property
insurers RLI and Torchmark, on Wednesday. But, then, well also hear from CSX, IBM,
JNJ, Netflix, Omnicom, United Airlines, United Health, and many more. Please consult the
daily listings, below, to understand how many sectors reports will arrive from, in the,
basically, 4 days reports are jammed into. And even after we highlighted a few financial
names on Monday, Tuesday, & Wednesday, theres more on Thursday, including Ally
Financial, American Express, Blackstone, BB&T, KeyBanc, Regions Financial, Synchrony
Financial, and another insurer, Travelers.
In sum, if you thought last week wrapped up the financials, think again. Theyll be
heavily represented, this week, along with a broad brush of other sectors, that will tell
the markets most of what it needs to know about the rest of the earnings season.
Generally, gains posted during the first week of the reporting season are given back this
week and next but with expectations as low as they are, perhaps theres room for
pleasant surprises, this week, before the Street becomes more demanding in the weeks
ahead. Weve seen periods when analysts fell on each other tweaking numbers up after
the first two weeks of beats. That sets up an inevitable disappointment by week three. One
thing markets have going for them, into this weeks much broader reporting calendar
is the fact that good news celebrated was, largely, isolated, without broad impact on
other sectors. So while JPMorgan and other banks kicked up their heels, last week (Looking
at you, BAC!), for the most part, the rest of the market carried on as if nothing was
going onexcept for Disney. But there, again, what was great news for Disney was
either taken as bad news for competitors (NFLX, looking at you), or merely ignored by the
rest of the market That means theres still a little room for more good news to be
baked into stocks, and equal room for some of last weeks celebrants to ease up a
smidge. Nothing is a given in this market, but its a pretty good bet that most
stocks wont celebrate as huge as JPM & Disney did, last week, If anything,
theres room for BAC, GS, & MS, to look disappointing by comparison. That would
be a shame, with bulls appearing to rule all around. At least financials had badly lagged
the market, JPMorgan in particular. Its hard to say that about the competitors that
got swooped up in Jamie Dimons enthusiasm. As always: Be careful out there!
ECONOMIC: (Highlights, only,
below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 on more complete due diligence.
April 0812, 2019 STOCK
PRICES AHEAD of THEMSELVES AS EARNINGS SEASON OPENS For some the highlights of the week will be the World Bank
Group & IMF Spring Meetings, held separately early in the week, before their Joint
Spring Meetings start on the 12th, and run through the 14th. Their
separate meetings start on the 8th and run through the 11th, then
hold their Joint Spring Meeting 12th14th. But ignore their
claims to separate meetingstheres no avoiding the overlap, or the number of
concurrently scheduled meetings by I-banks and, often, organizations like the Council on
Foreign Relations. The Clinton Initiative used to meet concurrently but Bill was forced to
wrap it up after Hillary declared her candidacy for president, back in 2015.
For others, the focus of the week will be the ECB Meeting, that concludes on the 10th,
with Mario Draghis post-meeting Press Conference, before markets open on Wednesday.
The only question is whether Draghi & Company will do more to stimulate EU economies
or just jawbones stimulation. Sometime between Wednesday and the 12th, we
wont hear from FOMC Chief Powell on the economy but he will be speaking, behind
closed doors, @ House of Representatives Democratic Caucus Retreat. Because its not
an official speech, or open to the public, Powells speech isnt even on the Fed
Reserve Board Calendar. The Retreat in Leesburg Va, ends on 04/12. Other high profile
speakers include John Legend, his wife, Chrissy Teigen, Re/code's Kara Swisher, Union
Chiefs (from SEIU, ASFSME, CWA), Fernando Garcia of Border Network for Human Rights, the
subtitle of the Retreat: "100 Days In: Fighting for the People." Now throw in
the FOMC Minutes from the March 1920 Meeting, at which the Fed flipped its position,
switching to a very cautious stance and more than patience before rates change.
Powells speech at the meeting is not unusual; Ben Bernanke did the same during his
term as chief.
For an equity investorespecially one invested in financials, the focus of the week
will be on Fridays Earnings, when JPMorgan, PNC Financial, and Wells Fargo report
their Q1 results. Wells, of course, will be pressured by the not, yet, finished clean up
of the consumer fraud scandals that, finally, resulted in Tim Sloan being tossed out of
the top spot. I know many fell he was unfairly blamed but theres no avoiding the
fact that he was a top executive during all the scandalous years, and therefore, bore some
responsibility. In fact, now that Sloan is gone maybe CNBC can hire him as an advisor,
too, as they did to his predecessor, continuing their unbroken record of aligning with
scoundrels who should have been shamed out of finance, rather than turned to as wise
guardians of advice. Ironically, the top 7 finance companies by assets are expected to
send executives to the US Congress, on Wednesday, to testify before the House Financial
Services Committee. Tim Sloan was expected back (he testified about Wells Fargos
issues on 03/12), but hes no longer available to speak for WFC. Perhaps the
banks counsel, serving as Interim President will show up in his place. Surely, the
head lawyer will know as much about the scandals as anyone still working at the bank.
But the gigantic banks testifying, March CPI, the ECB, and the World Bank introducing its
Interim President, Kristiana Georgieva making her debut Wednesday, is a lot to look
forward to, for a single day. Throw in the EIA weekly Petroleum Stats, and the Feds
V. Chair Quarles speech at a Roundtable on reforming Interest Rate Benchmarks
(rather than LIBOR), the FOMC Minutes, and Medicare Advantage Rate Sheets for Federal
FY2020 being released, possibly the same day, and one would be forgiven for overlooking
Thursdays March PPI, Chain Store Sales from the 9 chains that still report
monthlyinlcuing CostCo, speeches from Fed V. Chair Clarida, NY Fed Pres/CEOs
Williams, Feds Bullard & Fed Governor Bowman all expected Thursday. Then
Thursday night, China should release its March Trade Data, including Imports &
Exports, important information if one wants to know how badly flagging global economic
growth is hurting the worlds factory, and whether its governments
efforts to stimulate are working, or not.
As far as Events go, were marching towards the Easter/Passover break, Good Friday a
market holiday, on the 19th. Thats going to rearrange a number of
scheduled earnings releases, since its been years since Easter & Passover were
together, and so late in April. In fact, Passover started on March 26th &
27th, a number of years, and its the first time in years that a friend of
mine born April 4th can actually eat birthday cake on his birthday. If
youve tasted Passover cakes you understand why thats such a big deal.
Its a big week for events to benefit those serving consumers, including the
continuing NAB Show, for broadcasters, CLIA Cruise360, for cruise liners, and High Point,
the Home Furniture Show held twice a year in High Point because thats where almost
all American furniture used to be made, before much of it moved offshore to China. Today,
though, the furniture showrooms to the trade remain in High Point, the semi-annual ritual
of buyers arriving to write orders continuing. The 9th Annual American Banker
Retail Banking Conference meets starting Tuesday. While Colorado Springs is a bit off the
beaten track, its the one A B Conference that usual makes wavessending ripples
far beyond its doors. SAE High Efficiency IC Engine +Connect2Car describes 2 different
conferences @ WCX Symposium --World Congress (Consumer) Experience, Tuesday. Keynotes
include Fox & Friends Charles Payne, Samsung, Delphi, Harman, Ford, Toyota
Motors, IBM, Cox Automotive, Bosch, Mobileye, and much more. The presence of Payne as a
keynote suggests hes going to make the case for investing in autonomous carsas
if such a case still needed to be made. I can see how freeing a self-driving car might be
to someone like my 92 year old mother but I cant imagine giving up the joy of
driving, anytime soon. But should I ever get even close to my Moms age, Id
probably prefer the independence of a self-driving car rather than waiting for a taxi or
Uber, assuming they even exist by then. Ill skip CS Week the Customer Service Week
because most would be hard pressed to find a consumer who was satisfied by the
"Customer Service" they received calling one of those 800 numbers, Verizon
excepted. I have never had anything but positive experiences with Verizons customer
service dept, live or by phone. Perhaps thats because Ive always gotten what
Ive wanted, promptly, without having to repeat my "story" to 5 people
before Im promised someone will get back to mewhich never happens. That,
alone, is worth the few dollars extra I pay Verizon every month.
Topping the list of other notable events, must be EEI, the Edison Electric Institute
National Key Acocunts Workshop, in Seattle, which started Sunday. Tiburon Advisors
CEO Summit, in NY, starting the 9th includes a host of both CEOs & CIOs of Asset
Managers & Managed Assets funds. Seatrade Cruise Global is about the suppliers to the
cruiselines, from fresh food to fuel, to furniture, and more. The National Space Symposium
is the first with Trumps new "Space Force" officers speaking. Its
quite a milestone for something that didnt exist one year ago. Youd be
surprised how many commanders already exist, most drawn from the Air Force, rather than
the former astronaut force, though half a dozen of them will be speaking, too.
Keystone Symposias Antibodies as Drugs starting Sunday, and HealthTechs PEGS &
Drug Discovery, both starting Monday, in Boston and Sand Diego, respectively, suggests
theres be a large amount of drug news, especially since each of those conferences
includes at least 4 sub-conferences, PEGS more like 8. And, then, theres
BioCenturys 26th Future Leaders in the Biotech Industry, on Friday. It
should come as no surprise that Needham & Co picked this week for its 18th
Annual Healthcare Conference, starting Tuesday. Its a group thats lagged a bit
this year, so perhaps therell be some perking up, this week. Time was May &
November were drug discovery conference months but, it seems, thats every month of
the year, now, even as the head of the FDA, Dr. Scott Gottlieb quietly left office Friday.
JPMorgan hosts a Retail Roundup, Thursday, that remains a bit of a mystery, since
retailers who have confirmed involvement are nearly non-existent. But this year, it maybe
nothing more than a walk through the 67 new floors of retail shops at Hudson Yards,
where some retailers are posting the kinds of record sales numbers they never dared dream
were possible. (Im not at liberty to divulge who in this forum.) OMFIF is the
Official Monetary & Financial Institutions Forum. Theres a Roundtable on the 12th,
in D.C., on "The Costs & Implications of Adopting Central Bank Digital
Currencies." On the 15th, in NY, theres a seminar called simply,
Central Bank Digital Currencies, also in NY. Just whose Central Bank are they referring
to? To the best of my knowledge, its not a done deal, yet, at any Central Bank. And
given the creeping disappoint-ment of Blockchain, to some in the banking industry, the
topic seems a bit like the cart before the horse. I feel certain buyers will appear in
advance of Walt Disneys Investor Meeting, Thursday. Analysts are so sure it will
succeed in streaming, ESPN where its starting, at least 6 months before it gets to
Disney Entertainment. Well, Disney has certainly proven it can charge almost anything and
get away with it. Last year, it raised entry prices at its Florida park 3x, once calling
it surge pricing. Ask those people who paid top dollar and managed to get into only 3
rides in 10 hours, whether the price of admission was worth it.
Its quite stunning, to me, that the market still responds to Trumps every
tweet on Chinese trade negotiations. Anyone who follows him knows hes forever
boasted about everything he touches being the "greatest," and thats what
hell call the Chinese trade dealno matter what it looks like in the end.
Honestly, I often agree with what hes trying to do, just cringe at the way he goes
about it. Hes offended every ally the US has ever had, except Israel. The Street is
expecting lackluster earnings yet stocks are acting like companies are going to crush
estimates. The bond market is signaling trouble, the stock market nirvana. Sooner or later
the two will converge. That probably means stocks have to cool, and bonds have to heat up
a bit. What it doesnt justify is the relentless upside gains stocks have been
managing. Not to be a party pooper but, lacking whatever it is Wall Street is smoking,
time for caution as Earnings Season gets underway seems the prudent choice.
ECONOMIC: (Highlights, only, below. Full International Calendar, here)
© Sandi Lynne 2019 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 on more complete due diligence.
April 0105, 2019 NEXT
UP EARNINGS WARNINGS Fed speakers
are out in force, this week, none more tellingly than Feds Kaplan, Tuesday,
wholl discuss the Economic Outlook & Monetary Policy in light of the sharp
downgrade of FOMC forecasts for rates this year and next. Yeah, that oughtta be
interesting, donchya think? Hes speaking, of call places, in Toronto.
I say of all places because the ABAAmerican Bankers Associationmeets this
week. The event is called a Legislative update, and among the speakers, Representative
Maxine Waters, Chair of the House Financial Services Committee, Kevin Hassett whos
either Trumps Chief of Staff or Chairman of the White Economic Advisors, as well as
Senator Mike Crapo, chair of the Senate Banking, Housing & Urban Affairs Cmte, also
Tuesday. Feds Barkin Bostic & George will be panelisfs at the ABA Summit but,
still, my vote goes to Kaplan on the FOMC forecast downshift. For posturing, you can
always watch the PBMs testifying on high prescription prices, at Congress
Wednesday.
Of course, the weeks highlight is supposed to be the March Unemployment Report, out
Friday, after Februarys meager 20K addsif that isnt revised away,
Friday. Also Friday, the biggest banks have to submit their CCAR, or Capital Plans to the
Federal Reserve by Friday. Also Friday, Consumer Creditwhich is really debta
number that either suggests how confident consumers are, or how extended their finances
aredepending on which economists is viewing the data. Credit tends to spike in
September, as payments for school-related expenses are booked, and again in December,
around the holidays and vacations. Many consumers plan to pay off their credit card debt
with tax refunds but, with refunds running smaller than in years past, under the December
2017 Jobs & Tax Law changes, many are seeing smaller refunds, even as the IRS took a
while to gear up, after the Government partial shutdown that ended in January.
