February 3, 2016
January 27, 2016
January 20, 2016
January 13, 2016
Earnings season, China, crude and the major news that will move markets are all discussed. We also confirm our car sales theory with data that backs it up.
The Iranian affair and the State of The Union Address are up for commentary as well.
What is that coffee company that John can’t recall?
President Obama’s final State of the Union… and?
THE WORST FIRST WEEK OF YEAR EVER – that is the headline that is being pushed around. Also seeing many compare the future to 2008…. Yes, it was bad…. How bad?
|XHB||SPDR S&P Homebuilders||-9.13%|
|XLB||S&P Sel Materials Spdr Fd||-7.74%|
|XTL||SPDR S&P Telecom ETF||-6.92%|
|XLF||S&P Sel Finl Spdr Fd||-7.26%|
|XLE||S&P Sel Energy Spdr Fd||-7.08%|
|XLK||S&P Sel Tech Spdr Fd||-6.40%|
|XLI||S&P Sel Industrial Spdr Fd||-6.21%|
|XLY||S&P Sel Consum Discretion’y Sp||-5.82%|
|SPY||SPDR S&P 500 ETF||-5.86%|
|XLV||S&P Sel Health Care Spdr Fd||-5.57%|
|XLP||S&P Sel Consum Staples Spdr Fu||-2.91%|
|XLU||S&P Sel Utilities Spdr Fd||-0.39%|
Other markets around the world fared even worse last week:
China -13%, Africa -11%, Australia, -11%, Mexico -9%, Brazil -8%, Canada -6.75%….
Sectors that are getting beat up so far in 2016:
Homebuilders -9%, Materials -7.75%, Telcom -7%, Financials -7%, Energy -7%…
Utilities and Consumer Staples held up the best with only fractional losses.
Technical Conditions at end of last week:
- At the close of the week, only 101 stocks in the S&P 500 were above their 200 day moving average
- At the close of the week, only 61 stocks in the S&P 500 were above their 50 day moving average
- S&P 500 is under the 10-month and 12-month moving average
- Our Key Reversal Indicator (KRI) is flashing “oversold levels” consistent with near-term market turning points
- The Spearman Indicator is close to a low point that shows bottoming
From Tom McClellan this week: “In a Dec. 11, 2015 Chart In Focus article, I posed the rhetorical question about whether the market was reliving its past from 2012, or from 2008. The financial panic in China seems to have settled the question for us, and the market has decided on the 2008 scenario.”
China is trying to get a grip on markets. After falling 7% and triggering circuit breakers on the first trading day of the year, the govy spent $20 billion to try to keep a bid under markets. In addition, the expiration of the share sale regulations is going to be moved further out. (not to mention that the govy may look to make selling a criminal action (of course the next 7% drop and market halt scared them into removing the halt rule) . (LINK)
Crude is also causing consternation. WTI Crude today low $29.93
According to Bank Of America, Railroad cargo in the U.S. dropped the most in six years in 2015, and things aren’t looking good for the new year. Overall the DJ Transports are down 8% this year, 16% last 3 months and 21% 1-year. They are often a good read on economic activity.
POWERBALL – $1.5 billion. That would be a 20 year annuity of $75 million per year for 20 years. After taxes it would be a cool $45 million per year. Here are the odds: Grand Prize: 1 in 292,201,338
Earnings season is here! Alcoa (AA) announced earnings of $0.02 versus $0.04. However, the outlook is still bleak as prices are sliding causing their outlook to be reserved. Stock down 10% on the news. Hit many of the materials stocks, like Freeport (FCX) – now below its 2008 low… Sitting around $3.88
CSX reported and the outlook for transportation was not so good….
Starbucks said it expects China to eventually overtake the U.S. as the coffee chain’s largest market. company said it is on track to open 500 stores in China this year. (Is this a bad time to be opening so many stores in China?)
Still at it… Turkey – A suicide bomber believed linked to the Islamic State in Syria set off a powerful blast Tuesday in one of Istanbul’s most popular tourist districts, killing at least 10 people and injuring 15, officials said.
Auto Sales – highest ever in history. But, our thought that some of this is based on longer-term loans and discounts may be a reality. New survey shows that the average new car loan is 5.6 years. Autonation (AN) reported earnings last week and commented that margin pressure is growing. Stock tumbled. (Note: Delinquencies on car loans have increased by nearly 120 percent, from just over 1 percent in 2010 to 2.62 percent in 2014)
Sharp is toast… Japanese government-backed fund has offered to invest 200 billion yen ($1.71 billion) to help bail out electronics maker Sharp Corp.
CES – heard from a few people that drones, GoPro style cameras and personal health devices were big. What else?
