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 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 complete due diligence.
December 1731, 2018 WILL FOMC ESTABLISH the
POWELL PUT? For years, traders talked of the Greenspan Put, then
the Bernanke Put, and the Yellen Put. There are so many expecting the FOMC to back off its
former dot.plot projections to establish the Powell Put, even though theyre not yet
labeling it that, yet. (You can be sure they will if Powell & his Merry MPC disciples
back off next years 34 rate hikes. These optimists are even predicting an end
of year rally that could recover as many as 1k DJIA points by the end of the year.
Then, there are the economic purists, saying theres nothing wrong with the economy
except what the markets are endanger of talking into the economy. They believe the FOMC
will stick to its previously laid out rate trajectory, let the stock markets fall where
they may. I dont necessarily believe Powell will ignore the pain the equity markets
are inflicting on investors and retirement accounts but I dont see things playing
out the way either the bulls or bears expect. Rather, I think Powell will re-emphasize how
data dependent the rate setters are, willing to raise if the economy demonstrates
continued unsustainable strength or latent inflation, and ready to hold off if stock
market weakness, a slowing global economy, or any combination of factors cause the US
economy to slow. Of course, if such a scenario prevails, then both bulls & bears will
declare victory, markets will rally for a few hours, then fall back again as shell-shocked
investors use strength to unwind.
The foreign banks whose Living Wills are due on 12/31 include Banco Bilboa, Vizcaya
Argentaria S.A., Banco Santander S.A., Bk of China Ltd, Bk of Montreal (aka BMO), BNP
Paribas, BPCE, Cooperative Eabobank U.A., Credit Agricole S.A., HSBC Hldgs Plc, Industrial
& Commercial Bk of China ltd, Mitsubishi UFJ, Financial Grp, Mizuho Financial Grp,
Royal Bank of Canada (aka RBC, ticker RY), Societe Generale (aka SocGen), Standard
Chartered Plc, Sumitomo Mitsui Financial Grp Inc, Bk of Nova Scotia (BNS), The Norinchukin
Bank, Toronto Dominion Bk (TD Bank). Also 2 domestic lenders must submit their plans, CIT
& Citizens Financial Group.
Other than that, the next two weeks will be all about bond rates & action in the
equity markets. I dont necessarily expect the markets to string together 2 winning
days in a row before 12/27. Then again, Ive been wrong about the FOMC some 97% of
the time--dead wrong. Therefore, the bulls should not yet give up on their optimistic
expectations. Im quite willing to be proven wrong again, even though Im not
expecting this FOMC to establish the Powell Put--not before his first year is out in
February, at any rate.
Merry Christmas and a Happy, Healthy New Year
Sandi
ECONOMIC: (Highlights, only, below. Full International Economic Calendar Here) SEE FULL INTERNATIONAL ECONOMIC
CALENDAR THROUGH January 4th 2019
© Sandi Lynne 2018 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 0307 DAY of MOURNING WILL BREAK
THE MOMENTUM, No Matter the direction Sunday, I imagined
retailers around the country popping champagne. A day off during the week for a national
day of mourning is like an extra weekend day during the height of the holiday shopping
season. Macy*s, which just sent out oversized postcards and newspaper circulars for
Friends & Family 30% offeven 15% off cosmeticscaught a tremendously lucky
break, a 10-day special discount at a time no one else is has a competitive offering, and
the country taking a holiday mid-week, just as the coupon is making the rounds, and fresh
in everyones mind. And for those, like me, who dont recall the NYSE grinding
to a halt for a presidents funeral, a wise friend, Barbara Rockefeller, who runs
Rockefeller Treasury Services sent me a clip from CNN, that stated, "The NYSE has
traditionally closed for all or part of its session for the funeral of a US president,
including in 2004 following the death of Ronald Reagan and in 1994, when it closed for the
full day for Richard Nixon's funeral." How Nixon was honored after being run out of
office in disgrace is a head scratcher if there ever was one.
Unfortunately for the I-banks who were responsible for making this one of the heaviest
weeks of investment conferences, the turn-out is suddenly in question. Any portfolio
manager (PM) attending a conference can be more relaxed than usual, Wednesday, with stocks
not trading but the logistics for some beg the question: Is it worth schlepping in, from
Connecticut, lets say, just for the conference, when I can hear the companies make
the same comments streamed via whatever service the I-bank is using? On the other hand,
those attending out of town conferences really catch a bonusthe kind of bonus any PM
feels when allowed to relax because the markets are closed.
And, you might note, the Economic Calendar is filled with central bankers talking up a
storm on both sides of the Atlanticsome for the last time until next year. Most
interesting of all may well be BoEs Carney testifying (Tues.) at Britains
Parliament on the consequences of not approving the Brexit deal Prime Minister May
negotiated. I dont buy the most dire of consequences being tossed around, in an
effort to convince the members to vote for Mays deal but, then, its all part
of the drama that led to one of the biggest one-day sell-offs in history, when the UK
voted for Brexit. Even ECB"s Draghi is speaking this week (Tues.) in Frankfurt with
fellow MPCs Noury, Lautenschlager, & head of the EBA (European Banking
Authority), Enria.
On this side of the Atlantic, Im not really certain about which data will be pushed
out to Thursday but one would have to assume that anything coming from the Federal
Govt isnt going to arrive on Wednesday. But its really only the EIA
Petroleum Report, Wednesday, that should be pushed out until Thursday. Ditto the
Feds Beige Book which had been scheduled for 2pm et. But, then, FOMC Chairman Powell
was supposed to testifying before the Joint Economic Committee of Congress, @ 10:15am,
that will have to be rescheduledday and time to be determined, even as the year is
winding downHouse & Senate members getting out of town, even as another
Continuing Resolution is needed to fund the government, past Friday. Powell might have
been considering, possibly, tamping down some of the enthusiasm he stirred, last week, by
claiming that rates are, now, just below neutral. It isnt every week that the DJIA
rises 1,200 points or more. But clearly, his testimony will be moved. It wont happen
on Wednesday while Pres. Bushs casket lies in state.
So, what we know, instead, is that Canadas Monetary Policy Committee will meet on
rates. OPEC & Non-OPEC Oil producers will have met on new quotas; Federal Government
funding runs out on Friday, when Medicare recipients must, by midnight, name their new
supplemental insurer of HMO, and a Prescription Drug Plan (PDP). And, as if all that
wasnt enough, Novembers Unemployment Report is due, Friday, just as the
largest lay-off announcement in years came from GM, 14,600 jobs cut. Is that a turning
point? Well know only with the fullness of time. But it is the kind of announcement
that many wont forget.
Earnings will come from consumer discretionary companies more than any others. Yes,
Broadcom, Hewlett-Packard, and Marvell Technologies are reporting but, for the most part,
its all consumer-related names, only Hovnavian & Toll Brothers with the power
impact their sector.
Which brings us to Events. UBS 46th Global Media & Communications
(NY, Mom.), Bk of America Merrill Lynch Leveraged Finance (NY Mon.), Technology Investors
from Raymond James, Tech Services from Wells Fargo both start Monday. But, Wells
event in Deer Valley, UT is just the kind of place you want to be if youre a skier,
and the markets are closed an extra day. Also interesting, Monday, Macquaries Asia
Internet, Media & Education ConferenceTomorrows World, is taking place in
NY. That makes it a whole lot more accessible. Leerinks Devices & DNA has some
competition, in the form of ASH, still ongoing, Amgen broadcasting an investor meeting
from the event, Monday night. In fact, if you want to grasp a good sense of how much is
being squeezed into early December, before vacations start, you need do little more than
peruse the Event Calendar for Monday & Tuesday. The highlight of Tuesday, Goldman
Sachs U.S. Financial Services, and Barclays Eat, Sleep, Playits
not all Discretionary Conference, in NY. In fact, Eat, Sleep, Play sounds like a movie
starring Julia Roberts or Meryl Streep. Then, again, one can ask what Credit Suisses
European Business Services Conference is doing taking place in San Francisco. (Is it some
sort of matchmaker attempt to stir up M&A?) Meanwhile Nasdaqs 39th
Investor Program is in London, starting Tuesday, as are Bernsteins Strategic
Decisions, Credit Suisses Specialty Chemicals, & Citis Consumer
Conference.
All in, the calendar is extremely busy, even if the markets wont generate the kind
of frenzy this week, it managed last week. Sure, last weeks huge rally stole thunder
from this weeks post-Xi/Trump meeting 90 day tariff truce. But is there anyone who
didnt believe that a postponement of the January hike in tariffs from 10% to 25% was
coming, no matter what? Any momentum in one direction, or another, will be broken by the
Wednesday holiday. But the 90-day truce should be enough for some of the tech hardware
companies to recover, a bit. And an extra weekend-like day for holiday shopping,
Wednesday, should offset any bad news that might arrive with this weeks earnings
reporters. On the bright side, however, rates have been slithering down, since the
summers high, which might be just what the homebuilders ordered. The stage has been
set for upside bias into the end of the year. The serious rally I expected after the
Trump/Xi meeting happened last week, instead. There may be some payback this week, before
the rally finds more legs into year end.
ECONOMIC: (Highlights below, only. Full International Economic Calendar here)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should just one factor in more complete due diligence.
November 2630, 2018 MARKETS TILT
TOWARDS THE BEARS It is very rare for there to be a full week in
November, after Thanksgiving. Thats helping many sellerswhether car dealers or
retailerskeep an optimistic outlook on top of the fact that unemployment is so low,
and wages are rising, however reluctantly. But theres also a problem ahead. Early
this year, one company after another announced bonuses for workers, citing the Tax Cut
& Jobs Act passed in December 2017. For many workers not normally eligible for
bonuses, that extra cash made it a lot more enjoyable to buy giftsand
self-giftwith the extra money. The vast majority of those bonuses were one-time
events. Come January, when credit card bills arrive, most will find no extra cash to pay
for their largesse (or excess). That is likely to create pressure, early in 2019, that
even timely tax refunds wont necessarily alleviate. Who will cry the blues most? In
all likelihood, low end retailers and those in malls. (Heres an old theory that
doesnt work for people who, now, shop mostly online: If you stay away from the
mall you wont be tempted by discounted merchandise.) And who does the modest
wage gains benefit the most? Dollar stores, even more than Walmart, Target or Kohls.
And not to play the party pooper, but this past Saturday, the mall was the quietest
Saturday after Thanksgiving Ive ever observed, and Ive observed more than 40
consecutive post-Thanksgiving Saturdays, 28 of them at Town Center Mall in Boca Raton FL.
Besides the fact that almost every retailer posted signs promising 40% or 50% of
"entire store," and many offered an additional 50% off all sale merchandise,
most of the stores boasted "Black Friday held over, today." Crate & Barrel
offered 20% off all holiday-related merchandise, and surprised with some unique items,
like tents fashioned and screen printed to look like a B-B-Q stand, or camper, its
the discount that surprised the most. Crate & Barrel was somewhat of a late comer to
the mall, probably around only 18 years of the 28 Ive been here. And it started in a
smaller leasehold, and moved to a much bigger one, which it occupies today. I have seen
Crate & Barrel discount "seasonal" merchandise by 20% only after Christmas,
and not move to 50% off remaining seasonal merchandise until February. But Ive never
before seen it discount seasonal offerings prior to Christmas. Furthermore, if you can get
your hands on a copy of its holiday catalog, I think youll be shocked at how LITTLE
its asking for some of the items picturedone of the most expensive home stores
suddenly offering fancy items at value prices.
Here, the only stores that sold overcoats, in the past 8 years were specialty stores, like
Abercrombie & Fitch, which offered the same lined "puffer" jackets with fake
fur collars year in and year out. This year, suddenly, Macys & Nordstrom offered
over coatsJWN the biggest surprise, since it started carrying only lined and unlined
raincoats, as of about 6 years ago. This year, a couple of racks of wool coats took me by
surprise so I asked about their return. "We didnt order any, initially. But
once the3 weather finally coole3d here, and the country experience the heaviest and
earliest snow in years, we gathered a few from Orlando, a few from Atlantaall around
the country we had stores send us their back-ups from their stock rooms, so wed have
a r3easonable collection to sell. M brought in some from other stores, too, but
didnt bother to make sure it had a well-rounded collection in a range of sizes. At
ANF, the mens puffer coats were getting more browsing and trying than any other
areas in the store, the same coats, once again, revived for another winter. In fact,
despite record highs on Saturday, topping out above 87 degrees, and high humidity, college
kids home from the holidays were busy trying on ANFs coats. And, because it nags at
me, I must mention there are no "puffer" coatstheyve lined quilted
coats. Its analysts who, years ago, invented the "puffer" moniker which
made its way to store managers and, ultimately, to ads & rack toppers in stores.
Weve all heard a lot about malls and stores doing more to make sure their locations
attract millennials, who are accused of shopping almost exclusively onlinemostly on
their phones. Does that explain the French/Italian cubby hole or restaurant that was
replaced, in recent months, by a hot dog stand? Is it the reason Santas photo-taking
workshop, this year, ditched green & red décor in favor of green & lime décor,
with not a bit of red showing except the uniform on Santa? And I cant round out my
comments on the mall without pointing out the collapse in traffic at Michael Kors dept at
Macy*s, as well as at its own store? I can understand shoppers avoiding the KORS store,
since it didnt have a single sale sign in its windows. But at M, there was a decent
selection of KORS bags at 30% off, and not a single shopper in the department. In years
past, there were lines of people waiting for help (the possibility of a fresh bag in its
original packaging, in the store room), or to pay. Many of the KORS shoppers at M were
Asian, and at the KORS store were men hanging over the glass-enclosed watch display. This
year, not a soul was seen at either place. In contrast, Not only was Tapestrys Coach
division, at M, offering 30% off some small accessories but I found an turquoise wallet
with attached key ring, reduced from $178 to $23.93, which I snapped up on sight. No, I
couldnt use any additional M percentage or dollars off coupons but I was OK with
that. I might even keep that wallet for myself, given the color is my 4th favorite, and
perfect for someone who can no longer wear a shoulder or cross body bag. No Ill,
also, mention that the wallet was the biggest bargain I saw ALL day, and the only Coach
item that steeply reducedperhaps companions flew out the store on Black Friday. But
the amount of Coach items offered at a discount were the fewest Ive seen in the past
5 years.
And so its said, there are the maximum number of days possible between Thanksgiving
& Christmas, plus early frigid temps & heavy snows helped left more people feeling
like winter is here, and they dont need to look for swimsuits to get through
another warm winter. Still, 2017 was a 53-week year, and this year is 52 weeks. Plus,
there was no opportunity to sell overcoats and boots at full price, because most retailers
went to 40% or 50% off for Thanksgiving, earlier than they should have, given the weather.
Retailers are their own worst enemies. The only chain not offering gigantic discounts is
Nordstrom but that just makes it hard for it to sell. Additionally, with Macy*s,
Bloomingdales, Saks 5th Ave, & Neiman Marcus offering steep
discountsjust as JWNs vendors were doing in their own mall stores, JWN was
forced to price match discounts on tons of items. As a former retailer, I can state
unequivocally, its the worst business to be in right nowno matter how strong
ones digital sales may be.
So lets go back to the Economic Calendar a minute, to note the Sept. & Oct.
housing data that is scheduled to be released. Its really the number of Central Bank
speakers that knocked my socks off. In Europe, its members of the ECB, including
Novotny, & Couure plus Draghi, by Monday Morning, when BoE Gov Carney is holding a
discussion with former FOMC chief Alan Greenspan, which will be moderated by The Economist
editor, Wooldridge. After hes done there, hes hosting an online Q&A on the
Future of Money. But the event that takes the cake is The Clearing House Annual
Conference, starting Monday, w/FDICs McWilliams, Fed Presidents Bostic. Evans &
George, as well as Fed Vice Chair Clarida, and many bank CEOs (NY 26th thru 28th).
Also Monday, ECBs Mario Draghi testifies at the European Parliament Economy &
Monetary Affairs Committee (Brussels). Tuesday, Clarida keynotes day #2 the Clearing
House, while Bostic, Evans, & George are panelists on "Financial Innovation, the
Economy, Regulation & the Future of Payments,".w/Q&A @ 2:30pm in NY). Of
course, Tuesday, the Street may be more interested in the S&P Case Shiller Sept
20-City Home Price Index & FHFAs Sept House Price Index, or even the Conference
Boards Nov Consumer Confidence though, as Ive long argued, consumers often
consume the most when theyre feeling their worst. Its what we saw after 9/11,
and many other times. Then, again, the $40B in 5-year Notes the Treasury will offer,
Tuesday, might grab the spotlight, depending on how well it goes.
Wednesday, another guesstimate of Q3 GDP will be released, along with the associated
information contained within, including Personal Consumption & Business Investment.
Well also get the Oct International Trade Deficit, a 2nd look at Q3 Corporate
Profits, and Oct New Home Sales, along with the EIA weekly Petroleum/Gasoline/Distillate
Report, along with FOMC Chairman Jerome Powell speaking at the Economic Club of NY. I
dont believe the ECNY streams speakers, live, but even if it did, Powell is likely
to be a lot better preparedor at least less glib--than he was on October 3rd,
when he spoke of rates being "far from neutral," which is said to have launched
the trillions of dollars of losses the major indices suffered in that month. Also speaking
Wed., FDIC Chair Jelena McWilliams, whose keynote of the Clearing Houses day, a day
in which well also watch how the Treasurys $32B 7-year Note Auction goes,
along with the FOMC Minutes of the Nov 0708 meeting, at which the board took a
nothing done.
Even more unusual, is the 1st ever release of the Fed Reserve Boards
assessment of Financial Stability Conditions in the US (4:30pm). Almost every other major
economys central bank has for years published a Financial Stability Reportthe
BoEs report scheduled for release earlier Wednesday--but, until now, the Federal
Reserve Board of Governors has been the outlier for not publishing
onethough it hasnt operated with all seats filled in years, until recently.
Its almost too bad that such reports werent published in the Greenspan years.
Imagine how inscrutable they would have been. The Board of Governors are, now, correcting
that oversight. Starting on Nov. 28th, at 4:30pm, the Federal Reserve Bank
Board of Governors will publish their first of what will become a semiannual report on the
Boards assessment of financial stability conditions.
Other unusual items on the Economic Calendar include the Norges Bank (Norway) discussing
its Wealth Fund (Oslo, before we wake on Thursday). For only the 2nd time,
CEBRA holds a conferencethe Central Bank Research Association, an Int;l
finance & Macroeconomics programme [sic] that will examine "Risk, volatility,
& Central Bank Policies (Madrid Spain). In Frankfurt, the ECB, Federal Reserve Board,
and Fed Reserve Bk of NY host a Global Research Forum also on Intl Macroeconomics
& Finance, but in Frankfurt. CFTC Chairman Giancarlo is keynoting a Financial
Stability: Markets & Spillover Conference in D.C. thats co-sponsored by the Fed
Reserve Bk of Cleveland. even as Fed Pres. Mester opens the conference with
"Collaboration for Inclusive Economic Development: A forum for Philanthropies,
policymakers & practitioners," w/Q&A, at the Boston Fed Bank., where Fed Pres
Evans is a panelist. NAR Oct Pending Home Sales are expected the same day, Thursday.
Overnight, its data out of China that will be a focusthe Manufacturing,
non-manufacturing & Composite PMIs.
Now recall, the G20 Sherpas & Partners start meeting in Buenos Aires, on Monday, the
26th, but its not until Friday that the Leaders Summit starts, with a
speech by Argentine Pres. Marci, that will be streamed on YouTube, per the link provided
on the Economic Calendar, (which you should really peruse yourself, via the link
provided). Ironically, NY Fed Bank Pres Williams wont be attending G20 but, instead,
on Friday, will be a panelist at the 80th Plenary Meeting of the Group of
Thirty (G30), at 9am, in NY. At some point either Friday or Saturday, US Pres. Trump is
supposed to meet with Chinas leader, Xi Jinping, to at least open a dialogue on
trade & tariffs. Which brings me to what I think is the biggest error Trump is making.
The Earnings Calendar is filled with smaller retailers than those that have already
reported their earnings. What they do have, that prior reports didnt, is information
on how Black Friday and the rest of the holiday shopping went. I though Saturday was so
slow that, even if Friday was a blow-out, a good portion of Black Fridays gains were
offset by an unusually slow Saturday after Thanksgiving. In addition to the retailers
reporting, notable reports are expected from a couple of big Canadian banks, and a few
tech stocks of note, like Salesforce.com & Nutanix on Tuesday, Box & Weibo on
Wednesday, Ambarella, Hewlett-Packard (consumer), Palo Alto Networks, Tech Data, &
VMware Thursday.
And then there are Industry & I-bank events, which constitute a last rush before the
Christmas holidays bringing everything to a halt. Headline events include Credit
Suisses 22ndf Annual TMT Conference, in Scottsdale, worth going to for the stay at
the Phoenician hotel, alone, even if it didnt promise every tech company one can
think of. Also Monday, the Press & Industry days at Los Angeles Autoshow,
Citis Basic Materials, Goldman Sachs European Industrials, and the
aforementioned Clearing House & BPI (Bank Policy Institute) Conference. Also Monday,
Amazons AWS annual developer, integrator, and global Partner event, in Las Vegas.
Tuesday, Goldman hosts Global metals & Mining, while Scotiabank hosts the Canadian
version, in Toronto. Credit Suisse hosts Industrials in Palm Beach, Jefferies Energy in
Houston, while both Evercore ISI & Piper Jaffray host HealthCONx & Healthcare
conferences, respectively. NADA & J.C. Power host a one-day conference at L.A.s
Automobility, while ICSCthe Shopping Center Councilhosts Centerbuild, even as
JPMorgan will present the 2019 Fixed Income Markets 2019 Outlook, and Agricultural
Retailers Association hosts its annual conference.
Wednesday, beyond Powells speech at the Economic Club in NY. Deutsche Bank hosts
Gaming, Lodging, Leisure & Restaurants, a 1x1 in Miami Beach. Cowen, however, could be
hosting the event of the yeara Cannabis Summit in Boston. Unless Ive forgotten
another one, I believe Cowens is the first serious I-bank marijuana event in the US.
Paris France is where SocGen will host The Premium Review, one of the best known, annual,
European-hosted Conferences. Friday, SunTrust will also host Lodging, Gaming & Leisure
Summit, with presentations instead of the 1x1 Deutsche Bank chose. ASH opens
Saturdaythe American Society of Hematology, one of the biggest medical society
meetings of the year. Analysts will be talking about it all week.
