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2019 EXCERPTS FROM PRIOR WEEKS BELOW:
December 29, 2019 On Vacation. No OUTLOOK but Updated International Economic Calendar here:
Happy,. Healthy, Profitable & Productive New Year to all!
December 23—31, 2019 STOCKS SHOULD COAST INTO YEAR END There's nothing to really interrupt the bulls run, except a lack of volume, once Monday's first trades are out of the way. That's when the results of last Friday's Quadruple Witching and Index Rebalancing will be discounted by the funds that follow those indices, slavishly. Even with the rise of ETFs, many do follow the indices so must rebalance to account for changes made on Friday's close.
But after that, the only draw back will be a complete lack of volume, as holidays break up this week and next, and no one will find need to do anything drastic
So with that, a Happy Chanukah and Merry Christmas to all. And to all a good night!
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
December 16—20, 2019 OVERBOUGHT MARKET INTO THE HOMESTRETCH It felt to me like Trump intended to jerk everyone around the whole weekend, pretending to still be debating a 'Phase 1' deal with the Chinese but the Chinese forced his hand with a press conference stating a deal had been reached. Trump, more than any other person I've ever observed, loves to have the spotlight on himself and, even more so, with the US House debating impeachment, a "last minute" deal with the Chinese, announced as soon as the House Judiciary Cmte announced his impeachment, would have been a much better time to unveil a deal with the Chinese but, alas, the Chinese had other plans—namely perking up its people & workers, even if that wasn't Trump's plan.
Now for some good news about the malls—the one here which was often reminiscent of a ghost town was very busy this past weekend, with every specialty store offering either 40% or 50% off storewide. "Everything" at a single discount. Now for the bad news—the mall had many slots available for seasonal kiosks that weren't filled. Many of the kiosk structures were there but covered—perhaps closed for Sabbath, though I doubt it, since that's never been allowed in the past. The other piece of bad news was the lack of newness in the mall. The halls lacked holiday decorations and inside most of the specialty stores, one wouldn't have known whether it was 2019, 2017, of 2009. Gap, especially, is guilty of this, with plaid shirts, striped mittens & scarves returning for the umpteenth year. What was different about Victoria's Secret was panties 10 for $30, instead of 7 for $28, either way, a cheaper price this year than in years past. Without a fashion show, this year, V.S. had no need to bring back "angel wings" so didn't. Otherwise, you wouldn't have known one year from another. But don't let me pick on GPS & LB, alone, since the same could be said about most of the specialty stores in the mall, whether White House Black Market, LOFT by Ann Taylor, or Ann Taylor itself. At Kate Spade, tiny shoulder strap phone holders remain anywhere from $198 to $398, so at 30 or 50% off, still not bargains. At Coach, prices were 30, 40, & 50% off, plus another 20% off and, still, no one was in the store.
Who was busy? Apple. Apple and Apple, while LUSH, once again, proved a bigger draw than PINK (LB) or MAC, though I think many would have been satisfied to be as busy as the MAC store was. On the flip side, Saks was dead, while Bloomingdale's was busier in the men's department than it was in shoes or womenswear. And that's something else I observed; in past weeks, the shoe stores were the busiest—especially Steve Madden. Not this weekend when, it appeared, sho9ppers were finally serious about buying gifts for someone other than themselves. Meanwhile, the gaping whole Sears left at the local Simon Property mall seems no closer to being filled than it was 8 months ago, and that's despite SPG claiming everything is hunky dory. Meanwhile, 2 stores that were in the Sears wing have, since, moved to a busier spoke of the mall's wheel.
If it's mid-month, there must be housing data, starting with the NAHB Dec Housing Market Index, Monday, Nov Housing Starts/Building Permits on Tuesday, Wednesday's weekly Mortgage Apps, and Thursday, NAR (Realtors) Nov Existing Home Sales but, of course, that all pales in comparison to Friday's update to US Q3 GDP, and Quarterly Options & Futures Expiration, which will culminate after hours, with rebalancing of the Nasdaq 100 & Semiconductor SOX Index, as well as S&P Indices. That will inform trading, most, a week from Monday but suggests there's lots of updates Portfolio Managers will have to consider before the week is out.
Next most important, Earnings from FedEx, Jabil Circuits, and Navistar Tuesday, Worthington thrown in there because it'' benefited-—r should have-Trump's tariffs imposed on Steel. Wednesday, reports from General Mills Herman Miller, Micron Technology, and Paychex, which should have been Salesforce.com, but never realized the world was passing it by, as it stuck by its payroll software and check-writing, even as those checks became direct deposits, without the physical check. Thursday, reports are expected from Accenture, ConAgra, Darden Restaurants, Factset, Nike, and Sanderson Farms. Quite the microcosm of the American Economy, so a compact list that packs a punch.
Beyond those events, the items listed on Events Calendar are more company specific than Inudstry, with just a few exceptions. The FDA surprises, considering 2 drugs on Tuesday, from AstraZeneca and Merck, before considering another from Epizyme on Wednesday. Celgene was, originally, on Wednesday's schedule, also, but its date was canceled, moving EPZM's afternoon session into the morning.
In sum, Housing Data, quite a fair number of significant Earnings Reports, and Quadruple Witch to end the week—the last full week of the year, should make for spurts of activity in a very overbought market. And in the end, it's the overbought nature of the market, and the Quadruple Witch which caps the last full week of the year, that may, well, give the bulls some indigestion--even if a big weekend deal involving International Flavors & Fragrances & Dupont gooses the first trades of the week.
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be only one factor in more complete due diligence.
December 09—13, 2019 FOMC TAKES A NOTHING DONE Let's get straight to the heart of the week—the FOMC meeting that will wrap on Wednesday, with Jerome Powell's press conference at 2:30pm et, Wednesday. The FOMC will take a 'nothing done' at the meeting and repeat its intent to remain 'data dependent.' The most recent data—the November Unemployment Report, Friday, was reason enough for the FOMC remain on hold, even if 45K—55K of the workers within the 266K added were GM---related. Not just GM workers but the many workers employed by GM's suppliers who were laid off as GM's strike stretched from 2, to 3, to 4 weeks, before it was settled.
Wednesday, we'll also get a look at Nov CPI, food, at least, getting ridiculously expensive, even if US data isn't picking it up. And then, I paid half for this year's Thanksgiving turkey what I paid a year ago. That was a poultry illness, last year, rather than straight line Consumer Price hikes. The US Treasury will Auction 3-yeear Notes Monday, and 10-year Notes Tuesday. Thursday, it's a small issue of reopened 30-year Bonds. Thursday, early in the morning the ECB will release the first rate & QE decision under Christine Lagarde, who'll then follow-up the meeting with a press conference that will be covered by Bloomberg, if not CNBC, early Thursday morning before the market opens. Later Thursday, the Bk of Canada will release its rate decision, it's chief, Poloz, on countdown to his departure in May, announced last week. Friday, November's Advance Retail Sales will be out, covering Black Friday, through the Saturday that followed it. Also Friday, the Chicago Fed hosts its 33rd Annual Economic Outlook Symposium, while NY Fed Pres/CEO John Williams will speak on monetary policy, at CUNY—the City University of NY, in NYC, at 11am est.
