2020 EXCERPTS FROM PRIOR WEEKS
BELOW:
December 28, 2020January 01, 2021 DID
HE, OR DIDNT HE? Evidently, he did! New York Times & Marketwatch say Trump caved, and signed
both the COVID Relief bill and a Federal Government budget bill, assuring there wont
be even a partial shut down of the government, and some 14m unemployed Americans will
continue to receive extended Unemployment Benefits. Reuters hedged its bets attributing
the signing to "sources say." Of course, instead of cooking up another
farmers aid bill, the government should come up with another $1B to pay farmers to
deliver their crops, cattle, chickens, turkeys, and pork to food kitchens who are not only
overwhelmed with more hungry people than theyve ever fed before, but seeing that
growth in hunger just as theyre running out of donations and provisions.
What struck me about this week was the way US Treasury Auction values keep creeping up.
Whether the new, big numbers this week accounted for the Treasurys assumptions that
the latest $892B Pandemic Bill was going to be signed, or whether all the spending done
before that is responsible, or, even, just the two weeks that both include holidays and
thinner markets is responsible, or even, Mnuchin suddenly taking advantage of low, low US
rates when so much of the rest of the world is offering negative rates, is beyond the
knowledge of a peon, like me. I just know Ive never seen values like we see this
week for 2-, 5-, & 7-year Notes but, perhaps, thats, only, because these are
initial offerings, instead of reopenings, as has been common for more months than I can
recall. Given that rates have flirted with new lows, isnt it about time Treasury
started leaning more heavily on longer term issuance, at ever larger values, to assure the
US pays out as little interest on its debt as it can? Isnt that what so many on Wall
Street and, even, a few in Congress have been seeking, for years?
Some housekeeping for those interested. I always check store hours on Christmas Eve, to
see whos either most desperate to grab the last buck spent that night, or to see who
seeks to accommodate the biggest procrastinators. In the past, Toys R Us was always
the last to close, at 9pm or 10pm, depending on the year. But Walmart & Best Buy were
always right up there with them, closing just an hour earlierone year, WMT closing
just a half hour earlier. This year, the local Simon Property mall (SPG), Town Center,
appears to be closing at 6pm but Saks is breaking with the rest and closing at 5pm. Best
Buy is at 7pm, the latest of almost all of them, with off mall locations like Walmart,
closing at 6pm, the same as Kohls, whose closest location is 11 miles away. Target
wins the prize for latest closing that we saw, at 8pm, Christmas Eve. Office Max/Depot is
closing at 5pm. Meanwhile, I was shocked by the out-of-stocks at Targets toy
department, the Tuesday prior to Christmas. Not only werent they offering Barbie
dolls reduced to $5 each but most were $14.99--$19.99, if you could find one. In fact, I
found only one hidden behind the puzzlessomeone who might have hidden it there to
come back the next day. Puzzles were the other surprise to me. Target didnt have a
single one that wasnt marked as 14+ under age group. Not a one for a family that
included a 7, 9, and 10 year-old, which shocked me. But then, youd have been
hard-pressed to find any toys in the toy aisles, other than those puzzles for 14+. Come
the day after Christmas, Target was advertising on TV a 70% off clearance sales, apparel
tops on the list. Monday, Ill swing through Walmart to see if its as cleaned
out as Target (and to pick up something my mom requested.)
The Economic Calendar promises more than just Treasury Auctions but not much. Tuesday, the
Oct S&P-Case/Shiller 20-city Home Price Index, and Wednesday, NARs Nov Pending
Home Sales. Also Wed., the usual MBA Mortgage Purchase & Refinance Applications, The
Nov Trade Deficit, Chicago Dec PMI, and Nov Wholesale Inventories, plus EIA Petroleum, et.
al. data. Thursday, US weekly Initial Jobless Claims and Continuing Claims, with Bond
Markets closing at 2pm, NYSE & NASDAQ open until 4pm, as usual, because its end
of month and end of year. The volume wont signify the necessity the NYSE or other
Equity exchanges see but, alas, it is what it is.
Another 3-day weekend, ahead, is a welcome respite for those with elderly parents who are
the aide, the day the aide is off. This week, there are nearly no Earnings Reports, and no
events outside footballs bowl games, a New Years week tradition. So, Ill
state as I did last week: The bulls remain in control, even if a few traders feel need to
book profits before the New Year, just in case Georgia goes for Democratic candidates,
which will make it more likely that President-elect Joe Biden Jr will get the increase in
taxes he seekseven if that seems an insane idea during a pandemic thats put
14m or more into long-term unemployment.
A Safe, Happy, Healthy New Year to one and all. Good Riddance to 2020, a year no one will
miss.
ECONOMIC: (Highlights, only, below. Full International Economic
Calendar here)
© Sandi Lynne 2020--2021 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 2125, 2020 TOO MUCH
OPTIMISM MAY NOT HOLD BACK the BULLS We
searched the DoL & BLS high and low to learn which day this week the weekly Initial
Unemployment Insurance Claims will be released. The Federal Reserve states the Federal
Government will be closed on 12/24, to celebrate Christmas, and all information schedule
for that day, and Friday (Christmas Day) will instead be released on Monday, the 28th.
The problem is, that has never happened before. Instead, weekly items like UEI have,
instead, been released prior to the start of the holiday. And we recall it specifically
being released on Thursday, as usual,, before the holiday early close, in past years. But,
the Federal Reserve did say the Federal Government would be closed 12/24, so we put
initial weekly claims on Wednesday, along with the EIA Natural Gas data but, in fact, both
could be released on Thursday before the early close. We cant remember a time either
was held until the following week. While were on the subject of the Unemployment
Report, we did confirm that the December 2020 Employment Situation Report (a
misnamed release if ever there was one), will be released on January 8th.
Next, maybe its jut me, whos sick and tired of the lying Trump administration
but, did anyone else wonder if Pence & his wife really were administered the Pfizer
vaccine, when they received their shots on the news stations, 12/18? No close-up on the
vial, that I saw, and even if there were, and I did see it, did anyone else wonder if they
received saline solution? Can you imagine how destroyed confidence in
Pfizer/BioNTechs vaccine would have been if Pence or the Missus had a negative
reaction? Just askin.
Last on my list of questions is whether, by the time we get to general public vaccines, in
the US, theyll have to, instead, revaccinate the ones who got the first injections?
There isnt anyone whose vaccination happened a year earlier. That wont happen
until the first 600 volunteers arrive at late March or April. Until then, we have no idea
for how long the vaccinations will provide protection to recipients. Ive seen
DHSs Azur & Trump vaccine czar Slaoui say protection should last for years but
they dont know thattheyre only guessing or, perhaps, hoping thats
true. Mass Injections didnt start on volunteers until July 2020, so we wont
really know until July 21 that the protection afforded by the vaccines lasts for a
whole year, let alone more. I hope it doesnt happen but am fully willing to believe
the vaccines are, largely, untested over the long termboth benefit and danger, and
we dont know whether the first to receive those vaccinationshospital and
nursing home frontline workerswont need another booster shot, come July 2021,
or sooner.
Now on to the weeks schedule, which will include all markets closed Friday for
Christmas, and US markets, along with many around the world, closed early Thursday, as
detailed in the Economic Calendar, below. That ought to compress most of the weeks
activity into Monday, the first day rebalanced indices can be played, fully, including
both the S&P & Discretionary indices with the newest, big member, Tesla Motors.
There may be some clean up occurring Tuesday morning, especially, but the rest of the week
will be a snooze, allowing for much mischief. Technically, the Santa Claus rally starts
the day after Christmas (a week from Monday) and runs through the first couple of days of
the New Year but many will speak of a rally that begins this week as the Santa Claus
rally, no matter how incorrect that it is technically. Then, theres the question of
how much harvesting of long term gains may take place before the year ends, just in case
the Georgia Senate races go for the Dems, which would give Biden the votes hed need
to change the 2017 Tax & Jobs Act, reducing the big cuts in taxes corporations and the
1.0% enjoyed, and adding more pain to gains on stock sales. Its hard to imagine
Biden raising taxes into the jaws of a COVID recession but since legislatures change up
some members every two years, the President Elect wont have a heck of a lot time to
make the tax changes hes long discussed.
Funding for the Federal Government is on another short extension, and the latest COVID
relief bill hasnt been brought to a vote, yet either, for which those unemployed can
thank Mitch McConnell whos suddenly acting with urgency. So the Senate has its work
cut out for it, with Christmas fast approaching. Housing data is high on the Economic
Calendar, too, with NARs Existing Home Sales Tuesday, the same day the final
revisions to GDP is released. Wednesday, the MBA will release weekly Mortgage Purchase
& Refinance data, while well also be graced with FHFAs 20-city House Price
Index for Oct, just as Nov. New Home Sales are also released.
We distinctly remember items like weekly Initial Unemployment & Continuing Claims
being released on Thursday, before a holiday, into a half day of trade but the Federal
Reserve says all Federal Government Offices are closed on Thursday, the 24th,
and data usually out that day will, instead, be released the following Monday. Somehow,
that doesnt sound right, no matter how we were thwarted in our attempts to get the
correct information from BLS. Japan is the only country that all but ignores Christmas
Day, releasing its Nov Unemployment Rate Friday early morning in Japan, overnight during
our late, late Thursday.
Events are all but on hiatus, other than football Bowl games, and the first smattering of
NCAA basketball games, with the NBA Pro season starting .Tuesday.
Theres no question that the bulls remain in chargeFridays Stress Test
results, which lit a big fire under financials with news that the banks will be allowed to
resume buybacks should help validate the bulls. The only question in our minds is whether
those lagging start aggressively getting long to make their book look better into end of
year, or whether those harvesting gains before a possible change in tax schemes under the
new administration make their efforts known more.
A wonderful holiday to one and all! Jews always say, next year in Israel but, instead, if
I may, I hope the vaccines already approved, and those, like JNJs, yet to come, mean
next year with extended family. Stay safe and healthy, everyone!
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
December 1418, 2020 STRESS TEST
RESULTS FOLLOW FOMC MEETING In some cases, the Stress
Test results arriving Friday, after the close would trump the FOMC mid-week Meeting but
not this time. The BIG 10 in the US are not part of the group whose results are being
released. In fact, half of the banks are foreign, domestics like Northern Trust but not
JPM, Citi, GS, MS, or other names that have the most power to move markets most., That
leaves Fridays Stress Test results more of a side show, than the main act, even
though they incorporated the worst harm the FDIC & Fed Reserve thought the pandemic
would do to banks, at the lows in March & April., never anticipating the rip-roaring
recovery stocks would see. Note, also, the many central banks meeting Wednesday through
Friday morning, including the BoE & BoJ--Central Banks around the world that don't
usually make it onto our calendar. But, after stumbling on those listings, it didn't seem
fair to exclude them..
The S&P, NASDAQ and other indices will be rebalanced after Fridays close, Tesla
to be added to both the S&P 500 index & the consumer discretionary index. Boing!
Boing! Boing! Ordinarily, that would be a bell ringera reason to expect markets to
start unraveling, hard but given the time of year, thats probably not a good bet.
Yes, more of a give back than last weeks could be ahead, but probably not the BIG
ONE some contrarians have been predicting for months. End of year is just not the time of
year to expect big sell-offs, though another week of losses wouldnt surprise. There
are some portfolio managers (PMs) & Hedge Funds whod rather lighten up before
year end, so they can enjoy some time with family unfettered by worries of market
sell-offs. Another reason? Many PMs working remotely have been spending oodles of quality
family time, and have no need to carve up their portfolios to do that, especially, the
last couple of weeks of the year. The very idea seems a bit laughable, this year, when
what many may well be hoping for is less time with their family.
Now, about that FOMC meeting, that will culminate with a Jerome Powell press conference on
Wednesday, at 2:30pm et, half an hour after member projections and the meeting statement
is released. Last meeting, we knew theyd be discussing the new 2.0% average
inflation targeting. This meeting? Something out of left field to reassure the citizenry,
because Congress hasnt provided the fiscal support long needed and which the FOMC
begged for and counted on? Hard for them to manage, given 30 year mortgage rates made new
all time lows, last week, and the official rate is zero to 0.25%. Without going negative,
which has done nothing for Europe and other countries, theres little reason to lower
rates to a negative level. And theres even a chance this weeks Manufacturing
Indices will show a pick up in activitydespite raging coronavirus cases, and cities
initiating fresh lock-downs. Given how much merchandise was being ordered onlline, even
before the holidays drew so close, the kick off of Black Friday and the Thanksgiving
weekend only boosted holiday shopping-related activity. November Retail Sales out
Wednesday could even disappoint, as October did, despite Amazons Prime Days (and its
many competitors) falling on Oct 13th & 14th. Thats just
what happens when people outfitted home offices, home schoolrooms, and their backyards,
without need of a dress, blazer, pair of heels, or other work clothes, even as the weather
changed, as summer gave way to fall, and more recently, winter.
The Earnings Calendar is a bit of a sleeper. It does show bias to consumer discretionary,
without many of the headliners we saw in tech, last week. Thats what makes Lennar
Wednesday, and Jabil Circuits stand out Thursday, in a mix of more discretionary names,
like Nike, Darden Restaurants, and Scholastic. FedEx we can predict will blow the top off
estimates, at least given the number of times a day one of their trucks swings by my
house, and unloads its packages to all my neighbors, with tiny kids, and software jobs
that enrich them with fat salaries & stock options. They leave their houses for
nothing but a visit to friends with an even bigger pool. .
Which brings us the Event Calendar, the last week, really, when events will even appear on
that calendar. I hope someone attending AACC and the Clinical Lab Expo finds out which
genius atg Pfizer figured out the COVID-19 vaccines must be stored at negative (-94)
degrees Fahrenheit. Really, did they get to zero degrees and someone say, not cold enough,
lets try minus (-40F). Then someone else say closer, but not quite
therelets double that to minus (-94F)? Yeah! Thats the ticket! And then,
the World Congress of Psychiatry should be another wopper! How many depressed people are
out there? Unable to hug parents or grandparents, stuck home with the kids all day and
night. Depression is the number side effect of a pandemic, and I totally understand how
easy it is to succumb.
If anyone else saw "60 Minutes" tonight, I suppose they had the same ahah moment
I did. The Attorney General out there took on Sutter Health and won millions in refunds
and more transparent hospital pricing. That made him a natural for President Elect Biden
to name him designated Secretary of the Department of Health & Human Services. (Do we
have a Dept of dog services? Was there a reason to throw "human" into that
agency name? Would anyone have doubted who the agency was supposed to serve, otherwise?
Just asking!) And speaking of Biden, Monday, the state Electors submit their votes for
President. Theyre bound by law to vote as their states voted but Trump is still
trying to get them to do otherwise. Anyone else surprised to learn that there are
Democratic leaning votes who fear the electors wont do the job theyre supposed
to do?
Moving on, each day of the week features a notable I-bank event. Monday, its
Cowens 7th Annual Networking & Cybersecurity Summit, more interesting
thanks to Fire Eyes (FEYE) announcement, last week, that its own firewall
failed, and it had been hacked by a state-sponsored bad actor. FEYE is a
cybersecurity company. Did it really think clients & potential customers were going to
hear that and say, well, then, thats OK. Cant expect a company to fight a
state-sponsored bad actor. Of course they expect thatits exactly
why companies hire FEYE. Reminds of the time I had to call McAfee to install my new
security software, and 72 hours later I was hacked and they expected me to be OK with that
because it was, likely, state-sponsored hacking. Hello, no! I did not fell better or
understandit was exactly what I paid McAfee $129 to avoid. Maybe McAfee realized
theyre not charging a fee commensurate with the safety customers expected. But no,
they tried to blame it on me, which I was not buying. That PC didnt even get e-mail,
at the time. So it wasnt anything I opened.
Tuesday, D A Davidson stands out, with Semicap Laser & Optical V-event includes: AEIS,
AEHR, AMAT, AAOI, ACLS, BRKS, COHU, FORM, IIVI, ICHR, INTT, IVAC, IPGP, KLIC, LITE, MKSI,
NPTN, LASR, NYMI, ONTO, PLAB, TER, UCIT, VECO, VLDR, assuming they were requested for
1x1s. At OpCo, also the 15th, QUIK, Everspin, AKAM, T, and TMUS, are
confirmed, as of our post. Wednesday, Jefferies is hosting a Healthcare Investor Virtual
Summit which it insists on calling a "Denver" Investor Summit. Well, gee,
its not going to be in Denverit wont even be specifically anywhere but
in the ether. Its quite possible but TechCrunchs Space Sessions &
IEEEs Hi-Performance Computing get more attention, since the only healthcare anyone
is particularly interested in, at the moment, is the Pfizer/BioNTech COVID-19 Vaccine,
supposed to go to hospital workers & the most vulnerable elderly, and those who care
for them in nursing homes except, now we hear, members of the White House and Congress
will be ignoring CDC guidelines and cutting to the head of the line. Doesnt the
White House know the cats already out of the bag? That some 31 members have already
been infected, which means at least another 60 have been exposed.
Of course, speaking of the vaccine, Thursday Modernas COVID_19 Vaccine candidate is
before the same experts who, last week, recommended approval of the PFE/BNTX vaccine, and
unlike that one, MRNAs wont need exceptionally polar temperatures to remain
viable. Refrigeration, alone, is all MRNAs needs, with near equal efficacy to the
already approved Pfizer vaccine. Of course, by the time the FDA Advisory Committee weighs
in with its recommendation, all the street is going to be noticing is the Quadruple,
Quarterly Expiration of index options & Futures, the new world coming Monday, the 21st,
when Tesla is going to debut as an S&P 500 stock Boing! Boing! Boing! Maybe not but we
might find out many PMs have some housekeeping to do, and some of that must occur this
week, so they can make room for a little Teslaa stock that reminds me of Trump. Just
as many PMs hate it rabidly, as there are one who love it beyond imagination. Yes, PMs
have had weeks to make the adjustments necessary to include Tesla, and trim what they have
to if they want to mimic the index, itself. But sine most would be punished from straying
too far from their bogey, the majority will add it when it enters the S&P, which means
something else must be sold to make room. A harsh sell off for stocksNO! Nothing
like that. Just another week in which stocks trim some of recent gains, rather than notch
daily new highs.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors
alone, and should be just one factor in more complete due diligence.
December 0711, 2020 I-BANKS
MAKING the LAST SURGE INTO YEAR'S END
This week could be more fraught for the bulls than they expect, given that the Continuing
Resolution that got the Federal Government through the election expires at midnight
Friday, and Trump will try anything to get the election overturned, and may just believe
refusing to sign a bill funding the government will be the ace up his sleeve. Anyone who
heard him Saturday, in Georgia or read a transcript could be excused for getting the
impression that Trump believes he can either overturn Bidens win, or get the entire
election redone in his favor. He went to encourage Georgians to vote for the two sitting
Republican Senators, rather than give the Senate to the Democrats but, instead, spent
about 80 of his 90 minutes fighting his losing battle for a 2nd term. Hope
Melania Trump is wiser and directing her staff to carefully pack up her designer frocks
for shipments to NY & Palm Beach FL.
Also on countdown, and much faster, is open enrollment in Medicare & Prescription Drug
plans for seniors, since enrollment must be completed on Monday, or penalties can start
piling up for Social Security recipients. The TV Ads for those plans will be another item
Ill celebrate being overespecially the ones with Joe Willie Namath which are
run pathetically often, and spoils his legacy. Other items on the Economic Calendar
include Mondays Oct. Consumer Creditdebt really, except anyone taking out a
loan is euphemistically, being granted credit. JOLTS, Wednesday, is another item tat will
be closely watched, belying its more recent addition to the monthly data. The more workers
who quit, and the more jobs that are open for the unemployed, the healthier the economy
is, theoretically. But last month, when September was released, there were, supposedly,
nearly 6.4m job openings, and yet, Novembers Unemployment report suggested something
that surprised no onehiring has slowed down, considerably. With mortgage rates, once
again, hitting new all time lows, should spur mortgage & refinance application
activity but that hasnt always been true. There are only so many willing to buy
existing homes, sight unseen, and with coronavirus cases spiking, who wants strangers
schlepping through their home?
Note, Canada will deliver an interest rate decision on Wednesday, and the Bk of England
early Friday morning, while most Americans are just waking up. US Nov CPI will be released
Thursday, PPI on Friday but, by then, the government running out of money just as vaccine
distribution needs to be funded will be the bigger headline. The FDA outside Advisory
Committee will be reviewing the Pfizer/BioNTech vaccine for approval but, given United
Airlines is already transporting vaccines from Belgium to major and minor cities
throughout the US, its not as if the AdCom can reject the vaccine data and deny the
Pfizer team Emergency Use Approval (EUA). And while were on it, lets not
forget theres another FOMC meeting starting the 15th, at which the Fed
might just have to do something, if another budgeteven a short-term budget that gets
the Federal Government through the New Year, at least, fails to materialize by next
weekend. And let's not forget. Trump did shut down the government his first year in
officemore because he was drunk on his power than any other reason, and could do it
again while he has one foot out the door.
The Earnings Calendar features Toll Brothers & Hovnavian (Mon. & Wed.,
respectively), along with Adobe, Photonics (Wed) , and Thursday, both Broadcom (AVGO),and
Oracle. Outside those names, the Earnings Calendar is more dominated by more typical,
discretionary retail, including AutoZone, Brown-Forman, Chewy, Conns, GIII,
GameStop, Thor Industries, Campbell Soup, Designer Brands (owner of DSW Shoe Warehouses),
Oxford Industries (Lilly Pulitzer), Unifi (distributor of natural foods to customers like
Whole Foods), Vera Bradley, CostCo, Dave & Busters, Hooker furniture, J Jill,
Lululemon, and Vail Resorts (MTN). We all know its CostCo & LULU that will
attract the most attention and commentary but think about it: COST reported Nov Sales last
week, deceleration from prior months disappointing, while LULU has disappointed the last
quarters, as sales were worse than expected in each instance. Then, again, if LULU
surprises to the upside, attracting more online sales than expected, the stock could fly.
Vera Bradley was the big upside surprise its last quarter, though lets stipulate
its not my taste at all.
Which brings us to the Events Calendar, where the two starring events are UBS Global
TMT, stating Monday, and Goldman Sachs US Financial Services Conferences, both held
virtually, as it goes without saying, by now, though we still use the V- & D- to
indicate it. Barclays is also hosting a TMT event, starting Tuesday, but differs in
spelling it out: Technology, Media & Telecommunications. But this is one week which
should be examined carefully, day by day, because the I-Banks are out in force, and
theres barely a single one that isnt holding some event or another, this week.
But then, when we see multiple houses hosting similar events, the mass catches our
attention. For instance, In addition to UBS & Barclays hosting TMT, Raymond James is
hosting Technology Investors, Credit Suisse Disruptive Business, Morgan Stanley Future of
Application Development, which gets an honorable mention, too, along with Imperial
Capitals Security Investor V-Conference, Jefferies West Coast business Services
& Cybersecurity (both starting Thursday), with special mention for Bairds
Government & Defense, starting Thursday, only because its a topic held less
frequently, while the Hart Energy Annual A&D Strategies & Opportunities event is
postponeduntil February of next year.
Goldie will not have Financial Services all to itself, this week, since Jefferies is
hosting a Banks 1x1, the American Banker is hosting Digital Bankingas a Digital
Experiencewhile D.A. Davidson is hosting its 2nd Financial Institutions
Group, Wednesday, while Jefferies, in addition to its other two Thursday V-Summits, is
also hosting Consumer finance 1x1, that day. And weve only just scratched the
surface of this weeks I-Bank virtual conferences, so its surely time to
mention some industry events that shouldnt be missed. Sunday, the American Society
for Cell Biology continues its Annual Meeting, all week, while OSAOptical
Communications is timed just as Ciena is scheduled to report earnings, this week. ASH, the
American Society of Hematology is in progress, Sunday, through the 8th, while
Orthopaedic Medicines Annual Scientific Sessions start Sunday, and run through the
13th, yet the Cervical Spine Society Annual Meeting, usually concurrent, is not
starting until Tuesday, and without a city for either event, it cant be determined
if the two were meant to coincidea drawback to virtual events. The NY Fall Fashion
Week takes placed virtually, while Cowen is hosting Retail Automation, a completely new
I-bank topic. The 14th Homeland Security Summit & Expo will be a digital
event, starting Monday, as are ShowEasgt, BevNet Live V-Annual, and DTNs Progressive
Farmer Ag V-summit, starting Monday, as is ASTAs CSSCorn, Sorghum &
Soybean Seed V-Research Summit, all Monday. GES is the Virtual Wolrd Gaming, eGaming
Executive, Lotteries & Online Gaming virtual joint expo, that runs through the 9th.
Now, we could go on through each days even, pointing out the many highlights but
everything listed below is a highlight, or it would not have made it onto the calendar, at
all. The International Council of Shopping Centers RECon starts Wednesday though
thats likely to be a shadow of its usual self. Its a busy time of year for
retailersat least we hope it is, so its almost better for that to be a virtual
event that retailers can pull up on demand after the event is over.
Honestly, with the Continuing Resolution that funded the government running dry at
midnight on the 11th, who knows what kind of high jinx Trump may pull in his
unending effort to overturn the election. Republicans want to attach more Pandemic aid to
a budget bill, rather than pass a stand alone $900B new relief plan, when Republicans
dont even know what Trump will or wont sign. I think theres reason for
the bulls to proceed with a modicum of caution until this week is overand a budget
bill is passed. And, once, again, I ask: Someone please tell me what it is about Trump
that makes his supporters so rabid in their devotion? I met John F Kennedy, back in the
day, and got why some women swooned over him but overweight, uncouth Trump? Someone please
explain it to me!!!
ECONOMC: (Highlights, only, here.
Full
International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
November 30December 04, 2020 POWELL & MNUCHIN TESTIFY @CONGRESS; Nov. Unemployment Report
Wraps the Week On the one hand,
Treasury Secretary Mnuchin is demanding back billions of CARES Act dollars that
werent distributed and, according to the press, planning on putting those funds far
out of the reach of Janet Yellen, who whoever President-elect Biden chooses for
Mnuchins role. That sounds simply outrageously unbelievable to me because Congress
could easily pass a new bill freeing up equal or more funds. Mnuchin will probably go back
to producing movies and not really care a hoot about Biden or his administrationno
matter who winds up Treas. Secy for the next 4 years. And make no mistake, Yellen
has Congressional Cred, and can negotiate her own terms of support with members of
Congress.
While were on Central Bank officials, lets not overlook the number of speaking
engagements scheduled, this week, for ECBs Lagarde and other Monetary Policy
Members. Some members of the BoE are also planning on speaking this week, while the world
will, likely, be focused on FOMC Chiefs Powell & Treas. Secy
Mnuchins testimony on the CARES Act at the Senate Banking Committee on Tuesday, and
at the US House Financial Services Committee on Wednesday. CARES, for those whove
forgotten, stands for Coronavirus Aid Relief and Economic Security Act. When it was
passed, early in the pandemic lockdown, most didnt expect the pandemic to be as big
a problem 9 months later but it isclearly. Whatever Relief & Economic Security
the act provided has long since dissipated, stranding millions of still or, even, newly
unemployed former workers who are down to their last dollar, and struggling to get
buyoften waiting hours for food at drive up food banks. The message from Powell,
this week, in Congress, will be all about those former workers, and how badly they need to
be rescued by Congressional funds, or the economy will dig an even deeper hole. Mnuchin?
We dont really know what he will say, other than he tried negotiating with Democrats
but they were too unreasonable to meet him halfway. Meantime, one of BoE Gov Baileys
lieutenants sounded the alarm, Friday, of looming inflation that will be brought about by
all the government funds sloshing around the system. Some on this coast of the Atlantic
also worry about that resulting from all the funds flooding the system but some of those
individuals sounded the same alarm in 2009, after the Great Recession, and that never
happened then, either. And thats why we think Powell will press Congress for even
more reliefthe vaccines soon to be delivered too few to save the winter, as of now.
Note, also, that OPEC Meets, and then will meet with OPEC+, which consists of non-OPEC oil
[producers including Russia. With WTI Oil back over $40 per barrel, its not hard to
imagine OPEC+ member Russia pushing for quotas to be eased. Other notable events listed on
the Economic Calendar includes Oct Pending Home Sales, Tuesday, compliments of the
Natl Assn of Realtors, PMIs & ISMs, and the big
oneFridays November Unemployment Report which could well be weaker than the
Street expectsof dismissed as old news if its stronger than expected, given
soaring cases of COVID-19, and fresh lockdowns around the world. Also notable, the
Feds Beige Book, out Wednesday afternoon, and how quiet the US Treasury Issuance
schedule is this week. That could be supportive to Equities, since fixed income wont
drain the investment poolnot that rates at current levels are enticing, mind you.
But some feel obligated to invest a portion under management in fixed income, as ballast
against a bout of profit taking, should PMs fear theyve overstayed their
welcome and should clear the decks pre-New Year. And there are some worrying about Capital
Gains taxes being raised under Biden, so inclined to sell now, not later.
.
Like millions of others, I did my shopping online, this past week but I did drive around
several shopping centers proving that parking lots were much less crowded this year than
last year, which was already a strong online shopping year. So its said, retailers
are still a dominant force in the Earnings Calendar, this week, but so too are Canadian
Banks. Youll find both groups emboldened on the Earnings Calendar, along with Zoom
Video, Hewlett-Packard Enterprise, NetApp, Salesforce.com, and Synopsys. The retailers
whose disappointed due to high expectations, the past 2 quarters, was Ulta Beauty,
reporting Thursday. Mind you, I could point out other retailers who could disappoint but
none have the sky-high expectations of Ulta.
Which brings us to the Events Calendar, one of the last weeks of so many scheduled
before Events wind down for the holidays. The biggest events are Credit Suisses 24th
Technology Conference, starting Monday, and Bank of America Securities Leveraged
Finance Conference, both virtual events, of course. Tuesday, Wells Fargo hosts a TMT
V-Conference, and Barclays Eat, Sleep Play, which strikes us as self-explanatory.
NASDAQs 43rd Investor V-Conference involves a lot of the exchanges
listed members but has to compete with Jefferies Sports Betting & iGaming
V-Summit, as well as Healthcare events from both Evercore ISI & PiperSandler, all
starting Tuesday.
Wednesdays big events are Goldman Sachs Global Automotive V-Conference, Morgan
Stanleys Global Consumer & Retail V-Conference & Credit Suisses 8th
Global Industrials V-Conference. Honestly, we couldnt find many confirming
participation in Goldies Auto event, at the time it was posted but that may have
picked up since. And even with shopping centers attracting thinner traffic than normal on
Black Friday/Thanksgiving weekend, the parking lots were still busier than they were the
weekends prior, so UBS Global Real Estate CEO/CFO V-Conference could hold deliver
more bullish talk than most expectespecially in front of 6 weeks of usually heavy
shopping, delivery options thinning closer to Christmas, without spending an arm and a
leg. And then, the post-Christmas clearance sales are rarely as good to pick online as
off-line.
Cowsen & RBC Capital are holding Energy-related evens on Thursday, CanaccordGenuity
AgriFood Tech Innovation, and Wolfe Research a Virtual Payments Bus Tour
visiting with MasterCard, Visa, PayPal & Bill.com. That sounds like another source of
bullish talk.
And that wraps the week in a nutshella week too busy if your suffering from
turkey-related tryptophan fog from leftovers. Bulls are clearly in control, and likely to
scoop up shares on the slightest sip but those seriously worried about Biden raising
capital gains taxes might be lying in wait for any higher prices to trim their positions.
One of the oldest sayings on Wall Street is that no one was ever fired for taking profits.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
November 2327, 2020 A WEEK THAT WILL PROVE
NOTHING Because Markets are closed Thursday, for
Thanksgiving, and trade an abbreviated session on FridayBlack Friday, the first real
one to follow a holiday during which most brick & mortar stores will be closed for the
first time in over 10 years, the week will end Wednesday morning, for all intents and
purposes. Thanksgiving, thrown to the shopping gods for years will finally be a holiday
for everyone but first responders and hospital workers. Therefore, we thank them.
While much of the ECB is out and about, talking up a storm, stateside its mostly
housing data that will command attention. Tuesday, both the FHFA &
S&P-Case/Shiller Sept 20-city Home Price Indices are released. Granted NY Fed
CEO/Pres. John Williams will be speaking Tuesday, as will Fed V.Chairman Clarida, at a
V-Conference who's subject is "Lower for Loinger," though Clarida, specifically,
will discuss the Feds new 2.0% Framework. He'll be joined by Bk of Canada Deputy
Gov. Wilkins and the ECBs Lane at an IMF video event. Wednesday Oct New Home Sales
are on tap, along with Oct Personal Income & Spending, and the PCE derived from that
data. Wednesday will wrap with the Minutes of the FOMC Nov 0405 meeting, at 2pm, by
which time you might be tempted to slap your screens to wake them up but, in truth,
theyll be upreflecting a really quiet market that finished up before you did.
The Earnings Calendar is filled with Retailers with a few very notable exceptions. First
up lab company Agilent, and sensor chip provider Ambarella, plus Korn Ferry, the executive
search firm, reporting Monday. Tuesday, note Analog Devices, Dell, Hormel,
Hewlett-Packard, JM Smucker, Medtronic, and VMware. Then, John Deere is Wednesday.
Otherwise, the highlighted names are all retailers, including Urban Outfitters,
Abercrombie & Fitch, American Eagle Outfitters, Best Buy, Burlington Coat Factory,
Chicos Fas, Dicks Sporting Goods, Dollar Tree, Movado, Nordstrom, and Tiffany, the
latter put on sale to get the. Louis Vuitton Moet Hennessey buyout back on track. Whether
the revised deal will prove worth it remains to be seen but one thing is
certainDonald J Trump deciding Palm Beach will be his new permanent residence
(Florida has no personal income taxes), probably pleases Tiffany and its intended, because
it means 5th Avenue in NY will see fewer days of barricades that, as a side
effect, block entry into Tiffanys world renown flagship store just 2 blocks south of
Trump Tower. And trust me, NY state & city are very diligent about making sure those
disclaiming NY as their primary residence really mean it. Stay in NY for 181 days, and
youll be slapped will a fat lawsuit for current and back taxes.
Normally, the only events taking place this week would be overseas but, now that all
conferences, forums & seminars are virtually held, where they were originally
scheduled to occur no longer matters., A video Conference (or, now, v-Conference) is a
V-Conference no matter where it was supposed to take place. Thats how both the Citi
European Financial C-Suite & Credit Suisse European Financials Disruption events wound
up listed together Monday. Im partial, especially, to Deutsche Banks Business
Services, Leisure & Transport V-Conference and Credit Suisses Specialty
Chemicals V-Conference, both starting Tuesday, and both topics of great interest as
vaccines for COVID-19 are poised for near-term Emergency Use Authorization as soon as Dec
10th (Modernas mRNA Vaccine a week later).
Even so, its a short week, with little of major import beyond housing for market
pressureand we all know the homebuilders have been ebullientsuggesting the
home sales-related data will be strong, and not disappoint the way last weeks Oct
Retail Sales did, rising only 0.3%. And that is really worth mentioning because it was so
disappointing despite Amazon Prime Days held Oct 1314th, and the
competing sales from Walmart, Target & Best Buy lasting anywhere from 48 days.
Plus, a few major school districts opened their doors later than usual, making the BTS
shopping season longer than usual. And still, those Retail Sales numbers were notably
weak, and not to be overlooked because they may just suggest a US consumer timid and
worried. And with consumer spending 70.0% of GDP, thats a major worry, given rent
& mortgage moratoriums, all of which are plugged into GDPunless theyre not
paid. Been to a dentist lately, to have your teeth cleaned? How about your annual
physical? A trip to your internist for a seasonal flu vaccine? See what I mean?
Theres plenty consumers are foregoing, at the moment, those tepid Retail Sales
exemplifying the hesitance that mut be computed towards GDP. For now, it adds up to
several more months of pain and weakness before more vials of vaccines are available for
the general publicthose among them who'll be willing to take itand that
remains to be seen.
Happy, healthy & delicious Thanksgiving dinner to allmy thanks to Butterball
whos extended its brand to Lil Butterballs, so I could buy a 7.45 lb fresh
bird for just the two of us! Grab them while you can.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
November 1620, 2020 The GOOD, BAD & UGLY: RETAILERS EARNINGS STAR So, I have a lot of questions about last weeks
biggest news, Pfizer and BioNTechs vaccine required to be stored at minus (-94F)
degrees Fahrenheit. How did they figure that out? Did they get to zero degrees, ruin a
bunch of ccs of vaccine and decide to try it colder? Did they get to minus (-40F)
degrees and notice the vials of vaccine were still ruined but less badly? Was it the color
the liquid turned? An odor? Who was it who figured out taking the temperature down to
(-94F) would do the trick? We all know that UPS & FedEx allege the capability to
transport the vaccines at that cold a temperature but, really, what have they transported
that far below zero degrees F previously? What if anything have they transported at minus
(-70f)? let alone (-94F)?
And then, lets assess the outsized reaction to the news, including that the vaccine
is more than 90% effective. First, thats only after 2 injections, 28 days apart, and
no onenot even PFE & BNTX know for how long. In fact, the assumption is that
vaccinated people will need a booster shot every year. So, the detail beyond better than
90% effective was that PFE/BNTX intend to have 20,000 doses available by the end of the
yearassuming the FDA grants Emergency Use Authorization. Those 20K doses will cover
only 10K peoplenot a drop in the bucket. If nurses & doctors treating COVID-19
are first in line to be vaccinated, that probably will cover only those front line workers
in a city the size of Syracuse. Oh, maybe not. Upstate Medical is a huge facility will
that many in Medical school, internship & residency, on top of all those already
crowned as licensed doctors & nurses working at area hospitals. Maybe an even smaller
city is needed for 10K to suffice. My conclusion? I sure hope Moderna & Johnson &
Johnsons own vaccines are nearly as effective, because neither are alleged to need
such extremely cold transport temperatures, and are likely less nightmarish logistic
challenges.
Moving on. Christine Lagarde, the President of the ECB will wear this weeks crown
for most frequent speaker. She seems to be everywhere on the Economic Calendar, video
conferences making multiple daily appearances much easier than in-person ones. Not that
ranking members of the various regional Federal Reserve Banks are slouches, this week.
Theyre not, and seem to be everywhere, as well. Some are even teaming up with other
regional bank presidents to present jointly, while Richard Clarida, the Vice Governor of
the Federal Reserve in charge of supervision & regulation is much more frequent a
speaker than most. After last week testifying in Congress, hes speaking at the
Brookings Institution this Monday, though its really Tuesdays schedule that
takes the cake: The Dallas & K.C. Feds jointly host an Annual Energy Forum, this week
"Navigating the Changing Energy Landscape," though the leaders of the gtwo banks
hosting the event arent speaking at it until Wednesday. But not gto worry, Fed
Presidents Bostic (Atlanta), Rosengren (Boston), & Daily (San Francisco) are all
speakers at Racism and the Economy: Focus on Employment, an effort spearheaded by the
Minneapolis Fed whose leader, Neel Kashkari isnt speaking, since hes been home
celebrating the birth of his second child, 2 weeks ago, the same reason S. F.s Mary
Daly appeared in his place, at the recent FOMC meeting. Also speaking Tuesday, NY Fed
President/CEO John Williams, in conversation with Mark Zandi, at the Economic Club of NY.
Zandi, for those whose memory needs jogging is from S&P, and in charge of the S&P
Case Shiller 2-city monthly House Price Index. Just to round out the central bank speakers
that day, Bk of England Governor Bailey is speaking at a London/UK National Conference,
and Royal Bank of Australias Governor Lowe after hours, as will Lagarde, again, even
later that night, or early Wednesday morning, depending on your point of view. And as if
Tuesday needed more, Nouriel Roubini speaks at the IMF 8th Statistical Forum
(Measuring the Economics of Pandemic), and an impressive array of CEOs and execs will be
speaking at the New York Times DealBook V-Conference, including Masayoshi Son of Softbank
fame, Jamie Dimon, CEO OF JPMorgan Chase, and many more, as detailed on the calendar.
Note, so its said, as if all the top retailers reporting arent sufficient, for
the week, Oct Retail Sales are set to be released Tuesday morning. Wednesday, the Mortgage
Bankers Association releases weekly Purchase & Refinance Applications, along with Oct.
Housing Starts & Building Permits. Thursday, the National Association of Realtors
(better known as NAR), releases Oct Existing Home Sales. But it' the calendar of
retailers reporting this week that will prove most alluring. As always, weve
highlighted the tickers likely to attract the most attention but it bears mentioning Home
Depot, Kohls, Lazy Boy, and Walmart Tuesday. Wednesday, wed be remiss if we
didnt point out Jack in the Box, L Brands (Victorias Secret & Bath &
Body Works), Target & TJMaxx. Thursday, results are expected from BJs Warehouse
Stores, Calares, Macys, Ross Stores, and Williams-Sonoma. Friday, The Buckle, DXL
Stores (Big & Tall Stores), & FootLocker.
Those, in and of themselves would be enough for any given week but the week promises more.
Monday, Baidu, JD.com, and Tysons Foods stand out. Wednesday, KLA Corp (dont
send s-mails, they dropped the Tencor portion last year), and nVidia, Thursday, more
results from Intuit, Netes & WorkDay. The Earnings Calendar holds far more excitement
this week than it did last week, and pretty much wraps up the reporting seasonno
disrespect to the hundreds of companies still to report in the weeks to follow but the
companies that matter most will be done by weeks end. And thats why I-bank
events kick into a higher gear, getting in the events they can before the holidays.
I wont waste more time detailing the weeks I-bank meetings because
theyre not only listed below but each required no fewer than 2 verifications, since
some, like Credit Suisse originally canceled all its events, then restored most of those
scheduled after May, as virtual events. Other I-banks merely shifted all their events to
virtual events, while others broke up their events into weekly video conferences,
on-demand events, or abbreviated the schedule, and in some cases, shifting them to a week
or two later. In short, we have checked every event multiple times, and just as we were
getting comfortable changing every event into a virtual event, a few hybrid events started
popping upa mix of in-person & virtual/video conferences, even as some Asian
events werent updated in detail, so weve basically guessed based on whatever
news releases we could decipher, or find and/or translate into English. Having said all
that, a couple of events stand out, this week, including Citis Financial Technology
V-Conference, REITworld, which doesnt officially start until Tuesday, has at least 3
I-banks tagging along with v-Conferences, since its usually a mass analyst meeting
for REITs. Were sneaking it into Mondays mention because Citi is jumping the
gun, starting its related V-Conference a day prior to the official start of the REIT
event. Wolfe Researchs Industrials V-Conference feels well timed, not only because
some of those laggards perked up last week but because it seems likely President-Elect
Biden will seek an infrastructure bill that even Republican Senators will have a hard time
resistingassuming the Georgia Senate run-off, January 5th, doesnt
go the democrats way. Monday, its hard to irnoge J.D. Powers TalkAuto
@Home, along wth AWDAthe automotive Warehouse Distributors V-Conference, and
Automotive Cockpit HMI (Human-Machine Interface). Three auto events are not to be ignored.
Also Tuesday, Deutsche Banks 5th Lithium & Battery Supply Chain
V-Conference, subjects of high interest as EV cars and trucks ramp up production. RBC
Capitals Global Tech, Internet, Media & Telecommunications V-Conference usually
packs more of a punch than most of its events, partly because its not as Canadian
focused as most of its other conferences. Note, IQPCs Automotive Seating
Innovations, continuing the theme we highlighted for Monday. Count on wide interest in the
6th Annual Precision CRISPR V-Congress: NextGen Genome Editing Tuesday, along
with Jefferies London Global Healthcare V-Conference, perhaps more popular, even, than
Goldman Sachs Asia Pacific Healthcare that starts Monday.
Not to beat a dead horse to death but note Barclays Global Automotive V-Conference,
Wednesday. Also notable, Bank of Americas Global Research Consumer & Retail
V-Conference that manages to include a number of retailers who are not reporting this week
but will in the weeks ahead. Womens Wear Daily is hosting Beauty Inc, a sector I
would have expected to hold up better than it did in Q2 & Q3. Of course,
make-upespecially lipstickis wasted under a mask but with so much of business
& life conducted on Zoom (ZM) & WebEx (CSCO), Id have expected make-up to be
not only far more popular than it proved but expected even more expensive brands, like Tom
Ford, to sell even better than they usually do. If youre not buying shoes and
dresses to go out or vacation, you might as well splurge on a sinfully expensive lipstick
or eye shadow for that video call. And while were on the subject of make-up,
Im very interested to see how Ulta Beauty & Target handle their partnership.
