March 23, 2016
U.S. markets are flirting with unchanged for the year as the massive rally over the past few weeks has pushed valuations back into the danger zone, but with central banks showing more desire to stimulate, it may not matter… or will it?
Just last week, the Fed sent a confusing message to markets, now we are “only” to expect 2 rate hikes this year – so much for following the economic indicators.
All this and the winners of the latest Closest to the Pin…..
Terrorists hit Belgium… Once again Europe is the center of attention – just days after the capture of the Paris bombings “mastermind”. Two separate attacks, ISIS claims responsibility. U.S. Markets shrug off – Europe modestly lower. (Recall that the last couple of attacks saw massive market rallies)
— Of course the usual rumors of other potential acts circulated today as shorts/bears try to push on the news – none were confirmed.
Global Economics – Take a look at the stats for Manufacturing..
Valaent Pharma (VRX) – Remember last week, we questioned whether the CEO’s 2-month leave for “pneumonia” was for real? Well… Monday it was announced that CEO Pearson will be leaving the company. Ackman was appointed to board. Stock up 15% in reaction. (Note: CEO leaving does not seem to be good news as it may lead to more revelations about some of the internal issues with the company…)
Nike (NKE) has announced that a self-tying ( or self adjusting) shoe will be out by the end of the year. Now that seems to be progress!
— Nike earnings released today (stock down 5%++ after hours…)
– NIKE Q3 EPS $0.55 vs. $0.48 Capital IQ Consensus; rev $8.032 vs. $8.2 bln consensus
– NIKE Futures Orders +12%; +17% in constant currency vs. estimates in the mid to high teens ex-FX
— Futures as reported (ex-FX): North America +10%, W. Eur +16% (+23%), C & Eur +5% (+14%), China +28% (+36%), Japan +23% (+24%), Emerging -3% (+14%).
IMPORTANT: Sales will increase by a high-single-digit percentage during the next fiscal year, the company said on a conference call Tuesday. Analysts had projected a rate of about 10 percent for that period. Earnings will rise in the low teens, Nike said, compared with an estimate for growth of about 15 percent.
Will liquidity dry up like it did the first quarter before and during earnings season? Retail still pulling out of equities?
Deutsche Bank reports:
Buyback blackout period starts Monday. An increasing number of S&P 500 companies will enter into their blackout period starting next week, about a month before the earnings season kicks into high gear in the third week of April.
If there is any truth to the notion that much of the recent rally was due share repurchase programs, liquidity will start to dry up starting today and we may see some additional volatility and downside potential for markets. Depending on how many institutional investors positioned for the ramp higher, it may create an interesting environment over the next few weeks.
** ANNOUNCING THE WINNER of the DHUnplugged Closest to the Pin Contest **
John C. Dvorak !!!!!
|Chirag G.||$ 224.21||Winner||$ 2.17||0.96%|
|Charles F.||$ 229.07||Runner up||$ 2.69||1.19%|
Winners will be getting great stuff like the new DHUnplugged Shirts (Designed by Jimbo),
Sunglasses from Spitfire and more!
Markets closed Friday in observance of Good Friday
Thinking about Twitter (TWTR) – some recent changes makes it a more viable platform. Videos, gifs and other feature enhancements… Worth a look?
Some Apple news: (Smaller is better??? – Seems that size is the company’s only innovation)
Apple at event unveils new bands for the Apple Watch; says Apple Watch will now start at $299 starting today (prior price was $399)
New iPhone released – 4 inch model
- iPhone SE will feature ‘hands free Siri’ and improved battery life.
- iPhone SE will start at $399; will start shipping on March 31
- iPhone will feature the 64-bit A9 chip, introduced in iPhone 6s and iPhone 6s Plus, offers iPhone SE customers two times faster CPU and three times faster GPU performance compared to iPhone 5s.
Unveils iOS 9.3 – Software will feature light and dark mode, new enhancements to notes and news applications, and new educational applications. iOS 9.3 will be available immediately.
Apple confirms ResearchKit advancements; also confirms new healthcare application ‘CareKit’ – Available April 2016
Apple at event unveils 9.7 inch iPad Pro (current iPad Pro is 12.9 inches)
— FBI/Justice dept drops their calls for Apple to create a backdoor – they say they have another solution. Really?