The Earnings Calendar is a mash-up of consumer names, as well as high-end builder Toll Bros, and Vail Resorts, Monday. Tuesday, it's pretty much all consumer all the time, DBI, for those who don't recognize the ticker, Designer Brands, previously, DSW Shoe Warehouse, which remains its largest division. Wednesday, most will be watching Lululemon but it may pay to key into American Eagle Outfitters & Children's Place instead. The former became a teen jeans favorite who will be able to discuss Black Friday and holiday weekend sales in a way Children's Place can't. Not only has Children's Place left most mall locations but it, also, has bought the IP from Gymboree, which it will relaunch online early next year. Without any competition but Ascena's Justice, at best, PLCE has kids almost to itself. Justice really caters to preteen girls who, generally, object to the thought of being dressed at PLCE. Ascena is reporting Monday but it's a retailer in transition—closing all the brands it originally owned, dressbarn by the end of the year--to concentrate on Justice, Ann Taylor and LOFT by Ann Taylor. Also Wednesday, Tailored Brands, the one-time Men's Warehouse, which it still owns, Vera Bradley, and United Natural Foods, whose report long informed the success of Whole Foods Markets but, now, as part of Amazon, it says more about the sales of natural foods at general grocers, rather than Whole Foods, alone.
Thursday brings a flurry of tech earnings, including Adobe, Ciena, & Oracle, with retailers CostCo and Vince, as well. CostCo's comments on Black Friday and the holiday weekend will be carefully recounted, as it sells as much electronics as almost any retailer but Apple or Best Buy, as well as the very food that groans on American Thanksgiving tables.
Which brings us to Events, with ACC's NY Cardiovascular & ASH, the Hematology Annual ongoing over the weekend. Also still going, COPS25—the U.N. Climate Change Conference, continuing in Madrid Spain.
A quick look at the Monday & Tuesday schedules proves the Investment Banks are back at it, getting in their last licks before vacations and end of year foreclose attendance at conferences. The Tuesday, Goldman Sachs US Financial Services Conference may well be the highlight of the week—though not necessarily a positive highlight. Banks know activity slows into end of year, so often adjust their outlook for the quarter at Goldman's event. It has cut both ways, the complication, this year, the Charles Schwabs, TD Ameritrades, and Interactive Brokers, and their competitors, that have dropped commissions to zero. That may have started attracting RIA's to Schwab. Next, there's Barclays Global TMT Conference, in San Francisco, starting Wednesday. And don't miss the items at the end of each daily listing, where corporate Analyst & Investor Meetings are listed, though the McDonald's Restaurants analyst meeting Barron's discusses, on the 11th, is nowhere to be found on MCD's IR site. Events that day with Cisco, Home Depot, & LendingTree were confirmed, along with the events hosted by I-banks 1-on-1. Friday, Centene is hosting investors & analysts, another opportunity for the revived healthcare industry.
In all, it's the last full week of events for Wall Street, including the last FOMC meeting of the year, and Christine Lagarde's first at the ECB. You'll see and hear gurus claim that winners won't be sold into year end, when taxes can be postponed to next year if held into year end. But portfolio managers mostly mark to market, so some may feel it makes as much sense to sell as not. There is a tendency for small caps and the biggest losers to rise after Christmas, into year end, and the first 5 days of the New Year. All that's true but doesn't mean you have to own them, though owning them through options is often a way to profit without risking much.
And then there are the biggest losers of the year—specialty retailers that aren't Walmart, Target, Ross Stores or TJMaxx, and energy companies, that have been weak most of the year. I know Apache just disappointed with its update, last week but under $20—and especially under $19, it seems like a name that could get snapped up by a larger player—and it wouldn't have to be too large a player, at that price. That's an option I'd look into, perhaps a LEAP, though I can't endorse any of the small retailers—no matter what Ascena, AEO, or PLCE report this week. Retailers were built on bricks-and-mortar, and no one knows, yet, how much physical stores must shrink before the bleeding stops. It sure doesn't look like Sears or J.C.Penney have found the formula, and Macy*s surely hasn't either. And for a short couple of weeks pre-- and post-Christmas, it will seem like consumers have rediscovered malls and retail stores. That will fade in the New Year, and perhaps become even worse. Consumers have learned they spend less if they stay out of the malls, and would rather own high-end smartphones, pay for a Disney+, Netflix & Hulu subscription, rather than buy another schmata. The bulls own the markets, and don't look inclined to let go.
December 1st—6th 2019 BULLS & I-BANKS' LAST HURRAH! Except for Vice Chairman for Regulation & Supervision, Randall Quarles, testifying on Wednesday, at the US House, and Thursday at the US Senate, members of the FOMC are largely silent, this week—despite the NY FRB's Friday Conference, held jointly with Communulife, NYCity Health + Hospitals, and the Robert W. Johnson Foundation's Healthy Communities Conference Series: New Sources of Place-based Capital to Improve Upstream Social Determinants of Health. Call it the quiet period before the mid-month FOMC 2-day meeting, starting the 10th.
New ECB President Christine Lagarde is prominent, this week, testifying at Parliament, along with participating in a ceremony marking the 10th Anniversary of the Lisbon Treaty. The events are Sunday and overnight into Monday, US time, in Brussels.
But it's also a new month, which means the usual PMIs, ISMs, US Vehicle sales from everyone but Ford & Gm, plus Friday's November Unemployment Report. Friday will end with Oct Consumer Credit, at 3pm, and it's all pretty much over by then. The Bank of Canada MPC is meeting, as is the Royal Bank of India, both Wednesday. On Wednesday, Pres. Trump can attend the US House Judiciary Committee hearings—even have his counsel question witnesses the Dems might call but he hasn't accepted that invitation. Yet.
The Earnings Calendar lacks enormous headliners, other than Salesforce.com, Tuesday, Korn Ferry Wednesday, along with GIII, RH (formerly Restoration Hardware), Royal Bank of Canada, and Synopsys. Thursday promises Brown Forman, Hovnavian, Signet Jewelers, Tiffany, TD Bank, and Ulta Beauty. Friday, Big Lots (where I just bought my annual Black Friday red, 12-cup programmable, coffee maker for $9.99), and Genesco. An interesting mix of companies that won't lift or bury equities, one way or another.
But get a load of the Investment Bank conferences—the last Hurrah referred to in the title of this piece, Monday & Tuesday, especially, then again, Thursday, with one last flurry still to come next week but this week really the last hurrah, because traders will take a quick look at Friday's Unemployment Report before balancing out their portfolios for the year. If you took profits during the year, this is the week to take losses, before everyone else is doing it after this week. OPEC & OPEC+ meet to renew or reset production quotas but don't expect oil to do much of anything, this year.
Note Biogen will hold a webcast on Thursday, at 11am, to discuss results from a Phase 3 Aducanumb Clinical Trial, before holding a Q&A with investors, following that CTAD data release, at 5pm est. Viacom & CBS should close their merger, Wednesday, even as Disney World Orlando opens the Star Wars: Rise of Resistance ride, at the recently opened (August) new Star Wars Land. And while you'd think industry conferences would be winding down. In addition to the CTAD for Clinical Trials in Alzheimer's Disease, ASH, the 61st American Society of Hematology will open its Annual Meeting on Saturday, the 7th. It's one of the most highly anticipated meetings of the year, in a crucial area of research.
The bulls are clearly in control, despite Friday's losses, and likely to hold on, through this week. Sooner or later, profit taking—or loss taking to offset gains from earlier in the year—are bound to appear, before any Santa Claus rally gets underway. For those who adhere to the strictest of market lore, the Santa Claus rally starts after Christmas and runs though the end of the year. But the really big rally is the one that starts after January 1st, usually involving the prior year's biggest losers and small caps. So keep an eye on the new lows list through the end of the year, to anticipate those equities likely to rise the most, come January 2nd—5th. If you're so inclined.
November 24—30, 2019 HAPPY THANKSGIVING! We can't say nothing is going to go on during this holiday shortened week because that's not true. It's end of month, at end of the week, which probably means all the activity of substance will be finished by Noonish, on Tuesday, if not sooner. Plus, even with many traders working remotely, while trying to pretend interest in family, the Economic Calendar is stacked with the typical end of month Housing Data, even a speech by FOMC Chief Jerome Powell, late Monday. The location isn't very promising, by typical standards but the Greater Providence Chamber of Commerce Annual Dinner must have offered Powell reason to accept their invitation to speak, since Powell can surely turn down gigs that don't appeal to him.