Thursday, the FOMC Minutes, I fear, could sound more hawkish than markets want. Because
October so often produces negative returns that are, then, reversed in November, its
possible the FOMC came out of their meeting believing stocks would rebound before November
was over. Instead, stocks kept going down, with no end in sight. Its quite possible
that the FOMC would write different minutes, today but they dont go back and rewrite
what they signed off on 6 weeks ago, so expect to read very hawkish minutes. And,
unfortunately, a combination of Trump trying to pressure the FOMC, which they could feel
compelled to resist loudly, with actions & words, along with the long-held
determination to raise rates in Dec., to boost rates to neutral, so they have something
worth cutting, when the next recession arises, puts the FOMC in a precarious position.
Raising rates in Dec. on the 19th, while toning down their minutes of that
meeting. In the alternative, Powell could change his tune as soon as December 5th,
when he testifies before the Joint Economic Committee of Congress.
But before that, were likely to suffer more boasts from Pres. Trump. While he likes
to sling a lot of B.S., tout his prowess as a negotiator, and lay claims to successes that
never occurred, he has misjudged Xi. Even if current tariffs were seriously hurting
Chinas Economy, Xi must save face against all costs. He will not just roll over, I
dont personally think, even in the presence of Trumps threat to boost the
current 10% tariff on $200B in goods, to 25%, as of January 1st, 2019. If Trump
wants the Federal Reserve to back off rate hikeseven lower ratesjust wait and
see what inflation will look like if tariffs go from 10% to 25%, which manufacturers and
retailers will be in no position to absorb, even if they wanted to. How does the Federal
Reserve fight inflation? Just like other central banks doby raising rates.
So expect Trump to announce "great" talks with Xi, even as the Chinese deny any
progress has been madeand reiterate their position that China cant be bullied
into changing its policies because some outside force wants it to. Given my strong feeling
that China & the US will be no closer to resolving the trade differences, after the
two leaders meet in Argentina, it should come as no surprise that I think the bear market
in stocks since October 3rd, has only just begun. At the least, the longer
Trump is President, the less people and markets believe his blusterin the absence of
confirmation from his counterparts. Instead of a Santa Claus rally, it could get very ugly
in the US markets, just as Chinas markets have already assumed. Technically, stocks
have already entered a bear market. If Trump cant find a way to back off his demands
of China, the future will be filled with coal for US markets, the rally that often occurs
between Christmas & the end of the year, into the first 5 days of the New Year will be
MIA. Markets already tilt towards the bears, wholl probably be licking their chops
on any pop in stocks, no matter how slight. And dont forget its months
end, besides, putting more pressure on Wednesday.
ECONOMIC: (Highlights, only below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1519, 2018 BEARS ARE NOT READY TO GIVE UP Janet Yellen provides the general session at the Mortgage
Bankers Assn Annual. Shell be interviewed by Fortune Magazines Geoff
Calvin, which clearly opens the door for him to ask what she thinks of Trumps sharp
criticism of the Fed Reserve--perhaps, even, ask about Powell, the latter question she, no
doubt, either wont answer, or will, by complimenting his actions and comments to
date. Calvin might, also, ask the Queen of slow rate rises (waited a year between rate
hikes when her Fed first started tightening), whether Powell is moving too fast. For the
curious, shes now affiliated with the Brookings Institution, where Ben Bernanke is,
as well..
The Investment Community has penciled in September Retail Sales +0.6% after only +0.1% in
August. Ive got a mixed view on that data, coming Monday. On the one hand, Hurricane
Florence made landfall on 09/13, and took out the majority of nboth North & South
Carolina for the rest of the month but, also, caused problems in states south of South
Carolina, on its way in. Further- more, the Jewish holidays fell completely in September,
this year, which hurt mall traffic Sept. 08 through 11, and again, the 18th
& 19th, though supermarkets might have picked up some of the spending slack
seen in apparel and/or footwear. On the other hand, my view is mixed because Apple
introduced and started selling new iPhones, towards the end of Sept. Its mall store was
busier, this release, than its been for the last 2 years of releases. Id say
traffic and the number of shopping bags were 4x the number seen after the 2017 releases
(when iPhone X was released after Sept closed), and 2x the traffic seen in 2016. Shopping
bag count was significantly higher, this year, compared to 2017. Several families of 4 and
5 were seen walking out of the Apple store, each family member with their own bag. Given
how many more people are comfortable buying online, now, the traffic at the mall store
came as a surprise. It was equally curious to see that AT&T was offering $200 off new
Apple iPhones to military, since that seemed a ploy to draw shoppers away from Apple
stores & Apple.com. The offer had some positive impact, since AT&Ts mall
store, just feet form Apples, was busier this past weekend than it was at any time
after the 2016 n&17 release weeks but, then, even 2 people going into a T store
would have been significantly more traffic than last years, and 5 people a mob
compared to 2016. All in, though, it sounds to me like +0.6% might be a stretch, even if
Florence didnt, initially, cause the same "CNN effect" as other
devastating weather events have in the past.
To some, the biggest event of the week is Canadas legalization of marijuana,
starting Wednesday, though release of the FOMC September meeting minutes are the be all
and end all of the week for others. Powells indication, last week, that rates are
far from neutral suggests he knows where neutral is. Perhaps the minutes will provide
additional information, or the Fed speakers scheduled to mingle this weekjust
dont count on it. Doves like Bullard arent going to flip in a week, and
Fedheads have been very active speakers since the September meeting ended. Note, also, the
FIA 34th Annual Futures & Options Meeting, in Chicago, starting the same
day, when well also learn of building activity in Sept, Starts & Permits, as
well as the EIA weekly Petroleum, Gasoline & Distillates Report. It was difficult to
ignore the big dip in pump prices, this week, high-test 20c cheaper than each gallon was 9
days ago.
Monday, Open Enrollment for Medicare starts for the 2019 Calendar year. That will run
through to December 7th, with health insurers and provider offering periodic
updates on enrollment and, particularly, retention. Its much cheaper to keep a
enrollee than it is to attract new ones. Thursday, Fed Reserve Board Vice Chairman,
Randall Quarles speaks at the Economic Club of NY. Not being a member, I couldnt dig
up more information, like his topic, say, but hes one to watch. Also, Friday,
Feds Kaplan speaks at the Manhattan Institute, on "10 Years After the Crisis:
The State of Monetary & Financial Policy." His lunch time talk will be preceded
by comments from Mickey Levy, Peter Ireland, & Anthanasios Orphanides, a former Greek
FinMin, during the worst of its debt crisis and disagreements with the European Union
leadership. Also Friday, Feds Bostic speaking but the "discussion"
hes scheduled for Saturday could be the most revealing one. He will discuss the
"implications of the Feds Interest rate decision, the Atlanta Feds data
gathering methods, and which data is used by the Atlanta Fed." Hell stick
around for an open Q&A session, his topic the most promising of the weeks, given
the "neutral interest rate" could indicate just "how far away" the
neutral rate currently rests.
Friday, Bank of England Governor Mark Carney speaks at the Economic Club of NY, lunch
time. Where the BoE is, and where its going is an open question because the UK
hasnt settled on the terms of its separation from the EUBrexit. Hes the
man who has no idea what the BoE will need to do with rates in the near-term, and not for
at least the next year, since whatever deal is finally struckif one is, at
allwill determine how the country reacts and performs. For now, everything is merely
conjecture. Also Friday, Sept. Existing Home Sales. Even though there are only a few days
before Labor Day, after which most of the country commences a new school year, August and
September closings are seen as impacted by the school yearparents want their kids
living where theyll be going to school, before school starts. Another weak number
might be unsettling for the equity & bond markets, especially since at least some of
us assumed thered be a last minute rush to sign for a new mortgage, before the Fed
hiked rates on the 26th, sending mortgage rates still higher than they already
were, compared to 2017.
That brings us to the Earnings Calendar, which is far more voluminous than last
weeks. If there ever were weeks that need selected tickers to be highlighted, this
and the coming 3 weeks are it! The rest of the major financials are reporting, including
Bk of America, BlackRock, Goldman Sachs, Morgan Stanley, Northern Trust, Alliance Data
Systems, US Bank, American Express, E-Trade Financial, Bk of NY Mellon, BB&T,
Blackstone, KeyBanc, Travelers Insurance, Charles Schwab, State Street, SunTrust, &
Synchony are all on tapeven PayPal. But, there are also many non-financial reports
scheduled, including Health, W. W. Grainger, Kinder Morgan, SL Green, Steel Dynamics &
Nucor, Philip Morris Intl, PPG (already warned), Crown Castle International, SAP,
Snap-on, United Rentals, Winnebago, Canadian Pacific Railway, Danaher, Intuitive Surgical,
Taiwan Semiconductor, Werner Enterprises, ManPower, Proctor & Gamble, and
Schlumberger, to name the ones that should attract the biggest crowds. Snap-on,
particularly, a name that provides insight into the neighborhood gas stations repair
bays. People put off repairs as long as they can, when funds are tight. Today, not only
are new auto sales and leases coming off 4 incredibly strong years, cutting into the
neighborhood grease monkeys business but with unemployment so low, those nursing
older cars should have no hesitation bringing in their jalopy for service.
That leaves the Event Calendar, that offers few I-bank conferences, in deference to the
Earnings Calendar, which is tough competition. Notable events include the High Point
Furniture Market. Few other "to the trade" events get as much general media
coverage as the twice yearly High Point. Only the fashion industrys runway shows get
more general media coverage, in addition to the fashion-specific coverage it gets. Also
especially large and well covered will be NAB--the Natl Assn of Broadcasters,
which has a slew of sub-conferences scheduled to coincide. That includes AES (Audio
Engineering), Content & Communications (aka CCW), SatCon, and more. But Digital
Hollywood (Tues.), which one might consider a perfect fit with NAB, is instead in Los
Angeles (NAB in NY). Many digital Hollywood/Film events associated with storage, rather
than broadcasting, for whatever reason.
Oddly, the Powersports Dealer Expo meets in Las Vegas, the same week the U.S. Powerboat
Showa consumer showmeets in Annapolis. Powerboats, of course, are associated
with warm weather, yet, SnowMonile USA also was held over this weekend. Mortgage Bankers
are meeting starting Sunday, Janet Yellen, as stated above, the General Session speaker.
Over the last 2 weeks, a couple of banks announced cut backs in their mortgage
departments. Higher rates are, already, impacting home sales.
Even as Medicare open enrollment kicks off, Monday, the American Association of Health
Insurance Plans hosts its National Conference on Medicare, Medicaid & Duals (those
eligible for both Medicare & Medicaid.). As it is most weeks, theres no shortage
of medical-related events scheduled this week, Earnings Season or not. The American
Society of Human Genetics starts Monday, ASBMR hosts its 12th Intl
Conference on Osteoporosis, Arthritis & Musculoskeletal Disorders also starts Monday,
along with CNS for Childrens Neurology, Leerinks HCIT & Distribution
(Tues.), the European Society for Gene & Cell Therapy, Partnerships in Drug Delivery,
HDA Pharmaceutical Distributors Traceability Summit (Wed.), Orphan Drugs & Rare
Diseases, World Congress of Itch, Fall Clinical Dermatology (Thurs.), Pelvic Pain,
European Assn of Cardio Thoracic Surgery, Kidney & Nephrology Therapeutics
Summit (Fri.), EU Medical Oncology, EU Intensive Care Medicine (Sat.), and more, the
biggest of those BIO Investor Forum, starting Wednesday.
Retailers are starting their seasonal hiring, via single day Job Fairs. Dollar Trees
(and Family Dollar) starts on the 17th, Macy*s is on the 18th. Even
more significant for the retail index, is Walmarts meeting with the Investment
Community, on Tuesday, the 16th. Theres usually a special entertainer
featured at the event, most often a musician whos about to introduce an album he or
she will sell through WMT, only. Because of its upcoming meeting, I went into both Walmart
& Target, this weekend, which are night and day. WMT reminded me of a 3rd
world country, boxes of Halloween candy piled high, empty cartons on push carts, in the
aisles, leaving barely enough room for a single shopping cart to maneuver the aisle.
Heaven forbid 2 carts try to go down an aisle, either in the same or opposite directions,
it usually cant be done, at least not with disturbing a waist high display for both
to get through, no matter how far over each cart tries to get. All the merchandise &
boxes piled high make WMT seem dark. Target is bright and open, without any trollies of
empty cartons blocking the aisles. At WMT, three of the items I might have bought there
were not available, empty spaces where there products should have been. At TGT, even when
it seems they stock only a single package of any given product, somehow TGT always has
that product in stock, no matter what day of the week or time of day I go. I go to TGT
frequently because it often offers the best price on the soda I drink. Plus, that extra 5%
off with the TGT Red card adds up over the course of a year, or years. In addition,
TGTs prices are usually competitive with WMTs but, when throwing in the extra
5% off, TGT more often than not comes in ahead of WMT. I take a calcium supplement
thats $14.98 at CVS, 2c less at Walgreen, but $9.98 at TGT before the 5% is
deducted. Its exactly 2c less at WMT but WMT never has it in stock.
Much of TGTs new apparel looks stylish and on point while, at WMT, lets not go
there. I had dinner at friends, Saturday night, and they raved about TGTs
clothing, their four girls, 5 years old to 13, three of them on a swim team at a nearby
private school. Every time I hear an analyst rave about the physical improvements at WMT
stores I want to know where their store is. There are 3 within 4 miles of my house &
office, and all 3 are horrible to have to walk into. About the only thing WMT has going
for it is the small size of liquid Tide at $5.24, while CVS is offering it for $8.99, and
TGT doesnt sell that sizeits too small for them. At WMT, I have been
filling one prescription every 3 months there, to force myself to check up on it. Last
year, my Rx cost $!0. Earlier this year it went to $30. Today it was $39.24. Bye-bye
Walmart.
Look for Halloween candy prices to be slashed, starting with next weekends
circulars. WMT, in particular, has so much candy it will have to slash its prices to start
moving it. And, its the one holiday when the drug store chains are competitive.
Yesterday, I bought a bag of Halloween treat size Kit Kats at CVS for $1.99. Today, the
same bag was $2.99 at WMT. So far, it looks like stocks have only tricks for
investors. I dont expect to see the kind of reversal back up we saw after stocks
were dumped on news that the UK had voted for Brexit. It is when everything sounds so good
that the next recessions triggers start to build up. I do believe therell be
one more upside run before the year ends, or early into next year but the bull market so
many have enjoyed since March 2009 is now gone. Start polishing your short skills.
Theyll probably come in handy by the 2nd quarter of 2019.
ECONOMIC: (Hghlights, only, below. Full International Economic Calendar is here)
© Sandi Lynne 2018 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 0812, 2018 BULLS
WILL TRY & SALVAGE THE MONTH With a holiday on
MondayColumbus Daytherell be light activity but probably a minor
recovery from late last weeks sell-off to start the week, at any rate. From there,
an IMF/World Bank Group Fall meeting in Bali, Indonesia sounds exotic but probably not too
large an influence on US Trade, the rest of the week, after the initial IMF World Economic
Outlook, due for release Monday overnight, which will already be Tuesday, in Indonesia,
sadly, parts of the country recovering from an earthquake & tsunami that didnt
hit Bali, as far as I know. Interestingly enough, BlackRocks Laurence Fink,
jPMorgans Jamie Dimon, Morgan Stanleys James Gorman, and Socgens
chairman, all scheduled to speak at the International Institute of Finance meeting,
Friday, in Bali. However, JPMorgan is scheduled to release its Q3 Earnings, on Friday, so
one has to presume hes teleconferencing for one of the events.
Speaking of Fridays Earnings, Citi, First Republic, PNC Financial and Wells Fargo
are also Friday earnings reporters, so whatever happens Monday through Thursday could be
undone by Fridays release schedule. Except for Friday, last week, when 10 &
30-year rates became strongly favorable for bank net interest margins, giving the
financials a big lift, the group has been acting like dogs that failed to qualify for any
races as the West Palm Beach Dog Track, which a constitutional amendment is seeking to
close, leaving only the card rooms already there. Other than the Financials, Friday, Delta
Airlines & Walgreen Boots Alliance are the next 2 biggest reports of the week, both of
those on Thursday. However, Fastenal Wednesday should be a fair read on industrial
America, while Helen of Troy should provide insight holiday sales in the personal care
& home small appliance space. WBA, on the other hand, seems all over the place,
flailing around to set a new direction. There was its ill-fated partnership with Theranos,
a new partnership with grocer, Kroger, the ink on which is just drying, a deal to sell its
private label brand beauty products to Chinese consumers, on Alibabas marketplace,
an early this past summer investment in a Chinese pharmacy chain, GuoDa, even as its
reducing its stake in Guanghzou Pharmaceuticals Corp, announced still earlier, this past
summer. WBA is like a Giacomo Casanova who cant decide if he wants a blond, redhead,
brunette, or other, making CVS Caremark looking like a much more visionary and stable
choice, as its deal with Aetna nears closing.
Aside from the IiF, IMF/World Bank, the Economic Calendar also promises Fed speakers are mostly stateside, except for the New York Federal Reserve President/CEO John Williams, wholl be speaking in Bali, late Wednesday, 2x. Big data in the US includes PPI Wed., CPI Thurs., and a crap hole of US Treasury auctions, starting with 4-week, 3-, & 6-month bills, plus 52-week Bills, Tuesdaya heavier than usual day because of Mondays Columbus Day holiday. . Wednesday Treasury is offering 3-year Notes, and 10-year Notes, before Thursdays 30-year Bonds. Meanwhile, sometime this week, the Social Security Administration should be announcing the inflation increase on the retirement benefits it administers, as well as those that flow to military veterans.
As should be expected, given Mondays Federal holiday, Events dont really pick up until Tuesday. When Cowen & Co hosts its 21st Annual Therapeutics Conference, though most of the I-banks are hosting their events overseas. Wednesday, Raymond James hosts North American Energy Forum, and CIBC Liquid Alts, while the 12th Annual Pain & Migraine Therapeutics could be a showcase for the 3, recently approved Migraine treatments, after decades of almost no breakthroughs. Meanwhile Honeywell soon to spin off Resideo Technologies will host its Investor Day, Wednesday, also, even as a challenge to Genetechs Rituxan will be discussed at an FDA Oncologic Drugs Advisory Committee (AdCom) meeting. The biologic drug application was submitted by Celltrion, which has a marketing & sales agreement with TEVA, which could badly use some good news, itself.
Thursday, Cowen hosts its 7th MedTools Unlocked Conference, even as the 13th Annual ObesityDiabetes Summit gets underway, in Biloxi MS, cause meeting at casinos known for "All-you-can-Eat" $10 buffets is the best setting for avoiding obesity & diabetes. ACC for Cardiology Heart Valve Summit also starts Thursday, even as Automotive News Retail Forum meets in Chicago, Powersports Dealer AIMExpo, the US Powerboat Show, and SnowMobile USA also meet. Boy! Did the International Academic Conference on Meaningful Play realize it picked the same day to start its conference as the pricey water & snow sports equipment associations? A coincidence, no doubt. And finally, the potentially biggest event of the week starts Fridaythe High Point Furniture Market, in High Point NC, which presumably escaped flooding or already recovered from any deluge Florence dumped on the Carolinas.
There are many who seem to think the Financials fly on the day they report their
earnings but, in fact, the group reporting Friday rarely do. Theyre more likely to
join a larger party the week after this onewhen Morgan Stanley reports, Goldman
Sachs an outlier which seems to decline no matter by how much it beats the analysts
estimate, since it rarely beats in a way that the analysts approve wholeheartedly.
The bulls could win by holding losses, this week, to last weeks lows,
establishing a bottom upon which the bulls could build a recovery, later in the month. The
problem I foresee is the mid-term elections ahead. Schumer and the Democrats making the
mid-terms a referendum on the Trump presidency, and the Kavanaugh confirmation. The
liberals may be loathe to admit it but the same people who put Trump in the White House
are still rabid fans. What the mid-terms will be about, if anything, is who is more
motivated to go to the polls or, as in my case, mail in the ballot that already arrived
for the November election. And once again, I have to confess, I dont like either
candidate for the US Senate or the Governor of my state of residence (Florida). But given
all the problems Florida has voting, at all, Im never sure if my vote has been
counted, anyway. And dont for a minute believe the polls that have a democrat
leading in both of those races. Florida is one of the reddest states in the country (ex-
the southern tip, where I live), and touts in the press claiming Democrats are ahead is
just a way to get Republican votes out, perhaps persuade Dems to stay home. Its
going to be a long month until the polls close.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2018 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 0105, 2018 NEW MONTH, NEW QUARTER, TIME FOR TECH TO REVIVE????
New Quarter, new amount of Agencies & Treasuries the Fed is going
to allow to run off, monthly$50B. For the first time in years, the Feds
balance sheet fell back below $4 trillion, according to its most recently published
holdings. The Feds holdings will continue to run off at the new rate until the Fed
tells us something different. Reaching $50B after a year was the monthly goal for cruise
controlthe Feds desire to have those holdings run off automatically, in the
background, without any to-do. But one cant raise rates quarterly, AND allow a
balance sheet to run off, even as the Treasury needs to issue more debt to fund a budget
thats putting the US into deeper debt, all of which will suck up liquidity, even as
the cost of the debt keeps rising with each Fed rate hike.
As happens at the start of every quarter, a new Japanese Tankan Survey will be released,
and GM will reveal its quarterly sales, its monthly sales no longer released but, perhaps,
a quarters worth a better reveal, anyway. The San Francisco Federal Reserve Bank
gets a new leader, Mary Daly, with the rest of her cohorts about and around the country,
talking up a storm, just as the Nobel Prize committee releases all but the Literature
& Economic Prize, this week. The Nobel committee said it would not award a prize in
literature, this year, while the Prize in economics was never a Nobel prize, given out by
an organization that seeks to rectify an oversight in Nobels planned prizes. One
thing is for sure, when the Nobel Prize for Peace is announced, Friday, Donald J Trump
isnt getting it since North Korea has done squat about denuclearization, since he
bragged about freeing the world of the North Korean nuclear threat.