The Earnings Calendar is shrinking fast. There are just a few notable reports expected
including Lamb Weston & Walgreens, Tuesday, Signet & Canadas Hudsons
Bay, Wednesday, and Thursday, Constellation Brands, International Speedway, and Schnitzer
Steelone of the companies Trump intended to benefit with steel tariffs.
Hudsons Bay, owner of Saks 5th Avenue, Lord & Taylor, Gilt (being
divested), among other US retail divisions announced on 02/21, it would close its Home
Outfitters business in Canada and, after performing a fleet review of its Saks OFF 5th
Aves 133 stores, close up to 20 locations in the US. Well, thats exactly what
it did with its Boca Raton FL OFF 5th store, which wasnt even open for 5
years. The store was open March 28th, and suddenly closed on Saturday, the 30th. Regarding
Home Outfitters, Hudsons Bay said the "vast majority of markets" are
served by nearby Hudsons Bay stores. HBC, traded in Toronto, reports earnings,
Wednesday.
As for Events, the AACR got a lot less attention prior to the meeting than usual. In
addition to the ABA Summit already mentioned, CBA Live is for Community Bankers. The
Chemical Society meets just as Dow-DuPont is about to separate the Dow portion. It will
begin trading as ticker DOW, starting Tuesday, after Mondays spin-off. Hamburg
Germany hosts Aircraft Week which includes Interiors and Passenger Future Expectations,
along with World Travel & Catering. Stateside, CLIA Cruise360 meets, starting the 2nd,
with pre-conferences for two days prior. Cowen and Cos 5th Future of the
Consumer includes some big names, including Ulta Beauty, Nordstrom & Walmart. Citi is
hosting a 1x1 Forum in conjunction with the CapitalLink Intl Shipping Forum, a
one-day forum yet, on the 4th Deutsche Bank is, also, hosting a Shipping
summit, perhaps taking advantage of all the shipping execs from Greece scheduled to speak
at Capital Link and/or Citi, Monday.
Im not used to seeing AASAthe Automotive After Market Suppliers meet at a time
when SEMA is not meeting but thats the case, starting Tuesday. Also Tuesday,
Jefferies hosts a Healthcare REIT Summit, in NY. Its a group small enough to be
impacted by comments made at the summit. Obesity is meeting Wednesday, along with Spine
Week & Pain Societymany can draw a straight line from Obesity to the latter two
but, honestly, I weigh in at less than 90 pounds, and my Pain Management doctor is the one
I see most often, my Spine surgeon, only when my lumbar is so bad I have to have
epidurals. I.e. Pain is not just an obesity issue. Of not to some will be BMO
Capitals Cannabis Conference, in Toronto, a subject many US I-banks wont
touch, because it remains illegal on the Federal level. Thats why Congress is trying
to pass a bill that will open up banking to cannabis businesses in states where its
legal. The NAB Show, for broadcasters is scheduled to open next Saturday.
I am without charts, due to the failure to deliver by a long-standing data supplier. Seems
every quarter, either at the start or in the last week before the quarter ends, the data
supplier fails to deliver any dataalleging network problems each time.
Disgusted, Ill be in the process of switching this week, so will deliver an Outlook
next weekend, only if Im not too wrapped up in tweaking the new charts. For now, my
sense watching tick trade closely is, at the least, stocks are consolidating. Its
hard to imagine them resuming upside until banks report in a couple of weeks, unless all
the end of quarter news is good news. The odds of that happening are slim to none.
ECONOMIC: (Highlights, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 2529. 2019 MORE DOWNSIDE LIKELY, EVEN
IF THEY BOUNCE FIRST Talk about an about face, and
there are few who make such a big turn around as Powell et al just did, last week. His
attempt to fortify the opinion that the economy is "in a good place" fell flat
on its face. Stocks spent the better part of the week pricing in a recessionat least
for the financial sector. A group that was finally ticking towards the September highs
gave it all back by Friday, and then some. An over reaction? Only if the markets
fears of a recession prove unwarranted. And if they do, it may mean the FOMC stopped
hiking rates just in time. Market pundits, though, seem to think the FOMC needs to take
back the Dec. 2018 rate hike, for that to happen.
How are global central banks feeling? Well find out this week. Central bankers from
around the globe are speaking publicly, and those that arent, are hosting monetary
policy meetings, as the schedule below makes clear. Heck! Even a Fed Governor rarely heard
fromBowmanis speaking Thursday, along with 2 Fed Board Vice Chairs and 3 other
Fed Presidents. As for how portfolio managers are feeling, that will likely be disclosed
this week, as well. The Quinnipiac G.A.M.E. stands for Global Asset Management Education,
so no surprise, PMs are all headliners. Quinnipiac, many will recall, is better
known for opinion polls during election years. About the only thing unclear is whether the
UK can get its act together and pass an orderly Brexit agreement or be forced into a
so-called "hard," or "cliff" Brexit. The whole Hard or Cliff Brexit
threat reminds of Y2K and Ed Yardeni, especially, who warned that planes would fall from
the sky and power plants would shut down if year 2000 upgrades werent programmed
into every computer in the world. Well, of course, none of that happened, and no one can
convince me its because every single computer in the world had been reprogrammed in
time. I dont believe that ever happened, nor did I believe Yardenis worst
fears, either.
Dont look know but Uh Oh! Both the month and quarter end this Friday, which should
make for volume and volatility. And should markets unravel the quarters gains by
Friday, that would be the 2nd quarter in a row that markets finished to the
downside. Given how few retail investors have come to trust the markets, a 2nd
down quarter would be a death knell for marketsno matter how many new ways
ETFs slice and dice investing.
What we do get this week, is some housing data including Fed Housing Starts/Building
Permits, Tuesday, along with Core Logic S&P/Case Shillers Jan 20-city Home Price
Index & FHFAs version for Jan, too. That all 3 data points are scheduled for
release on Tuesday is just coincidence, as is another fairly, comparatively rare speaker,
San Francisco Fed Bank Pres Daly. If Wed.s MBA weekly Mortgage & Refinance
Application numbers havent picked up significantly, they will; Mortgage Rates are
the lowest theyve been in a year, or more. Cone Thursday, the Natl Assn
of Realtors will release Pending Home Sales for Feb. plus the release of Commerce Dept
numbers for Feb New Home Sales. And if that werent enough about home sales, for one
week, KB Homes reports Tuesday, and Lennar on Wednesday, which is as up to date as data
can get.
Otherwise, the Earnings Calendar is most notable for being slight. RedHat (Mon.), Synnex
(Wed.), and Accenture (Thurs.) will provide the most contemporaneous information we can
get about enterprise spending but RedHat isnt likely to say much, given its
being acquired by IBM, while ACN has few contemporaries, while SNXs best comp is
Dell or Hewlett-Packard Enterprise, without their software divisions, since SNX is mainly
hardware. All in, McCormick is seen as providing the pulse of restaurants, though every
home cook knows the brand well. Oxford Industries & PVH are both apparel
manufacturers, OXMs Tommy Bahama, these days, as promotional as any store in the
mall, which it never used to be. Lululemon is a special caselike Ulta Beauty,
its a name the Street has been waiting to see fail. Theyve forgotten, already,
the see-through yoga pants that almost destroyed its name and credibility, which
wasnt so long ago. The fact that it bounced back so strongly is testament to the
strength of the trenda trend that has, by the way, opened doors to imitators like
Gaps Athleta & Kate Hudsons Fabletics. If they ring a bell at the top of a
trend, some would say Levis public debut, last Thursday, was probably that bell but
dont bet on it. Unlike their parents and other generations before them, millennials
either got fat as kids, or arent about to now. Theyre the generation that made
yogawear as streetwear popular, and drag boomers and other older generations into the
trend. If its already peaked, then I wouldnt see so many overweight women in
yoga pants & crops. Those calling the end of athleisure are premature, though clearly,
LULU didnt maintain the same momentum in the just completed quarter that it did
earlier in the year. People are simply less inclined to buy skin-tight stretch pants when
the 3rd polar votex busts through town. Weather in most of the country has been
more conducive to Uggs than LULUs, except here in the deep south, where February was
the warmest on recordtemps in the high 80s not at all unusual, this year.
Which brings us to the Events Calendar, where Aircraft Electronics jumps out, given
the issues Boeing has been having with 737 MAX electronics systems. It starts Monday, in
Palm Springs California. Ironically, SAEs AeroTech Americas starts Tuesday, but in
Charleston SC. The 2nd big theme that pops off the schedule is Energy, with
Scotiabanks Howard Weil hosting its 46th Annual Energy Conference
starting Sunday. Unrelated to Weil, though it shouldnt be, is the Intl
Petrochemical Conference, starting the same day but in San Antonio (TX). Overlap? You bet!
So why dont they meet concurrently? The latter is famous for its National Oil
Company chiefs who attend.
APhA is the pharmaceutical discovery & development industrythe work that goes on
in labs, already underway Sunday, though Tuesday. The lab work Im rooting hardest
for is on Alzheimers & Parkinsons Diseases, For size & Fun, you
cant beat the Nightclub & Bar/Beverage Retailer Conference & Expo, in Las
Vegas, starting Monday. It once included a restaurant portion but thats not the case
anymorerestaurants meet separately. The Border Security Expo is just thatan
Expo. There doesnt appear to be any conference attached to it, so it wouldnt
appear to be an opportunity for Pres. Trump to show up and bash Democrats over his wall.
Another time. There is a Conference at the Precision Strike Annual Review, (both Tuesday)
but military personnel are the only ones named as speakers.
Wednesday, CIBC hosts its 22nd Retail Consumer Conference, in Toronto, while
Credit Suisse hosts Consumer/Retail Conference in London, where Retail Week Live
Conference will also take place. That will be complemented by Fairchild Media/WWDs
Mens Wear Summit, Thursday, which may be another excuse for Goldman Sachs
changed dress policy to be mentioned. Friday, the Rock & Roll Hall of Fame will induct
new members, at the Barclays Center, in Brooklyn, though the ceremony wont be
broadcast until April 27th. Ya know, they need enough time to edit out the
expletives. Friday is also opening day for the MLBs season. In reality, last
years World Series combatants played in Tokyo, last week on the 20th
& 21st, which the MLB claims was the real opening to the season but the
opening on US soil will be Friday, when 15 cities host 30 teams. Thats in the heat
of March Madness (NCAA Championship play offs) even as the Miami
Open Tennis Championship will be winding up with the last 4 of each sex playing for a spot
in the weekend finals.
All of which makes for a busy schedule, and no reason, what so ever, for the downside
momentum to reverse itself, especially if earnings warnings start spewing forth. Its
not impossible to imagine the weight of so many central bank speakers all leaning towards
the US being an island of good health having a positive impact on influence on shares to
at least limit the downside. But a switch to the upside? Stranger things have happened but
I wouldnt count on it.
ECONOMIC: (Highlights, only, here. Full International Economic Calendar here)
© Sandi Lynne 2019 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 1822, 2019 FOMC MAY NOT BE A Non-EVENT
The Street presumes the FOMC meeting, ending at 2pm, Wednesday, will be
a non-event but thats not guaranteed. True, rates arent going to be raised, at
this meeting but theres plenty still to come. For one, what members forecast
for rates on the SEP, otherwise referred to as dotplots. Second, members & Chairman
Powell have mentioned discussions about winding down the balance sheet unwind. Even former
hawks like Mester & George were both quoted as saying a decision about ending the
unwind could be decided as soon as this meetingnot that theyll halt unwinding,
necessarily but, rather, that they could announce a target balance, and end sales of their
securities when that balance is reached. The Street largely assumes the forecast will be
for one rate hike this year, at best, and some foresee a rate cut by the end of the year
but what if that widely assumed consensus is not what the SEP reveal? What if most of the
conversation is about expectations for the economy to pick second quarter, just as it has
over the last several years, even when the first quarter was a disaster? Surely, there
have been sufficient polar votex to expect better, more consistent activity once spring
arriveswhich it officially does, Wed, by the calendar, even if the weather up north
isnt spring-like regularly, for the rest of the month. (They can have some of
Floridas winter weatherits been in the mid-to high 80s more days
than its been in the 70s, since January ended.)
Were almost into April and data coming from the government has only just crept into
Jan. That makes much of it too old for me to care about. You? Whatever rolls your sox up
and down. In addition to the FOMC decision, theres be Monetary Policy Decisions from
Norges (Norway) Bank, SNB (Swiss), and the BoE which we all can safely assume wont
be raising rates until after Brexit, at the earliest, and thats just been
postponedassuming the EU agrees to the postponement the UK House of Commons just
voted for. And theres little reason to expect anything elseeven though
postponement entails an EU election that the UK will have to participate in, if it
postpones. I expect added interest in the NAHB March Housing Market Index, since home
sales have been a particular weak spot in the economy, lately but with rates as low as
theyve been in a year, pent up demand should start adding to activity, as the spring
selling season gets underway, in earnest, if it ever will. Realtors (NAR) Feb Existing
Home Sales are of less interest, Friday. Not only did February see some of the most severe
weather in history but its the shortest month of the year. Other than closings that
might have been postponed from January, because of the partial government shutdown which
deferred FHA approval for mortgages, for most of January. Also Friday, so its said,
Atlanta Feds Bostic is supposed to be speaking at a Fed Reserve Bank of San
Francisco Macroeconomic & Monetary Policy Conference, according to Reuters Diary
but I show that even in May, and couldnt confirm Bostics speech or any event
at the FRBSF, this week. So its said.
Hudson Yards, a new complex in NY, on the extreme West Side of Manhattan, now boasts
offices, residential units, and 1m sq ft of retail space that opened on Friday, March 15th.