Tuesday, Advance Oct Retail & Wholesale Inventories, plus S&P Case Shiller Core Logic Sept Home Price Index, FHFA Sept House Price Index, and US Oct New Home Sales. Anyway you cut it, that's a rare Trifecta of Housing Data arriving in a single day. Note, also, Fed Gov Lael Brainard is speaking at 1pm et, on Federal Reserve Bank Framework Review of Monetary
Policy Strategy, Tools & Communications, at the New York Association for Business Economics 2019 William F. Butler Award Event. At about the same time, the US Treasury will Auction $41B 5-year Notes, a fairly big dump for longer term offerings. That amount is more typical of 3 & 6-month Offerings. Overnight, Tuesday, China will release Oct Industrial Profits—for whatever that assessment is worth, given we have little verification, of Chinese statistics. And those we do have often don't confirm the National Statistics Bureau's release.
Wednesday, Oct Durable & Capital Goods Orders & Shipments, both probably constrained by the GM strike which ended later in the month. We'll also get a 2nd look at Q3 GDP, and PCE—the measure of inflation the Fed has depended on since Bernanke days. And then, Wednesday, both MBA Mortgage & Refinance Data, as well as Nat'l Ass'n of Realtors Oct US Pending Home Sales, which often close 4 – 8 weeks later. EIA weekly Petroleum Data, et all, will be out Wednesday but so will the weekly Natural Gas Report. Not long afterwards, the Treasury will Auctions $32B 7- year Notes, on top of the 4- & 8-week Notes whose values are yet to be announced. The Survey of Business Uncertainty isn't getting as much press as the degree of Uncertainty businesses are expressing. Perhaps someday.
Also Wednesday, and not to be overlooked, the Fed's Beige Book, in preparation of its FOMC meeting scheduled for December 10th—11th. But what the heck! Store receipts will be calculated from every angle, including from the sky, where satellites will pick up the crowding of parking lots at shopping centers—or their lack, there of. Stocks & SIFMA controlled markets close early Friday but no one cares. Every self-respecting shopper will be online buying what can't wait until Cyber Monday, after the weekend. Black Friday, more an electronics shopping event in stores, than other items but I'll fess up to buying a new, programmable 12-cup coffee maker each and every year. It's my own personal tradition, and often costs as little as $9.99 but often $3 more for Red, my preference. But otherwise, I could care less about what's on sale—I just don't think I need much of anything, unless Microsoft brings back Windows XP, with the most modern networking and internet software available anywhere, and a speedy drive—none of which XP ever had.
Which brings us to the EARNINGS Calendar, another bonanza of retailers, including Best Buy., Burlington Stores, Dicks Sporting Goods, Dollar Tree, and Movado, all on Tuesday. Also that day, Abercrombie & Fitch, Analog Devices, Autodesk, Central Garden & Pet (both a wholesaler & retailer), Dell Inc, Hormel, Hewlett-Packard, & VMware. Wednesday John Deere will weigh in. On Monday, Agilent, Ambarella, HP Enterprise, and PVH, which even against all odds, seems to always get the job done.
The EVENTS Calendar is too slim to spend much time on, except for some of the overseas events. Here, in the US, industries, companies, and I-banks are mainly sitting out the week. Thursday, Thanksgiving Day, is the biggest day for Macy*s, in terms of press attention, as its 92nd Thanksgiving Day Parade winds down Manhattan from the Museum of Natural History, on Central Park West, to Macy*s Herald Square. If Macy*s could retail as well as it parades, it would be a lot more successful than it's proven, of late. With the Parade, Macy*s gives the world of kids and their parents the magic they want. In stores, quite the opposite. M needs buyers who can cull vendor offerings, rather than just pour on the volume. Even under a new leader, Macy*s buyers haven't learned how to do that. Instead, they've institutionalized all their mistakes in something called Backstage—a last act of failed taste, of which there's any abundance at Macy*s.
Friday—Black Friday--a half day for Equities, and early close for bonds, was once the busiest shopping days of the year but no more. Cyber Monday has overtaken it, though retailers will keep trying. Still, except for those desperate to save $300 on a big TV from a 3rd rate brand, the joy of Black Friday was whittled down, when it moved a start during the dinner hour, on Thanksgiving Day—4—5pm at retailers opening that day. With Cyber Monday discounts of offerings planned like the 2nd coming of Black Friday, a little more of Black Friday's enthusiasm was whittled down. Some year, Amazon is going to plan Prime Day to coincide with multi-state sales tax holidays (this year the first weekend in August), and then you'll see a blow out Black Friday worth mentioning. Until then, the magic slips a little more each year, making for much better Thanksgiving Days with families than were possible, pre-Internet, when stores started opening Thanksgiving Day. Ya know who started that? Kmart, and look what's left of them, since!
Happy Thanksgiving to one & all! And thanks to Cesar at the local Best Buy Geek Squad who, instead of laughing me out of the store, actually put my XP Laptop into the compress air room, and blew out the dust that was causing the fan to sound like it was on death's door. It's not my only one but it is the only one I really love typing on, and the one with IBM's keyboard embedded stick mouse, which makes it so much easier to type at lightning speed!
Happy Holidays, everyone! Don't let some profit taking catch you off guard.
ECONOMC: (Highlights, only, below. Full International Economic Calendar here)
November 18—22, 2019 IF CONSUMER FINANCES ARE SO GOOD, WHY ARE RETAILERS SO BAD? The Economic Calendar promises Housing Data, more than other items, including NAHB's Nov Housing Market Index Monday, when the highlight may well be SIFMA's Annual Meeting, its Capital Market's Meeting, bringing out SEC Chair Jay Clayton among the speakers. Overnight, the RBA—Royal Bank of Australia—will release Minutes of its Nov Monetary Policy Meeting, when it elected to stand pat, to the surprise of everyone who follows such things. Tuesday, back to housing data, with Oct Housing Starts & Building Permits, followed by NY Fed Pres/CEO John Williams in a 1-on-1 at the SIFMA Annual Capital Markets Conference.
Overnight Tuesday, the Peoples Bank of China will set Nov 1-year & 5-year Prime & Interbank Rates. German Oct Producer Prices could get more attention than usual, as its recently announced GDP barely eeked out a positive result. Wednesday, two big blasts from the past will speak, Pres. Obama & Janet Yellen are scheduled to speak at the Greenbuild International Conference and World Business Forum, respectively. Also speaking, the USDA's Chief Economist, R. Johansson, who will keynote the Chicago Federal Reserve Bank "Improving Midwest Agriculture & the Environment Conference," perhaps shining a light on the large number of farm bankruptcies filed year to date. Wednesday, we'll also get EIA Petroleum, et al, data, on its regular schedule, after last week's delay for Veterans Day, before the FOMC Oct 29—30th Meeting Minutes are released. Not everyone was thrilled about a 3rd, consecutive interest rate cut but at least one former dissenter, James Bullard of the St Louis Fed, finally felt the FOMC caught up to where he'd wanted them when he dissented twice previously for more action than the FOMC took until the 3rd rate cut. Overnight, we'll see the ECB's Account of its Oct. 23—24th Monetary Policy Meeting, the last before Mario Draghi passed the baton to Christine Lagarde. The OECD will release its Eurozone Economic Outlook, while ECB board member Mersch is keynoting S&P's Global European Financial Institutions Conference, a bit of a misnomer. With just a few exceptions, all the speakers are S&P Global employees commenting on European Financials, information probably available online, without attending a conference in Paris, France. And because it's almost exclusively S&P speakers, it landed on the company-specific section of the calendar, instead of in the upper half of its day, when conferences are usually placed.