Meanwhile, China is off all week for Golden Weeka collection of daily holidays clustered in the week that leads to a week-long national holiday. The new Federal year begins, Monday, when the Supreme Court convenes its fall session, for now, without Brett Kavanaugh. If you caught any of last Thursdays testimony by Dr. Christine Ford & Judge Bret Kavanaugh, you probably saw the entire 9.5 hours. Riveting stuff, Kavanaugh, in my opinion, crossing many lines in his testimony, perhaps proving he doesnt have the temperament for traffic court, let alone a lifetime appointment to the Supremes. To be a fly on the wall at Cantor Fitzgeralds Global Healthcare Conference, Monday, when Pres. Bush keynotes. Of all the former presidents still alive, hes the one I remember being least able to speak. Just recall the way he said "nuclear." He didnt win the Peace Prize, either. FOMC chief Powell will speak Tuesday, at NABE, offering "View from the FRB," at a noon luncheon. Hes worth listening to, because he seems to have built fewer defenses against saying something hell latter wish he hadnt iterated. The FOMC is the only Monetary Policy Committee not planning on meeting in Oct. this week, alone, MPCs meet in Australia (Tuesday) & both India and Mexico (Thursday).
Friday, the September Unemployment Report will be delivered, a month in which we always
expect school-related employees to impact, the BLSs "seasonal adjustments"
usually successful in stripping out the surge in employees. And I dont mean just
teachersbus drivers, secretaries, janitorsyou name it, schools have them, the
majority employed starting just before or just after Labor Day, when most school calendars
resume.
The Earnings Calendar is slim, with just a few names of interest, i.e. PAYX, PEP, LEN,
SNX, STZ, & COST. Lennar, Wednesday, builds more homes than any other builder, so
often is the one name that stands out. Furthermore, it builds houses that are often at or
only a bit above the median price home, which makes it a good read on the average
workers ability to buy a home.
The Event Calendar picks up a bit, with NECA, NABE, & EEI Sunday, as notable as Paris,
Frances Ready-to-Wear fashion shows of equal interest. With retailers coming off 2
years of mall weakness to rebound, over the summer, its really the fashion quotient
that will determine how strong mall traffic will be this fall and holiday season. In
places where winter will soon bite, malls stand a better chance of attracting teens than
they do here, in Southern Florida, where school started in mid-August, and "feels
like" temperatures remain over 100 degrees. Starting Sunday, ACI-NA North American
Airports Council, AASA Automotive Aftermarket Technology, ARTBA: Road & Transportation
Builders were all slated to gain from Trumps promise to spend billions on
infrastructure but, alas, hes shown little interest in any building other than the
border wall with Mexico.
New York hosts Ad Week and all the associated sub-events connected to it. The toy
industrys fall preview is in Dallas, Ibex and other boat building related events in
Tampa. Digital Book World Conference/Expo meets in Nashville, which is odd, because Amazon
controls most of the digital book world, as well as audible, the company responsible for
spoken books that have become popular companions to drivers with long commutes, and
seniors who like to bring the library to their homes, instead of traveling to one.
Speaking of Amazon & audible, AMZN is releasing "Harry Potter: A History of
Magic" as an audible book, on Thursday. IFE, Americas Food & Beverage takes place
in Miami Beach, because its really about the southern "Americas," south of
Gulf Coast. But it starts Monday, when the nations Restaurant News hosts MUFSO,
while Supermarket News hosts a Supermarket Summit, also in Dallas. Given Restaurants &
Supermarkets have become competitors, its really a strange bit of scheduling,
Monday. MUFSO includes the expected Chefs, including Jose Andres but, also, Kimbal Musk,
who owns restaurants. Chain brands are prominent, including Inspire Brands (just spoke up
for Sonic Drive-Ins), LongHorn Steakhouse (DRI), Del Taco (TACO), MCD, RRGB, Smoothie
King, and lots of awards. So what does MUFSO stand for? Beats Us! Couldnt find an
answer anywhere on the website.
In addition to Cantors Healthcare Conference, Deutsche Bank hosts its 26th
Leveraged Finance Conference, in Scottsdale, starting Monday. Its not an I-bank
conference but MDRP, the Medicaid Drug Rebate Program Summit, in Chicago, could become
more interesting if Dems pick up some state governorships, and leadership in either house
of Congress. DBs event cuts across all sectors though telecoms, media & energy
companies are as prevalent as usual. On Tuesday, Leerink hosts rare Disease &
Immuno-Oncology (I-O in the vernacular.) Ladenburg Thalman is, also, hosting Healthcare,
BMO Capital Global energy Leadership (Pinehurst NC), even as Wolfe Research hosts
Utilities & Energy. Macquaries Montreal US Analysts day is a day during which
Macquaries US analysts travel to Montreal to meet clients up north. Bloomberg, on
the other hand, will host Canadian fixed Income in NY, even as Berenberg hosts Future
Energy in Zurich, Tuesday, after hosting it in London, on Monday. The Paris Auto Show
Conference starts Tuesday, in Paris France, while credit Suisse will host its 2018 Auto
Show Conference there, as well. Both Securities Traders & FPA (Financial Planners)
host respective meetings, starting Wednesday, in different cities. AGA, the American Gas
Assn Executive Conference takes place in D.C. while San Francisco hosts ID Week, for
Infectious Diseases. On the other hand, the virus bulletin Intl Conference vb2018
refers to digital viruses, not infections. In Paris, SocGen hosts Large & Midcap
Conference, Deutsche Bank a Philippines Conference, SGX/Credit Suisse Real Estate
Corporate Day (in Singapore), and Berenberg TMT in Zurich. Macquarie is hosting its Annual
Green Energy Conference in London, Thursday, when Citi hosts PCA-Emerging Restaurant, B
Riley FBR its 4th consumer & media conference, even as CE hosts Digital
Music, in NY, as part of the NY Media festival, an offshoot of Ad Week. Strategas hosts
its 5th Annual Investment Forum in Rosewood, Bermuda, Thursday, though I
suspect it will be about the midterm elections, rather than companies, per se. In fact, I
couldnt find a single company that announced participation in Strategas
event. NYU Stern School of Business hosts "Redefining LuxuryFuture of
Retail" a group thats enjoying a renaissance, as the 1% benefit from strong
stock market gains, and Chinese strivers return to shopping for luxury products.
Theres usually a lot of movement in the first week of a new quarter but it could be
more biased to the downside, as PMs rebalance their portfolios, pre-announcements
are released, and company buybacks go on hiatus in advance of earnings season, which will
kick off in mid-month after next weeks 4-day week for bonds. With Chinese businesses
& markets closed for Golden week, all week, and financials nearing a line in the sand,
under which they will not be able to bounce and will totally spook the market,
theres no reason to be a hero, this week. The risks are weighted to the downside.
Given Tech stalled out right before Financials started exploring the downside, the title
of this piece isnt meant to suggest Tech will revive but, rather, insist its
the group to watch, along with financials. If they both dont revive, the bulls will
be outnumbered, at least until they do. And bear in mind, Financials will lead off
earnings season, starting October 15th. In a single week, JPMorgan went from
making a new all time hi to probing longer term support. End of quarter shenanigans?
Perhaps but none of them had a great story to tell at recent Financials Conferences, so
until proven otherwise, assume Fed hikes are dinging loan demand, rather than improving
financials NIM. At least thats the story their stocks are telling.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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.
September 2428, 2018 FOMC RATE HIKE
SUBSERVIENT TO Q3 END If theres ever been a more
certain rate hike coming, I cant remember when it was. And its going to be an
especially noisy week, beyond the FOMC decision, what with the U.N. General Assembly
opening, and Trump on his way to address the world, in what for Dems will be another
cringe-worthy appearance. If that werent enough, theres the ECBs 3rd
Annual Research Conference, BoJ meeting minutes, and some lagged US Housing data expected,
even as it seems as if every central banker of moment will have a place on one stage or
another. And despite it all, Quarterly rebalancing may well take center stage, as
portfolio managers position for the coming midterm elections and the rest of the year, the
Quarter ending with this week, though for many, it ended with last Fridays Quadruple
Witch Expiration. Bear in mind, the SEC shortened the clearing time to T-2 from T-3, which
could boost exchange volume Wednesday, beyond what might be anticipated on FOMC decision
day.
The Earnings Calendar is slim but not without some notable reports, including Jabil
Circuits, KB Home, & Nike Tuesday, Bed Bath & Beyond plus CarMax on Wednesday. On
Thursday, Accenture, Carnival Cruises & ConAgra join spice seller McCormick, which
often comments on restaurant activity, in its conference call. On Friday, the report from
BlackBerry could once, again, surprise but its Vail Resorts that Im most
interested in hearing from. The 1% are having a banner year, which is often reflected in
Vails report.
A number of medical device companies plan "analyst" meetings at TCT
2018Transcatheter Cardiovascular Therapeutics. Edwards LifeSciences (EW), Boston
Scientific (BSX), and Abbot Labs (ABT) are 3 that announced meetings with analysts at the
event, but theyre not analyst meetings as we usually think of them. Instead,
theyre touting presentations of researchers working in their clinical trials, as
well as 1x1 with management at the booths set up in the exhibit hall. By the time you can
read this, the details about late-breaking posters will be available.
In a sign of how times have changed, SolarPower International used to be one of the
biggest events of the year. It starts Monday, in Anaheim, California, but I doubt it will
be a fraction of the big deal it used to be. Anyone seen those Elon Musk roof panels that
look like barrel tile roofing? ROTH is holding its Solar & Storage Symposium at the
event. The Lodging Conference, also starting Monday, is a large event that involves
everyone and anyone in lodging. Ive provided the participants at the Deutsche Bank
Retail One-on-One Day in Boston. I cant help feeling that now would be a good time
for retail execs to temper the enthusiasm, just a bit. I think its fair to say DB
has invited some retailers whove been disappointing, even as sales picked up over
the summer, traffic in malls rising a bit from seriously depressed levels. But for some,
like Ross Stores, Target, & ULTA, the Street is so enthusiastic, it might be nearly
impossible to exceed the whispers and hopes.
Perhaps buried in the very busy Events Calendar, is the NAB Radio Show, in Orlando,
starting Tuesday. Starting Wednesday, there are the Penn Veterinary Conference in Philly,
Spine Society Evidence & Technology Summit in L.A., and the International Vision Expo
in Las Vegas. The MLPA Annual Meeting in D.C. could be interesting for the changes in tax
treatment instituted with last Decembers Jobs & Tax Act. Thursday,
Rosenblatts 11th Annual Fall Investment Conference, in Chicago, is
notable for SEC Chair Jay Claytons keynote. But, then, the Senate Judiciary
Committee is supposed to hear from Brett Kavanaughs accuser, Christine Blasey Ford.
On CBS Sunday Morning, they went back to Anita Hills 1991 sexual harassment
accusations against Justice Clarence Thomas. Many of the current Committee members were
members, then, too, the committee chaired by then Senator Joe Biden. And it doesnt
appear that men know how to handle accusations of sexual impropriety any better today than
they did then. What Fords testimony means is D.C. will remain a zoo, even as New
Yorks zoo will be cranked up to max output and absolute gridlock.
This week could be one for the record books, and even then, I hesitate to suggest that the
kinds of records Im talking about are the kind the DJIA & S&P 500 made last
week. Brace yourself for a wild ride.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1721, 2018 QUADRUPLE
WITCH EXPIRATION Theres more economic news
out of China than the US, with the US news mostly related to housing. The Jewish high holy
day of Yom Kippur starts at Sundown on Tuesday, and lasts until sundown on Wednesday. Even
the least observant Jews tend to avoid working during those hoursjust in case.
The BoJ meets for 2 days but isnt alone. Also meeting, The Swiss Nation Bank &
the Norges Bankthe National Bank of Norway, plus South Africas central bank.
Yes, ECBs Draghi, Nouy & de Galhau speak at a Parisian event starting while
were sleeping, on Tuesday, pre-market hours but no earth-shattering remarks are
expected.
The U.N. convenes annually on the Tuesday of the 3rd Week of September, a week
counted even if it contains only 1 day. The UN General Assembly is also known as UNGA)
begins on the 2nd Tuesday of the month, but the big wigs from the most
important countries dont show up until the 18th, and most sessions will
be attended by attaches and undersecretaries until the 24th, when the
highest level debates and speeches run for 9 days. In fact, you know the 24th
is the bigwig day because its scheduled for UNGA high Level Plenary Meetings on
global peace, in honor of the centenary birth of Nelson Mandela, so known as the Nelson
Mandela Pea e Summit. Simultaneous with the 73rd General Sessions, the Global
Goals Week & Climate Week NYC 2018 meet. Hot topics in 2018: Russian
"invasion" of Crimera (still), Syrian Crisis, North Koreas nuclearization.
And, of course, with the influx into NYC, those who need to get around the city usually
slip into foul moods.
The Earnings Calendar slims considerably but contains some battleground stocks, like
Oracle (Mon.) & Micron Tech (Thurs.). But, perhaps, its Fedex, Monday, that will
attract the most attention, in a season that's usually off for package deliveries but
could surprise, thanks to Amazons July Prime Day. No match for Alibabas single
day, in November, Prime Day, nonetheless, might have been responsible for stronger July
Retail Sales than those reported, recently, for August. Speaking of BABA, its
hosting a 2-day Investor Day in Hangzhou, China, that starts Monday.
A combination of Yom Kippur and the gridlock that accompanies the U.N. General Assembly is
reason enough for so many I-banks to choose locations overseas for many of the weeks
events. China is a favorite spot. JPMorgan & Citi, most notably, taking their events
to China, while Tuesday is a busy day for domestic investor relations events.
Cambridge Houses Extraordinary Future Conference, in Vancouver, bills its event as
"The Hottest Tech Investment Opportunities" but also covers the future of
science & life, meant to drive Canadian innovation.
AGA Mini-Financial Forum for Analysts includes ATO, ED, ES, NJI, NL, OGS, SJI, SWX, SR,
UGI, the 20th but there are 3 separate events named for NY the 19th
& 20th that come down to those presenters, no matter how many times the
American Gas Assn separates out events with individual & collective names.
Then, again, watch out for Fridays Quadruple stock & index Expiration. If
theres any step back in stock investments, its liable to arrive post-Quadruple
Witch, as the days tick off to mid-term elections, Trumps (and the
Republicans) hold on Congress at risk. Ironically, stocks have done best when
Congress is split, so a Republican loss of one of both houses of Congress doesnt,
necessarily, spell doom for stocks. There are no sure things, of course, when it comes to
stocks. Therefore, dont bet the farm on any particular bet, without spreading the
risk.
ECONOMC: (Highlights, only, below. Full International Calendar here)
© Sandi Lynne 2018 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.
September 1014, 2018 LSHONA
TOVA The way Sheryl Sandberg (FB), in her testimony to
Congress, last week, talked about working with Congress to devise regulations I
couldnt help hearing in the back of my head, "so well have immunity from
people like Jones of InfoWars, when we disable his account." Just like
pharmaceuticals try to hide behind FDA approval when a medicine turns out to be dangerous,
social media companies are looking for a way to regulate how far free speech should go on
their platforms, without being prosecuted by those it terminates. So, yeah, social media
companies want to collaborate with Congress to set limits to free speech on their
platforms. Of course, FDAs rigorous approval process does NOT shield pharmaceutical
companies from lawsuits but it does set limits, and thats what the social media
companies are looking for, to protect themselves when a subscriber has to be blocked.
At the American Enterprise Institutions Friday Conference on the 10th
anniversary of the 2008 financial crisis, in addition to the keynote from Jeb Hensaling,
Chairman of the House Financial Services Committee, speakers and panelists hail from AEI,
Brookings Institution, Heritage Foundation, Harvard Law School, R Street Institute, QED
Investors, Columbia Business School, as detailed at the URL provided in the Economic
Calendar below. (Surprised that Sheila Barr didnt show up in the agenda, or Boston
Feds Rosengren, who feels smaller banks should have higher capital levels, because
they represent the next likely hit, without any.)
Given the stereotype of "garmentos" being Jewish, its quite shocking to
realize that the NY Designer Runway Shows were scheduled to run on the 9th, 10th,
and 11th, Rosh Hashana, the Jewish New Year, during which Reformed Jews are
supposed to pray on the 9th and until sundown on the 10th, while
Conservative & Orthodox Jews will observe from Sunday on the 9th, to
sundown on the 11th. Who bolluxed that scheduling? Some of the labels mounting
shows on the 10th including The Row, Carolina Herrara, Leila Rose, 3.1 Phillip
Lim, Proenza Schouler, Anna Sui and more. On the 11th, Alice_Olivia by Stacey
Bendel, Vivienne Tam, Zang Toi, and Calvin Klein.
Speaking of fashion, the London Fashion Week will be fur-free. Of course, Paul
McCartneys daughter, Stella McCartney, a British designer, famously uses no fur or
animal skinsnot even for her handbags, yet charges prices in line with fur and
exotic animal skins. Shes a Vegan. Last week, Burberry announced it would stop using
fur, as well, following in the footsteps of many designers who made the same decision
earlier. However, no fur doesnt mean no animal skins, so expect designer shoes &
handbagsif not pants, skirts, and coatsto continue to be made of animal skins.
An make no mistake, the court of public opinion found Trump campaign manager Paul
Mannafort guilty of horrible taste, after seeing his snakeskin jacket.
Remember the maxim I mentioned last week? Sell Rosh Hashana Buy Yom Kippur? The
latters the18th, at sundown, through to sundown on the 19th.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 0307, 2018 EVENT CALENDAR PICKS
UP WHERE EARNINGS LEFT OFF Holiday week, into the
Jewish holiday of Rosh Hashana, the Jewish New Year. For that reason, alone, staffing will
be a big question. Do some just take the week off, into what will be a 4-day weekend for
Conservative & Orthodox Jews, 3-days for the Reformed. The old Maxim is Sell Rosh
Hashana, BUY Yom Kippur, 8 days after Rosh Hashana ends. And that might just work out
well, this year, as the comment period ends Friday, on an additional $200B worth of
Chinese goods that must, ultimately, hit apparel & footwear makers, which have had a
an impressively strong rebound. Should Trump turn up the screws on the additional $200B,
its only US industries that will be hurt, since China doesnt buy as much from
the US as the US imports from China, so hasnt another $200B to slap tariffs on, in
retaliation. Chinese media already took the gloves off, moving from calling Trump
"unpredictable" to "crazy," Ive read. All in, appears the week
could strain the bulls more than the bears, even before possible warnings from companies
appearing at the ridiculous flood of investment banks scheduled for this
weekstarting Tuesday & Wednesday, in particular. Many will dial in from their
porches and sun chairs on the beach, rather than attend the event, itself. With very high
expectations for the coming earnings season, even as were barely 4 months from
comping against this years first reduced taxes 18Q1, bulls have more to think about
than the bears, making downside protection more attractive than its been in a while.
.
Because of Rosh Hashana, next weeks Outlook will be "just the facts," like
this week. Enjoy!
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinion expressed is the authors,
alone, and should be just one factor in more complete due diligence.
August 2731, 2018 SUMMER
ENDING OFTEN TRIGGERS SELLING as Mutual Fund Managers seek to jump the gun on
Competitors Scraping up Tax Loss Selling Candidates Fed Gov.
Powell was the headliner at KC Fed Jackson Hole Symposium. The highest ranking central
banker other than Powell was BoEs Andrew Haldane. See full agenda, here. https://www.kansascityfed.org/publications/research/escp/symposiums/escp-2018
b Powells speech, Friday, never touched on the upper limit of ratesor the
neutral rate--as some hoped. Instead,
Powell defended continuing gradual rate hikes, despite the Presidents
protests, pin-pointing inflation targeting as key to central banks sticking to their plan
even if inflation spikes or flags temporarily.
This is the key insight at the heart of the widespread adoption of inflation targeting
by central banks in the wake of the Great Inflation. Anchored expectations give a central
bank greater flexibility to stabilize both unemployment and inflation. When a central bank
acts to stimulate the economy to bring down unemployment, inflation might push above the
bank's inflation target. With expectations anchored, people expect the central bank to
pursue policies that bring inflation back down, and longer-term inflation expectations do
not rise. Thus, policy can be a bit more accommodative than if policymakers had to offset
a rise in longer-term expectations.
Powell also defined the FOMCs job succinctly, by pointing towards: "two
risks I identified--moving too fast and needlessly shortening the expansion, versus moving
too slowly and risking a destabilizing overheating." The latter, by the way, is
exactly what Trump would have him do. (If for any reason the link provided doesnt
take you to Powells Friday speech, check in FOMC "recent postings" rather
than speeches, the latter a month old with no sign of the Jackson Hole speech, when we
sought the text.) Im sure some are disappointed that Powell didnt add anything
to the conversation about the upper bound level of interest rates, in the current
environment.
The Joint 33rd Annual European Economic Ass'n + 71st European
Meeting of the Econometric Society Annual Congress (thru 31st, Cologne Germany) did not
bowl me over by the portions of the program I read. Im not enthusiastic about the
speakers lined up for plenaries, lunch sessions, "invited" sessions, etc. And it
doesnt appear that the K.C. Feds Jackson Hole Symposium sucked the air &
headliners out of a competitive Congress not sponsored by a central bank or one of its
branches, either. Except for Powell, the Jackson Hole Symposium lacked headliners of its
own. Other than Powell, former India central bank Gov. Rajan was the most high profile
speaker, and hes no longer a central bankerhasnt been for a couple of
years. ECB Economist Peter Praet is the highest ranking central banker I saw on either
scheduleEEA or ESA.
Wolf Richter, who writes Wolf Street, noted the Fed used the word "strong" 32
times in its most recent meeting minutes, released on Wed. 08/22, representing the
discussions and conclusions of its July 31stAug. 1st meeting.
He says the word was scarce, rarely used more than 35 times even in 2005, another
instance when the Fed was gung-ho on the economy. .
While Im passing out props and keeping score, on last weeks schedule, I
mentioned Altrias habit of raising its dividend at its Aug. Board Meeting, annually.
Sure enough, last week, MO raised its dividend by a bigger than I expected +14.0% to 80c
p/sh quarterly, despite the steady decline in cigarette sales and the FDA requiring
clinical studies for vaping and other digital cigarette products.
The highlight of this week may just be Chinas July Industrial Profits, expected
overnight Sunday, into the US Monday morning. Well get a 2nd look at the
July International Trade Deficit, and Case Shillers 20-city Home Price Index for
June (Tues0, as well AS NARs July Pending Home Sales Index (Wed.), and July Personal
Income & Outlays + Savings (Thurs.). Within the 2nd look at Q2 GSP,
Wednesday, will be the Feds favorite measure, PCE & Core PCE, as well as
whats likely to be hot Consumer Spending (Wed.). Of concern, Wednesday, is the
Treasurys auction of 7-year notes, a month before another interest rate hike is
virtually a given. Longer duration Treasuries are not the worlds favorite
pickespecially in front of additional rate hikes.