Ulta doesnt have a bunch of very high end products, while TGT has spent a lot of
time and money upgrading its beauty departments. What can Ulta offer that Target already
doesnt? Are there any brands that are going to cut off TGT stores that have Ulta
shops-within-shops, in favor of selling to Ulta? Then, again, not that many months ago,
TGT offered beauty consultants on the floor, particularly for brands like Kiehls.
Will Ulta offer them, now?
Two other I-bank v-conferences stand out, both on Thursday. JPMorgan is offering Ultimate
Services Investor, an exceptionally popular subject, even more so now that Salesforce.com
was added to the Dow Jones Industrial Average. The 2nd notable is Deutsche
Banks dbAccess Gaming, Lodging, Leisure & Restaurants, though as a 1x1,
its hard to know how many are participating, and who they are. eSports Rising is a
newer event, also Thursday, though on Wednesday, Morgan Stanley is going to anticipate the
event with an iGaming & eSports event of its own, according to Sports Business.
All in, this is going to be one crazy, busy week, with no doubt in my mind that the
retailers will be a story of the Good, the Bad & the Ugly. Its ironic that the
discountersTJX, ROST, & BURLwere the most successful retailers
pre-pandemic, and suffered dearly since March, as all 3 decided that online sales
werent as important to their customers, who sought treasury hunts that the internet
couldnt satisfy. As COVID cases surge around the country, any ground they regained
when the country reopened in early summer, could have been lost to fear of crowds. If I
drive up to CVS and see lots of cars, I drive away, and restrict my RX pick-up to after
10:30pm. Today, I had to pick up an Rx for my mom, whose CVS pharmacy closes at 7pm. When
I arrived, there were more than 19 cars in line for pick-up, or so it seemed, so I parked
in the empty lot and walked in. Turns out that line for pick-up was, actually, for COVID
testing, the vehicles so numerous they blocked the drive-up window. That CVS is conducting
hundreds of COVID tests a day, at $100 p/pop, which says everything one needs to know
about how fearful people are that they were in contact with the disease. Thats bad
news for the one-time stars of retailerthe discounters reporting this week, who
dont have the benefit of groceries or pharmacies, as Target & Walmart do.
Were headed for a particularly fraught holiday season, Pfizer/BioNTech headed for an
FDA application for EUA, or not, this week.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
November 0913, 2020 DELUGE of EARNINGS
with LITTLE IMPACT, as ATTENTION RETURNS to EVENTS I
will begin as I do every year, saying Shame on the NYSE & NASDAQ for continuing to
refuse to take one day a year to honor our veterans, by closing on Veterans Day,
((Wednesday), as the Bond Markets do. The Exchanges talk up a big storm of honoring those
who served, and especially the fallen but they have never ;put their money where their
mouth is, by actually closing for the day.
So lets get straight to the Economic Calendar, exceptionally busy with Central Bank
speakers, including BoEs Bailey, ECBs Lagarde, and even Chairman Jerome
Powell, on the 12th, when hes participating in a panel with the other
named central bank leaders, at the ECBs Central Banking V-Forum. (Once again,
were abbreviating virtual with V-, Digital with D-, and Online with O-. Theyre
all the same in the end, though some insist on making a distinction). We get a look
at Oct. CPI Monday, and PPI on Friday. Since no one expects inflation to rear its head,
especially with energy in the dumps, the only place were really seeing inflation is
in food prices, and those are conveniently excised in the data. Notably, both the IEA
& OPEC weigh in with monthly oil reports, this week, both expected well before US
Markets open on Thursday. Thats the day the EIA will reveal the weekly Petroleum, et
al report, too, before of the Holiday on the 11th.
Tuesday, both Fed Vice Chairman Randall Quarles and Fed Governor Brainard are speaking,
Quarles on Regulation & Supervision at the US Senate Banking, Housing & Urban
Affairs Committee. One of the more closely watched bits of data will be Tuesdays
JOLTS, at least one economist seeing jobs returning faster than expected but job openings
growing more quickly than that, even as workers looking for jobs are finding them. Gee,
not what Im hearing, and not borne out by the 11m+ still collecting unemployment,
even if not from their state of residence. Notably, many European central banks will be
wrapped up in GARPs (Global Association of Risk Professionals) Climate Risk
V-Symposium. Climate Change is something Europeans & the BoE have been discussing even
as our soon departing president has claimed its a non-issue. Come the inauguration
of the new administration, in January, climate change will become a national conversation,
as it has been for major energy producers for about 8 years, now. GARP starts Tuesday,
also. NY Fed CEO/Pres Williams hosts a keynote interview with G. Trett @FT Global
Boardroom. Cleveland Feds Mester & Philly Feds Harker speak at the Philly
Feds 4th Fintech V-Conference, starting Monday afternoon, Harker starring
in a Bloomberg live briefing on "Strengthening Resiliency: Investing in the American
Worker," Friday.
Earnings reports are expected from just a few headliners. In fact, we worked hard
straining the ridiculous number of reports expected this week, to find a few to embolden
that the Street and Traders might find alluring. Its a big week for real estate,
including Simon Property & Taubman Monday. But, honestly, there are dozens of
companies we werent able to confirm because of serious, near continuous rain which
has strained both FPL & Comcast. Sunday, were typing as torrential rains are
falling and wind gusts are up to 65 mph, causing lights to flicker and connections that
are often lost. But were doing the best we can, and posting what we have. Honestly,
any tickers we were deeply serious in following were checked, not always successfully. and
Ill call out Applied Materials and Cisco, in particular, Thursday, because
theres no question therell be serious interest in those two.
Which brings us to Investment Bank Events, which seem to kick into a higher gear, despite
the long list of earnings reports poised to drop. Top of any list has to be the Edison
Electric Institute Annual Financial Conference, which starts Monday, though both Citi
& Wells start their related events, separately, of course, on Sunday. EEI is a mass
gas Power Utility analyst meeting, that involves major presentations, and under usual
circumstances, 1x1s in private small conference rooms away from the presentation
ballrooms. This year, theres no doubt that analysts will have set up 1x1 calls for
clients but the more private meetings just wont be the same, without the major
hubbub and presentations. Second on our list of I-bank events is Bank of America
Securities Future of Financials V-Conference, starting Monday. As it happens,
PiperSandler is hosting East Coast Financial Services starting the same day. Our 3rd
nod goes Credit Suisses 29th Healthcare V-Conference. As we move to
Tuesday, our eye caught Morgan Stanleys 10th Annual Global Chemicals, Ag
& Packaging V-Conference, Bairds Global Industrials. And Raymond James
Co-hosting CFANYs Insurance V-Symposium. (CFANY is Chartered Financial Analysts of
New York.) Wednesday, Goldman Sachs hosts Global Natural Resources, Ban kof America Global
Energy, and Stanford University Global Energy V-Dialogues. Also Wednesday, Wells
Fargo' 8 Days a Week--Tour of the Banking Industry. As long as were on
that industry, theres a 54th Felaban Assembly, starting Monday, on the Economic
Calendar. Felaban is the organization of LatAm bankers, specifically, the Federacion
Latino/American de Bancos.
Thursday, JPMorgan hosts a Luxury & Brands V-Forum, thats usually in Paris,
France, UBS hosts Aerospace, and Jefferies Interactive Entertainment, just as the first
new game consoles are launched to the public. For those whose interactive entertainment is
mobile sports betting, Morgan Stanley has you covered, Monday, with a Sports Betting
V-Summit, prelude to the Sports Business Journal Media Innovators, starting Tuesday, and
its Sports Betting USA on Thursday. . So its said, note FIAthe 36th
Futures & Options Annual starts Tuesday, while a Flash Memory V-Summit starts the same
day.
Outside I-bank events, Id be remiss if I didnt mention the American Heart
Association Scientific Sessions starting next Friday, when the American College of
Allergy, Asthma & Immunology Annual Scientific Meeting also starts, separately.
Meanwhile, also next Friday, ASLDthe Liver Meeting starts Friday, also, one of the
rare times an I-bank meetingCowens 4th Annual IO V-Summitis
listed 4th, after trade events. As a rule, the I-bank events come first, the
bigger the I-bank, the higher up on that days list. But next Friday, theres no
question the trade events take precedence.
Meantime, we havent even dented the Event Calendar, because like the Earnings
Calendar, the number of events are overwhelming. And with winds blowing in gusts up to 65
mph, and our power flickering, its time to warn theres little reason for the
bulls to keep pushing up stocks. Last weeks big gains reversed most of
Octobers give back. Unless the news and forecasts provided at this weeks heavy
I-bank conference schedules warrant it, its time for some digestion of last
weeks gains. Thats probably what Fridays small drawdown was about, me
thinks.
ECONOMIC: (highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
November 0206, 2020 TUESDAY IS ELECTION
DAY; WILL OUR NATIONAL NIGHTMARE END? The nightmare Im
referring to is all the nasty ads candidates rannationally, and locally. The
Economic Calendar promises global PMIs, October Vehicle Sales, and a lot lighter US
Treasury Issuance schedule than last weeks crazy one ($373B before the 4- &
8-week were announced). The FONC is meeting Wednesday & Thursday, though I cant
imagine what theyll say that would differ from what Powells already said many
timesthey have our back but the country needs more fiscal policy support to avoid a
worse recession than the one weve seen. Of course, thats fallen on deaf ears
until now, and that might not change. If there is a Biden presidency ahead, theres
no reason to expect Republicans to support a big stimulus package before the changeover.
The Bank of England also meets and weighs in early Thursday morning, prior to the FOMC
statement. Friday the October Unemployment Report will be released, the third and final
big item on the Economic Calendar. All in, a huge week which makes the hectic Earnings
Calednar seem besides the point
Theres an exceptionally intriguing Earnings Report arriving Friday. If you think
about all the states seeing surging COVID hospitalizations, and the tent-hospital
expansions built in many cities, Hill-Rom (HRC) could be a beneficiary, since it makes
hospital equipment like beds, racks to hold IV bags, the rolling bed
trays/storage/mirrors, etc. Now, logic doesnt always prove out but when it does, and
no one else has anticipated it. It can be quite pleasing. Also in the Earnings Calendar,
the number of hotel & healthcare REITs scheduled to report is large. Further, looking
at FOX reporting, Tuesday, which basically owns only Fox News, now, its fair to
wonder wholl fill all its hours of programming starting Jan 21st, 2021,
if Trump doesnt get the second term hes rallied for. Of course, should Trump
lose, theres no doubt hed accept an on-air position at Foxhell
need a forum beyond Twitter, once hes out of the White House, and he loves
considering himself a celebrity. Then, again, there are any number of radio companies
reporting, plus ViacomCBS, and where is their revenue going to come from after such an
active campaign season, with so many candidates running so many commercials, it was often
hard to remember what program was on for a few minutes between the political ads?
The most significant Earnings releases are already in the can, making this weeks
extensive calendar more noise than substance, for investors in the markets top
megacap holdings. Still, weve emboldened those tickers we believe will attract the
most attention, even if we dont give a hoot about their results. And in most cases,
I think youll find, the emboldened tickers will, in fact, attract attentionand
not always for their rousing results or forecasts, when one is offered.
The Events Calendar remains light, though a few I-banks have returned to the schedule, as
the largest market cap companies have finished reporting. Case in point, Banco Santander
started its 12th International Banking Conference on Sunday. JPMorgan weighs in
with Oil & Gas Monday, while both Citi & Credit Suisse hold respective China
Investment Conferences, both starting Monday, as does Deutsche Bank European Leveraged
Finance, as well as Gabellis 44th Auto Symposium, in years past called the
Automotive Aftermarket Symposium, coinciding with AAPEX, Aftermarket industry Expo, and
SEMA360, a related Automotive Expo that runs concurrent, with the manufacturers. This
year, though, since Gabelli PMs and clients arent schlepping out to Las Vegas for
AAPEX/SEMA& CRASH, its mostly an independent conference, and simply Auto. Monday
is, also, the last day anyone interested can comment on the FAAs Boeing 737 MAX
training proposals.
Tuesday, of course, is Election Day, though I dont know how many people are left to
vote, given the 93m said to have already votedpresumably both in person at early
voting sites, and by mail. The Election isnt stopping Stephens from hosting its New
York City Bank virtual Trip, through the 4th. Meanwhile, Im quite curious
to know how many Meeting Planners will show up at the groups WECWorld
Education Congress. Given the number of events canceled, and the different skill set
required to set up replacement virtual/digital/online events, that group might be hurting
as much as airlines, with no end in sight for their nightmare. Granted, there are a few
hybrid events popping up, a mix of both virtual and in-person events but those still
remain few and far between, though the meeting planners, themselves are giving it a shot.
.
After ,mostly skipping election day, except for Stephens, I-bank events return Wednesday,
starting with Citis Paris Biz Services virtual trip, Berenbergs Video gaming
V-Conference, which should rightly be called a European Video Game V-Conference, Raymond
James Emerging Bank V-Symposium, and Credit Suisses 8th Annual
LatAm Basic Materials V-Conference.
Thursday, the BancAnalysts of Boston host their 19th (virtual) fall Conference,
which will be the highlight of the day, no offense to Macquaries Korea virtual Day,
or the Hedge Fund Leadership virtual Conference. I dont really know much about
UBS Guard Webinar: Leveraging Big Data to Model the Activist Mind but it sounds like
a financial magicians event. It is not redundant to list the ACK ARP Annual
Rheumatology V-Meeting Thursday, and EULARs 10th Advanced Academic
Rheumatology V-Convergence, Friday, since both are separate events, and would have been on
separate continents if they went ahead as originally planned. Ditto the Friday New York
Lung Cancer virtual Symposium, and Thursdays IASLC European Immunotherapy Lung
Cancer Conference, the latter, by the way, canceled.
To minimize wear and tear, weve abbreviated virtual conferences to V-Conference,
occasionally changing it up with D- for Digital, or O- for Online, if the organizer
insists. No matter how you slice it, one heck of a week ahead, the only reason for stocks
to regain their celebratory mood and rally is if the election seems settled by Wednesday
afternoonand Im not sure how that can occur unless one presidential candidate
wins an overwhelming majority of electoral votes, that states like Pennsylvania, Wisconsin
or a couple of other ones cant possibly change. Now, quite honestly, were stocks to
rally Wednesday even without a clear cut winner its quite possible what traders are
celebrating are the end to all the nasty election adscause thats a moment
Im sure looking forward to. Should Trump lose, that would be like fudge on top of
chocolate ice creama bonus that intensifies the joy but doesnt make all the
difference.
Likewise, Id like to see Congress pass a law about the number of rallies a sitting
president can use Air Force One to get to, without paying back US taxpayers. Trump
attended 43 rallies around the country, in the last 4 day-weekend before the election (one
was canceled due to weather), and you and I are paying for all those plane trips. Just
doesnt seem right, when theres no work hes doing in all those cities,
other than trying to get re-elected, in some cases, returning to the same
statelets say Floridaafter hop-scotching to the midwest and southwest on
a day he started by flying to a 2nd city in Florida. Were Trump paying for
those trips, out of his own pocket, Im sure they would have been planned more
economically. Small change, you say? Not at some $400--$800 p/hour to run that plane.
ECONOMIC: (Highlights only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
October 2630, 2020 END
of MONTH BRINGS ELECTION SO MUCH CLOSER
Theres nothing on this weeks schedule to compete with the Earnings Calendar.
Were we to put together an Tech Earnings Calendar meant to occupy the most analysts
possible, it would be hard to outdo the those slated to report on Thursday. Surely, any
reasonable tech watcher would toss out the first weeks major banks, and last
weeks Intel, to zero in on this weeks calendar. Lets start with
Thursday, which impresses me so much, and includes Alphabet (i.e. Google), Amazon,
American Tower, Apple, Comcast, Facebook, and Twitter. If we stretch "Tech" a
little farther, we can include Monderna, Starbucks, and Shake Shack, all of which rely on
digital power to expand their business. But even a day that impresses me less, say
Wednesday, there are more hefty reports expected, including those from Amgen, Automatic
Data Processing, Boeing, CME, eBay, Equinix, Ford, General Dynamics, Gilead Sciences, KLA
Tencor, MasterCard, Norfolk Southern, Perkin Elmer, Pinterest, Ryder, ServiceNow, Sony,
TeleDoc, Visa, Western Digital, and Yandex. And thats skipping over all the
homebuilders on this weeks list, al of whom use digital programs to design homes,
update floor plans and interiors per buyers customization, and more. At the least,
parse the emboldened tickers for each day, and find your ticket. Thursday is the mad crush
day but the whole week will be a highlight of the Earnings Season, even if more companies
report the week after this one.
Speaking of Big Tech, Wednesday, the CEOs of the biggest names reporting this
weekFacebook, Google, Twitter--will testify to the US Senate Commerce Committee on
Article 230 litigation protectionsprotections against lawsuits originating because
of something someone posts on their platforms. Also expected, confirmation of Amy Cony
Barrett to the US Supreme Court, the most contentious appointment in a long line of
disputed appointees, back to Bork. Also notable, the speakers at Yahoo Finances All
Markets V-Summit (our new way of indicating a virtual event). They include Treas.
Secy Mnuchin, NIH Director Dr. Anthony Fauci, incoming Citi CEO Corrie Barry, and
Best Buy CEO Wes Moore.
Otherwise, the Economic Calendar is more of a snooze but not without its own
highlights. Monday well get a look at US Sept New Home Sales and Tuesday both the
FHFA & S&P/Case-Shiller August Home Price Indices. So its said, Tuesday also
brings the Conference Boards Oct Consumer Confidence, which I always find more
believable than the version University of Michigan will put out Friday. Among the featured
speakers at Mondays International Economic Forum, originally the Toronto Intl
Economic Forum of the Americas are execs from Cummins, Desjardins Grp, RWE Renewables,
Parsons Corp, Investcorp, Eurazeo, UBS, Sun Life Financial, and Exos Financial. We could
discuss the Fed webinars, this week but, then, no one is thinking ahead to "The
COVID-19 Eviction Cliff," the subject of the NY Fed/NYU Furman Center Joint webinar,
or the Atlanta Feds "Biometrics: Technology & Policy."
But forget all that because there are central bank meetings, this week, including the Bk
of Canada, Wednesday, then the Bank of Japan, overnight Wednesday, into Thursday morning,
followed by the ECB in the wee hours of Thursday morning, Governor Baileys
post-meeting press conference bleeding into US pre-market hours. Well get an early
version of Q3 GDP Thursday, along with Sept Personal Income & Spending, both of which
will favor us with versions of PCE, which is the FOMCs favorite inflation indicator.
The Bank of Colombia also sets interest rates, Friday afternoon but the truth is, the star
of this weeks Economic Calendar may well be the amount of debt the US Treasury is
auctioning, with some tenors, usually limited to $30B or $36B is suddenly being offered in
the $50+B range. Total for the week--a rousing $373B, before we even know the value of the
4- & 8-week debt the Treasury will offer Thursday, the amounts of those not yet
announced until into the week. Ya know what happens when the US Treasury has a record or
near-record amount of debt on offer? Some of the Auctions meet dull demand, causing rates
to rise, in order to make the debt more attractive. Inevitably, stocks suffer when that
happens, even as this week in the Earnings cycle often sees weaker stock demand than
normal, too. All in, stock investors need to be on guardeven if we werent into
the homestretch of another nasty presidential campaign. And dont forget, we turn
back our clocks, next Sunday, which often puts people in a sour mood the week following
the change, which happens to coincide with the week of the election, if theres
anyone left to vote, who hasnt already voted either early, in person, or by mail
Which brings us to the Events Calendar, which is slim by design, because of the heavy
Earnings Calendar. You might notice almost all the events are Trade/Industry events.
I-bank events are, mostly, MIA. the events going forward, however, wont be the same
as they are other times, because virtual events are not quite the same. Can a distributor
get as excited about news solar panels seen virtually, as they might in person? Or
AESAudio Engineering. Can Zoom duplicate the effects of Bose speakers, in person,
even if your PC is hooked up to Bose speakers? Can Future Farmers of America be the same
virtually, as they would be with the smell of hay and the rump of pig to pat?
Between the flood of Earnings reports, and the mountain of Treasury debt on offer, stock
investors should be holding back until the eve of the election, at the very least. Stocks
would have to pull back far more than they have, to attract fresh investment. And that
would be a gift for those investors looking to position for the arrival of a vaccine, and
into the New Year.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
October 1923, 2020 EARNINGS SEASON KICKS INTO HIGHER GEAR
Central Bank speakers would normally rule the week but Earnings
Season kicking into a higher gear should prevail before the end of the week. Because we
usually start with the Economic Calendar, And the leaders of the FOMC, ECB, and BoE all
speak before markets open Monday, lets deal with them. ECB Pres. Lagarde & BoE
Gov. Bailey speak at the G-30 Intl Banking Seminar, part of the IMF/World Bank Group
joint meeting. Early Monday, FOMC Chief Powell will discuss Cross-Border Payments &
Digital Currencies at the IMF, a topic that BoEs Cunliffe will discuss, as well, as
part of a panel.
But thats not all! Atlanta Feds Bostic, the SECs Jay Clayton, and FOMC
V. Chairman Quarles all speak Monday after Powells talk, but theyre at the
SIFMA virtual Annual Meeting, the Capital Markets Conference. At 9am Monday, NY Fed CEO
Williams opens the NY Federal Reserve webinar on Culture, of all things,
"Partnerships in Building Ethical Norms." You might notice that ECB Pres.
Lagarde is actually speaking 3x on Sunday, 2 more after her G-30 speech, including at an
ECB Conference on Monetary Policy, and at the 16th Congress of the Regions de
France. The conversion of all conferences into virtual ones, allows for taped speeches, as
well as speeches to numerous events, from a single location thats easily hidden.
Note on the Economic Calendar that before Monday concludes, BoEs Cunliffe will weigh
in on Powells subjectCross-Border Payments & Digital Currencies. Philly
Feds Harker will be at the Operation HOPE Annual virtual Meeting, discussing the
Post-COVID Recovery: Private Sector Response & Outlook. Fed V.Chair Clarida will
deliver a speech at the ABA v-Annual Meeting, on "US Economic Outlook & Monetary
Policy," even as Minneapolis Feds Kashkari kicks of his FRBs
"Empowering gthe public to assess large bank resiliency." Mind, thats just
through Mondays market hours. After hours, Lane & Cunliffe are back, again,
speaking, at a Joint BoE/Banque de France/IMF/OECD workshop on Treasury International
Capital (TICS) & Financial Policies. And so goes the Economic Calendar, pretty much
the whole week, even with the IMF/World Bank Joint Meeting mostly completed. This is one
week we strongly recommend you check the Full International Economic Calendar, rather than
relying on our highlights. Between SIFMAs Annual Meeting, the wrap up of G-30 at the
IMF/World Bank Group Jt annual meeting, and a dozen small webinars offered by various Fed
Reserve Banks, any highlights wouldnt begin to present the full breath of
whats going on this week, or even the best highlights. One mans highlights is
anothers boredom, so explore yourself, using the link that heads up the Economic
Calendar, where there are links to all the external events. .
Outside Central Bank speakers, the Economic Calendar promises Housing Data, including
NAHBs Housing Market Index Monday, Sept Housing Starts & Building Permits,
Tuesday, the usual MBA weekly Mortgage & Refinance data, Wednesday, NARs
Existing Home Sales Thursday. However, we cant let one item escape without zeroing
in on it. Every Thursday, when Initial Jobless Claims & Continuing Claims are
reported, the talking heads and economists assume lower Continuing Claims numbers mean
more people have either been called back to work, or hired by other employers. The truth
is, after 6 months, many state unemployment benefits are exhausted. The people no longer
counted in the Continuing Claims portion may not be employed, at all, but instead, dropped
altogether, without any safety net. No Job, no meager state unemployment checkno
nothing but the ever growing lines of cars at food pantries. And some of those lining up
for food are, now, seniors, who worked part-time to supplement their Social Security
incomeoften at department stores where theyve worked for decades but no longer
can, either because the stores no longer need them, or because they understand the risk
theyd be taking, working in a mall daily, when few if any states are contract
tracing, and they know coronavirus could be the last illness they ever catch.
The Events Calendar reflects the spotlight shifting to quarterly Earnings. The I-bank
conferences that are scheduled were mostly planned for overseas, originally. Now that
nearly everything is being conducted virtually, origination no longer matters. Citi is
hosting Global Resources, and UBS Equity Derivatives, both starting Tuesday. The Capital
Link Shipping Forum, Wednesday, was always planned as an Analyst & Investor event, and
proceeds as such, with every shipper among the speakers. ROTH Capital planned its
Sustainability virtual Conference to include Solar, Storage, EVs & Recycling
because Solar Power International was on the schedule for Wednesday, too. The NAB Show,
usually one of the biggest broadcasting events of the year will be a shadow of its former
self, as will be CCA--the Annual Mobile Carriers. Virtual Convention & Show.
Wednesday, Nomura is hosting ESG 2020, and Credit Suisse its 9th Real Estate
CEO Conference, the latter planned in Sao Paulo. But this week is also the first week in
which hybrid events are plannedin-person supplemented by virtual events. The only
all in-person event on the calendar is High Point, the semi-annual furniture market in NC.
On the other hand, a calendar like ours provides opportunity to spot anomalies. Wednesday,
IACP is the initials for Culinary
Professionals, and also the initials for the International Association of Chiefs of
Police, both of which start their fall conference on Wednesday. We recommend you check the
Free Calendar on our website, periodically, in case we find more events scheduled for
Thursday than we found until now.
Which brings us to the Earnings Calendar. There are dozens of banks scheduled to report
that arent included on our Calendar. We cover the large multinationals, the largest
regional banks, and the biggest international banks traded in the US. The dozens of banks
omitted from our calendar do not fit into any of those categories. If you need them,
were the wrong site for you. Eliminating those banks that doesnt fit into our
universe, trimmed the Earnings Calendar considerably, leaving us with an interesting
collection of companies. Monday, we highlighted Crown Cork, IBM, and PPG. The third
already upsided. Crown Cork relates to brands, like TAB, which Coca-Cola announced it was
ditching. But Coke also stopped distributing some more popular brands, during the early
months of the pandemic, like Sprite Zero. That left people like me trying Diet 7-Up and
finding it enough like Sprite Zero to satisfy, at a much smaller price. For years, the
bottlersand Coke especially--have been insisting they were going to discontinue
discounts, and improve their margins. Well, the pandemic finally did it for them. 12-pakcs
of Coke products, which I could often buy for as little as $2.50 a case, is not $6.19 at
supermarkets, and $4.99 at Target & Walmart, before member discounts. Unfortunately
for Coca-Cola, Diet 7-up, which Ive now gotten used to, is often 3 12-packs for
$8.00, and my taste buds rarely notice the difference, except when I eat chocolate. But,
the story of products, finally, commanding full price is repeated across so many sectors
its hard to keep track. Ill be watching to see who cracks first, now that
products like toilet paper & paper towels are no longer difficult to buy. In fact,
most stores have taken down the rationing signs that used to restrict how many packages of
paper products a family can buy. So, CCKs report prompted a big digression that will
be relevant when Coke reports, Thursday. For once, its margins should have expanded
Tuesday, Albertsons report, early in its return to the public markets. Rails are
prominent this week, with the two Canadians (CNI & CP) Tuesday, CSX Wednesday. I
highlighted Interactive Brokers because its the last independent still standing. For
how long? IQV is related to all the clinical trials & drug approvals, while Lockheed
Martin needs no introduction. Manpower will provide a global look at employment, that
Robert Half International will complete Thursday. Also Tuesday, though, Netflix,
NVRthe luxury homebuilder, Procter & Gamble, of Charmin & Bounty paper
products fame, as well as Tide laundry detergent, and hundreds of other products. Prologis
specializes in warehouses, which online orders have made very popular. SNAP doesnt
do it for me but, then, that probably makes SNAP Management very happy. Im not the
demographic, at all. Tenet Health Care, Teradyne, Texas Instruments, and Travelers
Insurance round out the Tuesday reports.
Wednesday, Abbot Labs is a company analysts constantly pound the table for without doing
much for the stock. AutoNation is another story, given autos new & used are the one
strong consumer interest, after housing. Biogen Idec is trading on a lot of hope for its
Alzheimers drug which didnt prove particularly helpful but also did not harm.
When it comes to Alzheimers, the FDA is likely to approve any drug that does no
harm, because caregivers are desperate for something to make themselves feel better about
the deterioration in their loved ones condition. Also Wednesday, Chipotle Mexican
Grill, Crown Castle, the cell tower company, Discover Financial, Edwards LifeSciences, the
latter probably managed a rebound in heart valve replacements, after the COVID hospital
lock down. Equifax is another name with a bead on employment. ICON plc conducts clinical
trials for drug companies, while Interpublic is the advertising giant that probably
suffered a weak first half. Kaiser Aluminum probably enjoyed the auto rebound, while Lam
Research is a leader in semiconductor equipment, Las Vegas Sands a story of Las Vegas,
Macau, & Singapore. Makes me wonder if Japan lost its best opportunity to have casino
companies bid on its coming casinos. Meritage, a middle income homebuilder, in contrast to
NVR. Nasdaq, on the other hand, a beneficiary of trading in the most popular tech stocks.
Next Era owns Florida Power & Light, as well as the biggest solar power farm in the
world. Others would rather focus on Tesla and Thermo Fischer Scientific, while Valmont
will benefit if an infrastructure bill ever passes, while the next 3 need no introduction:
Verizon, Whirlpool & Winnebago. Renting a home on wheels for a cross country trip with
the family became a very popular way to travel and social distance, this past summer, WGO
already celebrating for months.
Thursday, note American Airlines, Capital One Financial, the latter rarely in need of huge
reserves because its fairly stingy with credit limits, often starting card holders
with only $500; But its bought a few big store affiliated cards, in the last few
years, and some of those had huge credit limits, COF hasnt gotten around to
trimming. Checkpoint Software & Citrix Systems are 2 names Ive long waited too
see taken over. Danaher, is an industrial favorite of analysts. Intel talked of giving
over manufacturing to one of the contract fab companies, on its last quarterly call, will
shocked its shareholders & analysts n end. With laptops & Chronebooks especially
popular with returning students, its hard to gauge how big a benefit that business
was to Intel. The low end is not its thing, while the new game consoles are all AMD.
Kimberly Clark is the 2nd tier to PGs brands of paper products. Then,
reports are expected from toymaker Mattel, defense giant Northrup Grumman, Penske
Automotive, one of the largest auto & truck dealer groups in the world. Pool Corp has
been on a tear, all the new pools built in backyards future regular customers. Pulte Homes
probably did better than Quest Diagnostics, whose COVID-19 tests were banned in Florida,
after 400K results went missing for over a month, in some cases, for more than 3 months.
Seagate Tech, Snap-on, and Southwest Airlines wont generate the interest
STMicrosystems will. SIVB, which now owns Leerink, long ago took shares in young companies
that needed loans, and made itself a fortune along the way before buying Leerink. Tractor
Supply, whose ads Ive just started seeing down here, has proven a big winner during
the pandemic, as people decided they needed new ride-on mowers to take care of their own
lawns, and horse owners ordered hay and other supplies from them, the way dog & cat
owners order from Chewy. TPH is TriPointe, another homebuilder, while UNP caps off all the
rails reporting this week. W.W. Grainger and Walmex report the kinds of revenue most can
only dream about. Verisign, on the other hand, has a gold mine in running the doc.com
registries, among others.
Friday, American Express, AutoLiv and Gentex stand out, the latter two auto-related names
So that wraps the weeka choice of central bank speakers or Earnings Reports that
will kick up into higher gears as the next 2 weeks unfold;. I hate to say it but when it
comes to speakers like Jerome Powell, we know his schtick, so more encouragement and
urging for Congress gto get itself into gear and vote for more stimulus for the
unfortunate who lost their jobs, and whose prospects get worse with each passing week that
the virus spikes, leading more people to stay home, and more businesses to close. And keep
in mind, the biggest tech companies have yet to report. The more reports that arrive, the
more times were likely to hear about uncertainty ahead.
ECONOMIC: (Highlights, only, below. Full
International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
October 1216, 2020 BANK EARNINGS WILL
DWARF IMF/WORLD BANK GROUP JOINT MEETING International
Institute of Finance (IIF) Membership Meeting is subtitled : Financing a Sustainable
Recovery: Crisis Recovery and Drivers of Future Growth. It runs through the 16th,
overlapping with the IMF & World Bank Group fall & Joint Meetings, the 12th18th.
(Nevermind Jerome Powell is first speaking on the 19th. the program is what it
is.) IIF is the rare International event that uses 3 time zones to list session times,
making it easy for everyone who wants to tune in. BoJs Kuroda is up first, at 7am
et, in the Policymaker Series that leads off the entire event, elevating a regulator whose
attempts at boosting inflation has failed for decades, not years. . ECBs de Guindos
appears at 11am, the rest FinMins and university professors/former govt officials,
like Glen Hubbard and Jared Bernstein who some bet will be a repeat in a Biden
administration. In frontier markets, central bankers appear from all over the 3rd
world, think Kenya, Pakistan, Costa Rica, and more. Invesco S&P Global, Fitch Ratings,
and Fidelity are just some Portfolio Managers (PM)s weighing in on a "Brighter Future
for EM." Make no mistake, the pdf schedule is hard to read because its so
dense, with most sessions consisting of panels of 4 or 5 plus a moderator, and youd
be hard-pressed to find a single bank or investment management company not on the program.
Then, there are the non-financial corporates like Amazons aws, Google, and
Microsoft., plus any number of press members selected for panels, from FT, NYTimes, WSJ,
BBG, plus the obligatory Central Banker/Regulators, like the Feds Richard Clarida,
on the 14th, at 9am. Most sessions are "In-Conversation," 1-on-1s rather
than deep panels but, for the majority of other sessions, the titles do describe
whos participating, making it easier to take meaningful deeper dives. IFF Pres/CEO
Tim Adams will be the busiest of all people this week., given how many sessions hes
slated to moderate.
Most of the IMF/World Bank Group sessions are panels, also with 46 members and a
moderator. Recall Christine Lagarde headed up the IMF prior to being appointed as
president of the European Central Bank https://meetings.imf.org/en/2020/Annual/Schedule Both the IMF & World Bank conduct individual, fall meetings
prior to the joint meeting. World Bank Group President is David Malpass, a one-time and
long-time economist at the late Bear Stearns. The IIFInternational Institute of
Finance full schedule is here: https://www.iif.com/Portals/0/Files/Event
Files/2020_IIF_AMM_agenda.pdf?=2020-10-10-213137
BlackRocks Laurence Fink will take part in "Post-COVID-19 Recovery &
Resilience," at 1pm on the 13th, shortly after the G-24 Secretariat holds
its press briefing. Other financial executives are particularly common on the 16th,
under "View from the C-Suite." Corporates from outside banking are not
significantly represented at the joint meeting but there is a session or two with
Facebook, Google, Mapbox, Veraset, and the Bill & Melinda Gates Foundation, a combo
that puzzles. (Melinda is a panelist later, while Google CEO Sundar Pichai speaks on the
16th, when a few more tech execs appear.) Central bankers from around the world, including
from tiny 3rd-world countries are more common on the program, than the big
techs. IMF Managing Director Kristialina Georgievas Plenary isnt until the
15th, at 5:30am, of all times. She & Malpass will share the stage at that hour.
So given the G20 & G24 also meet during the IMF/World Bank joint meeting that overlaps
with IIF, youd think that central bankers and their banks would have avoided
scheduling any conferences/events during the Joint Meeting but, it appears, thats
wrong. Just take a quick look at the Economic Calendar to see how wrong that thought is.
Even despite a Monday bank/Treasury holiday, when stocks will trade regular hours, the
schedule is packed, with major banks reporting earnings, and beyond that, not least
because of the US Senates hearings for Supreme Court nominee Amy Coney Barrett. And
I feel compelled to say something about that appointment, if for now other reason than a
cousin of mine, a lawyer, died Saturday, and he and every other lawyer in the US has
always viewed appointment to the Supreme Court as a position earned after a long,
distinguished law career. Barrett has spent much of her legal career as a professor at
Notre Dame Lawnot litigating. And she spent more time on the bench in Illinois than
she did representing clients or prosecuting defendants. In sum, except for her short,
finite stint as the late justice Antonin Scalias clerk, she didnt have much of
a legal career in any court room. That must be causing many to fume.
Note Tuesdays CPI & Wednesdays PPI, without overlooking Vice Chairman
Claridas US Economic Outlook & Monetary Policy" @IIF Tuesday, followed by
Fed Vi. Chair Quarles "Financial Regulation" to be delivered to Stanford
Universitys Hoover Institution, mid-afternoon. Then, again, if naughty former NSA
Chiefs ingtrique, I would nogt be surprised if General H.R. McMaster includes at his
virtual speech at the Economic Club in NY, suggests a vote against Trump is in order.
Thursdays weekly initial jobless claims & continuing claims will be a highlight
but so could UK P/M. Boris Johnsons Thursday deadline for Brexit talks. Equally
frustrating is the FDICs 10th Annual Consumer Research virtual Symposium,
for which there was no agenda made available, as of the weekend prior.
But lets jump ahead to the Earnings Calendar but thats sure to be highlight
for good or bad. Tuesday, reports are expected from BlackRock, Citi, Delta Airlines,
Johnson & Johnson, & JPMorgan. The CEOs of BLK, C & JPM will deliver
"View from C-Suite" sessions at this weeks big conferences, as detailed
below. Wednesday, well hear from Bk of America, Goldman Sachs, PNC Financial, US
Bank, United Airlines, UnitedHealth, and Wells Fargo. Both Wells Fargo and Citi are in the
dog house with their primary regulators, for misbehavior still being carried over from the
200809 mortgage crisis. Last weeks $400m fine against Citi probably explains
why Michael Corbat said hed leave early next year, an announcement that came as a
surprise, when it was recently made known, a couple of weeks ago. Thursday, Earnings
Reports are not as populated as the two prior days but still promises Intuitive Surgical,
Morgan Stanley, Taiwan Semiconductor, Truist & Walgreens Boost Alliance. If Truist
doesnt ring a bell youre not alone. It is the new name chosen for the merged
SunTrust Financial & BB&T, 2 large southern banks that merged this year, and are
wiggling themselves into the new name. Call BB&T and theyll answer BB&T , a
Truist Bank. Ditto for SunTrust. Ill confess, Ill never get used to the new
name, and think it stinks but, with so much other stuff stinking this year, its not
something I can get as riled up about, as the possibility of a 2nd term for
Trump, the chief crazy in white House. Fridays reports will come from Ally
Financial, Bank of New York Mellon, Kansas City Southern (railroad), State Street, and VF
Corp.
Which brings us to the Event Calendar, as fluid as any calendar could possibly be. There
were events canceled, that weeks later were suddenly offered on-demand, via pre-recorded
sessionssometimes from last year or earliercobbled together to form an
"event." Three-day mass analyst meetings have been converted into 2-hour
sessions. And without need of hotels or convention centers, events can appear online with
only hours notice. So why bother, you might ask? Thats the easy part: they bother
because many professions and licenses require ongoing continuing education credits,
credits that can only be earned via attendance at a recognized "conference" or
scientific session. So, whether its as useful as its supposed to be, or merely
the bare minimum to qualify, virtual events are here to stay, this year, and for the
foreseeable future.
And then, if the truth be known, beyond all the events and speakers mentioned above,
theres Amazon Prime, Tuesday & Wednesday, and the many competitors from Walmart,
Target, Best Buy, and others, seeking to pry your money from your pocket. And much as you
and I may believe we can resist, Its quite possible well fall victim,
especially when it comes to hooking up an elderly relative who hasnt seen her
grandchildren in 6 months or more. IF you know of a really old person whos been cut
off from family and friends, and can spare the cost of a Kindle or other tablet, help them
connect virtually with younger relatives, by donating a tablet to them. You might just
save a life, without realizing it. Better yet, set it up for them, and input all the
numbers they need, so all they must do is press dial. Make that the mitvah youll
perform this year.
And dont let a shrug at bank earnings fool you into thinking it will be an easy
Earnings season. The banks are a ringed group that dont often have relevance to
other sectors. But whatever you do, dont forget the countdown to the election is on,
and accelerating to the denouement. No matter who wins, at least 40% of the US population
is bound to be disappointed.
ECONOMIC: (Highlights, only, below.
Complete International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in far more complete due diligence.
October 0509, 2020 CENTRAL
BANKERS HAVE PLENTY TO SAY The
only event bigger than FOMC meetings, themselves, is the NABE meeting with FOMC Chief
Powell, ECBs Lane, Sheila Barr, & Chicago Feds Charles Evans. However, if
you were talking about money managers, its hard to top 13D Monitors
Active-Passive virtual Summit, on the 8th, with Starboard Values Jeffrey
Smith, Bill Ackman (Pershing Square Capital Mngmnt), Glenn Welling (Engaged Capital), Jeff
Ubben (now, Inclusive Capital Ptnrs), Keith Meister (Corvex Mnmgnt), and Carl Icahn, of
Icahn Enterprises, whos not my cup of tea but may well be yours.
Whats odd is how few headliners appear on the agenda for the Federal Reserve annual
Stress Testing Research virtual Conference, hosted this year by the Boston FRB. Perhaps
the reason is In the descriptive, "This conference is tailored for researchers and
academics," which suggests the speakers listed, as of 10/01, very well. Reads more
like an IMF Conference. On the flip side, SIBOS is filled with bankers, a smattering of 3rd
world Central Bankers plus Feds George, and the many banks who use SWIFT, along with
Microsoft, Google, & Amazon AWS. Where appropriate, weve included US Bank CEOs
& Chairs speaking at SIBOS, on the Events Calendar.
The Economic Calendar, otherwise, feels a little flat The Supreme Court is back in session
Monday, hearing arguments on Obamacare. Trump has been promising a replacement healthcare
plan for four years and has yet to deliver even a hint at one. European Central Bankers,
especially ECBs Lagarde are frequent speakers this week. The move to virtual events
means that someone like Lagarde or NY Fed CEO John Williams can speak at 2pm, at a NY
event, then an hour later, at a European event. And since no one, necessarily, must know
if a speech is live or videotaped, the opportunities are endless. No worries about large
convention sites being available, or sufficient hotel rooms in the neighborhood.
Whats become a party or meeting planners nightmare has opened unlimited
opportunities for popular speakers. And make no mistake, Central Bank leaders are popular
enough that even the WSJ promises Largarde for its CEO Council Summit, Tuesday.
A combination of JOLTS (Tuesday) and Earnings from Paychex (Monday), may tell us more
about where employment stands than last Fridays Unemployment Report, disappointing
as the headline number of 870K may have been. PAYX should be an advance warning of
lay-offs to come, depending on its outlook. Well also see the September FOMC Meeting
Minutes, Wednesday. Hours later., the vice presidential debate takes place between V.P.
Pence and Dem V.P. candidate Kamala Harris. Pence is so used to being Trumps booster
and defender, he wont be coming out like the pitbull Trump was, and could see Harris
make mincemeat out of him. Wed love to see her extract an admission from him that he
doesnt always agree with Trump but is a loyal soldier. Thursdays Initial
Jobless Claims probably wont reflect, yet. the big lay-offs announced by airlines,
Walt Disney, and oil companies but that will all be part of Octobers data.
Aside from Paychex, Levi Strauss is Tuesday, Lamb Weston Wednesdaya clue to how many
fries McDonalds is selling. Thursday, Dominos Pizza & Helene Curtis
report, the latter hurt by hair & nail salons that were kept closed to the bitter end,
in NY, California, Southern Florida, and many other places where governors & mayors
were especially cautious.
The Events Calendar was touched on at the open, NABE, the virtual Annual National Business
Economics Meeting with Powell. The EEI (Edison Electric Institute) National Key Accounts
Workshop and NASS Spine Society Evidence & Technology both start Tuesday, both
generally the site of member companies meeting with analysts. I can see turning
conferences into virtual streams but just dont see it for trade shows or expos, like
NLBMDA for National Lumber & Building Materials ProDealer (Wed.), when new materials
are usually introduced, tactile senses a big part of building materials. On the other
hand, event like the US Powerboat Show, an in-water event in Annapolis MD plans to go
ahead as it does every year. Did the Presidents Rose Garden Introduction of ACB for
the Supreme Court not teach us anything about the false sense of security of outdoors
events? Some 11 people who attended have tested positive, so far. True,. We arent
sure that event was the nexus of the spread but its possible. Probable, even.