Thursday, the ECB and NY FRB will jointly sponsor a "Workshop on Expectations Surveys: A Tool for Research & Monetary Policy," which we felt compelled to mention, since we consistently diss the U.M. Consumer Sentiment Surveys, especially the preliminary one generally delivered mid-month, for the as few as 250 respondents its based upon. The NAR—National Association of Retailers, who met last week, presents Oct. Existing Home Sales, shortly before Fed's Mester speaks at her Cleveland Fed Joint Meeting with the OFR—Office of Financial Research—Conference on "Financial Stability: Risks, Resilience & Policy." Then, Fed's Neel Kashkari participates in a moderated discussion with Q&A at the Minnesota Chamber of Commerce Economic Summit. The US Treasury will, then, Auction a mere #12B reopened 10-year TIPS. Overnight Thursday, into NY's Friday morning, the G20 Finance Ministers & Central Bankers are scheduled to meeting in Nagoya city Japan, though if Powell is attending, the FRB schedule doesn't say so, and ECB's new Chief, Lagarde, is scheduled to speak in Frankfurt, at the European Banking Congress, so could only be 'attending G20' by video.
Friday, Chicago FRB Pres/CEO Evans opens the 14th Chicago FRB/OCC/FDIC Joint Community Bankers Symposium, a one-day event. U.M. will deliver the very early November final Consumer Sentiment & Expectations Survey, the school closing up shop early, for Thanksgiving. Also expected, Markit's US Nov Flash Manufacturing/Services/Composite Purchasing Managers Index, aka PMI, and the K.C. Fed's Nov Manufacturing Index. That's a sector still depressed but should be better now after GM workers ended their strike in late October.
The Earnings Calendar could be a minefield, with so many retailers reporting their results. Let's not forget, the Quarter, for most, started in August and ended in late October. That means the Prime Day sale from Amazon, and all the competing sales weren't captured, because they occurred in mid-July. However, early August was when most states that offer Back-to-School Sales Tax Holidays held them, two events that may, well, have stolen sales from the tradition BTS shopping done, more conventionally, in September. What has worked out for retailers is some of the earliest snow in history, in the northern most states in the middle of the country and, this past weekend, with frigid temps in plenty of places—here in Southern Florida, our high on Sat. was 74, and on Sunday, 64—sets up nice sweater, overcoat and boot weather for retailers who may not have to moan, as Jack Ma did about Alibaba's Singles Day, that the weather was too hot for sales of winter wear. That may, in fact, encourage retailers to be a little more optimistic about holiday sales than they would be, otherwise.
Retailers to watch include Home Depot, Kohl's, and TJMaxx on Tuesday, L Brands, Lowe's and Target on Wednesday, Macy's, Nordstrom, Ross Stores, and Williams-Sonoma on Thursday. There's very little point watching Gap Stores on Thursday, since it already warned and its CEO left the building. All most of its coverage wants to know is whether the spin-out of Old Navy is still planned for early next year. Friday's most important report is expected from FootLocker, which should benefit, ahead, from Nike's decision to stop selling through Amazon. Yes, the point of dropping Amazon is to retain more sales from Nike.com but FootLocker will still benefit from the elimination of Amazon as a competitor.
Which brings us to the Events Calendar. Just as the American Heart Association Scientific Sessions continue over the weekend, the American Academy for Cancer Research kicks off its Cancer Immunology & Immunotherapy Meeting, even as the International Oncology Leadership Conference commences in Antwerp Belgium. Also Sunday, Ford is introducing its first non-2-day Mustang, the Mustang Mach-E electric SUV. At CME Group's 11th Annual Global Leadership Conference, starting Monday, a couple of high profile former CEOs are highlights: Lloyd Blankfein, who stepped down as Goldman Sach's CEO almost exactly a year ago, and former PepsiCo CEO, Indra Nooyi. The event, also known as GFLC, also promises Oprah Winfrey, and for space fans, Virgin Galactica (SPCE)'s Director Stephen Attenborough, NASA Administrator Jim Bordenstine, and Katie Couric, to name about half the high profile speakers--SpaceX getting equal time with its Senior V.P. Tim Hughes. Euro Finance Week starts the same day and earns its name, covering finance for more than a handful of subsections, including Blockchain Nation, Green Finance, Sports Governance & Finance, Football & Finance, Technology, R.E, Forum, Rick Management & Compliance, Tax & Finance, Industry 4.0, Payments Konferenz, China Day, and more, right down to a Sustainable Investors Summit and an Award to the Banker of the Year.
On Tuesday, CNBC will probably provide nearly wall to wall converage of its "Evolve" event, "Transforming Companies for the Future." CEOs from Levi Strauss & Co (LEVI), Ticketmaster (LYV), Walmart (WMT) CEO Doug McMillon, Chipolte Mexican Grill (CMG) CEO Brian Niccol, Activision Blizzard (ATVI) CEO Bobby Kotick, and many more will have conversations with the gamut of CNBC anchors, from Becky Quick to Julia Boorstin, to Tyler Mathisen, and more. The event is in Los Angeles, so live conversations, or edited clips won't land on air until after 11am, at soonest. Also Tuesday, Stifel hosts Healthcare, Raymond James Growth & Value, Jefferies Energy, Bradesco a CEO Forum & LatAm Conference, both of those in New York. J.D. Power and NADA, Jointly, host an Auto Conference in L.A., where the Los Angeles Auto Show is opening. Stephens calls its Midwest Industrial Conference "Monsters of the Midway," the corporates participating noted by their tickers, on Tuesday's listing. Also Tuesday, POWER-GEN International, and a host of I-bank conferences in London, where Jefferies will host Global Healthcare, starting Wednesday.
On Wednesday, also, Barclays is hosting a Global Automotive Conference, but in NY, instead of L.A., where the industry is meeting. Baird is hosting Government & Defense, Berenberg West Coast Consumer & E-Commerce, and SVB Leerink its 13th Annual POLARxPRESS bus tour.. The 14th Homeland Security Conference & Expo starts Wednesday, in D.C. Until this year, it was called the Border Tech Expo, making this, actually, the 1st Homeland Security Conference/Expo. As you'd expect, speakers are from the U.S. Dept of State, Dept of Energy, DHS, FAA, Dept of Treasury, TSA, National Guard, US Secret Service, US Customs & Border Patrol, FEMA, and much more. And, as you'd also expect, many execs from ports and major cities around the country are speakers, as well. Still, can't help but wonder whether "Border Tech" was too inflammatory. Then note the IDTechEx Show, starting Wednesday, because it's actually 7 events rolled into one major co-located events the biggest for number of attendees the Printed & Flexible Electronics Conference, Electric Vehicles, Wearables, & Sensors. Every name in the supply chain and chip making is involved in one of the several sub-conferences. And though all of that is happening in Santa Clara, CA, Qualcomm chose to schedule its Investor Day, not there but, instead, in New York, Tuesday. Other stock specific events of note include Akamai Edge Forum, starting Monday, overseas, ConocoPhillips' Investor Day, in Houston, Tuesday, the same day Penske Automotive Group is meeting with Northcoast Research clients, Salesforce.com starts Dreamfoce, in San Francisco, Samsung Global speaks at Dashin Securities' Tech Conference in Seoul, and Union Pacific Railroad meets with Wolfe Research clients at its headquarters in Omaha.