The retail tenants runs the gamut from Uniqlo, H&M, Zara, Madewell, Sephora,
Lululemon, Tumi, and Athleta to luxury shops Dior, Fendi, Louis Vuitton, Cartier, and
Tiffany. The property is anchored by Dallas-based department store chain Neiman Marcus,
its first Manhattan location, ever, at a time when its more in the news for
fights with bond holders. The Yards, as my niece who helped set up a new
Madewell (URBN) for Fridays opening, even has an area devoted to brands like
mens athleisure company Rhone, tech hub b8ta, shoemaker M.Gemi and mens
underwear retailer Mack Weldon, that were all born on the internet. The plaza at the
property spills out onto the High Line, an elevated walkway on the West Side of Manhattan
and a popular tourist attraction that runs all the way downtown through Chelsea, with more
food places on that walkway. Equinox will be opening its first hotel ever, at Hudson
Yards, this summer, that will include the biggest Equinox gym in the world. If you
arent a New Yorker and need an excuse to visit the city, this is sure to be a
destination, until the first retailers start closingas they, inevitably, will.
Speaking of retailers, if you dont know the ticker RTW, on the 21st, thats
Retailwinds, formerly New York & Company, ticker NWY. Eva Mendes & Gabrielle Union
are spokespersons, joining long-standing face of the company, Kate Hudson. So many
womens apparel retailers have petite "shops," barely anyone pays attention
but NY & Co goes a step farther with a "Tall Shop." I dont know of
another womens apparel retailer that offers "tall" choices. Even if
mens specialty shops its rare, one of this weeks reporting companies,
DXLG, that standard bearer.
While were discussing retail, I was in Macy*s earlier Sunday, 03/17, and expected
big crowds because its Friends & Family sale included 15% off cosmetics &
fragrances. There were no crowds, despite weather that was conducive to indoor
activitieshigh 80s with humidity at 91%--very oppressive air. There was only a
single counter crowded, with more women waiting than the sales staff could
accommodateEstee Lauder (EL). I had no problem parking on lower level (thank
goodness for covered parking on days like this, that are very sunny in addition to heat
& humidity), 4 spaces from the East entrance to Macy*s. That says more than I could
about the lack of crowds lining up for F&Feven when cosmetics are
includedwhich is very rare. Id actually bought my Shiseido needs last
weekendpre-sale, as all the stores refer to it, and then they couldnt find my
paid purchaseeven with my ticket. Meanwhile, this whole Last Act bargain basement
within the store makes Macy*s look like Johns Bargain Basementwhich most of my
readers are probably too young to remember. It is so low end I have no reason to walk in
there ever again, except to secure 15% off expensive cosmetics, rarely on sale.
While Retailers dominate the Earnings Calendar, in volume, there are more important
reporters expected, this week, including FedEx on Tuesday, General Mills & Micron
Technology, on Wednesday, ConAgra, Darden, and Worthingon Industries on Thursday, and of
all the retailers, Nike and Tiffany could be the most important, this week. TME is Tencent
Music, Tuesday, its first report as a public company. WAGE, on the other hand, is
WageWorks which is seriously delinquent with quarterly and an annual SEC Filing, but has
promised to report by the 19th.
Which brings us to Events, during a week in which many school districts have scheduled
spring breakdespite a later than lately Easter holiday, which wont arrive
until April 21st, after several years of late March and first week of April dates.
Thats why, you may notice, there were many more I-bank conferences last week than
are scheduled for this week. Portfolio managers really dont want to dial into a
heavy week of conferences when theyre on vacation with their families. Additionally,
after so many YTD conferences, theres hardly a subject that hasnt been covered
extensively, even as events like Cardiologists, at ACC (ongoing through Monday), or the
entire Cable Industry at ACA (Tuesday), or drugmaking at AphA (Friday) sufficient to deter
I-banks, as well. It remains puzzling, to me, however, to see Jefferies hosting Animal
Health & the Pet Industry in NY, Wednesday, when Global Pet is taking place in
Orlando, starting the same day. Then again, PMs will be tuned in, especially, to IR
Magazines Global Investor Relations US Awards, that day, as well. In NY.
Having said that, there are a couple of non-I-bank & overseas events that might
attract US PM attention. That includes the Consumer Healthcare Products Assn
Executive Conference, starting Sunday, as I write, and GDC, starting Monday, in San
Francisco, for Game Developers, whether traditional, social or mobile, and VR/AR.
nVdias GPU (Graphics Processing Unit) Technology Conference (started Sunday) is
probably more important to PMs than its analyst day at the event, Tuesday, at
the GPU Conference. The International Vision Expo in NY and Hinman Dental Meeting in
Atlanta (both starting Thursday), are industry events that will attract analysts &
PMs. Then, there are two overseas I-bank conferences that will attract US PMs.
The first is Bk of America Merrill Lynchs Global Industrials & EU Autos
Conference may be in London but it is truly Global, so includes many US companies. Morgan
Stanleys European Financials (London), on the other hand, will not offer US
companies but European financials do have branches in the US. Both start Wednesday, as do
Timberland Investment World Summit (in Amelia Island), and Hunter Hotel Investment
Conference (Atlanta). Making that one very busy day.
The S&P 500 did take out 2800, last week but Im not sure that will mean much
this week. The week after a Quadruple Witch (Expiration of Equities & Index options
& futures) is often biased to the downside. That doesnt have to mean stocks fall
apart but it does call for more caution than might be expected after an index breaks out
to the upside. Then, again, there are those question marks hanging over the FOMC meeting
and updated financial forecasts, not to mention the time of the quarter when earnings
warnings start sneaking out, after hours. .
ECONOMIC: (Higlights, only, below. Full International Economic Calendar is here)
© Sandi Lynne 2019 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 1115, 2019 QUARTER
FAST COMING TO A CLOSE
Fed Chief Powell sat for an interview with CBS "60
Minutes," Sunday. Thats not unusual; both Bernanke & Yellen did before him
but the timing seems odd to me, with Trump supposed to deliver his 2020 budget on Monday.
Say this for Trumpthe Federal Reserve Board has been filled more completely under
his watch, then in any other time in recent years. Powell declared the Fed is independent,
and doesnt believe the president has the authority to fire him. Many though
hed say the Fed Reserve Board is determined to do more to help the average American
but he never quite worked it in. Then, again, perhaps unlike his predecessors, he chooses
not to stoop to what people want to hear, unless its something he can deliver.
China has removed a planned trip to President Trump's Mar-a-Lago Florida property,
originally on Xis schedule for late March, around the 27th. It was removed from Xi
Jinping's calendar, Fox Business reported, without attribution, to save embarrassment if
it had to be removed closer to the date because a deal still hadnt been reached. The
report said Xi may still come in April but it was safer to wait until the deal was struck.
Aside from another near certain defeat for Prime Minister Mays Brexit deal with the
EU, the only suspense in the UK will be whether Parliament than votes to postpone Brexit
from its current March 29th exit date. Some have called for a vote on canceling
Brexit altogether but thats not about to happen, IMO. The UK will also reveal its
Jan GDP, Trade Balance Industrial & Manufacturing Production and other data, this
week.
Closer to home, Trump is scheduled to unveil his 2020 budget, Monday, with rumors that
hell ask for close to $9B for his wall, in that document. If he couldnt get an
all Republican Congress to vote for $5.7B, and couldnt get such a vote from a split
Congress, either, what makes him think hell get $9B from that same split Congress?
But Trump has trouble with realityconfusing a so-called "reality" program
with the real thing, so why would a little thing like the facts of life deter him?
The data this week includes Jan Retail Sales (Mon.), Feb. CPI, (Tues.), Durable Goods
Orders & Shipments, & PPI (Wed.), while Thursday promised Jan New Home Sales. Some
of this data was delayed by the partial government shutdown, so a bit stale on delivery.
Friday promises Feb Industrial Production/Capacity Utilization, the Empire State (NY Fed)
Manufacturing Index, and Jan JOLTS.
Of course the most influential item on the Economic Calendar is Quadruple Witch, Friday.
S&P Dow Jones Indices announced Dec 20, 2017 that it was considering rebalancing its
indices not on close with the Quad Witch Expiration but, instead, rebalancing on the last
business day of the rebalancing month. Alas, that was never changed. Despite all the
fanfare with which news of the proposed changed date, S&P Dow Jones Indices released
the 2019 Rebalancing calendar without any changes. When Quarterly Index Futures Expire,
the indexes, themselves, will be adjusted on close. Thats what makes the Quadruple
Expiration such a big deal.
Please note all the bigwigs speaking on Tuesday: CFTC Chairman Giancarlo, SEC Chief
Clayton, FDIC Chair McWilliams, and Comptroller of the Currency Otting among the speakers
at the Institute of International Bankers, Tuesday, even as Wells Fargo CEO Tim Sloan will
be testifying at the US House Financial Services Committee, at about the many scandals the
bank has been ensnared in, plus the International Futures Industry will meet here in
Florida, even as the UK Parliament votes on Brexit and a delay. Were it not for the
Quadruple Expiration Friday, Tuesday would be the biggest day of the week.
Earnings a skewed heavily towards retailers but none of the giant companies that have
reported previously. There are a number of radio firms reporting, mostly Tuesday, and a
couple of large tech companiesBroadcom, Jabil Circuits, & Oracle most
specifically, all three on Thursday, along with Adobe. I noticed, Sunday, for the first
time, that ELF Beauty popped up in Target stores. The struggling make-up company announced
with its earnings, last week, that it will be closing all its retail stores. Makes sense,
if youve landed Target, Forever 21, and Ulta Beauty, the latter reporting Thursday.
Ive long waited for Ulta to stumble but it hasnt, really, yet. Sooner of later
it will.
South by Southwest continues this week, the final weekend next week. Meanwhile the NCAA
Division 1 mens basketball championshipaka March Madnesskicks off with
the first round starting Friday. You wouldnt think anything could distract from a
medical meeting as big as AAC (Cardiology) Scientific Sessions, starting next Saturday but
March Madness can manage it. Meanwhile, Energy traders will want to tune in to CERA Week,
which starts Monday. Also Monday, Deutsche Banks 27th Media, Internet
& Telecom Conference, and Cowens 39th Annual Boston Health Care
Conferencethe preferred spelling at Cowen, wholl be competing with Barclays
Global Healthcare Conference in Miami Beach.
Sunday, the Mortgage Bankers Association opened its Mid-Winter Housing Finance Conference,
in Colorado, while Bank Innovation IGNITE19 starts Monday, in Seattle. Conversational
Interaction Conference, also starting Monday, is about Connecting Humans & Machines,
with Alexa the clear front runner, to day. Meanwhile, Healthtechs Molecular Medicine
Tri-conference kicked off Sunday, in San Francisco, one of the biggest healthcare
conferences of the year because of the several sub-conferences, including Microbiome-based
Precision Medicine, and Cell-Based Cancer Immunotherapy, which reminded me that the real
headliner on "60 Minutes" Sunday was not Powell but the doctors who explained
how they used altered HIV viruses to insert a missing gene in patients suffering from
sickle cell anemia. WOW!!!
Other Events of note include Bk of America Merrill Lynchs Consumer & Retail
Technology Conference, Tuesday, RBC Capitals Financial Institutions
Conference, the same day, and Susquehannas SEMI & Technology Conference, also
the same day and like RBCs, in New York. CanaccordGenuitys Musculoskeletal
Conference, in Las Vegas, starting Tuesday, capitalizes on AAOSOrthopaedic Surgeons
meeting there, starting the same day. Usually, half a dozen orthopaedic device companies
host analyst meetings at ortho conferences but not this yearfor whatever reason. I
checked about 8 device companies and not one scheduled an analyst meeting during the
conference. Cant tell you why.
Thursday is the next big meeting day, with JPMorgan hosting Gaming, Lodging, Restaurant
& Leisure Management Access Forum, also in Las Vegas, while Piper Jaffray will host a
Security Symposium the same day, in Chicago, and Berenberg Design Software, in NY, even as
Jefferies is hosting "Brands Still Matter (BSM)" in NY, JPMorgan its 7th
Large Bank 1-on-1, even as Stephens hikes to the San Francisco, the same day, for its 11th
West Coast 1-on-1, with 20 companies that range from EGHT, to ANDE, CSGP, to DPZ, FNF,
FIVN, GLUU, HOMB, TREE, LMNR, LAD, NEWR, PKG, WTTR, SUM, SVMC, the coast the only thread
that ties them together. Goldman Sachs, on the other hand, will be in London for European
Chemicals. And if GE hasn't done enough to discourage investors, year-to-date, its
hosting an Outlook call, with its leadership team, Thursday morning.
The Bk of Japan holds a Monetary Policy Meeting, that will end in the wee hours of Friday,
east coast time. I consider it such a hopeless case, I simply dont see what the BoJ
could possibly say or do that will pull that country of its long-standing funk, especially
when Europe is on pins & needles about Brexit and the US & China are struggling
towards a lasting trade truce, with Chinas economy clearly weakening. What was
stunning, however, last week, was the big pop in the US dollar, and the way the financials
finagled their way out of losses, Friday, to close with a smidgen of gains. Of course,
with Boeing sure to be under pressure, to start the week, after another 737 plane crash,
any follow through by the financials may not be enough to force the indices into positive
territory. Then, with a Quadruple Expiration at the end of the week, much of what happens
to stocks, this week, may have little to do with actual corporate activity. But it might
pay to bear in mind that the number of companies appearing at conferences, with the
quarter fast coming to a close means, suggests that earnings warnings & upside
statements could arrive in a flood. So, unless youre absolutely certain about the
earnings about to arrive, lightening up may be the best course of action, for now.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 0408, 2019 EXPECT MORE
CONSOLIDATION to START MARCH Trumps North Korean
tet-a-tet failed to meet any goal; Trump canceled plans to raise tariffs on Chinese goods,
even though theres not only no agreement with the Chinese but Trump, now, wants to
throw out his negotiators M.O.U.s; and even the Senate will put together a
majority to vote for the Democrats bill seeking to block Trumps attempted
money grab from other allocations to fund his border wall, which is nothing more than a
campaign promise by a neophyte politician who still doesnt get the idea
of checks and balances, and Congress holding the purse strings. On top of all this, Trump
has, now, demanded that China immediately remove all tariffs on US Agricultural products.