Retailers dominate the Earnings Calendar, which includes Best Buy and Tiffany, Tuesday,
Brown Forman, Dicks Sporting Goods, and PVH Wednesday, Burlington Stores, Dollar General,
Dollar Tree, Lululemon, and Ulta Salons Thursday, no one reporting, to my knowledge, on
Friday, into the 3-day Labor Day weekend. But its nor just large retail chains
reporting, this week, Hain Celestial and Hewlett-Packard Enterprise will report Tuesday,
Salesforce.com Wednesday, Ambarella & Ciena Thursday, along with about a dozen other,
smaller retailers.
As befits the week before a long holiday weekend, the Events Calendar is slim. Some of the
most impactful news will come from across the Atlantic, at ESC, the European Society of
Cardiology, where Amgen hs 6 presenters discussing the benefit of Repatha, and Pfizer
plans to hold an analyst review of Tafamidis data. They wont be alone but are the
only 2 who are set up to notify me of investor meetings. Outside healthcare, Jefferies
Semis, Hardware & Comm Infrastructure Conference, in Chicago, is likely to biggest
event stateside, given the bull and bear debate on the Street about where Semis are
in their cycle. Ambarellas earnings release (Thus) wont solve that debate.
Take a look at the video game releases on the 28th & 31st.
Youd think a new video game console was being released this week but thats not
the case. Its just a bunch of video game publishers hoping to snag the attention of
kids and co-eds returning to public school & college, just as football season
launches. With so much riding on video games, and eSports, especiallyincluding the
Barrons cover story for the weekit appears video games and gamers are the
antidote to the NFL. By the same token, its not totally surprising that the I-banks
are setting up in Korea, Japan & China, just as the US Holiday weekend kicks off.
Which brings us to the title of this piece. The major indices all made new highs, last
week, so its difficult to imagine a lot of tax-loss selling to be executed but given
how much rotation theres been between leading sectors, there are some losers of the
past Quarter and year, whose shares are likely to be trimmed by Portfolio Managers seeking
to offset some of the profits taken earlier this year. Most mutual funds close their year
on Oct 31st, a scheme designed by Congress to limit the amount of tax loss
selling that hits shares around the holidays, while also trying to assure theres
enough time for funds to pay their annual dividends passed through to shareholders, and
for the funds to prepared the K-1s, 1099s, and other documents shareholders
need to pay their estimated taxes for 2018, by Jan 15th, 2019. In the past
decade, PMs trying to get a jump on competitors tax-loss selling have started
their own earlier, and earlier. Hence, some years theres evidence of their selling
in August but not this year. That leaves September as the last chance to get a head start.
Forewarned is forearmed. It gets more dangerous from here on in, until mid-term elections,
which themselves represent a big unanswered question as the swamp around himself that
Trump attracted seems to close in on him, just as the 51st Republican Senator
lies in state, at the capitol. Things like Cohen & Manafort dont matter until
they do, and with so many Trump execs and confidantes working out immunity from
prosecution, how long before it matters?
P.S. We're unsure about preparing an outlook on Labor Day. Don't plan on it and be
pleasantly surprised if it happens
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed 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 2024, 2018 CENTRAL BANKERS WILL
DOMINATE From the Central Bank Research Association starting early
Monday morning in Frankfurt, through the end of the week, when the Kansas City Fed will,
again, host its Annual Jackson Hole Economic Symposium, central bankers will dominate.
FOMC Chief Powell speaks Friday morning (10am et), on "Monetary Policy in a Changing
Economy." As is typical of the K.C. Fed and other Federal Reserve conferences, the
full list of speakers wont be known until after the meeting starts. Surely, there
are those who believe such secrecy is a measure of protection but, really? With Bloomberg,
CNBC, and CNN setting up chairs & cameras outside the main meeting hotel? Ya think the
terrorists couldnt find the place, even if the schedule werent released until
after the shindig ended?
The Central Bank Research Assn Meeting has an unusual format. Each of the central
banks participating created their own topics, and held their own "Call for
Papers," the selections then submitted to SAFE & CEBRA for the meeting agenda.
The US Treasurys auction calendar is slight, this week, which might also impact what
the week should look like. The known headliner is the FOMC Aug. 1st Meeting
Minutes, out Wednesday, the meeting at which the FOMC decided that therell be a
press conference after every FOMC meeting, starting next year. Another topic of late, has
been where the upper bound of rates now resides. Some think its a lot lower than it
used to be but others say its a moving target that will keep rising as the US
economy absorbs paced rate hikes without cracking. Also notable, housing information like
Thursdays FHFA June/Q2 House Price Index, and July New Home Sales.
The Earnings Calendar cranks up again, this week, with more major retailers that will move
the weight of evidence for and against brick + mortar retail, one way or another. Tuesday,
Coty, J Jill, Kohls, TJMaxx, Tuesday Morning, and Urban Outfitters will report. Away
from retail, Medtronic & Red Robin Gourmet Bugers will out the day. On Wednesday,
reports are expected from L Brands, Lowes, SteinMart, Target & Williams-Sonoma
will report. On Thursday, Alibaba, Big Lots, Cato, Childrens Place, Citi Trends, Gap
Stores, New York & Company, Ross Stores, and Stage Stores. Anf it that isnt
enough, also Thursday, Autodesk, Spam-maker Hormel, Hewleett-Packard, Intuit, Toro, &
VMware. On Friday, The Buckle, FootLocker, and Hibbett Sports wrap up the week.
EnerCom stands out on the Events Calendar. It started Sunday, as I wrote in Denver.
EnerCom is additionally supported by the many Street sponsors, as well as Wolfe
Researchs EnerCom Event, and BAMLs Energy Bus Tour in Houston, starting the
last day of EnerCom. Also notable, AV18-Autonomous Cars in Detroit, starting Monday, then
the 7th NextGen Automotive Manufacturing: Lightweight Materials Summit, also in
Detroit starting Tuesday. Then, also starting Tuesday, Automotive Cockpit HMI
(Human-Machine Interaction). The latter is in Ann Arbor Michigan, not so far away that it
wont have overlapping attendees from the Detroit events.
But it really is the Central Bankers that will hold sway, particularly, the US own
FOMC, starting with Wednesdays meeting minutes, following through the K.C. Fed
Jackson Hole Economic Symposium. The full weight of the speakers wont be known until
the full agenda is released, and that wont occur until after the meeting starts, at
6pm mt on 8/23, to be exact, the K.C. Fed says. Keep your skis & skates nearby, since
you might just have to slide into next weekend, if you insist on remaining as long as you
were in April. Bear in mind, September is rarely kind to stocks.
ECONOMIC: (Highlights, only, here. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1317, 2018 LAST OF
THE IMPORTANT EARNINGS RELEASES? Not Yet
The US Treasury is on a bit of a hiatus, after last weeks debt sales. This week, 3
& 6 month Bills, and 52-week Bills, but nothing longer. Notable data on the way
include the NY Fed Banks 18Q2 Household Debt & Credit Report (Tues.), July US
Retail Sales (Wed.), NAHBs Aug Housing Market Index (Wed.), along with Q2
Productivity & Costs, and Jul US Industrial Production & Capacity Utilization,
before the EIA releases weekly petroleum, gasoline, and distillate numbers. Thurs, July
Housing Starts & Building Permits, along with the Philly Fed Outlook Survey. Friday,
US Q2 eCommerce sales, along with Baker-Hughes weekly US/North American Rig Count. If
anything, data from Canada, China, Japan & the UK might attract even more comment than
the US data, since the S&P 500 is all the Street really needs to see, to decide what
kind of impact Turkeys lira collapse, or Trumps latest tariffs will have on
the US Economy.
The Earnings Calendar does get more interesting, with large retailers stepping up to the
plate, starting with Home Depot on Tuesday, when Advance Auto Parts, Tapestry (formerly
Coach), and Brinker International weigh in. Wednesday Macy*s leads off, with Cisco &
NetApp additional highlights. Thursday, expect JCPenney, Nordstrom & Walmart but,
also, away from retail, Applied Materials, Madison Square Garden, nVidia, and Chinas
JD.com. Friday, Deere is the only notable report and from the land of golf clubs and
construction, I can tell you green lawnmowers are more prevalent than yellow construction
machines, Deere rarely seen as often as now, while two nearby new community construction
sites look more like Caterpillar dealerships than construction zones.
So lets talk, for a moment about the big retail earnings teeing up for this week. I
found both Nordstrom & Macy*s busier this year than last year but that was partially
tied to how long teens and their parents had steered away from the mall. No sooner was the
Back to School sales tax holiday over, than crowds in the mall disappeared for a week,
before returning the week prior to schools startMonday, Aug. 13th,
here. Part of the quick return stems from how restrictive Floridas sales tax holiday
appears, with school supplies limited to $15, and clothing, footwear, and "certain
accessories" limited to $60. Well, $15 wont even buy a decent calculator, while
$60, in todays world, wont even buy most pairs of sneakers. There are states
that exempt computers up to $4,500, which makes the Florida limits look silly, never mind
stingy.
Big Events include the NY NOW Housewares show, formerly, the NY International Gift Fair,
as well as MAGIC & WSA (World Shoe, in Las Vegas), which reinforces the prominence of
retail, this week, throughout the calendars. Meanwhile, the I-banks are back, trying to
seize an opportunity when competition is usually slight. So, Credit Suisses Basic
materials, KeyBanc Global Technology Leadership, OpCos Newport Summit for
Revolutionary Biotech, start Sunday, when brewers are feasting on 3 related meetings in
San Diego. Tuesday, Citi Insurance 1x1 and Raymond James Park City Telecom Summit
are small compared to World Show & MAGIC, and the many related events concurrent with
the big shows. Tuesday, Citi hosts 1x1 MLP/Midstream Infrastructure will be fighting all
the retailers & manufacturers at MAGIC. In New York, Instinet hosts Cloud Builders
Summit, Susquehanna Energy, while Stephens embarks on a Mid-Atlantic Bank Field Trip,
which will run into Wednesday, when Raymond James hosts energy, OpCo Midwest Corporate
Day, Wedbush its PacGrow Healthcare Conference, along with GMA Grocery Manufacturers
Leadership Forum, none, perhaps, with as big an impact as STRs 10th Hotel
Data Conference, in Nashville. STR, for those who dont follow hotels closely, is the
successor name to Smiths Travel Research. If you saw what happened to Marriott
Intl, in recent days, then you know something is not going well in the sector, many
not hesitating to blame the tweeter in chief, who they feel has driven away foreign
tourists. Given Americas long time reputation as a safe haven, Trumps rhetoric
may be impacting tourism in ways no one anticipated. IF you own hotel shares, now may be a
good time to re-examine your thesis.
And while youre doing that, consider how a slump in foreign tourism might impact
retailers like Macy*s (and its Bloomingdales division), as well as Tiffany, and
other retailers who call NY, San Francisco, or Los Angeles their flagship locations. In
fact, if history is any guide it might be time to start taking some profitsat least
protect the downsideraising some cash to redeploy in October.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 0610, 2018 SUMMER QUIET SOMETIMES
MAKES FOR NOISY MARKETS Equity markets usually ramp to a top,
around this week, before sliding into September on a downward trajectory. Having said
that, its worth mentioning how often this market has defied expectations, and done
just what it made no sense to do, time and again. Were already into a tit-for-tat
trade war, thats ramping to a crescendo, though youd never know it by watching
equities or bonds, for that matter. The hardest thing to do, for the past year, was to
remain invested in winning stocks, yet thats just what so many have done. And even
more incredibly, after a 42 point decline, analysts are pointing to Facebooks
decline as the gift one should accept by laying down dollars to buy its shares. Well,
Im not here to recommend FB as a buy or sell but I do recommend you watch the
Treasurys weekly issuance, because after a light week, last week, the Treasury will
try and sell 10 & 30-year debt, this week. Wednesday, the Treasury is offering $26B
10-year & on Thursday, $18B 30-year. What US long term debt is paying in the US can
only be seen as attractive to an investor in Japan or Germany, where rates are nearly
invisible or, even negative. But that doesnt mean anyone from those countries would
be comfortable locking up their money for 10 years, or worse yet, 30 years. So the debt
markets are worth watching, this week.
Data will be of more interest this week, too, as PPI is out Thursday, & CPI on Friday.
Many are almost "excited" to see inflation rising, evidently not students of
what past Federal Reserve Banks did to tamp down budding inflation. Out of curiosity, I
went from store to store in the mall, this past weekend, stopping in at any store
advertising for help. What were they offering as pay? $7.25 p/hour plus commission, the
commission doled out after minimum sales were accomplished. No wonder teens dont
have jobs this summer: who wants to worth for nothing? And, yes, I did try and account for
my age by offering teens an opportunity to earn $5 by popping into stores advertising job
openings, and report back what they were offered in pay. Each of them were offered as
little as I was, and none of them said theyd work for that little pay. And that was
during a busy weekend when shoppers were out to take advantage of Back to School sales tax
holidays, albeit apparel and/or shoes topping at $75, and school "supplies" at
$15. Still it was encouraging to see so many people shopping at the mall, exactly what the
sales tax holiday is intended to spurt. But inflation? No signs of that in pay offers, and
no signs in market prices for jeans, fleece, graphic tees or VANS.
Worldwide chip sales reached a record high in the second quarter, surging more than 20%
from a year ago, the Semiconductor Industry Association said late Friday. In the second
quarter, global sales rose 20.5% to $117.9 billion, or 6% sequentially
Wells Fargo & Co. disclosed in a filing Friday that unspecified U.S. government
agencies are looking into the bank's use of low-income housing tax credits. "Federal
government agencies have undertaken formal or informal inquiries or investigations"
about how Wells Fargo applied for and used those credits. Analysts keep welcoming every
DoJ settlement and recommending the shares. I wouldnt bank there and certainly
wouldnt invest in such a tainted bank, and recommend ignoring any analyst who finds
each settlement as an added reason to buy its shares.
The Earnings Calendar is only a smidge slower than it was last weekat least in terms
of the number of reports expected. There are more consumer discretionary companies
scheduled, from restaurants, to hoteliers, to shopping mall owners, radio station owners,
and TV distributors. Some are renamed companies, like Priceline, now Booking.com,
reporting Wednesday, even as the TV networks sliced and diced into half a dozen of more
companiesDiscovery & Libertywill compete with Walt Disney, Viacom for
analysts attention and investor dollars. And its not just American companies,
as Netease, Sina, Weibo, & Yelp are expected to report, as well.
Which brings us to conferences, a schedule slimmed by summer vacations, with most I-banks
on hiatus until September, some until November. The big events this week include
Cowens Communications & Infrastructure Summit Monday, UBS Financial Services
Conference starts Tuesday, the competition including Jefferies, offering Global
Industrials, and Oppenheimer Co its Technology, Internet & Communications Conference.
UBS Genomics 2.0 Summit, in Park City Utah, starting Tuesday, is likely to
overshadow Needhams Annual MedTech 1x1, & Leerinks West Coast Biotech Bus
Tour. Its a mini flurry of I-bank meetings not to be repeated again, this month.
Also Tuesday, the Annual Space & Missile Defense Conference is starting, subtitled
"Space & Missile Defense
Sharpening the Militarys Competitive
Edge," but, of course, lets not forget Pres Trump now wants a new "space
protection" military division to add to Army, Navy, Marines, and Air Force. Quite
naturally, Space could absorb the Air Force or vice versa, space becoming a sub-division
of the Air Force. But the concept doesnt seem to rise to the same level as his
Mexican border wall, so dont start designing the new logo youd like to see
embroidered on patches consumers could buy at any of NASAs operating launch sites
that allow the public to tour.
Ill give a nod to JPMorgans Auto Conference, the participants not much
different from the ones that appeared at the European version, last month.
Wednesdays CanaccordGenuitys 38th Annual Growth Conference, in
Boston, promises microcaps that are too small for us to mention. Thursday, Morgan Stanley
will host Telecom & Media, while Goldman Sachs hosts Power, Utilities, MLP &
Pipeline Conference, both in New York.
And there you have ita week in which Earnings presenters will dominate the news
wires, with a gaggle of I-banks hosting clients at events that didnt need to meet
this week, specifically, but probably will because someone noticed how few I-bank
conferences are held from June 30th to September 1st, and thought,
so why not throw one ourselves? Of course Europe, forever walking to the beat of its own
drummer, has made it so difficult for I-banks to get paid for their work, that most simply
gave up organizing investment conferences., at all. If youre sticking with equities
it might be wise to buy some downside protection. September and October tend to be ugly
months, even if August cruises through without a hitch.
ECONOMIC: (Highlights, only, below..Full International Economic Calendar here)
© Sandi Lynne 2018 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 30August 03, 2018 EARNINGS
QUICK SAND THIS WEEK Each Time One Hangs Up, Theres Another CEO On a
Call No economist has, yet, forecast
the FOMC raising rates at the meeting this week. And that surprises me, a little, given
how hell bent Powell is on gradual rates increases. Why wait for September? Especially
with Trump threatening a shut down on the govt if he doesnt get $5B for his
Mexican border wall, which more than a few might remember he promised to get Mexico to pay
for. Why demand any money from Congress if he thinks Mexico is going to pay for it? So
look for FOMC speculation to dominate both before and after the meeting ends on August 1st.
The BoJ also meets, this week, along with the BoE, and both the Brazilian & Mexican
Monetary Policy Committees.
Funding for the National Flood Insurance program runs out on July 31st, at
midnight. I sure hope congress manages to extend funding for the program, since I just
paid for my policy; last week, and would hate to have to fight with the Federal Government
to get my money back. The Economic Calendar boasts mainly Housing data, including
NARs June Pending Home Sales on Monday, S&P/Case Shiller 20-city Home Price
Index, Tuesday. Wednesday promises that FOMC post-Meeting statement, and June Personal
Income & Spending, which includes a measure of PCEPersonal Consumption
Expenditures, a Yellen favorite though we dont really know whether Powell is
inclined to look for something else. For now, he seems content with whatever Yellen used.
Friday, the BLS releases the July Unemployment Report and, once again, participation
should rise, as college graduates start circulating their resumes. The PMI indexes rarely
matter as much as the ISM, since it releases more data then the PMIs, including
employment data.
Whoever said last week saw the peak number of companies reporting earnings doesnt
know what hes talking about (looking at you Bob Pisani). This week is the crusher,
with the number of reporting companies reaching a crescendo on Wednesday & Thursday.
Though lets not kid ourselves; the largest market cap
companyApplereports on Tuesday afternoon, with the ability to make or break
the S&P 500. The biggest problem with the Earnings Calendar, this week, was narrowing
the tickers chosen to embolden. In the end, we did it with a wing and a prayer,
The Dept of Homeland Securitys July 31st Cybersecurity event in NY,
boasts V.Pres Pence & Secretary of Homeland Security Kirstjen M. Nielsen, Secretary of
Energy Rick Perry, FBI Director Christopher Wray, Commander, U.S. Cyber Command and
Director, National Security Agency General Paul M. Nakasone, and top CEOs from the
financial services, energy, information technology, and telecom sectors participating in
the summit, along with some sending their CEOs, detailed here, attending but not
necessarily speaking..
https://www.dhs.gov/news/2018/07/26/department-homeland-security-announces-national-cybersecurity-summit-participants.
When I prepare the Earnings Calendar, I often check a companys IR site to confirm if
theyre reporting on the schedule we have for them in the past. Thats how I
came to ask why Sealed Air has a section on its Investor site titled, "Modern Slavery
& Human trafficking?" Just asking cause it struck me as extremely odd, and not
something Ive seen on other IR sites. .
The Events Calendar is lighter than usual, in deference to a heavy Earnings Calendar, and
due to respect for the summer months, when at best, PMs my phone in from the beach
or mountains but rarely line up for an industry conference. AACR/ASCO Methods in Clinical
Cancer Research is in Vail Colorado, a location many PMs and medical practitioners
will be happy to travel to..World Shoe & Accessories Marketplace is preliminary to
MAGIC. But maybe someone can explain to me whey IQPC hosts Automotive Seating Innovators
in Novi Michigan, Monday, while the Center for Automotive Research (CAR) hosts its
Management Meetings nearby in Traverse City Michigan but not together with Seating.
Needham & Stephens go where few I-banks are inclined to go in late July or August, to
NY for a 7th Annual Industrial Technologies 1x1, and to Nashville for a
healthcare Update Forum, respectively. The biggest news of the week may just be the Sales
Tax Holidays starting on August 3rd, and running through the 5th,
that will be held by 12 states, to mark Back to School sales. Some, like Florida, are so
chintzy, you couldnt even buy a decent backpack for the $15 is allows on school
supplies. The $100 apparel allowance will buy a non-performance pair of sneakers and
little else. For some camps, next weekend is parents weekendat least for whichever
ones didnt host parents weekend last week. Either way, with the TV Critics Fall
Press Tour underway, football season and the fall TV season cant be far behind. That
also means were nearing the period when Earnings releases transition to retailers,
and volume on the exchanges shrivels to near nothing. Stocks often ride the Earnings
season to a crescendo anywhere around the 5th of August, before PMs
lighten their load of equities in anticipation of equities dipping into October, and
whats likely to be a hard fought mid-term election season. In other words, get out
while the getting is good.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 2327, 2018 EARNINGS
SHOULD DOMINATE, UNLESS TRUMP HAS OTHER PLANS Existing Home
Sales Monday, FHFA May House Price Index Tuesday, New Home Sales Wednesday, and Friday The
2nd guesstimate of Q2 GDP, which includes PCE, what Janet Yellen focused on for
consumer inflation, Powell, not yet, specific about what he wants to see, other than to
confirm Yellens yard sticks.
The ECB will announce its rate decision in the wee hours of Thursday morning-on the 26th
in local time. The post-Meeting Mario Draghi press conference will bleed into pre-market
hours Thursday, in the US. A secondary story of the week is the amount of debt the US
Treasury is auctioning--$215B to be exact. By the time the week gets to Thursday, and the
Treasury wants to sell $30B in 7-year Notes, the bond market could head for a
convulsion--especially since the FOMC, and Powell in particular, during his testimony to
Congress, is still talking up 4 rate hikes this year, which means there are still 2 more
to go, so 2 more reasons to shun the 7-year auction.
Earnings are another storylikely the story of the week, given the tickers we
emboldened ranging from Alphabet (GOOGL), to 3M Tuesday, when Biogen, Chubb, Lockheed
Martin, Paccar, Sherwin Wiliams, Texas Instruments, UBS, and United Technology, along with
both AT&T & Verizon. On Wednesday, AMD, Baidu, Barrick Gold, Boeing, Citrix,
Coca-Cola, Facebook, Ford, GM, HCA, Mohawk, Mondelez, Nasdaq, NextEra, Norfolk Southern
Rail, Norfolk Grumman, Qualcomm, STMicro, UPS, Visa, Waste Management, and Mattel, which
was living a disaster before Toys R Us filed for bankruptcy.