Alzheimer's Disease Therapeutics: Alternatives to Amyloid, in NY, Wednesday, is an opportunity for me to weigh in on Bristol-Myers Squibb's Alzheimer's drug that didn't work, then months later suddenly did. There is no single disease that strikes as many seniors, or puts as heavy a strain on caregivers—whether they be the spouses or children of adults stricken. For that reason, if there's any shred of efficacy, and zero instances of harm, the FDA will approve the BMY drug, even if the "efficacy" represents the slimmest of substance. Also Wednesday, Cigna CEO/Pres. David Cordani speaks at the Economic Club of NY, for breakfast, while Salesforce.com hosts Investors & Analysts for their annual meeting @Dreamforce. Thursday, Liberty Media is hosting an analyst day, with many of its partially public siblings making appearances for the Analysts. Thursday, so soon aft Cigna's CEO spoke at the Economic Club of NY, Michael Dell does, for lunch, starting at 11am.
Friday is a head scratcher: Best of IASLC, the Annual Lung Cancer Conference will be held in San Francisco, even as Perspectives in Thoracic Oncology meets in Long Beach CA. Friday, 2 of the biggest movies of the holiday season are slated to open: "Frozen 2," from Walt Disney, and Tom Hanks in "A Beautiful Day in the Neighborhood," a biography of Mister Roger—Fred Rogers—a PBS stalwart, told through his friendship with a journalist. Tom Junod, and produced by Sony's TriStar Pictures and Tencent Pictures, with TriStar distributing in the US. While Mr. Rogers Neighborhood was translated into many foreign languages and ran on public TV stations around the world, to the best of my knowledge, Asian countries weren't prominent among them. So for Tencent to be a co-producer, it seems, the surprise must be on me. Japan must have been one of the countries that lapped up Fred Rogers.
As we slide into the countdown to Black Friday and the coming Christmas season, this could be the last big week for I-bank conferences, until early December. It will be interesting to see whether there's a little rush to take profits at the end of this week, before everyone else gets that idea before Thanksgiving. Stocks have run an awful lot, ignoring how far Hong Kong is pushing the Chinese, along with the Impeachment Hearings in D.C., where our President still doesn't get what it means to act Presidential—instead insisting he has the same right to free speech as other citizens, tweeting commentary on the former Ukraine rep from the State Dept, even as she testifies. No matter what Americans think of Trump—and they're obviously very polarized in their love or hate for him—it's what the rest of the world thinks that we should take a minute and ponder. And then, while we're out it, think about how little growth in earnings were reported in Q3, and how much less is expected in Q4. All that makes me wonder why stocks are making new all time highs almost every day, and when the big money will call time-out. Surely, there won't be much in the retailers' earnings to celebrate—even if the off-price retailers manage to deliver..
November 11—15, 2019 POWELL TESTIMONY, EEI FINANCIAL MEET, & WALMART EARNINGS You can tell the majority of the Earnings Season is over by the number of I-bank Conferences on this calendar—the longest calendar in weeks, ex-the Earnings Section. And it will be a barn-burner of a week, with FOMC Chief Powell testifying at Congress, twice, After the Bond Market takes a Veterans Day rest, on Monday, even as both the Electricity Production and REIT industries hold separate, all hands on deck, mass analyst meetings. The former is the 54th EEI Financial Analysts Conference, the latter NAREITworld. And if you doubt their importance, all you need do is check the number of I-bank events taking place at each of them. EEI started Sunday, NAREIT starts Tuesday. And, if that wasn't enough, NAR—the National Association of Realtors, via whom we get Pending Home Sales, monthly, and SABEW, the Society of American Business Business Editors & Writers, at which Patrick Harker is the lead off speaker, and ARDA—Resort Development, usually most heavily weighted with timeshare developers, where all the top hoteliers have dived in.
The Powell testimony should hold few surprises but we're yet to see how the Street will react to him insisting that the Economy is well, and the FOMC has time to let the 3 rate cuts work into the system, doing nothing in the meantime. Philly Fed's Patrick T. Harker will be answering audience questions @SABEW, the Society of American Business & Economic Writers, Tuesday. Most disturbing is the first session, right out of the gate, after welcoming comments is "Recession Coverage: How Can Business Journalists Prepare Audiences for the Next Recession?" I read that and my thoughts immediately leapt back to Richmond Fed's Barkin comments, on 11/05—She said she doesn't see a recession imminent but does worry we could talk ourselves into recession. Yeah, there was a lot of such talk flying around the Street but less since the FOMC's most recent interest rate cut.
The Calendars at other websites present a conundrum, this week. Two Calendars have Charles Evans, the Chico Fed President, speaking at the 3rd Annual Philly Fed Fintech conference which the Philly Fed does not show as repeating this year. Then, another two calendars we consult has Pres. Trump speaking, 11/12, on Trade & the Economy at the Econ Club of NY. Problem is, the best known of those—the Economic Club of NY, does NOT show a Trump event on its website. Perhaps Trump has rented the club for a private event, or there's another Econ Club in NY I don't know about—a range of possibilities do exist, including a members only event the club is keeping from outsiders. Econoday & the CME show the event on their Calendars but I just can't confirm that happening on Tuesday, and don't blindly post what I can't verify.
A few I-bank Conferences seem obvious to watch, including UBS' Global Technology Conference, in Scottsdale AZ, Credit Suisse's Healthcare Conference in the same city, both starting Monday. Morgan Stanley hosts its 8th Global Chemicals, Agriculture, & Packaging Conference, in Boston, starting Tuesday, the same day Citi starts Financial Technology, and Jefferies West Coast Consumer 1x1 in San Francisco. On Wednesday, JPMOrgan hosts Ultimate Services Investor, Sandler O'Neill Partners East Coast Financial Services, in Naples, FL, Berenberg Pain, in NY, Needham Big Data/Infrastructure Software 1x1, and ROTH Partners New Industrials & Technology. Given that mix, the event few may pay much attention to, initially, is Stephens, Wednesday, hosting Nashville Investment Conference. The first assumption may be healthcare, because it's in Nashville, the 2nd might be mid & small caps. But all that would be wrong. Stephens is hosting multiple sectors, and the largest market cap company reporting is none other than Walmart, also reporting earnings on Thursday.
This might feel like a good place to move onto the Earnings Calendar, and I'd love to but, then, I'd miss mentioning Deutsche Bank's dbAccess Gaming, Lodging, Leisure & Restaurants 1x1, and UBS' Aerospace Conference, in Palm Beach FL, along with Wolfe Research's Midstream Tour and JPMorgan's Paris, France, Luxury & Brands Conference and Deutsche Bank's dbAccess Lithium & Battery Supply Chain Conference, and the International Kidney Symposium, in Miami, starting Friday, or the American Heart Association's Scientific Sessions, starting next Saturday, in Philadelphia.
And, then, we haven't really done the Economic Calendar justice, since we haven't mentioned the 11th BRICS Summit, starting Wednesday, in Brazil, distinguished from other multiple nation cooperation associations in that it states, outright, it's a political, not an economic cooperation association. That could be why Russia's Vladimir Putin is flying such a long way to get there for 2 days. Xi of China is attending, too, so we know Putin will have some competition in his efforts to expand his sphere of influence. A quick scan of the Economic Calendar shows the Fed Bank offers up more than just Powell, this week, with Vice Chairman Clarida speaking at 5:30am et, Monday, in Switzerland, and Tuesday, both Richmond's Fed Pres. Barkin & Philly Fed's Harker speaking, as is Minneapolis Fed's Kashkari late in the day. Overnight, into Wednesday Morning, the Reserve Bank of New Zealand will release an Interest Rate Decision, by which time it will be Wednesday, the 13th, there. That's the day Powell testifies at the Joint Economic Committee of Congress, while Richmond Fed's Barkin speaks on "The New Environment for Monetary Policy," presumably referring to policy after 3 "insurance" cuts. Also speaking Wednesday, Dallas Fed Pres. Kaplan, in a conversation on national & global economic issues with Douglas Holtz-Eaton, of American Action Forum, which badly fails to do his past history justice. Also Wednesday, US Oct CPI will be released, ten Thursday, Oct PPI—Final Demand. Clarida speaks, again, that day, on the Federal Reserve's Review of its Monetary Policy, Strategy, Tools & Communications Practices," at the Cato Institute. Mid-day Thursday.