For me, it all adds up to expectations for stocks to continue to consolidate the
year-to-date gains, albeit with an upside biasat least until the FOMC meeting ends
on the 20th. (Whether updated member projectionsthe dot plotsstill
show 2 rates hikes in 2019 will determine what stocks do afterwards.) The calendar will
play a large role in another aspect of equity market actionretailers likely
inability to push spring merchandise with Easter not until a month after the FOMC meeting
(April 21st)about as late as it gets, after years of very early Easters.
And, if that wasnt enough to deter spring shoppers, the reported lower Federal tax
refunds will retard spending enthusiasm in March, too. For me, that all seems a prelude to
a less celebratory market.
On the other hand, we may now have entered one of those perverse periods when bad news is
good news for stocks. High Jan. Retail Inventories, Monday? Stocks celebrate. Weak Durable
Goods Orders & Shipments? More celebrations! Though I dont think the market will
be pleased if seasonally adjusted Dec New Home Sales are weak, Tuesday, or Jan. Factory
Orders, on Wednesday. But whatever you do, dont hope for really weak numbers out of
Fridays February Unemployment Report, though, clearly, a 28 day month that saw a
polar vortex freeze and snow that blanketed a large part of the country wont offer
up anything near the boffo job numbers reported in January304K jobs added. But, for
the most part, to a some extent, bad news will be good news, because it keeps the Fed on
pause. IF the FOMC is going to change its tune, the first to reveal such changes might be
either Esther George or Loretta Mester, since they were staunch hawks until the last
minute.
FOMC Chief Powell will speak, Friday, prior to the SIEPR Stanford Institute for Economic
Policy Research Economic Summit and dinner, March 8th, sponsored by Dodge &
Cox and Heidrick & Struggles (HSII) but I dont think hell flip flop that
soon. The last thing he probably wants is to be accused of flip flopping, when data
dependency requires not letting any single data point change his mind. Note, also, the ECB
meeting, the Draghi post-Meeting press conference running into the early pre-market hours
in the US Thursday. The RBA (Aussie) will weigh in on rates in the wee hours of our
Tuesday morning, while the Bk of Canada rate meeting will end fairly early Wednesday
afternoon. When FOMC members start talking about last Decembers market dip having
little impact on the data (which is arriving late, because of the partial government
shutdown), and appearing to be a minor glitch, rather than a sustainable problem to be
addressed, thats when the pivot to a more hawkish stance will start making itself
known.
The Earnings Calendar promises more retailers, the biggest of which are Target, Tuesday,
followed by CostCo Warehouse Thursday, but its not without some tech charms
like.drone chip maker Ambarella, fiber optic manufacturer Ciena, Chinas Sina &
Weibo all Tuesdays highlights. Also Thursday, reports range from Burlington Stores,
to still shrinking Barnes & Noble, to tax preparer H&R Block, to casino supplier
Intl Game Technology, homebuilder Hovnanian Enterprises, chip designer Stratasys
Ltd, and computer and server distributor Tech Data. Still, I dont see any real
threats from the reports scheduled for release.
Which brings us to the Events Calendar, where the biggest event in terms of presenters and
attendees is likely to be Raymond James 40th Institutional Investor
Conference. However, in terms of coverage of a sector, the award goes to Citis
Global Property CEO Conference in Hollywood. Citi didnt say whether thats West
Coast or East Coast Hollywood but were pretty sure its Florida. Both RayJay
& Citi started Sunday night. Next up, JPMorgans Aviation, Transportation, &
Industrials Conference, in New York, not starting until Tuesday, which may be just what
NYC needs to recover from the snow storm aiming at it as I write. (NYC Schools scheduled
to be closed, Monday, according to Florida news reports, Sunday late afternoon.) Also
Tuesday, Evercore ISIs Annual Industrial Conference (NY), Wells Fargos
Homebuilding & Building Products Forum (NY), S&P Global Intelligence 32nd
Annual Power & Gas M&A Symposium (NY), and several I-banks hosting meetings at OFC
(Optical Fiber Communications) in San Diego.
Wednesday, UBS hosts Global Consumer & Retail Conference (Boston), and Evercore ISI
Energy & Power Summit (Houston). Over in London, Credit Suisse will host Global
Healthcare starting Tuesday, and Morgan Stanley, Wednesday, European MedTech &
Services Conference, even as Jefferies hosts Paper & Packaging, also in London, also
starting Wednesday.
But I want to circle back to Citis Global Property CEO Conference because of the
recent announcements about the slug of stores being closed. Mall REITs have, basically,
ignored store closures, of late, instead rising because the Fed is on hold, which makes
their yields more attractive, their cost of funds low. Gymboree is closing 800 stores. JCP
is closing more stores, and Gap 230, over 2 years. Payless ShoeSource is the hammer of
closures, with about 2.1K US & Puerto Rican stores closing shortly, by the end of
March, its bankruptcy a liquidation. Granted, many of its stores are not in enclosed malls
but, instead, in strip centers but, even then, there comes a time when the number of
closures in a strip center reaches critical mass. If a Payless, Toys R US &
Babies R Us all close in a Target strip center, it has to, ultimately, impact TGT.
Around here, some TOY stores were snapped up by Dicks Sporting Goods and Fresh Markets,
the new retailers opening fairly quickly, the concessions offered to get them there
unknown. But the large number of doors closing, so far this year, will unquestionably
impact the mall REITs sooner of later. Where Sears left Town Center in Boca Raton FL.
Simon Property was able to shut off the mall at its Sears former entrance, and
minimize the impact but thats a monster sized space to fill, and now Tesla is
leaving a leasehold thats seen 5 different occupants in the past 12 years. Where
Nordstrom is closing its fairly new store in the Wellington Mall, in Florida, its
hard to imagine a replacement coming quickly. Theres already a Dillards &
JCPenney, the latter probably not done with store closures, yet. Theres already an
Ashley Furniture store there, and maybe its high time auto dealers started taking a
hint from Tesla and set up new car dealer showrooms in malls, as they do at Town Center
about 4 times a year, offering a selection of cars to test drive in the parking lot. Heck!
Sears had a Service & Tire Center in its mall store, while luxury dealers do put show
cars in the hallways, to attract attention. Town Center, anyway, still draws a large
contingent of tourists from the US, Canada and, especially, from South America and Europe.
Nuts as it sounds, Childrens Place bought the Gymboree & Crazy 8s names,
IP, and related property (websites), while Gap bought Janie & Jack. I suspect PLCE
bought the portion it did for $76m is a purely defensive move. GPS, on the other hand,
might well like to mull its intent with Janie & Jack as it works towards separating
Old Navy in 2020. Both Baby & Kids Gap are successful division of GPS, though their
results are not broken outmostly to keep the Street & Investors from learning
just how poorly the GAP adult division is really doing.
All that said, at least until Fridays Employment Report, I expect stocks to continue
consolidating year-to-date gains, with a slight upside bias. Of course, if youre
smart, you should consider replacing stock with options, and socking away a lot of cash
for a better opportunity. Next whiff of business slowing could well trigger a December
swoon repeat.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 25thMarch 1st, 2019 FOMC CHIEF POWELL
STARS FOMC Chief Powells Semi-Annual Testimony before
the US Senate & House (Tues/Wed) should not be dismissed without a 2nd
thought. In fact, much as Powell is probably relieved that the equity markets have
recovered so much of December 2018s losses, its not hard to imagine him
worrying that things are getting a little out of hand, again, and reminding the Street
that rates could resume rising, if incoming Economic data warrant it. For now, I
dont see that happening because Federal agencies are just starting to crawl back
from their shutdown, so data arriving, even this week, are a little moldier than normal. I
dont think Powell will want to freak out investors since, as FOMC member Bullard
said on CNBC, Friday, US Rates are quite high compared to the rest of the developed world
But, likewise, Fed Vice Chairman Clarida said, last week, hes not sure if the US
Economy is slowing down or not, given that data hasnt been released. So, while I
believe no one is a big rush to resume raising rates again in the short term, I do think
Powell will remind the Street that rates are a two-way street, and could rise as easily as
fall, depending on how the data unfold.
Powell wont be the only FedHead speaking this week. The NABE (National Association
of Business Economists) hosts its 35th Economic Policy Conference (EPC) this
week, featuring many Fed speakers as detailed below. Even past FOMC members William Dudley
& Alan Greenspan are speakers, in addition to Clarida, and Bostic. But outside NABE,
Fed speakers inclkude Harker, Kaplan, and Mester. And note, Housing Data Tuesday, from
S&P CoreLogic Case-Shiller and the FHFA, in addition to Housing Starts/Building
Permits, all for December, on Tuesday, plus Wednesday, NAR Pending Jan Home Sales. With
mortgage rates backing off from 5.2% to 4.41%, according to some sources, theres
reason to feel more optimistic about the spring selling season than there was a few months
ago. Other big data this week includes 18Q4 GDP (which includes PCE), again data old
enough its barely helpful in gauging the economys status, especially since
its reasonable to assume that non-essential government workers who knew they were
marching towards a partial shutdown, and a lack of paychecks, probably started to pull
back even before so-called non-essential workers were told to stay home, on
December 22nd.. Likewise, Friday, the government is supposed to deliver Jan.
Personal Income & Dec. Spending, both sure to be influenced by the partial government
shutdown. Weve already been told that Dec Retail Sales declined (-1.2)%, to the
Streets shock, so unless this fresh data is diametrically opposed, there may not be
great news in that data, either; Most of January lacked paychecks to Coast Guard, and 800K
other government workers, in what was one of Trumps worst calculations, having
boasted of his pride in shutting down the government until Republican Congressional
members started freaking out, and furloughed Federal workers started showing up at soup
kitchens, told to go to their banks to get a loan by Wilbur Ross, another tone deaf member
of the administration. Of all the data to be released, the ISM Manufacturing Index might
offer the most contemporary and insightful information of all Id also bet that
Michael Cohens testimony, this week, will be draw droppingits what
hes set out to do. And who can blame him? Trump dumped him like a hot cakenone
of the "good man" talk he reserved for Flynn & Manafort, or any of his other
felonious cronies.
And not for nothing, Friday is the day the debt ceiling suspension ends, and Saturday the
day Trump threatened to raise the tariffs on $200B of Chinese goods from 10% to 25%. I
doubt tariffs are rising, since Trump has made clear he feels good progress is being made
by negotiators, and even said, last week, March 1st isnt a magical date,
in contrast to what he was saying in December. The Debt Ceiling, however, is another
issue, altogether, for a President who, on the campaign trail, claimed he could wipe out
the deficit in 4 years but instead increased it by another $1 trillion.
Which brings us to the Earnings Calendar. What are the odds that 3 fairly newly listed
companies involved with "new" ways to sell cars would be reporting at the same
time, on Thursday? They are: CarGurus (CARG), Cars.com (CARS)the oldest of them all,
and Carvana (CVNA). Welcome to the new world, just as new car sales, in general, are
slipping, which may help used car marketsthough that wasnt evident in
AutoNations report last week. Likewise, competitors, of a sort, Nielsen &
comScore both report Thursday. It seems logical for NLSN to buy SCOR, for its own
survival, since SCOR is the internet specialist, and networks were never satisfied with
NLSN TV-viewing data, let alone its attempts to cull online data.
But the focus shifts to retailers, this week, includes, on Monday, Carters and Etsy.
Tuesday, Autozone, Big Five Sporting Goods, Home Depot, Macy*s, Office Depot/Office Max,
and possibly, Dillards, which still counts so many family members as owners and
managers, it doesnt feel compelled to alert the Street long before its report is
released. Also Tuesday, Carcker Barrel Old Country Stores, Papa Johns, Red Robin
Gourmet Burgers, and for that matter, Realogy, TiVO, and Toll Brothers. On Wednesday,
reports are expected from Best Buy, L Brands & Lowes, along with Booking.com,
Carols Restaurants, Churchill Downs, Monster Beverages, Qurate Retail and Steve
Madden. Others will focus on Hewlett-Packard and Square. Thursday, retailers reporting
include Gap Stores, JC Penney, JD.com, Nordstrom, and notably, Sea World &
Sothebys. Then, again, so will Marriott and Marriott Vacations Worldwide, Starwood
Properties Trust, Hostess Bakery Products (personally addicted to the all chocolate
Hostess Cupcakes), and Wingstop. Thursday will also be notable for the first returned to
public markets Dell Technologies Report, along with VMware & WorkDay.Also prominent on
this weeks calendar, lodging companies, especially trusts, along with smaller
restaurant chains. Also, lots of smaller Hoteliers, reporting this week, a couple of
larger tech companies, including newly public Dell Technologies, the two largest global
beer companies, and TV Station owners. Friday, look for FootLocker & TJMaxx, though
FootLocker took away some of the suspense with a slug of announcements last week. Champs
is a cash machine here, more so than the FootLocker brand while the House of Hoops is just
a waste of space, so good that Nike is paying half the freight.
Which brings us to the Events Calendar, the star of which is likely Morgan Stanleys
TMT, starting Monday, out in San Francisco. Even larger, in number of attendees and
presenters, are the connected JPMorgan events in Miami BeachHigh Yield &
Leveraged Finance Conference, and Global Emerging Markets Corporate Conference. Other
notable events include BMO Capitals 27th Global Metals & Mining, and
the coincidental Personal Care Products Council Annual Meeting in Palm Beach FL (so soon
after CAGNY, nearby), and the Global Beauty and Wellness Exchange in Blufton SC. Back to
Monday, BAML hosts Animal Health, JMP Securities 6th Technology Research
Conference. The Aerospace & Defense Industries are mounting a Manufacturing Summit, in
Las Vegas, the Mortgage Banking Association National Mortgage Servicing ,IQPC Autonomous
Cars, and AMWA Convenience Retailing University.