Its my guess that the Central Bank speakers will dominate the conversation this
week, a pause before Q3 Earnings start flooding to the fore, lead by banks like JPMorgan
in two weeks. Meantime, the Federal Reserve and other regulators have continued their
suppression of banking company stock buybacks and dividends, if the dividends exceed the
past 12 months of earnings. With big reserves eating up earnings since Q1 reports
arrived in April, after the mid-March shutdown caused by the pandemic, even companies like
JPMorgan are at risk of having their dividend wings clipped. In fact, the only
"safe" banks are those will minor exposure to consumers, like Goldman Sachs,
State Street Bank, and Bank of NY Mellon, the latter two trust banks hardly exposed to
consumers, at all, except those to whom they send overseas pension payments, that cause
them no credit exposure.
What was most interesting to me, last week, was NY Fed CEO Williams much more
sanguine view on the status of the economy, than Powells. While Williams agrees that
the unemployed and hard hit industries need more Congressional largesse. He also sounded
like he believed the equity markets were suggesting the economy would survive just fine
without it. For people whove lost their jobs, and the over 100K restaurants already
shuttered permanently, Wiliams position is quite quixotic. Tens of thousands of
people whove never needed help before have lined up at food distribution centers for
hours, just to feed their kids. Seems to me, Williams is not seeing the depth of pain that
clearly exists in many communities. Lets hope Pelosi & Mnuchin can come to
agreement on a 4th stimulus plan, despite Williams doubts.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be taken 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 28October 02, 2020 SHORT WEEK, DUE
TO JEWISH HOLIDAYSKIP RIGHT to FRIDAY UNEMPLOYMENT REPORT, with a debate
between In deference to the holiday, Sandi is taking
the weekend off. NOTE, please, Fridays September Unemployment Report, perhaps no as
jolly as prior, recent months. 10/01 is the date tariffs on Canadian fir, spruce &
pine (lumber) are supposed to fall by 50.0%. If that happens as its supposed to, the
celebration in homebuilders could get a second wind this week.
There have been constant rumors of Alphabets Google being charged with anti-trust
violations, and Facebook being charged with other complaints. Amazon is under scrutiny,
also, for supposedly squeezing out small sellers whose ideas are constantly ripped off,
thanks to the intelligence Amazon can only gather because those sellers use its platform.
Given the tight election, does anyone doubt Trump wont pull some rabbit out of a hat
within the next 35 days? Then, again, if you watched "60 Minutes" today, surely
you noticed the charges of abuse of power and interference in the government bidding
process. With equal certainty, we dont doubt that the NY AG will find some way to
get Eric Trump in to testify, and perhaps, even, get Deutsche Bank to give up some Trump
financial recordsgiven the animosity between NY Gov. Cuomo and Donald Trump.
So sit back and watch Tuesdays debates. See if Trump doesnt find a way to act
more Presidential. All Biden needs to do is not stumble, stutter, or act confused. Who has
the tougher job? Probably Trump. In four years he hasnt acted Presidential, and
probably doesnt know what that looks like.
Happy Holiday, one and all
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here, with links to conferences)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions express are the authors,
alone, and should be just one factor in more complete due diligence.
September 2125, 2020 FOMC
CHIEF POWELL SPEAKS 3 TIMES & RGB WILL OVERSHADOW HIM It wont be Ruth Bader Ginsburg, at all but her
seat as an associate justice on the Supreme Court that will overshadow Powells
testimony to Congress, three times this week. Everytime the Democrats get a chance to show
some class and real empathy for Americans--any American, they take the low road. I am sure
the seat RGB just vacated is a new opportunity for the Dems to do what they do
bestblow another opportunity to keep their heads up and act classy.
The United Nations convening is often an opportunity to irritate everyone who lives in NYC
but only a single delegate representing a member country is permitted to enter the
building, which should ease traffic jams usually coincident with the annual meeting--this
the 75th Anniversary Meeting. And, more than a few traders are disappointed the Jewish
holidays fall mainly on 2 weekends, so no real opportunity for an extended weekend ungtil
next weeek. The maxim Sell Rosh Hashana, BuyYom Kippur still, probably, applies.
This week there are some exceptions to our usual well-researched reporting: Trump approved
of an Oracle/Walmart deal for US TikTok but I cant say Ive seen a detailed
account of the "deal" Trump approved--and even China denied knowledge of a big
donation that's part of the deal struck. In an effort to finish fast, we did not
post links to central bank conferences in the Economic Calendar below. Youre welcome
to follow the link provided, in the Economic Section headline, to find all those links.
Were aware that our software adds our URL to 3rd party website
hyperlinks, a set-up that dates back to 1994. No one seems able to undo that today, since
current coders are too young to be familiar with our aged software. Remove extraneous
entries, like our own URL, to get where I meant to send you. Third, were having
trouble with the letter g, which keeps inserting itself in front of
Ts, and havent been able to stop gthat, eigtherlike that,
and that! When we catch the error we correct it, of course but dont always catch
itnot this rushed weekend, especially. Fourth, assume almost every event is
virtualor Digital, as some prefer. However, just this week, we spotted 3 events that
are going to attempt a Hybrid--live and virtual presentation. The most prominent of those
is the U.N. 75th Anniversary General Assembly. Fifth, we also note the passing
of Associate Justice Ruth Bader Ginsburg, a true pioneer for equal rights. If youve
not seen CNNs documentary about her, she really was "The Notorious RGB."
And Oh My! She really did fight the good fight in everything she did, including against
pancreatic cancer from which we can name a dozen relatives and friends lost to it!@!!!
With that, were going back to our cooking for family, planning on relaxing more than
usual this holiday--until the power goes out any second now!!.
LShona Tova to all!
ECONOMIC: (Highlights, only, below. Full
Intl
Economic Calendar & Links here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
September 1418, 2020 FOMC MEETS,
EVEN AS I-BANKS CRANK OUT MORE CONFERENCES
The FOMC meets, with Jerome Powells press conference
wrapping it up on Wednesday, at 2:30pm et. Other than to reiterate how little the members
are thinking about thinking about higher rates, theres not much for him to say. The
new policy of averaging inflation around 2.0% was widely stated even before Powells
speech at the virtual Jackson Hole Economic Policy Summit made it officiallater
confirmed by a vote of FOMC members. Of course, what does it really matter if, in the 10
years after the 2008 "Great Recession," inflation only exceeded that level very
briefly, just in time for the latest "Greater" Recession, though what was (or
is) great about either one of them remains a mystery to me.
Im not sure theres reason to expect anything more exciting from the Bank of
Japan Rate Meeting, which wraps on Thursday, or late Wednesday, if one is in the US.
Perhaps more consequential for that country is Japans Liberal Democrats Vote (on the
Economic Calendar for the 14th). It might seem out of left field but Shinzo Abe resigned,
pending the selection of a successor, and that vote could wind up with a new Japanese
Prime Minister. Also on the 14th, the unfamiliar SUERF event at which
ECBs Lane speaks is the European Money & Finance web Foruma fireside chat
on the Economic Outlook, the ECBs monetary policy, and financial market
implications. Its supposedly a two and a half hour chat.
At the Institute of International Finance Conference, besides ECBs Pentti
Hakkarainen, other speakers include the CEO of Itau-Unibanco, Chairman of BBVA, Ping An
Insurance co-CEO, Microsoft' Managing Director of FinServices, Monetary Authority of
Singapore, Raghuran
Rajan, the former head of the India Central Bank, Standard Chartered plc' Chief Data
officer, OEC D, Commonwealth Bank Ex-General Manager of Compliance, and many more top
drawer execs. .
The 7th Conference on Sovereign Bond Markets boasts a stellar collection of
co-sponsors, too many to name on the Economic Calendar. It includes Deutsche Bundesbank,
NYUs Stern School of Business, Imperial College Business School, ECB, Bank of
Canada, Bank of England, Mitsui Life Financial Research Center, U.M. Ross School of
Business, SAFE (Sustainable Architecture for Finance in Europe), and the Salomon Center
for the Study of Financial Institutions. The welcome remarks are from newish BoE Gov
Andrew Bailey. Other BoE MPCs either speaking or members of panels include Vlieghe &
Broadbent but, otherwise, the speakers/panelists are more from behind the scenes, and less
well known, with the exception of Joseph Stigitz, an economist whos as close to a
household name as they come, thanks to a Nobel Prize.
On the 18th, the NY Fed says its VP & Deputy Head of Market Operations
Monitoring & Analysis is speaking at the Bank Policy Institutes (BPI)
"Credit-Sensitive Benchmark Symposium" but theres no such event listed at
the BPI website, and a search at BPI for that event, in particular, drew a blank.
Were not surprised to see accelerated discussion of the coming use of a LIBOR
replacement, just not one that includes bank officials that the organizers dont
bother to list.
Wednesday is notable for more than just the FOMC post-Meeting Statement, member economic
projections, and Powells presser because therell also be MBAs weekly
Mortgage Apps, US Aug Retail Sales, July Business Inventories, NAHBs Sept Housing
Market Index, and EIAs Petroleum, Gasoline, Distillates, & Refineries Report,
back on its usual schedule, after last weeks Labor Day one-day delay. Of course,
Thursdays weekly Initial Jobless claims & Continuing Claims will take a starring
role, as it usually does, even as equity markets seem to ignore the tale they tell. Note,
also, Rosh Hashana starts at Sundown, Friday, whats already known as the High Holy
Days elevated because it falls on the Sabbath, as well. Even though most are still working
remotely, many of those from home, expect the usual early fall in volume, Friday, as
Jewish traders turn off their screens for at least one night and day.
So its said, OPECs Monthly Report is expected early Monday morning, IEAs
into Tuesdays opening, even as the OPEC Joint Ministerial Monitoring Committee also
meets in gthe wee hours of Thursday.
The Earnings Calendar is very slender but includes Lennar on Monday, Adobe, Cracker Barrel
Restaurant & Old country Store, and FedEx on Tuesday, and Herman Miller on Thursday.
Given the upscale office furniture Miller sells, it could be awhile before executive
suites will be redone, no matter how many CEOs retire. It just wouldnt look
good during a recession, while any upper level management who had to redo home offices to
accommodate their remote schedule has, probably, already done so.
Which brings us to the Events Calendar, chock full of Investment Bank events. Monday is
especially busy, though so is Tuesday, Wednesdays thinner schedule, perhaps,
acknowledgment of the upcoming Jewish Holiday. The notable events on Monday include Morgan
Stanleys 18th Global Healthcare Conference, Barclays Global Financial
Services, JP Morgans Gaming, Lodging, Restaurant, & Leisure Management Access,
and Deutsche Banks Technology Conference, all virtual events it should go without
saying.
Tuesday notables include Goldman Sachs Communcacopia, JPMorgans 11th US All
Stars, Morgan Stanleys 8th Annual Laguna (Industrials), and Credit
Suisses 33rd Basic Materials Conferences. Thursday, AGAs Finance
Committee Mini-Forum for the Financial Community & Investor Relations Mini Workshop
are not the BIG Annual IR Conferences the Street waits for all year. Then, again, despite
all the I-bank conferences, its possible the Pfizer & Roche R&D days, both
scheduled for Monday, Pfizers a 2-day affair, as well as Apples Press Event,
and Kraft Heinzs IR Day, could have more impact than some of the corporate-packed
virtual conferences that offer too many companies to choose from. One reason for that is
the likelihood that analysts will turn into at least 3 of those 4 events in real time,
while the I-bank presentations can be replayed, most without fear of one analyst getting a
jump on another one. The 4th, KHC, was a filed merger that the pandemic helped
rescue with more people working from home, eating at home, and cooking at home. Its
worth noting that Apples invitation read, "Time Flies," which leads many
to believe its about a new watch, especially since it announced, previously, that
the next iPhones wont be released until October, instead of September, as they
usually are. Either way, Apple, Pfizer & Roche events are likely to be well-attended
in real-time.
All of which is a long-winded route to ;point out the obvious: What people really want to
know is whether the Nasdaq correction has run its course or has more to go. I favor
another 5.0% to the downside, though believe a sooner attempt to regain some lost ground
could come first. Its amazing to me that Trump takes credit for all the equity
markets upside and doesnt seem to realize that the downside has been coming
after the latest revelations of his dishonesty or obfuscation. The fact that theres
so much evidence of Trumps misdeeds is most disturbing, of all, because it confirms
he doesnt know the difference between right and wrong. How can he claim he thought
misleading the American public about the severity of coronavirus was an attempt to prevent
panic, when that' just what every one of his trump for president TV commercials
attempts to do-claiming Joe Biden wants to defund the police, and lawlessness will
be Bidens hallmark, even as the Dow will collapse if he isnt re-elected. The
bulls will have their work cut out for them, if they see an easy path to the upside
between now, and a few days prior to the election, on November 3rd. And
thats the typical pattern pre-election: weak September and buyers emerging a couple
of days before October ends. And to top it off, the old Street axiom says, "Sell Rosh
Hashana and buy Yom Kippur," For the record, Yom Kippur begins at sundown, Sunday,
September 27th.
ECONOMIC: (Highlights, only, below. Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
September 0711, 2020 I-BANK
EVENTS FLOOD the CALENDAR
If you didnt know Labor Day Weekend was over, and
just looked at the I-bank events scheduled, a student of market history might guess this
was the week. Meantime, on Friday, the S&P announced 3 companies to be added to the
S&P 500, and none of them were Tesla, which undoubtedly angered and disappointed its
fansfans the proper term for its supporters, since theyre ravenous about the
shares in a way few other stocks can boast. And truth be known, Elon Musk pulling off the
EV cars Tesla makes, while also being able to send men to the Intl Space Station and
back, makes him a rocket scientist of near unequal peer. Maybe someone toiling away at
Jeff Bezos Blue Origin is a rocket scientist of equal genius but, if he or she is,
they havent, yet revealed themselves. So its said, the companies that got
S&Ps nod for inclusion in the 500 index were Catalent (CTLT), Etsy (ETSY), &
Terdyne (TER). On the other hand, I vigorously disagree with the Barrons writer who
felt Facebook (FB) should have been added to the Dow Jones Industrial Average, instead of
salesforce.com (CRM), last Monday. FB should never enter until its leader, Mark
Zuckerberg, does away with his controlling shares, and allows outside shareholders a vote
that counts towards the make-up of the Board, and other decisions.
Beyond the I-bank events, this is a "tween" week. Many schools are not reopening
their doors until later in the month, when they usually do, the day after Labor Day. The
FOMC meeting isnt until the week after, while the only big item occurring on
schedule, is the return of the US Congress, contentious though the two sides are within
that body. Of course, after several committee meetings and testimonies were conducted
virtually, via software like Ciscos (CSCO) Webex and Zoom Videos (ZM) Zoom,
theres really not all that much reason for representatives or Senators to return to
D.C. (How fast has Zoom become a verb? Record time Id guess.)
So, lets start with the Economic Calendar, promising lots of US government issuance
($282B in 2 days), July Consumer Credit (debt, really), which has been falling, as people
neither travel nor eat out at restaurants, much, and most didnt have to pay for
sleep-away camp, this year, either. JOLTS is out Wednesday, with the Street estimating 6m
job openings, which I think sounds optimistic, as many businesses dont have a good
fix on demand ahead, as their Q2 post-Earnings Reports comments made clear. Also
Wednesday, MBA weekly Mortgage Purchase & Refinance Applications, which probably
wont see the rush to close before Labor Day, since schools arent opening
immediately afterward, this year. The newly issued school reopening dates should spread
out the closing dates on houses, as well.
Thursday morning, the ECB Monetary Policy Committee will announce its rates & QE
decision, presumably followed by Chief Christine Lagardes press conference, though
that wasnt specified on the ECB Calendar, as it usually is, post-meeting--at least
not when we prepared our Economic Calendar and checked. She will speak a little later in
the morning, on "Banking & Payments in the Digital World," at a virtual
conference hosted by Germanys Bundesbank. Of course, US traders are likely to be
more interested in US weekly Jobless Claims and Continuing Claims, as well as US Aug PPI,
July Wholesale Inventories, and EIAs weekly Petroleum/Gasoline/Distillates/
Refineries Report, EIA delayed one day because of Mondays holiday. Inventories need
to decline for manufacturers to receive fresh orders, so its a shame that statistic
is so old, by the time its released. Still, we can draw some conclusions from the
Aug Manufacturing ISMs and PMIs, along with those aforementioned Q3
outlooks--mostly not offered with Q2 EPS releases. Based on the commentary and reluctance
to offer outlooks, the easy guess is that inventories arent falling as fast as they
need to, for order activity to pick up significantly.
Friday, well get Aug CPI/Core CPI, with prices at the pump bumped up by hurricane
activity that really racheted up in September, more than August, though still rose that
month on OPEC+ better than expected quota compliance, as well as US on-shore production
shut-downs, as low prices for crude and debt laden producers idle rigs. The shocker
Friday, though, will be the US Treasury Budget Statement. .A number above $3 Trillion
shouldnt shock, given prior debt added with the two big Pandemic stimulus bills but
will anyway. Traders dont always put 2 and 2 together the way economists do.
The Earnings Calendar is slim but with quite a few notables. For starters, HD Supply and
Navistar report Wednesday, Oracle, a rumored bidder for TikTok reports Thursday. From what
IBM & SAP have said, when they reported, one cant be faulted for presuming ORCL
did fine. Also reporting Slack (ticker: WORK), Tuesday, which at least one CNBC Fast Money
member fancies and uses, though competitors include Microsoft TEAMS, the latter known for
throwing software in with big, unrelated deals, if it means crushing an upstart
competitor. Also notable among Tuesday reporters, Calavo Growers, who in my mind, is tied
to Chipotle Mexican Grill, since so much of CMGs profits have been tied to the price
and availability of avocados in many quarters. Caseys General Stores, Tuesday, has
been suffering from work-from-home as much as Peleton has benefited from gyms being kept
closed. You dont sell gasoline to people who arent driving. Still, Im
not as enthused about PTON as analysts are. Lack of supply of bikes has led many to sign
up for the low-cost, monthly subscription to online classes, without buying a bike. Both
conditions limit sales of what are very expensive stationary exercise bikes.
I feel differently about Lululemon, only because I once owned a small, NY chain of tennis,
swim & ski stores that were so popular, people would offer $5 to buy one of our large
shopping bags, so theyd look hip walking the streets of NYC. Such trends do,
eventually, pass, but remote working has extended LULUs popularity, for the time
being. When analysts push Gaps Athleta, as if they were equivalents, they are
misunderstanding the cache of LULUs inverted U (or horseshoe, if you prefer) logo.
Athleta simply doesnt have the same cache. Nor does Fabletics, despite its movie
star connection (Kate Hudson).
If Caterpillar is any indication, Navistar may have done well, though CAT is more common
at construction sites, than NAV isat least everywhere Ive lived on the East
Coast. Former Florida Agricultural Reserve land, under a string of governorsdating
back to Jeb Bush--have been allowed to be converted to country clubs. The 2 miles of
former Ag Reserve that starts 1/10th of a mile north of my home is so filled with CAT
equipment, the construction sites look like a dealership. Another non-consumer name
reporting this week includes AeroVironment, which is an airline supplier, as well as a
drone maker for government. Boeings 737 MAX issues have weighed on its results, in
recent quarters.
Other consumer names reporting include GIII, GameStop, RH, Chewy, Zumiez and Kroger. GIII
manufactures a mix of owned & licensed brands. It owns DKNY Donna Karan, G.H Bass, and
Andrew Marc, the latter known for leather jackets which will, undoubtedly, suffer weak
sales this fall and winter. Thats because its wholesale customers, like major
department stores, will keep orders very light, since people working from home dont
have reason to buy new outerwear. Ditto outerwear made under licenses with the NFL, NBA,
MLB, and NHL, along with some of the 150 colleges that have already sent students home
after COVID-19 positive tests spiked. Its clothing licenses include Calvin Klein, Tommy
Hilfiger, Karl Lagerfield, Kenneth Cole, Levis, Vince Camuto, Guess?, and more. To
the extent some of those are dress licenses, exclusively, work-at-home, again, limits the
need for such garments while many of the licenses, like LEVI, are for outerwear. Ditto
work-from-home on those.
GameStop has been dying on the vine, awaiting the release of new game consoles from
Microsoft & Sony. Both are expected in time for holiday, though neither has set a
launch date, yet. Activists, who declare the shares undervalued frequently pop up in SEC
filings, the founder of Chewy the latest, in the past couple of weeks. But without its
one-time cash cowtrade-ins of used games--to boost its profits, its profits are a
fraction of its past gains. Speaking of Chewys founder, that company is reporting
Thursday, along with Zumiez. The latter may benefit from online-savvy customers, overseas
locations that were closed on a different schedule than stores in the US, and the fact
that skate boards are enough of summer pastime that it might have survived the quarter in
better shape than other teen retailers. Still, I miss the monthly sales reports it used to
release, one of the last to discontinue them. The convenience of ordering from Chewy is
utterly understandable. Kitty Litter containers weigh either 5 pounds, 25 lbs, or 50 lbs
and more. Ditto food for pets. PetSmart & PetSupermarket both deliver, too but
heres where marketing makes the winnereven more so than with LULU. Chewy made
itself THE online pet supplier, or "the only pure play pet e-tailer" as it
claims, and became what it advertised. PetSmart owns Chewy, having paid a pretty penny for
it in 2017, and might have done the same with its own brand but didnt. Instead, it
allowed CHWY to become identified with online pet ordering, and still hasnt seen
profits flow through, yet.
RH, the former Restoration Hardware, has been reporting results so strong Ive been
waiting for a short seller to release a negative report on the company. No matter how many
times I visited the West Palm Beach store, I saw people treating it like a museum, rather
than shopping there. Worse, I often heard people say they liked something, then remark to
a companion that theyll look for it online, where it would sure be cheaper. Instead,
apparently, people flush with cash order very pricey home furnishings from RH, with near
unlimited abandon. Plus, its foray into restaurants and hotels was so new that the
elimination of leisure activities didnt badly damage its overall resultsat
least not until now. And as part of its brand extension, RH also went into building homes,
a sector thats been red hot.
American Eagle Outfitters, which reports Wednesday, has the aerie brand which specializes
in lingerie, sleepwear, and loungewear, the latter 2 perfect for our times, and all of it
at value pricing. While it doesnt offer the extensive selection of candles, scents,
and make-up that Victorias Secret does, aerie has been competing well against
LBs V.S., for the past couple of years and might continue to. Last, theres
Krogers report coming Friday. It wasnt so long ago, many were ready to write
off supermarkets, altogether, ceding the industry to Amazon. Until COVID-19. Suddenly,
grocers were a hot sector, business skyrocketing when so many other retailers were
declared non-essential, and forced to close during regional lock-downs. And honestly, if
you havent noted my comments in an earlier Outlook, Ill repeat them again. Our
local, dominant supermarket chain is Publix, and Ive seen them empty every shopping
cart and rolling metal shelf display into the parking lot, a steam truck disinfecting and
sanitizing every one of them, after the store closes. Ive seen that happen at the 3
Publix closest to my house. Thats the kind of genuine COVID cleanliness Ive
come to trust. When someone orders from Amazon, do they really know what went on at the
fulfillment center?
Which brings us to Events, and the overflow of I-bank conferences, particularly Tuesday
& Wednesday. Two that caught my eye on Tuesday are B Riley FBRs Online Sports
Betting & Gaming virtual Conference, and Barclays Global Consumer Staples virtual
Conference because you just dont see either of the subjects very often covered by
conferences. You might guess that UBS Business Services, Leisure & Transport
virtual Conference must be overseas, since it was scheduled on Labor Day, and youd
be right. Originally planned for London, cities no longer matter, now that everything is
virtual.
The biggest events of the week are usually Citis Global Technology, and Bank of
Americas Media Communications & Entertainment. Then, again, given the virtual
nature of all the weeks conferences, its hard to ignore Citis BioPharma
Tuesday, Wells Fargo Healthcare & Bairds Global Healthcare, both Wednesday, with
the topper Goldman Sachs Biotech Friday. Also usually well attended is the Raymond
James Defense & Government Services virtual Conference, attendance at all these events
easy to manage, since one can navigate into the event, in real-time, or pull up the
presentations on-demand, in most cases, starting hours after theyve ended.
Of course, most wont be able to take their eyes off stocks, Tuesday, to see if
Thursdays drubbing has a 2nd round, this week, or if Fridays turn
around from the depths of the sell-off was the harbinger of whats to come this week.
That turn around, Friday, was said to be attributed gto articles that identified Softbank
as the Nasdaq "whale" that had been scooping up tech call options, betting on
higher prices, that became a self-fulfilling prophesy. Personally, I think there would
have been a turn around Friday, either way, since traders close their books before a long
weekend. Id look for rally attempts to be sold, initially, with the final direction
not decided until later in the week. The truth is, this election season is shaping up like
no otherwinning an award for nastiness, even as its clear the results may not
be known for days, if not weeks, with so many ballots mailed in. Yes, most of us remember
the Al Gore election that wound up decided by the courtsthe hanging chad election
decided against Gore, which he was man enough to accept. The current WH occupant is not
likely to concede until every qualified vote is countedif a loss is whats
ahead for him, and is sure to be as nasty as hes shown himself capable of being. So
theres reason for stocks to suffer several bouts of volatility, the one-way
escalator up probably over, for now, until closer to, if not after November 3rd. So
its said, Ive been voting by mail for 10 years, and this is the first year the
supervisor of elections has offered the opportunity to check that mail-in ballots were
received. Thats progress!
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 31September 4, 2020 NEW DJIA,
AUGUST UNEMPLOYMENT REPORT, and the BEIGE BOOK The new Dow
Jones Industrial Average debuts, Monday, with Honeywell back in, along with Salesforce.com
and Amgen added, even as Apple effects a 4:1 stock split. And if that werent enough,
the S&P will be impacted, not just by Apples split-adjustment but by the split
adjusted shares of Tesla, the latter a 5:1 stock split executed after last Fridays
close. Leaving the DJIA are ExxonMobil, Raytheon, and Pfizer. For XOM to be kicked out but
Chevron left in, is a blow to Exxons pride, if nothing else. The decision to boot
Pfizer from the index seems obvious. Its about to combine its generic business with
Mylan, causing Pfizers stock price to shrink upon separation, another blow to its
stature, even if the S&P Dow Jones Index editors could overlook the fact that
Pfizers stock price hasnt changed much in the past 20 yearscontributing
to the DJIA lagging the new highs posted by the S&P and, especially, the Nasdaq Comp.
In fact, it was back when Pfizer won FDA approval for Viagra, that Pfizers stock was
last in high demand, and that was long enough ago for Viagra to be part of the off-patent
drugs deal with Mylan. The DJIA, all but ignored by most professionals remains the index
Main Street knows best. What the editors have done is kicked out the worst performing
shares, adding in some rocket fuelSalesforce.com (CRM), perhaps, expending all its
near-term rocket launch on the news its going into the DJIA, followed by the
moonshot that met its quarterly earnings report.
Now, add in the August Unemployment Report on Friday, and word on August Automotive Sales
from all but Ford & General Motors, and the week promises trading volume until about a
half hour after the Labor Department wraps August Jobs, after which traders will start the
3-day Labor Day weekend, with volume drying up. Granted, stocks tend to rise into long
weekends but with a pandemic raging, and a nasty presidential election on countdown to
November 3rd, there could be some selling into the long weekend, rather than a rise,
especially given the new, somewhat regular record price highs made by the S&P, and
Nasdaq Comp, especially, on recent trading days. September is, historically, the worst
month for stocks. The general public usually pins October as the worst month for stocks
but, in fact, October is the month stocks usually turn around from the sell-off started in
September. Octobers record for turn arounds higher, is true, especially, towards the
end of the month, even in front of an election.
US Treasury auctions are on a near hiatus of their own, this week, while the ECB is
heavily represented at the CEBRA (Central Bank Research Assn)/LSE (London School of
Economics & Political Science) Jt Annual (virtual) Meeting, the Economic Calendar
capturing major speakers each day. The Reserve Bank of Australia Monetary Policy Committee
(MPC) meets, this week, its decision expected before our open Tuesday. The ECB is
also hosting its 5th Annual (virtual) Research Conference into next weekend.
Meantime, NY Fed Pres/CEO Williams and his predecessor, William Dudley, are the stars at
the Bretton Woods Committee webinar, "New York Fed Presidents on COVID-19."
Other Fed speakers have changed their topics, discussing the New Monetary Policy
Framework, instead of what they originally planned on saying. (In one case, the URL
linking to a Fed speaker remains the old topic, despite the change in the headline. BoE
Gov. Bailey will discuss the future of cryptocurrencies in the US, at the Brookings
Institution, Thursday.
The Brookings meeting thats far more interesting will be Tuesday, when Fed Gov
Brainard is slated to discuss "How the Fed will respond to a COVID-19 recession in an
era of low rates and low inflation," another opening to discuss the new Fed Monetary
Policy Frameworkaverage inflation, shall we call it?followed by a Q&A with
Brookings scholars Janet Yellen & Ben Bernanke, both former FOMC chiefs. From where I
sit, it feels like Jerome Powell has talked about letting inflation run hot for awhile,
after periods when its been light for awhile, so formalizing those comments as the
"new Fed policy framework" seems overkill but, nonetheless, thats exactly
what Powell did at the K.C. Feds annual (virtual) Economic Policy summit. Note,
also, the Feds Beige Book, out Wednesday, in advance of the Feds mid-month
meeting. St Louis Feds Bullard sees full steam ahead while most other Fed regional
bank presidents are seeing activity slow down wherever coronavirus cases has kept rising.
Now, with parts of Louisiana devastated by Hurricane Laura, and Iowa still suffering,
weeks later, from the damage done by a derecho, there are places where coronavirus is the
least of their worries.
Next on the list is the Earnings Calendar, with ScanSource, Zoom Video, Ambarella,
Brown-Forman, Broadcom, Campbells Soup, Ciena, Science Applications, Hovnovian,
Toro, and Smith & Wesson Brands, vying for top billing against At Home (wants to be
Wayfair 2), Calares, Shoe Carnival, Five Below, ?Guess, Macy*s, PVH Corp (Calvin Klein,
Tommy Hilfiger), Designer Brands (DSW Warehouse), Genesco (Journeys, Johnston & Murphy
Group), Michaels Stores, Oxford Industries (Lilly Pulitzer, Tommy Bahama), and
Signet Jewelers (Zales, Piercing Pagoda).
Which brings us to the Events Calendar, as the week slides into a 3-day Labor Day weekend.
Tuesday, Jefferies will host Semiconductors, IT Hardware & Communications
Infrastructure, along with Cowens 13th Annual Global Transportation
Conference, along with Stephens Multi-Modal Transportation virtual "trip," whose
participants are listed below. Also Tuesday, MAGIC gets underway, virtually, with its many
sub-divisions, for shoes, accessories, off-price, childrens and more but, trust me,
it just wont be the same for the small exhibitors, trying to break into new, larger
accounts.
Wednesday, Jefferies is back with Mining & Steel, PiperSandler with its annual
European Energy Conference, referred to as the Gleneagles Conference, for the Scottish
golf club at which it usually takes place. Like almost everything else this summer, it
will be a virtual event. BMO is hosting Real Assets Wednesday, when the 77th
Venice Film Festival is supposed to get underway, Cate Blanchett presiding, Matt Dillon
one of the judges to decide who gets the Palm dOr.
Theres no early close for the bond markets, Friday but wholl be around to
notice? With the last 2 months of a particularly nasty election season kicking off, I
wouldnt count on the usual rise into the 3-day weekend. It could happen but
its not something Id bet on. Theres also no guarantee that the 2 mega
companies trading split-adjusted Monday will continue to reach for the moon. Meanwhile,
anyone with call options on the DJIA might be wondering at what level that will trade, by
the close Monday. Three new members in, 3 out, and Apple split adjusted, no longer the
most expensive stock in the DOW, And to Andrew Barry of Barrons who insists Facebook
would have been a better choice than Salesforce.com, that will never happen. Mark
Zuckerberg set up the shares to assure he will retain full control, for as long as he
wants it. Thats reason enough for the S&P Down Jones editors to keep passing it
over.
Be careful out thereboth trading and on the road, if youre venturing out.
Fewer cars on the road should make for a safer than usual weekend but when there are so
few cars on the road, the feet on gas pedals tend to get very heavy. I assure you the
police will be out this weekend. Giving out tickets is a way to ease the frustration of
pulling highway duty on a holiday weekend.
ECONOMIC: (Highlights, only, below.
The Full
International Economic Calendar is here)
©Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 2428, 2020 POWELL, SMALLER RETAILERS,
RNC & END of MONTH Lets jump to the
27th, first, because thats when FOMC Chief Jerome Powell will be speaking
at the K.C. Fed Jackson Hole Economic Policy Symposium, like so much else this year, held
virtually. The lodge in Jackson Hole is so rustic, many of the past participants might be
celebrating the fact that its gone virtual, this year.
What else is of note, this week? The follow-up to the Democratic National Convention, the
RNC, the Republicans turn at bat, Trump not letting a lot out other than the fact
that he intends to speak nightly. Well, whats new about that? Hes been holding
solo coronavirus updates, nearly nightly, and shortly before I posted, announced a
break-through in treatmentconvalescent plasma transfusions, which proves he really
hasnt been paying much attention. Even before he announced todays
"emergency authorization," there have been fairly regular transfusions,
including some high profile virus recoveries, like Tom Hanks and his wife, and ABC
News Katie Hartung.
And, by the way, its End of Month, under T-2, before the two notoriously worst
months of the year for stocks, though some can argue the greatest turn arounds have
actually come from Octobers deep declines. And heres a sign of the times:
ACTE, the Corporate Travel & Lodging Association entered Chapter 7 Liquidation
Bankruptcy this summer. Theres more pain to come in the Travel & Leisure sector,
if theres not a new airline and hotel bail-out in the next rescue bill that Congress
passes.
The Treasury is issuing a lot of debt this week, which might suck some liquidity out of
the stock market. Dealers are required to bid, even if they dont want to swallow
more Treasuries. The offset could possibly some recovery in the polls for Trump, who the
Street seems to prefer, despite his erratic and belligerent attacks on friends as well as
enemies. Surely Trumps niece, Mary Trump, wasnt satisfied embarrassing her
uncle in a book but released the tapes of his sister, the retired Federal judge, in
conversation with Mary Trump, who seems to have gotten some her most explosive accusations
from Trumps own sister who, it should be noted, didnt travel to the White
House for the memorial service for their brother.
Besides Powell speaking at the K.C. Fed Symposium, whose topic is "{Navigating the
Decade Ahead: Implications for Monetary Policy, BoEs relatively new Governor,
Bailey, is speaking, while the ECB is sending Lane, Panetta & Schnabel. Note, also,
the late Labor Day, this year, creating more pain for retailers, for whom Back-to-School
is often their 2nd best season. Labor Day isnt until Sept 7th.
So, about those smaller retailers reporting this week, many are the incredible shrinking
retailers, like Nordstrom, Tuesday, Chicos Fas and Express Wednesday, Abercrombie
& Fitch Thursday, wholl no doubt pale in comparison to Dollar General and Dollar
Tree, even as Best Buy is expected to shine, Tuesday, But theres, also, a smattering
of tech stalwarts expected to report, including Intuit, its TurboTax, perhaps, benefiting
from tax day pushed out to July 15th, salesforce.com, and NetApp. Dicks
Sporting Goods was able to stay open with essential retailers, while Williams-Sonoma does
a lot of its business online, even in the absence of COVID-19, so expected to benefit from
nesting, the upgraded version of work from home. ULTA Beauty disappointed last quarter,
and could again, as several big counties forced salons to stay closed, long after
essential retailers started raking in the dough. Likewise, its worth wondering if
Burlington is more Ross Dress for Less than TJMaxx. GAP, in case you missed it, has an
upcoming collection with Kanye West, and announced a dedicated department that will turn
Old Navy staples into corporate apparel.
Otherwise, its the last week of summer, which means time to clean up old business
before readying some time off with the family, even though many kids are starting school
remotely, and Back-to-School may not look much different than computer time, on any other
day. Still, Im counting on schools & teachers being better prepared for remote
learning, because no one was in March when many schools closed, suddenly, mid-month.
I have been unenthusiastic about stocks for a couple of weeks, and feel that way again,
this week, even as I admit Powell may admonish Congress for not passing more stimulus, and
assure markets the Fed stands ready to do whatever it takes. At some point, itll be
time to acknowledge the 11m without jobs, and the millions no longer benefiting from an
extra $600 in weekly, Federal unemployment boosters. Yeah, I know, at least 11
states unemployed will be getting an extra $300 per week, instead but, honestly, how
many can pay their rent or mortgage and other bills on that little? Plus, theres
been 3 weeks without any Federal boosters handed out at all, the $300 not starting until
September 1st, at the soonest. Thats a lot of money not circulating, as
surely more retailers will attest, when they report, this week. Bullish on stocks? Not me.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 1721, 2020 RETAILER
EARNINGS COULD DAMPEN the MOOD
The Economic Calendar promises Housing Data, including Aug NAHB,
Monday, July Housing Starts & Building Permits Tuesday, and Fridays July
Existing Home Sales. Wednesday, of course, will include the weekly MBA Mortgage &
Refinance Applications, and Thursday weekly Initial Jobless Claims, just under 1m, last
week, for the first time since pre-Coronavirus. FOMC Minutes of the July 2829th
Meeting are expected Wednesday, even as the Democratic National Convention starts Monday
night, and wont end until Thursday. Of course, this will be a convention like no
other, without any mass meetings, or big balloon drop to celebrate the vote that changes
Joe Biden from presidential candidate designate to official candidate.
Earnings are going to be more significant than they were last week, because those
reporting include Advance Auto Parts, Home Depot, Kohs & Walmart Tuesday, L
Brands, Lowes, Target & TJMaxx Wednesday. Thursday, well hear from
BJs Wholesale Clubs, Estee Lauder and Ross Stores Dress for Less. Friday, Buckle,
& Footlocker. Away from retail, Agilent reports Tuesday, Wednesday nVidia, Synopsys,
& Weibo, Thursday Alibaba, Keysight, Melco Crown Resorts, and Friday John Deere.
Thursday we also highlighted OSI Systems because its hurt significantly by fewer
travelers & luggage passing through X-ray machines.
Which brings us to Events, secondary to all the retailer earnings coming. EnerComs
The Oil & Gas Conference is one of the, usually, most eagerly awaited energy even of
summer. Tuesday, RayJay hosts a virtual SMID Cap Growth Conference, and Credit Suisse its
3rd FinTech Conference, with almost exclusively non-public companies. Needham
hosts MedTech 1x1 on Monday, then Cancer Diagnostics 1x1 Tuesday. TU-Automotive & UX
Virtual Detroit will, clearly, lose something in the virtual translation, even though
Wards still plans to host Auto Interiors simultaneously. One of the most interesting of
the weeks conferences may be Consumer Brands Managing Unprecedented Demand, which
has certainly been the case since March. One of my moms neighbors, in her 55+
community is a new resident with a garage filled with Bounty paper towels & Charmin
Toilet paper. The garage door is open whenever I arrive, Sunday, and it appears no one is
stealing this hoarders supplies, though there have been times Ive been tempted
to teach them a lesson. NOT because I cant buy Bounty or Charmin, now, but the
audacity of being a hoarder and leaving the garage door open for everyone to see the
surplus supply without fear of recrimination or theft. I was lucky to load up at a Target
sale in February, and not run out before I was able to buy more in July. Mom, on the other
hand, has an aide whose own mom shops at CostCo, in Miami, where such products were always
available. (Personally, Im a Viva not a Bounty gal!)
We are not out of our minds, and neither are the Podiatrists planning on meeting, in
person, in Teaneck NJ, this week. I guess, if schools can reopen, this specialized meeting
can be heldat least thats what they think they can pull off. Otherwise, summer
is waning, kids were supposed to return to school, so events are light until the days
after Labor Day when the mad crush starts anew. Meantime, watch out for stocks to be
tripped up by the retailers reporting. Wonderful results are expected form Walmart, and
Target estimates are so high, it seems reasonable to expect disappointment. Both are doing
really well with shoppers whove trusted them throughout the pandemic, and needed to
buy school supplies, out of force of habit, as much as anything, since the Back-to-School
Sales Tax Holiday weekend was August 7--9th, in 11 states, and were all
Pavlovian dogs responding to saving 6,7, or 8% sales tax, depending on the state. I even
considered a new laptop, with the 7.5% savings my state offered up to $1K on computers
but, alas, buying a computer that will probably be $200 less around Labor Day was the same
offset as saving 7.5%. I bought nothingand wasnt even curious to go into the
mall, and see if people responded.
School here, instead of starting August 8th, as originally planned, wont
start until August 31st. And then, it will be remote for at least a month.
Meantime, the county commissioners sent everyone in the county face masks. Would you where
a paper mask that wasnt wrapped up? Anyone want to buy a cloth mask that is wrapped
up, as well as stamped with the Palm Beach County Commissioners seal?
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 1014, 2020 TUESDAY,
I-BANK EVENTS BACK IN QUANTITY
Theres something very disheartening about the Unemployment Rate
of over 10.0%, the coronavirus raging in 40 states,, with the major markets rising
strongly, last week, the DJIA +3.8%, the Nasdaq Composite +2.5%, the S&P +2.5%, and
the long, beleaguered Russell 2000 rising +6.0%. And thats despite a National
election in fewer than 90 days, that could change the face of the White House & the US
Congress, significantly. Its just unsettling, to say the leastand I say that
as someone whod welcome a change in the White House.
The Economic Calendar is slim, unspoken and not listed, any negotiations across the aisles
to break the stalemate on additional aide to businesses, states, schools, and the
unemployed. Trump, who cant accept hes not the CEO of the US, and cant
rule by executive action, has signed 4 more executive actions that open the door to
department heads to look into doing more with Congress, as well as stealing FEMA funds to
pay extended Unemployment Benefits, as we approach the heart of hurricane season, and the
damage done by Isaias still not repaired., What is on the Economic Calendar is June JOLTS,
the small business NFIB Business Optimism Index & Producer Prices, Tuesday,
OPECs Monthly Oil Report, US July CPI Wednesday, and July Retail Sales, Friday,
along with Thursdays weekly Initial Jobless Claims and Continuing claims.
Unfortunately, with the virus surging in 40 states, there are more initial claims, as
businesses that opened are either forced to close again, by state or county edict, or they
simply given up due to a lack of customers.
The Chicago Fed, Cleveland Fed, Dallas Fed, & St. Louis Fed plan regional events, the
Fed event in neon lights at the end of the month, when the K.C. Fed hosts its 44th
Jackson Hole Economic Symposium, not in Jackson Hole, and not in person but, instead,
virtually, invitees not released until the day the event opens, unless foreign central
banks diverge their leaders participation sooner.
The Earnings Calendar is a bit quiet, the highlight, perhaps, the foreign reporters Trump
is targeting, including Tencent Music, Tuesday, though not that division, specifically,
and Baidu, Thursday, wholl have to bring its auditing up to US standards or risk
delisting. Elsewhere on the Earnings Calendar, notable reports are expected by Brinker
(EAT), Caci (CACI), Cisco (CSCO), and Ping Identity (PING), a name not heard often but
probably instrumental in remote work environments. Also reporting, Applied Materials,
Thursday, and Tapestry, the former Coach, which expanded its name as it added new labels
like Stuart Weitzman.
Which brings us to those Investment Bank Conferences mentioned above. Monday, Wells Faro
hosts its 5th (virtual) Technology Services Forum, and BTIG a Biotechnology
(virtual)Conference. Tuesday, though, is the huge day, with UBS hosting Financial Services
and Genomicas 2.0 + MedTech Innovation (both virtual) Conferences. Wedbush will host
PacGrow Healthcare, Guggenheim MedTech Disruptors, Goldman Sachs Power, Utilities, MLPs
& Pipelines, CanaccordGenuity its 48th Annual Growth Conference,
Oppenheimer its 23r4d Annual Technology, Internet & Communications, Cowen
Communications Infrastructure, and Keybanc, after canceling all its summer conferences,
reinstate3d its Future of Technology Series. For any September weekday an event calendar
as filled with I-bank events would be notable but, also, typical. In mid-August, its
quite a sight to behold for a market starved for information on the quarter. Wednesday,
Citi is hosting a 1on1 Midstream/Energy Infrastructure Event, while Thursday Jefferies
also hosts Financial Services, and Wedbush Footwear, which just 3 named participants, as
we went to press. Its a refreshing onslaught after weeks of silent I-banks that,
virtually, especially, should be well attended, and make not mistake, theyre all
virtual events.
Now that the Russell 2000 has gotten in on the program, perhaps 2 Financial Services
events is what it will take to light some fire under that group. They sure need something
to spark trader interest, and with extended Unemployment benefits ending, and more
businesses reclosing, the outlook for payments on mortgages and credit cards is cloudy, to
be generous, darkening, to be honest. And whatever the Fed paid banks for processing PPP
& Main Street Loans (the few of the latter that have actually been distributed),
wasnt enough to make up for the pain in consumer wallets.