Also Thursday, NY Fed Pres/CEO John Williams is the lead off speaker at the San Francisco Federal Reserve's AEPC—Asia Economic Policy Conference, complete with Q&A. AEPC is shaping up to be one big conference, with economists from many regional FRB, as well as S.F. Fed Pres. Daly, the Hong Kong Monetary Authority, the Reserve Bank of New Zealand, Bk of Korea, Banco Centro of Brasil, and Bk of Canada's Gov. Poloz, all on opening day. On the 2nd day, Friday, Daly and a less stunning group of speakers will close out AEPC. Then, Friday, BoC's Lane is a panelist on Digital Currency. Data releases will include US Oct Retail Sales, the Empire State NY FRB Manufacturing Survey, Import/Export Prices, Oct. Industrial Production/ Capacity Utilization, US Sept Business Inventories and, of course,Baker-Hughes' weekly Rig Count
I'll also note the empty BoE Calendar. Usually, when we check the following week's planned schedule of announcements, speeches, economic data, etc, it's filled with items. This week, there was nothing of current economic relevance--zippo—a Lord Mayo's Show (a parade connected wo the appointment of the new Lord Mayor of London, a ceremonial position). and "Painting a Fortune: JMW Turner and the Bank of England," an exhibit of research from the BoE archive that "sheds light on the famous artist's career and investments." The Lord Mayo's show is an annual "procession" that starts at the BoE. The position was created in 2000 but the "show"—a parade/procession, has been occurring since the 16th century. The only other item is the display of Tuner's work, and the bank's records of his transactions, including his first investment at just 18 years of age, 3% of Consols stock. The exhibit at the BoE museum is associated with Turner starring on the new 20 GBP note. Other than those entries, there's nothing until 11/27, which may suggest the ECB expected to be putting out all kinds of "fires," after the 10/31 planned Brexit, so lightened up its load in the immediate aftermath. Certainly, neither of these items would have wound up on the Federal Reserve Board of Governors website, were they happening here.
Stephens is hosting a couple of sub-sector dinners associated with its Nashville Conference. On the 13th, it's holding a Transportation Dinner. Transport-related companies attending include the following tickers: ATSG, CP, DSGX, CVTI, ECHO, FDX, FTAI, HTLD, JBHT, KNX, MRTN, NSC, RUSHA, SRI, ULH, USAK, USX, WERN, WNC, WKHS, YRCW, as of this post, all on the 13th. The Nashville Investment Conference, which starts the same day, and runs through the 15th, has a tremendous list of participating companies, across multiple sectors, the biggest, as I pointed out earlier, Walmart, the smallest market cap, perhaps, Zynga. Just don't tell Stephens where you obtained the link within this paragraph, please.
Which lands us on Earnings, where more media companies are reporting, including Cumulus, Qurate (HSN, QVC), and Tencent Music, Monday. Tuesday, CBS, CBS, and homebuilder D R Horton. Wednesday, Beazer Homes and McClatchy, Thursday, Applied Materials, Dolby, and Viacom, in addition to the aforementioned Walmart. But also on the calendar, Rockwell Automation, Tyson Foods, Canada Goose, Cisco Systems, NetApp, and Stratasys, before Friday's J C Penney & JD.com. Not a big list but one with some punch, nonetheless.
All of which makes for a very busy week and the possibility of some minefields not delivering the narrative the Street has sold itself—1] The Fed has the Market's back. 2] The slowdown has already ended, because the Fed cut rates 3x. 3] The trade war is easing—with the Chinese claiming the US agreed to roll back some tariffs as a condition of signing Phase 1 of a Trade Deal, Trump, on the White House lawn, Friday, insisting that's not something he's agreed to you yet.
So, I'll point out the fact that Trump was boasting of the greatest Phase 1 deal with China in the history of the U.S., shortly after their last meeting. Not hours later, the Chinese said not really, they think another meeting will be necessary to finalize Phase 1 before signing it. Now, it's the Chinese claiming all their terms were agreed to for Phase 1, and Trump saying, not so fast—he hasn't agreed to roll back any tariffs as a condition of signing Phase 1, even though he already pushed off some that were due to be instituted on Oct. 15th. So, it sounds to me like Trump is waiting for one more thing associated with the Phase 1 deal, while the Chinese are prepared to dig in their heels on insisting a rollback of some tariffs, as a condition of signing the Phase 1 deal—a mostly agriculture deal, much as the details have been released—and few of them. So, if you think the market is ready to hear more China trade back and forth, and Powell saying the FOMC is on lock-down, for awhile, pending incoming data, which would, still, have to meet a high bar for them to cut again, then this market is for. Be my guest, keep buying at ever higher highs, even as the Earnings outlook has softened, and Unemployment probably has peaked, though we won't see that clearly, until all the retail seasonal hires begin getting laid off in late December, the January. Yes, all the technical conditions for more gains appear well set up but how many more points? How much higher? Was it Bernard Baruch who said, something to the effect of, he made all his money by letting others stick with stocks for the last 5% move, even as he sold out?
ECONOMIC: (Highlights, only, below. Full International Economic Calendar)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one part of more complete due diligence.
November 04—08, 2019 Future of Financials & BancAnalysts of Boston may Define the Week The Economic Calendar holds early month data, and a number of Fedheads speaking, though not always in the usual venues, and most towards the end of the week. We should hear Oct US Vehicle sales from foreign makers Monday, along with Durable & Capital Goods, Orders & Shipments. Sept Factory Orders are out, Monday, also, the GM impact likely small if any. Most of the breakdown in GM and its supply chain occurred in October, before the strike was settled.
Tuesday there are a smatterig of elections across the country, most for governor and empty legislative seats. Some might be even more localized.. Tuesday, count on the September Trade Deficit, Markit Oct Services & Composite PMI, the ISM non-Manufacturing Index, aka the Service Index, which is being watched more carefully, now, as traders and economists keep an eye out for any slowdown. ISM has a lot more information the Street pays attention to than PMI, including Prices Paid & the Employment Outlook. Speaking Tuesday are Dallas Fed's Kaplan and Minneapolis Fed's Kashkari. Neither will be at forums that suggest pronouncements on interest rates. NY Fed Pres. Williams, though, may, not so much at the Wall Street Journal Workforce Conference Wednesday but, later in the day, when he makes welcome remarks at the NY FRB's GARP Global Risk Forum. Note, overnight Tuesday, into Wednesday morning in NY, the BoJ will release minutes of its Sept Monetary Policy Meeting, though I think most think its status is hopeless. Kuroda spoke, a couple of weeks ago, of the need to try something other than negative rates but, to date, he's not made an alternate suggestion
Wednesday, we'll also hear about Mortgage & Refinance applications, US Q3 Productivity & Costs, and word from pieces from both the NY Times DealBook Conference & WSJ's Future of the Workforce. Wednesday, overnight, Stockholm will host the 15th Annual Conference on Microstructure of Financial Markets, for 2 days, p lus, as morning dawns, Thursday, the BoE results of its MPC meeting and Gov Carney's Press Conference which will bleed into early morning Thursday hours. The IMF D.C. office is host the 19th Jacques Polak Research Conference, the topic, "DEBT: The Good. The Bad. The Ugly." It will last until the 8th. The Treasury will auction $19B of 30-year Bonds, Thursday, an amount that should be absorbed without a blink. Thursday, Wired Magazine hosts its 25th Anniversary Summit, in San Francisco, which will last until the 10th. Fed's Kaplan speaks, again, at a Dallas Chamber of Commerce Year-Ahead Summit, with Q&A, which may not yield much on where rates are going. Later, US Sept Consumer Credit will be released—debt really, which should not have risen much for the revolving credit side, since there was little in retail sales to suggest strong hits to credit cards—other than strong sales of iPhones, most of which are bought on plans that pay monthly to cellphone providers. After hours, Atlanta Fed's Bostic speaks monetary policy at a Money Marketeers of NY event, where he might have more to say about his outlook for rates than we've heard from him previously.