The Fashion Industry will be taking over New York City, starting Monday, with FAME &
Sole Commerce 2 of the related events. That usually makes city dwellers a little sour.
Meantime, Mobile World Congress will be held in Barcelona Spain, a few I-banks hosting
clients over there, even as Pret-a-Porter takes over Versailles, France.
Tuesday, its more of the same, with BAML hosting Global Agriculture & Materials,
in Ft Lauderdale, Berenberg a one-day NASH event, in NY, where Intercept should be the
star, causing Gilead more pain. Also Tuesday, Piper Jaffrays Annual Energy
Conference in Las Vegas, even as IPInternational Petroleum Week is in London, and
the Semi-Annual EnerCom Conference is in Dallas TX, starting Wednesday. Keybanc hosts
Emerging Technology Conference in San Francisco, the 12th Annual Medicaid
Managed Care Summit in D.C, along with the 3rd Opioid Management Summit.
Wednesday, Leerink is hosting its 8th Annual Global Healthcare Conference, in
NY. Now owned by Silicon Valley Bank, Leerink is still one of the most respected
Healthcare research houses. Citi hosts Asset Management, Broker Dealers & Exchanges
Conference, also in NY. Wells Fargo hosts its 22nd Real Estate Securities
Conference, also in NY, BTIG Medical Technology, Life Science & Diagnostic Conference,
in Snowbird UT. The Entertainment Finance Forum in L.A. is a fish out of water, this week,
as is ICSCs OADOpen Air Center Summit, in Austin. Of course, Wednesday, you
can tune into Powell, or Michael Cohen, a former fixer for Trump, also testifying at
Congress. Likewise, as referenced earlier, NABEs 35th Economic Policy
Conference starts Wednesday, while yet another Triumph of Ag Expo opens in Omaha NE, who
leading light, Warren Buffett & Berkshire Hathaway took a sucker punch to the belly on
its investment in Kraft Heinz, which wrote down its brands and lost a good chunk of its
value, last week.
Thursday, Ill be curious to hear how busy Credit Suisses Asia Frontier Markets
Conference will be in NY. I have no doubts, however, about KBWs Cards, Payments
& Financial Technology Symposium, also in NY, or Commodity ClassicGrow Beyond,
in Orlando. While it doesnt get much attention in most corners of Wall Street,
Society of Consumer Psychology should, also Thursday, in Savannah GA. ACTRIMS, a
consortium of Multiple Sclerosis Centers meets starting Thursday, in Dallas, while
Clinical Immuno-Oncology will be held in San Francisco. The International Congress on
Hematologic Malignancies: Focus on Leukemia, Lymphoma & Myeloma will attract a lot of
interest in Miami Beach, even as the Tokyo Auto Show opens to the
All in, the small gains eked out last week suggest a market consolidating, which seems
long overdue. Im not that optimistic about the coming Retailer earnings, because I
found the post-Christmas mall traffic down significantly, y/o/y, and February has been a
lot worse. And thats down here, in Southern Florida, where the weather has been no
barrier to access, as the Polar Vortex has been in other parts of the country, storms
again this weekend. Having said that, its becoming harder to judge retailers by
their mall traffic alone, as more of their sales move online. Still, post-Christmas sales
& returns, as well as usage of gift cards generally boost traffic and that wasnt
really a big factor, this year. Thats quite troubling, especially with mall REITs so
strong of late, as interest rates have backed down, and the Fed has paused. Its time
for some caution or, at least, a little less enthusiasm.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2019 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 1822, 2019 FOMC MINUTES
& WALMART HIGHLIGHT the WEEK The highlight of
the week may be the FOMC Minutes due Wednesdayat least until the week after this,
when Jerome Powell testifies before the Senate & House on 26the and 27th.
The Minutes should be filled with discussion of re-examining more rate hikes this year, as
well as the "automatic" run-off of the balance sheet in the background. Even
Cleveland Fed president, Loretta Mester, last Tuesday, 02/12, stated the FOMC, at coming
meetings, will be "finalizing our plans for ending the balance-sheet runoff and
completing balance-sheet normalization." The next meeting isnt until March 19th20th.
A long-time hawk, Mesters casual confirmation of rate hikes stopping and, at coming
meetings, ending the balance sheet run-off, is uncharacteristic. Maybe
Mesters switch in posture will be explained at an event starting Thursday--the USDA
95th Agricultural Outlook Forum The Roots of Prosperity (Arlington VA thru 22nd).
Its part of the USDA (US Dept of Agriculture) Office of the Chief Economist (OCE),
and subtitled "Growing Locally, Selling Globally," with speakers including the
USDA Chief Economist Robert Johansson, Secy of Agriculture Sonny Purdue, & Dpty
Secy Steven Censky, plus a Plenary panel that includes the Governor of Nebraska,
Pete Ricketts, NASDA (Natl Assn of State Departments of Agriculture) CEO Dr.
Barbara Glenn, and others most wouldnt know outside agriculture. The heart of the
conference is outlooks for the many ag subdivisions, like Oilseeds, Chinas Market,
Sugar, Grains, Livestock, Sweeteners, Food Retailing, Dairyeven Indian
Merchants Chamber of Commerce (Native Americans, not the country in Southeast Asia).
There are sessions on organic agriculture, led by the Organic Farming Research Foundation,
as well as USDA subdivisions that includes the Forest Service, Grain Inspection, Ag
Research, & both Animal & Plant Health Inspectors. So perhaps theres
something in farm country that changed Mesters mind. And if not in Ag, perhaps
something in auto land, as Cleveland is in the heart, also, of automaker country. More Fed
bosses will be speaking this week, a number of them on "The Future of the Federal
Reserve Balance Sheet" at the Univ. of Chicagos Booth School of Business 2019
Monetary Policy Forum, taking place in NYwhich means a lot of opportunity for CNBC,
Bloomberg & Fox business networks to interview out of town Fedheads.
The NAHB Feb. Housing Market Index, out Tuesday, will be torn between a polar vortex that
kept people inside, and falling mortgage rates that beckon house hunters. Meantime, the
OPEC and 10 non-OPEC oil producing countries are meeting in Vienna, at OPEC headquarters,
to discuss quotas and, in all likelihood, extending them, if not strong arming more cuts,
which only Russia, outside OPEC, is in position to do given its high production rate.
Saudi Arabias Saudi Aramco already shut down its largest field, last week, for an
indeterminate time. The Saudis have cut the most production, overall, since the
first quotas were instituted. Given Pres. Trumps support despite Congress finding
the crown prince responsible for Koshoggis murder, the House of Saud, and therefore
Saudi Aramco, walks on eggshells. Should the price of oil rise considerably, and draw
comment from Trump, the Saudis would be forced to do whatever it is he wants,
putting them at odds with their intent to boost prices.
Speaking of Trump, hell be speaking on Venezuela, in Miami, Monday evening, on his
way home from Mar-a-Lago in Palm Beach, Trump was first to leap into the fray, for reasons
that remain a mystery to us. We can find no reason other than his constant desire to be in
the limelight and stir up the pot.
You might recall how bad reported Dec. Retail Sales were, when they were finally released.
In fact, despite strong ecommerce gains reported by Amazon, Etsy, Target, and Walmart, the
Retail Sales report claimed they rose only 3.9%?? No, Dec. Retail Sales claimed
eCommerce sales FELL (-3.9)%. That should make Wednesdays 18Q4 eCommerce Sales, from
the Commerce Dept. especially interesting. Lower oil prices have certainly helped
consumersespecially those who heat with oil, rather than natural gas, after a polar
vortex interrupted a warm winter. The polar votex has helped even those of us in Florida.
My bill for January was the lowest in the history of owning this house, for 26 years, at
just $70.66, despite running A/C on many afternoons when the sun heated up my office,
along with running my dish washer, clothes washer & dryer, and oven. While were
having ridiculously hot days since the chill dissipated, with temps unseasonably
warmin the mid-80sthat polar vortex chilled us enough for my usage to
drop by 132 kw, this year. It also helped that this years "month" was only
29 days against 32 last year but still, that drop in usage put the bill $14+ below any
bill FPL has ever sent before. So the Sauds & other producers want higher oil prices
while Trump and consumers like the lower prices just finea 10 year run of new car
leases & purchases putting millions of consumers in more energy efficient vehicles,
just as Europeans were learning that the promised savings of their diesel power vehicles
were all a mirage, cooked up by software engineers to fool regulators.
Speaking of cars, and industrials, the headline events of the week include Citis
Global Industrials Conference, starting Tuesday, in Miami Beach, as well as Barclays
Industrial Select Conference starting Wednesday, also in Miami, Florida. Thats a big
odd because NAHBthe National Association of Home Builders is hosting its annual show
in Las Vegas, starting Tuesday, with the Kitchen & Bath Industry, plus Pools &
Spas meeting concurrently. Also not to be overlooked, is CAGNYConsumer Analysts of
New York, meeting in Boca Raton FL, starting Monday, a big event for the household
products industry, along with packaged food and beverages. The Citi, Barclays, and CAGNY
analysts could have arrived early to catch the Miami International Boat & Sail show,
or still have time to see it Monday, a holiday. While were in Florida, Outsourcing
World meets in Orlando, starting Sunday, though ITSM (IT Service Management) meets in Las
Vegas, also starting Sunday;. I suspect therell be heightened interest in
CanaccordGenuitys eSports 1x1 Thursday, though its in Toronto. Then Friday,
AAAAI startsAmerican Academy of Allergy, Asthma & Immunology, in San Francisco,
one of the biggest pharmaceutical industry events of the year. Also Friday, Gabelli, then
GameCo, now G, Research, is hosting its 28th Annual Pump, Valve & Water
Systems Conference, in NY. Sounds like GameCo is working hard to figure out how to survive
Mario Gabellis someday retirement. Heck! Even Bill Gross is retiring, so Mario will
someday, too, unless he can pull off a John Bogle (founder of Vanguard), never really
retiring but going out still speaking out on index investing and low fees for investors.
As for Earnings, there are a couple of Tech laggards, including Himax Tuesday, Analog
Devices and Synopsis Wednesday, Infineon, Intuit, and Hewlett-Packard Enterprise
Thursday.I supposed we could include NetEase (Wed.), Baidu, and Zillow (both Thurs) could
be considered tech companies, too but all three are consumer internet companies, and
thats where we see the Earnings Calendar shifting towards--consumer names, Walmart
on Tuesday, the biggest of them all in revenue terms. Restaurants step to the place,
starting with Texas Roadhouse Grill Tuesday, Cheesecake Factory and Jack-in-the-Box
(Wed.), and Thursday, BJ Restaurants, DinEquity, Dominos Pizza,. Take a look at the
tickers emboldened on the Earnings Calendar. Other than a couple of chemical companies
whose strong earnings expectations caught my eye, a few auto parts suppliers, and medical
suppliers Medtronic (Tues.) & Henry Schein (Wed.), the rest are mostly consumer
related, as the calendar creeps into the weeks when retailers will dominate, Walmart
setting the tone. It remains the filthiest store I ever enter, my visits strictly to see
what the heck analyst fans are talking about. Thursday, I found an elderly woman on the
floor right in front of the pharmacy counter, and no one working there, or walking past
her seemed to notice. The good news about that was that no one stole her Prada handbag
sitting in the child seat of her shopping cart but not one person paused to ask if she
needed help, until I did. When I asked pharmacy to call for help I was told theyre
separate, "tell them at the front of the store." Well, I certainly wasnt
leaving her there, so stopped a woman who was nice enough to pitch in, and run to the
front to snag an Asst manager. He didnt know what to do other than to call
911, so I suggested he bring over a chair from the pharmacy dept, and help get her into
the chair. I knew she didnt have any broken bones because I saw her attempt to rise,
herself, moving her legs, feet & arms. The next analyst who says anything nice about
WMT needs to have their eyes opened. Its an awful operation that doesnt train
even assistant managers in protocol in case of an emergency, let alone any other
workerone of whom told me she couldnt stop moving the stuffed animals to the
front of the store because Valentines Day was only for a few more hours, and they
needed to be sold before the day ended.
In sum, with the Fed out of the way, the Minutes Wednesday, should do nothing but confirm
it. Then, the street will be examining somewhat moldy data, finally coming out of the
reopened Federal government, and looking ahead to Powells Congressional testimony
the 26th and 27th. In between, well get Walmarts earnings,
which I dont expect to excite. The rally, at 8 weeks old, is getting long in the
tooth so, perhaps, time to seek out winners to exit, rather than worry about cash not
being deployed.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 1115, 2019 BULL MARKET ACTION on CLOSE NOT IN CHARTS There should be a giant question mark floating above this
weeks Economic Calendar, given all the agencies working to compile data since the
Federal Govt partial shutdown. And the data being released, is sometimes November
data, when December of January would normally be on tap. Frustrating enough for data to be
a bit moldy when it arrives on time, its all but worthless when its delayed by
a month or two. And maybe its just me but it isnt hard to imagine some workers
at these Federal agencies, urged to break their backs to getting delayed data ready,
sitting around wondering why bother?, when Trump might only shut them down
again, this Friday, the 15th.
Nonetheless, if things proceed on plan, Wednesday should bring the US Jan. Consumer Price
Index, Thursday Jan. Producer Prices and Final Demand, while both Jan Retail Sales &
Nov Business Inventories are under the shadow of that enormous question mark, though
Retail Sales is supposed to arrive, Inventories questionable. Note, also, how little
Treasury issuance is expected, at the same time theres an abundance of Fed speakers.