Yet, as the percentage gains added to the major averages, last week, clearly demonstrate,
people want to own stocks, as long as Fed largesseglobal central bank largesse can
be counted on. Its a party I now feel obliged to sit out,
ECONOMIC:
SUNDAY. 08/09 (Highlights, only, below. Full International Economic
Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
August 0307, 2020 JULY UNEMPLOYMENT REPORT
and HUNDREDS OF EARNINGS REPORTS, MOST NOISE Lets
look past the hundreds of Earnings Reports scheduled to be released, since most are mere
noise. Hotels, online travel agencies, and cable channels, along with Walt Disney.
Insurance companies including Allstate, MetLife & Prudential, when we all know
regulators are going to try to get them to cover COVID-19 work stoppages, even though none
of the policies cover businesses that are intact but forced to close by government
officials. I once owned a pro shop in a tennis club that was covered by a bubble kept up
with blown air. In a snow storm, the bubble came down, and more than 40 feet of snow was
piled by plows blocking the parking lot and entrance to the small, permanent building that
included my 150 sq ft pro shop. Did business interruption insurance cover my store? No it
did not, even though it would have been impossible for anyone to enter the store. Why?
Because the 150 sq ft interior of my store was unscathed, and the policy covered damage to
the premises, not impossible entry. I doubt any businesses collect on their business
interruption insuranceno matter how deserving, under the circumstances which include
buildings closed up tight.
If there is anything thats going to top the flood of reports its Fridays
July Unemployment Report which may show jobs added, even though many businesses were
forced to re-close after reopening. The situation stinks, and its a wonder more
people havent simply given up and committed suicide. Then, again, theres still
time for that to happen, with the extra $600 per week Federal Unemployment Insurance
bonus. Id imaging counseling services are more popular today, than ever before.
Also on the Economic Calendar, PMIs & ISMs domestically and globally.
Ironically, despite the $3.5+ trillion in debt the government has racked up, there
isnt a lot of debt being offered, this week. First is Wednesdays Treasury
Refunding Announcement, which brings us to the 2nd item, beyond the July
Unemployment Report that the Street will be watching: Congress painful negotiations
for bail-out #3, the HEROES Act from Dems, and the HEALS ACT from Republicans, which are a
mere $2 trillion apart. For three years, Republicans didnt care what they spent on
anything but, now, in the midst of a pandemic and sky-high Unemployment, the Pubs are,
suddenly, shy about spending money. With rates near zero, it makes not sense, and
certainly now sense for the people in leisure industries, especially, forced out of work
through no fault of their own.
Events are slimmer than usual, even given that summer is often a slow season. Many o9f the
events scheduled were, originally, planned for March & April, postponed until July
& August, back when many, naively, believed the pandemic would be past, by now. At
this point, virtual events are planned out to next February, and many are starting to
understand the pandemic could be around for years.
One event that caught our eye is the Annual Space & Missile Defense Virtual Symposium,
that starts Tuesday. Perfect timing, given that SpaceXs Dragon capsule landed in the
Gulf of Mexico, Sunday, just as planned and hoped. In preparation, I thank FX HD for
giving me another chance to see "Hidden Figures," the night beforea
fantastic movie with some hard subject matter very appropriate to todays protests
for racial equality.
Wednesday, Jefferies starts a 2-day Virtual Industrials Conference. Air Products, Leidos,
Worthington Industries, Boeing, Exogene, CalAmp, Douglas Dynamics, Lincoln Electric,
Parsons Corp, Huntsman, Comtech Communications, 3M, Ford, Glatfelter, Mercury Systems,
AGCO, Kraton Corp, Mercer Intl, Williams Industrial Services Group, Atlas Equipment
roup, Orion Engineered Carbons, CECO Environmental, Timken, Littlefuse, and more are
scheduled to present. As one of the few domestic I-bank Conferences on the schedule,
its sure to be received well. Lack of competition will do that.
So, a slug of earnings reports, many of which will be unadulterated disasters, a July
Unemployment Report that may not please as much as the last 2 did, and Congress
negotiating across the aisle, likely to come to some agreementeven if its more
stopgap than the last one. Should employers & schools be offered a liability shield
against lawsuits if a worker, student or teacher catch the COVID-19 virus? Yes, as long as
they did nothing irresponsible to cause the transmission. Do any of these 3 most important
items bear the risk of taking down markets? Yes, of course. But will they? Only if
Congress cant agree on any bail-out for the tens of millions unemployed and forced
to live on state Unemployment benefits, alone. In Florida, thats under $275 per
week. In New York, it may be $400 per week but even thats not an amount anyone can
live on New York City. Even an extra $800 per monthan extra $200 per week, is a
recipe for disaster for many, if not all, of the unemployed. On the flip side, the Federal
government cant be expected to support people indefinitely but with Fauci & the
President promises a vaccine by the end of the year, or early next year, theres a
limit to the amount of time the Federal check book has to remain open. Its not
indefinitely, but wont make a difference if Congress cant come up with a plan,
fast, to bridge the gap.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 2731, 2020 INSTEAD OF ASKING, WHAT IF
BIDEN & DEMS SWEEP, ASK WHAT IF WE HAVE TO SUFFER FOUR MORE YEARS OF A NARCISSISTIC
TRUMP??? Theres an FOMC meeting, this week
but, really, who cares? Rates arent going anywhere for a long time, and the biggest
risk Jerome Powell et al pose is a dose of reality. The "V" shaped recovery that
was looking so good when the economy first reopened has been all but buried by the revival
in coronavirus cases. Maybe some still wont mask-up, and some teens and
twenty-somethings are still partying like its 1999 but a goodly portion of the
country has been scared back into their houses, causing restaurant seating, where still
allowed, to nose dive. In his July testimony, Powell was accused as being more dour than
necessary but, alas, perhaps he was right, after all., Many peoplenot just
seniorsare going out as little was possible,, sheltering-in-place without anyone
ordering them to do so.
Aside from Wednesdays FOMC statement & Powell press conference, the Economic
Calendar promises June Durable/Capital Goods Orders & Shipments, Monday. It seems
possible thats the day the top tech CEOs testimony will be postponed, due to a
memorial service for Rep. John Lewis, the Civil Rights activist and so-called
"conscience of Congress." Congress is sure going to need a conscience, this
week, seeing as the Republicans havent done squat on the HEROES Act the Democratic
US House passed a month ago, which is causing the Federal Unemployment Benefit--$600 per
weekto expire without a replacement of any kind. While many have, rightly,
complained that the $600 per week took some Unemployment Benefits above the salary
beneficiaries were collecting by working. But any working stiff forced to pay for his own
health insurance and drug/doctor appointment co-pays knows that $600 barely covers those
expenses, monthly, nevermind leaving anything over for rent or a mortgage, car payments
and food. While the CEOs will testify or be postponed, V.P. Pence will be in Miami to see
the first large human trials of a COVID-19 Phase II vaccine get underway. Wonder whether
hell be putting his arm out to volunteer, and whether anyone will believe hes
really being used to trial an unproven vaccine, or faking it.
Also on the Economic Calendar, the S&P/Case-Shiller 20-city Home Price Index for May,
and a slug of Treasury Auctions. Wednesday, before the FOMC statement is released, NY Fed
Pres./CEO William Dudley is in conversation with the OMFIF, on US Economic Policy &
Outlook, followed by June Pending Home Sales from the Natl Assn of Realtors.
Thursday, the weekly Initial Jobless Claims/Continuing Claims, along with the NIPA
Comprehensive Annual Benchmark Revision. NIPA is the National Income & Product
Accounts, revised July, annually. On the 30th. think of it as a super-duper GDP
compilation. Also Thursday, as it turns out, well get the advance Q2 GDPthe
first look at Gross Domestic Product, which includes Business Spending, CapEx, Household
Spending, and the FOMCs favorite indicator, PCEPersonal Consumption
Expenditures. Then Friday, well get a 2nd look at PCE, when June Personal
Income & Spending are released, along with the Savings Rate & PCE. Also Friday,
Drs. Fauci, Redfield & Admiral Giroir are scheduled to testify in Congress on the
National Response to Coronavirus. Since theres pretty much agreement that Pres.
Trump messed up the responsefour months worth, to be exactI imagine
thats happening at the US House, where the Democratic majority is looking to seize
every possible opportunity to embarrass the Republicans.
The Earnings Calendar is quite a handful. There are new economy reporters like F5, NXP and
SAP Monday, AMD, Akamai, Ebay, Starbucks, Seagate, and Visa, on Tuesday, plus Wednesday,
Equinix, Facebook, PayPal, Qorvo, Qualcomm, ServiceNow, Shopify, Spotify Technology S.A..,
and TeleDoc. Thursday, well hear from Alphabets Google, Amazon, American
Tower, Apple, Comcast, EA, Intercontinental Exchange, MasterCard. Friday, Pinterest stands
out.
On the other hand, theres also a surfeit of old world Earnings Reports expected, as
well, which isnt to dismiss any of their attempts to drag themselves into the new
economy, whether its McDonalds digital ordering, or GM & Fords
attempts to develop electric powertrains, and autonomous driving vehicles. Still, they
have 3 feet of a 4 pedestal table in the old world, so thats how theyre seen.
Monday, look for Hasbrok and Heidrick & Struggles. Tuesday, 3M, Amgen, Armstrong World
Flooring, Asbury Auto, Avis, Big 5 Sporting Goods, Boyd Gaming, Celanese, Centence, Chubb,
Community Health, Corning, Cummins, D.R. Horton, Dennys, DexCom, Ecolab,
Harley-Davidson, Invesco, Jetblue, LabCorp, Martin Marietta Materials, McDonalds
Restaurants, Mondelez, MSCI, Omnicom, Pfizer, Polaris, Rayfheon Technologies,
RenaissanceRe Holdings, Rockwell Automation, Roper Industries, Ryder, S&P Global
Intelligence, Sherwin-Williams, Wyndham Hotels, and Zebra Technologies.
Wednesday, there are reports expected from Anthem Health, Apache, Archer Daniels Midland,
Automatic Data Processing, Avalon Bay Apartments, Boeing, Deutsche Bank, DinEquity, Eaton,
Enterprise Products, Genearl Dynamics, General Electric, the aforementioned GM,
GlaxoSmithKline, Hess Oil, Holobix, Interpublic, Lam Research, M/I Homes, Mid Atlantic
Apartments, Norfolk Southern, OReilly Automotive, Penske Automotive, Pilgrims
Price, Scotts-Miracle Gro, Werner Trucking, WingStop, and Yum China.
Thursday is by far the heaviest day for Earnings releases. In addition to the new economy
names mentioned, well also hear from AGCO, Alexion, AB InBev, Anheuser Busch, Arrow
Electronics, AstraZeneca, Baxter, Beazer Homes, Bio-Rad, Brunswick, Builders FirstSource,
Cigna, Columbia Sportswear, Conoco-Phillips, Eli Lilly, Expedia, Ford, Gilead Sciences,
Group 1 Automotive, HanesBrands, The Hartford Financial, Host Hotels, Kelloggs,
Keurig Dr Pepper, Kraft Heinz, Mettler Toledo, Mohawk Brands, Molina Health, Molson Coors,
Newmont Gold, Northrup Grumman, Pebblebrook Hotel Trust, PG&E (fresh out of
bankruptcy), Procter & Gamble, Shake Shack, Stanley Works, Striker Corp, Taylor
Morrison Homes, United Parcel Service, Valero, Vertex Pharma, Waste Management, Xilinx,
YUM Brands.
Which brings us to Friday, when reports are expected from Abbvie, Caterpillar, CBOE,
Charter Communications, Chevron, Church & Dwight, Colgate-Palmolive, ExxonMobil, Fiat
Chrylser, L3Harris, Merck, Phillips 66, Under Armour & VF Corp.
If you get the impression that the FOMC Meeting is likely to take 2nd place
behind all the Earnings Reports, Im not about to argue the point. Whatever we
havent learned about the economy from the past couple of weeks or reports,
were sure going to learn this week, as both the new & old economy report in
force and volume.
Which brings us to the Events Calendar, which is especially light both because of the
Earnings Calendar, cancellations, postponements, and summer, the last week of July usually
Parents Weekend at camp, and the last unencumbered weekend before kids in southern school
districts usually return to school. Of course, this year, the coronavirus has caused many
school districts to postpone the start of school though none, yet, until after Labor Day,
when the schools in the north usually start. Continuing Sunday, Retinal Specialists, and
those specializing in Cataracts meet, along with the Alzheimers Association, all 3
Virtual meetings. NAIC, the State Insurance Commissioners also meet Virtually, along with
AdWeeks New Tech, and more. Monday, BCVS, a Basic Cardiovascular Sciences Scientific
Sessions meets virtually, along with Soil/Water Ecosystems Services. CSCE20 claims
its taking place in Las Vegas from the 27th to the 30th but
the event site hasnt been updated since Feb 8th. No matter which link we
try, theres no update to say it was converted to a virtual event, or postponed until
next year. Among the co-located conferences are BioComp, BioEng, and others. Las Vegas has
reopened, with casinos at 25% of capacity, so the 1K2K researchers expected
arent impossible for the MGM to handle but we cant really confirm the original
A.I. group meeting will take place live, in person, as the website claims
Tuesday, Keefe Bruyette Woods breaks the mold by holding a Virtual Community Bank Investor
Conference. Smart GridGrid Evolution also meets virtually, along with CompTIA, for
its partner summit, and the Permian Basin Completions Optimization & Interwell
Communications event.
Wednesday, Southeast Building and the ABI Northeast Bankrputcy-Consumer Conferences are
both virtual events, as is SNAC Intl elevating Marketing Confeerence for the Snack
industry. Thursday, ICSC (Shopping Center Owners) host a Next Generation Virtual
Conference while the National Medical Association, for African America M.D.s is hoting a
virtual event on Transcending COVID-19 to a Healthier Black America. Friday, the Future of
Breast Cancer will beheld Virtually, while ESTRO, for European Radiology Oncologists
rescheduled for Nov. More important, Friday, is the arrival of 22 NBANational
Association of Basketballteams gather at Walt Disneys ESPN World Complex,
outside Orlando FL, to continue the season ended in March.
Saturday, AIAA, an airport group, and USU jointly holst their Annual Small Satellite
Virtual Conference, while the ASBC--Brewing Chemistsrescheduled their annual meeting
for September through October, as on-demand webinars.
Clearly, despite an FOMC meeting, its earnings that will control markets, this week.
The old economy is dominant but there are some star new economy companies reporting, whose
results will determine whether last weeks consolidation (Correction to some) is
arrested after a week or has more room to the downside. Meantime, every time a pundit
talks about what a Biden win, and/or Democratic sweep of the White House & Congress
could mean to markets, I instead want them to answer what 4 more years of a narcissistic,
tempermental, possibly unhinged Pres. Trump could meannot just to our relations with
China but our relations with all of Europe, and even Canada & Mexico. What would 4
more years of Trump mean for the dollar? For our economy, in general, not to mention our
public health. And I dont just mean the virus ravaging 30 states but environmental
protections, as well, not to mention the constitutionally provided states autonomy.
Do you want unnamed Federal troops overrunning your hometown? How oood do you think 4 more
years of Pres. Trump would be?
.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
July 2024, 2020 EARNINGS DOMINATE
The Economic Calendar is dominated by Housing data, domestically.
Overseas, the BoJ releases minutes of its mid-June Monetary Policy Meeting, the PBoC sets
1-, & 5-year Prime Rates, overnight Sunday, into US Morning hours. Overnight Monday,
the RBA (Aussie) central bank releases Minutes of its June 2nd meeting, its
Governor, Lowe, speaking after the release. Even the South African Central Bank considers
tweaks to interest rates, Thursday, while, also, Russias Interest Rate Decision will
arrive overnight Thursday, into our Friday morning. In the UK, Parliamentary hearings will
be held on the Appointment of Jonathan Hall to the Treasury Select Committee, while the
re-appointments of BoE MPC members Haldane & Tenreyro are to be voted on by the same
committee.
Not to be outdone, the nominations to the Federal Reserve Board of Judith Shelton &
Christopher Waller are to be voted on by the Senate Banking Committee, Tuesday. Shelton is
a chief proponent of MMTthe policy that says deficits dont matterat all.
The US House sub-committee on Anti-trust will hold hearings with the CEOs of Amazon,
Apple, Facebook and Alphabets Google, also Tuesday. We know its mostly
show-time, for House members to grandstand for their constituents. Still, CEOs
occasionally do wind up with egg on their faces. FBs Zuckerberg has ingratiated
himself to Trump, with secret White House dinners but the House, controlled by
Democrats, have not reason to treat him with the same kid gloves.
The Housing Data mentioned above includes weekly Mortgage Purchase & Refinance
Applications early Wednesday morning, followed by both FHFAs May House Price Index
and Natl Assn of Realtors June Existing Home Sales, the same day.
Thursday, we learn of the weekly initial jobless claims & continuing claims, before
Fridays delivery of June New Home Sales from the Dept of Commerce. Looking at the
weeks ahead, August is filled with Central Bank meetings, before the majority take a rest
in September.
The Events Calendar is slim because its summer, and because events that prefer
in-person dealings have been postponed until October through December, and in some cases,
though referenced as postponed, are rescheduled for next year, when another meeting would
have taken place, anyway. The Events that survive and stand out for us are the Animal
& Meat Science Annuals, that will be held virtually, this year, starting Sunday.
Granted, its not the same as actually petting an award-winning Heifer or Holstein,
but nonetheless, taking place as virtual scientific or technical sessions. SEMICON West
& the Standards Meeting, starting Monday, also feel like cheats, held virtually, given
that plug & play isnt possible virtually but, alas, they are happening, with the
Applied Materials Sustainable AI Summit accompanying it, even as the 50th
Anniversary Celebration wont be the usual cocktails & canapes affair. The NRF
NXT keynote will be from Spotify. (2022nd). Its a digital
conference on digital content, much concentrated on the technical hardware needed to excel
at digital sales & content. Tuesdays EAA AirVenture Aviation Week often involves
Experimental Aircraft and represents, perhaps, the ultimate social distancing. You
cant fly too close before getting your wings clipped, can you?
Wolfe Research is hosting non-deal virtual roadshows with Bank of NY Mellon & Morgan
Stanley, Monday, while Charles Schwab is hosting its own summer update, Tuesday. Monday
is, also, the day a slew of retailers will start requiring face coverings in their stores,
though that wont require any changes, here, in Palm Beach County, where theyve
been required for weeks, by order of county leaders, even though the states governor
has his head so far up Trumps a-- --, he insists the spike in COVID-19 cases is
because the state is doing more testing than any other. Be that as it may, Jacksonville,
which is scheduled to host the Republican National Convention, has decided to trim the
number of delegates that can attend inside the convention centerspoiling all
Trumps fun, though the city will allow more delegates for the final day, when Trump
accepts the nomination, than it will the preceding days, when regular delegates, only,
will be permitted to attend.
Other notable events include DACDesign Automation, when companies like Cadence
Design Systems, Siemens Mentor Graphics. And Synopsys are the stars. Sprott is
hosting a virtual Natural Resources Symposium, like DAC, starting Wednesday. Thursday, 360
AnDev, a developers conference, starts, while Retina Specialists meet starting Friday,
when B RileyFBR is hosting a virtual Infectious Diseases Summit, "Fast & Curious:
Race to Find cures for Several Infectious Diseases, including COVID-19."
Which brings us to the Earnings Calendar (EC), with Monday trim but promising bang for the
buck, as reports are expected from the aforementioned Cadence Design, Halliburton, IBM,
and Manpower. IBM, along, can add or subtract 6090 points with its results, on its
own. Zions Bancorp is one of the larger regionals we do include on the EC.
Tuesday, weve highlighted Canadian National, Capital One Financial, Coca-Cola,
Interactive Brokers, Intuitive Surgical, Lockheed Martin, Novartis, Paccar, SNAP,
Synchrony Financial, TD Ameritrade, Texas Instruments, UBS, and United Airlines.
Synchrony, like Capital One, promises word on subprime debtors, while IBKR & AMTD are
the last, large independent brokers, now that Morgan Stanley is poised to take E-Trade
Financial. Both of the independents are seeing Robinhood steal some share, while Schwab is
in a class all by itself, dwarfing the other independents but its no impossible to
imagine a scenario when SCHW could scoop up IBKR or AMTD, to flush out its active trader
division.
Wednesday, we note reports expected from ABB, Biogen, Canadian Pacific Rail, Checkpoint
Software, Chipotle Mexican Grill, CSX, another rail, Discover Financial Services, HCA, one
of the largest healthcare providers, IQVA, which compiles prescription drug fills,
KeyCorp, another large regional we expect to be scooped up, someday, Kinder Morgan, Las
Vegas Sands, MarketAccess, Meritage Homes, Nasdaq Exchange, Northern Trust, the last
remaining independent trust bank, Thermo Fisher Scientific, The Travelers Insurance Co,
and Whirlpool. Perhaps most important, Wednesday, reports are expected from both Tesla
& Microsoft. Tesla, I fear, could be another Netflix, though losing 60 points would
hardly be noticed by its investors or the analysts who keep raising price targets.
Microsoft, on the other hand, should benefit from remote work from home, even as expenses
to stockpile the upcoming, new, video game console should be risingexpenses,
perhaps, not fully reflected in analysts expectations. I suspect it will sell all
that it can make, for the first 6 months, or so, as its been more than 9 years since
the last complete overhaul, though updates have been fairly constant. That doesnt
mean expenses may not ding the coming report, or its outlook for the current quarter.
Thursday expect another credit card company, Alliance Data Systems, along with American
Airlines, AT&T, AutoNation, Cintas, Dow Chemical, E-Trade Financial, in what should be
its final report as an independent company, Hershey, Intel, Kimberly-Clark, Mattel, Pulte
Homes, Quest Diagnostics, Robert Half, Skyworks, Southwest Airlines, STMicroelectronics,
Silicon Valley Bank, which not only merged with Leerink but has a long history of taking
its fees from up-and-coming tech companies in stock, Tractor Supply, Travelers, Twitter,
and Union Pacific. Left out of the alphabetical order was Citrix Systems, the original
remote-work software company whose continuing independence shocks me quarterly. Twitter I
can give a rats as about but, evidently, Im alone in that opinion.
Friday, expect American Express, Carters, Honeywell, NextEra, the Florida behemoth
power utility, Schlumberger, and Verizon. American Express is the one I think could
surprise most to the downside. Not only is no one travelingairfare and hotels
typical charges by corporate customers in other times. Then its recent effort to seek out
lesser credits to its revolving cards, unlike its original cards that must be paid in
full, monthly, or suffer 24.97% interest rates, which businesses can, now, elect, though
why would they, at that rate, when the official Fed Rate is zero to 0.25%?
Last week, markets scooted through most of the Earnings Calendar, when the majority of
banks reported better than worst fears. This week may be another story, altogether. It
will come down to expectations, and while those are way down for the airlines reporting,
one cant necessarily say the same for the rest of the calendar. Then, again, when it
comes to expectations, one must, also, ask if theyre too high for Microsoft, and
modest enough for Intel, even if some of the supply chain reported better than expected.
Finally, the unsung heroes of this entire earnings season are Verizon, AT&T, and other
internet providers who have kept all the kids connected to their schools, and all the
workers connected to their offices, clients, and co-workers. While neither are likely to
surprise to the upside, given most people have held onto their handsets, awaiting for a
large selection of new 5G phones yet to be releasedthe 5G iPhone especially, since
Samsung just started taking orders for its latest phones. Housing Data may be a bright
spot, this week but earnings reports are filled with potential landmines. Bear that in
mind if the recent decline in big tech names strikes you as irresistible.
ECONOMIC: (Highlights, only, below.
Full
International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommen-dation 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 1317, 2020 ALL ABOUT BANK
EARNINGS, or Lack Thereof The week will be all about
bank earnings reportsor the lack of earnings. More specifically, it will be about
reserves against loan losses, which will detail the horror of 14.0% Unemployment, or
worse. As I said last week, enough about jobs added, since we can say none have been added
when jobs, for now, are merely being restored, which was the whole point of the
PPPPaycheck Protection Program, which offered near interest-free loans to businesses
that would use the funds to keep their workers on payroll. Now which jobs were really
added, if the Federal Government preserved jobs w/PPP loans, and the workers were merely
recalled from home to their prior places of business?
But I digress, because the week will be about those loan loss reserves and, for tat
matter, how much Wells Fargo lowers its dividend, the only stress tested bank that has to
lower its dividend, even if the main reason its past 4 quarters of earnings failed to
support its current dividend is the high cost of fines, penalties, and restitution
regulators have ordered it to pay, after it cheated and defrauded its own customers, under
prior management. Hefty loan loss reserves were taken in Q1 by all the banks with exposure
to potentially problem loans, before the loans went unpaid. So, the first truth this
weeks bank earnings will reveal are how well banks anticipated Q2 problem loans, and
how much worse it actually became in Q2, not to mention how much worse managements expect
deficiencies to become in Q3. Might markets ignore bad news? Probably, other than a
temporary stutter step as the week goes on but thats been typical of the week the
major banks report their earnings, even in good times, so why expect anything difference,
now?
Notably, the BoJ offers a rate setting meeting, as does the Bank of Canada, the Polish
(Tues.) & South Korean (Wed.) Central Banks, and the ECB (Thurs.) to wrap it up, with
ECBs chief, Christine Lagarde bleeding into our Thursday morning pre-US market open.
Chinas National Statistics Bureau will offer its data dump overnight Wednesday,
while Central Bankers are speaking everywhere, the G20 Finance Ministers and Deputy
Central Bankers meeting virtually, starting Thursday, the Central Bankers, including the
ECBs Lagarde & Panetta joining by Saturday. The Federal Reserve doesnt
list external events, unless streamed by the FRB, or when Jerome Powell needs to reset the
markets, so makes a show of announcing an external meeting. Therefore, we may presume
hell teleconference into the G20 but cant be sure because its not listed
on the Federal Reserve Bank Boards calendar.
But even without G20, theres plenty to see on the calendar, including NY Fed
President/CEO John Williams and Bk of England Gov Bailey, Monday, on "LIBOR: Entering
the Endgame," as plans proceed for SOFR to overtake the benchmark LIBOR has long
been. Gov. Brainard, who wanted all bank dividends to stopped as a precautionary measure,
after the stress tests, speaks on the Economic & Monetary Policy Outlook @Perspectives
on the Pandemic, hosted by NABEThe National Association of Business Economists.
Unluckily for her, none of the bank earnings will precede her Tuesday speech, so she
wont be able to use that speech to make any point about the suspension of bank
dividends she prefers. At any rate, as many have pointed out, the amount spent on
dividends is a small percentage of what banks usually spend on stock buybacks, so with
those suspended, voluntarily, from the COVID-19 start, banks are already warehousing more
funds than theyre reserving against loan losses, at least until now.
Later Tuesday, Philly Feds Harker speaks on the "Impact of COVID-19 on Small
Businesses," then Wednesday, on the Economic Outlook, at Center City Proprietors
Assn, virtually, of course. Mid-afternoon Wednesday, the Fed releases its Beige
Book, which ought to be a more interesting read than usual. Thursday, NY Feds
Williams speaks again, along with the Chicago Feds Evans, at the 11th
Rocky Mountain Economic Summit.
Meantime, Economic Data ranges from the OPEC & OPEC+ Joint Ministerial Monitoring
Committee Meeting over the weekend, to US June CPI on Tuesday, MBA Mortgage Purchase &
Refinance Activity Wednesday, before the Empire State Manufacturing Index, plus the June
US Industrial/Manufacturing Production/Capacity Utilization, June numbers expected to show
a pick up, after all the states joined the reopening of the economy to one degree or
another, by then. The Feds Balance Sheet has started to fall, and its
withdrawn its purchases in one bond market, declaring its help no longer needed,.
Thats why one of the most interesting streams may come from the NY Fed Exec VP of
Markets, Lorie Logan, on Federal Reserves Market Functioning Purchases: From
Supporting to Sustaining, at a SIFMA webinar. Wednesday is also the day that US Income
Taxes for Individuals, Corporations & Trusts are du, unless an extension was filed on
Form 4868 (corrected 07/13). The CARES Act allowed for some clawback of corporate taxes
already paid, so it will be interesting to see how much the final payments of taxes
bolster the Federal Budget Balance. Friday, well also learn of June Retail Sales, a
number that greatly excited the markets in May, because a double digit rebound was
expected after a steep decline in Aprilexpected by all but market participants who
acted like it was manna from heaven, and the biggest surprise in the world. Of course,
June CPI, Tuesday, will show theres no inflation to worry about, except in food,
which doesnt count in the numbers economists consider. So what if cole slaw has gone
from $2.89 per/pound to $5.89 per/pound, consumers can buy gerbil food and get their
roughage that way. Of course, May Business/Wholesale Inventories may show a rise
thats disturbing, though that, too, is to b expected, after stockpiles built up in
April and May, before the majority of the country reopened.
Now to the nitty gritty, Earnings, which PepsiCo kicks off Monday, and should please.
Its not the sodas as much as the salty snacks, which stay-at-home kids and remote
workers find irresistible, even without live sports to watch on TV. Tuesday kicks it into
high gear, with Delta Airlines reporting, along with Citigroup, JPMorgan Chase, and Wells
Fargo, the latter slated to announce the size of its dividend cut, with its earnings.
Analysts see it falling from half a buck to 20c p/sh quarterly.
Wednesday, ASML, Progressive Insurance, and United Health Corp report, along with Bank of
NY Mellon, Goldman Sachs, PNC Financial, and US Bank. Thursday, reports are due from Abbot
Labs, Dominos Pizza, Johnson & Johnson, Netflix, and Taiwan Semiconductor but
mark my words, its Bank of America, Charles Schwab, Morgan Stanley, & Truist the
media will hone in on, the latter the recently merged BB&T & SunTrust Banks, 2
southern powerhouses now merged into one. Notably, Goldman Sachs & Morgan Stanley
usually report year-end a week after the other banks but for Q2, theyre part of the
party this week.
Friday, reports are expected from Kansas City Southern Railroad, Ally Financial,
BlackRock, Citizens Financial Group, Regions Financial, and State Street. As trust &
transaction banks, Bank of NY Mellon and State Street are less directly impacted by
interest rates than the other banks but given equity & bond market activity, and the
return of volatility, Schwab & Moran Stanley look better situated to capitalize on
volumes than some of the other banks, while BlackRock has been in charge of executing the
Federal Reserves bond buying, low-margin business that nonetheless adds to earnings.
The large banks all participated in distribution of PPP loans but none of them are going
to get rich on those loans. The funds were supposed to be distributed before any really
knew where the guardrails were, unsure of the rules leaving billions undistributed as the
program wound up, which is why Congress had to extend the deadline to August 8th.
Ally Financial does plenty of subprime lending but usually caps the limit on
loansincluding credit cardsat such low levels customers can only hurt it n
aggregate. Well learn the extend of the aggregate loan deficiencies soon enough. On
the other hand, analysts are so sure NFLX subscribers skyrocketed, sentiment is set up to
almost surely fail. But should NFLX blow out its subscriber numbers, especially in the US,
it can still make new highs. I say "especially in the US" because analysts fear
the damage Disney+ could do to NFLXs ability to add more domestic subs, fear that
seems overblown, especially with Googles YouTube raising its base subscription
service to $65 from $50 p/month. Take Disney+ at $4.99, Netflix at $15.99, and CBS All
Access at $9.99, and for $30 p/month, one can kiss those $100+ cable bills goodbye, even
with Comcasts NBCUniversal launching Peacock on the 15tha service
thats ad-supported, so free to most usersfree for 2 weeks, already, to Comcast
Xfinity TV subscribers. While International subscriber adds have been key to the last few
NFLX quarters, strong adds in the US would speak loudly of NFLXs ability to
withstand the assault by the Walt Disney juggernaut.
Which brings us to Investment Bank & Industry Events, slim and far between because of
the time of year. Until mid-August, Iarge I-bank events all but disappear but B RileyFBR,
Mizuho, and SVB Leerink plan healthcare-related events, B RileyFBR a virtual Infectious
Disease Summit: Fast & Curious: Race to finding cures for several infectious diseases,
including COVID-19. SVB Leerink plans a virtual Annual Therapeutics Day, and Mizuho a
Therapeutics Expert Seminar, all on Tuesday. The oddest event to take place virtually is
ICAST & IFTS, sportfishing and boating events that simply cant be the same by
video conference. The 66th ALPA, Airline Pilots Assn Air Safety Forum is
canceled, while theres some question about how many members will survive furloughs
until 2021, and will be able to afford the membership fee by then. Theres really
only one industry worse hit than the airlines, and thats the cruise lines, the
former getting more financial support from the government than the latter, because none of
them are flagged in the US, and none report felonies to the US.
If youre confused by one Society of Nuclear Medicine canceling its event, while
another didnt, the canceling subdivision is from NUC Gang, the Pacific Northwest
division of the Society of Nuclear Medicine & Molecular Imaging, SNM. But likewise,
many medical schools plan meetings and cocktail parties at such events, and all those are
canceled, too. BuilderExpo Wednesday says nothing about canceling its Atlanta GA event but
its hard to imagine it taking place, in person. Fairchild will virtually hold
Beauty Inc Wellness Summit & AAFA (Am. Apparel & Footwear Assn) its Fighting
the Fakes in a COVID-19 World. Im not sure what a COVID-19 world has to do with
fighting footwear & apparel fakesmore concerning would be fighting phony
treatments and tests but, alas, AAFA is holding that event virtually.
Comcast plans on officially launching Peacock, its free, ad-supported streaming service on
Wednesday, while Cinemark plans to open its long-closed movie theaters starting Friday,
masks required. Walt Disney postponed the debut of Chris Nolans "Tenet,"
but, instead, will re-release his "Inception," to welcome the reopening of movie
theaters. Warner Bros (T) claims the release is to celebrate the 10th
anniversary of "Inception." The funniest event on the Calendar, though surely
not mean to be humorous, is a China Licensing Expo, starting Wednesday. China licensing?
Since when is China a paragon of recognizing intellectual property rights, and licensing
them, instead of stealing them?
That may be the only joke of the week. Surely, its not funny knowing Florida
reported an all-time higher 15K new coronavirus case Sunday, as the country seems to be
racing towards herd immunity, with overflowing ICUs, instead of flattening the curve, as
epidemiologists had urged. Stay healthy, stay safe! Stay home if you have no reason to go
out.
ECONOMIC: (Highlights, only, below. Full
International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommen-dation 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 0610, 2020 CAN WE PLEASE CALL THEM
RESTORED, NOT ADDED JOBS?!?!? Every
time I hear someone refer to the number of jobs being "added" monthly Im
furious. No jobs have been addedtheyve been restored, which was exactly the
plan when the PPPPaycheck Protection Programwas passed by Congress. Employees
kept on payrolls but not physically showing up at their jobs were either working remotely,
or paid to stay home due to shelter-in-place orders. Now, as some of those businesses
reopen, most of them service jobs in leisure industries, workers are being recalled to
their place of employment, rather than being paid to stay home. If jobs were being
"added," then the Unemployment Rate would still be 3.5%, and falling, as it was
in January and February. No jobs are being added: Furloughed workers are being recalled,
or their positions at places of business are being restored, but not a job has been added.
The workers the BLS, media & Bullish Street analysts are celebrating are those who
remained on payrolls, thanks to PPP, now returning to their places of business.
The second half of the year began last week but its really this week when Portfolio
managers are likely to rebalance their portfolios. There will be sales of businesses whose
coming earnings reports will be fails, and purchases of companies who, like FedEx last
week, benefit from more people ordering more of their needs for delivery. One telling
report, this week, could be CostCos June total & comparable store sales,
Wednesday, an extreme beneficiary of food at home and pantry stockpiling. CostCo will be
in a position to contrast the states that have safely reopened, with those that reopened
and saw virus cases surging. In the latter instances, many people have returned to
shelter-in-place safety, rather than the freedom of lock-downs being lifted.
Of course, lifted lock-downs offer no freedom if the risk is a greater chance of
infection. Seniors, in particular, have remained wary of lifted lock-downs and will remain
slow to return to shopping in stores and dining out. But the summer has settled one issue:
Heat and humidity did not kill the coronavirus, as the President and others told us, back
in March & April, was going to happen. Florida has been suffering through all the heat
and moisture typical of rainy seasonheat indexes well over 105, and darned if the
number of virus cases arent surging in the southern-most counties in that state.
Miami-Dade, Broward & Palm Beach Counties keep notching the kinds of records no state
wants to seea record number of newly diagnosed cases of coronavirus, though
thankfully, the number of hospitalizations & deaths are not keeping apace of
infections.
On the Economic Calendar, this week, Markit US June Services & Composite Indexes, the
Conference Boards Employment Trends Index, and the ISM June non-Manufacturing
Business Activity, Employment, Orders, Prices Paid, etc. The Royal Bank of Australia will
make an interest rate & QE decision overnight, into Tuesday, in the US. Hours later,
the Federal Reserve will release the May JOLTS reportthe number of Quits and Job
Turnover, with openings seen at around 4m, down from 7m last December. In England, members
of the Monetary Policy Committee will appear at hearings of Parliaments Treasury
Committee. A generally reliable website shows Fed Presidents/CEOs Bostic, Barkin &
Daly speaking on the 7th. I check media advisories for every regional Fed bank,
weekly, and saw no such items listed. Now, honestly, the Fed is delinquent in posting
external events for its bank leaderswhether regional or Fed Governors, if
theyre not official Fed Bank events. But ultimately, I find those items. This week,
nada! So be forewarned. The financial sites listing such events could be right but I found
nothing to support their notations. Wednesday, in addition to the MBA Mortgage Purchase
& Refinance tallies, the Fed releases May Consumer Credit (debt, really), late
Wednesday afternoon. While vehicle sales did pick up in May, and some states started
reopening mid-May, theres no reason to expect growth in credit that month. Big
coastal states were still locked down, making it hard for credit to grow. And since many
states still hadnt decided where they were on day camps & sleep away summer
camps, at that point, deposits for such facilities werent due, then either. Did
gasoline see more draws, rather than builds? Possibly; More people returned to work, and
the number of active oil rigs all but collapsed, even as OPEC+ has been complying with
limited quotas. OPEC & OPEC+ Joint Ministerial Monitoring Committee (JMMC) will meet
next Saturday, by webcast, to examine compliance. Producer Prices are out Friday, along
with Canadas June Unemployment Report, which the BLS favored the US with last week.
The Haute Couture Fall/Winter 20/21 Fashion season gets underway, with video
runway fashion shows. Christian Dior the highlight on the 6th,
Chanel on the 7th, Elie Saab, Viktor&Rolfe, plus Valentino the highlights
of the 8th. Hemlines have often followed the economy, rising when people are
celebratory, falling in recessions. Fashion colors, also, follow the zeitgeist. So it will
be interesting to see what the designers have in store for cruise/winter 2021.
The Earnings Season is on intermission, with just a few names reporting, almost all of
them notable, for one reason or another. Tuesday, Levi Strauss & Paychex report.
Wednesday, Helen of Troy, Pricesmart & Walreens Boots Alliance report. With nail and
hair salons, along with barber shops closed for 6 weeks to 3 months, HELE could have fared
worse than most businesses. PriceSmart is the CostCo or Sams Club of the Caribbean
& Latin America, so should have held up. On the surface, Walgreens should be a
beneficiary of the pandemic, with people pre-filling prescriptions prior to locking down,
and consumers stocking up on cleaning supplies, paper goods, etc. But the truth is, WBA
was a big loser, it wasnt able to supply toilet paper or paper towels from early
March through early June, and cleaning supplies were equally scarce. Im aware of
CostCos & Walmarts that were flush with toilet paper & paper towels
throughout the pandemic but CVS, Walgreens, and even Publix & Winn-Dixie were woefully
lacking in supplies through the duration, until mid-June. Early pandemic stockpiling led
to sparse customers later, the lack of supplies reason for consumers to stay away. I know
of people who ordered face masks at Amazon, in late February, who were given June delivery
dates, that ultimately were real. But online business sections at places like Walgreens
& CVS answered queries for face masks with "out of Stock" and a refusal to
take orders. Even today, youd be hard pressed to find bottles of alcohol at any
store, though toilet paper & paper towels are more widely available. I did find a
bottle of alcohol for a friend who was desperate but it was hidden behind the register at
a Walgreens, and I had to ask for it. It was most reluctantly surrendered to me, in
exchange for $1.99 plus tax. Only after I dropped it off in the portico of a friends
house did I learn similar bottles are selling for $36 each, on Ebay. Thats a crime a
more engaged federal government could have prevented by making sure suppliers &
distributors didnt favor COST & WMT, over all other chains.
Friday, Carnival Cruises & Greenbriar, the rail car maker and lessor report. Neither
are in a sweet spot. On the contrary, cruises arent set to resume until October, at
the earliest, while rail traffic declined with the shut-downs and, sometimes, repurposing
of automanufacturers, obviating the need for rail cars to transport new vehicles, or the
PPEPersonal Protective EquipmentGM and others were manufacturing, instead.
Which brings us to the Events Calendar. Once again, I-bank conferences are few and far
between, the ones that are scheduled, originally intended to take place
overseasmostly in the far east. Of course, with every event converted to a
teleconference, or webinar, it doesnt matter to whom it was originally targeted,
event when the delivery language is Japanese, Chinese, or Korean. Simultaneous translation
is more easily employed online, so again, a video conference, instead of a live, in-person
event, opens the door to more participants. But without I-bank events, which will largely
be absent for most of the summer, the Event Calendar is nearly as trim as the Earnings
Calendar. The most highly anticipated post-July 4th event of the summer, the
Allen & company soiree in Vail was canceled, this year, while the AGA 2021 Financial
Planning Forum could be a more sober than usual affair. Its not just that it will be
a video conference but no one really knows when in-person events will be able to resume.
So many March & April events were, naively, first pushed out to June, then rescheduled
for August or October. Now, next Marchs Geneva Motor Show has already been canceled,
and organizers are beginning to comprehend the full extent of the disruption this virus is
causingand may continue to cause.
After 9/11, we all said, and knew, life would never be the same, again. The recognition
has been slow to dawn, during this pandemic. And still, Im not sure most fully
understand how much life has changedand little our future will resemble our
pasteven if theres both a vaccine & treatment regimen thats more
successful than the 2 now in use. Coronaviruses mutate, as were told the strain in
the US already has. That means that there wont be "A" vaccine but,
probably, several. And while the US FDA is requiring a vaccine to be effective for a full
6 months before approval, a virus thats mutating makes that a tall order to fill.
Unless you believe in fairy dust and sugar plums, the "V" shaped recovery the
stock market has built in simply wont occur. But in the meantime, please stop
talking about the jobs "added," when thats not what they are, at all.
Theyre furloughed jobs restored, unless another governor or 2 decides to return to
shelter-in-place, again. No jobs have been added, at all. Rather, workers paid to stay
home are being asked to return to their original places of businessrestoring the
duties they used to perform to earn the pay the PPP made sure they were still receiving.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 29July 03, 2020 SHORT WEEK
COULD FIND BUYERS AFTER UGLY WEEK The short of it is,
the week around July 4th is often ugly, redeemed by some late long positioning
before the holiday. Independence Day is a holiday celebrated on the 4th, no
matter where it falls in the week, though a close the Friday before, or the Monday
afterwards, when it falls on one of the weekend days, is common.
Central Bankers are chatty this week, on both sides of the Atlantic, the switch to
teleconferences fully formed. There are still many events Postponed (read canceled in most
cases) and canceled but almost all of the I-bank events are going ahead, until they nearly
stop until mid-August. The beauty of video conferences is someone like the NY Fed
CEO/Pres. John Williams can speak at conferences on both sides of the Atlantic, as he will
this week. To top it off, FOMC Chief Powell testifies this week at the US House Financial
Services Committee, along with Treasury Secretary Mnuchin. I think Powell as spent more
time speaking to Congress in recent weeks than my representative or Senator has. Also
worth noting, the sole dissenter to last weeks Bank test results, Lael Brainard, who
felt the banks dividends should have been halted, altogether, speaks Tuesday on
"A Decade of Dodd-Frank." That should be interesting because hours before
release of the Stress Tests, the Fed, FDIC & OCC loosened the rules around the Volcker
Rule, a part of the Dodd-Frank legislation, freeing up so $44B in bank funds tied up as
collateral. One of the strangest concoctions. I ran across, this week, was BoEs
Breeden having a conversation with Prue Leith, on 07/01. Breeden supervises
deposit-takers; Leith is a judge on the "Great British Bake Off," a TV program
not just carried in the US but copied by the Food Network.