Thursday, Allergan, Ally Financial, Altria, Amazon, AmBev, Amgen, Budweiser, Beazer Homes,
Comcast, Conoco Phillips, Discover Financial Services, Fair Isaac (FICO), First Solar,
Group 1 Automotive, Intel, KKR, Lam Research, MasterCard, McDonalds, Newmont Mining,
Republic Services, Royal Dutch Shell, Southwest Airlines, Spirit Air, Total, Taiwan
Semiconductor, UnderArmour, Valero, Western Digital, and much more. Friday, Chevron,
Colgate Palmolive, ExxonMobil, Merck, & Twitter. All in, every sector is represented,
even in the selected tickers Ive pulled out.
Sunday, both the Alzheimers Assn Intl Conference & ASRS for Retina
Specialists continue. Farnboroughs Air Show continues but its the part
thats open to the public, the airlines, defense ministers, and other big wigs
already gone. Investment Bank conferences are mostly MIA, both due to summer &
earnings season. Starting Sunday, PAYMENTS Institute, FAME, MODA & MRKET, aka Fashion
Week in NY, for Ready to Wear. For the Curious: Reinhold Environmental APC &
Wastewater PcUG Conference (Lexington KY thru 26th), PCUG stands for Pollution
Control Users Group. The event involves FirstEnergy, Southern Co, Ameren, PacifiCirop, DTE
Energy, Dominion, Duke Energy, Detroit Edison, SRP, East Kentucky Power Co-op, Dynergy,
TVA, AEP, and more. In the same vein, CHRIE is the Council on Hotel, Restaurant &
Institutional Education
South Atlantic Well Drillers Jubilee is not oil drilling but drilling for water,
specifically ground water wells. In fact, the URL for the event is jubileewatershow.com US
Geological Survey among the speakers, along with Franklin Electric, Phase Technologies,
Pentair Flow Technologies, Goulds Water Technology but a strange schedule that shrunk each
click I tried to zoom in. USDA Crops & Chemicals USA (Raleigh NC thru 25th) will
surely touch on Floridas Toxic Green algae coating on lakes & canals. While many
think its caused by the extreme heat & humidity, along with Agricultural
run-off, the Army Corps of Engineers are the convenient target, because theyre so
worried about Lake Okeechobees locks & dams that the Corps regularly empties
excess water into the Saint Lucie River and other estuaries. The Corps is responsible for
toxic green algae? Probably some combination but much of its naturally occurring.
CIBC breaks the rules about I-banks, this week, hosting both Financial Institutions &
a Data Center Tour. Both are in Toronto. Alphabets Google is hosting Cloud Next in
San Francisco, thru the 27th, while Microsoft is hosting Media &
Entertainment Day in NY, much of its delivered via its Xbox consoles. And thats not
the last weve heard from megacaps, either; Amazon hosts Alexa Dev Days in San
Francisco, starting Wednesday, which is when the TV Critics Fall 18 Tour begins with
CTAM, including A+E Networks, Amazon, AMC Network, Audience, Britbos, Sony Crackle,
Discovery, Hallmark Channel, AT&Ts HBO, National Geographic, Netflix, Rooster
& Teeth (new to us, also), STARZ, now owned by LionsGate Entertainment (LGF.A),
Viacom, and Alphabets Googles YouTube, all in Los Angeles.. Next week, it will
be the networks turn, most of that in New York.
Citigroup is hosting a Fixed Income Investor day, for those invested in its own bonds
& preferred shares, Thursday. Friday, one of the biggest events of the year kicks off,
World Congress on Heart Disease Scientific Sessions, in Boston. Also Friday, shareholders
of both Walt Disney & 21st Century Fox get a chance to vote on Disney
taking over Foxs entertainment assets. No surprise that Disney doesnt want Fox
News, which often sounds like Donald Trump mouthpiece. Saturday, 2 of the worlds
largest cancer organizations joint for Methods in Clinical Research, in Vail. World Shoe
& the Accessories Marketplace Show, in Las Vegas are prelude to MAGIC, despite the RTW
industry meeting in NY for FAME., MODA, & MRKET. The New York shows are more for
holiday and cruise, Las Vegas for Spring 2019.
Its hard to dismiss the bulls whove kept shares rising no matter what Trump
and other world leaders throw at them. But if Trump is serious about trying to find a
total $500B worth of goods to slap with tariffsthe sum total of all our trade with
Chinait could trigger a quick fall into recession. I dont think thats
something he wants but do believe some of his advisors want just that, so he can, then,
pull the country out of recession. Meantime, diplomacy is .foreign to Trump, who
continually looks like a bull in a china shop who has no respect for the china, at all.
And why should he? The china doesnt read "TRUMP" which is the only thing
he seems to understand. Regrettably, I think the US gets the raw side of the stick in
dealing with China and some other countries but there are ways to get what you want, and
it doesnt seem Trump wants to try anything that gentle or benign. Stock investors
should be prepared for a strong outflow of funds as smart money refuses to wait for all
evidence of a trade war, rather than a skirmish. And despite Alcoa talking about added
costs because it has smelters in Canada, theres more speculation about what might
happen, rather than concrete instances of company earnings badly hurt by tariffs to date.
Be very careful out there, and start lightening up for the last hoorah into the first week
of August.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1620, 2018 TUESDAY,
July 17, FOMC Chief Powell Semi-Annual Testimony @ US Senate WEDNESDAY, July 18, FOMC
Chief Powell Semi-Annual Testimony @ US House Truth is, once
Powell testifies on Tuesday, no one will be listening very closely except economic
journalists, hoping to glean an additional morsel, or a reversal of some position
theyve concluded Powell didnt mean to state. The Economic Report already
appeared last Friday, so from here on in, the testimony will be about the inane questions
Congresspeople ask.
And, then, theres Earnings, the calendar still filled with banks that, mostly, are
not included in our Calendars, because theyre neither major money center banks or
the largest regionalsthe only ones we cover, along with the odd foreign bank subject
to Stress Tests & CCAR, with ADRs that make them tradable in the US. So whos
reporting? Monday, Bk of America, BlackRock, and Neftlix. Tuesday? CSX, Goldman Sachs,
Interactive Brokers, J&J, Kinder Morgan, Omnicom, T-Mobile, United Airlines, and
UnitedHealth. Wednesday: American Express, Canadian Pacific Rail, Crown Castle Intl
(Tower company, though so will the can maker), eBay, WW Grainger, IBM, Morgan Stanley,
Northern Trust, Novartis, and Ericsson. Thursday: Alliance Data Systems, Bk of NY Mellon,
BB&T, Blackstone, Capital One, Dominos Pizza, E-Trade Financial, Intuitive
Surgical, KeyBanc, Microsoft, Nucor, NVR, Philip Morris Intl, PPG, Skyworks, Taiwan
Semiconductor, Travelers, Union Pacific Railway. Friday, Baker Hughes A GE Company (for
now), Honeywell, Kansas City Southern Rail, ManPower, Regions Financial, Schlumberger,
Stanley-Works Black & Decker, State Street, SunTrust, VF Corp. Some wouldnt have
normally made this detailing but with tariffs enacted on metals, first, and other tariffs
awaiting their 2 weeks on the Federal Register before being launched, a few names muscled
into these details.
Then, theres the Economic Calendar and, in particular, the testimony referred to in
the title of this piece. Last week, both Bostic & Harker backed only one more hike,
and seem more concerned than Powell about what tariffs could do to suppress the economy. I
had anticipated a draw, the week of July 4th but if I told you the US Reported
crude supplies drawn down by (-12.6m) barrels, would you have expected E&Ps, and
Oil, itself, to tumble? Granted July 4th holiday was included in the week
reported, a big driving holiday, even if ones doing nothing but day tripping to the
nearest beach & fireworks display. But still, that was a monster draw, and a reaction
that was inexplicableeven if Libya will be able to resume exports at its eastern
ports. Seeing that reversed with a largish build, this week, wouldnt surprise, at
all. What surprises is Donald Trumps reaction to the recent rise in crude, Brent
nearing $80 and WTI comfortably in the $70s, until last weeks pullback. But
pump pricescurrently $2.89 for regular, and $3.76 for high testis hardly at a
panic price. Scarier, IMO, is the fact that Govt tax receipts are way down, on the
December tax cut, even as spending has gone up considerably. If the price of anything
should be panicking Trump it should be the cost to service the US debt. As it is, the
Treasury, Tuesday, intends to offer $51B 3-month bills, & $45B 6-month bills, the
largest short term debt offerings I can remember over the last 43 years. And theres
a degree of sheer stupidity to be cranking up the short term issuance, rather than longer
term dated debt, to capture what are still relatively low rates.
If last weeks NATO, and Trumps upcoming summit with Russias Putin
werent enough, the G20 Finance & Central Bank Governors are expected to meet in
Buenos Aires, Thursday through next Sunday. Thats a ton of international interaction
bunched together, the only upside being G20 heads of state are not scheduled yet.
The Summit on Sports Gambling (Cleveland OH) is the pre-conference workshop to the
Natl Conference on Problem Gambling. The Investment Banking industryNIBA,
meets in NY Monday, when the Farnborough Airshow (UK) opens for bigwigs and, ironically,
AAAE for Airport Execs meets, too, but in Atlanta. SSA for the Shareholder Services
Association starts Tuesday, an event thats often at odds with NIBA. Note both the
Amazon AWS Summit & Oracles Uber (Ultimate) Java Conference start on Tuesday, in
separate cities, though, NY & Denver, respectively. Tuesday also happens to be the
full day Amazon Prime day, which will start at noon on Monday. For those unfamiliar, Prime
Day grew out of a marketing coup Bezo created to preempt some sales from Alibabas
Single Day, always held 11/11. Was that why the malls have been painfully empty
since the weekend after July 4th? Or was it World Cup & Wimbledon watching?
Hats off to France, Angelique Kerber, & Novak Djocovic for winning the Cup, and
Wimbledon Womens & Mens Championships, respectively.
The Events Calendar is thin because analysts & PMs are involved in the Earnings
Calendar. Still, in addition to AWS & Uber Java, Softbank World will start Thursday,
in Tokyo, while the original Comic-Con meets in San Diego, starting Thursday, even as
Major League Baseball hosts its 89th All-Star Game on Tuesday, If you own
Biiogen and/or Eisai, youll want to prepare for the Alzheimers Association
International Conference, in Chicago, starting this coming Friday. After BIIB surged 15%
plus, a few analysts were quietly criticized as thin, the data upon which BIIB made very
bullish blue-sky comments. And it wouldnt have been the first biotech or pharma to
have announced extremely encouraging clinical trials data in a potential Alzheimers
drug, only to be forced to not only reverse the comments but, often, pulled the very
trials upon which the original comments were made, and cease development of the molecular,
altogether.
Stocks often dippy-do during the 2nd week of earnings season, which is where
this week falls. Its not usually a fatal pullback, with stocks often on their way to
new highs by August 5th, as traders & PMs conclude earnings were
better than feared. This Earnings Season suffers from a dangerous faultthe big
growth in earnings expected that wont be matched by outlooks. And worse, the closer
we get to the end of the year, the closer markets get to comping against the first year of
deep tax cuts, which are contributing greatly to results. Once a year has passed, there
wont be tax cuts to boost corporate earnings results, and its certain
operating earnings wont be a 1 for 1 offset. Then, of course, theres the
probable trade war Trump has launched which markets, for now, are ignoring. Trump
doesnt like to back down, though doesnt seem troubled by reversing himself
over the space of a few hours. Still, hes proven hard to read, hard to predict, and
harder to pin down, which might take the trade war deeper into hurting the economy than
even hes willing to observe, to get his desired result. Truth is, China doesnt
import enough from the US to match Trumps proposed tariffs tit-for-tat, on an
additional $200B in US goods. And, no, I dont think the Chinese merely dump their US
Treasuries, wholesale, because that would hurt their finances more than it would ours.
Given how much lower US Tax receipts are proving after tax cuts, and the larger tranches
of debt the US Treasury must offer to compensate for the cash shortfall, Chinese selling
would lower rates, which might be good in the most intermediate terms, if the Treasury
only proves wise enough to capitalize on the lower rates. It hasnt been before so
little reason it would be this time. But either way, its possible the US Markets are
in the August 2007 denial phase, reality yet to arrive and pull the rug out form under
bulls who, for now, control the markets.
ECONOMIC: (Highlights only, below. Full International Calendar here)
© Sandi Lynne 2018 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 facet of more complete due diligence.
July 0913, 2018 EYES
OVERSEAS THIS WEEK Donchya hate when theres
a Friday the 13th, just as US banks start reporting Q2 Eps? Most on them on the
13th? Just doesnt feel especially promising. And to make matters worse,
Pres. Trump, who has offended those nations that are supposed to be our closest allies,
with tariffs on products they exports to the US, and will have the opportunity, thanks to
a NATO Summit, to offend those leaders, again, face to face. Just what markets need, right
? (Being Facetious, here, folks!!!) Wanna know if consumers have been impacted by rude
behavior towards supposed allies? Watch Consumer Credit (really the growth in consumer
debt), just not as soon as the May data coming on Monday. But small businesses may voice
their concern in Tuesdays NFIB Optimism Index. Then, prepare for Wednesdays
PPI & Thursdays CPI, to reflect higher crude oil prices, even if price gains at
the pump have lagged gains in crude, itself.
The Bank of Canada is meeting and expected to announce a rate increase on Wednesday. Quite
quaintly, the Chief, Gov. Poloz is almost always accompanied by his deputy governor,
Wilkins, every time he hosts a post-meeting press conference. Then, dont be
surprised if BoE chief Carney discusses a desire to start tightening rates, soon, when he
speaks on Wednesday. Do US tariffs mix up the best of plans? Sure do, if the minutes from
the FOMCs last meeting, released last Thursday are any indication. They
havent, yet stopped the FOMC but still could by the time they next meet at the very
end of the monthdepending on how far along tit-for-tat tariffs rise, by then.
Wednesday afternoon, John Williams will debut at his first regional meeting with
government, business leaders and residents, when he comes out as the new Pres of the NY
Federal Reserve, in Brooklyn, at 4:30pm. Because the NY Fed has a permanent vote on the
FOMC Monetary Policy Committee, the Pres of the NY Fed is one of the most important
members of the FOMC, always. PLUS, since he followed Janet Yellen in San Francisco, when
she left the presidency of that Fed Bank to lead the entire MPC, hes probably not
all that dramatically positioned compared to Yellen. Hes gotta know the ridiculous
home prices in San Francisco, Marin County, San Jose, etc, are not indicative of
whats happening in the rest of the countryjust indicative of the influence the
big tech companies and their employees have on pricing there. And its always been
the sameeven back when Intel and Hewlett-Packard were the biggest kahuna in tech. It
may be worse now but even in the early 80s, hovels in San Francisco sold for a
minimum of $600k, even in the Mission District, besotted by drunks and homeless.
A little curious about Neal Kashkaris speech on Immigration Thursday at 8pm. He is
not afraid to speak out and criticize higher ups, when he feels its justified. And
no matter where you stand on illegals entering the country, separating 2 year olds from a
parent cant possibly sit well with anyone. For the record, Im not
concentrating on the 10th Rocky Mountain Economic Summit on the 12th
& 13th, despite Street luminaries like David Kotok of Cumberland Advisors
moderating a few sessions because the entire event is operated under Chatham House Rules.
That means no speaker can be identified with what he/she said; nothing is for attribution.
Still, there are luminaries a keynotes from Dallas Fed President Patrick Harker. On the
one hand, he must be thrilled to see higher crude prices clearing up a lot of weak oil
company balance sheets but on the other, Texas is ground zero for illegal immigrant entry,
which has to be a strain on his states budget. Then, since he cant be quoted
verbatim, he might very well discuss how he sees tariffs impacting the job of the Fed.
Earnings Season starts this week, with PepsiCo on Tuesday, Delta Airlines on Wednesday,
and a crop of banks Friday, including Citi, JPMorgan, PNC Financial, & Wells Fargo.
Like many, I was surprised that the Fed didnt use either the stress tests of C-Car
to penalize Wells in any way, after Yellens parting slap last February. Maybe the
Fed, FDIC & OCC think Wells has finally learned its lesson about short cuts and
pressure to get its employees to open new accounts. I will say that after the Stress Tests
& C-Car results failed to boost financials, Im not at all sure, now, that even
stupendous earnings will do that trick.
The Events Calendar promises Semicon West, and presumably, the Allen & Co Annual
billionaires outing. At one time a media hotspot, convergence long ago dissolved the
perimeter around media. NOW, though, with Comcast & Disney dueling for Foxa & Sky
TV, being a fly on the wall of the Allen & Co meeting should be prime viewing. Of some
passing interest, the AGA (American Gas Association) presentation to the Philadelphia
Securities Association Luncheon. If you find yourself in Brooklyn, perhaps to hear NY Fed
Pres. Williams speech, be aware that The Forumla E ePrix takes place in that
borough, the 12th through 15th. A lot more fun than watching Trump
elbow his way to the front of the photo, pushing aside other world leaders who, for the
moment, may have no use for him, at all. As for the rally, I expect one more big push
towards a high around August 5th, Im not sure this is the week to expect
that swoosh. Keep reminding yourself its summer, with volumes low, and futures able to
push stocks around more than usual.
ECONOMIC: (Highlights, only, below. Full International Calendar here)
© Sandi Lynne 2018 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 2nd6th, 2018 TARIFF DAMAGE ABOUT TO HIT HOME? On
June 14, 2017, the FOMC laid out its plans to roll off Treasuries & Agency debt it had
accumulated through several rounds of QE. However, a close read of the roll off plan
announced then, implementation to begin in September 2017, laid out increases in the
amount allowed to roll off over 12 months, only. That means, at some time in the very near
future, likely at the July 31st meeting that will end on August 1st.
Initially, for the first 12 month period, the Fed set $6B in Treasuries to run off for 3
months, the amount to increase in steps of $6B, until it reaches $30B per month. Right
now, the Fed should be at $24B, as of July 1st, and will rise to $30 by
September. For Payments of Principal from its holdings of agency debt & mortgage
backed securities, the Fed set out $4B monthly to initially roll off, the amount rising in
steps of $4B at 3 month intervals, until it reaches $20B over 12 months, which will, also,
be by September. And in a footnote to the June 14, 2017 FOMC Meeting addendum to the
Policy Normalization Principles & Plans, not many have read, what was laid out on June
14, 2017, was a recap of a plan first adopted at a meeting on September 16, 2014, the only
news being when it was implemented.
Now, the FOMC did say that it intended to see its automatic roll off remain at the caps
placed on them--$30B for Treasuries, $20B for Agency debt & MBS, so that the Federal
Reserves Securities Holdings will continue to decline in a gradual and predictable
manner until the Committee judges that the Federal Reserve is holding no more securities
than necessary to implement monetary policy efficiently and effectively. Still, Powell,
and the two very hawkish female FOMC members seem really eager to get the tightening
going, so an acceleration of the background run-off wouldnt surprise me, at least.
Trump starting a trade war was never something anticipated by the Federal Reserve. Not
only will Trumps tariffs raise the prices of many things consumers use but will
artificially but nonetheless push up inflation, which would encourage the FOMC to tighten
more quicklyor at least move off neutral, or wherever theyre at right now. So,
as the anniversary of the roll off approaches, in September, what the FOMC intends to do
with the roll off should be mentioned, side by side with rate setting, even though the
FOMC did clearly state that toying with rates was its main tool for setting monetary
policy.
What better time than fresh off the Stress Tests & CCAR to note the US system used to
rate banks is called "Camels. "That stands for "Capital Adequacy, Asset
quality, Management, Earnings, Liquidity, and Sensitivity to market risk." I thought
that not only cute but educational. After some 40 years in the biz, albeit following
equities, not debt, its never too long before I read or hear something new to
surprise me.
Back in July 2016, NBCUniversal (CMCSA) acquired rights to the Harry Potter
series & other current & future Warner Bros Films (T), as of July 1st,
2018. Its fair to question whether T will try to buy out CMCSAs rights.
AT&T wasted no time getting a postcard out to all its customers, notifying them of the
new relationship with Time Warner, now Warner Media, and that means T is able to cross
market Time Warner & AT&T customers information back and forth. Precisely,
"AT&T Companies share your information with each other. With our merger,
WarnerMedia is not included. This will mean great deals, relevant offers and new ways for
you to enjoy premium content from Turner, HBO and Warner Bros." Something else that
caught my eye last week, for the first time: Whos the UBS Retail Analyst, talking
about Nike results? Jay SOLE. What were the odds? Do you ever wonder, If July 4th
is the day the U.S. Declared Independence from Britain, why isnt that day some kind
of holiday theresomething along the lines of shrinking kingdom day of
depression? Of mourning? Somethinganything to recognize Britains New
World Loss!
TECSYS (TSX TCS) is a Canadian software company that will report on Thursday, after the
bell, but will hold its conference call the next morning, Friday, at 8:30am et. I mention
it only because Barrons noted TCS would host its conference call Friday, without
pointing out that the release will arrive the night prior. Frankly, hats off TCS PR
firm. Id never heard of them before, had you?
The week will be filled with the first trickling of June data, including the PMIs, ISMs,
Motor Vehicle Sales, and the all important June Unemployment Report, out Friday. Its
also a time frame known for portfolio rebalancing, and taking a little off the
tableespecially if one is invested in any sector that should suffer from US tariffs
and global retaliation. And perhaps I should change my mind and name June Motor Vehicle
Sales as the all important June datapoint out with week, because the group might be
suffering a touch of whiplash given all the tariffs, retaliatory tariffs, and the
retaliatory tit-for-tat tariffs being described, threatened, and in some cases, about to
be levied, as of this Friday. One would hope that Thursdays FOMC Minutes of the June
1213th meeting would have noted tariffs levied and threatened, and the
dangerous pressure they could exert on manufacturing companiesthe automakers,
especially. And, not that I wish New England lobstermen any harm but I will be very glad
if Chinas new, 25% tariff on US seafood, including Lobsters, brings down the cost of
a lobster dinner in the US. After years of paying between $13.95--$18.95 for a one pound
lobster, the price suddenly rose to $2837, a couple of years ago, because Maine did
such a splendid job marketing lobster to the Chinese. I would love to see retail &
restaurant prices lower, again.