Feds George, a former hawk, is sounding more hawkish again. Her position may seem
more reasonable when the Feds JOLTS release arrives Tuesday, many hours prior to her
Kansas City speech, just as the January Unemployment Report at 304K jobs added in January
must have made Jerome Powells cheeks turn crimson, right after he pivoted to dove
from hawk. Feds Mester speaks Tuesday, also, even later in the evening than George,
and again on Wednesday. Likewise, Feds Bostic & Harker speak, separately, on
Wednesday, also, Bostic in Ireland. In addition to his economic outlook speech on
Wednesday, Harker speaks again on Thursday, though the topic of Leadership
doesnt sound conducive, at first glance, to opinions on rate hikes. But if
Harkers view on leadership includes the strength of leadership to hike
rates in the face of the President and markets urging you to back off, then, he could turn
the topic into a treatise on rate hikes. Conversely, San Francisco Fed Pres. Daly, Friday,
could well include her views on rate hikes in her speech at the Economic Forecast
Conference, since any view that includes faster growth, labor shortages that push up
wages, or tariffs forcing companies to pass along higher prices could all feed into a
hawkish view on interest rates. While the FOMC doesnt meet this month, at all, this
week, alone, the central banks of New Zealand, Sweden, and Norway all are scheduled for
monetary policy meetings. Granted, none are as influential as the Bk of Englands
meeting last week but, then, Parliaments debate on P.M. Mays Brexit deal,
Friday, is key, just as the possible partial US government shutdown, that day, is too.
Which brings us to the Earnings Calendar, voluminous, if nothing else. And there are a few
key technology companies expected to report, including Activision Blizzard, Akamai,
Groupon, Twilio, NetApp, Applied Materials, Arris Networks, Cisco Systems, Equinix, CME,
LogMeIn, Nice Systems, nVidia, Zebra Technologies, and Yandex. Dont agree that CME
is a technology company? Ill be happy to debate the point, anytime.
In addition, the Earnings Calendar is spotted with homebuilders, healthcare providers, a
few large REITs, hoteliers, 2 large mattress companies, along with the first earnings
report as a public company of Yeti, if my memory serves me. Berkshire Hathaway hasnt
reported, yet but, like all public companies gets extra time to prepare its annual report.
Last year, that report was delivered on Feb. 24th. This year? Theres
nothing on Berkshires website to suggest what day it will arrive but Id use
the year ago date as a guide, and expect it on the 22nd, after the market
closes, rather than this Friday. It is always, though, surprising to me that a man who
advocates for simplicity, manages to produce a 148 page annual report. Then, again,
Buffett loves dividends, except when it comes to Berkshire Hathaway paying out any.
Which brings us to the Event Calendar, with investment banks creeping back into the
schedule. Credit Suisse happens to wear the I-bank crown this week, for its Energy
Conference, which started Sunday evening, in Vail Colorado, and its Financial Services
Forum, which starts Monday, in Miami Beacha good winter for southern meetings, given
the frigid arctic vortex which has swept the countrynot to mention day-time temps
near mid-70s to low-80s predicted for this entire week, in Southern Florida.
Stifel is hosting a Biopharma Ski Summit in Park City Utah, starting Monday, when the
annual BIO CEO & Investor Conference starts in NY. Not great timing. Barclays is
hosting Industrial Select, also in Miami Beach, starting Tuesday, while Goldman Sachs
hosts Technology & Internet, in San Francisco. Morgan Stanley is hosting Chemicals
& Agriculture Corporate Access Day, Thursday, when KBW is hosting Financial Services
in Boca Raton FL, even as BMO Capital hosts Auto Financial Forum, in toronto.
Its the season for agricultural expos, two big ones starting Tuesday in Tulare
California & Des Moines Iowa, even as Poultry, Feed, and even Pet Food takeover the
Atlanta convention center. Note John Deeres earnings report scheduled for Friday.
Other big industry events include New York Womens Fashion Week, which will tie up
traffic all week. The Mortgage Bankers Assn hosts a CREF (Commercial Real
Estate Finance) Multifamily Housing Convention, so big UBS is hosting the convention
reception. The IABInternet Ad Bureau hosts is Annual Leadership Meeting, HIMSS is
the Annual Healthcare IT Conference, at which Citi hosts meetings. The NBAA Business
Aircraft Leadership Conference used to be more Textron & General Dynamics than Boeing
but with Boeings partnership with Embraer, its now a bigger player in the
business airplane market than it used to be. Also of note, Womens Wear Dailys Beauty
Forum (after Estee Lauder and Coty were post-earnings stars, last week), NASS, the spine
organization Summit, AFCEA West, starting Wednesday, and the American Academy the
Advancement of Science (AAAS) Annual meeting, starting Thursday, and the New York
International Toy Fair, in NY, none as big as BIO, as mentioned earlier, for attracting
analysts and investors.
Markets that open down but finish up, as they did last week, is said to be classic bull
market activity. However, after 7 weeks rallying, the charts dont look as bullish as
they should. In fact, there arent many bullish charts, at all, which is quite
troubling. Some that look the most positive, like retail REITs, havent noticed that
the bull market in retailers ended with Macy*s warning back in early January. Then,
theres the action is Amazon, itself, arguably the fastest growing large retailer in
the world. After hitting an all time high above $2k p/share, and momentarily ranking as
the largest market cap stock in the world, its trading more 22.0% below that all
time high, looking anything but bullish. But, at a still very healthy 25.0% above its
52-week low, there are probably many computers programmed to light upperhaps to rush
into activity--when its decline equals exactly 50.0% of the gain--the 50.0% mark a
standard retracement in technical analysis. Then, again, if youre looking for a
bullish leaning chart, gold might qualify, even without the inflation that usually
triggers the metals gain. So much for the gold replacement bitcoin was supposed to
be. Gold, instead, is looking shinier. Please dont ignore the less than bullish
charts that suggest the post-Christmas rally, for now, isnt all its cracked up
to be, yet not exactly hinting at imminent selling, either. Such indecision suggests
caution, rather than throwing caution to the wind--at least not until the 200 day moving
average is exceeded on a closing basis, and confirmed 2--5 days later.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 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 0408, 2019 ECONOMIC
CALENDAR UNCERTAIN Well
start with the Economic Calendar, because its contents are uncertain. During the
partial government shutdown, many agencies didnt compile the data they release,
which means the penultimate data that relies on components prepared by other agencies
cant be produced. The top example would be GDP (Gross Domestic Product), due
Wednesday but most likely to be rescheduled. There are components that werent
compiled during the shutdown, so GDP cant be produced until those items are updated.
When the data chain will be complete remains an open question, making some items on the
schedule either best guesses, or dates were know wont be met. Then, add to that
China closed for the weekGolden Weekwhich incorporates the Lunar New Year
which falls, this year, on the 5th. About the only things that will be running
in China over the next 6 days are railroads and airplanes. Factories, shippers, etc? Nope!
And we should say "Greater China," because Hong Kong, Taiwan, South Korea, and
even Singapore will celebrate at least part of the week, if not the entire week. (The
Najarian brother who recommended purchasing an option on FXI--the China large cap
index--made a rookie booboo. How do you bet on an index that wont fully trade this
week? Well, you dont, if youre more aware of your surroundings, rather than
just the volume on an option.) But for what its worth, the purchase of a call option
just before Golden Week ends to capture activity when everything reopens usually pays off.
FXI has a tendency to rise when the first trades after the holiday ends are booked.
What we do know for sure about the Economic Calendar is that the US Treasury has a heavy
week of issuance planned, after one of the lightest weeks of the year. And its
possible demand may be strong, ex-the missing Asian governmentsnot just because so
little was issued last week but because Powells press conference comments were taken
to mean the FOMC is on hold until June, at least, which makes current US Government rates
rather appealing. If the FOMC were expected to raise rates at its next meeting, in March,
then current rates would be less attractive. Thats not the case nowand
probably not for the next 5 months. So Wednesdays 10-year auction, and
Thursdays 30-year, though small, arent a worry at all. US rates, especially
compared to those in the UK and Europe, are the tastiest yields on "safe" debt.
Other items on the Economic Calendar include Pres. Trumps rescheduled SOTU address,
Tuesday, Speaker Pelosi making good on her promise to schedule it after the government was
fully reopened. As with most Trump speeches, hell speak to his base, which will be
enraptured by every word, while the Dems will hear every word as stupidity, or worse. He
is the most polarizing president in history, who so lacks social graces even people who
agree with some of his positions cant support him because of the way he goes about
expressing his position. Then, Thursday, the Presidents former personal
attorney/fixer testifying behind closed doors at the US HouseDemocratic-controlled
House. The shame is that its been changed to a closed door session from open,
broadcast hearing, after Cohen claimed the President and his current attorney, Rudy
Giuliana threatened him and his family.
Other items of interest include expected central bank actions from Australia, Brazil,
India, Russia, Mexico, and the Bank of Englandthe latter creeping ever closer to a
no deal Brexit. If youre up early, Thursday morning, youll probably be able to
catch BoE Gov. Carneys post-meeting press conference on Bloomberg, or at least
online. CNBC doesnt bother with more than snippets. So, the ASEAN world is closed
for New Year celebrations while the Western world is heavily influenced by a slug of
central bank monetary policy meetings.
Which brings us to Earnings, headlined by Alphabets Google, on Monday. Beyond that,
please peruse the Earnings Calendar, and those tickers emboldened because they tell the
story for anyone who needs to know more than Googles report. If youre a CNBC
fan, you wont hear much, if anything, about the other companies in bold, since CNBC
is all about Apple. Facebook and Google, with an occasional side of Netflix. Speaking of
FB, its "Communities Summit" takes place in Menlo Park, California, starting
Thursday. Then, Thursday after hours, Twitter reports, another CNBC favorite obsession.
The financial television network of record will, most likely, not note Mattel reporting
Thursday, and Hasbro Friday, both geared up for analyst meetings, this week, at their NY
showrooms, in advance of the opening of the New York International Toy Fair, at the Jacob
Javits Center. CNBC has only 45 stocks on its mind, and HAS & MAT arent
them. If play time werent enough, the TV Critics Winter Press Tour continues this
week, with FX & FOX TV the lead-off presenters. Then, again, MAGIC, the semi-annual
apparel show starts Tuesday, in Las Vegas, while in NY, Mens Fashion Week will
occupy the week, bleeding into Womens Fashion Week, starting Fridayboth
involving runway shows for high-end designer lines, as opposed to the ready-to-wear lines
presented at MAGIC. Speaking of the financial news network of record, CNBC, its parent,
Comcast, is comping against the South Korea Winter Olympics in Pyeongchang started in
February, 2018. Thats going to make year on year comparisons of viewship and ad
sales impossible to match. As well as Comcast just reported for Q4, for Q1 it will have an
Olympic obstacle, that will make comparisons look weak. Theres nothing that can be
done to overcome that.
A couple of other items stand out, this week. That includes Raymond James Chemicals
Forum, in Toronto, Tuesday, and Cowen Groups Annual Aerospace/Defense &
Industrial Conference, in NY, Wednesday through Thursday. Another big event is MD&M,
concurrent with Electronics West/Advanced Manufacturing Expo & Conference, in Anaheim.
MD&M concentrates on Medical Devices, in addition to every other kind of manufacturing
represented at Electronics West. And heres one we dont encounter often; Both
Swedish Match & Altrias smokeless tobacco products are before the FDAs
Tobacco Products Scientific Advisory Committee, Wednesday & Thursday, respectively.
While fears of FDA rejection have concentrated on flavors in tobaccomenthol
especiallytheres been very little discussion of smokeless products, though
mouth, throat, & tongue cancer are directly related to smokelesschewing tobacco.
I expect equities to meander, this week, looking for direction. There just isnt any
reason to expect the companies reporting this week to trigger either a severe decline or
another leg up in the post-Christmas rally. Sector changes are a different story, as
homebuilders (i.e. BZH, MHO), health-care providers (i.e. CNC, HUM), insurers (i.e. ALL.
CB, MET, PRU), auto-related (i.e. GPI, ABG, GM, FCAU, PAG), exchanges (ICE, CBOE), energy
(i.e. APC, MPC, TOT), entertainment companies (i.e. EA, SFLY, VIA.B, DIS, LGF.A, NWS.A,
TTWO), apparel & accessory manufacturers (i.e. RL, COLM, TPR, CPRI), need I go on?
Clearly, any sector could be dragged down or boosted by the reports scheduled for this
week but none are likely to trigger market-wide reactions. And truth be known, the one
report Im most curious about is NXP Semiconductor (NXPI). Qualcomm walked away from
its bid to buy NXPI, when it couldnt obtain all the regulatory approvals it needed
for the deal. Not weeks later, in its first concession after Trump tariffs were imposed,
China said it could probably approve the deal. Yet, Qualcomm didnt come back, and no
one else stepped in, either. Thats a name I am watching, and contemplating a call
option on, in expectation that someone makes an offer. When better to do that then when
chips are out of favor, on a dip in smartphone sales?
And the, last but not least Ill keep reminding myself that ASEA celebrates the
Lunar New Year most of the week, China all week, with markets & factories closed.
Thats the kind of week that encourages meandering, at least until late in the week,
when the holiday being over is anticipated. Throw in the fact that data provided by
Federal agencies will remain MIA, until it arrives, and theres little reason to get
too bullish or negative. Meander should be the pace of the week.