The bigger event of the week is the Institute for International Finance, IIF Central
Banking in the Age of CVID-19. NY Feds Williams is offering a webinar on "US
Recession & Public Policy Response," which strikes me as humorous because the
CARES Act is the topic of Powell & Mnuchins testimony. For those who are already
studying the potential HEROES Act and forgot, already, what CARES stands for, its
Coronavirus Aid, Relief, & Economic Security Act. Funny how quickly a couple of
Trillion disappears. If only the virus disappeared as quickly!
The National Association of Realtors will be offering May Pending Home Sales on Monday,
S&P/Case-Shiller the April 20-city Home Price Index Tuesday. Wednesday, the MBA will
offer Mortgage Purchase & Refinance Data, just as Mortgage Rates hit an all time low.
Also Monday, to usher in the new month, the divisive SEC Regulation BIBest Interest,
another in a long line of regulations that all add up to "know your customer."
Problem is, can organizations like Robinhood possibly know their customers, when every
desk jockey under 35, stuck working at home, has opened an account to trade there, without
fees, because theres been no sports to bet on.
Thursday should be circled on your calendar because the Bureau of Labor Statistics is
going to release both the weekly Jobless Apps and the June monthly Unemployment Report.
Bond Markets close at 2pm Thursday, because Friday off isnt enough. Equity markets
trade usual hours Thursday, though there may not be much volume even before the bond
market closes.
The Earnings Calendar is slight, with Micron Technology Monday, Congra & FedEx on
Tuesday, Capri Holdings (formerly Michael Kors), Constellation Brands, General Mills, and
Macy*s Wednesday, before Korn Ferry on Thursday. Macy*s has already released most of its
quarterly data on 2 earlier occasions, so cant surprise without contradicting
something its filed earlier. Conagra & General Mills serve food that people
consumer at homenice spot to be in, lately. Constellation Brands could be selling
lots of beer and wine to people working from home but can probably not offset the bars
& restaurants that were closed during the quarter, no matter how much alcohol
shelter-in-place buyers bought. Capri Holdings could be quite ugly and no one should be
surprised.
As for the Events on the schedule, the I-banks holding events this week largely scheduled
them overseas, originally. Many of the corporate & I-bank events originally scheduled
to run into the July 4th holiday, were scheduled that way to allow members and
spouses to plan a long weekend away, at the host city. With events converting to virtual
events, the entire purpose for the scheduling mid- to late this week is obviated. The
event Ill miss most is Wimbledon, which Im sure NBC (CMCSA) will miss even
more. However, if youre going to circle a 2nd event on your calendar, it
probably should be Mondays first trades in the reconstituted Russell Indexes. I
doubt thatll be much of a big deal, given FTSE Russell had been announcing probable
changes for over a month, and gave the changes away long before last weeks changes
after Fridays bell. Still, if you see volume pick up in Russell 1000 & 2000
indexes, that shouldnt surprise.
In general, though, given Thursdays short day for Bonds, and the Friday celebration
of the Nations birth, there shouldnt be a surfeit of volume most of the week,
barring a flurry Thursday morning, when the BLS releases its two powerhouse jobs
reports. Once again, I doubt the bulls will be patient and wait for stocks to pull back
sufficiently, even with the virus numbers spiking around the country. On the other hand, I
expect some to be drawn to the financials that were killed Friday, after the Fed et al
froze dividends for the 3rd quarter at least. My only question is, with Wells
Fargo just about done paying lawyers, fines and restitution, will the regulators
acknowledge its last 4 quarters of earnings only missed because of those non-operating
costs, and let its dividend slide? Or will the regulators deal Wells Fargo the latest
blow, and force it to lower its dividend. And then, were that to happen, would the Street
celebratea lower dividend subject to so much speculation for so long, sometimes it
frees the subject of the yoke that had been weighing on the stock. If it lowers its
dividend and gets it over with, does Wells become more attractive to buyers interested
into financials on the cheap?
Have a nice holiday, one and all!
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 2227, 2020 STRESS TESTS + CCAR OUT, WITH DIVIDENDS ON THE LINE While the MegaBank Stress Tests & CCAR
(Comprehensive Capital Analysis) tests are not scheduled for release until the 25th,
we all have seen the banks start leaking portions that serve their stocks well, prior to
release. In past years, banks have gone so far as to announce higher dividends &
larger buybacks in the days prior to the official release. That happens because the
Federal Reserve & FDIC discuss the results with the banks, in advancesometimes
offer banks a chance to revise their capital requests (read dividends, since buybacks were
halted in late March, given the rise in delinquencies expected to result from the economy
being shut down and higher unemployment.), before release. With buybacks the largest
portion of shareholder returns, in recent years, dividends are largely seen as safe, at
all but Wells Fargo, if you listen to the analysts. That may be optimistic, however, given
the pandemic has hit the economy even harder than the worst scenario originally devised by
the regulators. They then went ahead and provided new scenarios that include devastation
from coronavirus.
With earnings so seriously damaged, particularly in Q2, from higher loan and cr3edit card
delinquencies, its possible therell be additional requests to trim dividends,
since most of the tested banks are now handing out more than their profits provide.
JPMorgans CEO, Jamie Dimon, has discussed that very issue, and will fight
strenuously to maintain its dividend but the regulators make the rules. At least one
analyst has a reasonable recommendation to all companies: Lower your fixed dividend, and
tie a flexible portion to results. Thats a strategy just a few European companies
use but it would make sense for companiesespecially in the commodities
industriesgiven wild swings in commodity prices from quarter to quarter, year to
year. Tying their dividends to realized prices, which determines profitability, seems to
make sense for gold and copper miners, as well as oil companies.
I realize there are a couple of housing data points on the Economic Calendar, and a few
foreign Central Bankers speaking but fheggedaboudit! Its the Megabank Stress Tests
& CCARs that will decide the weeks fateeven though tech has led the
market, and the banks were all but left for dead. Id also note a boatload of
Treasury Issuance, this week, even if the Federal Reserve is the biggest buyer, and last
week reported a $74B drop in holdings, which has some panicking about the message being
sent. For me, the message is a Fed that might not mind a short-term pullback in stocks, to
convince Republicans in Congress that no one has blown the all-clear horn.
Other than the Stress Test & CCAR (Comprehensive Capital Analysis) results, the
dominating event of the week will be WWDC20, Apples Worldwide Developers
Virtual Conference. Much as AAPL might have loved to show off the Steve Jobs theater and
new campus, Thats not happeningAAPL even decided to close 11 stores it had
recently reopened, due to spiking COVID-19 in the states that those stores are located
within. The new title for this years event, Full Stream Ahead, probably serves it
very well, since it sees its future selling content, including apps that keep product
owners tied closely to their devices. I dont own a single Apple product, but when
one of the 3 largest companies by market-cap holds a meeting, its not to be ignored.
And if were going to talk about timing, how about the Fed & FDIC releasing the
Stress Tests & CCAR results just as the Russell Indexes are being rebalanced, on this
coming Fridays close. Speaking of Friday, May Personal Income & Spending will be
released, along with PCE, which the Fed has long considered its preferred measure of
inflation.
The Earnings Calendar is trim, with KB Home on Wednesday, Accenture, Darden, FactSet,
McCormick (spices), Nike & Synnex reporting Thursday. Synnex isnt well known
outside the business community but it used to own CompUSA, and other defunct consumer
technology brands, switching to all business in recent years. It has blown out Street
estimates pretty regularly but offices being closed weigh against this quarters
report. McCormick, the spice packager, can be presumed to have suffered from the dramatic
decrease in restaurant business. As restaurants go, so does its earnings, as a rule but
sent to find dried garlic for my mom, I can tell you the spice racks at Target &
Publix look decimatedlike they havent been restocked in weeks, if not months.
Thats lost opportunity. Nike, which has really concentrated on building its
direct-to-consumer business, in the last 2 years, may not have lost as much business as
one might assume, at first blush. Yes, its wholesale business to customers like
FootLocker & FootAction still count for a lot, its margins on DTC are much bigger and
more profitable, so its revenues may be down but not as deeply as some suggest.
Once again, the majority of Events that have remained on the calendar are Investment Bank
events. Many of the I-bank events were originally scheduled for overseas but once the
presentations are streamed, it doesnt matter where theyre coming from. For all
the I-bank events on the calendar, nothing is as intriguing as Bloombergs Virtual
Invest Global. BBG has assembled a stellar coterie of presenters that promises Bill
Ackman, US Treas Secy Steve Mnuchin, Carlyle co-founder David Rubenstein, Blackstone
CEO Steve Schwarzman, Joseph Stiglitz (Columbia U), OECD Secy General, Man Group CEO
Luke Ellis, Bridgewater Associates Co-CIO Bob Prince, PIMCOs Mohammed El-Erian, NYU
Stern Schools Nouriel Roubini, and other equal neon-lights headliners. It is clearly
the event of the week, outside Apples WWDC. Im sure Amazon would object, since
its launching a 10-day Summer Sale that isnt Prime Day or connected to Prime
Day in any way. Scanning the I-bank events, I simply dont see anything as novel or
stellar as the events named.
Im willing to be proven wrong but the spiking coronavirus cases, across the U.S.,
weighed on shares at the end of last week, and could continue to. The big rally off the
March lows presumed a world that got back to business as usual when lockdowns were ended
but, clearly, thats not happening in the near term. And even the countrys
greatest hope for a vaccine, Moderna, doesnt see one becoming available until next
yearnever mind a President who doesnt know squat about how medicine and
vaccines are developed and tested, before being released into the general population.
Ive heard vaccine makers say there arent enough syringes or vials that can be
assembled, even if a miracle happens and a vaccine wins approval this year. And then, of
course, there are the people who simply wont allow themselves to be vaccinated
before the vaccine has been in widespread use for 3 years, or more. I have a 3-year
minimum rule on medications, never mind something as serious as a vaccinesomething
Ive been told to never have againthe lump on my arm from my last vaccine, 9
years ago, a visible warning that my body is starting to reject such treatments. And what
can a bad vaccine do to someone? Given them Guillan-Barre, as happened to my mom, from a
flu shot, resulting in her spending 4 months in ICU. The older the person, the less likely
they are to go back to their old way of life, or accept a vaccine. Guess who spent the
most, pre-coronavirus? . Get the picture?
Happy Fathers Day to all Dads!
ECONOMIC: (Highlights, only below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 1519, 2020 POWELL
SEMIANNUAL TESTIMONY We live in
interesting times. Tuesday & Wednesday, FOMC Chair Jerome Powell delivers his
Semi-annual Testimony to Congress--an opportunity sound more optimistic than he did at the
post-FOMC meeting press conference. He really doesnt want equities declining 1,862
points, as the DJIA did, last Thursday. All his efforts are directed at lifting the
economyor at least, not allowing the economy to take a deeper dive. But he also made
clear he thought Congress shouldnt take the May Unemployment Report gain of 2.5m
jobs as reason to say weve done enough." Especially when Florida, for
instance, would have subtracted 2m jobs, alone, if it had properly processed the 2.2m
applications for unemployment insurance that hit its mottled, past-their prime servers.
While Florida is notoriously incompetent in so much tech-related processing, it was hit
with more applications for Unemployment in 6 weeks, starting March 18th, than
had applied in the past 2 years, cumulatively. Twenty-five hundred applications a month
would have been a lot.
To be quite honest, the big rally to new highs in the Nasdaq kicked off after traders
decided Powell sounded more optimistic, on the TV show "60 Minutes," then he did
at the American Enterprise Institute of International Economics appearance, shortly
before. I never thought he sounded any different, and puzzled over what traders
extrapolated that escaped me. Given the post-FOMC meeting sell-off, I think its fair
to say the Street got the message I did, all alongthere are over 20m unemployed, and
despite the initial rush to shop when apparel & shoe stores reopened, crawling back
from the 23 month shutdown is a marathon, not a sprint, and will take much longer
than equity levels had factored in prior to the sell-off. And even then, Ill rush to
say, this sell off wont discourage stock buyers from showing up at a level they
decide represents value. What level is that? Any level from which they believe stocks will
rise. In the S&P, that could be as nearby as 30003008. In the Nasdaq Composite
9350 isnt out of the question, though traders havent shown the kind of
patience that it would require for the COMP to get down there. BTW, if youd like to
read the K.C. FRB announcement about Jackson Hole not being in Jackson Hole, this year,
its here. Can we say this years
conference will be a state of mind?
While there are a couple of notable events beyond Powells testimony in Congress,
including Powells & Cleveland Fed Pres. Mester in conversation, Friday, the same day
Vice Chairman Quarles will speak on Stress Testing, and Boston Feds Rosengren, on
the US Economy & Current Financial Conditions, I think therell be a degree of
skepticism about May US Retail Sales, Tuesday, when theres also release of May
Industrial Production & Capacity Utilization. Theres a Bank of Japan MPC
Interest Rate & QE meeting overnight, into US Tues. morning, a Swiss National Bank MPC
Interest Rate meeting overnight Wednesday, and then later into Thursday early morning, the
Bk of England will wrap a meeting, and announce its Interest Rate & QE Decision,
theirs including the Meeting Minutes at the time their decision is released, followed by
BoEs Gov Bailey hosting a post-meeting press conference, that will bleed into the
pre-market Thursday morning. For what its worth, the Taiwan Monetary Policy
Committee meets, as does Polands MPC. A busy week by any stretch of the imagination.
Two giant events that are usually scheduled for this week were planned, then canceled.
They are the High Point Intl Home Furniture Market, in North Carolina, &
NIAIAS--the North American International Auto Show, that was to take place in Detroit.
Also canceled ACE Water Works, Intl Pulp Week, and Cannes LIONS Creativity Festival,
all postponed until 2021.
Among the thorns in our side are events, like Global Licensing Week, starting the 15th,
originally canceled, then suddenly, after we corrected the original post and noted it that
way, was rescheduled as a Virtual event. There are so many like that, weve found
ourselves posting an event, then checking it a few weeks later, then again, days prior to
the event, because, when it comes to events, you can never say never, evidently. Then,
there are other events canceled but we dont find out unless we try to register for
the event. Once we demonstrate that type of seriousness, the message about cancellation
finally pops up. It has never been harder to keep up with all the flip-flops in the
schedule. The only near-sure thing are Investment Banks converting their conferences into
virtual onesPiperSandler an exception that breaks whats become a near rule.
But Id also like to point out the Diabetes Assn 88th Annual
Scienbtific Sessions, virtual though they may be, in 2020. EHA, the European Hematology
Congress is equally notable. Both were ongoing over the weekend. Credit Suisses 22nd
Annual Communications Vritual Conference is one of the few that firm retained.
JPMorgans virtual Energy Conference was originally planned for London, while its
virtual European Insurance Conference was originally in Paris France. The NASDAQ 42nd
virtual Investor Conference is all NASDAQ listed companies, this time suported by
Jefferies. The usual suspects include Cisco, Broadbom, and other member sof the NDX 100.
The Asian Banker Future of Finance planned for Kuala Lumpur Malaysia was the one event we
could neither re-confirm nor cancel. It doesnt say it will be held virtually, yet
its hard to believe it will proceed as planned in the city cited. Theres a
Citi European Healthcare Virtual Conference starting Tuesday, then a JPMorgan version
starting Thursday. The one event everyone would have loved to see proceedASM, or
American Society of Microbiology Microbe Annual was canceled. Lets hope its members
are hard at work trying to crack the coronavirus known as COVID-19
Next Saturday, the Belmont Stakes will be run. It usually tops off horse racings
Triple Crown. Instead, it will kick-off the three races that constitute the Triple Crown,
with a long lag between Belmont & the other 2 races. In deference to how early in the
season it is, and how untested the horses are, instead of being the longest of the 3
races, at 1.5 miles, Belmonts track will be shortened to 1 1/8 miles. The Kentucky
Derby, usually the lead-off event, and the Preakness, usually in the middle, both in May,
as a rule, are being held September 5th & October 3rd, respectively. There will be
material for books for generations to come, about the havoc wrought by this pandemic, and
it wont be exclusionaryevery facet of life will be able to get in on the
actincluding an Israeli basketball team fined $8,600, because a playera single
fathertook his son to the mall adjacent to the teams hotel. Already were
hearing top players objecting to the rules set out for the US Open Tennis Championship in
NY, in September. Many may not show up because theyll only be allowed to bring one
person to stay with them at the residences set aside for players, and theyll be
banned from leaving the bubble that will be set up around them. The NBA is going to live
in a bubble at a Disney Resort, if plans are adhered, so team owners & the league can
salvage some portion of the season and revenue. Ya really think none of the players are
going to sneak out at night? I certainly dont. There are casinos all over the state,
and if theres one thing we learned from "The Last Dance," players like to
play cards and gamble for pretty large stakes.
Which brings us to the slim Earnings Calendar. Tuesday brings Groupon, Lennar, and H&R
Block. HRB usually reports its best quarter of the year, this report but not this year,
with the IRS deferring the date when taxes are due from April 15th to July 15th.
Furthermore, though email attachments & the old reliable fax machine works well for
transmitting support documents to an accountant, most dont have that kind of
relationship with workers at H&R Block. In fact, most of HRBs workers are
usually dismissed by April 30th, if not sooner, though this year may have spent
the prime tax weeks of yore locked down like everyone else. With many states just
reopening in June, I suspect more have, or will, be filing form 4688, the Automatic
Extension to File a tax return.
Oracle, like most software companies, uses the last 2 weeks of the quarter as crunch
timewhen deals close to make the quarter. Many businesses wait for the last two
weeks, expecting to get better deals in that period, so their salesperson can make their
quota. The Quarter being reported? Doubtful. On the other hand, I could make a case for
Cloud hosting, to assure remote workers are all working in a protected environment that
the business can control. So a miss doesnt, necessarily, bode poorly on the current
quarter. ORCLs handicap was waiting to get into hosting, so it was forced to play
catch-up to Amazon, Microsoft & IBMthe latter now run by the former head of
RedHat, which wrote the book on open software, after ORCLs Java was coded. Lennar is
a homebuilder that is the sweet spot, building homes that cost under $500K, so-called
affordable homes, as it advertises them, with everything included. With Mortgage Rates
under 3.0% last week, a $400K home becomes quite affordable, presuming the buyer has a job
that can be substantiated.
"SWBI," Thursday, is Smith & Wesson Brands Inc, recently changed from
American Outdoor Brands Corp, whose ticker was AOBC. Sometime later this summer, its
spinning off its outdoor products & accessories, in a tax-free distribution to
shareholders, leaving Smith & Wesson Brands Inc, as a separate company. Kroger, also
reports Thursday, and is the surest thing on the Earnings Calendar, though costs to
sanitize stores and higher payments to even hourly workers starts to add up. .How much?
Well both Walmart and Target discussed how much sanitizing, upped hourly pay and other
COVID-19 related costs ate into profits. And Wednesday night, I went to a drugstore after
the local supermarket, a Publix, was closed. ALL of the Publixs shopping carts were
in the parking lot, along with all its dollies and other shelves and equipment on
wheelsincluding free standing displays, and it was all being steamed with a bleach
tinged stream, that I could smell walking 100 feet away from a parking spot to the
drugstore. The sprayer was a truck mounted with a large plastic barrel, much like the ones
used to power wash streets or water fresh plantings on divided highways. It was only then
that I realized the extent to which these businesses are taking their sanitizing. Until
then, Id only seen workers with bottles and rags spraying the pulls on the freezer
doors, and the handles of shopping cartsoften with a rag used repeatedly. And I must
say, smaller stores are raising prices to catch up to what theyre paying out, even
faster than the chains. The local gourmet food purveyor where I buy most of my
food raised its cole slaw price to $5.49 p/lb. I asked if there were now gold flecks in
it. Thats too outrageous for me to pay, when it was $3.29 p/lb just 2 weeks ago.
Heck, Im getting to the age when I talk wistfully about the way prices were back
whenthough gasoline prices have rarely been so cheapand Ive rarely
driven so little, as I have the last 3 months, so its not like Im really
benefiting much.
Also reporting Thursday, Designer Brands, owner of DSW Shoe Warehouse, deciding it needed
a more upscale and diverse name to reflect its purchase of Camuto. Unfortunately, the
result is how few recognize its ticker, now. And make no mistake, the vast majority of
women prefer to try on shoes before buying, even if they know their size and the brand.
Friday, CarMax & Jabil Circuits report. One cant help feeling both of their
times have come. No doubt, JBL will be busy making 5G phones in the months ahead, while
CarMax should have its pick of gently used vehicles, as leased vehicles are
returnedmany early because of lost jobs, and more because Hertz will be trimming its
inventory. About 5 weeks ago I told a friend about seeing 2019 Cadillacs advertised for
$19,999, with only 7K miles on the odometer. Turns out, those deals were thanks to Hertz
raising cash.
So, will the bulls regain control, this week? Its possible, because theres a
new generation of trading jockeys getting wet behind the ears, and young enough to believe
they can earn back whatever they lose. Professional portfolio managers, on the other hand,
are likely to wait and see which way the momentum goes. Their computers will speed read
Powells Tuesday testimony before hes thanked the committee for inviting him to
appear, and will already be trading his speech before anyone has asked a question. Where
you stand could well depend on where you sit. The Democrats want another aid bill to be
passed, the Republicans would rather notor not at least until they can write the
bill and set its price. By Wednesday, when Powell doesnt take a seat until noon, the
:Pros will be over him. You have to be very brave to jump into stocks in front of
whats likely to be the most awful earnings season in the history of the US but,
then, the brave have been right since the bottom in March. Nevermind May to October are
notoriously the worst months for stocks. Down last week, some will see the decline as the
opportunity theyve been waiting for, at least until Friday morning.
ECONOMIC: (Highlights, only, below.
Full
International Economic Calendar here)
© Sandi Lynne 2020 Nothing Contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 0812, 2020 WHAT FOMC MEETING?
The 179th OPEC Meeting, scheduled for the 9th,
and 11th OPEC+ meeting scheduled for the 10th, per the OPEC.org
website, were instead held, and finished by Saturday afternoon, the 6th, with
all members, and additional observers (Ecuador, Indonesia, Tinidad & Tobago),.to abide
by the April 12th agreed reductions, and extended them another month through
July, those having trouble meeting those reductions, agreed to continue reductions through
the summer into September. The OPEC & OPEC+ press release is on the OPEC site, here. So, s the world starts to wake up from an 610 week slumber,
OPEC & Partners are going to keep a knee on the worlds supply, even as the US
Rig Count tumbles to near oblivion.
Weve done our best to keep up with events postponed, rescheduled, canceled, or
changed to a virtual/digital events but, honestly, some events canceled in March, suddenly
reappeared as Virtual events in June, while others canceled, were suddenly moved to
October. We have done our best to keep up but on some of the minor events we changed once
or twice, already, werent worth our effort to check a 3rd or 4th
time. On the other hand, some like CIRI, the Canadian Investor Relations Conference, on
the 8th, was changed to a Virtual "Conference," only in the loosest
sense of the word: it starts at 7pm and ends at 8:30pm. Not really our definition of a
conference but, alas, these are extraordinary times, and the speaker might, just, be the
one person Canadian investors wish to hear from. I dont judge, if I can avoid
it4 date changes for a minor event, excepted. On the other hand, the rescheduling of
events, especially those moved from March to June or July, clearly demonstrate how
optimistic organizers were, when the pandemic hadnt, yet, been termed that. Even
events moved from early April into July, are now, first, being canceled as the reality of
the danger starts to sink in. You wouldnt know it from watching global
demonstrations, with people shouting and singing without masks but, honestly, the threat
is very real, even if no one knows, for sure, how many are asymptomatic carriers, and how
many already carry the antibodies indicating theyd already been infected.
Most of the events planning on going ahead as originally scheduled are Investment bank
events, or I-bank events, as I prefer to shorten it. Realistically, I-bank presentations
have long been streamed to those who want to take part without attending. The only
difference now, is the I-banks dont need to spring for cocktail parties and drinks,
or rent expensive ballrooms to admit the crowds. If anything, its almost easier,
now, for I-banks to control the listeners, since no one is sitting in a ballroom streaming
the presentations surreptitiously to portfolio managers back at the office. And honestly,
many of the presentations will be video streams, which means body language can, often be
discerneda major reason to attend in person. The weeks major I-bank events
include: Goldman Sachs 41st Global Healthcare Conference, starting
Tuesday, Morgan Stanleys US Financials Conference, starting the same day, and
likewise, William Blairs 40th Annual Growth Stock Conference. the latter
the biggest surprise of all, given some of its headliners that include Salesforce.com,
Teledoc, Ulta Beauty & Cosmetics and Voya Financial, a mix you wont see at many
other conferences. But really, you must go through the daily list, noting each I-bank
conference, for yourself, or youll miss a lot of what I cant do justice in
this space. The one event youd have thought would have been no problem switching to
virtual is E3, the Entertainment Software event where new games are introduced, and many
thought the new game consoles, coming for the holidays, from Sony & Microsoft, would
have been unveiled. Instead, Sony has promised an event in the coming weeks, on its own,
while Microsoft probably will do the same, before Back to School shopping gets underway.
For the record, 11 states will hold their BTS Sales Tax Holidays on 7th through
9th, if not longer. No one ever expected the new consoles to go on sale before
Septembernot before late October, at the earliest-- but introductions by then make
sense. Truth is, Sony had pulled out of E3 before coronavirus, and Microsoft followed
suit, its rumored, because a demo version of its new console wasnt as far
along as hoped. No matter, E3 is caput for now. For the record, were not positive
the Credit Suisse Asia Healthcare Conference will proceed, at all but will virtually, if
it does on the 10th11th. It is the ONLY overseas-planned event
C-S kept on its Conference Calendar after March.
And, of course, there will be some disappointments within the virtual meeting space.
NAMRC, the International Manufacturers Summit is a Virtual event held over several days,
as part of ASMEAmerican Society of Mechanical Engineers but, if youre a
manufacturing equipment maker, who expected to demonstrate a new, break-through machine
you wanted customers to see in action, will you be satisfied with a video of the item?
Satisfied with missing fact-to-face with customers? I think not.
Which brings us to the Earnings Calendar, which promises Casy*s, a gas station/convenience
store which surely suffered, doubly, from so many businesses being locked down. Stitch
Fix, last week, announced more lay-offs, while Thors RVs are the real deal,
and looking mighty attractive to families who want to go on a US vacation while avoiding
hotels & restaurants. La Mesa RV, in northern Palm Beach County is advertising like no
tomorrow, some mobile homes from recently declared bankrupt providers reduced by $60K.
Tuesday, is AMC Theaters, which already slapped a going concern on itself.
Brown-Forman, the spirits company unencumbered by a beer business, Five Below, which may
not have done quite as well as the Dollar Stores but should have kept its head above
water; Genesco, owner of Journeys, and other teens brand retailers, Johnson &
Murphy, HD Supply, and Signet Jewelers, a heavily mall-based jeweler who might have
benefited from weddings scaled back.
Wednesday, Guess, Oxford Industries, Tiffany, along with United Natural Foods report. If
you dont know Oxford, off-hand, you do know its brands Tommy Bahama & Lilly
Pulitzer. Thursday promises Adobe, possibly the headliner of the week, Childrens
Place, the one retailer who might have survived the shutdown, since kids grow no matter
what, Lululemon, a hot brand for as long as it lastsremote working playing right
into its hand, and PVH, owner of Tommy Hilfiger, Calvin Klein, and older brands like Van
Heusen, other mass market brands whos suffering wont end when stores reopen,
since wholesale customers like JCPenney and Macy*s are still promising to trim more
stores. But lets be clear, other than ADBE & LULU, there isnt a name on
the Earnings Calendar that could bring down a significant portion of the market, and the
issues with retail, at least, by now, are well known. More interesting to me, while
preparing the Earnings Calendar was reading about companies like J Jill &
Francescas Holdings, whose businesses were tenuous before coronavirus hit, and may
not survive until the last mall fully reopens.
Which leaves the Economic Calendar, and oh yeah! An FOMC meeting Tuesday & Wednesday
at which we expect nothing much except Chairman Powells further promises to do what
it takes to help the economy back to full health, leaving rates at near zero for the
duration. CPI on Wednesday, and PPI on Thursday will be non-events, though the
latters weekly unemployment applications might be of some interest. Id like to
point out that, down here, in Florida, only 400K unemployment applications were processed
out of the 1.2m filed. Florida messing up is an old story but the extent to which the
"Employment Opportunity Agency" has screwed up unemployment Insurance benefits
is beyond the paleeven worse than the national election that was settled by a court
in Bushs favor.
And Ill end on that note because theres another election around the corner,
and almost no one is talking about it, though the market will sit up and take notice if it
thinks Trumps second term is seriously threatenedas many think it should be
after his unforgivable display of a lack of empathy and knowledge of the constitution. But
then, law and order got him elected and, he evidently has only one script while the
democrats, once again, failed to find a candidate worth elevating. Best they can hope for
is enough Republicans disgusted enough to position for anyone but Trump. And that may not
work out well for them, come election daystill a lifetime away, in political terms.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar, here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
June 0105, 2020 MAY UNEMPLOYMENT REPORT
ENDS the WEEK The advantage the US markets have is the
possibility the May Unemployment Report, out Friday, could be better than our worst fears.
Since the Household Survey, from which the Unemployment Rate is derived was taken the week
the first 8 states started reopening. That means some of the previously unemployed may
have already returned to workif the household answers honestly. Of
course, those afraid of losing their benefits prematurely may not answer honestly but
thats a different story. For now, that report could be the worst, as 50 out of 50
states were, at least, partially reopened by Juneeven hard-hit NY and California,
even if their major cities remained locked down. Canadas May Unemployment Report is
released Friday, also, though that will be after the RBA (Australia) MPC meeting, to open
the week, Bk of Canada Monetary Policy Committee meeting, Wednesday, and the European
Central Banks MPC meeting, Thursday. ECB Chief Lagardes post-meeting Press
Conference should be at around 7:30am et, just after the Challenger May Lay-off Report,
covered fully, as a rule, by Bloomberg, though not by CNBC.
Well actually get hints about Fridays Unemployment Report from the various
Purchasing Manager Indices & ISMs, the latter my preference, especially when
combined with the Challenger Report. The Treasurys Auction schedule, on the other
hand, is light, except for the weekly 3- & 6-month Auctions, and the 4-, & 8-week
ones, the amounts of the latter not released until Tuesday, as a rule. There is $105B on
offer in reopened debt but thats becoming the norm, as well, just as the 3-month
offerings of $60B+ and 6-month ones topping $50B are the norm, at least until they get
even larger, after Congress passes the next Pandemic bail-out bill, which Republican
Senator McConnell, finally, concedes will probably be needed. US April Consumer Credit,
out Friday, at 3pm et will arrive too late in the day to have much of an impact.
Furthermore, we already know from Retail Sales and other reports, including April Vehicle
Sales, that consumers werent spending much beyond what it cost for essentials, in
April On the other hand, one ugly May report thats likely to be better, at least,
than the April one is Wards May Vehicle Sales, out in the wee hours of Wednesday. In
May, dealers rolled out delayed payments, and 72 months interest-free, as well as
discounts off the sticker price. What dealers now face, however, are a flood of Hertz cars
being sold used, at tremendous discounts. I saw 2019 Cadillacs offered at $19,999.
Thats not a price GM or any Caddy dealer plans to match but a bankrupt vehicle
rental concern that has to raise cash has mostly cars to sell, if its looking to
trim its fleetas Hertz surely is.
In general, assume any event on the schedule that hasnt been canceled is proceeding
as a virtual eventonline. How naïve and optimistic were we all, when coronavirus
shelter-in-place orders were first issued? The MIPIM Property Congress in Cannes France,
starting the 2nd, was rescheduled from March 1013th, because
of coronavirus. Now, it will be holding daily virtual calls to deliver the program, over 4
days. Likewise, the SSCITubular Steel Products Congress, supposed to start June 2nd,
was moved from January to June, and canceled. We show, below, on the 31st, the
International Logistics & Supply Chain Forum in Naples FL, because the event
organizer, Richmond Events, has the event posted as if nothing else in the world was going
on. There have been no updates, yet we fail to conceive of the event proceeding as
planneddespite the static website that suggests it will. Residing on the other coast of Florida, we
have little reason to believe the event will take place in Naples.
Nevadas Governor gave Las Vegas casinos permission to reopen this Thursday, the 4th.
Caesars Entertainment, MGM Resorts & Wynn Resorts sent out press releases that
theyre reopening that day. Penn National & Boyd Gaming have been reopening their
casinos in other states since May 18th, so theyll also be reopening in
Nevada, where it applies. Las Vegas Sands, on the other hand, has been quieter about its
plans but likely to reopen, too. In Florida, seniors make up a big percentage of the slots
players and many of them have not left their homes since early March. But, of course,
theyre not the money makers the casinos crave. In fact, seniors expect more freebies
just for showing up, so no certainty, theyll be missed, initially. Young people, on
the other hand, crave parties after weeks locked up, as the bar & pool at Lake of the
Ozarks well illustrated. At any rate, the Governor DeSantis is only allowing Miami-Dade
& Broward Counties to enter Phase 1 since the day after Memorial Day. Its hard
to staff casinos when only 25% of capacity is allowed.
The Earnings Calendar is trim but not without major curiosities, most of them retailers.
The reports that could surprise to the upside include Zoom Video, Tuesday, Campbells
Soup on Wednesday, and Smuckers on Thursday. Navistar? Perhaps, since Caterpillar
did. Otherwise, only Canada Goose, Wednesday, could surprise to the upside since most of
its down jackets were sold & shipped prior to the coronavirus triggering
shelter-in-place orders. But the lock downs that started mid-March probably eliminated
reorders and end of quarter sales to retailers, the closure of retail stores for half of
March & May, and all of April, not only interrupted its fall wholesale selling season
but may well have left retailers with inventory to carry over into fall. Caleres,
Thursday, has a large shoe retail division, in addition to its wholesale divisions, that
probably suffered the same fate as Goose. GIII has trimmed a good portion of its retail
operations over the past 5 years but the entire spring selling season for leather jackets
was all but eliminated. Its wholesale customers probably have a lot of inventory to carry
over into fall. If any of them fail to offer guidance because they claim they cant
anticipate the impact of the pandemic, its hogwashdreamers holding onto hopes
for a miracle in the second half of the year. Despite the optimistic sightings of retail
analysts, the high level of unemployment will weigh against retailers for months to come.
Outside essentials, and items for babies and young kids whose growth cant be
stopped, retail, IMO, is poisonand thats a former retailer talking. Toro, on
the other hand, Thursday, may be a beneficiary of the good news delivered by Tractor
Supply recently. People stuck at home, and those now working remotely from home on a more
permanent basis, will have more time on their hands and be more inclined to mow their own
lawnequipment for which theyre likely to need to buy. Vail Resorts, on the
other hand, may not have been as lucky, though rentals should have been strong. Anyone
desiring to escape the pandemic in cities like New York & Los Angeles, may well have
rented a condo in Vail to work remotely. I have tons of friends and relatives who rented
vacation get aways in March, April & May, forced to surrender them for Memorial Day
weekend because the price quadrupled starting then.
Which brings us to the Events Calendar. Once again, theres a flood of I-bank events
being held virtually, a mad dash for Portfolio Managers ears, before the summer
escape starts. When those events were scheduled, no one could have anticipated the whole
country moving to virtual life, yet no one was more prepared for that than the very
I-banks who are saving a fortune on hotel conference rooms and meals/drinks for attendees.
Goldman Sachs Travel & Leisure replaces its Lodging, Gaming, Restaurants, and
Travel event, starting Monday. Bank of Americas Global Technology Conference is
another highly anticipated annual event, at which every tech company one can imagine is
scheduled. I suspect therell be big interest in MoffittNathansons Payments,
Processors & IT Services, despite the many private companies presenting beside the
public ones. Credit Suisses Chemicals & Agriculture, Packaging & Cement
Conference might attract much interest, though, perhaps not as much as UBS Global
Industrials & Transportation. For the latter, expect airlines to present, and for them
to react positively to every uptick in passengers, as surely there were for Memorial Day
weekend. Stocks have run far ahead of the recovery in the economy but the bulls will
celebrate every bit of data or conversation that confirms their bullish positionsno
matter how temporary or, even, flimsy.
One group doing exceptionally well during the lock downs have been the
exchangesespecially equity exchanges, wholl star at PiperSandlers Vrtual
Global Exchange & FinTech Conference, starting Wednesday. If youve been
pre-occupied elsewhere, during the pandemic, you might have missed Piper Jaffrays
merger with Sandler ONeill, to form PiperSandler. And if youve likewise been
watching tech and not the forlorn banks, Bank of Americas Brian Moynihans
comment about trading rising 10% in Q2 might have escaped your notice, as well. And he
wasnt the only banker talking up trading activity, at last weeks Deutsche Bank
Virtual Global Financial Services Investor Conference, which started last Tuesday and
wrapped on Wednesday. That event helped trigger a large rebound in money center banks with
trading divisions. Tech was a little quiet last week but could play some catch-up this
week, during Bank of Americas big conference.
JPMorgans 16th (virtual) Global China Summit, starting Tuesday, could be
eagerly "attended" as PMs seek information on US-listed Chinese
companies plans if a bill in Congress, now, is passed by both houses, as expected.
It would require Chinese companies listed in the US to, first, submit to financial audits
in the same manner as US companies, and to certify they arent owned by a government
entitylocal or national. The latter is trickier for some, since municipalities in
China often fund and own, say, chip factories, and until now, Chinese companies have been
able to get away with local audits that dont include the rigor of US audits. The
initial reaction to the bill was a sell-off in US-listed Chinese companiesthe bigger
the harder the selling. No doubt, PMs who didnt sell in the first reactionary
sell-off want to hear their holdings will comply with the bills requirements. I
think thats a bit foolhardy. With Trump raising the thermometer on Chinese
relations, particularly over Hong Kong "security" bill, and the origins of
coronavirus, (as a way to distract the US from the White Houses failures in the
beginning of the pandemic, to hear many tell it), theres unquestionably pressure on
US-listed Chinese companies to come back home. In fact, one argument for the new
"security" rules governing Hong Kong is to get a firmer grip on that financial
center, though the opposite will happen, in the eyes of foreign investors.
Its worth noting two events scheduled for this week that were canceled. One is
NIAIS, the North American International Auto Show, that was supposed to start this coming
Friday, the other ABACE, the Business Aviation Conference that Jefferies is, sort of,
pretending is proceeding, hosting its Business Aviation Summit, Tuesday, as if ABACE was a
go. On the flip side, there are two large industry events that are taking place virtually:
thats ASCO, for Clinical Oncology, that started right before this weekend and runs
thru Tuesday, as well as NAREITs REITweek, starting Tuesday, with a NAREIT Investor
Relations Symposium, which Raymond James co-hosts.
I wish American traders were as worried and outspoken about race relations, here, as they
are about what will become of Hong Kong. We desperately need a nationwide conversation
about police brutality against men of color but thats something I cant
possibly solve in this space. Just know that every white person Ive spoken to, or
have seen interviewed on the local news, agrees the other 3 Minneapolis cops should be
charged for saying nothing as they stood by, witnessing brutality and ultimately, a
murder. That wont bring George Floyd back but, perhaps, will make another cop,
somewhere, think twice before standing by silently, and instead stop a cop from
brutalizing someone in the future.
Last weeks break outs bode well for the bulls, a group I have not joined, and
probably wont. Sure, there may be malls enjoying the first visitors upon reopening,
and even some spending in celebration but, at 70% & 80% off, thats to be
expected. But with COVID-19 cases rising in states that reopened first, and more to
arrived within 2 weeks or Memorial Day weekend, when revelers ignored recommendations to
social distance, theres a rude awakening still to come. The only positive Ive
seen is the fact that everyone I see is warning a mask, which no one was, back in late
march or early April. Masks will help protect against the spread of the virus but too many
peopleincluding those protesting around the countryarent wearing masks,
which I fear, they will soon regret. Again, I say: Curb Your Enthusiasm, with thanks to
Larry David. If you have big profits, hedge those positions you disinclined to sell.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 2529, 2020 SHORT WEEK, END of MONTH
FOMC members are prominent, this week, albeit virtually, even as ECB monetary policy
members (MPC) are out in more force than theyve been since Marchvirtually, as
well. Of course, even with several GDPs set to be released, the highlight stateside
may well be the manned space launch of two American astronauts, for the first time in over
9 years, from Cape Kennedy, Wednesday, at 3:33pm et, if all goes well. What makes lift-off
especially notable is that it' Elon Musk's SpaceX doing the blast on its Falcon 9
rocket thats already made a few flights into space, including to the space station
and back, with remarkably on-target landings. Therefore, the stock to watch this week may
not be the Canadian banks reporting earnings, CostCo Warehouse Clubs, Dell Inc, NetApp,
Ralph Lauren, Toll Brothers, or any of the other companies slated to deliver their quarter
but the only public stock connected to Elon Muskno matter SpaceX operating as a
completely separate company.
Having said that, here are a few more items of note, starting with the rest of the
Economic Calendar, which features the S&P/Case-Shiller March Home Sales & April
New Home Sales, both due out Tuesday. Thursday, the National Association of Realtors
releases April Pending Home Sales, while Toll Bros reports Wednesday, I ran through
hundreds of charts, over the weekend, and was surprised to see how strong builders
relative strength looked, while most of the other stocks that have been rising failed to
exhibit anything better than a mostly flat RS on daily charts (video gamin stocks were the
other exception demonstrating relative strength.)
Tuesday, Minneapolis Feds Kashkari will appear with Lawrence Summers, and other
notables, moderated by Tom Brokaw, on "Living in a COVID-19 World,: a topic very
similar to the IIFInstitute of International Finance virtual meeting, "The EU,
COVID-19 & the Future of Financial Services.". The ECBs current chief
economist, Lane, is the headline speaker on Tuesday. To accommodate a global audience, the
IIF sessions will be streamed from 7am to 11:45am Washington DC time, then starting at
noon London time, and again at 1pm Brussels time. The agenda can be found here.. Other boldface names include former
ECB MPC members, and EU Commissioners.
On Wednesday, NY Fed chief John Williams will be meeting virtually with Long Island
leaders from government, business & non-profits. The NY Fed itself will host "Too
Important to Fail: Minority-Owned Businesses Navigating COVID-19 & Beyond," while
the Dallas Fed Chief Kaplans speech, after hours, Tuesday, to the Money Marketeers
of New York, is not detailed, at all. In fact, because its an external event, it was
found off-site, rather than on the Dallas Feds website, 2 weeks ago, though it might
be listed by now. Whatever his topic, the first reaction to Kaplans speech
cant be initiated until Wednesdays trade. As if Wednesday didnt have
enough to capture rapt attention, with a space launch, the Feds Beige Book will be
out at 2pm. The President & Vice President planning on attending whats supposed
to be a 3:33pm et launchif the weather cooperates, all the major networks planning
on covering it, some starting at 3pm. Thursday, of course, brings another weekly Jobless
Claims report, continuing claims possibly declining, however slightly, as all 50 states
began a period of early phase openingsno matter how limited. That should have
brought back some employees previously claiming unemployment. While were on
Thursday, not that the weekly Petroleum, Gasoline, Distillates & Refineries stats will
be out that day, after the Natural Gas storage report, due to Mondays holiday.
US April Personal Income & Spending, includes PCE, though the country was closed down
that monthexcept for essential services like drug stores, groceries, and postal
workers, so thats a report that could be a total disaster. Youd think everyone
knows that but youll be surprised at how harshly the street reacts, anyway, just as
it did to the several early weekly jobless claims numbers everyone knew would be a
disaster. Note, also, Friday, "A (video) Conversation with Jerome Powell,"
moderated by a former FOMC member, Alan Blinder, via Princeton Universitys Griswold
Center for Economic Policy Studies. Baker-Hughes weekly Rig Count could et even more
interesting, now that the total rig count is almost half what it was a year ago.
Thursdays Las Vegas Sands Sands Cares INSPIRE is, apparently, cancelled. Tickets
went on sale in February but the event is no longer shown on Sands site, just when
it would have meant so much to so many, to have another charity event raise money.
Originally planned to kick off Sheryl Crows tour, it appears it was canceled before
anyone realized how widespread home video would be used once people were ordered to
shelter-in-place and social distance.
There are more Earnings Reports of note, this week, beyond those already mentioned. That
includes Hewlett-Packard, the PC & Printer company, Salesforce.com, Tech Data, and
VMware. In the retail realm, theres, also, Burllington Stores, Dollar General,
Dollar Tree, Nordstrom, Steve Madden, Ulta Beauty, Williams-Sonoma, Big Lots, and a pot
company, Canopy Growth. Also notable, Sanderson Farms, one of the "meat"
companies that have struggled to keep their processing facilities running, as workers
catch the virus.