Note that markets close early, Tuesday, on the Black Friday schedule, with equities
closing at 1pm et, bonds at 2pm et. With a holiday Wednesday, then only 2 days left until
the weekend, new tariffs being initiated, on Friday, Q2 results to be announced, starting
in the middle of this month, may take a back seat to warnings about Q3 earnings if the
tariffs are assessed as discussed. And really, back and forth tariffs become a game of
whos on top, spiraling to a point where global trade comes to a halt, as countries
are restricted in some way against every country. Does Trump really think he can drop out
of the Iran nuclear agreement, and force other countries making no changes to the
agreement they signed drop all business with the country? Because Trump says so? I think
its fair to say the countries Trump has gone out of his way to humiliate are ready
to defy his ordersinstead abide by the treaties they signed, even if Trump pulls the
U.S. out. Megalomania is an ugly trait to confront and rarely admitted by the person
exerting all the signs.
From where I sit, the question isnt whether tariffs are getting out of control but,
rather, why have the markets so calmly accepted, until now, the vicious cycle the US
kicked off? Dont be surprised if all hell breaks loose, now--prepare for the worst
and be pleasantly surprised if something milder grips the equity markets.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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.
June 2529, 2018 Comprehensive
Capital Analysis and Review The Federal Reserve, FDIC &
OCC dont release the results of the CCAR until Thursday, after hours. However,
historically, banks have announced their intentions to raise their dividends &
buybacks, as soon as Wednesday and, once, on the Tuesday before the release of the
results. The Federal Reserve discusses the results with the banks & holding companies
subject to the review, before the results are released to the rest of the world. The
results determine the extent of the capital return plans regulators will permit. Because
banks know prior to release of the actual results, on Thursday, after the close, most rush
out announcement of their capital plans, like proud parents whove learned their kid
got into Harvard. You might recall a few banks, last year, announcing capital plans that
were below their previously stated objectives, earlier in the year. That was the result of
input from the regulators who control how much the banks & holding companies can
disburse. On the other hand, Goldman Sachs has had a habit of not releasing any capital
news, in the week during which the CCAR results are out. Hewing to the fact that its
up to the board of directors, GS waits until the directors have met and voted on a course
of action, before announcing updated capital plans. For that reason, GS has often
underperformed other banks, JPM & MS, in particular. Youd think the Street would
be wise to GS methods, by now, but somehow, its always news to them.
The Economic Calendar also promises hosuing data, like Mondays May New Home sales,
Tuesdays S&P Case Shiller CoreLogic April 20-city Home Price Index. Does anyone
else wonder why the Street is so spellbound by data that old, in an age of lightening fast
computers? Wednesday, May Durable Goods Orders & Shipments, the May International
Trade Deficit, which might prompt a tweet storm from the #1 disser of current
International trade balances. Also Wednesday, May Pending Home Sales from the Natl
Assn of Realtors, EIAs weekly Petroleum stats, and Fed Vice Chair for
Supervision, Quarles, speaking at the UBA 110th Conference, starting 9:20am,
presumably, local time, in Sun Valley ID, though that was not specified on the agenda.
What the heck is that, you might rightly ask? Well, thats the Utah Bankers
Assn, the state a favorite for whats referred to as "industrial"
banksbanks that serve a solitary business of a certain industry or company.
Industrial Banks may be Home Depots credit card business, or IBMs employee
credit union. Licenses for new Industrial banks havent been issued since the 2007
crisis, and worse, at least for a friend of mine, was the fact that the Feds
simultaneously kept a tight grip on license transfers, so friend with a Utah industrial
Bank that negotiated a $400m cash sale was nixed by the regulators. His wife waited
another 9 years for a divorce, by which time hed raised the cash he needed to be
freed, while she lowered her sights on how many millions she felt she was entitled to,
that license still not transferred to anyone new, though additional partners were allowed
in. Feds Rosengren is delivering the John Olcay Lecture on a topic that still has me
scratching my head: "Is the Economy too Sensitive to Economic Downturns?" Surely
I jest, youre thinking but Im dead serious. The Peterson Institute is
responsible for the topic, as host. Also Wednesday, the Treasurys auction of 5-year
Notes, at 1pm, may not go well, so its something to keep in the back of your mind.
Likewise, Thursdays auction of 7-year Treasuries may be even worse. Of course, CCAR
results out after hours might heal any Treasury wounds. And at the least, mark your
calendar for Friday, because thats the end of the trading month, quarter, and
half-year. If youre trading the Russell indices, Im sure you dont need
me to remind you that, on the 26th, FTSE Russells reconstituted Russell
indices debut on open, which is, also, when the Dow Jones Industrial Average will be
reconstituted, GE out & Walgreens Boots Alliance inserted in its stead. Walgreens
merged with Boots, a European pharmacy chain, that makes up almost half of sales. Im
sure thats why it was chosen over CVS Caremark, even as CVS is waiting for
regulators to approve its buy of Aetna. Still, many think WBA was a bad choice,
altogether, preferring another tech-dependent name. Maybe when they replace IBM they can
fill that spot with another tech company.
Turkey held an election this Sunday. Current President, Recep Tayyip Erdogan, won as
expected, his victory accompanied with complaints that the elections were rigged. The EU
is holding a summit on immigration, this week, with Hungary, Poland, and the Czech
Republic not attending because they dont like the thememore equal sharing of
migrants.
The event of the week may be Goldman Sachs 14th European Business
Services, Transport & Leisure Conference, starting Monday, its London location no
hindrance. On Monday, the AIAA starts its 2018 Aviation Forum, in Atlanta. Ste3phens
begins its Airline Investor Trip in Atlanta, the following day, and will have dropped in
on Delta, Spirit Airways, American Airlines & United Airlines, ending up in Chicago on
the 27th. Jefferies hosts a Steel Conference one day prior to earnings releases
from Schnitzer Steel & Worthington, both of which report on Tuesday--both
beneficiaries of Trumps tariffs on steel. Youll note that most of the I-bank
events this week are occurring overseas. Thats because this is the week before the
July 4th celebrations will break up the first week in July. Major tech
companies will come together on Friday, for the US-China A.I. Summit at Half Moon Bay, in
California. Thats a day after JPMorgans NextGen Payment Services Forum, and
Berenbergs Blockchain Conference, on opposite coasts.
The movies opening Friday leave much to be desired. The Red Sox vs Yankees 2-game
interlude, in London, could be better watching than the movies debuting, that surely
account for the big hits already opened and running strong. Then, again, you could just
hop down to Walt Disneys Hollywood Studios, in Orlando, for the launch of "Toy
Story Land." Happy hunting into the end of the month, quarter, and half-year. The
worst months of the year started in May. I expect one more spike into August 5th,
or so, as Q2 Earnings Reports dont surprise. But by the time were into August,
the Street will start looking ahead to 2019, and thats when the trouble should
begin. And you could always pop into Old Navy (GPS), where flip-flops are being advertised
for $1 p/pair, a fairly regular July 4th promotion for the chain. Pandora
Jewelers (PANDY) offered 45% off about 2% of its merchandise, a bigger promotion than
typical. And dont be misled by how small a percentage of its overall merchandise the
sale component represents. Two percent is, still, well over 500 pieces. And, unlike some
of its pendants, which require a separate purchase of the chain, a few of the pendants in
the 45% promotion come with the chain. So, a chain & 2 star pendants that retail for
$90, were reduced to $52 with sales tax included, when the chain, alone, usually costs
more than that. Still, the mall store wasnt as jammed as one might have expected, on
the last Saturday of the sale, even though the mall was still enjoying the better traffic
that showed up in Q1. That may say more about shoppers ability to snub their noses
at any sale that isnt at least 50% off, most in the past week 50% off plus an
additional 1025% off, except at Banana Republic, where it was an additional 40% off
merchandise already discounted by 50%. Gap divisions are pulling out all the stops for
business, and not getting as much response as might be hoped.
ECONOMIC:(Highlights, only, below. Full International Economic Calendar is here)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
along, and should be just one factor in more complete due diligence.
June 1822, 2018 CENTRAL BANKERS
AGAIN DOMINATE UNTIL THURSDAY. Thats Stress Test Results Day on Market Close
Megabank& Financial Holding Company Stress Tests will be released after the Close (4:30pm
et). The market may well act like thats the whole story and nothing but the story.
Of course, the rest of the world may suspect the CCAR out a week later are more important,
because CCAR decides the level that dividends & buybacks can rise to. But, of course,
thats not all because the New York Federal Reserve Bank welcomes its new leader,
John Williams, previously from the San Francisco Fed, whos scheduled to be in NY on
Monday. And not just arrive quietly. Instead, the NY Fed is hosting an event, Monday, that
until now NY Fed CEO/Pres William Dudley will open with "Reforming Culture &
Behavior in the Financial Services Industry: Progress, Challenges, & the Next
Generation of Leaders. Williams will close the event, at 4pm, with remarks on
"Financial Services Industry Culture," a passing of the baton, if you will, from
departing Dudley in the morning, to Williams right as the market closes. In between,
Dudley and a former Fed Governor, Elizabeth Duke, currently atop the Board at Wells Fargo,
will be panelists. Duke, for the record, was the first female board member at WFC,
replacing the Wells Chairman Stephen Sanger, in August 2017.
But, I digressed: The day-long, New York Fed conference, is not all well hear from
the Fed. On Wednesday, ECBs Draghi, FOMC Chief Powell, BoJs Kuroda, &
RBAs Lowe will all speak on a Central Bank panel, at the ECBs Central Banking
Forum, in Sintra Portugal, which will run through the 21st. And while
were at it, the Swiss National Banks Monetary Policy Committee (MPC) meets,
also Wednesday, its leader, Jordan, will host a post-Meeting Press Conference. Norges
Bank, Norways central bank, issues an interest rate decision, as well. So too will
the Bk of England, the sole central bank that releases its minutes at the time it releases
its MPC statement, at the conclusion of the meeting. Mark Carney, the BoE chief, will host
a post-Meeting press conference of his own, which usually occurs late enough in London to
occur not long before the US markets openlate enough in the British business day
that Bloomberg often broadcasts it to the early morning crowd. And just to finish the last
of the Central Banking news worth knowing, be aware that Esther George (vocal hawk) is the
alternate who will replace the absent San Francisco Fed president, voting at future FOMC
Meetings. That places one of the most outspoken rate hawks in voting position 6 months
before she would have, ordinarily, rotated into a vote, only the second time an alternate
has stepped up to the plate. Given that Janet Yellen was the San Francisco Fed President
prior to becoming the FOMC Chief, and Wiliams is moving into the New York Fed Monday,
taking over from William Dudley, who is retiring, it appears that the San Francisco
Feds profile is rising strongly. (For the record: The last time the rule requiring
an alternate member to vote at the Fed was triggered was in 2006, when St. Louis Fed Bank
President William Poole voted twice in lieu of the Atlanta Fed President, as that spot was
vacant.
The other organized body that should be watched is OPEC. Its holding the 7th
Petroleum Seminar, starting on Wednesday, the 20th, in Vienna Austria, that
will run through the 21st. Then, on the 22nd, OPEC will hold its 174th
(Ordinary) OPEC Meeting, at its headquarters in Vienna. Of course, with a 2-day global
meeting Petrol meeting preceding the regular meeting on the 22nd, its
possible all the horse trading on easing the production cuts will have been concluded by
the time the "regular" meeting takes placea rise in production recognition
that Venezuela & Irans production are too erratic to count into daily totals.
With all the hoopla about autonomous vehicles, there are few industry events as important
as the SAE Automated & Connected Vehicle Systems Testing Symposium (06/1921),
taking place at the Clemson University International Center for Automotive Research
(CU-ICAR), in Greenville SC. Virginia Tech, which first detected the VW emissions defeat
software is the opening presenter, offering group leaders from its Truck & Bus Safety
Transportation Institute, along with PACCARs Peterbilt Motors, and dealer Local
Motors (Natl Harbor MD), in addition to the hosts. With many University-based
speakers, side-by-side with corporate speakers, and the US Dept of Transportation, the
symposium reads like the cross section of all autonomous undertakings.. And, in addition
to companies like Metamoto, SGS Transportation, BMW Group, Ford Motor Co, Fiat Chrysler
Automobile, Toyota, NHTSA (Transportation Safety Agency), Michelin No. Am, TUV SUD,
Robotics Research Corp, and TNO, tech companies like Intel are fewer and farther between
than one might guess but, also, features the unexpected, like Shanghai Intl
Automobile City"A NICE City." Then again, it felt like 2 of the biggest
elephants in the room are missingperhaps 3, if one adds GM to Tesla & Panasonic,
the latters batteries running almost all the prototypes & vehicles already being
tested.
Then again, its surprising how few times Teslas sister solar company gets
mentioned, even as California is mandating that all residences built starting in 2020 must
have solar panels. PV Production & InterSolar Europe, will be held in Munich, starting
in Wednesday. In the past, it was so well covered, and stocks involved shot up so high,
the event might as well have been in the US. But nOW, even with California forcing
builders to include solar power in new homes, Pres. Trump slapping tariffs willy nilly on
everything the US imports or producesthe latter to protect US companies producing
the tariffed items--the news out of InterSolar may be like that adorable puppy in the
window your heart yearns to take home but Daddy says you can't have. For what its
worth, 2 solar companies are reporting this week: Jaso on Monday, Rene Sola on Wednesday.
Otherwise, Earnings Reports are expected from high profile tech companies (ORCL, MY, RHT),
consumer companies (BKS, FDI, FINL, KR, KMX, CCL), and companies who will be badly hurt by
tariffs on steel & aluminum: Winnebago & Steelcase. Ultimately, of course, CarMax
could benefit, short-term from metal tariffs, since theyll increase the selling
price of all vehicles, and could make smaller vehicles more popular than theyve been
in recent years, when pick-up trucks & SUVs were all shoppers wanted to buy. And
the more expensive new vehicles become, the better KMX can do with an inventory of
off-lease sedans few have wanted until now. Same thing must have happened with Deutsche
Banks AutoTech Day, in London, Friday.
Which brings us to the rest of the weeks Events, none of which will rouse the Street
as much as the ones already mentioned, though Tuesday stands out for me. Jefferies is
hosting a Consumer Conference, in Nantucket, on the Cape, Oppenheimer is hosting its 18th
Annual Consumer Conference (Boston), while CIBC is hosting a Retail & Consumer Small
Cap Forum, too, even as its hard to see Amazons Alexa Dev Day (Toronto), on
the same day, as anything but a consumer event, given Alexa has been targeting consumers,
above all else. As more and more developers write software for Alexa, the Amazon
ecosystemand Primebecome harder to leave, as Apple surely knew from the get
go, with iPhone. Just why so many I-banks woke up some 6 of 8 months ago, and decided
theyd cover consumers, on June 19th, is beyond me but that what must have
happened for them all to be scheduled simultaneously, CIBC & Amazons Alexa
single day events, unlike the others that will end on the 20th.
Then, again, did I mention the Megabank Stress Tests are out Thursday, after the close? I
did, but perhaps too many lines ago. And it might pay to bear in mind that trade opens
Monday, after last Fridays quadruple witching expiration, which often sees stocks
rise for about 18 minutes, before they reverse course and sell off, sometimes steeply.
What happens by the end of the day is usually the direction worth following for the next
few daysthough Id be surprised if bets on Thursday arent to the upside,
in advance of release of the Stress Tests. Failing grades for an Ally Bank, as happened
previously, wont upset most applecarts. Then again, dont ignore the housing
data out Monday, Tuesday, Wednesday, & Thursday, either, though watching rates might
serve your purposes well, in that case.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1115, 2018 FOMC
MEETS for the Quarter Point Hike the STREET AWAITS, & thats not even half the
story, cause so do the ECB & BoJ!
Trump meeting with the North Korean dictator on the 12th, the FOMC meeting
Quarter point hike expected on the 13th, everything else on both ends of those
two days likely to be more noise than substance. Yes, last weeks break out took me
by the surprise but the coming rate hike is likely to stall out the rallyno matter
how well anticipated it is in advance. Jerome Powells 2nd post-Meeting
press conference is also Wednesday.
The Signature event of the week is Goldman Sachs 39th Global Healthcare
Conference, starting Tuesday, never mind its a sector so well covered with I-bank
meetings, already, this year. The Goldman event is the book end to JPMorgans Jan.
event, which kicked off the year. Last week, former FOMC chief Bernanke predicted stocks
could fall 50%. This week, Janet Yellen is the headliner for Stifels Cross Sector
Insights Conference, expected on Wednesday in whats being referred to as a
"fireside chat" with Stifels leader.
Economic Data ramps up also, with May CPI on Tuesday, PPI on Wednesday. Also Tuesday, the federal court is expected to release its opinion on the AT&T merger with Time Warner that the DoJ sought to block. A couple of observers found the judge to seem skeptical of the administrations position in blocking the combination. But the judge might be trying to find a way to buck the administration without suffering a fuselage of tweets from the President who may still be in Singapore. On Thursday, the Dept of Justice Inspector General is supposed to release its report on the investigation into the DoJ & FBIs investigation into Hillary Clintons use of a personal server for emailemail she still denies ever contained classified information. Then, again, I dont imagine Hillary expected that any of her emails would show up on the laptop of a man who cant keep his hands off himself, who liked to email photos of the job he does on himself, to underage girls. Well, maybe not the first time he was slammed for doing so but certainly after that, donchya think? Is covered in the IGs report should be the conduct of former FBI director James Comey who announced a new investigation into Hillary Clintons emails 11 days before the elections, in 2016, only to say never mind, 8 days latertoo late for even some fans to vote for Hillary.
Trading on Monday, June 11th, could be a bit wild, given its the first
day of trading after FTSE Russell published preliminary lists of changes to its indices to
come at the end of the month. Its also the first day of trades after Quadruple
Witchingthe expiration of options & futures on stocks & indices+commodities,
respectively. The June 11th Deutsche Bank dbAccess Caterers Day &
French Food Retail Investor Trip (Paris FR) sounds ridiculous until its connected to
the Global Consumer Conference, also in Paris, starting the following day. I dont
know what Credit Suisse was thinking, naming its conference starting on Wednesday the US
West Coast Yankee Bank Conference & Investor Day (San Francisco). Theres not a
Yankee bankor even a US bankamongst those presenting, which are all European
banks. At least Piper Jaffrays Heartland Conference is all about presenting
companies based in the heartlandand many of those healthcare, to boot!
If you missed it, last Thursday, the Feds & FDIC announced the schedule of releases of
the mega-bank & mega-holding company Stress Tests & Comprehensive Capital Analysis
& Review, otherwise known as CCAR. The Stress tests will be out after the close on
June 21st. The CCAR is coming on the 28th, both at 4:30pm, right in
time to influence the weekly options that expire the day after both of those Thursdays.
But, then, we warned you last week to take into consideration the release of those items
when buying any options expiring in June.
On June 12th E3 Expo opens the video game starring turn, producers like EA
& Activision at levels never seen, only dreamed of back in the late 90s. EA,
alone, already sent out 6 press releases, touting its games to come, and the dates of
release. And dont forget, the White House has promised to unveil its list of $50B
worth of Chinese products on which the US will slap new tariffs. Thats why the
Earnings Calendars two solar power reports are not highlighted. Theyre already
under tariffs, and theres probably more to come.
So, it promises to be one very busy week, Every mid-year index change creates stronger
volume and more active trades in everything expiring at the end of the week but rarely
does the Quad Witch arrive so early in the month, and rarelyif everwith an
FOMC meeting that promises a rate hike, a US leader in North Korea (thats never
happened before but Trumps desire to win a Nobel prize knows no bounds). But add to
that, the previous FOMC leader speaking on the same day the current one is holding a
post-Meeting press conference, with the DoJs IG report to come, and a Federal Court
deciding whether the US can go ahead and block the merger of a telco with a content
company. Whew! Even just writing about it all is exhausting, and thats before we
have any idea what the latest dot-plots (SEP) will look likewhether 2 hikes look
more likely after the 2nd hike of the year arrives on Wednesday. If the week
were a mystery book gathering all the suspects for the big reveal, it couldnt be any
more suspenseful than the one ahead. Be careful out there! Wednesday could mark a near
term top, trade the rest of the week to a downside the markets act like they dont
expect, after Wednesdays hike. Then, again, the rally could gather another leg if
the dot-plots still anticipate only 3 hikes this year, leaving only one after
Wednesdays near certain quarter point addition. And to think, we've got all this
going on even as the ECB and BoJ meet this week, as well, with Dragh's press conference
flowing into the US morning on Thursday.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar is here)
© Sandi Lynne 2018 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 0408, 2018 Apple WWDC May Be the Event
of the Week Itll be a week with few items to recommend
ita week before the one during which the FOMC meets. That makes it a tweener, where
foreign data will catch up with what the US already released, last Friday, and Earnings
Reports dominated by Consumer Names, many of them disasters in progress, along with a few
Tech names that wont make or break the markets. The Techs include Dell Technologies
& Palo Alto Networks, on Monday, when Building Supplier Quanex also reports. Tuesday,
Ambarella is the tech name, that stands out, along with HD Supply (formerly Home Depot
Supply), Navistar & another building supply company, NCS. Wednesday, Brown Forman is
the notable name, Jack Daniels maker but still as much a consumer name as Ascena
Retail, Caseys & Freds, on Monday. Thursday, Broadcom is the major tech
reporting, Hovnavian the Builder du jours, but the world wont end if any of them
miss, Broadcom the only one that might shake confidence.
ASCOthe American Society of Clinical Oncologists got underway on Friday, and will
finish up Tuesday. Any news out of ASCO is already publicly known, by this week, except
for anything Bristol-Myers Squibb, Roche, or Merck might say when they meet with analysts
@ASCO, Monday. BlackRock hosts an analyst meeting Tuesday.. I-banks are back in full
swing, most of them hosting conferences, this week, even as the hotel & REIT analysts
will all be at NAREITs Investor Relations Conference, on the 4th, similar
to mass analysts meetings recently held by AGA & EPG. On the 5th through 7th,
NAREIT hosts REITweek, less 1x1 than the IR day on the 4th. Also notable,
DDWDigestive Disease Week, along with Evercore ISI Autonomous Driving, AI &
Mobility, similar to Needham & Cos Automotive Tech Day, both Monday.
Even with Goldman Sachs Lodging, Gaming, Restaurant & Leisure Conference, and
the EEI Annual Convention +AGA Tech Advisory Cmte Meeting & CFO Meeting, plus BIO
International, its really Apples WWDC (worldwide developers conference)
that will captivate the media, which all bulls have to hope goes well, given it retains
the biggest market cap in the world, and the biggest of all Tech Stocks, though some would
dispute its inclusion in that category, given how much of its earnings come from the
retail & wholesale sales of iPhones. Still, if youre a bull, you have to hope
analysts & developers are impressed with the software introduced at WWDC. There
generally isnt much discussion of hardware at WWDC, though there is more of that in
some years than there used to be.