ECONOMIC: (Highlights only below. Full International Economic Calendar here) *****Data from Federal Agencies will be
rescheduled as availablesome in need of more time before theyre ready ****
© Sandi Lynne 2019 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 28February 1st, 2019 REOPENED
GOVERNMENT MAY NOT DELIVER ALL DATA The Government was funded
for three weeks, making it possible for government agencies, closed for 35 days, to reopen
starting Tuesday. (Some museums were able to open as soon as Saturday, the day after the
short-term funding deal was announced.) Given that computers were turned on for over a
month, and cyber security encryption wasnt updated for over a month, theres
little reason to believe that any data expected this week will arrive, and if it does,
that it will be more than preliminary. Note, however, the slug of Treasury issuance that
was planned, anyway, which may weigh on stocks if the erratic funding of the US Federal
Government weighs on investors. Not that they have a lot of choices: US debt is still seen
as quality, unlike Turkeys, or Argentinas, the latter suffering from dueling
leaders. That means, the highlight of the week may be the FOMC meeting, rather than any
data that may or may not arrive. Ive left the notations next to questionable data,
in case only the most preliminary numbers are announced, or data is postponed.
WSJ claims "Federal Reserve officials are close to deciding they will maintain a
larger portfolio of Treasury securities than theyd expected when they began
shrinking those holdings two years ago, putting an end to the central banks
portfolio wind-down closer. Officials are still resolving "details of their strategy,
and how to communicate it to the public, according to their recent public comments and
interviews." But is that Wednesdays news, or merely a discussion that
wont be unveiled until the minutes are out in 3 weeks, or perhaps during the press
conference? This news was enough to boost stocks Friday morning, so how much more legs
equities get out of the concept remains to be seen..
All the Economic Data arriving from non-government agencies takes on more importance as
data usually delivered by various government agencies has been lacking, while the partial
shutdown continued. Also, last week the Treasury Auctioned virtually no debt and this week
theres a surfeit. That might test the market, if buyers disappear--govt
restored or not, since the deal is only for 3 weeks, until February 15th, and
Trumps insistence on funding for a border wall probably doesnt disappear. The
border is something like 2.3K miles and Trump is demanding $5.7B, just enough for 240
miles. Does that make sense to anyone, or does it seem more reasonable to fund a more
permanent solution for the entire border, rather than 240 miles?
With the government reopening, mostly Tuesday, some year on year comparisons, might make
sense, for the record. In 2018, the IRS didnt open tax filing season until Jan 29th.
This year its opening on Jan 28th. In 2018, the Pres.s State of the
Union Address was delivered on the 30th. This year it was scheduled for the 29th,
& probably gets rescheduled. Do you think Trump has had time to prepare a speech while
railing against democrats, campaigning in farm country, and firing 12 illegal immigrants
at his Westchester NY golf club thats employed those illegals for 12 years? In 2018,
the govt also shutdown, and reopened on Jan 29th. so, if you are
experiencing a sense of déjà vu, you havent imagined it. This year is a bit of
Ground Hog day, most Federal agencies expected to reopen Tuesday, the 29th.
Markets will be lucky to get the January Unemployment Report on Fridayconfused as it
might be with government workers who applied for benefits when furloughed, and contract
workers who stood no chance of receiving back pay when government reopens, this week..
January Motor Vehicle Sales could be a nail biter, as consumer and business confidence
waned as the 2 parties fought over border wall funding.
Which brings us to Earnings, where financials importance will diminish, as some
techs will rise to prominence along with pharma & biotech companies. On Monday,
earnings crank up slowly, with Caterpillar, Celanese, Ethan Allen, Sanmina, and Whirlpool.
On Tuesday, note 3M, AMD, Allergan, Amgen, Biiogen Idec, Boeing, Danaher, Ebay, HCA, KLA,
Lockheed Martin, Paccar, Pfizer, Pulte Homes, Renaissance Re, Robert Half, SAP, Verizon,
and drum roll please, Apple Inc. Some analysts believe the bad news is already embedded in
Apples price but Im not as confidentnot after Intels report.
Wednesday, watch Alibaba, Ally Financial, Anthem, Boeing, Caci, Checkpoint Software,
FaceBook, Fair Isaac (FICO), General Dynamics, Ingersoll Rand, Invesco, McDonalds,
Meritage Homes, Microsoft, Mondelez, Murphy Oil, Nasdaq, PayPal, Qualcomm, Royal
Caribbean, ServiceNow, Sirius XM, Thermo Fisher, US Steel, Visa & Wynn Casinos &
Resorts. By now, it should be clear that earnings cut across every sector, this week, with
the exception of Utilities.
Thursday, Amazon, AmerisourceBergen Brunswick, Aptiv, Blackstone, Celgene, Charter
Communications, ConocoPhillips, Deckers Outdoor, DowDupont, Eaton Corp, Ferrari, GE,
Hershey, Lancaster Colony, ManPower, MasterCard, Northrup Grumman, Parker Hannifan,
Raytheon, Royal Dutch Shell, Sherwin-Williams, Sprint, UPS, Valero, Yum China. Which
leaves Friday, when reports are expected from Chevron, Cigna, ExxonMobil, Honeywell, ITW,
LyondaleBasell, Madison Square Garden, Merck, Simon Property, Virtus Investments,
Weyerhaueser, and Zimmer Biomet. Again, if you wanted to know how the US economy is
faring, you could do worse than concentrate are this weeks reports which lack
nothing but utilities. And I wouldnt worry about them, given all the snow, this
winter season, with cold even gripping the deep south of Florida.
Which brings us to Industry and I-bank Events, and there arent many of the latter,
as Earnings usurp interest in events. One of the highlights of the week will be Tour
dAlis, a hotel/lodging investment event, whose keynote will be none other than
Goldman Sachs CEO, David Solomon, Monday. Citi is hosting meetings with clients,
there. The program reads like a mass analyst meeting for the industry, the government
shut-down one detriment the group faced the past few weeks as travel was canceled right
and left. I must say Im attracted to a conference that started Sunday for Bank
diretors"Acquire or be Acquired" in Phoenix. NobleCon15 is Noble
Financials annual small & microcap event, while Stephens Regional Banks
Investor Conference is just what it says it is. (Wed be remiss if we didnt
mention more bank earnings expected this week than our Earnings Calendar belieswe
cover only major money-center banks & the largest regionals, plus selected foreign
banks. That leaves a lot in between.)
Health Benefits, ITXpo, Multifamily Housing, DesignCon (for chips & circuit boards),
FIG Partners 23rd Bank CEO Forum, Credit Suisses Latin American
Conference in Brazil, Jefferies Winter Consumer Summit (in Vail, CO), Laboratory
Automation Science (SLAS), SPIE Photonics, and the early, pre-MAGIC events, like
Off-Price, get underway before the week is over. So, despite a heavy Earnings Calendar,
and a lack of I-bank events, there are still a few, along with some significant industry
events that will add color to the earnings already reported. Toy Fair in Nuremberg,
Germany may be the biggest event overseas.
All in, whether the post-Christmas rally can continue will depend on the quality of
earnings. Yes, it will be nice to see government data return, but with an FOMC meeting,
and the heavy Earnings Calendar, the government is more of the side show, as its
been while it was partially shut down, and data was MIA.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any securities. The opinions expressed are the
authors, alone, and should be just one factor in more complete due diligence.
January 2125, 2019 ALL
ABOUT EARNINGS for NEXT TWO WEEKS The Economic Calendar has
some holes, because the US government partial shutdown has shutdown some of the data
normally released. This week, Durable Goods Shipments & Orders, plus New Home Sales
that arent arriving on the 25th, Friday, if the government isnt
fully reopened. And that doesnt look likely, since Trump offered the Dems a 3-year
extension of their residency for Dreamers/DACA but no path to citizenship, and no amnesty.
Needless to say that was a non-starter.
Meanwhile, in deference to Earnings season, the I-bank calendar of events is mostly
overseas, while the World Economic Forum, too, would have limited the number of I-bank
events on the schedule. Trump has not only canceled plans to attend WEF but also canceled
the US delegation that was going to be lead by Treasury Secy Mnuchin. Likewise,
yellow vest protesters in France have caused that countrys leader, Macron, to cancel
his plans to attend. That leads the door wide open to Xi Xinping of China to be the star
leader in attendance. (If hes not going, its nothing Ive heard or read
about.)
Speaking of China, its big day of data arrives Sunday night, our time, Monday in
China, when the National Bureau of Statistics will release a slug of data, including
preliminary Q4 GDP. Weekend financial press was all about the "weakness" in
Chinas economy, which is a little hard to swallow. Are they talking about growth in
GDP of 6.0% instead of 6.7%? Do we even trust the statistics China releases? I hardly
trust half the data the US releases, until the 2nd revisions, which are really
the 3rd time data is offered. In fact, we might all be better off if the
partial government shutdown spares us the first 2 attempted guesstimates and goes right to
the final version, after the shutdown ends. For the record, the UK will dump a lot of data
overnight Monday, Tuesday morning UK time.
Note the especially light US Treasury issuance, this week. Nothing longer than 6-months,
something that happens, I guess, if you force people to work without paying them. Given
the strength in the job market, at the moment, I wouldnt be surprised if some of the
more run of the mill government job holders simply find something else. I dont mean
air traffic controllers, since those are highly trained and fairly highly paid critical
jobs but one more bureaucrat at the IRS, who hasnt already been deemed essential?
You bet Id work away, if I was in that position and could find a new job. Former
government workers are often in high demand in industry, law, accounting, and other
professions. In fact, show me an accountant and Ill show you someone who brags about
former IRS examiners now working for them.
We might be off Monday for MLK Jr day but the rest of the world will be busier. Prime
Minster May is going to resubmit her Brexit deal to Parlament, though not a word has
changed. The BoJ Monetary Policy Committee will meet, its decision out on Wednesday,
Japanese time, which means in the wee hours of our Wednesday. Likewise, the ECB MPC is
meeting, Draghis post-meeting conference starting early our Thursday
morningtimes, I might add, so the US can tune in to watch and/or listen.
Earnings take a day off Monday but ramp Tuesday through Thursday. More Financials,
including Capital One, Interactive Brokers, TD Ameritrade, & Discover Financial
Services, along with Travelers, UBS, and Synchrony Financial. Away from Financials,
theres IBM, JNJ, Abbot Labs, ASML, Comcast, F5, Ford Motor, Lam Research, Las Vegas
Sands, Texas Instruments, Varian, Xilinx, and were not even at Thursday yet. Be my
guest: examine those featured below but understand, because we cover only the major
money-center banks and largest regionals, like Zion Bank, Tuesday, there are several dozen
more small banks reporting that are not listed on our calendar, at all.
Which brings us to the Event Calendar. NAVC: North American Veterinary Conference (Orlando
FL thru 21st) will feature Brooke Shields and Rob Loweeveryone but Ellen
Degeneres & Betty White who were prior keynotes. Americans adore their pets. Speaking
of Betty White, she is one of the honorees at NATPEthe Natl Assn of
Television Programming Executives (22nd), along with Byron Allen (his new
distribution company is turning up almost weekly, when we prepare the films opening list),
Robert Greenblatt, Rita Moreno, and Henry Winkler. The best way to get big stars to show
up is to offer to bestow upon them a special honor. Works for the Grammys, Oscars, and
other less known events, including NAVC & NATPE.
France will finish up Men;s Haute Couture week, before the Womens version launches,
on the 21st. Retina 2019, continues Sunday but runs all week. CIBC breaks with I-banks
avoiding interference with earnings season, to host its Whistler Institutional Investor
Conference starting Wednesday. Also starting Wednesday, the PGA Merchandise Show, which
CNBC is likely to cover in one fashion or another. NBCUniversal, after all, is home to the
Golf Channel. Also notable, the World Stem Cell Summit (22nd), and Argus
Crude Summit (21st). Thursday, the Sundance Film Festival starts
Thursdaytalk about star power and honoring those who want to show up; Robert Redford
and his Sundance Festival manage that in spades. While were talking stars, the 2018
Oscar Nominees will be announced on ABC TV, Tuesday morning.
And heres one we didnt expect to see. The Australian Open, a two-week tennis
tournamentone of the 4 majorsis hosting a "Fortnite" day, on
Saturday, Jan 26th. Theres a championship that offers a $100K top prize,
and another $150K in cash prizes for runners up. Also, therell be a pro-am
"Duos" tournament, where the top prize is $50K, a few tennis players eliminated
earlier in the Open expected to compete for a spot. Saturday is Ladies Final Day,
Mens on Sunday. Meanwhile, across the Pacific, in Hawaii, theres a major
Dermatology Conference, even as Rheumatology is meeting in Snowmass Village CO. Why do
dermatologists always meet where theyd recommend that patients lather up with
sunblock, repeat every two hours?
At any rate, its Earnings that will either release or hold stocks hostage. It was a
lot easier, going into last week, when equity valuations were significantly lower. This
week, earnings will have to impress, or stocks will likely stall, if not give back some of
the last near months gains. I wouldnt count on stocks being able to add to
their post-Christmas gains immediately, unless earnings are a lot stronger than I expect,
and a govt partially shut down doesnt impact the outlooks. If that can happen,
then perhaps the government doesnt need the 380K furloughed and not asked to come in
and work without pay. Trump didnt clean up the swamp, perhaps he could drain some of
the fat, instead.