Friday We'll get the U.M. nearly worthless Preliminary November Consumer Sentiment, 7 days into the month, as if it isn't usually worthless, anyway, mid-month, based on as few as 250 consumers surveyed. The Chicago, St Louis, & San Francisco Federal reserve banks are hosting events Friday--San Francisco the only one that promises prominent Fed speakers, both regional Pres. Daly & Fed Gov. Brainard at the far West conference. The topic is Climate Change, which doesn't promise much comment on future interest rates—both the benefit & drawback. It will be after 10pm on the East Coast by the time Daly closes out the West Coast event.
Which brings us to another too full schedule of Earnings announcements. I started preparing these outlooks in the 1980's. It was a lot harder then, when there was no internet, so extracting information on companies required Value Line & S&P books/magazines, and none more so than Investor's Business Daily's weekly chart books which provided a wealth of information, delivered every Saturday morning. There were so many fewer public companies, then, that as my work moved onto the internet, in the mid-1990's, the Earnings Calendar, in particular, opened up a wealth of knowledge—about stocks that were new to me. Even though IPO's wax and wane, every once in awhile my socks are rolled up and down—meaning the list can surprise even me. That happened this week, when I stumbled upon ticker KRUS, It stands for Kura Sushi USA Inc, with restaurants in about 5 western states. Really? Raw fish rolls went public? August 5th, and I'm first seeing it now?
Other than the number of broadcasters & hoteliers scheduled to report Earnings, the list is long but not nearly as meaningful as its length. Afraid I don't share financial TV's fascination with Uber. The major healthcare products distributors are reporting this week too. I also can't help noticing ROKU reporting Wednesday, and TiVO Thursday, Roku winding up everything TiVO was supposed to be and isn't. Sometimes I throw in a ticker I know that most don't, like KTB in Thursday, which is Kontour Brands, the jeans spin off from VF Corp. Of course, Thursday, Walt Disney will be the name everyone watches, as spending on streaming service, Disney + reaches maximum spending before launch Nov 12th. I'd watch Kelly Services Wednesday, too, because it's an early warning sign on employment weakening.
Which brings us to Events, with more I-bank meetings scheduled than we've seen for a few weeks. Barclays New Frontiers, in London, which started Sunday, brings together business leaders, innovators, decision makers, and others to discuss the Digital World's relationship with society, identifying and discussing key ethical questions raised. And it won't be all social media since cloning DNA is one subject, British scientists considered the vanguard after they cloned Dolly, the lamb.
At Monday's G Research, better known by its former name, Gabelli Securities, Automotive Aftermarket Conference, auto suppliers speaking include: AZO, BYD.UN, CTB, DAN, DCI, GNTX, GPC, LEA, MNRO, NMPAA, NAV, ORLY, PAG, RUSHA, SMP, SRI, SUP, TEN. Since the days of computer conferences ended more than a decade ago, AWDA (Automotive Parts Distributors), SEMA (Specialty Equipment Manufacturers, CARS (Collision, Repair & Refinish), and AAPEX, together, probably constitute the largest event to take place in Las Vegas, every years. Schwab's IMPACT for its advisors and suppliers includes a keynote by Charles Schwab, and another from former US Ambassador to Greece & NAtTO Nicholas Burns, and country star Tim McGraw, plus presidential historian/author Jon Meecham, among many others.
Monday surprises with so many large tech events, from Adobe, FICO (Fair Isaac), Microsoft, nVidia, Samsung, & VMW, even as Charlie Ergen, founder of DISH & Echostar is scheduled to keynote the InCompas telco event, formerly known as CompTel.
Tuesday's key even is Bk of America Merrill Lynch's (BAML) Future of Financials, which promises all the big name financials. About halfway through what will amount to Q4, considering the last 10 days of the year are often wasted, their comments on how the quarter is going could stop their rally. NYTime's DealBook Conference, the 6th, is a hodgepodge of executives I'm calling the Good, Bad, & Ugly, without identifying which is which. Heading off the event is Andrew Ross-Sorkin, with Accenture Strategy, Arthur O. Sullzberger, IBM's Gini Rometty, JNJ's Gorsky, BA's Muilenberg, US DoJ Ass't AG, Uber, Airbnb, Kris Jenner & Kim Kardashian, Hillary Rodham Clinton, NFLX's Reed Hastings, Valerie Jarrett (formerly of the Obama White House, now from When We All vote), Bill Gates, Gwyneth Paltrow, and more. The same day, also in NY, WSJ hosts Future of the Workforce, in NY, where NY Fed Reserve Pres. John Williams keynotes, and a day later, Wired's 25th Anniversary Summit starts in San Francisco, with speakers that include X Prize Captain of Moonshots, US Nat'l Security Agency, Slack (WORK), actor Chris Evans, Director Rian Johnson, Hugo-Award Winning author N.K. Jemisin, head of FB's Instagram, Tracee Ellis Ross, Stripe CEO/Founder Patrick Collison, 3 described as "Youth Plaintiff & Climate Activist" but not Greta Thronberg, Cloudflare (NET) CEO, (MSFT )'s LinkedIn CEO, Ben Horowitz (Andreessen Horowitz) and more. Also Tuesday, Baird's Global Industrials, and Hart Energy Executive Oil Conference.
It's a little odd that the Farm Equipment Manufacturers host their Marketing & Distribution Convention just the Auto world does but that's the case Tuesday. HSBC hosts a Global Investment Forum Tuesday, also, in NY, even as the Restaurant Innovation Summit meets in Cleveland, of all places. Also note, Tuesday, Intel's Mobileye Investor Summit in Jerusalem, Tuesday, in addition to ST Microelectronic's Tech Tour touching down in Boston.
Wednesday, Wolfe Research hosts an Inaugural Healthcare Conference, while the Consumer Technology Association assembles for their Hall of Fame dinner, oddly, in NY, when most of the industry is based farther West. As if we won't have heard enough from major banks at Bk of America's Conference, there's another change Thursday, at the 34th Annual BancAnalysts Ass'n of Boston Conferences, which ends Friday. Once, again, all the major banks are expected. Stifel will host Midwest Growth, a 1-on-1 which limits the amount of information available. The Pulmonary Fibrosis Summit in San Antonio, starting Thursday, should be where Trikafta, a novel triple combination treatment for Cystic Fibrosis, from Vertex Pharmaceuticals. Even the FDA said the combo should be able to treat 90% of CF patients, which should make VRTX an unqualified star of the week.
IF not, there's always McDonald's Restauarant's revival of little plastic Happy Meals toys, including some of the most iconic over the decades, starting Friday, for less than a week, or Phillips 66 (PSX) analyst meeting. Then, again Kroger meets with analysts Tuesday, grocery war between Amazon & Walmart almost assuring destruction for Kroger. I saw it play out in Atlanta, where a whole rotisserie chicken can be had for as little as $3.99, when the local Public, here in So. Florida charges $7.49.