Interesting news. SunEdison (SUNE) rumors are that the company is looking for debtor-in-possession financing. This is a tactic used by distressed and bankrupt companies that need financing. This type of debt is AHEAD of all other debt, equity or other assets that can be claimed. How great is that?
Lumber Liquidators Holdings Inc.’s stock soared 14% in midday trade Tuesday, after the wood flooring maker announced an agreement with the California Air Resources Board that “fully” resolves previous inquiries into its laminate flooring products sourced from China. As part of the agreement, Lumber Liquidators will pay CARB $2.5 million, and will implement voluntary compliance procedures to ensure all of its flooring products comply with CARB’s formaldehyde standards.(Didn’t they have 3X the expected amount of carcinogens?)
Kazakh officials and their visitors will have to leave their smartphones at the door of government buildings from March 24 in line with a new policy aimed at preventing leaks of sensitive documents, a leaked document showed on last Thursday.
Minnesota officials seized a “FMUSLMS” license plate and apologized for issuing it at a driver’s request, saying on Wednesday that approval procedures for so-called vanity plates were under review.
Cuba is gaining opportunities for travelers – Carnival Cruise line wins approval to sail to Cuba. We going? DHU Trip?
Poor Elon Musk – He an wife are divorcing for 2nd time. Why marry again after divorce in the first place?
See this week’s stock picks HERE
March 16, 2016
China is still in terrible shape, but investors are still looking for more stimulative actions to come to the rescue.
It will be a big week upcoming with a busy economic calendar and the Fed’s rate decision on Wednesday…
And.. What is with the Unicorns? Write-downs happening quickly as there is a sense that valuations are way to rich for many of these names.
Trip to Panama – had some interesting foods and experiences. (Plenty of Ceviche, Cow Foot Soup, Tripe and more…)
– Panama casinos… 5.5% cash check out charge!
– Diving 2 oceans on one day!
Daylight Savings Time is here! Happy? – Plenty of stories about problems related to the time change… More accidents, less productivity. Really? LINK
Prem Watsa, the investor who heads Fairfax Financial Holdings Ltd. and foretold a drop in technology company shares two years ago, is now saying “I told you so.” In his annual letter to shareholders, Watsa said he expects tech stocks from Twitter Inc. to Yelp Inc. to fall even further — as much as 90 percent from their peak in the last two years. Now calling former UNICORNS = UNICORPSES
Weird story – A day after indited on violations of Sherman Act, U.S. shale pioneer Aubrey McClendon dies in suspicious auto accident.
— Data shows he hit speeds of 89 miles an hour seconds before his Chevy Tahoe slammed into a concrete bridge earlier this month in a fatal crash, according to a report issued Monday afternoon by the Oklahoma City Police Dept. McClendon’s SUV, which was fitted to run on compressed natural gas instead of gasoline, crossed the center lane more than 60 yards before the crash. He wasn’t wearing a seat belt, the Oklahoma City Police said. Data recovered from the vehicle’s black box showed that McClendon tapped his brakes several times before the crash, but didn’t truly brake hard. His Tahoe hit the bridge at roughly 78 miles an hour.
Just as the markets turn, several big brokerages are slashing the year-end price target for S&P 500. Morgan Stanley is the latest with a price target of 2,050. Do we view this as a contrary indicator?
OOFAH – The massive rise for some energy and materials companies over the past couple of weeks has been amazing. (and the fall this week)
— Past 30 days: Halliburton +22% , Helmrich & Payne +29%, Chesapeake Energy +176%, Marathon Oil +49%, Linn Energy +157%, Continental Resources +43%…. (Some relief as companies get reprieve with advancing oil prices and secondary offerings)
Politics: Trump rallies cancelled as violent protests have begun. This is going to be a nightmare… What happened today? Who will drop out?
Twitter and social media – how to make sense of the financial world? So many players trying to advance their own agendas…
— Afterthefact’ers, toldyouso’ers, vague range gang, complainers, pumpanddump’ers, pompous parade, clickandsell’ers, negative nellies, positive posse…
Auto-Upgrade? As Microsoft auto-upgrades more PCs to Windows 10, some users are complaining that they weren’t adequately notified. Reports of unwanted Windows 10 upgrades have been circulating for the past few days on Reddit and Twitter, etc.