As for Events, there are more Investment Bank virtual events, those the majority of
conferences going ahead as originally planned. Almost everything else has been canceled,
postponed, or rescheduled for either later this year, or next year. And that includes
events like the Indy 500 and French Open Tennis Championship. Of the I-bank events
scheduled, we award Stifel for creativity, renaming an annual dental & veterinary
event "Jaws & Paws." How 2 I-banks settled on 2 separate Best of Europe
1-on-1s not just starting the same week but the same day (Wed.) will remain a bit of
a mystery. Bernsteins Strategic Decisions Virtual Conference is a 3-day,
multi-sector event, like the Best ofs. But before those 3 events starting Wednesday,
Tuesday promises Deutsche Banks (virtual, as you must presume for all subsequent
I-bank events) Global Financial Services Investor Conference is an opportunity for all the
participants to disclaim business as bad as their stocks suggest, if thats the case.
Cowens Tech, Media & Telecom is the 48th Annual Conference, so an
usually eagerly awaited event, two-thirds of the way through Q2. Then, again, theres
value in Jefferies IT Services Summit, even as CRM & TECD report, this week.
Likewise, KeyBancs Industrials & Basic Materials Conference is a group
thats been promised an Infrastructure bill worth nearly a trillion dollars for
years, and has yet to be passed. With unemployment at 15.0% or worse, and a 2nd
wave possible (probable, if the numbers in Arkansas are any guide, and that was one of the
first 8 states to reopen), now would be a really good time for Congress to work on that
bill. RBCs Global Consumer & Retail Conference arrives just as some of the worst
hit retailersapparel retailers--are about to report. SocGens Nice Conference
is almost as eagerly anticipated as Cowens TMT. That starts Wednesday, too, along
with Cowens 2020 Digital Dining: Restaurant & Food Technology. Local news
programs here, in Florida, showed the crowds at beachesincluding those from
California, New York, New Jersey, and northern Florida but the Southern part of the state,
where we are, has been locked in a series of downpours, interspersed with light rain, that
eliminated any interest in beaches from the Keys north into Martin County.
I cant believe MFWMiami Fashion Weekcan possibly go ahead as planned,
given Miami-Dade County was given permission only 5/20, to partially open in Phase I
starting Tuesday, the 27th but there was nothing on the site to indicate it was
canceled or postponed. Maybe the swim designers are streaming their runway shows
individually. Weve seen everything, this month, so who knows? It just would have
been nice if the site specified the plans, instead of leaving up something posted in
February.
Normally, this week sees very light volume, as people who headed out of town stayed for
the shortened week. Of course, we have no idea what the week will look like, as NYC
because the epicenter of coronavirus in the US, many who owned or rented summer homes left
as early as March, and havent been back since. And thats the beauty of virtual
conferences, people can tune in from anywhere, and often do so for at least a week after
the video was first posted. Surprised at how optimistic the markets have been, Ive
been equally surprised to see the crowds on boardwalks and beaches, along with the lines
waiting to enter water parks. Still, I can see myself going to a restaurant and eating
outdoors (when its not raining) but cant imagine sitting down in a restaurant
to eat indoorsnot after seeing the breadth spray wafting on air conditioning, in a
restaurant in China, where dozens fell ill after eating at a table near where someone
carried but wasnt yet suffering from the virus. I recommend noticing the flattish
relative strength index, even in most of the strongest stocks, and reminding that May
though September are usually good months to be out of the market. And what I cant
see recovering for the foreseeable future are apparel retailersexcept those catering
to growing kids. Anyone who wanted more comfortable clothes to lounge around in while
working from home has already bought them. With prices reduced by as much as 80% online,
for weeks, shopping for clothes was easily accomplished and probably stole sales from
stores reopening, now, and in the coming 2 weeks. Apparel retail is one area I avoid
at all costs.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 1822, 2020 POWELL
REITERATED HIS MESSAGE FROM PIIE on '60 MINUTES'
How to piss off the President in 2 easy lessonseven if
youre not former Pres. Barrack Obama? Be Fed Chairman Powell and reiterate your
message from last Wednesdays Peterson Institute for International Economics,
emphasizing the long, hard slog the country has in front of it, getting back to where it
was just 2 months agoand repeat, effective, support for the additional $3 Trillion
HEROES Act the US House passed late Fridaywhich the Republicans are dead set
againstclaiming its a liberal wish list. Hell be testifying Tuesday at
the Senate Banking Committee, this week, likely encouraging the Senators against the
Heroes Act to work on forming a bill they can live withjust shovel more money out to
the citizens who, eventually, will be responsible for repaying all the borrowing the US
will have to do to fund recent and the latest proposed spending.
Like last week, this week was supposed to be a banner week for Investment Bank
Conferences, topped by 2 mass analyst meetingsthe AGA Financial Forum, and EPG
Annual Spring Financial Forum. The American Gas Association will be held Virtually, with
several concurrent I-bank 1x1 virtual meetings to run concurrently. EPG, the Electrical
Products Group decided to skip it this yearcanceling the many associated I-bank
Conferences usually held alongside it. The AGA, originally, said it canceled this
years event, in an earlier page than the one that confirms its a being held,
this year, as a Virtual Financial Forum .
Most Fed conferences have been canceled but the Cleveland Feds Center for Inflation
& ECBs Joint Conference on "Inflation: Drivers & Dynamics" will be
held Virtually, this year, which the Cleveland Feds CEO, Mester, will open As for
the Agenda? That seems the tightest secret in the world.even our considerable
research skills failed us. The ECB confirms that their member, Lane, will be speaking the
2nd day but, otherwise, the ECB listing points to the Cleveland Fed, which
offers nothing but the original announcement. Though, despite social distancing and
self-isolation efforts, Fed speakers will be more commonplace this week, including
Rosengren speaking Tuesday, NY Feds Williams on Thursday, plus Fed Board Vice
Chairman Clarida at a NABE hosted webinar Thursday, followed a little over an hour later
by Powell, kicking off a Fed Listens program on how COVID-19 is Impacting Communities. The
ADBAsian Development Bank is hosting a one-day spring meetinga virtual one,
for most attendees, Id presume, despite the event being listed in the Philippines.
Otherwise, the Economic Calendar is filled with Treasury Auctions out the whazoo,
including the first 20-year Bond Auction, Wednesday, shortly before the FOMC Minutes of
the April 28th29th Meeting are released. Otherwise, the
Economic Calendar will be notable for housing tidbits, including NAHBthe
Homebuilders Sentiment Index Monday, and the Natl Association of Realtors
April Existing Home Sales, on Thursday.
The Earnings Calendar switches to large retailers, though some large ones like TJMaxx
& Ross Dress for Less (both Thursday) will be reporting small numbers since neither
does much of an online sales, and stores were largely closed for part of the Quarter which
started in February, and ended with April. Tuesday, Home Depot, Kohls, Urban
Outfitters & Walmart lead the earnings parade though its Advance Auto Parts that
might surprise most to the downside, since people who dont drive to work dont
need to repair their vehicles. Ive been in my local store to pick up oil and
windshield wipers and never saw the store and parking lot so empty.
Wednesday, Earnings headliners are L Brands, whose deal to dispose of part of
Victorias Secret fell apart, Lowes, and more financial dribbles from Macy*s
which really isnt reporting and filing its 10-Q until June but is offering more
tidbits before sitting down for a "fireside chat" with JPMorgans
well-respected analyst, Matt Boss. Also on the Schedule for Wednesday, Take-Two &
Target. Most of the traffic and demand in Walmart & Target have been for food and
household essentials which means the higher margin apparel TGT has developed so well
hasnt been a hot ticket. Thats doubly bad for the current quarter since, last
year, TGTs special collaboration was with Vineyard Vines, which sold out quicker
than you can read likedy split. Furthermore, it seems both CostCo Warehouse Stores &
Walmart had near exclusives on toilet paper & paper towels for the entire quarter,
once shelter-in-place orders and closed schools triggered hoarding. Wednesday, Analog
Devices & Synopsys report, two big tech names that will set the tone for coming
reports, Thursday, from Agilent, Hewlett-Packard Enterprise, Intuit, and nVidia.
Medtrtonic, usually a reliable performer probably suffered from the cessation of elective
surgeries, starting sometime in Marchthough perhaps for only 2 weeks of that month.
Other notable Thursday reports will come from Best Buy (benefited from working and
schooling at home), Deckers Outdoors (Ugg boots probably bought before schools shut down
but reorders were unlikely), and the aforementioned ROST & TJX. Friday, Alibaba Group,
Jone Deere, FootLocker and Tribune report. FL, Im afraid, hurt by the reliance on
mall-based stores and direct competition from its suppliersespecially Nike, adidas,
and New Balance.
Which brings us to the Events Calendar, with most of the I-bank conferences planned
surviving as Virtual events that will be streamed out. As the Earnings Calendar tails off
into Retailers, there will be plenty of portfolio managers eager for more information on
how the current quarter is progressinginformation not provided at the time Q1
reports were delivered, due to COVID-19 uncertainty. With Memorial Day weekend dead
aheadFriday a short day for bond markets2/3rds of the quarter is n the bag,
even if that bag is one-fifth the size of the one usually used for the 2nd
quarter of the year. From the top, GS Global Staples will be one of the few happy
talk events of the week, since most are spending more time at home and using more cleaning
supplies than they ever have before. After that, not so happy for JPMs Homebuilding
& Building Products, though Macquarie Asia Consumer is one that could preview
whats to come in the US, as 49 states, now, reopen at least partially. CUEa
Virtual Computer-Using Educators BOLD Symposium now deals with the norm, rather than the
exception. Daiwa Virtual China A-Share & Macquarie China Virtual Semiconductor Day
both important links in the recovery puzzle, since China went into lockdown first and came
out first.
Tuesday, Citis Car of the Future pre-empts GMs unveil of its EV Hummer,
Wednesday. (Anyone else imagine the Hummer will look like Elon Musks pick-up truck?
Me neither. Transformers, perhaps but not the Tesla truck.) UBS Oil & Gas might throw
more kindling on the fire burning out the energy renaissance in the US. SunTrust RH
Financial Services has some big names appearing, as will RBCs Housing & Mortgage
Conference, though more are scheduled the following day, at Wells Fargos FinServices
Investor Forum. RBCs Global Healthcare is a topic too well covered, by now, giving
the edge to JPMorgans European Technology, Media, & Telecoms CEO Conference, or
even, JPMs Annual Shareholder meeting. Like FOMC Chairman Powell, JPMs Jamie
Dimon likes to tell it like it is, which isnt always easy to swallow. And while
were at it, Virtual shareholder meetings are also scheduled from Chipotle Mexican
Grill, Amgen, McDonalds, Morgan Stanley, and Southwest Airlines though, some of the
shareholder meetings cited by Barrons arent that at all. Many of the companies
they name will be speaking at Wolfe Researchs Virtual Global Transportation &
Industrials Conference, streamed to shareholders who choose to tune in but not, literally,
Annual Meetings. Ironically, recently bankrupt J.C. Penney is holding a virtual
shareholder meeting, Friday afternoon, at which it plans to lay out the split off of its
real estate assets into a separate, listed companysounding more and more like Sears
by the month.
Last week, the bulls finally surrendered some ground, after a 6 week impressive run. With
a 3-day weekend ahead, the bulls will be able to declare victory if they merely resist
giving up much more ground. Powell has been doing his best to call em like he seems
em, as Jamie Dimon will, as well. That hasnt stopped the bulls until now, and
little reason to expect them to surrender, now, no matter how little sense that makes to
the realists, like David Tepper. Or me, for that matter.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security, The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 1115, 2020 ITS the BIGGEST
I-BANK CONFERENCE WEEK OF THE YEAR If Only Virtually, this Time There are2 BIG items on the Economic
Calendar, one of which could be canceled. The first is Jerome Powells Wednesday
video appearance at the Peterson Institute for International Economics, on the 13th,
pundits sure it was hurriedly scheduled to counteract the brief dip into negative
territory yields took into next year. The other item was supposed to precede
PowellNIAID Chief Dr. Anthony Faucis testimony to Congress, Tuesdayan
appearance meant to examine the White House response to coronavirus. Lets, first,
acknowledge. Dr. Fauci is one of the most diplomatic member of any team connected to the
White House, often disagreeing with the Presidents statements without appearing to
make Trump look foolish, stupid, or worse. In fact, many times, he seems to expand on the
party line, merely adding some new, crucial information that doesnt sound like it
disagrees with the President, even when it clearly does.
So, to start, Trump tried to block Faucis testimony. Now, it appears, Fauci has the
perfect out if he chooses to take it; given that the Vice Presidents press secretary
tested positive for COVID-19, and Fauci has been physically close to her, many times, when
the coronavirus task force met and held press conferences, he could easily beg out. He
could, of course, choose to testify via video conference, as is the common schedule, these
days but if Fauci wants to duck out, he easily could. We therefore, leave his testimony as
a question mark, for Tuesday, even as we know Fed Vice Chairman for Supervision, Quarles,
plans on testifying before the Senate banking committee, also Tuesday. Feds Harker
is also on the schedule for Tuesday but a videoconference with the Delaware State Chamber
of Commerce, on local issues. Likewise, Chicago Feds Evans is speaking Monday, to
the Lansing Regional Chamber, another local event, he and Harker not expected to trigger
any earthquakes.
If you want earthquakes, that will be the US Federal Governments Monthly Budget
Statement, out Tuesday, late in the day. Then, come Thursday, when the weekly US Jobless
Claims are released, per-market, well learn how many out of job workers were rehired
when their states reopenedmany more reopening this week, including all but
Miami-Dade & Broward Counties. From the looks of the food lines on TV, last week, more
people are hurting then everrehires scarcer than the hungry. April CPI Tuesday, PPI
Wednesday, and Retail Sales Friday will be dismissed out of handoil prices were
collapsing, meat shortages werent, yet, a thingthough obvious to anyone who
looked into a meat and poultry counter, hoping to be enticed. Likewise JOLTS may show a
significant drop in job openings, and a lack of quits but wholl really be taking
either number to heart?
Which brings us to the Earnings Calendar, where both of the major debt insurers are
scheduled to report, along with a surfeit of hoteliers, more mall REITs, Infineron, Cisco,
Applied Materials, and Stratsys, representing tech, along with Under Armour, The Container
Store, JD.com, and VF Corp.
Which brings us to what was scheduled to be the biggest Investment Bank Conference week of
the first half of the yearor at least the very biggest since early January. Just
about all of them remain a go, albeit via videoconference, rather than as large assemblies
in fancy hotels, with the drinks and other amenities that accompany with wining and dining
future clients. How many Portfolio Managers will actually tune in? Hard to say, though
many could, certainly, stop in after the event is over, using the format for on-demand
listening and viewing, rather than tuning in during real-time delivery. In fact, if you
spend a few minutes examining the schedule, about the only events not canceled or
postponed are all of those I-bank conferencesexperiments in social distancing that
could change the face of I-bank conferences, forever. Thursday, you might note, Strategas
is hosting Ivy Zelman on Housing & Homebuilders. I cant help feeling
Barrons stole some of Strategas thunder by printing a Q&A with Zelman in
this past weekends print edition (available, of course, online, too.) Surely, Zelman
knew Barrons would appear before her Strategas conference call so the presumption is
shes saved quite a bit for the latter event. In fact, there was almost nothing said
in Barrons about the suppliers or realtors, at all, leaving some topics wide open
for Strategas.
Last, I messed up last week when I forgot to mention some exciting ESPN scheduling,
proving how starved the Walt Disney Company was for video most had never seen previously.
So what did you miss last week? The Stone Skipping Championship and the Cherry Pitt
Spitting Contest. No wonder the Tennis Channel and CW showed the UTR Round Robin from Ibis
Country Club in West Palm Beach. What the heck is UTR, you might rightly ask? Its
the Universal Tennis Ratinga mash up of tennis stats that pretty much ignores
tournament results to rank players by the kind of stats fantasy team owners use to
formulate a team. Exciting? Maybe for Reilly Opelka who fired off his usual fuselage of
aces but, otherwise, a name I had to explain to otherwise faithful watchers of major
tennis tournaments. (Hes the Andy Roddick of this generationa really tall
great server whose all round game comes up short, otherwise.) But the point is, if
youre sick of watching stocks go up because Amazon, Apple. Google, Facebook &
Microsoft are rising, then be sure to check out ESPNs channel guide. You never know
what it might be broadcasting, until live sports returns.
EONOMIC: (Highlights, only, below.
Full
International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
May 0408, 2020 MORE EARNINGS, MEAN LESS
Lets cut to the chaseFridays Unemployment Report for April.
Of course, youd think there would be nothing in it to surprise us, given the weekly
Unemployment Applications announced Thursday mornings but, consider, for a moment, if some
of the slowest state Unemployment offices, like Floridas, finally catch up in time
for this Fridays report. Over two million have applied for benefits but only 40K
checks have gone out to claimants, as of May 1st. DeSantis, a disciple of
Trumps, decided to solve the woeful DEODept of Employment Opportunity, a
misnomer, if there ever was oneby ordering 100 new servers. Now, a smart governor
would have called in Microsofts Azure, or Amazons AWS but not a Trump
disciple, whos sure everyone is a crookthe reason Trump is against mail-in
ballots for Novembers election. So, I can assure you, Florida wont get caught
up for weeks, if not months, since all those servers have to be programmed and integrated
but, perhaps, theres another state that was equally behind and handled it more
smartly, and got caught up in time for Fridays report. What we think we know could
be far worse than what we do, indeed, know.
As for other items on the Economic Calendar, note the newly obese amounts on offer,
Monday, in Treasurys 3-, & 6-month Bill auctions. Record high amounts. And if
that wasnt enough, the Treasury is reopening past offerings so that therell be
105-day Bills Monday afternoon, 119-day & 42-day Bills on Tuesday morning, all before
the Treasury Refunding Announcement, Wednesday, which should be a doozy!
The Reserve Bank of Australia will announce its Rate & QE decision in the wee hours of
our Tuesday, while the Bk of England will weigh in early Thursday morning, ushering in the
very early pre-market hours with new Chief Baileys post-Meeting Press Conference.
Also Thursday, April Chain Store Sales from those who still report such data, CostCo
Warehouse Stores out Wednesday, after hours. Starting Thursday, through a week from
Tuesday, many retail chains will announced their Q1 Sales, in advance of the May earnings
reports the majority file, that month. Hardly scintilating data, given most retailers have
been open for online orders, only, and essentials have been far more popular than apparel,
shoes, or heaven forbid, jewelry. As an industry, non-food retail is close behind airlines
& hoteliers, on the edge of bankruptcy filings though, honestly, it makes sense to
expect chains to shrink, considerably, before they take the bankruptcy route, if they can
hold on.
Which brings us to the weeks buffet of earnings reports expected, heavy with
property owners, restaurant chains, hotels, and a bevy of energy names. Whether the
property owners are landlords to retailers, apartment dwellers, or businesses, the number
who skipped April rent and, possibly, May, too, will say volumes about whats going
on behind the scenes. Kelly Services also reports Monday, and is likely to provide an
outlook for Fridays Unemployment Report, which it does monthly, even when its
not reporting results. Other notable Monday reports include AIG, Loews, whose
Diamond Offshore declared bankruptcy, its hotels not doing much better. Also Monday, Shake
Shack, Skyworks, Starwood Capital, Texas Roadhouse Grill, Tyson, Williams, and Wyndham
Hotels, each of them of interest for different reasons.
Tuesday, Activision Blizzard & Electronic ArtsEA if you preferboth report
what should be good results, given all the people stuck at home, connected to networks
most phone & cable companies have promised not to disconnect. Also reporting Tuesday,
Allstate, AMC Networks, Asbury Auto, Cheesecake Factory, Carters, Chemours,
Expeditors International, Fiat Chrysler, Group 1 automotive, ITW, Ingredion, KLAC
Tencor, Lancaster Colony, Martin Marietta, Mattel, Newmont Mining, Perkin Elmer,
Pinterest, Prudential Financial, Regeneron, Republic Services, SBA Communications, Sealed
Air, Sprouts Farmers Market, Store Capital, Sysco, TopBuild, Total Oil, US
Food Service, The Walt Disney Company, Wayfair, and so much more.
Wednesday theres more of the same, most notably Avalon Bay Communities, Apache,
BioRad, CDW, Discovery Communications, Equinix, Etsy, Everett Reinsurance, General Motors,
IAC Interactive, Jacobs Engineering, MetLife, Mid American Apartments, New York Times,
Nexstar Media, Papa Johns, PayPal, Penske Automotive, Scotts-Miracle Gro Square,
Sturm Ruger, T-Mobile, Waste Management, Wendys, Wingstop, and much more.
We could go through the same exercise for Thursday and Friday, too but you can scan the
tickers highlighted, and choose your own representative ones, though Id be remiss if
I didnt point out Amerisource Bergen Brunswick, a pharma distributor, in the midst
of a pandemic, Bristol-Myers Squibb, Gannett, Danaher (acquirer of a GE division), Hilton
& Host Hotels, plus JetBlue, News Corp, Post Holdings (in light of how well the cereal
space has done on lockdown), Uber (which I couldnt give a hoot about but the Street
does), and ViacomCBS. Thursday is the heaviest day of Earnings season, by far, topping
last weeks Thursday by dozens of listings.
Then, we arrive at the Event Calendar, filled with mostly canceled events, and the I-bank
conferences being held virtually. Many of the postponed events are already off the list,
and inserted where they whenever they were rescheduled for. Some of the virtual
conferences, like one from Stephens, dropped one of the originally scheduled companies
leaving only 3 to soldier on.
Japan and China are celebrating Golden Week, which means Taiwan, Hong Kong, and to a
lesser extent, Singapore will be closed more than theyll be open, too. But with so
many earnings reports scheduled, two central banks meeting, and Fridays coming April
Unemployment Report, theyll hardly be missed. The question is whether the onslaught
of so many reports from so many deeply damaged companies finally brings the bulls to their
senses? It would be about time.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here.)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 27May 01, 2020 ALL ABOUT EARNINGS
While Thursdays Weekly Unemployment Applications will be closely watched, the market
didnt really react to the last 2 reports. The April Monthly Employment Situation
wont be out until May 8th, which leaves Earnings as the headline Calendar
of the week.
And what a Calendar it is! Lets focus, for a moment, on Wednesday, with American
Tower, ADM, CME, Deutsche Bank, DinEquity, eBay, Enterprise Product Pipeline, Facebook,
FICO, General Dynamics, GE, The Harftford, Hasbro, Humana, MasterCard, Microsoft, Norfolk
Southern, Northrup Grumman, Pilgrims Pride, Qualcomm, Ryder, ServiceNow,
Sherwin-Williams, Teledoc, Tesla, United Rentals, Valero, and Yum Brfands, just to name
some of the tickers embolodened. Also reporting, Wednesday, Boeing, which backed out of
the deal for Embraer, over the weekend, devastating the latter, for sure, but probably
something Boeing shareholders will celebrate.
We could have just as well picked Tuesday, with 3M, AMD, Akamai, and Alphabet (Google),
just to name the most high profile "A" names, while further down the line that
day is Merck, Mondelez, PepsiCo, Pfizer, Starbucks, and more. Likewise, I could have
focused on Thursday, with Amazon, Amgen, Apple, Comcast, Dow Chemical, Eaton, Gilead,
Ilumina, Intercontinental Exchange, Kraft Heinz (rescued by shelter-in-place orders),
McDonalds, Twitter, United Airlines, U.S. Steel Visa, Western digital, Whirlpool,
and more. As the title says, to us, the week is all about Earnings.
Most of the Events scheduled for this week were either converted to Virtual events, or
already rescheduled for either later this year, or combined with next years event.
RBCs Fixed Income Financial Services Investor Symposium, originally scheduled to
travel from NY, to Boston, to Chicago, has gone Virtual, and is still listed on RBCs
Institutional site by city, so perhaps the FinServices companies participating in the
virtual conference will be from NY on Day #1, Boston, on Day #2, then Chicago on Day #3.
IABInteractive Ad Bureau--sponsors the NewFronts scheduled this week. While many of
the UpFronts were rescheduled, the NewFronts, which are for digital companies, are largely
expected to go forward as VIRTUAL (digital) events, After Thursday, they skip into the
first full week in May.
The Event likely to have drawn the most viewers is EA & ESPN2s broadcast of the
"Road to Madden Bowl," and "Madden NF: 20Celebrity Tournament" which
ran all weekend, live. eSports doesnt, yet, draw the way the NFL does but Madden NFL
is one of the longest-running video games, with tremendous participation, especially from
those who formulate "fantasy teams." And online gambling has been one of the
more successful shelter-in-place activities, even with the majority of sports a no-show.
The FOMC meets this week but its hard to imagine them saying anything that could
surprise, now. The voting Fed Reserve members have been busily meeting in advance and
between regularly scheduled meetings, announcing the first alphabet soup of programs to
save the economy since 2008/09. So what could that group do, now, or Powell possibly say,
during his post-meeting press conference to surprise the Street? Short of launching a
program to buy equitieswhich economists & traders dont see
comingtheres nothing, for now. In fact, as often as I get the FOMC wrong, I
think the message repeated from here on in is going to be patience to see how the programs
already initiated play out.
Short of moving Mothers Day, later this month, the biggest surprise for the coming
month of May is Churchill Downs moving the Kentucky Derby to September, from the first
Saturday in May. Warren Buffet & Berkshire Vice Chairman Greg Abel are planning an
audience-free Annual Meeting for Berkshire Hathaway shareholders next Saturday, the
Q&A the only surviving portion of the meeting. Berkshire Hathaway said, on 04/27,
Charlie Munger will not be participating, confirming Buffett & Abel are the only 2
directors expected to partake of the annual meeting.
The only other notable item on the schedule is the size of the Treasury Auctions, which
have been ballooning steadily but still seem far short of the amount of funds Congress has
been authorizing to support the economy, and the Federal Reserves enlarging balance
sheet, now at $6.6 trillion. But weve been noting Treasury Auctions for years, and
$57B in 3-month ^ $48B in 6-month Bills are both far larger than they were as few as 6
months ago. Then, again, the BoJ has been betting the farm since 2008, and wont
surprise when it announces its latest decision, in the week hours of East Coast Tuesday
morning, because most of its debt is bought by Japanese. The ECB weighs in with its April
Rate & QE decision, in the early morning of Thursday and might pull a rabbit out of
its hat, because the EU countries have repeatedly failed to agree on an EU rescue
planso-called COVID Bonds.
So, with 3 Central Banks meeting this week, we still think the focus will remain on
Earningsthe repetitive withdrawal of full year forecasts and failure to guesstimate
the current Quarters results will get old very fast. On the other hand, you might
not want to hear realistic assessments of the current quarters results, which may
very well arrive, later in May, when retailers start offering their best guess of how bad
the losses will become. Given that stocks often slump in this week of the Earnings Season,
and dont recover until this week and next are completed. The bulls will have to pull
in their horns, temporarily, at least. Are the lows in? Probably. The March 23rd
margin clerk liquidations probably set a low we may not repeat but the bulls are far ahead
of the economy, in an unsustainable optimism that will be dashed in the coming weeks,
despite all the Fed and Congress are doing to keep the economy afloat.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 2024, 2020 THE COMING 3 WEEKS USUALLY
TOUGH for EARNINGS, EVEN WITHOUT CORONAVIRUS
Well get a mix of pre- and post-COVID-19 data, this
week, which will demonstrate how strong the economy was, in February, as well as how
12 weeks of business closures (depending on the state) managed to destroy March,
before the April near-total cessation demolished this month, completely. For instance,
Wednesday, FHFAs February Home Price Index will demonstrate moderate gains in home
prices, in places where snow didnt shut down activityand even then, some of
the most snow-bound states do best in ski season. Tuesday, the Natl Assn of
Realtors release March Existing Home Sales. Those are recorded on closingunlike New
Home Sales, to be released on Thursday, are counted when a contract is signed. Coronavirus
probably didnt do as much to destroy Existing Hone Sale closings, in March, since
those were for contracts signed from 3090 days earlier. COVID-19, however, might not
have done much damage to New Home Sales either, since those are not just counted when the
contract is first signedusually before the house is finished, sometimes before
ground has even been brokenthe first half point rate cut in March, likely triggering
a spike in sales, before shelter-in-place and other lock-downs were ordered, to offset
those that werent signed once those state and county orders were announced.
Come Thursday, the weekly Initial Unemployment Claims data, and continuing claims data,
will clarify how many more people were let go after it became clear business shutdowns
were not going to be a simple couple of week affair. Then, Friday, Mar Durable &
Capital Goods Orders & Shipments might have seen a spike, as the Federal Government
started mobilizing the National guard to aid the states, though all those all those tests
needed to seek COVID-19 positive people are not either Durable or Capital Goods, so
wont show up in the data. Refrigerated trucks to house the dead, unfortunately,
might.
The Earnings Calendar is a bit of an off week, after last weeks bit money center
bank reports, with companies like Amazon & Microsoft not scheduled until the end of
the month. Still IBM Monday, Chipotle Mexican Grill, Chubb, Coca-Cola, Emerson, HCA,
Lockheed Martin, Manpower, Netflix, Prologis, SAP, Texas Instruments, & Traveletrs,
all Tuesday, will set the tone fofr the week.
Examine those tickers emboldened, especially compared to the number or reports expected,
and concede the number of market-moving names are somewhat slim. Still, Ill point
out CSX, Delta Airlines, Discovery Financial Services, Kimberbly-Clark, Kinder Morgan, Lam
Research, Las Vegas Sands, Nasdaq (perhaps the pick of the week!), NextEra (owns FPL),
OReilly Auto Parts, Quest Diagnostics (DGX), Seagate Technology, S L Green, TD
Ameritrade, Teledyne, Thermo Fisher, Wolverine Worldwide, and Xilinx are Wednesdays
stand-outs. NDAQ stands out most because volatility is great for business, and tech stocks
have been the stars on the way down, and on the way back up. If you glanced at any of the
money center bank reports, you might have noticed that trading ticked up. No one likely
benefited more than NDAQ, even IPOs dried up.
Thursday, Air Products stands out because it has often benefited from higher hospital
utilization, which COVID-19 has provided in spadesglobally. Alliance Data and
Capital One could be teeing up big loss reserves but, then, thats to be expected as
unemployment soars. Banks already made that clear. And Capital One is very cautious with
new cards, often restricting credit limits to customers with short credit histories to no
more than $500 in credit. Citrix Systems is one of the forgotten remote working
beneficiaries, perhaps around too long for most to notice, now. Crocs and Skechers just
happen to report on the same day. Whatever they report, their prospects are bright in
periods of high unemploymentcheaper footwear is more affordable, and thats a
winning formula in a recession. E-Trade Financial, of course, is being purchased by Morgan
Stanley, so its latest report is less of a factor than it otherwise would be. Pulte
Homes, Pool Corp, and TriPoint are all variations on similar themes. Housing in Q1 was
strong, thanks to a mild winter, and mostly pre-COVID-19. Edwards LifeSciences may take
down numbers. You might think of aortic and other heart valves as crucial surgeries that
people dont put off but youd be wrong. In fact, doctors often watch a weakened
valve for a few years before deciding it needs replacementand certainly can put off
that kind of surgery another few weeks, in a situation where hospitals are overrun with
highly transmissible viral disease. The big report of Thursday, and one of the biggest for
the week is, clearly, Intels, Thursday afternoon. The issue is, while business
people may have gone out and bought new laptops or home PCs to work remotely, the vast
majority of educational units sold to, or handed out to public school kids were
Chromebooks, with little memory, and far from the best central processing chips. In fact,
Chromebooks, for those big wigs who dont know much about them, are little more than
server connecting appliances, that store little to nothing locally, and run without most
programs people use for documents or computing. Everything is done on the remote Google
server, including document handling apps.
Friday, American Express, AutoLiv and Verizon will be the headliners, AXP more vulnerable
to unemployment than its ever been. A proliferation of new cards that aim for the
masses may, yet, be the undoing of its once pristine reputation for being choosy about
whom it lets carry its cards. Furthermore, for now, the travel business has been replaced
by videoconferencing, and it may be a very long time before people travel as freely as
they once did. Does anyone need to spend $250 on a gold card, if theyre not going to
travel much? Does anyone need to spend $150 on a green card, if they dont plan on
traveling much, at alland thats before we even discuss Amexs offers of
business card payments over time, at 24.97% interest rates, in a ZIRP world?
Which brings us to Events, most of which have been Canceled, Postponed, or will be offered
virtually. Those that were truly postponed, and rescheduled, are no longer listed on this
weeks calendar. In fact, one of the surprises of our week has been the large number
of events already rescheduled for August through November. Many are merely postponing this
years events to next year. Ive long been particularly partial to mentioning
Albert Hoffmans discovery of LSD, because the mega-pharmaceutical company we know as
Roche grew out of that discovery. Well give a nod to Timothy Leary, who made sure
every college kid in the 60s knew of the discovery.
Some of the canceled events were replaced with something worth noting. For example, the
Adam Smith Annual Workshop on Asset Pricing & Corporate Finance, planned to take place
at the EDHEC Business School in Nice, France, was canceled but the accepted papers are
available online, here. The TriBeCa Film Festival
was likewise canceled but many of the short films submitted are available to stream, free,
on the festival website. If youve been watching HBOs offerings free, in April,
note that CBS (VIAC) has, now, made its CBS All Access free for a month.
"Sports" of a sort remains on the schedule. FIFA and EA are showing their Stay
& Play Cup on Amazons Twitch, while Variety plans to stream its Silicon
Valleywood Summit. The National Football League Draft will start Thursday. While players
will be at home, when they get the news, therell be a lot of zooming going on, which
ESPN, ABC TV & NFL Network will be bringing live, to viewers at home. I think we can
consider the Saturday night Global Citizen event Stay at Home Together a Zoom & Skype
success, even if some of the artists seemed to have lost their voices, without the big
productions backing them up. Mendes & Cabello were, arguably, the best part of the
show, with kudos to the Rolling Stones who also pulled off their bit. But others
wholl remain unnamed sounded, simply, awfulunnamed because they let their
segments be broadcast, anyway, for the cause.
Last week, I ended by saying "Curb Your Enthusiasm," even though I knew about
Gileads remdesivirs success treating critical COVID-19 patients, because I
felt the bulls were too optimistic about what the economy will look like in the near
future. I still feel that wayeven more so now, after last weeks big gains. And
even if GILDs drug does wind up a "cure," its ability to scale up
production is limited. It has said, itself, that it could make one million doses by next
Maybecause its a biologic, which is a lot harder to make than a pill that
merely compounds a few off the shelf chemicals. Plus, its an infusion, which must be
administered by trained nurses. But even suppose the Federal Govt would write Gilead
a check for $483m, as it did Modernas unproven vaccine effort, its simply not
that easy to make remsdisivir, and its not without its detractors. Thousands of
small businesses have already past the point of no return, even as big hotel companies and
hedge funds have tapped into what was supposed to be hundreds of millions for small
businesses. Granted, Congress is supposedly on the verge of passing a new authorization
for hundreds of millions more but, again, its the larger businesses that have the
banking relationships and the army of accountants to fill out the paperwork the banks are
requiring. Once again, it seems, its the 1.0% that are benefiting most from rescue
funds, and thats really bad news for the unemployed. Once again, Im simply not
as bullish as the markets seem to be. Perhaps thats because I once owned a 3-store
chain of stores in NYC & on Long Island, and I know what being closed for a month or
67 weeks would have cost my business, and done to the merchandise Id either
just unpacked before the shutdown, or ordered to be delivered during that time. Please
take profits when given the chanceor at least write call options against stock, then
use the premium to protect the downside with some puts.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 1318, 2020 BEYOND
WEEKLY UNEMPLOYMENT? BANK EARNINGS
Easter is the celebration of the resurrection, which must be why Trump is
assembling a new task force to pitch the reopening of America. Granted, that will happen
someday, and probably in places other than New York, first but Trump has been in a rush to
"flip the light switch," originally hoping it would be today, Easter Sunday.
This is the week of G7, the IMF/World Bank Group Joint Spring Meeting and a G20 Meeting,
all scheduled for teleconferences. The Bk of Canada meets, Wednesday, and usually releases
its post-meeting statement a little after 10am. March Retail Sales will likely be a
disaster, except for business at food stores. The Feds Beige Book is out Wednesday,
at 2pm. Can you imagine what the regional Federal Reserve Banks business
"contacts" had to say? Even as we should bear in mind whats said depends
on what day of the month the survey was taken. If most were taking the pulse of business
contacts during the last week of the month, we can all imagine how bad business was
feeling. If the pulse was taken any time in April, many "business contacts" may
not have been, even, reachable. Dont expect much optimism from the NAHB April
Housing Market Index, Wednesday, hours prior to the release of Beige Book.
The EARNINGS Calendar will be a highlight of the week, more than most of the Economic
Data. Major financials are the focus this week (JPM, WFC, BAC, C, GS, SCHW, BK, BLK, STT,
as well as some major regionals, like PNC, KEY, CFG, and RF. Major healthcare companies,
JNJ, UNH & ABT report. Theres PGR, which hasnt had to pay out many
accident claims, since few are driving more than a mile or less to grocery stores.
Theres also ISRG, whose seen the volume of surgeries collapse, as coronavirus
patients consume all the beds and hospital resources. Tech names ASML and TSM will
instruct on how many 5G smartphones are being built, not to mention a boost from laptop
& tablet sales for remote working and learning, from homealbeit, most of the
laptops Chromebooks, which are very low end and lack much memory. FAST? Without planes or
vehicles being built, a nice portion of screw sales dried up, even as MUSA suffers from
the same thing making PGR more profitablelack of drivers. UAL? Frequent updates let
the world know how bad things are- -really awful, which is why the government crafted a
special section of the bail-out CARES Act for airlines. CONN? It specializes in selling
products to weak credits who couldnt buy a bigger flat screen TV, new dishwasher, or
laptop without its payment terms. In the 200809 financial crisis, non-payers almost
put it out of business. Hopefully, it will be more careful granting terms this recession.
Turned out, during the last recession, 2428% interest rates didnt
provide enough payers to offset the deadbeats. KSU? Among other things, railroads carry
coal, oil, and vehicles. Not many of those in March, in particular, draining Q1, since
final month in the quarter is when fixed costs are cleared and profits, usually, kick in.
Not this time, we fear. Outlooks? No one knowsno one, though BlackRock, a conduit
for the Fed Reserves bond activities, should help offset the losses that customer
withdrawals, and lower stock values will do to fees that are based on a percentage of
assetsthough not completely, given that most of the activities started in
Aprilif at all, by now, and government work is more charitable than institutional
fees usually are.
There are no Events to speak of. Most Western Markets will be closed Monday, turning this
past weekend into a 4-day Easter weekend. Those that are taking place will be virtual,
whether Needham & Cos Annual Healthcare Conference, Tuesday, or the NACFS
(Convenience Stores) State of the Industry Summit. Most events are postponed or canceled.
So we all await the major banks Earnings releases, their outlooks likely MIA, or
worse than most expect so they can surprise to the upside. Even United Health, reporting
Wednesday, probably wont have an upbeat story to tell. Youd think, with
hospitals packed with patients, and the Federal government picking up most of the
coronavirus tab, UNH would be swimming in profits but, truth be known, every worker who
lost their job is a potential lost subscriber to a UNH health plan. In short, theres
no company reporting this week that can escape getting hurt by coronavirus, even as their
outlooks will be non-existent.
Last weeks big rally? Too optimistic for me. Analysts who believe consumers
cant wait to shop know far too little about mental health. The pandemic has changed
people and their thinking. Those who retained their jobs wont be out buying 9 pairs
of shoes or multiple handbags. Id bet most would rather sit down for a meal at a
restaurant than spend money on thingsthings have become a lot less important to
anyone quarantined at home 24/7. And it will be a long time before people are greeting
friends and relatives with hugs, or business associates with handshakes. The economy will
be on life support a lot longer than the pandemic will be aroundassuming a vaccine
and cure are found this year, which is no sure thing. Even Chinaa command
economyhasnt figured out how to get people back to work at full speed. What
makes anyone think the U.S. will be more enthusiastic? And thats coming from someone
who predicted massive consumer spending after 9/11, foreseeing how much people would want
to celebrate survival by shopping. Thats not the case after this pandemic, so with
all respect to Larry David, "Curb Your Enthusiasm."
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar, here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
April 0610, 2020 NO LASTING BOTTOM
UNTIL TRADERS LOSE HOPE for a RECOVERY First thing to
watch, this week, is the $201B in debt the US Treasury is issuing, after a couple of weeks
of laying off heavy issuance for a couple of weeks. Does the world have an appetite for
that much US debt, at whats now, incredibly low yields? We shall see.
OPEC+ meets via teleconference, Monday, though even another 10m barrels cut wont
make much difference, given the collapse in demand, with most of the world still on lock
down, and something like 15m barrels of excess supply, per day. Still, dragging Russia
back into the program would be an accomplishment, and signal the joint OPEC 7 non-OPEC
cartel is getting more serious. Meanwhile, in the US, Whiting was the first, though surely
not the last to declare bankruptcy, while the US rig count has fallen 3 weeks in a row,
and sure to fall some more.
Tuesday, February Consumer Credit will be released at 3pm, February data the last hoorah
for an economy gone into the tank. Wednesday, the IMF & World Bank plan on holding
their annual Spring meeting virtually, while all the other events usually held
simultaneously are MIA, during the coronavirus pandemic. Later Wednesday, the FOMC will
release the Minutes of its extraordinary Sunday intermeeting rate cut, though it will be 5
years before we read the real minutes of that meeting, rather than just the highlights. Of
course, the shocker of the week will be the weekly claims for unemployment, Thursday, even
as hundreds of newly unemployed across the country are complaining that they cant
get through to their state unemployment office. The Reserve Bank of Australia is scheduled
to meet, Thursday, Australia time, Wednesday night for US traders, the night Passover
startsnot that families can get together to read the prayers. Any family, like mine,
dispersed from Florida, to New York, to California, that had to cancel plans to gather,
and, like mine, have a 93 year old matriarch, are simply not gathering this holiday but
still will observe some traditions, individually.
The Earnings Calendar is slim, a couple of names highlighted though without enthusiasm.
As for Events, heres whats amazing; the vast majority of Events planned for
this week were not simply canceled or "postponed" but, rather, were already
REscheduled for August through October. Thats why the Events Calendar, below, has
thinned so dramatically. Meantime, many events were kept on the calendar as
"digital" or "virtual" events, which isnt futile. For years,
portfolio managers (PMs) have been dialing into conference sessions over the web, tuning
in only for those companies they want to hear. The switch to Virtual Events, now, is
almost the natural progression of the live streamed events PMs have been
cherry picking for years.
Not, Friday,, Good Friday, markets are closed, while the Treasury markets closes early
Thursday, to stretch a three day weekend into a 3.5 day weekend. I dont expect any
PMs to initiate positions of risk, before a holiday weekend, and feel badly about the
stores advertising Friends & Family sales of Spring clothes for Easter that no one
needs. I know a few people who havent been out of their housecoats and/or sweats
since March 12th, and have no plans to change that anytime soon. This pandemic
will only accelerate the number of retailers forced out of business sooner rather than
later. JCPenney, in particular, comes to mind, though it paid its rent April 1st,
when other retailers said they wouldnt . A last hoorah of its own?
Please distrust rallies. The economy will get worse before it gets better. Possibly, a
whole lot worse, as the hop for a rainbow at the end of the pandemic, ultimately, fades.
Bear markets rarely bottom until few believe in the future.
ECONOMIC: (Highlights only below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 30April 03, 2020 CENTRAL BANKS ARE
ALL IN; PMS WILL ALSO BE SOON Heres what all you need to
know: Earnings Season is all but over; Central Bankers are not going to mingle, so will be
speaking at video press conferences, like the one FOMC Chief Powell held two Sundays ago
(March 15th); and the Economic data will be uglyuglier than anyone alive today has
ever seen first hand.
Lets start with the Economic Calendar, where Fridays March Unemployment Report
will tell only half the storysince many states force those laid off or fired to
endure a waiting period, prior to be eligible for unemployment benefits. And theres
no reason to wait for Friday, since Wards will announce US March Vehicle sales before
stocks open Tuesday. "Collapse is a word youll hear applied to much of the data
arriving this week, and for the foreseeable future. Note, also, Mondays 3-, &
6-month Treasury Bill auctions. I cant say I can remember quantities that large in
the pastthough Ill also admit to following the Economic Calendar less closely,
in decades pre-2000. What will also shock is the contrast between data from January &
Feb, like S&P Case Shiller Jan. House Price Index, compared to March, even though
coronavirus didnt really hit hard until half the month was over. Watch the dollar,
as well, since Japans new Fiscal Year begins on Wednesday, which is often when
repatriated yen converts back out. Thursday, of course, Challenger Gray &
Christmas March Job-cuts announcement may be a preview of whats coming in
Aprilespecially since most unions and many states require a notice period prior to
when the lay-offs are official.