Beyond Apple, theres ASM, Thursday, for Microbiology & Microbes, which is
co-located with Interscience Conference on Antimicrobial Agents & Chemotherapy. In
truth, IAAC has been absorbed into ASM, but some old-timers still look for the IAAC to be
named. Also notable, Friday, is release of the Preliminary list of Russell Indices
reconstitution, which will be updated on June 15th & 22nd.
Lastly, Canadians are hosting G7--Growth that works for Everyone, one of the 5 topics of
focus at the meeting, though its also been adopted as part of the title of the
event. The others are preparing for Jobs of the Future; Working Together on climate
change, oceans, and clean energy; Building a more peaceful & secure world; Advancing
gender equality & womens empowerment. Prime Minister Justin Trudeau presides
over the meeting, at which US reps may well be shunned. And finally, after the "Hans
Solo" disappointment, "Oceans 8" hits theaters with female cast members
replacing the male crews that dominated 11 & its successors. Some theaters will show
"Oceans 8" on Thursday some theaters are offering early peeks.
I give the bulls credit for not letting the markets fall apart, altogether. That suggests
some underlying interest in staying long sharesdespite the old maxim Sell in
May & Go Away. But I dont think the bulls have had the last move, yet. In
a typical year, crude would cool off starting now, until the first hurricane threatens the
Gulf. Stocks would mark time or even pull back some more, before winding up for a last
hurrah to the upside, after July earnings. Financials, though, may not have to wait that
long, given the FOMC has said it would release results of the C CAR & Stress Tests,
before June 30th. As I said last week, make sure to account for that release
when buying any calls or puts that expire in June. The place to get short until late Oct
wont arrive until around August 5th. Then, again, weve never had
anyone like Trump, who seems to relish in the possibility of starting a trade war. Canada
already filed a complaint with the WTO against the US tariffs on steel & aluminum?
Does Trudeau really think Trump will give a crap about what the WTO decides? And
thats the very independence that should scaring businesses in the US, and all the
world over.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 Nothing contained in this commentary is to 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 28th - June 1st, 2018 MUCH
ADO ABOUT FRIDAYS ECONOMIC RELEASES and Wednesdays Beige Book
It would be my pleasure to take the weeks breakdown, below, and distill it into just
a few items but that wont be possible. First, my fingers are doing their own thing,
not obeying my directions, at all. (C-6 & 7 crushed, impacting my arms & hands.)
Then, I think Ive already highlighted the biggies for Economic, Earnings & Event
Releases, that you all are capable of distilling for yourselves. Take Canadas
Monetary Policy Committee Meeting Decision falling on the same day as the Fed releases its
Beige Book. I wouldnt expect Canada to take any action while NAFTA negotiations are
ongoing. As for the Beige, theres little reason to expect it to waffle any less than
it always does. Nor do I expect companies to stop complaining that workers are hard to
find. What they really mean when they say that is that other companies are paying more for
workers, so we can no longer hire people and pay them squat and expect them to stay longer
than 2 months.
While were on the Federal Reserve, the board announced its tentative 2019 meeting
and press conference schedule. It includes 8 meetings and 4 press conferences after the
March, June, September & December Meetings. Move along. Nothing to see here. Pundits
had it wrong. As of now, they are not increasing the number of press conferences. https://www.federalreserve.gov/newsevents/pressreleases/monetary20180525a.htm
Speaking of the Federal Reserve, in announcing the scenarios for the 2018 CCAR (Capital
Analysis & Reviews), and Stress Tests of the largest 18 banks operating in the US
(Includes foreign ones), the Fed said results of its supervisory tests would be announced
by June 30th. That means the Fed could announce its going to release the
results at any time between Friday and the end of the month. I cant speak for Jerome
Powell or other current leads at FDIC but, historically, the Fed has had a habit of
scheduling huge events like stress test results on the Thursday night prior to expiration.
In that case, the results could be announced as soon as June 14th, June
expiration one of the shortest, coming on the 15/16th. Then, again, the news
could be released on June 21st or 22nd. In my book June 28th
or 29th are less likely, because the major banks, by then, will be rushing to
close their books, for the quarter, and dont need any additional complications. In
fact, thats why June 14th/15th sound more reasonable, all
around. The Feds announcement on stress tests & CCAR, with the "by June 30th"
release date, here. Furthermore, the list of those banks &
holding companies that must submit to the tests is included in that release. DB USA Corp
is, presumably, Deutsche Bank which, at the rate its shrinking, may well escape the
stress test mandate as soon as next year. Recall, last week it was rumored that as many as
10K US based employees could be subject to job cuts. At any rate, when youre buying
options--no matter which week in June they expireyou must build into the cost what
may happen if the stress tests & CCAR results are released, or even, supposed to be
released by that weeks end.
Then again, faster than it does some months, Fridays June 1st data will
include May Motor Vehicle Sales & the May Unemployment Report. Because the BLS makes
"seasonal adjustments," theres little reason to expect an onslaught of
college graduates will make either the unemployment or participation rate look remarkably
different from recent ones On the other hand, I know of at least one 34-year employee laid
off from a construction company, and a teacher whos decided to throw in the towel,
due to untoward politicizing of her elementary school. And, while were at it,
theres probably nothing that will come from the G7 Pow-Wow in Whistler, late this
week. "Investing in Growth that works for Everyone" is, simply, not on any
legislative priorities.
The Earnings Calendar is extremely heavy with retail names and other consumer companies.
JCPenney started closing 100 stores on May 27th, 2017. At the time, (soon to be
ex-)CEO, Marvin Ellison, said activity in the stores slated for closure were going to
remain open for a few weeks longer than originally planned, because the stores were so
busy. Liquidation sales raised considerable revenues, that will make this quarters
comparable store sales that much more difficult. I have not been a bull on Macy*s for a
decade, and cant stand the "Johns Bargain Store" look of its main
floor, as shoes, handbags, and menswear host Backstage clearance sections, up to 80% off.
Worse, traffic has picked up but so, too, has the amount of liquidation priced
merchandise, much of it shopworn, missing buttons and belts, have pulls or runs, and half
fallen hems, or suffering other indignities that make some of the inventory unappealing at
almost any price. But, with Sears & JCPenney closing so many stores. Macy*s could well
wind up the only lower end department store left for shoppers of a certain income level.
In the short-term, Macy*s may well suffer uninspiring sales caused by the liquidation
prices at JCP & SHLD, as they close stores but 2 or 3 years ago, SHLD and JCP may have
so few stores that theyre no longer competition to Macy*s, at all, and out 710
years, may not be around, at all.
But, in addition to retailers, Booz Allen, Bank of Nova Scotia, Hewlett-Packard,
Salesforce.com, Analog Devices, Ciena, Marvell Technology, Tech Data, and VMware will
attract plenty of attention. Also worth noting are Microsofts InterOp DevDays in
Asia, and Walmarts Q&A with the Investment Community, as well as MSCIs
inclusion of Chinese A-Share listed companies in its emerging market index.
Likewise, there are few larger events than ASCO, and surely none that are more newsworthy,
as a rule, for biotechs. It doesnt open until Friday, so whatever hasnt
already been announced wont be until the doors open. But thats not all the
Event Calendar offers; There are an insane number of I-bank events as the Street rushes in
now that Earnings are largely done, and before the summer escape empties the caverns of
lower Manhattan. Other than ASCO, Sanford C Bernsteins Strategic Decisions CEO
Conference is well respected though a mishmosh of sectors. Deutsche Banks Global
Financial Services Conference (Tues.) should be full of positive news, as recent
volatility is manna from heaven to trading facilitators. Cowen & Cos 46th
Annual Technology, Media & Telecom Conference is reliably newsworthy, as the calendar
just entered the tail end of the quarter push.
Last week I was positive on FootLocker which worked out well. I dont have a pick for
this week, though. I base my preferences on the actual action I see in malls, and despite
busy corridors, Im not see as many shopping bags as I am people empty handed as my
area (southern Florida) enters its 25th straight day of rain. American Eagle
Outfitters? Theyve been closed, here, or rather, open in a temporary, new location
outside, where one must get rained on to enter. Not a good move given all the rain
weve had. It is rebuilding is usual spot, adding the leasehold next door, that used
to American Apparel, probably to add more aerie and, possibly, kids. Adding kids is
exactly what Abercrombir & Fitch has done, after closing the dedicated kids
store, last year before back to school. Expanding the sizes available is probably a good
way to curb piling up inventory of items that might not sell, while reducing the rent
expense ANF suffered when it maintained 2 separate stores, one for kids, one for adults.
Target, in whats got to be record time, opened a dedicated "pick-up" are
close to its entrance, for shoppers who either call in or order online, and want to be
quick about picking up the order already paid for. Six spaces were cordoned off one
Monday, and three weeks later the spots were market with large signs. Whether shoppers are
respecting those "PICKUP ONLY" signs or not is anyones guess. My 91
year old mother feels entitled to use the maternity parking spots near Talbots,
where are too few handicap spaces. Is anyone going to argue with her? Probably not."
If there are any other events worth concentrating on, theyre probably those
concentrating on sectors less traveled, like RayJays Defense & Government IT
(Wed.). Is there anything thats going to come out of Book Expo America, in NY
(starting Wed.)? The only valuable intel I could scrounge up is that most of the author
readings & signings will take place on June 1st. BEA has one of the most
annoying websites Ive ever encountered, that revs up the same video before
disclosing any information, slowing down a researcher like me to maddening
distractionenough to elicit an email to the producer.
With that our digits are done. Its just too painful to keep typing except to say
that Trump knows he needs to actually meet with Kim Jung-on of North Korea to be in
contention for a Nobel Prize for Peace, so expect him to push for that meeting to take
place, no matter how little is likely to get done.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here.)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
along, and should be just one factor in more complete due diligence.
May 2125, 2018 EVEN MORE CENTRAL BANKERS
& RETAILERS GALORE After a light week for debt issuance, last
week, the US Treasury cranks it up this week, offering $231B in debt. Most worrisome is
the $30B 7-year Notes being offered Thursday, the $36B 5-year notes perhaps needing a
higher rate to attract sufficient buyers. How smart is it for the Treasury to offer $33B
of 2-years Notes, on Tuesday, then, $16B of reopened 2-year Floating Rate Notes on Wed.?
With the next rate hike all but promised for the June 1213th Meeting, it
doesnt take a genius to expect FRNs to do better than fixed rate debt of the
same durationeven if that duration is short by central bank terms..
The FINRA Annual Meeting speakers list is filled with many lawyers and brokerage house
members, along with the SECs Chairman Jay Clayton. Keynote from Robert Cook,
Chair/CEO of FINRA, Wells Fargo Advisors represented by Ron Long, is an ironic panelist on
"Working Together to Protect Senior Investors." I say ironic because I know,
first hand, through my mom, that Wells employees thought nothing of opening unwanted
accounts for seniors, that charged them monthly fees, even when the accounts held jumbo
funds, and the money was transferred out from accounts that charged no such fee.
Theres a bootcamp on Advertising Compliance, while WFC offers a panelist for
"Emerging FinTech Trends." IMO Wells needs to do a better job of running the
bank it has before getting into FinTech.
Take a look at Mondays FedHead speakers: Bostic on Welfare Economics, Harker at the
Chief Executives Organization CEO Financial Seminar 2018Visionary Investment:
Managing late cycle Risk & Opportunities. Tuesday, SEC chairman Jay Clayton keynotes
at the FINRA Annual. FOMC May 1st2nd Meeting Minutes are out
Wednesday, along with April New Home Sales & Neel Kashkari At Next Energy Williston
Basin Petroleum Conference in Bismarck, ND. In addition, Wednesday, the Treasury will ber
auctioning 5-year Notes in addition to the aforementioned 2-year FRN, while overnight, NY
Feds soon to be leaving President Wm Dudley, is a panelist at BoEs Markets
Forum 2018, the topic: "Reference Rate Reform" Improving the Culture of FICC
Markets," a topic were pretty sure he wont be asking his former firm
about, since Goldman Sachs FICC has badly lagged every other firms. Thursday,
Feds Kaplan, Bostic & Harper are co-panelists on a "Policymaker" panel
at the Dallas Fed TED: Technology Enabled Disruptgion: Implications for Businss, Labor
Markets & Monetary Policy (Dallas thru 25th) And if that werent
enough for Thursday, Harker will participate at a later Q&A at TED, at 2pm et.
Meanwhile, Thursday also promises FHFA March & Q1 House Price Index (9am), & NAR
April Existing Home Sales (10am). At 1pm the Treasury will try and auction off $30B in
7-year Notes, which worries me. Longer tenors have not gone well, of late.
Friday is expected to be challenging for Facebook, Google, Microsoft, and Verizons
Yahoo & AOL due to EUs GDPRGeneral Data Protection Regulation, effective
on the 25th, which includes the "Right to Be Forgotten." Before the
day is over, Fed Chief Powell will be a panelist with Boes Carney &
Riksbanks Liikanen at "Financial Stability & Central Bank
Transparency," at Sveriges Riksbank Anniversary Conference: 350 Years of Central
BankingThe Past, Present & the Future (Stockholm 9:20am et) Before the day is
over, Feds Evans, Bostic & Kaplan will be co-policymaker panelists, again, at
the Dallas Fed TED event that Kaplan will, also, close. But Friday could be a lost cause:
Its not T-3 for End of Month, and Treasuries, along with other SIFMA controlled
markets close at 2pm. Equities, only, will remain open, because the NYSE doesnt like
to close no matter what Bonds do.
Which brings us to Earnings, Consumer Discretionary names dominant, from Auto Parts Stores
Advance Auto Parts to AutoZone, plus discounters TJMaxx (Tues), Ross Stores +Target
(Thurs), but also some tech firms like Hewlett-Packard Enterprise, Intuit (Tues), NetApp
& Synopsys (Wed.), and Autodesk (Thurs), plus builder Toll Bros (Tues), apparel
manufacturer & retailer Ralph Lauren, plus Tiffany & Williams-Sonoma, Canadian
Banks RBC & TD, plus Spam (forever food) maker Hormel, McKesson & Medtronic. And
if malls have improved, which they lately seem to have done, than the Street is too
negative on Footlocker, reporting Friday.
Sunday, The Natl Restaurant Assn Meeting continues, as does ATS, AUA, the
Intl Trademark Assn Annual, along with Infusion Therapy. Starting Sunday, the
ICSC (Intl Council of Shopping Centers) REcon, a Global Retail Real Estate event,
REITs that own Retail Real Estate out of favor has more store closures get announced
monthly. Beyond REcon, AGA is the American Gas Associations Financial Forum, a mass
analyst meeting that, rightfully, attracts all the analysts that cover the group. Ditto,
EPG is Electrical Products Group, holding its Spring Annual Meeting, like AGA, a mass
analyst meeting at which companies like 3M, GE, & Honeywell will host analysts
meetings in Longboat Key FL. Barrons and other publications have talked up UBS
Global Healthcare Conference in NY but thats a subject overplayed since JPMorgan
kicked off the year with its own Health Care Conference in January. The only thing one can
say about biotechs & pharmaceutical companies is that theres zero optimism in
them, despite Trump offering little in the way of restraining their pricing on drugs, when
he unveiled his plans. FDA Chief Gottlieb wants to do more to more generics along but he
cant really do any more than the Congress has allowed. So, yeah, drug makers may
bounce this week but I wouldnt bet the farm in that direction. In fact, Id be
putting the rest of the year under serious scrutiny by listening to some of the
presentations at AGA & EPG. Raymond James is stepping out of the box to host meetings
at the Wireless Infrastructure Show, which this year is taking the name "Connectivity
Expo) in Charlotte NC. The Medicaid Managed Care Congress is in Baltimore.I even like the
Licensing Expo (starts 22nd) better than many of the I-Bank Conferences, this week. This
is where real TV, Toy, Apparel & Other Merchandising properties gets seen and
licensed.
I do prefer UBS Global Oil & Gas Conference to its Healthcare one, and like that
Argus has scheduled its North American Natural Gas Conference, and the New Texas Swing DUG
Permian Basin Conference, not any of them in the same city in Texas. To top it off, Daiwa
is hosting a Texas (Energy) Research Tour in Texas, thru the 25th. And we just
looked at Sunday and Monday. Tuesday, Gas Shipping Americas takes place in Houston, one of
several shows OPEC lists on its calendar. JPMorgan heads to London for its 45th
Annual TMT CEO Conference, where Morgan Stanley will land, too, for ChemTech Day.
Dont overlook SEMICON Southeast Asia, in Kuala Lumpur, either. Or ConFab which
started Sunday, since Semis have been sizzling places to invest, until last
weeks report from Applied Materials. All could be on its way to recovery, if Micron
Technology makes the right noises, Monday, when it hosts its analyst meeting. Intl
Display Week, starting Tuesday on the West Coast could also give a boost to LED
semiconductor companiesCREE a name thats held its own after its last 2
earnings reports.
For fun, Memorial Day weekend, theres a host of Disney movies available. Think
"Black Panther," "Avengers: Infinity war," & opening Thursday,
"SOLO: A Star Wars Story," a prequel of sorts, which introduces Chewbacca, and
his role as the co-pilot. For women, theres Book Club, with women of a certain age
who are stlll attractive & sexy to men of the same or more age. While Stocks could
rise on low volume into weeks end, it wont be anything to get too excited
about, unless the news out of AGA & EPG are a lot better than either GE or 3M gave
anyone to expect.
Drive safely! Enjoy the long Weekend next weekend. We will update the Economic Calendar
but an Outlook is debatable.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1418, 2018 RETAILERS & I-BANK CONFERENCES
DOMINATE, with a side of Central Bankers The Consumer
Discretionary space will dominate Earnings, this week, with reports from Macy*s, Nordstrom
& Walmart, to name the 3 most notable names. WMT, of course, is not about current
earnings for the moment but, rather, about the billions its spending for a majority
stake in Indias Flipkart, the fact that its giving up on the UK, selling ASDA
to J Sainsbury, jumping from one boiling pot to another, when it hasnt really done a
fantastic domestically, yet. But, also, weve gotten ahead of the way we lay out the
weekly Outlook Calendars, so lets circle back to the Economic Calendar, and take
them in order.
The US Treasury wont be offering a lot of debt, this week, just 4-week, 3-, &
6-month Bills, Monday, and $11B of reopened 10-year TIPS, on Thursday. Also Thursday, the
Treasury will announce its refunding plans, even as it just announced the April budget
surplus was at a record $214B. That would be thanks to Corporate fiscal taxes due March
15, and personal income taxes due April 15. Stocks often struggle less when Treasury
auctions dont disappoint. Theres nothing on offer this week capable of
disappointing, short of a complete strike against US Debt.
Also this week, April Retail Sales & NAHBs May Housing Market Index, both
Tuesday. Wednesday promises April Housing Starts & Building Permits, April Industrial
Production/Capacity Utilization, the latter likely strong, given shale oil drilling and a
freak spring snow storm that kept utilities in overdrive to warm homes & businesses.
Before markets open Monday, Feds Mester will speak in France, those from BoE
Governor Carney & ECBs Praet probably not earth-shattering, since their topic is
Gender & Career Progression. More trembling is the opening of the new US Embassy in
Jeruselum, which has enraged just about everyone but Trump and his family members, along
with Israels government. The people of Israel may celebrate the move publicly but
privately they bemoan that Arab hatred for both Israel and US are at near all time highs.
Feds Bullard presents at CoinDesks Consensus 2018, in NY, Monday, part of
BlockChain Week New York. The Senate Banking Committee will hold hearings on the
nominations of Richard Clarida & Michelle Bowman to the Federal Reserves Board
of Governors. Neither should encounter big issues getting confirmed. Feds Williams,
soon to move from the San Francisco Federal Reserve Bank to New Yorks more
prestigious one, conferring on him a permanent vote at FOMC meetings, will speak at the
Economic Club of Minnesota, Thuesday. Feds Bostic will provide an Economic Update
Wednesday, the same day Bullard opens the Homer Jones Memorial Lecture, not quite the
venue for monetary policy proclamations. Thursday, Feds Kaplan & Kashkari are at
separate events, Kashkari, a well-entrenched dove on rates, answering questions put to him
by the Executive Director of the Minnesota Home Ownership Center. Many hours later, in
Frankfurt, Mester, a hawk, will keynote the 2nd day of the 3rd ECB
Macroprudential Policy & Research Conference, on "The Limits & Overlaps of
Macroprudential & Monetary Policy." Mester is hawkish enough that shed find
a way to discuss her objection to the FOMC raising rates so slowly, no matter what the
topic. The topic of this conference works, perfectly, to her leanings. Still, she probably
would have been more comfortable speaking at the BoE/ESCoE/ONS Conference on Economic
Measurement, which questions the value of statistics and their interpretation.
Which brings us to Earnings. In addition to the 3 names mentioned above, Dicks
Sporting Goods, Home Depot, VIPshop Holdings, Take-Two Interactive, Tencent,
Childrens Place, and JCPenney, stand out. But the week isnt, exclusively, the
province of retailers or restaurants. Other notable reporters include Agilent, Invitation
Homes, Applied Materials, Canadian Solar, Cisco Systems, and Deere. Deere, known more for
agricultural machines than Caterpillar, and on a six month slide since the year began,
seemed to rally on CATs strong earnings, last week but left room for additional
gains if it reports a strong quarter and sees one ahead. Canadian Solar was a name I
wouldnt usually mention but Californias new law requiring builders to install
solar panels on almost all new homes, starting in 2020, has opened my and other
traders eyes to the Canadian solar name, given the hefty tariffs on Chinese solar
panels. As always, filtering out the tickers to mention is very subjective. Feel free to
disagree.
Last, the Events Calendar bucks up just as retailers begin dominating the Earnings
Calendar. I try to sort the events by geographic region, first, then by what I think will
be most influential on stocks. So US events, trump Canadian ones, and are listed prior to
European ones, with Asia and Australia usually last. Within those parameters, I afford the
most weight to the investment houses with the most influence, and sometimes place related
events near the main one, to emphasize how many ancillary meetings spring up to capitalize
on a particular event. For Monday and Tuesday especially, this week, I did the best I
could. Rarely are days so filled with I-bank run conferences that theyre dizzying
but thats where I was this week. Im partial to events that dont follow a
long string of similar ones, so JPMorgans 11th Annual Homebuilding &
Building Products Conference, in NY, took the top spot Monday. With interest rates rising,
even as home prices are rising strongly, and the calendar is at the height of the
builders season, it struck me as an event that portfolio managers (PMs) will be
eager to attend. But, really, any of the first 5 events that appear for Monday list could
have been on top. And no fewer than 3 I-banks are hosting China Conferences, this week.