New trend? After years of relying on the Amazon cloud to store its users’ files, Dropbox has shifted gears and begun using primarily its own technology instead.
Japan’s central bank issues statements during their two-day meeting that was a bit of a surprise. While many did not expect any further stimulus actions this meeting, there was also thoughts that there would at least be a some commentary about the potential for something in the future. Not only did they have nothing to say on that matter, there was a clear omission about the negative interest rate policy that led some to believe that they may actually be rethinking the tool. In response, the Yen climbed sharply and that created a negative bias for equities.
Busy couple of weeks – Central banks ! Europe went more negative on deposit rates, ramped up asset purchases and now including some corporate debt. What next?
HOOSICK FALLS, NY: More than six weeks after declaring an environmental emergency in this upstate village, Gov. Andrew M. Cuomo made his first visit here on Sunday, announcing that a new filter system had successfully cleared a toxic chemical known as PFOA from the municipal water supply.
Valeant (VRX) – Stock got crushed after earnings report. While company had a good quarter as compared to analyst estimates, the outlook was very poor – showing a sharp reduction in revenue and earnings. Plus a big write-down of the Philador unit.
— How did smart guy like Ackman get bamboozled with this name? (Akman’s Hedge fund estimates are showing a loss of $1 billion+ on today’s plunge)
— CEO Pearson is now back after months of “pneumonia” (who has pneumonia for months?)
Anyone see the video with the guy urinating into the Rice Crispies?
Not a surprise – Chipotle (CMG) posted some nasty numbers – sales down 25%+
See this week’s stock picks HERE
February 24, 2016
The debate over the effectiveness of central bank actions is raging on. Once an investor’s best friend, confidence is waning and markets are reacting. Following the best week of 2016, equities are once again seeing weakness as oil falls on OPEC comments.
The bearish position is strengthening, but should this be a sign to start to nibble again on stocks? Is this a contrary indication or something that we should heed?
Markets moved out of the correction as of Monday, only to slump again on Tuesday. Oil to blame? Iran essentially saying that they think price freeze is stupid/Saudi Arabia won’t cut production. Oil got smoked on that news as well as fact that yesterday’s rally was not what it seemed….
Coming into the last few days of the month – do you think that the markets will be able to turn green? Most major indices are off slightly…
– Indices are trading very technical, the 2,050 level was key resistance and that was hit with selling. Today, markets stopped on daily support and held
Not surprised: Consumer confidence falls in latest reading. Middle income confidence fell the most since October 2008.
– Still, Fed officials are talking up more rate hikes for this year.
Listening to the news, TV, reading… Bearish commentary is everywhere…. What does that mean?
Fitbit (FIT) announced earnings. Stock down 19%on weak guidance. (Looks like same game-plan as GoPro)
– Look for these one-hit-wonders as potential rally and fade candidates in the future.
Politics – Jeb Bush is out!
Lumber Liquidators (LL) Unbelievable: The U.S. Centers for Disease Control and Prevention said earlier this month that tests on the company’s products showed minimal health risks, which renewed confidence in the chain as the stock rebounded. Now the agency has corrected those findings because of the math error (used feet instead of meters?) , saying formaldehyde exposure is three times higher than previously projected, although the risk of cancer remains low. Stock was crushed on Monday.
Home Depot (HD) out with earnings – company still looking good. Lowes (LOW) out tomorrow… Which do we prefer?
Do we want to chime in about the Apple/Feds rigmarole?
Oil plunge is starting to hit banks and energy sector companies. While stocks were suffering, not much in the way of bankruptcy or otherwise. Now starting to see headlines about sales, div reductions, massive earnings shortfalls… (Massive build after the close tonight)
JP Morgan investor day – investment banking fees down 25% over year and sees some need to add to the reserves for bad debt related to oil related debt. Stock down 4% on the negative commentary from company
** ANNOUNCING THE FIRST (new and improved) DHUnplugged Closest to the Pin Contest **
Walt Disney (DIS) … Listeners will be completing against John and Andrew
Now Open for entries through March 2nd (Final Price Date: March 11)
Some oddball Andrew stories:
Saw a raccoon in front of my house last night – called wildlife control and they gave me a sure fire way to get ride of it.
Had a very nice Uber driver. Woman driver had to take me to a boat ramp to pick up my car. She had no idea where she was and told me: ” I got to tell you, you are taking me to places that no one has ever taken me before… ” NICE!