Shipments of personal computers fell 10.6% during the fourth quarter to 71.9 million units, the largest year-over-year decline in PC sales on record, according to industry tracker IDC. (LINK)
Ford Motor Co (F) announced after the close that it was declaring a $1 billion supplemental cash dividend and that it expected to have operating profit of at least $10 billion in 2016, roughly the same as its earnings in 2015. (stock down in after hours on the news…. maybe due to lack of growth)
From an article about the decline in PC sales… Look at this chart.. Such idiots writing news…
So, Iran is holding two small Navy ships and their crew – accused of snooping as they drifted into Iranian waters. The theory that the U.S. is offering up is that it is possible that the boats lost propulsion and drifted into Iranian waters… Both boats lost engines at the same time??????? Of course, this is after U.S. agreed to a deal that is very favorable to them.
See this week’s stock picks HERE
January 6, 2016
The end of the year is approaching and markets are seeing heightened volatility into the end. With the recent rate hike by the Fed, what will be in store for 2016? More of the same as 2015 or clear sailing to new highs? We will help to take the clarify some of the confusion.
John and Andrew take a look at markets, the news that is moving markets as well as an update on our stock picks.
2015 ended on a sour note. The DJIA and the S&P 500 finished in the Red, the NASDAQ was positive. The mega-cap trade helped to keep the S&P 500 from a much worse situation (4% differential between S&P 500 cap-weighted and equal-weighted). 2016 saw a tightening as the trade flipped a bit. NFLX, GOOG, FB, etc, all got chopped at the start of the year.
China is trying to get a grip on markets. After falling 7% and triggering circut breakers on the first trading day of the year, the govy spent $20 billion to try to keep a bid under markets. In addition, the expiration of the share sale regulations is going to be moved further out. (not to mention that the govy may look to make selling a criminal action. (LINK)
China has also been involved in a serious game of currency devaluation since July.
Global markets dropped on the first day of the 2016 year as China worries (economics) and tension in Middle East sent traders running for cover. (China PMI once again missed expectations as did some U.S. economic reports).
There has been a great deal of discussion over the latest Fed move to hike rates. Now many are saying that is was totally wrong and timing was terrible. Thoughts?
Crude prices could not even hold onto the gains from the Mid-East tensions for the day – that is a bad sign…
Overnight, the Baltic Dry Index slid 5 points to hit a new all-time low of 468. The index has hit a few new all-time lows in recent months. From a year ago, rates are 39% lower!
New York City will begin this month replacing thousands of pay phones with free Wi-Fi hot spots that will sit atop a 9.5-foot tall box featuring electronic advertising screens and an Android tablet that can be used to place free phone calls. (LINK)
Obama going to invoke Executive Order? Gun stocks rallied as investors again bet that new restrictions to be rolled out by President Barack Obama not only wouldn’t deter sales but would propel them. Smith & Wesson shares surged 14% and Sturm, Ruger & Co. climbed 8% at the open. (LINK)
On the political front, Trump still in the lead. Have you seen his TV ads? Really doing some fear mongering.
The Big Three auto makers had some impressive December U.S. sales numbers, as car makers remained poised to report their highest annual sales ever, shattering the record set in 2000. Is this because of great demand or sales tactics (like longer term loans)? (LINK)
Virtual reality – been a big news item these days. Is it here to stay?
Apple (AAPL) is expected to reduce output of the iPhone 6s and 6s Plus by around 30% in the January-March quarter compared with its original plans, a measure that will deal a blow to Japanese and South Korean parts suppliers. Production is expected to return to normal in the April-June quarter, once inventory adjustment is complete. (LINK)
Blackrock – the world’s biggest bond ETF player has a new warning: Bonds…
FitBit (FIT) announces the Blaze – $199 and will be available for pre-sale in March. On the announcement the stock plunged 18% – Pricing issues or is it because they are going against Apple with this product? (LINK)
Hedge Funds – 2015 was not the best year. Ackman’s Pershing Square was down 20% and Einhorn’s Greenlight was down about the same. Overall the hedge fund universe under-performed. (LINK)
Follow up on Volkswagen: Today the company reported December sales of 30956 units, down 9.1% year-over-year. Also, news that the U.S. is suing the company over the emissions scandal is not helping shares…
Chipotle (CMG) – Another outbreak and now people are taking pix of stores and sending around making fun of the fact that stores no longer have lines.
The energy sector is still limping along – could be interesting contrarian trade for 2016. News out today that Pioneer Natural Resources (PXD) commences a public offering of 10.5 mln shares of its common stock. (JCD SHORT position in Weekly Picks)
Load of Crap: Malaysia Air Bans Checked Bags Over Fears Headwinds Could Leave Jets Short on Gas. (LINK)
DHUnplugged Stocks (LINK)
See this week’s stock picks HERE