ECONOMIC: (Highlights, only, below. Full International Calendar here)
© Sandi Lynne 2019 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 1418, 2019 A
PIVOT IF NOT A PUT Well, the markets finally got from
Powell what it wanteda more data dependent Fed thats more receptive to
exercising patience before its next moves. Im sure Powell feels he was data
dependent all along, and doesnt really intend to take the reduction of its balance
sheet off autopilot, which it was Janet Yellen who set out. But he said the
obviousif the economy & data demonstrate something other than the strong economy
were in and foresee, the Fed can afford to be patient before the next rate hike,
given inflation remains barely at the Feds target, and, of course, can slow the
reduction of its balance sheet if liquidity suggests money is getting too tight to support
a growing economy. So, probably not a real about face or change in his stance but
certainly a pivot in his expression of the FOMCs intentions. (Jeff Gundlach
disagrees. He said Powell established his "put" last week, and thats
that.) And if that werent enough, one of the more "hawkish" Fed
Presidents, Evans, last week, said the Fed could afford to be patient before the
next rate hike, even though he forecast 3 hikes this year. The market, wearing its
rose-colored glasses, heard patience not 3 rates hikes this year. Feds Bullard, long
recognized as one of the more dovish Fed members, in an WSJ interview warned the Fed could
push the economy into recession, if it keeps raising rates. Furthermore, he said the Fed
will cut sometime in the future, and recognized the FOMC coming to his view on this. The
good thing about Bullard is hell be a voter starting in February. (Ill thank
Alfred Afstad for suggesting "pivot," for Powells switcheroo, without whom
I may have used pirouette.) One thing is for sure, Powells comments were sufficient
for the markets to stage a grand jete to the upside, even though Powell stated the
Feds balance sheet is far from where it needs to go"far
from" the exact words he used, Dec 4th, to describe where the Fed
Funds rate was in relationship to neutral. And watch Feds George, Tuesday,
because shes been a staunch hawk who in her last appearance sounded a little less
strident than she did up until then.
Mondays main stage event at the NRF (Natl Retail Federation) BIG SHOW starts
at 8:30am, with former FOMC chief Janet Yellen, re/codes Kara Swisher, &
CNBCs Steve Liesman discussing "Impact at Scale: Leading in prosperous yet
uncertain economic times." Ironically, the entire mood surrounding retail reversed,
this past week, as Macy*s, in particular, blew the quarter, as a prior Outlooks pointed
out was likely. I had never seen so few Macy*s shopping bags around the malleven
after Christmas, when its Last Act was offering up to 80% off, a division carved into
regular stores that makes the place look like an embarrassing mess. The same was true this
past weekendso few Macy*s bags I couldnt wait to walk by and see if it was
even open. The BIG SHOW is about check-out systems, software, inventory management, and
other machinations & apparatus used in retail but not about the retailers, at all. For
that, you have to check out the ICR Conference, where public & private retailers &
restaurant chains will presentthe private ones not until the 16th. Note
how many investment banks are hosting clients at ICR. In addition to the commentary from
presenters, there will be buys and sells from portfolio managers, ICR a cant miss
annual event though Id posit that retailer have had their days in the sun, and
its time to move. That may be the upshot of the holiday sales updates from Signet
Jewelers & Tiffany, both of which weigh in, on Thursday & Friday, respectively .
For the record, the Mid-America Restaurant Expo, which started Sunday, was formerly the
North American Pizza Expo, and is still heavily represented by pizza.
AFBthe 100th American Farm Bureau Convention likes slogans. This year,
"when Mother Nature is your business partner, expect a few curveballs," a
favorite. Not sure if the Director for Sustainable Development, Office of the Chief
Economist of the USDA can show up, personally, for her appearance at the American Farm
Bureau Foundation Convention, given partial government shutdown, or if shell attempt
a video conference, as FDA commissioner attempted at the JPMorgan Healthcare Conference,
in San Francisco last week, to audio that no one could hear. Likewise, I dont know
if Sonny Perdue, the US Secy of Agriculture, scheduled for Monday, will attend or be
kept away by the budget fracas impacts but he can always ask for a ride on Air Force One.
On 01/10, the Farm Bureau announced it will welcome back Pres. Trump to address the
Centennial Convention, Monday, at 11:15 a.m. cst (subject to change), for a 30 minutes
slot but hes usually late, and often rambles on, well past his allotted time, as
prior presidents have before him. Others the French Embassy, and two EU Commissioners,
several members of Congress, including the Chair of the Senate Ag Cmte, Pat Roberts
(R-KS).
Weve tried our best to keep up with which Federal Agencies are probably unable to
deliver the Economic data the market thrives on. We made appropriate notes, below, where
its probable data wont be arriving. And well note, again, the number of
FedHeads speaking this week, especially Tuesday, when even the ECB Chief Mario Draghi will
be addressing the EU parliament sometime during our early hours.
The NAIASNorth American International Auto Show is a mass analyst meeting for
automakers and their suppliers. If that wasnt true about the first 2 days of the
meeting, itself, for trade only, it would be true, anyway, about the Deutsche Bank
conference held coincident, which will be held starting Tuesday. Also that day, the IHS
Markit Annual NAIAS Briefing, and the Automotive News World Congress @ NAIAS both also
Tuesday. Other notable events include Peters & Cos Energy Conference, in Canada,
augmented by TD Securities Energy one in London, along with UBS Midstream, MLP,
& Utilities 1-1 Conference. Needhams Growth Conference.
The highlight of the week, no doubt, will be all the Financials reporting earnings, this
week, along with 2 airlines and 2 railroads. Often, Citi, JPMorgan, Bk of America, and
Wells Fargo report one week, and both Goldman Sachs & Morgan Stanley the following the
week. Not this time: Were getting themn all, including Bk of NY Mellon, BlackRock,
Charles Schwab, US Bank, and State Street, along with BBT, M&T Bank, KeyBanc, Citizens
Financial Group, PNC Financial, Regions Financial, & SunTrust Bank, large regionals.
Then to spike it up, United Airlines, UnitedHealth Group, CSX, Kinder Morgan, NetFlix,
PPG, Taiwan Semiconductor, Kansas City Southern, Schlumberger, and VC Corps. Im not
hot on retailers, right now but believe VF Corps North Face division could have
delivered a super quarter, as snow arrived earlier than usual and hasnt quit since.
While a Fed thats hiked rates 4 times in the past year is seen as positive for
banks, the group has been acting terrible, and all of CNBCs technical gurus are
predicting the worst yet to come. It doesnt make a lot of sense after a year in
which the first 9 months of the year encouraged hanging in with the stocks you were
already in, the final quarter of the yearand the last month, especially, encouraged
wholesale dumping of equities, and a switch into bonds. Thats the kind of equity
that should have favored the banks with large equity divisionsJPMorgan, Bk of
America, and Morgan Stanley, as examples. Well see if that was borne out, and
whether franchises like Goldman Sachs were able to maintain their winning trading ways.
GS stock is suggesting, absolutely, not.
Also Monday, the Australian Open starts, with Andy Murray announcing, 01/10, it is very
likely to be his last appearance as a tennis playerhis swan song, he
announced, due to hip problems that surgery hasnt resolved. For the UK, losing
Murray is a big loss, since he was their best player in years. But, of course, Brexit
without a separation deal with the EU, will hurt even worse. Parliament is supposed to
vote on Prime Minister Mays exit deal worked out with the EU Tuesday. Oddsmakers are
betting Brexit will be postponed. Are you feeling lucky? If you are, then you wont
be long stocks until the 4th week of Earnings season, or afterwards.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© 2019 Sandi Lynne Nothing contained this commentary should be construed as a
recommendation to buy or sell any securities. The opinions expressed are the
authors, alone, and should be just one factor in more complete due diligence.
January 0711, 2019 FEDHEADS
GALORE, I-BANK EVENTS & WARNING SEASON We thought
the Joint AEA/ASSA reached a new high with all the Federal Reserve Bank Presidents
speaking but this week will take the cake, especially Wednesday, where Ive added
some asterisks, and noted the speakers will be augmented, besides, by the FOMC Dec
1819th Meeting Minutes, to be released that day. Thursday is another day
of Fed-packed speakers, while Friday promises George, one of the few who didnt speak
at AEA. Meantime, a US Delegation is in Beijing for high-level trade talks that, we hope,
dont end like Trumps bipartisan talks on the border wall, which even he
admitted havent made progress. Theres also some confusion about which
government data will be released and which will be deferred because of the partial federal
government shut-down.
US Nov Consumer Credit (3pm et), out Tuesday, will upset the applecart if growth in
revolving debt didnt grow as much as the Street expects. If consumers waited to
charge up a storm until Dec, then some will worry about the bare number, without
contextespecially since Thanksgiving week and Black Friday are such big days for
consumers to spend. Others will worry that banks are trimming the sails of credit card
debt, causing shrinkage. Lets remember the surveys that claimed retail sales rose
+5.1% in Dec, so thats when the most credit (debt) was probably added.
Id like to get excited about Thursdays US Dec. Chain Store Sales but few
retailers still report those, and a few, like Tiffany, have said theyll report
Holiday Sales, but not this week. Also notable, those FOMC Minutes of the Dec. meeting,
out Wednesday because well get more insight into just when the Fed started changing
its tune about this years interest rate hikes. I suspect 2 more weeks of stiff
equity selling into years end was what flipped the switch for Powell & Co. US
Dec. CPI, out Friday, is likely to dissuade anyone who fears inflationespecially
since crude followed equities down, into year end.
CES (Consumer Electronics Show) and NAIAS (North American Intl Auto Show) are the
top Industry events of the week, both likely to be crawling with analysts and execs, both
promising 2 days of press conferences before the events, "officially," open.
Both include a day for "industryonly." We dont know why RayJays
calendar states it is hosting meetings at ICR Conference on Jan. 7th & 8th,
since the public company conference doesnt start until the 13th, and the
private company section until the 16th. Was it a place holder based on year ago
information? We have no idea but there it is, on RayJays 2019 calendar, starting the
7th. Maybe were wrong and Raymond James has set up meetings with
corporates presenting, for the week prior to the conference opening. Its just not
the way it usually occurs, and plenty of other I-banks are sponsors, all of them hosting
meetings during the ICR Conference, mostly the 14th16th,
rather than a week prior. On the corporate side, the big Kahuna of I-bank events is
JPMorgans Annual Healthcare Conference, in San Francisco. There are at least a half
dozen Healthcare events scheduled to coincide, the most coveted by Leerink Partners. JPM
can also boast of its Tech Forum, @ CES, and Citi of its TMT @ CES, while Goldman
Sachs Energy Conference is a headliner, too, especially for its Miami location, just
as another deep freeze is supposed to sweep from the West Coast to the East.
If the National Banks of Eastern European Countries are an interest, then UniCredit has
the Emerging Europe Winter Conference designed for you. In Kitzbuhel Austria, its
hosting officials from the National Banks of Hungary, Romania, Poland, Czech Republic,
Russia, and Turkey, plus the FinMins from those countries and more.
On the other side of the globe, Citi is hosting a 7-day Nationwide (China) Luxury &
NEV {sic} Dealership Channel check that starts in Shanghai on the 11th, moves
to Nanjing/Suzhou/Wuxi on the 12th, then Beijing on the 18th,
Tianjin on the 19th, Shenzhen on the 26th, and Shenyang from
02/0102, in Mandarin, only. Deep dive into this week? On the 11th Citi
will be visiting dealers of BMW, Benz (Citis terminology, now ours), Audi, GWM
(Wey), Geely (Lynk&Co), BYD, Hyundai. Id protest that the hi-level
"ministerial-level" trade talks will be much more significant for sentiment, at
a time Trump really needs a win, and China needs to boost its economy, suffering from US
Companies limiting the orders placed there. For China, the biggest risk is apparel &
shoe companies finding alternate manufacturing in Vietnam, Cambodia, South Korea, Latin
America, and elsewhere, and permanently moving some of their production away from China.
The longer the trade stalemate endures, the more companies will diversify their production
away from Chinanever to return.
Id also tune into the American Farm Bureau Federation Convention and IDEAg Trade
Show, starting Friday, because those were some of Trumps biggest supporters, his big
idea to spend $12B on grants to farmers, to keep their support, as China cut back on
orders of soybeans and other farm products. Id be surprised if Farmers could be
bought for so little, and question why no opponents are questioning the legality of the
White House farmer bail-out, whe3n other industries arent getting the same soothing.
Earnings from KB Home & Lennar will be watched carefully, though Constellation Brands
(STZ) is reporting a quarter that ends before the bulk of holiday alcohol & wine sales
kick into high gear but, still, with beer often a working mans drink and employment
at some of the highest levels in decades, we cant say theres nothing to be
learned from STZs report. Likewise, Synnex (SNX) is an Enterprise supplier of
technology and integration services, so one to watch, especially since last quarter it
reported its first disappointment in years.
Id also keep a sharp eye on England and the EU, since the Brexit deal Prime Minister
May negotiated seems less likely to squeak through Parliament. In fact, theres more
talk, of late, of the current status being extended for a period of time while
negotiations continue. Many in the EU are dead set against such a result, and I sure
dont want that to happen because Im eager to buy British stocks, selectively,
into the March 29th Brexit date. For instance, Tata Motors is almost 1/3 of its
52 week high, while oil is so soft, the foreign E&P stocks are suffering more than,
say, Chevron, while Royal Dutch Shell "B" shares are design, specifically, for
US investors, who wont have UK taxes taken out of B share dividends, never to be
reclaimed again, without great expense.
How this week turns out could well depend on Earnings Warningshow many as well as
how big the miss. None may be as damaging as Apples but enough of them would
certainly do more widespread damage. Stay safe out thereIm not at all certain
that the selling is overand cant readily say the opposite with any confidence,
either. The charting program Ive long used suddenly wont accept any dates past
December 31, 2018. 2019 data comes in but isnt being integrated into my charts. That
means I need to start fresh, with a new program, this week, and pray it wont be as
painful as some new programs were to use. I still have nightmares of my dad upstairs, on
hold for tech support, back when "small" business computers took up an entire
room that required their own punch cards and air conditioners. Now thats a
nightmare!
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2020 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 complete due diligence.
EARLIER,
2018 EXCERPTS HERE
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