Quick update – bought the exercise bike from Sears (bought online then picked up for better price)
Macy’s reported a better quarter – Stock up 3% and into a “hole” that could see it break to $50. So much bad news was already priced in to these big-box retail stores.
Don Matingly (Coach of Miami Marlins) enforces no-facial hair rule. What is that? What about ridiculous hair in the NFL?
Yahoo! – more layoffs and now looking to sell itself. Mayer clearly looking to get big payday before the ship goes down. (also closing divisions)
– Time Inc is looking into possible bid.
Google is closing Google Compare – what was that anyway?
China government is “telling” media only to write financial stories that play within their rules. They want to stop any negative views or there will be consequences. (Some on Twitter seemed surprised)
On China – devalue of the Yuan – how to play? (China started to devalue again Monday… Looks like they are setting the Yuan fix lower again)
Tesla – Musk finally gets the Tesla.com url after years of fighting for it. (now redirects to www.teslamotors.com)
There has been some murmurs from big institutional investors saying that now may be the time to start buying emerging market debt again (PCY, EMB)
Time to go to the U.K. for a little vacation? The Pound is down 18% against the USD since July 2015. Hitting 1.40 for the first time since 2009 on Brexit fears. Is this possible?
See this week’s stock picks HERE
February 17, 2016
Oil soars on news that there will be a production cut, then sours after the announcement of a production freeze. Waiting on the “left-hook” devaluation from China after they pledged to keep the Yuan strong.
Draghi promises the world that more stimulus is on tap and Japan continues to believe that negative rates are the answer to their economic woes. Meanwhile, there is some chatter that the Presidential candidates are the reason that markets have been in a downward spiral. More on this and other important topics.
Good is bad, Bad is good – Japan markets finished last week down 14.5% after the Yen rallies to 111/USD. GDP drops 1.4% YoY and that was enough to drop the Yen back to 114/USD and markets rally 5%.
U.S Markets finished lower for the week, even with the Friday surge of 2%. This week starts off on a different note as central bankers are jawboning the markets. ECB’s Draghi once again stating that he may add stimulus in March and Japan’s Kuroda talking up the benefits of negative deposit rates.
The 2-Speed economy – Manufacturing related continues to suffer:February Empire Manufacturing -16.6 vs -9.9 consensus; January -19.4
Meanwhile…. China is out with commentary that the RMB (YUAN) should not weaken from here. Yuan had one of its best rallies (strengthen) on record after markets re-opened from the New year holiday. Waiting for the left-hook devaluation… (Skeptical?)
China loves the movies…. China’s retail sales over the Spring Festival holiday rose 11.2 percent from the same vacation period a year earlier, with cinemas posting sharp increases in box-office sales, the country’s Ministry of Commerce said in a statement Saturday.
** More info and an Update… Announcing the DHUnplugged Closest to the Pin Contest –
The first CTP will start in March… Listeners will be completing against John and Andrew **
The ECB Council voted today to scrap the €500 note. They say that they are doing this to counter black market and nefarious uses for higher denomination bills. The reality is that taking it out of the system will effectively reduce the cash in circulation by upwards of 30%. (Will this help gold, metals and alternatives like Bitcoin?) *** Larry Summers floating the idea of scrapping the $100 bill.
Oil… Check out inventories: (note – Saudi Arabia and Russia met and implemented a FREEZE rather than production cuts)
Chatter that current Pres candidates are the reason that markets are acting poorly. Now on the front cover of Barrons this week…
Here we go… Apple (AAPL) planing massive bond sale. 30-year bond may yield 2.15 percentage points more than similar-maturity Treasuries (To benefit shareholder return plan) – $10 – $12 billion
At the same time: Carl Icahn reduced his stake in Apple by 7 million shares to 45.7 million shares in latest quarterly release.
Splinters: Acting on a tip, agents of the U.S. Food and Drug Administration paid a surprise visit to a cheese factory in rural Pennsylvania on a cold November day in 2012. They found what they were looking for: evidence that Castle Cheese Inc. was doctoring its 100 percent real parmesan with cut-rate substitutes and such fillers as wood pulp and distributing it to some of the country’s biggest grocery chains.