And sometimes I have to scratch my head: while Tudor Pickering Holts Hotter n
Hell Energy Conference starts Tuesday, Citis hosting Energy & Utilities in
Boston, Stephens is hosting energy in Little Rock Arkansas, and Deutsche Bank is hosting
Clean Tech, Utilities & Power in NY. And while JPM is the top dog for this weeks
homebuilding sector, Jefferies offers Residential Real Estate Housing Summit, also in NY,
even as Morgan Stanley will host E&P & Oil Services in Houston. Instinets
Gaming, Leisure, & Lodging Conference, Monday, has competition from Wells Fargos
9th Annual Gaming, Hospitality & Leisure Conference is nearly identical.
Believe me, I dont mean to sound like Im criticizing any of the I-banks.
Instead, Im merely pointing out how I decide the hierarchy, and the schedule that
results with so many similar conferences occurring bunched together, because all the
I-banks observe a quiet period around the three weeks during which the most S&P
companies report their earnings, and most suspend conferences during the summer, when many
PMs are either at their summer homes or otherwise engaged with other activities.
Last week I discussed the potential for a post-earnings season rally that usually starts
this week. Traders jumped the gun and fanned the flames burning in bulls hearts,
reversing a long slide with a big rally. While Im not expecting a rally similar to
last weeks to occur this week, I do think that a period of backing and filling will
be followed by more gains, before the pre-Q2 earnings season jitters grip stocks.
ECONOMIC: (Highlights only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 0711, 2018 EARNINGS TAKE BACK SEAT TO
CENTRAL BANKERS plus Welcome Back I-Bank Conferences The tide has
shifted again, and though Wednesday is flooded with Earnings Reports, its really the
central bankers on the Economic Calendar worth attention. In fact, I suspect the Richmond
Feds Thomas Barkin may be set for his coming out party, Monday, when hes
scheduled to speak at George Mason University. If hes spoken before it escaped my
notice. He was installed on January 1st of this year. Given all the Fedheads
speaking at the Federal Reserve Bank of Atlantas Machines Learning Finance
Conference, its a bit surprising that he wasnt on the schedule. But its
not just the Federal Reserve Banks that are offering up speakers, the BoJ is set to
release its March Meeting Minutes, before the US Markets open on Monday, the New Zealand
central bank is holding a Monetary Policy Meeting, the MPC decision due out Wednesday,
overnight, while the BoJ will also release its summary of Opinions from its April
2627 Meeting the same night, while the BoE will hold a Monetary Policy Meeting, and
release the results overnight Wednesday, also.
Outside the central bankers, theres FTSE Russell Indexes Reconstitution Rank
on Friday, with 2 more updates in June, before the reconstituted indexes make their debut
after the close, on June 22nd.And it that wasnt enough, theres the
Treasury intending to auction 30-year Bonds on Thursday, the 10-years meeting some
resistance, so 30 could be a disasteryou never know. A softish April Employment
Report last Friday has some thinking that, perhaps, Caterpillars CFO had it
rightthe high water mark was 18Q1.
I did my best to highlight the scheduled Earnings Releases I suspect will attract the most
attention but its not always for their earnings, specifically. Taken Tyson, Monday.
Are the Chinese pulling back from buying the chicken feet because of US Tariffs? Then,
what are the odds that 3 big brewers would report on Wednesday? Who, you wonder? AmBev
S.A., Anheuser-Busch, and Craft Brewing. All wed need is Constellation Brands, which
has already reported, and Sam Adams, and the entire industry would be reporting Wednesday.
Likewise, there are a number of solar-related names reporting this week, and more than a
few entertainment companies. Then, again, it should be interesting to hear how IACs
chairman, Barry Diller, also chairman of Match Group, both reporting on Wednesday,
downplay the risk of FaceBooks entry into dating. Then, Thursday, Kelly Services is
reporting, the company usually an early warning sign of economies slowing down, since the
first thing they do is freeze hiring, before they even get to laying off some workers.
And it cant be a coincidence that a Timeshare merger was announced, last week, just
as ARDA World & Global Time Shares start their meeting in Las Vegas, today, Sunday, as
I write. I-banks are back in the conference mix, though many of them are venturing to the
Orient for their meetings and, in some cases, Tours, which both JPMorgan & Citibank
plan, even as Macquarie plans a Greater China Conference on Thursday, even as UBS hosts
China A-Shares in New York, Monday. Macquaries Business Services C-Suite Conference,
in Boston, starting Thursday, sounds like a fresher topiccertainly less trod ground
than Healthcare, which happens to be the biggest I-bank event of the week. Its also
the oldest, Deutsche Banks 43rd Annual Health Care Conference, starting
Tuesday, in Boston. But then, Citi is hosting Consumer Staples on Monday, and Goldman is
doing the same on Tuesday. Then, again, on Tuesday, both Wells Fargo & Oppenheimer are
hosting Industrials, in NY.
All in, it will be a busy week, the hundred some odd companies reporting earnings a bit of
a sideshow to the main events. Those start with Central Bankers yapping on both sides of
the Atlantic, then move to I-bank conferences. But there is something to be said for this
weeks earnings, they usually end a period of 34 weeks of market indigestion
that typically accompanies both the earnings season and income tax season. By the week
after this one, the bulls might be able to flex some muscle, as the Street decides the
best earnings season in years thanks to a tax cut ushered in some optimism for the 3
quarters ahead. It wasnt all bad.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 30May 04, 2018 2nd DELUGE of
EARNINGS + CENTRAL BANKERS After last weeks $229B of
issuance, the US Treasury provides a light week, with 4-week Bills, amount not yet
announced, and both 3- & 6-month Bills Monday, and thats it. Of course, the FOMC
meets this week, post-Meeting Statement on Wednesday, at 2pm but virtually the entire FOMC
will be speaking this week, albeit, not until the end of the week. The happy rate hikers
speaking at the Hoover Institution (Stanford University), Friday and Saturday, before Gov
Quarles does double duty next Sunday, at the 23rd Annual Financial Markets
Conference on "Machines Learning Finance," a somewhat unexpected topic for the
Federal Reserves Banking Supervision governor.
Its not just US central bankers speaking. Tuesdays Bk of Canadas Poloz
speaks, Wednesday, in addition to the FOMC statement, the Norges Bank (Norway) monetary
policy committee meets on rates, while the ECBs Constancio & Coeure speak on
"Fostering Banking Union & Capital Markets," and the Bk of Frances
Galhau speaks, at the Bank of France/European Investment Bank jointly host a conference on
Investment in France: Gearing up for momentum, in Paris, while, by Thursday, the St Louis
Federal Reserve s hosting its Advances in Research Conference, with a surprising lack of
FOMC leaders in attendance. But feat not, the Swiss National Banks Gov Jordan will
be speaking, on the Vollgeld Initiativea movement that wants to see every penny lent
by financial institutions backed by cash or gold. (No, I didnt see Rand Paul or his
father on their Agenda). Then, Friday, the Hoover Institution hosts a smorgasbord of FOMC
members for its "Currencies, Capital & Central Bank Balances: A Policy
Conference." Fed Gov Quarles & San Francisco (soon to be NY Fed) Pres Williams
present on "Financial Stability, Regulations & the Balance Sheet." Before
the day is out, the Feds Bostic, George & Kaplan will, also speak. And even so,
the highlight of the week may well be next Saturdays Yahoo stream of Warren Buffett
& Charlie Mungers Q&A with shareholders at the Berkshire Hathaway Annual
Meeting, a weekend event known, also, as Woodstock for Capitalists.
Which brings us to Earnings, this weeks volume of reports only slightly smaller than
last weeks. And though it may feel like every important company has reported,
already, let me point out a few you might be overlooking: Monday, Akamai, Allergan,
McDonalds, & Vornado Realty Trust, to name just 4 out of a larger group
highlighted. Tuesday, Aetna, Allstate, American Tower, Anadarko Petroleum, Apple, ADM,
AutoNation, BP, Eaton, Gilead, HCA Healthcare, Kindred Health, Merck, Mondelez, Pfizer,
Sabre, Scotts-Miracle-Gro, Seagate Technology, Tapestry (formerly Coach), Under Armour,
Wellcare Group, & Yum China are just a few of the names highlighted.
Wednesday, reports are scheduled from AIG, AmerisourceBergen Brunswick, Apache, Automatic
Data Processing, Avis Car Rental, Beazer Homes, CDW, Cerner Corp, CF Corp, Clorox, CVS
Caremark, DinEquity, Energizer, Equinix, Estee Lauder, Express Scripts, FireEye, Host
Hotels & Resorts, Humana, Hyatt Hotels, Kraft Heinz, Madison Square Garden,
MasterCard, MetLife, Molson Coors Brewing, Murphy Oil, Norwegian Cruise Lines (2 days
before its analyst meeting), Novo Nordisk, NXP Semiconductor, Prudential Financial,
Republic Services, Scientific Games, newly public Spotify, Square, Tableau Software,
Taylor Morrison Homes, Tesla, Wayfair, Wyndham Hotels, YUM! Brands, and Zoetis. I
wont even try and pull out just a few names for Thursday, given how many significant
reports have been highlighted, already. Skim the last two days of the week yourself, and
then look deeper into the daily lists, if you wish. Its simply another ridiculous
week for earnings, no ifs and or buts about it. Why does the entire public
vacation-ownership segment seem to be scheduled to report on Thursday? Beats me but most
are somewhat recently spun out of their original, hotel parent. And Alibaba stands out for
me, Friday, just as Berkshire Hathaways Annual Meeting does for others, Saturday,
competition for the Kentucky Derby, the Triple Crowns opening leg. For the record,
my naming some of these companies Im not endorsing them or, sometimes, not even
interested in them but either the Street, traders or the media must be, for me to embolden
them.
Which brings us to Events, where the number of I-bank meetings remain slight, because the
Earnings calendar is so heavy. Which makes it ironic that so many oil companies are
scheduled to report, even as Offshore Technology starts Monday, Credit Suisse an
exception, hosting a concurrent meeting & tour. The Interactive Ad Bureaus
week-long schedule of NewFronts, this week, starts on Monday, with FaceBook, New York
Times, and Viacom. A day later, FaceBooks F8 Developer Conference could shine the
brightest, Tuesday, as developers surely await the changes they should expect after the
Cambridge Analytica disaster. NewFronts, fo those who vaguely recall the term are the
digital equivalents to the major networks UpFrontsits when companies try
and pre-sell ad space on their digital (internet) websites.
All in, it will be another insane week, the spotlight, thanks to NewFronts, still on the
internet companies that have already reported, even as the rest of the big names are
scheduled for this week, BABA included. Plus, the schedule promises a surfeit of energy
names, hotels, hospitals, insurers, and large biotechs, plus cult names like Tesla, who
Whitney Tilson may well mention during his "Art, Pain & Opportunity of Short
Selling " presentation, Thursday, an event CNBC will definitely cover, since
its the sponsor. And much as this week will, for some, be all about waiting to hear
the Q&A from Buffett & Munger next Saturday, for most of the Street, the biggie
will be this Fridays Unemployment Report. (You know Im waiting to see the
final revisions to February, the shortest month of the year which has, so far, delivered
the largest number of jobs added in yearsover 300K.) The FOMC meeting statement,
Wednesday, will be Jerome Powells 2nd, so his emphasis is still evolving
in the Streets eyes. The Minutes for his first meeting as chief was filled with
uncertainty, especially about what the tax cuts & budget passed means for the economic
outlook. For all the central bankers speaking this week, Powell is not among them. That
seems odd, unless hes trying to develop his voice in private, before taking his
place more prominently, at some of the events his underlings are populating. And
thats odd, given that his first duty as FOMC Chief was the semi-annual testimony
before Congress, in February. You cant make your grand entrance twice!.
Historically, this is the last week of earning-related hesitation before a post-earnings
relief rally, celebrating getting through earning season without getting bludgeoned to
death by huge misses. No need to jump the gun before later in the week, unless you have a
particularly strong opinion about where the Unemployment Report will come out. .
ECONOMIC: (Highlights, only, below. Full International
Economic Calendar here)
© Sandi Lynne 2018 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.
April 2327, 2018 EARNINGS
SLAM IMF and orld Bank Group Meetings? Who cares? G7
& G20 meetings on the sidelines? No one cares. A slug of US Housing Data? Unlikely to
change the trajectory of interest rates, the Treasury making up for lost time, this week,
by auctioning off $229B of debt, the 5 & 7-year Debt not going as smoothly as some
might hope, of late, higher rates not a cure-all and starting to ding stocks. .
This weeks Sohn Conference might make things worse, since its value investing
speakers are likely to point out a lack of value available in stocks at current levels.
Also this week, March Durable Goods Orders & Shipments, and the first crack at Q1 GDP.
One facet of GDP is the Personal Consumption ExpendituresPCE, upon which the FOMC
bases its inflation snapshot. Of course, the first estimate of GDP isnt often close
to the final, 3 months later but the initial guess is often the one that attracts the
biggest reaction. The Blue Chip Consensus ranges around 2.5% but the Atlanta Fed shows GDP far from the 3.04.0% Trump and his
team promised. In fact, theres a chance GDP will barely make it to 2.0%, at least in
the first pass. The Feb GDP estimate of nearly 5.0% a mystery to one and all. Then, again,
harsh snowstorms, right into April, must cut into productivity, just as Sundays
southern deluge of rain kept everyone inside.
There are, also, central bank rate decisions expected from Swedens Riksbank, the
ECB, and the BoJ. Mario Draghi has promised that European rates would go nowhere until, at
least, past September, though some are betting the ECB will withdraw some of its stimulus
before the year ends.
The week will be flooded by the sheer number of companies scheduled to report earnings
this week. It can only be considered a slam. Sheer volume, as well as some of the biggest
FANGs will influence what tech does this week and, possibly, beyond, as Alphabet (Google)
(Monday), Amazon (Thursday), Facebook (Wednesday), and Microsoft (Thursday) report, as do
Comcast (Wednesday), Charter Communications (Friday),, & Time Warner (Thursday), not
to mention Royal Dutch Shell (Thursday), and on Friday, both Chevron, & ExxonMobil.
But that doesnt even scratch the surface of the number of companies scheduled to
report, which should make this THE week for earnings. The volume will drown out almost
everything else but equity investors should not overlook whats happening with
interest rates because rates are starting to reach damaging levels, that will make
everything from cars to mortgages more expensive. Higher rates have the power to lower
company earnings, and lower consumption. While credit card companies havent yet
raised their rates on the best customers, that can only be around the corner, crimping
consumption even more.
Surviving the week wont be easy but if you do, perhaps youll end the week at
the movies, seeing Disneys "Avengers: Infinity War," which it turns out,
is debuting before Black Panther has finished its run in theaters.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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 1520, 2018 FOMC RARELY AS
UNCERTAIN AS IT SOUNDS NOW The following 3 paragraphs
excerpted from the much longer FOMC Minutes of March 20th21st
Meeting stood out for me. First, they dont know how tariffs, retaliation, or tax
cuts will impact the economy, yet, they didnt shy from raising rates at the meeting,
or forecasting more rate hikes to come. So whether Street economists see 3 or 4 more rate
hikes coming, they know no more or less than the members of the FOMC, who arent
really sure how anything will pan out.
Participants did not see the steel and aluminum tariffs, by themselves, as likely to
have a significant effect on the national economic outlook, but a strong majority of
participants viewed the prospect of retaliatory trade actions by other countries, as well
as other issues and uncertainties associated with trade policies, as downside risks for
the U.S. economy. Contacts in the agricultural sector reported feeling particularly
vulnerable to retaliation.
Tax changes enacted late last year and the recent federal budget agreement, taken
together, were expected to provide a significant boost to output over the next few years.
However, participants generally regarded the magnitude and timing of the economic effects
of the fiscal policy changes as uncertain, partly because there have been few historical
examples of expansionary fiscal policy being implemented when the economy was operating at
a high level of resource utilization.
Participants agreed that the longer-run normal federal funds rate was likely lower than in
the past, in part because of secular forces that had put downward pressure on real
interest rates. Several participants expressed the judgment that it would likely become
appropriate at some point for the Committee to set the federal funds rate above its
longer-run normal value for a time. Some participants suggested that, at some point, it
might become necessary to revise statement language to acknowledge that, in pursuit of the
Committee's statutory mandate and consistent with the median of participants' policy rate
projections in the SEP, monetary policy eventually would likely gradually move from an
accommodative stance to being a neutral or restraining factor for economic activity.
The Economic schedule is filled with FOMC speakers, as well as central bankers from other
countries, given the joint Spring meetings of the World Bank Group & IMF. That Joint
Meeting is always accompanied by meetings of other groups timed to take advantage of the
central bankers from around the world who intend to participate in the schedule. In truth,
both the World Bank & IMF host their own, individual, spring meetings starting the 17th,
then join for the Joint meetings on the 19th22nd.
Speaking of meetings, future meetings of the House of Representatives will look
drastically different, a year from now. Republican members are planning to retire in
record numbers, the Speaker of the House, as well. So I wondered how much a representative
makes for living away from home, for months at a time, aside from the perks like staff
salary allowances, and housing allowances. Whats it worth in pensions to have put up
with all the muck and dirt slung at the House. Paul Ryans pending retirement income
is quite modest, after 20 years, and explains why a former House or Senate member would
set out on the speaker circuit, and write a book.
At 48, Paul Ryan can claim his pension in 2 years, collecting a Federal Employees
Retirement System pension of nearly $85K p/annum, $76K of which is for his 20 years of
service as Congressman, another $6,493 for toiling as a staffer in Congress. FERS
contributions have been mandatory since 1984. When hes older, Ryan will be able to
collect Social Security, as well, plus whatever hes put away in the Congressional
equivalent of a 401(K) plan, a Thrift Savings Plan. Of course, Ryan will make real money
once his one-year "cooling off" period ends, that period the Congressional
equivalent of a non-compete. Afterwards, he can make 6-figures as a lobbyist, consultant,
or any other job he may be offered. Evidently, Congress anticipated the pot at the end of
the rainbow, as speakers, boards of directors, and other more lucrative possibilities,
when setting such a small pension for members. How else to justify explain such a puny
pension after 20 years of flying back & forth to Wisconsin, and 3 years as the leader
of the US House?
The Economic Calendar also includes the typical monthly releases; Housing data Monday
& Tuesday, as well as March Retail Sales Monday, which analysts expect to reverse
weakness in Jan & Feb, tax-refund related delays to some spending. Canadas
monetary policy committee meets Wednesday, the countrys data expected to be released
throughout the week, Friday March CPI & Feb Retail Sales. Most interesting, perhaps,
Fed Gov Quarles testimony in Congress, Tuesday and Thursday, the first appointed point
person on banking supervision and regulation in yearsa position that never got
filled under Obama.
The biggest week of earnings, so far, starts Monday, with Bank of America, Netflix, &
Charles Schwab 3 highlights. In the past, Bank Earnings usually lifted markets that were,
shortly thereafter, brought down by successive reports from the rest of industry. This
time, banks reported strong earnings, last week, none of which seemed to please the
streetnot even when accompanied by strong outlooks.
Tuesday could prove another important day for earnings, with Goldman Sachs, CSX Railroad,
Interactive Brokers, IBM, Johnson & Johnson, Kinder Morgan, Lam Research, Omnicon,
United Airlines, and UnitedHealth set to report. Wednesday, note American Express, Morgan
Stanley, Robert Half Associates, Steel Dynamics, Textron, & US Bank Corp.
On Thursday, note Alliance Data, Bk of NY Mellon, Blackstone, Keybanc, Philip Morris, PPG,
Quest Diagnostics, & Taiwan Semiconductor, leading into Friday: Baker-Hughes a GE
Company, GE, Honeywell, Kansas City Southern (Rail), Manpower, Procter & Gamble,
Regions Financial, Schlumberger, Stanley Works, State Street, SunTrust, & Waste
Management, a hefty cross section of every sector but Utilities & REITs, which are yet
to come. The week, in short, will clear out the last of the most important financials to
report, ex-insurers.
Former FBI director James Comey interview debuts Sunday, at 10pm on 20/20, with George
Stephanopoulos lobbing the questions. Tuesday his book, "A Higher Loyalty"
launches, and I sure hope its better than Wolfes "Fire & Fury,"
because thats a terrible book, very poorly written.
What about Industry & I-bank Events? The schedule dries up during the heart of
earnings season, and especially when the IMF & World Bank are set to take center
stage. The biggest conference, AACR, the American Association of Cancer Research Annual
Meeting is usually a highlight of the spring. It was surprising that analysts werent
stepping out more, last week, bulling the biotechs & pharma companies scheduled to
have research unveiled. Amgen sent a press release about studies to be revealed at AACR,
while Gilead did the same on NASH, at HIV & Co-Infections in Whistler, the Liver
Meeting in Paris France, and the British Society of Haematology in the UK. Also notable
this week, the International Home Furnishings Market, in High Point. Cruise Lines should
be in focus as Cruise3Sixty gets underway in Ft Lauderdale. Norwegian is the latest to
provide a horrible experience to passengers, renovating a vessel were people were on a
$10K cruise. Then, there are people who keep falling off cruise ships, usually because
they were drunk as skunks, and trips where rape committed by cruise employees are
hush-hushed. If you want to subject yourself to lawlessness, a cruise is an easy way to
accomplish that, the noro and roto viruses often the least of passenger worries.
The Denver Gold Group is hosting the European Gold Forum in Zurich, just as gold is
finding some favor. Bigger still, Business Aviation Asia, in Shanghaiwhich Im
typing just as "60 Minutes" is finishing its hack of AllegiantAir. Watch the
Farm Equipment Manufacturers Supply Chain Summit, given Trump is working on offsets to
tariffs & repercussions, which should be a highlight. HIDA, the healthcare
distributors e-Commerce Conference strikes me as a rebuttal to the possibility that Amazon
could enter the field, even though theres never, before, been an eCommerce event for
the healthcare distributors. Then, again, I cant remember a world congress on
Osteoporosis, Osteoarthritis & Musculoskeletal Diseases in Poland, before. Or, you
could just sneak away to Indio California, and let loose at Coachella.
Meantime, if youre still long, be looking for levels to get out. The Trump honeymoon
is dead, and even a great earnings season wont be sufficient to drive stocks up.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 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.