The Earnings Calendar includes some items to note, that may seem curious. Top of that list
is Verint, highlighted on Tuesday, because it announced plans to separate into 2 public
companies, the split to occur soon after its FY ended on 01/31/2020.
Therefore, there could be more news on that split when it reports. TGI, the same day, is
aerospace supplier, Triumph Group, the only business, right now, kept off the bottom of
the barrel by oil production. If you want to know how poorly take-out and delivery, only,
are working for fast food chains, perhaps theres no better tell than
Wednesdays Lamb Weston Holdings, the French fry king. Likewise, McCormick could be
hurt badly by the drop in restaurant sales, even if it didnt feel the pinch in the
quarter being reported. But even Pres. Trump admits theres not going to be a
"beautiful Easter" or "beautiful packed churches for Easter," social
distancing extended to April 30th, which means more pain for restaurants &
catering. CarMax reports Thursday, perhaps in coming quarters a beneficiary of stocks
taking a wild ride, since car shoppers often switch to used cars when payments on new ones
become a deterrent. Chewy, on the other hand, is a big beneficiary of pet owners resisting
a trip to the pet store for pet food or kitty litter. Walgreens Boots Alliance, the same
day, is a beneficiary of hoarding and hyperchondria, even prior to discussing the need for
medicines, for those diagnosed with any virus or bacterial infection. Unlike CVS, however,
Walgreen has shortened its store hours significantly, yet may not be giving up as much
business to its 24-hour competitor as you might suppose; Health plans with prescription
drug coverageincluding Medicare Part Dusually designates one or the other the
preferred retail provider, so theyre not as interchangeable as youd think.
Which brings us to the Event Calendar, packed with scheduled events postponed, canceled,
or virtualized, our listings using the language the organizer did, to describe the
situation. Unlike the early days of social distancing, back around the 12th of
March, many of the events postponed already offer the dates arranged for later in the
yearsometimes as early as September. Those listed as "Virtual" or
"digital" shouldnt surprise. For years, traders and portfolio managers
(PMs) have been attending conferences by dialing into conference calls or, more recently,
watching streamed presentations in real time. That theyd be forced to switch to that
method now, as the sole method to host a conference, makes perfect sense. And they might
be well attended, during the stream, or in replays available laterjust as TV shows
can be watched as theyre broadcast, or later, replayed by a DVR or on demand from a
cable provider. COVID-19 only accelerated the switch, whether thats temporary or
permanent, to be seen. For some of the smaller, boutique I-banks, its a heck of a
lot cheaper to run an event virtually, than it is at a hotel or other rented venue. And no
I-bank Sr V.P. has to buy the drinks or food for clients.
Which brings us back to where I started. Central Banks are all in on stimulusthough
thats not the best word for the financial support being provided, since social
distancing all but obviates stimulative spending, when restaurants and retail stores
outside groceries and drug stores are closed. What the Central Banks and, now, governments
are providing is monetary supportbuilding a bridge of money to assure that
businesses get the rent they expect, or the cash flow they need to pay employees they have
no need for, as long as their businesses are closed. The 21.0% rally off the 9-day dive
stocks took is not the best time to load the boat. Theres more selling and plenty of
back filling to be done before stocks stabilize. But pick your vehicles and your price
level because its never been wrong to start buying when Central Bankers &
government purses are all in, as long as you have at least a 6 month horizon.
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 2327, 2020 UNSURE OF EVERYTHING
Last week, we were pretty sure about what we didnt know, and
could say with some certainty what was canceled and what was going on as scheduled.
Surprisingly, less is known this week, since some firms just removed prior information,
without a word of cancellations or postponements. This week, were less sure of
whats postponed and whats canceled, since some firms have done little to
clarify. In most cases, were assuming that events that werent removed from the
schedule will be held digitally, or "virtually," as some companies prefer it. In
other cases, events that were changed to virtual may well be posted after the dates
provided.
Stephens, for instance, hasnt said a word about its Field Trips but we know that the
governors or mayors of certain states or cities have banned meetings, so virtual is the
only way they can, conceivably, be held. All things considered, however, none of it much
matters but the efforts by the FDAs clinically trials on coronvairus vaccines, or
antivirals being tested from Bayer & Gildead Sciences. Lagardes speech to the
ECB Watchers Conference remains on that central banks website though, surely,
thats not taking place, except virtually. Though that would likely be mentioned,
wouldnt you think? And again, probably not as important as Thursdays weekly
Unemployment Claims.
Thursdays weekly applications raise a question for me. IF Congress is working on a
bail-out program thats meant to encourage companies to keep paying their employees,
who then is getting the $1 payment planned to all adults April 6th and, again
May 6th. If employees are being kept on the payroll, thanks to the largesse of
Congress, why do those paid workersperhaps not workingneed an extra $1k check
from the government? Just wondering.
The rest of the Economic Calendar, outside weekly unemployment claims, will be either
backward looking data, or really backward looking data, like FHFAs Jan House Price
Index, Wednesday. I wouldnt count on Wednesdays weekly Mortgage &
Refinance Applications being as robust as they were the week earlier only because banks
pushed back on refinance apps, as they waited to see what the Fed Reserve would do next.
Furthermore, I doubt planned house purchases are going ahead as originally scheduled,
either. People afraid of losing their jobs dont finish major purchases like new
homes, as we saw in 2008no matter how much better capitalized the banks are today
than they were, then. And someone doesnt have to lose their job to pullback from a
major purchase, like a homethey just need to know some people who are losing their
jobs, to worry they may be next.
Which brings us to the Earnings Calendar, where Nike is a feature on Tuesday, Synnex the
same day, who can speak to consumer & business activity, respectively. Think 5G is
coming either way? Micron Technology, Wednesday, may provide insight on that, while Oxford
Industries, Signet, Lululemon, and K B Home, Thursday, may provide all the granuality we
need to see how harsh and immediate the hit to consumers has become. Wouldnt you
want to know how well the very strongest retailersNike and Lululemonare
weathering the coronavirus storm? Both have very strong online sales but with gyms and
schools closed, hows demand? Im quite sure well off prior highs. Consumers are
as scared as theyve ever been. And those who arent are simply annoyed, because
theyre not smart enough to know when they should be scared.
Expect recent volatility to continue unabated, even if the range from high to low narrows
somewhat. Whether Thursdays release of 4Q19s final look at GDP could be
worthless, if you believe the recession thats probably already started is going to
last at least 2 quarters, and probably 3. The meek 2.1% GDP previously reported for Q4,
wasnt sufficient momentum for 1Q 20, to offset a slowdown that started in late
February, or event early March. The world that was has been turned upside down, with
little reason to expect a reversal in coming weeks. Even Easter will look a whole lot
different, this year. And it will be a long time before markets return to bull market
status, in the interim.
ECONOMIC (Highlights, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 1620, 2020 NO FIXED SCHEDULE
EVERYTHHING IN FLUX You know were in extraordinary
times when even the FOMC cancels a meeting, and moves 3 days earlier, on a Sunday, to
slash rates to zero.
Here are the 3 bulletins the FOMC released, in the order in which they were released.
https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDAsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDAzMTUuMTg3NjY3OTEiLCJ1cmwiOiJodHRwczovL3d3dy5mZWRlcmFscmVzZXJ2ZS5nb3YvbmV3c2V2ZW50cy9wcmVzc3JlbGVhc2VzL21vbmV0YXJ5MjAyMDAzMTVhLmh0bSJ9._AaakiL08792i06HyWRTiIGOAnEb2RS3qwPgQsP7a0I/br/76147535514-l
https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDAsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDAzMTUuMTg3NjY3ODEiLCJ1cmwiOiJodHRwczovL3d3dy5mZWRlcmFscmVzZXJ2ZS5nb3YvbmV3c2V2ZW50cy9wcmVzc3JlbGVhc2VzL21vbmV0YXJ5MjAyMDAzMTVjLmh0bSJ9.ac9H2IHd7ZomV22Xh9LmvVnW1nbJvPdCGl_AHTZEhlU/br/76147708882-l
https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDAsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDAzMTUuMTg3NjY4MTEiLCJ1cmwiOiJodHRwczovL3d3dy5mZWRlcmFscmVzZXJ2ZS5nb3YvbmV3c2V2ZW50cy9wcmVzc3JlbGVhc2VzL21vbmV0YXJ5MjAyMDAzMTViLmh0bSJ9.tPzOVTEZYdlBVpOJMltWUeQzxn6U8_1szzUBvtPtToM/br/76147702219-l
While the Licensing Leadership Summit scheduled for the 16th17th,
in NY was postponed, the organizers are determined to reschedule it, in NYC, for later in
the year. While I doubt that happens it is reasonable to suspect it will be held May
1921st, in Las Vegas, when the Licensing Expo is still scheduled to go
forward but, of course, subject to cancellation at a later date.
The only scheduled event we have reason to believe will proceed as planned is the Midwest
Poulty Federation starting Tuesday, because their website said thats what they were
determined to do, in the face of any disruption, no matter what. Morgan Stanley and some
other I-banks are going to do their best to hold their conferences
virtually--teleconferences. MS is singled out particularly, because McCaul remains on the
central bank calendar speaking at the event. Transworld insists its event will proceed as
planned on the 19th. On the other hand, Variety has 'postponed' its Entertainment
Marketing Summit.
Other than that, when even FOMC meetings are cancelled, and spring loaded, instead, by 3
days, you know were living in unusual times. To say the least. Be careful out there.
Trump can try and bully stocks up all he wants but most will prefer, instead, to conserve
cash.
ECONOMIC: (Highlights, only,
below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 0913, 2020 WHAT ISNT
CANCELED???? Excuse me if I
feel like months of tracking events up to a year in advance was for naught. But I
dont want to personalize the event cancellations given that everyone I know, for
now, is just peachy, coronavirus not yet hitting close to home. For that Im
thankful. And, I sure hope they dont cancel the CROI 2020 Conference on Retroviruses
& Opportunistic Infections (Boston MA thru 11th) scheduled to start Sunday,
the 8th. Because thats the one group of researchers working on antivirals
against coronaviruses, but the current one and past ones, in addition to those yet to
arrive.
But first, theres a fairly quiet Economic Calendar, filled with more Treasury
Auctions than there were, last week but not tons else, domestically, until Wednesday.
Wednesday, well learn results of the primaries the day prior, as well as February
CPI, and that months Treasury Budget Statement (Dont ask! No one in D.C. seems
troubled by the rising deficit and why would they? Rates have never been lower and, for
now, no shortage of willing buyers.) Thursday promises weekly Unemployment Claims and
continuing claims, PPIFinal Demand, plus the 4Q19 Change in Household Wealth.
Thats rubbing salt into investors wounds, donchya think? Lets hope
futures recover, some, before the mornings bell, though that seems unlikely.* The
number of global cases of coronavirus is over 105k, globally, with no end in sight, and
Saudi Arabia has decided to teach Russia a lesson in failure to cooperate. Word over the
weekend is that the Sauds slashed the price of its crude supplies, and are pumping like
mad, to draw sales away from Russia, until Russia falls in line with additional
production cuts, we presume.
Oh to be a fly on the wall of the FIAthe Futures Industrys 45th
Annual Meeting, assuming its going ahead as planned. Of course, we cant swear
to that without driving about 7 miles east to where the event is supposed to take place,
and counting how many people have shown up. Showing up was the problem that caused
SXSWSouth by Southwestto cancel. With more than a handful of major sponsors
pulling out, and a slug of speakers, artists, and musicians sending their regrets, there
really was no choice. The ECB is holding a 2-day meeting, Christine Lagardes press
conference after the meeting set to be streamed in the wee hours prior to our markets
opening. With rates already below zero, and Italy hit hard by the virus, and German still
too worried about out of control inflation to institute fiscal policies to spur the
Eurozones most important economic country. What can she possibly say? China data out
this week, incluing PPI & CPI, Monday night, will have an asterisk alongside it.
Coronavirus shutting down entire provinces and the attendant manufacturing for an extended
Luna New Year that's run into a month or more, now, in some places, just can't be
considered relevant for more than a quarter.
Which brings us to the Earnings Calendar, again, featuring many consumer related
companies, and a few high profile tech companies. There arent many emboldened
tickers, this week because there arent that many reports scheduled that can
seriously impact equities. Vail Resorts Monday, Dicks Sporting Goods Tuesday, Wednesday,
United Natural Foods and ZAGG caught my eye, along with Peuoduo, the so-called Chinese
Netflix. Adobe and Broadcom Thursday, along with Calares (shoes), Dollar General, Genesco
(Journeys, Lids, Johston & Murphy), Gaps Stores, Ulta Beauty, and Zumiez all Thursday,
along with Oracle, just a week prior to its leaders Indian Wells Tennis Tournament,
a player favorite. I emboldened Saga Communications & Salem Communications, 2 radio
broadcasters who might have been positively impacted by Mike Bloombergs half a
billion dollars investment in defeating Trump. If nothing else, he sucked the air out of
the Democratic field, which narrowed it quickly prior to Super Tuesday, and even more
afterwards. Of course, if Joe Biden keeps flubbing his statements, Mike might regret
having exited the race.
For now, assuming they go forward, Deutsche Banks Annual Media, Internet &
Telecom Conference starting Monday, and JPMorgans Industrials, starting Tuesday,
could be 50/50 events. Some of the presenters at the event, others streaming their
presentations from elsewherewhether a local DB or JPM office, of from their own
headquarters. Likewise, Id bet Bank of America would be very disappointed to have to
cancel Consumer & Retail Technology, starting Tuesday, the same day Barclays Global
Healthcare, & STRHs (SunTrust Robinson Humphrey, a Truist Company, now),
Technology, Internet & Services Conference are sxupposed to start. Likewise, Id
bet RBC sees little reason to cancel Global Financial Institutions, but, again, the
situation is so fluid, it could change in an hour, or 8 hours, or a day. This had been
scheduled to be the first really big I-bank week after Earnings Season was almost wrapped
up but now has become nothing but a big question mark. Friday, AAAAI, the American Academy
of Allergy, Asthma, & Immunology Annual is schedule to open in Philadelphia but many
of those scheduled to attend might find themselves urgently needed back home to deal with
the spreading virus.
There is a surfeit of fear, more than anythingfear of the spreading virus becoming
more pervasive, at a time when our country of 340 million people has confirmed under 500
cases, totaland I think that includes those infected on cruise ships allowed to
disembark onto land. And while many are digging up the Hollywood film,
"Contagion," to scare themselves even more, Im more fascinated by the fact
that kids seem to escape the virus grip. Wonder if well learn, in a few years,
or a decade that the younger folk were immune because of some vaccination theyve had
in their short lives that had the added benefit of reducing the impact of coronavirus. The
elderly seem most susceptible, perhaps because the immunizations protecting the young were
given to them 60, 70, or 80 years ago. If nothing else, it would seem, Trump has learned
that increasing funding to the military, and nothing else, is not going to provide the
protection and treatment the country needs most, right now. Im rooting for Gilead
Sciences anti-viral, for the hope it might provide to those already exposed or
stricken. And should that work out to be the case, dya think Trump will still want to
severely restrict what Gilead and other can charge, in order to recover their costs of
development?
ECONOMIC: (Highlights, only, below.
Full International
Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
March 0206, 2020 WHATS BEEN CANCELED?
After spending some 45 years tracking scheduled events, the job
now involves keeping track of which events have not been canceled. Events out to May have
been canceled. Google canceled an event planned for the 3rd week in April,
while sticking to plans for an event at the end of the first week of April. Makes no
sense, at all.
Thursday evening, NY Fed's Williams is delivering a "MAjor Policy Address" @ the
Foreign Policy Association dinner in NY. Who says it's a "MAjor Policy Address?"
That's how the NY Fed described it on its weekly scheduled. Another Item that makes no
sense, this week, is the 'Shadow Open Market Spring Meeting,' on Friday. Is it still the
'Shadow Fed' if 6 of the speakers are members of the current Federal Reserve, each of them
the Pres./ CEO of a regional Fed Reserve Bank? Dont believe me, scoot down to Friday
on the Economic Calendar, use the link, and see for yourself. And that may be the most
interesting item, of all, on the Economic Calendar, considering the data coming our way
will be delivered with an asterisk, given that were still finding out how many
companies still heavily rely on Chinese factories for their supply chain, almost 3 years
into tariffs that were supposed to end all of that. It might be the ISM that gets the most
attention, since it is more closely followed than the PMI, and Employment intentions will
be considered a forward-looking indicator.
Speaking of Friday, the week will end with the February Unemployment Report, probably too
soon to expect to see the impact of the supply chain seizing. And to its credit, as much
as China locked down 2 major areas of the country, last month, it is also urging workers
and companies to get back to business, now. Reportedly, only 6070% of workers were
responding, last week but that could improve as the coming week progresses.
Then, again, Tuesday is the so-called Super Tuesday in an election year. Thats when
14 states and at least 1 territory go to the polls to choose the Democratic candidate who
hopes to run for the US Presidency. In a most unlikely turn of events, Bernie Sanders was
leading going into South Carolina, where Joe Biden probably won a larger percentage of
votes than most thought hed manage. Mike Bloomberg, former Mayor of NYC will,
finally, be on some primary ballots, Tuesday, when well learn how many votes half a
billion dollars can buy. Dont get me wrong, given a choice of Bloomberg or Trump,
many will vote for Bloomberg but hes a long way from the nomination, and the stigma
of sitting out Iowa & New Hampshire will follow him the rest of the year, into the
elections, should he be on the ticket. And I will say Bloomberg came off much better in
Sunday nights "60 Minutes" on CBS than he might have, if someone wanted to
edit him to look like a jerk.
MBA Mortgage & Refinance Applications will be of interest, also. While mortgage rates
are scraping lows near the ones seen after the Brexit vote in 2016, some believe major
purchases, like those for homes, will be put off while the equity markets are taking a
deep dive. The worst is probably behind stocks, though, with a tradable bottom very
nearby. I say that because a few indicators I rely on were flashing the bottom is
imminent, by Friday. Those include VIX soaring; stocks that escaped the carnage all week
being taken out to the woodshed, Friday (i.e. JNJ & Nasdaq), shorts covering positions
in stocks like Macy*s, and words from the chief of the FOMC, Jerome Powell, meant to
soothe, failed to hit the markany mark.
Earnings, this week, are heavily dominated by retailers. In honor of that, and temps in
the 40s in Southern Florida, I went to the mall to see if sweaters & outerwear
were selling. Nearly every store was hosting a 29% off sale, on Saturday, in honor of Leap
Day. Those that werent, like the Gap chains, were offering 4050% off, and an
extra 3050% off clearance racks. Meantime, it struck me, TJ Maxx was busier late
Friday afternoon into evening, then any store in the mallperhaps hosted more
shoppers than all of the mall, combined. And, yes, even T J Maxx offered some racks of
clearance merchandise, while the Runway featured Michael Kors, Tory Burch, Escada, Emilio
Pucci, and other 'designer' name brands regular shoppers hope to find at T J Maxx, but
dont often. Also of note, at the mall, the 2nd floor of Forever 21 was
nearly empty, as if that level was heading towards closure. While it remains open, menwear
has been moved up, taking up about 20% of the total floor space. 4ever 21 & Express
for women seemed to have trimmed their inventory most severely, while 21 now offers Amazon
lockers, which it didnt on January 20th, when I was last in there. Also
missing, prom gowns & dresses which, entering March, should be on the racks. Lego
opened a store in the mall, which acts as a magnet to every kid who walks by. Parents who
dont pop in suffer screams, crying, and temper tantrums. And for the record, I
disagree with the newspapers claiming that hand sanitizer is sold out everywhere. Bath
& Body Works & White Barn had all one could want, as of my Saturday scoot around
the mall. And I bought a box of facial masks in 2017, when my community spread down 7
different fertilizers and other chemicals in a week, and I found it hard to walk outside
without protection. When a friend asked if she could have some for her very ill mother, I
immediately offered half the box, without hesitation. It was the humane thing to do, even
though Ill need some for the next chemical overload by the HOA.
Notable retailers reporting this week include Kohls, Nordstrom, Ross Dress for Less,
Target & Urban Outfitters, on Tuesday. Wednesday brings Abercrombie & Fitch,
American Eagle Outfitters, and Dollar Tree. Thursday, BJ Warehouse Clubs, Burlington
Stores, CostCo, and Kroger report.
Ironically, Investment Bank Conferences were slated to ramp up, big time, this week but
many have become question marks. Like Mobile World Congress, which was canceled for
February 24th27th, The Geneva Intl Motor Show was
canceled, this week. Slated to start on Wednesday, its the show at which luxury
marques prefer to introduce their newest vehicles. And its not that Switzerland has
suffered a high count of COVID-19 cases. On the contrary, it doesnt appear any have
been reported there but canceling that show was a way to keep foreigners who might be
infected but not showing symptoms out of the neutral state. BMW (Tues. 2:15am et), Porsche
(Tues., time unknown, to debut new 911 series), & Bentley (day & time not yet set)
are debuting the vehicles they wont show in Geneva, with online press conferences,
instead. Audi & Mercedes-Benz are still firming up their online press conference
plans, Sunday evening. Fiat Chrysler is also evaluating how to unveil its new all-electric
Fiat. There were 67 press conferences originally scheduled in
Geneva. Other events canceled 03/02, after this was posted on
Sunday, is CERAweek in a week, while FFIV closed its headquarters and postponed a planned
analyst meeting, and Target changed its 4Q19 and FY19 Investor Community Meeting into an
online, only, meeting.
As far as we know, most of the other I-bank conferences slated for this week, in the US,
are going ahead as planned. The biggest of them is probably Morgan Stanleys TMT, in
San Francisco, starting Monday. About all the Liberty divisions planning on speaking at MS
TMT, its CEO Greg Maffei making the presentations for one and all. Meanwhile, many
of the companies presenting at MS are, also, presenting at either Raymond James
Institutional Investor Conference or KeyBancs Emerging Technologies, or both. The
overlap is strong.
Morgan Stanley, last week, asked any attendees at its San Francisco Conference, this week,
to report visits to coronavirus countries,. TMT CTL, IPG, SNAP, NFLX, LYV, T, FB, Uniti
Grp, YEXT ZBRA, Lamar Advertising, SNPS, Z (ZG), PROS. BOX, Clarivate Analytics (CCC),
VEEV, UBER, AMT, IIVI, EQNX, RAMP, ZNGA, QRTEA, COMM, MCHP, LBXMA, LBXMB, LSXMK, FWONK,
LBRDA, CMCSA, EVBG, MSTR, CSCO, NTNX, DEAC (DraftKings CEO presenting), OUT, GLIBA, CASA,
EGHT, VSAT, POLY, REAL, TDOC, JNPR, DOMO, TDS, USM, GLUU, VIAC, RPD, INOV, VG, PSTG, BAND,
MOBL, OPRA, LPSN, DDOG, DELL, IHRT, AMBA, QLYS, NEWR,m PFPT, TXN, FOXA, ZEN, BL, APPN,
AXON, WK, NOW, TEAM, CYBR, FEYE, AVLR, PANW, NVDA, PLAN, LVGO, ETSY, WW, CDK, ATVI, VMW,
TRMB, ANET, DOX, AMAT, GDDY, SIMO, AKAM, VZ, CRNC, Scribed, Lumentum, OTEX, TA, FB, TVGO,
CHGG, NUAN, PYPL, DocuSign, Atice USA, SWI, TWTR, CHTR, RING, COUP, SailPoint
Technologies, HPE, WDC, FTNT, MSFT, GOOG, NLSN, RDFN, BCE, AEIS, ZS, NYT, MU, and many
more than we could list here. ZenFi Networks is broadcasting the event, its co-founder Ray
LaChance featured in a fireside chat.
Raymond James (Orlando, started Sunday) is not just tech, and will be a large conference,
too, as will be Cowens Annual Health Care Conference, in Boston, starting Monday,
like Morgan Stanleys.. Meanwhile, honorable mention to Credit Suisses Energy
Summit, in Colorado (started Sunday), Citi Global Property, in Hollywood FL, and CBOE Risk
Management, in Bonita Springs, FL (thats on the West Coast of the state, for those
who dont know.) Tuesday, honorable mention goes to KBWs Cards, Payments &
Financial Technology, which saw need to list FinTech separately, for those who didnt
get it. Bank of America is hosting Power, Gas & Solar Leaders in Boston, starting
Monday, also, while Arlington Virginia will host the 29th National HIPAA
Summit. Credit Suisse is slated to host Healthcare in London, starting Tuesday, while
Ill take a wild guess that Citis Asia Tech Tour to Taiwan, Korea & Japan,
wont got forward. For that matter, JPMorgan is supposed to host an ASEAN TMT 1x1 in
Singapore, starting Tuesday, and separately, Macau Gaming & Hengqin Development Tour,
that Im guessing is in doubt, too.
Wednesday, UBS is hosting Global Consumer & Retail Conference, in Boston. Deutsche
Bank is hosting Global Bank Capital, in London, where Jefferies is hosting Paper &
Packaging. Thats ironic, given PackExpo East is starting in Philadelphia, the day
before. Citis Korea Investor Conference, starting Wednesday? Probably as thinly
attended as an event can be, if it even goes on. And we checked these I-banks
websites and, if events were canceled, that was done more quietly, to registered
attendees, rather than with a widely distributed notice. Thursdays SCPSociety
for Consumer Psychology--couldnt be more perfectly timed but, no doubt, papers on
the impact of stocks swooning, suddenly, for a week after making new all time highs,
probably wont be presented. It was looking like stocks were never, again, going to
fall, and the 15% cash Id been holding since December looked like the most foolish,
conscious decision, in history.
Please Note, Target Tues.), ExxonMobil (Thurs.), & Chevron (Tues.) all plan Investor
meetings, this week, along with Centene, which will release its first outlook taking into
consideration its recent acquisition of WellCare. Lam Research (Tues.) meets with
analysts. Target starts after it reports earnings, this week. Last time Target reported,
its stock was crushed because comps missed. This time, I expect TGT to spend a lot of time
on store renovations, since the one my local store is undergoing is dramatic, and so
thorough, that even the bathrooms were closed for two weeks, then reopened in a trailer
outside. The beauty aisles look like LeDrugstore in Paris France, with line of sight
across the entire department. Gone are all the sky-high shelves and backboards.
All of which means nothing if stocks continue to sell off hard. As I said, Friday I saw
the first 3 signals I look for when deciding how close we are to a bottom. Given how
extreme the selling became, I am not looking for an immediate big "V" recovery.
Rather, I expect some fits and starts, and backtracking, as those who looked at their
month-end statements over the weekend, use the first bounce to get out,. But I do think
stocks are set up to start recovering, as soon as Monday, tentative as that recovery might
be. With coronavirus cases now confirmed on both coasts, I simply would not be in too big
a rush to buy.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 2428, 2020 CONSUMER FACING
COMPANIES DOMINATE EARNINGS NABEThe National
Association of Business Economists which opened the year with a big conference hosts its
36th Economic Policy Conference, "20/;20 Vision: Examining Prescriptions
in an Election Year," starting Monday, an event well populated by members of the
Federal Reserve, and more. Loretta Mester is first up, Monday, at 3pm, discussing the US
Outlook & Monetary Policy. Shes one of the more bearish Fedheads, who
didnt believe 3 rate cuts were necessary. Tuesday, World Bank President, David
Malpass provides the "View from the World Bank," at 8am, and then is followed by
Charlie Cook (a political commentator), and economics Mark Zandi and Diane Swonk of
Moodys & Grant Thorton, respectively. Well get a peek at the FHFA Dec
House Price Index & the S&P/Case-Shiller 20-city Dec House Price Index, with Fed
Vice Chair for Supervision, Clarida, providing the "View from the Federal Reserve
Board of Governors" at NABE (3pm et). Tuesday is also Fat Tuesday, the last day of
Mardi Gras/Carnival, depending on where youre celebrating.
That previews some of the highlights of the NABE Business Economists 36th
Economic Policy Conference but the entire agenda includes a more comprehensive group of
top drawer economists from Harvards Kennedy School (Jason Furman), American Action
Forum, Penn Wharton, FHFA Director Mark Calabria, Urban Institute, CoreLogic (CLGX),
American Enterprise Institute, Brookings Institution, IHS Markit, Freddie Mac, Robert Half
International (RHI), Peterson Institute for International Economics, Oxford Economics,
Columbia Threadneedle Investments, BlackRock (BLK), Charge Point, ThirdWay, a former
Asst Secy of US Dept of Energy, and more, in addition to those featured on the
Eco Calendar.
Wednesday is Ash Wednesday, the start of Lent, when the EIA will return to its regular
schedule to report Petroleum, et al, while January New Home Sales is also expected, even
as Janet Yellen, former chief of the Fed Reserve Board will be speaking at the Brookings
Institution. The title of the event is, If the Economy is doing so well, why are so many
struggling?" Shes going to cover wage stagnation & income inequality, which
is a bit of a scream, donchya think? Once in a position to do something about it, now all
she can do is dissect the problem without providing a solution. Thursday, well get
preliminary January Durable & Capital Goods Orders & Shipments, as well as the 2nd
guesstimate of 4Q19 GDP, in which its many components include not just business investment
& both government & consumer spending but, also, PCE, the measure of inflation the
FOMC prefers. A day later, will get a monthly version of PCE, on Friday, when January
Personal Income and Spending are released, along with the savings rate, and PCE.
Im not going to point out either the Conference Boards or U. Michigans
Consumer Sentiment Survey because those are often impacted by weather, sometimes an
unexpected school holiday due to snow, and rarely match spending with any reliable
correlation. Some of those surveyed, in fact, may be upbeat because Bernie Sanders won the
Nevada caucuses, while others might be depressed for the same reason. I rarely believe
what consumers report, unless they report being in a deep depression, in which case I call
someone to offer them assistance.
Which brings us to the Earnings Calendar, on which appear many companies that deal
directly with consumers, or supply those that do, especially restaurants, retailers, and
housing, with a few tech companies thrown in for good measure. Most notable, Monday, are
DinEquity, Hewlett-Packard (HPQ which XRX is pursing), Intuit, and Shake Shack. Tuesday,
Caezers Entertainment Group, Cracker Barrel Old Country Store, Home Depot &
Macys, and the RealReal, which analysts like a lot better than sellers do.
Wednesday, Apache stands out, along with Lowes, Marriot, NetEase, Papa Johns
Intl, Sea World, Square, Weibo, and Wendys. Thursday, AMC Entertainment Hldgs,
Baidu, Beyond Meat, Big Lots, Discovery Communications, J C Penney, Keurig Dr. Pepper,
Live Nation, and Steve Madden. Friday, FootLocker & Wayfair stand out but I dont
do the Earnings Calendar justice with these highlights. Please see all the tickers
emboldened for a more complete picture.
Which brings us to other events, beyond NABE, and the canceled MWCMobile World
Congress, the biggest smartphone/cellular event of the year, unfortunately, a victim of
Coronavirus fears or caution, depending on how you view it. Note, Mid-America Restaurant
Expo (Sunday)used to be known as the Pizza and Ice Cream Show but has morphed in the past
two years. .The bulk of the New York International Toy Fair is ongoing, the character
paradesort of a toy, game, and hobby/craft mascot parade, is the kick off, as I
write. Of course, Mattel & Hasbro met with analysts on Friday, Hasbro able to announce
an extended contract with Disney for Star Wars & Marvel-related toys and games.
Combined with winning the Princess license a couple of years ago, the extension of these
licenses means Disney is please with Hasbros results, as are shareholders,
evidently.
The biggest event of the week is actually two JPMorgan events held simultaneously, at the
same hotel in Miami Beach, FL. First up is the Global High Yield & Leveraged Finance
Conference held with the Global Emerging Markets Corporate Conference, which other firms
refer to as GEMS. JPMorgan, obviously, is striving to make the trip worthwhile, and not
wasting an opportunity to maximize the location. They start Monday, as does JMP
Securities Tech Research Conference participants can be viewed at https://jmptech.ljfevents-rsvp.com/participating-companies, including both public and private companies. Close to Wall Street,
BTIGs Targeted Therapeutics is likely to be well attended, Monday, as might be the
NBAA (Business Aircraft Assn) Leadership Conference in Orlando, FL. Consumer Brands
was formerly called GMAGrocery Manufacturers of Americahost their Legal
Conference, also starting Monday, in California.
The Wells Fargo Pop-up Conference on Transforming Banking promises a bunch of private
companies, plus Bk of America. (Yeah, surprised us too! BAC sticks out like a sore
thumb.). Private companies involved include Afiniti, Flybits Inc, Greenlight Financial
Technology Inc, H20.zi, J.D. Power & Associates, McKinsey & Co, Selby Jennings,
and lawyers Sullivan & Cromwell. Not who we expected, either! The Payments Summit in
Utah should be fertile ground for analysts who want to know more about Ally
Financials purchase of CardWorks, which hit ALLY hard, last week. (Dont look
at methe seller is a friends former husband. He can thank the Federal Reserve
for repeatedly refusing to allow him to transfer Merrick Banks Industrial Banking
License several times, beginning in 2010, for bringing him a more than 6x as better deal
this year. You think only equity investors are grateful to the Fed?)
Speaking of the Fed, Treas. Secy Mnuchin, evidently, was the US representative to
the G20 FinMin & Central Bankers meeting in Saudi Arabia, last week. No word on
whos going to Prague, in the Czech Republic, for the off the beaten path World
Banknote Summit, taking place there, starting Monday, with large representative groups
from all the central banks around the world attending, including Fed Reserve economists,
BoE, SNB, and reps from Norway, Colombia, Namibia, EUROPOL, Mexico, South Africa,
Australia, Canada, and so many more. Who knew? Though, if you think about it, you can make
copies at Kinkos so true in color, that paper and hidden threads and laser
treatments used for banknotes arent guaranteed to deter forgeries. That, also starts
Monday.
Sadly, the memorial celebration for Kobe Bryant and his daughter, plus the 7 others lost
when his helicopter crashed will take place at Staples Arena, in Los Angeles, also Monday.
There are few companies whove named an arena or stadium thats garnered as much
free publicity as Staples, and despite the sad event from which all those mentions arose,
come out smelling like a rose, as Staples has.
Tuesday, SVB Leerink hosts its Global Healthcare Conference in NY, Citi hosts Asset
Managers, Broker Dealers & ExchangesInsurance Conference, also in NY, and Wells
Fargo its 3rd Real Estate Securities Conference, also in NY. As must seem
obvious, the I-bank conference season is back in full swing, despite winter weather that
occasionally grounds flights. And for some, the highlight of the week will be JPMorgan
Chases Investor Day starts Tuesday, at 8am, also in NY.
But JPM wont have the spotlight to itself, this week. Wednesday, Credit Suisse hosts
its 21st Annual Financial Services Forum, in Miami. Bank of America
(theyre dropping the Merrill Lynch name) hosts its 2020 Global Agriculture &
Materials Conference, in Ft Lauderdale FL. IQPC is hosting Autonomous Cars, in Silicon
Valley, while ICSCthe Shopping Center Organization, is hosting OAC for Open Air
Centers in Nashville TN.
The Intl FCStone Vision 20/20: Global Markets Outlook (starts Thursday, the 27th,
in Orlando) will cover financial & commodity markets, including Fx Rates, Interest
Rates, may Commodities, as well as Global Securities. Offers Tracks in Ag, Correspondent
Clearing, Dairy, and SA Stone Wealth Management. Thats even as the Commodity Classic
meets in San Antonio TX, and G.research (formerly Gabelli) hosts its 30th
Annual Pump, Valve & Water Systems Conference, in NY. Medicaid & Managed Care meet
in Alexandria VA, also starts Thursday, as does ACTRIMSthe Consortium of Multiple
Sclerosis Centers, meeting in W. Palm Beach FL. Friday, as incredible as it sounds, we
found no event starting that day or the next. South Carolina, though, will hold a primary
on Saturday, as the pace picks up leading into Super Tuesday, March 3rd, when
14 states hold primaries that could seal the democrats fate.
All of which brings us to last weeks minor losses, in the face of a disease that
Evercore ISI, at least, believes is much worse in China than the Chinese are letting on.
They ask why China has locked down so many cities, and so many factories, if the numbers,
as announced, as a fraction of the illnesses and deaths that occur from influenza, any
given year. Im not a conspiracist, yet dont have a good answer to that
question. It got me thinking, anyway, as I sit in a bigger cash hoard than usual, waiting
for the pullback that will be worth buying. Meantime, Im nibbling on June 19th
Chevron calls, as the stock gets creamed, cause I cant remember a year in which oil
didnt rise into the summer driving season. The lower the price goes, the better the
recovery should be, as the Memorial Day weekend approaches.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar, here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 1721, 2020 RETAIL &
RESTAURANTS START DOMINATING EARNINGS With FOMC Chief Powell's
testimony out of the way, Fedheads are out in force, ,speaking, especially towards the
latter half of the week. IF you habitually seek out word on what Fed Governors or the
chief are doing,, on the Fed Board Calendar, be aware that calendar does not include
whats called "external" events. Therefore, we know the ECB chief Lagarde
and her lieutenant, Panetta, are both appearing at the G20 FinMins & Central Bank
Governors in Saudi Arabia, of all places, next Saturday. We have no idea whether Powell is
attending, and the FRB calendar wont give us a clue because its an external
event. The FRB monthly calendar only discloses external events if a speech will be
streamed by the FRB. We can assume the BoEs Carney is not attending because
its not on their weekly calendar. And why should he? Hes gone next month, his
new govt position already announced.
On the flip side, the University of Chicago Booth School of Business Annual "US
Monetary Policy Forum," in New York is filled with Fedheads speaking. And not just
speaking but Mester is moderating a panel populated by Fed Gov Clarida, BlackRocks
Rick Reider, and BoEs Teneyrothe latter noted on the BoE weekly calendar.
.ECBs Lane is the keynote, while Fed Gov Brainard & Atlanta Feds Bostic
are panelists at the same forum, earlier in the day, addressing "Monetary Policy for
the Next Recession," a topic most FedHeads, generally, want to avoid, so consumers
dont talk themselves into an "upcoming recession." If all that wasnt
enough for a Friday, when markets have, recently and regularly, given up some of the
weeks gains, Dallas Feds Kaplan is opening the Dallas FRB/ Texas A&M Real
Estate Centers "Room to Grow: New Economy Conference," just as long-term
rates are scraping the bottom of the barrel,
And why not? Half of China is all but at a standstill, which means the tech supply chain
is largely at a standstill, even as about a third of the apparel industrys factories
are at a near standstill, too. As luck would have it, the apparel & shoe industry was
forced to seek out alternate factories to the ones theyd been using in China, thanks
to Trumps tariff, so a good portion of that supply chain was already moved to
Vietnam, Cambodia, and other 3rd-world countries, saving that sector from total
devastation. It really seems as if the Street is ignoring the real risks COVID-19 presents
to the supply chain, under the assumption that disruption will mimic the SARS crisis, even
though SARS infections never approached the number of coronavirus infections in China,
alone. My Fx consultant, Barbara Rockefeller of Rockefeller Treasury Services wrote,
Monday that China is now quarantining money, and attempting to disinfect it before locking
it away for 2 weeks, to make sure money isnt transmitting new infections.
How badly is COVD-19 hurting Chinas economy? Since we dont know if the
perpetual 6.1% growth the country regularly reports for GDP, its impossible to know
how badly shutting entire cities and provinces will hurt but, a month in, we have to
assume its going to hurt, and some economists have ventured to guess a half a point
cut to GDP to 5.65.5%. Believe that if you wish but it doesnt appear the
crisis is over, yet.
And, before we jump to another Calendar, note the EIA Petroelum, et al data wont be
out until Thursday, half an hour after the usual Natural Gas Report is released. Tuesday,
well get the NY Fed/Empire State Manufacturing Survey which should be a shrug.
Manufacturing mostly left NY decades ago. NAHBs Housing Market Index is a sentiment
index that means little beyond optimism if traffic is strong at new communities, dour if
its not. Wednesday, US Jan. Housing Starts & Building Permits, which should be
strong, given the mortgage apps already reported, and warm weather for the time of year.
More important, Wed., is the Jan Producer Price Index, FOMC Minutes of the Jan. 2829th
meeting, as well as a surfeit of Fedheads speaking, starting with Bostic, moving to
Minneapolis Kashkari, before Feds Barkin weighs in at Duke University, half an
hour after the market closes.
Thursday, well get the Philly Fed Manufacturing Index, both EIA announcements, and
Ag Secretary Sonny Purdue speaking at the 96th USDA Agricultural Outlook
Foruman event at which Trump has been known to decide to attend and speak at, at the
last minute. Friday, Markit offers up the preliminary Feb Manufacturing, Services &
Composite PMI (Purchasing Managers Index), while the Natl Assn of Realtors
will offer up Jan Existing Home Sales, a series for which a lack of inventory is an issue.
Which brings us to the Earnings Calendar, where the highlight of the week, undoubtedly,
will be Walmarts report and Meeting with the Investment Community, Tuesday. Recall,
Target disappointed with weaker than expected same store sales in Q4. That may or may not
happen at WMT but the law of large numbers surely will soon catch up to it. Plus. I know
more and more people who are ordering online and picking up in the parking lot, where a
WMT employee will place their order in the truck of their car. As convenient as that is
for customers, it kills impulse sales, which is why vendors pay to get a display right
inside the doorway, and candy vendors have boxes of single servings lining the aisles of
check-out counters. But heres another problem to keep an eye on. My local Target,
which is NOT a super store, has a major renovation underway. (I previously mentioned the
fact that the bathrooms were closed off, and a week later, restrooms in trailers added
outside.) Well, the look for the new Target floored me. The cosmetic department has
ditched all the tall, metal displays, replacing them with shoulder height free-standing
shelving thats lit up like Christmas, and reminds me of Le Drugstore, in Paris,
France. An associate manning the electronics department did near cartwheels to find the
security software I was looking for, and was equally as energetic looking for an Apple
watch III for another customer, finally reserving her one at a store 8 miles away, and
encouraging her to use pick-up in the parking lot, so she wont be inconvenience. I
have never before encountered that kind of service in electronics, at Target. Furthermore,
when I marveled at the 32" brand name HD TVs marked down to $129 each, as part
of the clearance sale in advance of that department being renovated, she told me they were
only $20, or so, less than what was available, elsewhere, so really no reason to buy now,
and think of who needs one in their kitchen, afterwards. Walmart, on the other hand, is
still a very dirty and yellow-lit place to visit.
Beyond Walmart, Ive highlighted any number of stocks set to report, restaurant
chains, hotels, the sleep industry, homebuilders and their suppliers, along with a number
of COVID-19 hit stocks, electricity generators, auto-suppliersalso China supply
chain handicappedand Viacom, the latter Thursday. One of the saddest reports may,
well, be IMAX, Wednesday, given most of its theaters forced to close for Lunar New Year in
China & Taiwan. Other thoughts on Earnings include wondering whether SCIService
Corp (Mon), hopes COVID-19 kills a lot of people in its service areas? Also, considering
TIVO (Tues), contrasted with ROKU, which is everything TIVO ever hoped to be. How did ROKU
accomplish everything TIVO didn't?
Which brings us to Events, NADANational Auto Dealers Association Convention and
Expo, at which ATDAmerican Truck Dealerswill exhibit, this year, too. Given
Mondays holiday closures, its a bit odd that CAGNY, the Consumer Goods
Analysts of NY scheduled their week to start Monday. Perhaps it was a way to provide a
discount hotel rate to attendees, the weekend prior, providing another excuse to attend,
if they didnt have sufficient ones, already.
I dont know how Barclays scheduled its Industrial Select Conference to start
Wednesday, when Citi is offering up its Global Industrials Conference Tuesday, but given
theyre both in the Miami area, its mighty convenient for the presenters, to
shuttle from one event to the other. Jefferies is hosting a Dental Summit, in Chicago,
Thursday, while those who arent turned off by travel by air, can attend the Capital
Link 11th Annual Greek Shipping Forum, in Athens, Thursday, if they cant
wait for the NY version. Meanwhile, the entire toy and game industry is assembling in NY
for the International Toy Fair, Mattel & Hasbro hosting walk-throughs of their
exhibits to analysts, on Friday, before the event officially opens, on Saturday. I
included the JPMorgan Taiwan Tech Tour on the schedule, originally planned to start
Thursday but wouldnt be surprised to learn that event was canceled, due to
coronavirus. I dont even know if planes are flying into Taiwan, now.