And so it begins: The US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans. Paul Aker says he was arrested at his home last week for a $1500 federal student loan he received in 1987. He says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the 29-year-old school loan.
Comcast outage – massive system failure on Monday. Still not sure if all fixed and how many affected.
**Extra – Just got the Sony 65″ Bravia 4k – Android TV – NICE! (AMAZON Prime 4k and Netflix 4k movies!)
See this week’s stock picks HERE
February 10, 2016
Oil continues to get hammered and now below $30 per barrel – even with the rumors flying around that there will be a special/emergency meeting with OPEC/Non-OPEC countries in an effort to stabilize prices.
Japan market crumble, bond yields are dropping and all eyes are on the Fed’s next move. Listen in as we dive deep into the real news that matters most for investors.
Japan reeling after the BOJ implements negative rate policy – Yen up 5% since 1/29/16 and markets tanking (Nikkei dropped 5.5% last night) — Japan 10-year falls below 0% for first time
FACT – Negative rates are not good for markets – Central Banks are now tinkering with tools they have no idea what outcome will be. (Yen rallying again tonight – now at 114.31)
The biggest concern right now may be that China devalues the Yuan after the Chinese New year Holiday.
The global financial situation is getting worse as seen by the Contingent Default Swaps (CDS) – remember those?
Interesting: Last year, the number of dividend reductions far surpassed 2008.
Goldman Sachs Abandons Five of Six ‘Top Trade’ Calls for 2016 – Inflation, dollar bullish call, Emerging market stocks, U.S. banks and a few others. So much for the big boy’s being right…
There has been a lots of talk about a potential U.S. recession. There are lots of voices that are protesting that concept. There are some areas that are clearly in recession.
Oil at $30 a barrel is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash. Companies including Marathon Oil Corp., Noble Energy Inc., Callon Petroleum Inc., Pioneer Natural Resources Co., Rex Energy Corp. and Bonanza Creek Energy Inc. used a strategy known as a three-way collar that doesn’t guarantee a minimum price if oil falls below a certain level, company records show. While three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines.
May be some market moving potential as Janet Yellen is giving testimony to congress over the next few days. Will the Fed dare to hike rates again anytime soon? (U.S. yields have slid since the rate hike)
What is this all about? A record 4,279 individuals renounced their U.S. citizenship or long-term residency in 2015, according to data released by the Treasury Department.
LinkedIn (LNKD) stock tumbles 50% after earnings release. Are advertisers feeling the pinch and finally giving up on some social media? (FB, TWTR follow lower after report) – We should have seen this coming – we knew Facebook had a new business service that was competition to LinkedIn.
SolarCity (SCTY) comes in way ahead of estimates, but the outlook is awful – stock down
25% -31% -35% -37%
Disney (DIS) beats on both earnings and revenues…Stock slumps after hours.
** Announcing the DHUnplugged Closest to the Pin Contest – The first CTP will start in March…
Listeners will be completing against John and Andrew *****
WHILE in attendance at the Super Bowl, Apple chief executive Tim Cook snapped a photo of the post-game festivities and shared it to his almost two million Twitter followers. BLURRY photo and followers gave him lots of crap about it.
India’s telecom regulator said Monday that service providers cannot charge discriminatory prices for Internet services, a blow to Facebook’s global effort to provide low-cost Internet to developing countries. Facebook’s “Free Basics” program provides a pared-down version of Facebook and weather and job listings to some 15 million mobile-phone users in 37 countries around the world. When it debuted in India in April, however, Free Basics immediately ran afoul of Internet activists who said it violated the principle of “net neutrality,” which holds that consumers should be able to access the entire Internet unfettered by price or speed. (LINK)
Daimler recalls 840,000 cars – potentially due to Takata Air bags —- When will someone put an end to this company manufacturing bad airbags?
Deutsche Bank (DB)doing a massive bond repurchase program – stock up a bit on the announcement. What does this mean? (I think they are eating their own cancerous debt)
Is this a good idea? The Titanic II, an exact replica of the original is being built and will be ready to sail (or sink) in 2018. (LINK)
Sanders and Trump will New Hampshire – oh my (possible markets don’t like any of the candidates?)
Results from the DHFed – WE HAVE A WINNER! – Max Humphreys guessed $4,650.00 (Within $3)
See this week’s stock picks HERE