And that tour is just one example of the issues the Wuhan virus has created, the Mobile
World Congress is the biggest of the events forced to cancel, and that was the biggest GSM
show of the year, and in Spain, never mind Taiwan. And, still, the market seems to be
operating with blinders on, refusing to see the degree of risk COVID-19 represents, just
because SARS was a minor event, over before it exerted a huge impact. I am not that
cavalier. Even factories that have reopened are reporting widespread employee outages
because theyre afraid to show up and mingle with fellow workers. With at least a 14
day incubation period, this new virus is no SARSits impact already multiples more
damaging than the SARS outbreak was. Be careful out thereVERY careful about your
long positions.
ECONOMIC: (Highlights, only, below. Please see Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 1014, 2020 POWELL TESTIMONY + I-BANK
EVENTS RETURN Lets be honest, especially after
Fridays gangbuster January 225k jobs added, Powells Semi-Annual Testimony to
Congress (Tuesday House & Wednesday Senate) trumps (if youll pardon the
expression) another Earnings Calendar filled with more reports than seem justified, by
now. Sure, markets were due for some profit-taking, after last weeks big gains,
Monday thru Thursday but, surely, there was some trepidation about such a strong
employment report, when the FOMC is supposed to be on hold for the yearor at least
through the November elections. Not that anyone should expect a shock, when Jan. CPI is
released, Thursday, especially when the price of crude has been collapsing (update to last
weeks comment on prices at the pump: the price for Supreme did, indeed, fall by
(-34c) p/gallon on Monday, right after the Super Bowl cleared out of town.)
Lets swoosh past other Fed speakers, this week, for the moment, Fed Governor for
Supervision, Quarles, speaking on Bank Supervision, @Yale Law School, delivering the
Deans Lecture, just past noon Tuesday. However, unless something changed since
Thursday, its not a speech that will be steamed. Maybe theres a rule against
streaming supporting Fedheads when the major domo (Powell) is speaking, live, on TV. Also
Thursday, it might be interesting to see where William Dudley, former CEO of the NY Fed,
goes in his discussion with current NY Fed CEO John Williams. Last we heard from Dudley,
you might recall, he wanted to see the FOMC use its rate setting power to help push Trump
out of office.
And, as Fridays Jan Retail Sales are rolling off the presses, along with Dec
Business & Retail Inventories, and as Jan Industrial & Manufacturing Production
& Capacity Utilization arrive, half of Wall Street will be clearing out for the
Washingtons Birthday/Presidents Day holiday, come Monday, Feb 17th.
While were on Friday, and the long weekend, note NADAs (Automobile Dealers)
Convention/Expo starts that day in Vegas, accompanied by Connect, for IoT vehicles, while
ATD for Truck Dealers is being held concurrently, in Las Vegas, kicked off by J.D.
Powers Auto Summit.
Now, about the volumes of Earnings Reports expected, the crescendo on Wednesday &
Thursday, there are some tech leaders like Akamai, Cisco, Alibaba, NetApp & nVidia,
and pardon me, if I say so, tech companies not considered that way, like CME. Entire
industries report this week, like the waste hauling & recycling industry, including
Waste Connection Wednesday, Republic Services & Waste Management on Thursday. Toymaker
Hasbro reports Tuesday and Mattel on Thursday, even as both prison operators, CXW &
GEO report Wednesday. Hilton reports Tuesday, and Wyndham Hotels on Thursday. Check out
other highlighted tickers, on the
Earnings Calendar, to see more names you might want to watch, including PepsiCo, Thursday,
when an authority on employment, Kelly Services is also due to weigh in.
Which brings us to the Events Calendar, which includes the New York Designer Runway Shows,
along with Ready-to-Wear shows, making for NYC gridlock. It makes sense for WWD to host
its Beauty Forum in NYC, Wednesday, where the Fashion World will be assembling. Out in
Palm Desert, CA, IABthe Internet Ad Bureau Annual Leadership Meeting gets underway,
in a week OmniCom is expected to report, Tuesday.
BIO CEO & Investor Conference starts Monday, in NY, which is why its a little
odd that Stifel hosts Biopharma as a Ski Summit, in Park city UT, while the 17th
ImmunoLBX Summit will be held starting the same day, in San Diego. Enercom, in Dallas, is
a big energy conference,
One of the headline events of the week is sure to be Goldman Sachs 2020 Technology
& Internet Conference, out in San Francisco. Theres, also, Cowens 41st
Aerospace/Defense & Industrials Conference, in NY, while KBW hosts its winter
Financial Services Conference, in Boca Raton, FL, and Guggenheim hosts Healthcare Talks
Oncology, Day, in NY
Bill Gates is one of the AAAS Plenary Speakers, starting Thursday, as is WIRED journalist
Maryn McKenna, and MSFT GM of Quantum Systems Krysta Svore. Its worth noting
that Orthopaedic Research has been meeting and will continue into Tuesday.
MD&MMedical Device & Manufacturing Conference/Expo meets concurrent with
Electronics West/Advanced Manufacturing Expo/Conference, though Additive Manufacturing
Strategies meets in Boston, starting Tuesday, too.
And Id be remiss if I didnt mention United Technologies 2-day Analyst Meeting
for its spin-off companies, Carrier (HVAC) on Monday and Otis (Elevator) on Tuesday, when
Visa will, also, host an Investor Day. Emerson, Johnson Controls, Enova Intl, &
Penske Automotive will all be meeting with investors, on Thursday.
But for all that, its really Powell, and the Goldman Sachs & Cowen Conferences
that will rule trade, until the great exit before the 3-day weekend gets underway. Of
course, thats barring anything unexpected out of China and the coronavirus, which
seemed to be slowing its spread rate over the weekend. Calm before the storm? Evidently.
The death toll has reached 908, growing by 97, while the confirmed China mainland total
cases rose to 40,171, even as new cases were reported in Spain, and at a French ski
resort, where 5 British visitors were diagnosed but the cruise ship quarantined in Japan
has been released., desepite a significant number of new cases on the ship
ECONOMIC: (Highlights, only, below.
Complete
International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
February 0307, 2020
ANOTHER EARNINGS SLAM, IMPEACHMENT TRIAL TO END + SOTU ---IS THAT ALL? In covering Economic Events on the highlights calendar,
below, beyond domestic data, I concentrate on International "hotspots," if
Aussies will excuse the reference. So, the UK thanks to Brexit, which finally happened at
2100 gmt, Friday, 01/31, Hong Kong because of protests (how long will China remain hands
off?), China, always, because its the 2nd biggest global economy, and was
heading towards first, until coronavirus, and Australia, because of the beastly bushfires
that, thankfully, didnt derail the Australian Open Tennis Championship, and the
impact of Chinas coronavirus stoppages (New Year extended another week, to keep
travel and mingling to a minimum), and the impact on the Aussies natural resources
exports, get the focus for now. Truth be known, while everyones been speculating on
how Brexit will impact the UK, theres been much less talk of how Brexit will impact
the EU but thats probably an oversight corrected as issues arise in coming days,
weeks, and months. And while no one Im aware of has put the two together, the
EUs main engine, Germany, barely grew, in recent quarters, its economic health
now in question.
The Economic Calendar, overnight Sunday, promises China December & FY19 Industrial
Profits, pus Caixins version of Manufacturing PMI. While local Sunday news claimed
the actual number of Chinese coronavirus cases was up to 75K, prior to China admitting to
an issue, theres not much corroboration. And while the sight of deserted Chinese
cities & highways is eerily spooky, the truth is Chinas Lunar New Year causes
atypical behavior, anyway, so the closure of "infected" cities to stop the
spread of the virus seemed extreme, when first announced, the truth is, workers leave the
cities in droves to return to their rural homes for the New Year, anyway. What really
struck the most resounding chord, however, was the (-80.0)% drop in visits to Macau over
the New Year holiday. Of note, too, Sunday night, is Hong Kong Q4 GDP, likely to have been
seriously impacted by protests, curbing sales of luxury goods, to which HK is usually a
large contributor. Well, also, hear Markit & partners Jan Manufacturing
PMI for the Eurozone, France, Germany, Italy, & Spain. Also expected, Wards January US
Vehicle Sales. With Fiat Chrysler, Ford, and GM reporting earnings this week, well hear a
lot more granularity than usual.
Monday, Iowa caucuses will provide the first concrete numbers on the democratic
candidates. And Im partial to the ISM Manufacturing Index, over the PMIs,
cause ISM seems to match up better with actual activity. The Treasury will Auction
3-, & 6-month Bills, Monday, and yet to be announced 4-week & 8-week bills,
Thursday, but otherwise is out of the issuance market. Honestly, I could not find info on
Atlanta Feds Bostic speech on Big Data, AI & Machine Learning but one of my most
reliable sources says its a go. I can, on the other hand, confirm Fed Gov Brainard
speaking on Payment Innovation, at a Stanford, CA, Symposium on Future Payments. Also
Monday, the Feds Senior Loan Officer Survey. Monday night, Overnight, (the 4th,
in local time), the RBA MPC will announce its Feb Target Cash Interest Rate. Given
brushfires disrupting a good portion of the country, a rate hike is out of the question.
On the other hand, given that the Australian Open Tennis Championship was able to proceed,
as scheduled, suggests little need for a rate cut. But as mentioned, above, Australia is a
big exporter to China, so that country all but closed down is bound to impact Aussie
activity. Also overnight, Monday, Hong Kong Dec Retail Sales, business district protests
likely to impact the luxury market especially hard.
Tuesday, revised Dec Durable & Capital Goods Orders & Shipments. Then, in the
evening, Pres. Trumps State of the Union Address, touted as extremely upbeat.
Overnight, into Wednesday in the US, Caixins January Services & Composite PMI,
and the same data for the Eurozone, France, Italy, & Germany from Markit and partners.
ECB Vice President de Guindos will open the ECB conference on "Macroprudential stress
testing & financial stability." Former Fed Gov Kohn is one of the more high
profile speakers. Also overnight Tuesday an ECB Economic Bulletin, "Breaking the
chain effect of tariffsforeign trade zones in a time of
protectionism." Also, UK Jan New Car Registrations, and Markit/CIPS
Services/Composite PMI, as well as Eurozone Dec Retail Sales.
Wednesday, the US Senate will likely vote to dismiss the Articles of Impeachment passed by
the US House, ending the impeachment saga that mostly disrupted life for those still
addicted to soap operas. Also Wednesday, the weekly MBA Mortgage & Refinance
Applications, US Jan non-Manufacturing ISM Index, EIA weekly
Petroleum/Gasoline/Distillates/Refinery Report, and Brazils Central Bank Interest
Rate Decision. Overnight, into Thursday, Chinas Jan. Trade Balance, possibly
impacted only slightly by coronavirus shut-downs though New Year would have had a similar
effect, falling in January, as it did, as opposed to February last year, and most years.
ECB VP de Guindos is the opener at Santander's XXV1th Iberian Conference in Madrid, while
ECB Chief Lagarde opens the Quarterly ECON hearing before the EU Parliament.
On Thursday, Fed Vice Chairman for Supervision, Randall Quarles, speas on Monetary Policy
& the Economic Outlook at the NYU Money Marketeers meetinga dinner meeting. All
of the above is a long way of getting to Fridays big datanot just the January
US Unemployment Report but BLS Benchmark Revisions, as well. While the Street is
expecting 180K, or so, jobs to have been added, any number above 150K probably will
suffice. The Fed Board will submit to the Senate Cmte on Banking, Housing, & Urban
Affairs, and to the US House Financial Services Cmte its July 2019 Monetary Policy Report,
which the Fed Chairman testified to back in July 2019.
That brings us to Earnings, Alphabet (better known as Google, still) reports Monday
evening, along with Check Point Software, The Hartford, Leggett & Platt. NXP
Semiconductor, & Syscothe other one, that delivers food to groceries. No doubt
Alphabets report will set the tone for the week of Earnings, though therell be
plenty more ahead. Tuesday, BP & ConcoPhillips report, along with Allstate Insurance,
Chipotle Mexican Grill, Chubb, Clorox, Cummins, Eaton, Emerison, Ethan Allen, Gilead
Sciences, L3Harris Technologies, Lancaster Colony, Match.com, McKesson Corp, Microchip
Technology, Pandora Jewelers, Prudential Financial, Ralph Lauren, Royal Caribbean, Seagate
Technology, Simon Property, Sony, Walt Disney, Waters Corp, and Zimmer Biomet. Thats
a collection that nicely encapsulates a cross section of American industry.
Wednesday, highlights include Avalon Bay, Cabot Microelectronics, Capri Holdings (formerly
Michael Kors), Coty, Energizer, Fox Corp, GM, Group 1 Automotive, Humana, IAC, M/I Homes,
Merck, Met Life, Penske Automotive, Qualcomm, Spirit Airlines, Taylor Morrison Homes, and
Yum China. Thursday, reports are expected from AGCO, Arrow Electronics, Baidu, Becton
Dickson, Bristol-Myers Sdquibb, Cardinal Health, CDW, Columbia Sportswear, Estee Lauder,
Fiat Chrysler, Intercontinental Exchange, Kellogg, Merdith Corp, Mettler-Toledo, Motorola
Solutions, New York Times, News Corp, Penn National Gaming, Philip Morris, Pinterest, Post
Holdings, Regeneron Pharma, S&P Global Intelligence, Skeckers, Spirit Aerosystems,
Synaptics, T-Mobile, Take-Two, Tapestry (formerly Coach), Twitter, Tyson, Verison, Willis
Towers Watson, Wynn Resorts, and Yum Brands.
Friday, the schedule lightens up, with notable reports from AbbVie, ASE Technology, Canada
Goose, Chicago Board of Trade, and Hanes Brands. If Equities can get through the Earnings
dump, this week, and coronavirus isnt cited as a reason to lower Q2 estimates,
its altogether possible the worst of the virus sell-off will have ended by
weeks end. Of course, passive investors of all stripes will have to get over the
fact that their stocks probably didnt rise despite what sounded like relentless
gains in stocks, most of the month, until late in the month. Surely, Trump will talk up
stocks Tuesday, during his SOTU, and probably blamed last years Fed rate hikes for
the fact that stocks werent higher, still, to end the year.
Which brings us to events, InterSolar North America, starting Tuesday, one big event,
MAGICthe enormous apparel, footwear & accessories market an even bigger event,
in San Diego & Las Vegas, respectively. Both draw a number of sub-events, yet oddly,
FFNYfancy footwear--is in NY, while most of the shmata industry will be in Vegas.
And even stranger, the New York Fashion Week, the one known for designer runway shows,
starts for Men, Monday, and for Women, Friday. EEIthe Edison Electric Institute
holds a one-day Wall Street Briefing, Wednesday, when the Cattlemens Beef
Association will meet in San Antonio TX. Why, then, does Feed & Grain meet in Iowa?
Beats us! ORS for the Orthopaedic Research Society, starts next Saturday, the
aforementioned ZBH earnings report, mentioned above, more than a hint about how that group
is faring.
Because of the crush of Earnings reports scheduled, I-banks are mostly AWOL this week. An
exception is Stephens, starting on the 3rd, when it kicks off its Regional
Banks Investor Trip to visit these tickers: ABTX, BSX, BSVN, BOKF, CBTX, CMA, CFB,
FFIN, GNTY, HTH, IBTX, PB, STX B, TBK, VBTX (Dallas TX thru 5th) Otherwise,
UBS is partying at NAPE, Thursday, though the Wildcatters Ball Friday is the better
known evening entertainment. Those larger I-banks that were engaged, probably were at SPIE
Photonics West, continuing through the 6th, in San Francisco, or at APEX
Expo/PC Printed Circuit Expo, in San Diego, both of which started on the 1st.
and runs through the 6th. New York wont be home to just fashion, this
week but will also host New York NOW, formerly the NY International Gift & Housewares
Show.
All in, a busy Economic & Earnings Calendar will define the week, the number of cases
of coronavirus in the U.S., to date, still quite small. And, if you think about it, even
75K cases in Chinaa country with 1 billion peopledoesnt sound
terrifying, in perspective, though no doubt it is for the relatives of those 75K. Put the
220, or so who died, in perspective, in relation to 1 billion total citizens, and that
doesnt sound so scary, either. And in a control economy, its not hard to
imagine those infect, first, avoiding medical help, initially. China has already started
larg injections of cash into the economy, to steady things. Clearly, US stocks were aching
for an excuse for profit takingand found one in coronavirus. But having raised cash,
in early January, Im not sorry to see a sell-off. I just hope I know when to
capitalize on the carnage with some buys. And in the meantime, I'd love to see the price
of gas at the pump come down, like crude has. So far, not but, perhaps, a Super Bowl just
36 miles away has helped keep prices elevated, through this weekend.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions are the authors, alone, and
should be just one factor in more complete due diligence.
January 2731, 2020 WHAT FOMC MEETING?
While some are anticipating a potential tweak to what the Fed pays on
reserves left with it, that really would defeat the purpose of all its injections in the
REPO market. You dont get banks to step in they way they used to in the REPO market
by paying them more on the dead money theyre forced to deposit at the Fed as a
capital buffer. Why would the
Fed do that? Beyond that, everyone and his uncle expects the FOMC to be on hold until
after the November elections, at the least, so this is one Fed meeting that might be
forgotten in a blink. Or as I said in the title, "What Meeting?"
Because of the FOMC meeting, Fedheads arent speakers of note this week. Yes, NY
Feds Williams keynotes a NY Fed Pitch Event but that has to do with Puerto Rico, so
wont be a US Policy statement. The Bank of England meets this week, too, with Gov
Carneys last post-meeting Press Conference early Thursday morning, before US markets
open. Set for his term to expire on March 31st, his replacement has already been named, so
no reason to dally. Theres no reason to expect the BoE to act, given that Brexit is
supposed to take place on Friday, Jan 31st, and if anything, a rate cut could
make more sense than a hike, while it doesnt appear that England has suffered,
terribly, as a result of Brexit, or even the delay. If anything, Prime Ministers
Boris Johnson won an even bigger mandate in December, so the country is behind Brexit,
even if all the ts arent crossed, nor Is dotted. The whole
"Brexit" doomsday scenario reminds of Ed Yardeni predicting planes dropping out
of the sky, when the calendar turned 2000 from 1999. It didn't happen, nothing even close
happened. Even Florida, of hanging chad fame, managed to keep electricity pumping through
the wires to homes and businesses. Brexit doom? Too much ado about nothing.
China, because of the coronavirus, by the way is on lock down for the New Year, which is a
crying shame. First, the tradition is to pass around money in red envelopes, that then get
spent, and second and more important, New Year is when workers squeeze onto a train to
leave the city and go back home to their rural families. Lock down cities, airports,
trains and other forms of transportation, and its possible some workers wont
see their families for another full year. Of course, a country that can build 2 new
hospitals in a week can manage to declare a 2nd holiday to duplicate the period
denied during the Chinese New Year. Meantime, But the economic injection from red
envelopes may be MIA this year, too. Donchya think shopping centers, clubs, and other
places where people mingle and hang out will be locked down, next, if not already?
Dont look know but the Treasury is in a sudden rush to issue a ton of debt--$243B,
in the 3-days, Monday through Wednesday, if my calculations are correct. Anyone remember
when the Republicans were the standard bearers of lowering US Federal debt? Ahh, the good
old days. We need a Great Thunberg to get on Congress, and Republicans, in particular, to
stop the spending. If they cant see climate change as a risk, perhaps debt will wake
them instead.
The rest of the Economic Calendar promises Dec New Home Sales on Monday, the S&P
Case/Shiller Nov 20-city US Home Proce Index on Tuesday, plus Realtors Dec Pending
Home Sales on Wednesday. Away from housing, the IRS will start accepting personal, Federal
Tax Returns on Monday, while Tuesday promises US Dec Durable Goods & Capital Goods
Orders & Shipments. SONTState of the Net is an annual meeting organized by
Congressional workers. At one time, the biggest clash was over the US turning management
of the internet over to ICANN but thats come and past without much notice. Also
Wednesday, Dec. advance Trade Balance, Wholesale Inventories, and Retail Inventories, plus
EIAs weekly Petroleum, Gasoline, Distillates, and Refineries status. OPEC is
expected to release its monthly member production report a day later, before US markets
open. Thursday, Advance Q4 GDP is expected, and with it, Business Investment, Consumer
Savings & PCE, the latter the Feds choice of inflation measurement. Friday, Dec
Personal Income & Spending includes a monthly look at PCE.
Which brings us to Earnings, a calendar as plump as any, in any week of the reporting
season. One Street wag claims 30% of the S&P will report this week. Who am I to argue?
What I do know is that AMD & Apple report Tuesday, Facebook, MasterCard,
McDonalds, Microsoft and Tesla on Wednesday, Amazon on Thursday, and both Chevron
& ExxonMobil on Friday. Well also hear from a large portion of the megacap
defense companies (Tues.: LMT & United Technologies; Wed. Boeing, General Dynamics,
GE, then Thursday Oshkosk, Northrup Grumman, leading to Fridays Honeywell.)
Homebuilders are well represented this week, with D I Horton Monday, Pulte Homes Tuesday,
Meritage Wednesday, and Beazer on Thursday but lets not overlook suppliers like
Whirlpool Monday, Scotts Miragle-Gro and Stanley Black & Decker on Wednesday, or
Sherwin Williams on Thursday. And then theres are a handful of rails, including 2
from north of the border, plus megacap healthcare companies like Pfizer on Tuesday,
Alexion, Amgen & Biogen on Thursday, along with AT&T on Wednesday, plus Verizon on
Thursday, when Visa also reports. But trust me, that only scratches the surface of coming
earnings reports. The Earnings Calendar is worth a close look not for the sheer number of
companies reporting but because the middle weeks of Earnings Season is when stocks,
typically, pull back, until the deluge weeks are complete, and PMs decide the
reports were not as bad as they could have been. And even if they are this week, which
banking behemoths gave us no reason to believe is likely, it can all be blamed on the
trade war, which entered truce this month, when Lui He and Trump signed the phase 1
agreement, mostly about agriculture. Lets not forget, Huaweis CFO is sitting
in a Canadian prison, at the USs request, and demands for extradiction could be the
subject of a court case this week, even as Trumps Impeachment Trial proceeds.
And make no mistake, the NY Times bombshell from John Boltons book, that Trump
directly tied the withheld $400B in aid to Ukraine to that countrys announcement of
an investigation into the Bidens could, potentially, sway some Republicans who decided to
leave Congress, after this year, or some moderates who really could put country before
politics. Had the whisttleblowers report not been made known, Ukraine could still be
waiting for that aid, or would have already announced the investigation Trump wanted, just
to get the aid. Brain injuries suffered by US service people in Iraq, when Iran revenge
bombed US bases, were referenced dismissively, by Trump, as "little headaches."
That may have gone too far for some Republicans in Congress. You can mess with anyone but
never veterans or service people who were injured on duty.
Which brings us to Events, where investment bank hosted conferences are slim, due to
Earnings Season, even as one of its own, Goldman Sachs, plans an investor day,
Wednesdayits first in 5 years or more, and surely the first without Blankfein. The
Event Calendar is heavy with healthcare-related events, Food Marketing Executives &
Organic Food, .FIG Partners, now owned by Janney, hosts West Coast CEO in Phoenix,
starting Wednesday, timed to follow Bank Director Acquire of Be Acquired, an annual
conference, in that city, starting Sunday, as I write. Other notable events include Philly
National Candy, Gift, & Gourmet Show and Inside ETFs, and IEEE Radio & Wireless
Week, all starting Sunday. Monday, Tour dAlis is the Americas Lodging Investment
Summit (ALIS), a group hard hit by coronavirus, in the few days the presence of that virus
has been disseminated. For many tech investors, DesignCon, Where the Chip Meets the Board,
is a big event but with Sanmina, Lam Research, and other Semi Equip names reporting
results, therell be a surfeit of information, including at SAW Hybrid & Electric
Vehicle Technologies Symposium, which starts Tuesday.
Speaking of Tuesday, in a case of perfect timing, ASM--the American Society for
Microbiology meeting starts that day, Biothreats the original topic, coronavirus, surely,
a prime topic of conversation, if not abstracts and/or poster sessions. The first person
diagnosed in Chicago was said to be doing well in a hospital. Evidently, her case was mild
or the antivirals theyve given her are working. Thats the first were
getting word of a person stricken recovering. Also Wednesday, CIBC hosts its 23rd
Annual Western Institutional Investor Conference, in Banff AB, Canada. Besides GS
Investor Day, Kinder Morgan hosts its own in Houston, while TD Ameritrade hosts its
National LNC Conference, in Orlando, starting the same day.
Otherwise, End of Month, 2 major Central Bank Meetings, plus a slug of Earnings Reports
will occupy Street interest, a pullback continuation of last weeks action quite
typical of this stage of Earnings Season, so get ready for talking heads to urge one and
all to use the pullback as an opportunity to scoop of fallen shares. Its what
theyre paid to do. Normally, as we enter February, Id been looking for June
call options to buy on energy stocks. Typically, the oils bottom in February, and rise
into Memorial Day. Given how beaten up the oils are, its something to keep in the
back of your mind, if the coronavirus doesnt become more significantly widespread
outside China.
R.I.P. Kobe Bryant and all those who died with him.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 2024, 2020 NOW the EARNINGS
RUBBER REALLY MEETS THE ROAD Now that all the big money
center banks have reported, hundreds of smaller banks are slated to weigh in, along with
major regionals like Zions Bancorp, major credit card & auto loan lenders American
Express, Ally Financial, Capital One Financial, Discover Financial Services, &
Synchrony, smaller brokers like Interactive Brokers & E Trade Financial, and a large
international bank, UBS Group. Additionally, heavy hitters like Intel & IBM, Abbot
Labs, Johnson & Johnson, Procter & Gamble, United Airlines, Netflix, American
Airlines, Comcast, ST Microelectronics, Travelers, & Union Pacific, though youd
be well-served to, instead of stopping here, checking out all the emboldened tickers on
the Earnings Calendar which is, admittedly, missing at least 50 smaller banks that
arent within our coverage universe.
Pres. Trump was scheduled to speak at the 101st American Farm Bureau Federation
Convention and IDEAg Expo but given Mondays holiday, and Tuesdays start of the
Impeachment trial in the Senate, its difficult to believe therell be much
interest in a 48-hour old speech, by the time markets reconvene. Hell speak again at
the World Economic Forum in Switzerland but given the time lag, and the Impeachment trial,
the only thing the media will be interested in, from Switzlerand, is catching other
foreign leaders making fun of Trump, or Trump managing to embarrass himself, as he has at
other global gatherings, when hes tried to muscle into the middle of a line of world
leaders, standing shoulder to shoulder without him. Trump will not be the only famous
American speaking at Davos, as the Economic Calendar bravely details. Those sessions that
are streamed will be streamed from WEForum.org, only, as far as we know.
The Bk of Japan has a Monetary Policy Meeting that ends on Japans Tuesday,
overnight, Monday, for us. The Bk of Canada MPC also meets, its statement expected on
Wednesday. Early Thursday morning the ECB MPC will weigh in, too, Lagardes press
conference not so early in the a.m., that many traders wont catch it live, before
some traders make it into their offices. The BoJ weighs in, again, overnight Thursday,
releasing minutes of its December 1819, 2019 MPC Meeting. The Chinese New Year
celebration kicks off Friday, which pretty much puts China out for 12 days, the actual New
Year on the 28th, early this year. Many years, the Chinese New Year is closer
to my birthday, which means just a couple of days prior to Valentines Day. That, so
its said, occurs on a Friday, which is really good for restaurants.
Other items on the Economic Calendar, of note, include housing data Wednesday, from FHFA
& Natl Assn of Realtors. Petroleum stats wont arrive until Thursday,
because of the MLK Hoiliday, Monday. Otherwise, the Events Calendar is a little all over
the place. In addition to the Farm Bureau previously mentioned, theres Retina &
ACCs Cardiovascular Conference, a Veterinary Conference, then imprinted Sportswear,
Halloween, Costume, Party & Special Occasion Show, and Mens Haute Couture shows
in Paris. Retail Leaders moved from Northern Florida, and the ICRConference, south to Palm
Beach for RILAthe Retail Leaders CEO Forum. While the press will heavily cover
whats going on in Paris, France, New York will be home to the Mens
Contemporary Fashion Market, while San Francisco will host Winter Fancy Foods.
Womens Haute Courture (Designer Runway) Shows start in Paris Monday, when
Bloombergthe TV channel, not the candidate, will move to Switzerland for single-day
events concurrent with WEF. But note, too, the CEOs of Goldman Sachs, IBM, Bk of
America, and Salesforce.com, are speaking in Davos, too, so some left shortly after they
reported earnings last week, while Ginni Rometty will, perhaps, phone it in for her
companys Tuesday earnings report. Note Trump will not be without friends in
Switzerland, his Treasury Secretary, Steve Mnuchin is a speaker overnight Thursday into
Friday, a panelist with ECB Chief Christine Lagarde.
The National Association of Home Builders (NAHB) hosts a big show in Las Vegas, starting
Tuesday, which also happens to be the first trading day after January options expired. I
mention that because some of those options that expired, could have begun as LEAPS as much
as 2 years 3 months ago. Theres no other month in which that can happen, except with
custom designed options that the wirehouses arrange for big clients. Because its a
big week for earnings, after a 3-day weekend, not many I-banks have events scheduled in
the US but Jefferies does, starting Tuesday, in Beavercreek Colorado. Meeting in the same
city, Beyond A Million Genomes: From Discovery to Precision Health. Also starting meetings
that day, NATPE (TV Program Execs), World Stem Cell Summit (Miami), the PGA (Professional
Golf Association) Merchandise Show, and MPMC Media Trade Council Conferencefrom
SEMA, Wheel & Tire Council.
Wednesday, Barclays breaks the earnings week ban with an Insurance CIO Conference &
Roundtable., also in Palm Beach. Somewhat ironically, CFANY hosts its 5th
Insurance Company CIO Roundtable in NY. The ICSC (Shopping Centers) meet in Miami for
Nexus Conference, which has a LatAm flair. Los Angeles hosts CannaWest, a Cannabis
Conference, while TD Securities is hosting Mining, in Toronto Canada. I Imagine the Iowa
Pork Congress, in Des Moines, starting Wednesday, will be jolly affair, given China has
had to slaughter pigs to stop swine flu, and had to buy heavily to satisfy demand for the
New Year. ASHA, the American Senior Housing Assn meeting that starts Wednesday,
contrasts with NMHCMultifamily Housing Councils Strategies Outlook &
Annual Meeting, starting Sunday, as I wrote, since ASHA manages to extract $3,500--$8,500
per suite at Assisted Living Centers. Some, like country clubs, even demand hundreds of
thousands in upfront "membership fees."
Friday, AFIB (Atrial Fibrillation) is the subject of a Symposium, in D.C., despite the ACC
Cardiovascular Conference which ran through the 22nd, in Snowmass, and next
Saturday, the Society of Cario-Thoracic Surgeons Annual Meeting & AATS Tech-Con get
underway in New Orleans. Evidently, you can pick music, or sun & surf, or skiing, if
youre a heart doctor. ASCOs Gastrointestinal Cancers Symposium starts
Thursday, when Renewables & Wholesale Electricity Markets meets in Houston, &
CoalTrans in Miami. Also next Saturday, Winter Clinical Dermatology Conference for
Dermatologists (as opposed to GPs), in Maui, Hawaii, despite their constant warnings
about skin cancer. Also next Saturday, Winter Rheumatology in Snowmass Village, Midwinter
Conference of Immunologists, and SLAS2020., the Society for Laboratory Automation Science,
all very big conferences in terms of volume of attendees, for some, because of the
setting, in particular.
All in, itll be one heck of a busy week, for a 4-day week, with the potential for
Earnings to weigh on the bulls party. Thats not to say stocks have to
collapse, from here. On the contrary, with the Trade War in a truce period, and many
Republicans too sure of Trumps innocence to worry about the impeachment
trialif Senate leader Mitch McConnell even allows anything approaching that term,
and the bulls impassable, to date, theres no collapse coming but a softer market is
not beyond the realm.
ECONOMIC: (Highlights, only
below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in more complete due diligence.
January 1317, 2020 ITS ALL
UP to the FINANCIALS When
JPM surpassed $140 and started taking the rest of the major banks with it, I started
trimming my stakes in some names. The Fed had cut rates 3x, which isnt good for
banks, I thought, when I noticed something others, surely, notice too. Quick to raise
rates in lock-step with rising Fed rates, they are very slow to lower rates. That means
the banks are making a fortune on credit cards, whose rates rose for a couple of years,
and may not come down one bit, now.
And it is all up to the banks, who dominate the Earnings Calendar, this week. And not
just any banks but Citi, JPMorgan, Wells Fargo, Bk of America, BlackRock, Goldman Sachs,
PNC, US Bank, Bk of NY Mellon, Morgan Stanley, Charles Schwab, Citizens Financial, Regions
Financial, and State Streeta collection without peer. Yes, Delta Airlines, United
Healthcare, CSX & Kansas City Southern, plus Taiwan Semiconductor report as well but
the spotlight will on the financials, especially.
There are a few Fed speakers, this week, including NYs Williams, Bistib;s Rosengren,
K.C.s George, Philly Feds Harker mostly Tuesday, the last on Wednesday, though
thats the day Liu and Lighthizer, at the least, will be signing the first phase of
the US-China Trade Deal. Mind you, its a deal whose terms are unknown, except to
those most directly involved, beyond $50B worth of Ag products China is supposed to buy
from the US, over 2 years. During any other given week, the Feds Beige Book would be
the highlight of Wednesdays schedule, outside of earnings but that isnt likely
the case this week. Anecdotal comments from various Fed districts? Give me a break!
The other interesting facet of the weekly Economic Calendar, as presented, is
Fridays expiration of what were formerly LEAPSlong term Options that could
have been contracted as long as two years and 7 months ago, if not more. One of the
hardest things to do under Trump has been to hold on for dear life and not trade away
winners that because even bigger winners, as time went bymarkets hitting new ALL
TIME HIGHS Last Week. But thats really about a small handful of large cap names,
rather than the run of the mill stock but still, stocks have hit new highs, so someone
whos held became a winner. While all that expiration machinations will be
Fridays business, it also pays to notice that the markets are closed on the 20th,
to celebrate Martin Lither King Jr.
As for Events, the big kahuna is JPMorgans 38th Annual Healthcare
Conference, in San Francisco. That, and the ICR Conference (for retailers, apparel
manufacturers & restaurants) draw the most concurrent Investment bank eventssome
tied to the JPMorgan Conference, merely identified by their city, San Francisco. ICR,
however, draws any number of events scheduled to coincide, suggesting that interest in
consumer-facing names is undiminished, no matter how poorly most of retail has been doing.
ICR is in Orlando FL while, ironically, the NRF Vision Show, aka the BIG SHO)W, will be in
NY, as per usual.
Peters & Company hosts its Winter Energy Conference in Canada, starting Wednesday,
when US events start winding down, due to the King holiday, that will be stretched into a
35 day weekend. And note, the upcoming holiday didnt deter the 101st
American Farm Bureau Federation Convention & IDEAg Trade Show, starting Friday, in
Austin TX, a city I dont believe has hosted it before. Perhaps the 2020 election
campaigns diverted the event from Iowa, and other more typical farm states that have
hosted it in the past.Also notable, but on Thursday, Raymond James10th
Home Building & Wood Products Forum, ESG Edition, also in Canada. And the coming
Monday Holiday, in a week, didnt deter ACC, Retina, or Veterinarians from hosting
conferences that start on Saturday, each in a city favorable to long weekends,
respectively, Snowmass CO, Hawaii, & Orlando.
And Id be remiss if I didnt point out the meeting of the FDAs Anesthetic
& Analgesic Advisory Committees 3-day meeting to discuss and evaluate not one,
not two or even 3 but 4 opioid drugs from Tuesday through Thursday. Whats wrong with
that picture, when opioids are, supposedly, the scourge of our society?
Whether its time to start getting more serious about profit-taking, will depend on
what the major, money-center banks report. But even then, if they deliver, markets
wont be in the clear. Stocks usually suffer in the 3 weeks after the banks report,
until the market, collectively, decides Earnings reported could have been a whole lot
worse than those delivered. Buying some protection may be a waste of money, given how the
market refuses to go down and stay down but, then, what a way to waste a little money, if
youre protecting a long portfolio.
ECONOMIC: (Highlights, only,
below. Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one part of more complete due diligence.
January 610, 2020 FIRST REAL WEEK of the NEW
YEAR Its the first full week of the New Year, and
itll start with a bit of a bang. Central bankers are speakers, and the first of
December sales news will be released Wednesday, the 8th, at 4:15pm et, by
Costco, more on the 9th, as those retailers who still report sales monthly
release Dec sales, too. Also, Wednesday, Bed Bath & Beyond reports its quarter,
comments on December sales sure to arrive, then, too. Also Wednesday, Constellation Brands
reports its quarter, comments on December sales sure to accompany the release, even as
Walgreens Boots Alliance reports, Wednesday, as well, Barrons particularly negative
on its results, which surprises me a little. CVS gave up selling cigarettes a few years
ago, leaving that kind of walk-in business to WBA, alone, in most of the drugstore world.
Yes, supermarkets & Walmart, for one, still peddles cigarettes but for parking
convenience, few offer the close-in spots available at drug stores.
Now, to those Central Bankers mentioned, we start with NY FRB Pres/CEO John Williams, a
panelist, as I type, at the AEA/ASSA Annual Winter Meeting in San Diego. AEA is the
Association Economists, ASSA the Association of all Economic/Social Societies, of which
there are 11, if I recall, off hand. Other panelists appearing wit him include the
BoEs Broadbent, the ECBs Lane, the BoJs Wakatabe, and the Bk of
Canadas Dpty Gov, Wilkins. Their topic is "Monetary Policy Frameworks in a
World of Low Interest Rates." Earlier in the day, at the same meeting, a panel of
past Central Bankers that includes Janet Yellen, Olivier Blanchard, Lawrence Summers
(technically, a Treasury official, not a central banker), and Adam Posen dicusses
"Japanification, Secular Stagnation & Fiscal & Monetary Policy Challenges,:
also at AEA/ASSA Annual. At 10:15am pst, theres a 3-session discussion of FOMC
transcripts, and what can be learned from themwhether Central Bankers can be taken
at their word. While the vast majority of speakers are academics, in addition to the
Central Bankers, theres a smattering of corporate economists, not just from the
obvious, financials, but from corporates like Microsoft & Caterpillar, all of whom
have to form an economic forecast to direct their companies future.
As is typical of the first full week of a month, the week will be full of all kinds of
data, Treasury Auctions, and culminate in Fridays December Unemployment Report..
While much of the rest of the weeks data is for November, it might be more
instructive than usual, if the end of the GM strike caused a surge in orders, not just at
US factories but Mexicos too. And we havent heard the last of the Central
Bankers, either, once AEA/ASSA ends. On Wednesday, Fed Gov. Lael Brainard will discuss
"Modernizing the Community Reinvestment Act," at the Urban Institute, while in
the early hours of Thursday, BoEs soon to be leaving Governor, Carney, will open
"The Future of Inflation Targeting," a conference at the BoE whose URL was not
to be found but which will host NY FRB Pres./CEO Williams, on Inflation Targeting. Also
Thursday, Fed V. Chair Clarida will discuss "U.S. Economic Outlook & Monetary
Policy," at the Council of Foreign Relations C. Peter McColough Series on
International Economics, in NY, even as the Bk of Canada will wrap its first monetary
policy meeting of the year, with release of a statement and Polozs press conference.
Later on the same day, St Louis Feds Bullard speaks to the Wisconsin Bankers
Association Economic Forecast Luncheon, an event he attends almost every year.
Of course, the December Unemployment Report will decide the fate of the markets, for
Friday, at the least. Of course, results from Lennar on Wednesday, and KB Homes on
Thursday, will also trigger pencil sharpening by economics, with rates, again, scrapping
very attractive lows. The last Earnings Reporter who should pay attention to is Synnex,
because its one of the largest VARsValue-Added-Reseller, whose business is a
good read on corporate spending on technology.
If you follow consumer tech stocks, its the Consumer Electronics Show, in Las Vegas,
opening the 7th, that makes you week. Samsungs keynote at CES, on the 6th,
will delivered by H.S Kim, wholl discuss where consumers are headed, and the
blending of physical and digital worlds---what Kim refers to in a blog
as the "Age of Experience." Time was, Microsoft was the annual keynote but, now,
like Apple, it doesnt even purchase exhibit space, which is not to say it will be
completely absent. On the contrary, it will have hotel suites to receive analysts,
wholl be at CES in droves, as the Events Calendar makes clear. The number of events
listed "@CES" are numerous, and include not just consumer technology but autos,
too, JPMorgan hosting an Auto/Tech Forum @CES, and Citi a Global TMT West Conference, at
CES. Likewise, the SAESociety of Automotive Engineersare hosting Connect2Car
at CES. Facebook & Instagram plan a briefing at CES, while Intel is one of the other
keynotes, and is holding a press conference, at CES, while its Mobileye division is, also,
hosting a CES press Conference, both of them on Tuesday. Other concurrent events, at CES,
beyond the many I-bank "hosted meetings" and exhibition tours, include Kids
@Play, and IDCs very odd, "Building Next Generation Tech on a Foundation of
Consumer Trust." Excuse me!!!! Where, exactly, does IDC see consumer trust?
If all that wasnt enough, the TV Critics Spring Press Tour starts this week, on
Tuesday, at FOX, now a Walt Disney Company. As the week progresses, the TV Critics Spring
Press Tour will look like a nearly all Walt Disney event, thanks to the many Fox division
it picked up with its recent purchase, not to mention its own ABC on Wednesday. Not until
Friday does someone other than Disney entertain the TV Critics, and that day its
PBSor Public Broadcasting Services, which Trump had, at one time, threatened to stop
funding with government money. Debuting Friday, when "Like a Boss," opens in
movie theaters, the first film to sport the new, combined ViacomCBS logo.
Other big events, otherwise, include Goldman Sachs Global Energy Conference,
starting Tuesday, and the Credit Suisse 2020 Aircraft Leasing Conference, both starting
Tuesday. Wednesday, CJS Securities 20th Annual New Ideas for the New Year
Conference, and ICSC (Shopping Centers) Red River States Conference & Dealmaking
event, in Ft Worth TX. Cant say I ever knew Texas was a Red River State. I have a
very off color joke about that which Ill refrain from noting, in deference to good
taste. Theres a Commercial Real Estate Forecast Conference, starting Thursday, when
Raymond James hosts a Deer Valley Telecom Summit, and the Correctional Association hosts
its annual event. For whatever reason, London is where the Beef Industry is hosting its 21st
Annual ConventionLondon Ontario, Canada, I should specify, as opposed to the London
UK, where Citi is hosting European Insurance, and TD Securities an Energy Conference, even
as Credit Suisse is in Hong Kong for a Greater China Technology & Internet Conference,
wile Jefferies is in the same city for a Consumer Corporate Day 1x1, and Citi a Hong Kong
& China Corporate Day with a Healthcare Theme.
Friday, the Annual ASH (Hematology) Review hits both NYC & Seattle Washington, just 2
out of 10 stops early in the New Year. The American Bus Association Marketplace &
BusWorld Academy take place in Berkshire countryOmaha Nebraska, while Brussels hosts
the European Auto Salon, where overseas automakers are more likely to introduce new models
than they are at any US based auto event. Saturday, East/West Biotech CEO opens in NY,
while Plant & Animal Genome opens in San Diego, and Color Management 20, a PIA/GATF
Conference & Expo opens in San Diego too.
All in, its an incredible busy week with the potential for Fridays Employment
Report to be a landmine for market bulls. Lets not overlook the fact that retailers
start laying off seasonal help after Christmas, even though physical stores are often
busier with bargain hunters & people toting returns after Christmas, into January. And
its only a mere 2 weeks until the next market holiday arrivesthe Martin Luther
King Jr holiday, an event the NYSE celebrates by closing while still staying open for
Veterans Daysomething I have, simply, never understood.
Ill give full credit to the bulls for shaving Fridays losses despite
Trumps bombing Iran, taking out a revered general there, and escalating the
temperature of the US enmity with Arab countries who Trump threw over the side as soon as
he was inaugurated--withdrawing from the nuclear disarmament deal signed by a predecessor.
How long can the bulls pretend theres nothing to fear from either Iran or Iraq, or a
rogue Muslim zealot? We probably wont find out until we see retaliationand
where that occurs. The closer to home, the more unsettling it will be.
ECONOMIC: (Highlights, only, below.
Full International Economic Calendar here)
© Sandi Lynne 2020 Nothing contained in this commentary should be construed as a
recommendation to buy or sell any security. The opinions expressed are the authors,
alone, and should be just one factor in complete due diligence. EARLIER,
2019 EXCERPTS HERE
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