So, watching the indices making new highs last week, I wonder what all the enthusiasm is all about. The President is totally unpredictable, Earnings were barely inline with estimates that had been lowered several times, and the outlooks were far from encouraging, the trade war a real drag on companies, though Trump would have us all believe it's the Federal Reserve that's been and continues to be the drag. Party on, if you care to. I've been trimming longs into the rally, wondering if the bulls will run out of steam come December.
© Sandi Lynne 2019 Nothing Contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence
October 28—November 01,2019 FOMC MEETING and MORE EARNINGS Let's start with the FOMC meeting, ending with Wednesday's meeting statement, then Powell's press conference. There's nearly universal agreement that the Fed will cut another quarter point, despite 2 possible dissenters, and a past dissenter who wanted more cuts, so should be satisfied with this 3rd quick cut in succession. IF what's gone on in the REPO market has had another to do with yield differential, then the market is demonstrating—rather than just talking—the need for another rate cut. IF, as it appears, another quarter point cut does little to shrink the yield differential, then it also won't be enough. But let's at least acknowledge the Street doesn't see another cut coming for the next 6 months, after this week's. Just as the FOMC wraps its latest meeting, Mario Draghi will deliver his farewell speech on the occasion of his departure from the ECB, Christine Lagarde selected to replace him, to be installed on November 1st.
Note a few Fed speakers scheduled after the meeting ends, notably, Vice Chairmen Quarles & Clarida, as well as NY Fed Chief Williams, all on Friday. Friday is when the 2nd biggest event of the week arrives—the October Unemployment Report, last a little soft at 135K adds but a new fiscal year for the Federal government, businesses bulking up for the holiday season, and the last of school-related personnel being placed, and there's reason to believe October won't be a disaster, even if there's collateral damage from GM's strike and the related businesses laying-off workers until the automaker's parts orders start picking up, So it's said, GM reports this week, the strike over, the quarter being reported largely concluded before the strike turned really serious and started dragging suppliers into the mix. But, as many vehicle parts suppliers also report this week, the extent to which the now-ended strike has put pressure on the current quarter should be revealed. Then, there are the big dealers, like AutoNation & Penske Auto Group
Also on the Economic Calendar, this week, Wholesale Inventories, Monday, and Tuesday, S&P Case/Shiller Aug 20-dity Home Price Index and NAR's Sept Pending Home Sales Index. Fans of Boeing should know CEO Dennis Muilenberg will testify at the US Senate Commerce Committee Tuesday, and on Wednesday, at the US House Transportation & Infrastructure Committee. Just as there's no doubt in my mind that Boeing's costs related to the 737 MAX grounding will compound in the months ahead, I'm also sure the FAA deserves a lot of criticism for, in effect, passing off its regulatory obligation onto Boeing, so the fox was guarding the hen house—with thousands of lives lost because of it, albeit overseas, which is why there hasn't been a larger outcry at home, and why CNBC Fast Money traders were buying and touting Boeing the whole way down.
The Earnings Calendar felt only slightly shorter to cover, this week, than last but that's not to say there's much slighter about the reports expected. Yes, the major money center banks are done, and lots of big tech has already reported but with Alphabet (Google), Apple, AMD, Amgen, American Tower, Facebook, KLA Tencor, Western Digital, and Seagate Technology, and almost all the major mall REITs reporting, just as the latest bankruptcy was Forever 21. We'll get reports from Apache, Hess, Royal Dutch Shell, Total, Chevron, & ExxonMobil, proving the reports cued up are not inconsequential. On the contrary, it pays to stay on your toes, as major Pharma companies like GlaxoSmithKlein, Pfizer & Merck & Co, are reporting, along with many of the operators, like HCA, Mohlina, Magellan, in addition to insurers and reinsurers like MetLife, and Chubb, plus a couple of reinsurers. Top that off, some of the market's more "boring" companies are reporting, too, including Colgate Palmolive, Clorox, Kellogg, Kraft Heinz, and Mondelez, to name a few. Note, also, Chinese giant Alibaba, on Friday, and some significant non-bank financials, like Intercontinental Exchange, CBOE, and MSCI, the index company. The latter may take more heat if the trade war continues. Last year, MSCI added many more Chinese companies to its indices, and Trump seems to have gotten it into his head that US investors—large and small—should not have to be buying Chinese companies when they invest in an domestic index fund. In addition to Starbucks, and YUM!, reports will start dribbling in from other, smaller chains, Including YUM's spin-off YUM China. Don't believe the indices can't be influenced by this week's reports, just because the major money-center banks, Intel, and Microsoft have already weighed in. Consult the emboldened tickers on the Earnings Calendar as your starting point.
Because of the big shift in when the Jewish Holidays fell, October conferences, especially, fell almost completely out of synch with past schedules. Therefore, we've found ourselves way behind in updating the events for late October & early November. We post all week. Newly updated events appear first on the free calendar, here, and often, are added to the list below, as time allows. Last week, we added more than a dozen events, after the Premium Events Calendar was published, last Sunday. That could well happen again, this week.
So what about this week's Events? Again, I-banks are mostly MIA, because of the depth of earning season, and the FOMC meeting. Furthermore, with the American Bankers Association hosting its Annual Conference/Expo, and Mortgage Bankers hold their Annual Convention/Expo, quite separately, many bankers will be out of town. Also note a 3rd weekend event, the AAI, or American Ass'n of Individual Investors, from whom there's a sentiment index that some on the Street watch quite closely. Auto Finance News is hosting, you guessed it, an Auto Finance Summit, just as some are writing about the high rate of sub-prime delinquencies, Santander Consumer singled out for delinquencies so early in the process, it's often out some portion of the loan, that must be paid to ABS buyers. I'll thank Barbara Rockefeller of Rockefeller Treasury Report for pointing me towards an October 25th, 2019 blog at wolfstreet.com, that covers the Santander lax underwriting.
Other notable events on the Event Calendar includes nearly the entire hotel industry at BISNOW Hotel Leadership & Management Summit GlobeSt Apartments, and Air Cargo Americas all starting Tuesday. And that's before the Cardiovascular Disease 30th in LaJolla CA, SAE's Int'l Innovations in Mobility, in Michigan, and Mega Event Worldwide, which no one would ever know, without help, is for airline loyalty programs worldwide. Also Tuesday, FOLIO Show, a conference & expo for magazine publishers. The 35th Annual FIA Futures & Options Expo also starts Tuesday, as does Blockchain & Cryptocurrency, timed to coiocide with Money2020. The latter has drawn analysts from Stephens & Wolfe Research, clients in tow. Note AT&T's WarnerMEdia Investor Day, Tuesday afternoon, at which it intends to flush out more about its coming streaming service, as if Netflix needed more pressure on its shares. AT&T's service won't arrive until April 2020, while Disney+ is just a couple of weeks away. If Netflix can survive Disney+, I suspect it can survive the other coming competitors, for a few years but, long term, say 10 years down the road, Netflix either needs to produce a plethora of content, or needs to acquire content, its choices, domestically, very limited. Still, if NFLX was sniffing around, you'd think LionsGate Entertainment, which also owns STARZ, would have a stronger stock than it does. But think about it, if every major and minor studio is betrothed to their own OTT service, where's NFLX getting content from, long term?
Wednesday, Future Farmers meets for the 92nd time, Either last year, or the year prior, Trump showed up at FFA. Democratic candidates could be crawling all over the place, trying to woo farmers away from the Trump campaign. Some people who know more farmers than me say they're fiercely proud and the $28B promised to them by Trump, to ease the Chinese buying strike that tariffs caused will have no impact on them—that it's not the way they want to earn a living. My question is, where did Trump get the money from? I don't' remember Congress allocating $28B in farmer reparations. Was I out that day?
Thursday, the north American Cystic Fibrosis Conference starts in Nashville. That should be big news for Vertex, which just won FDA approval for Trikafta, a three-drug combination that was approved for CF sufferers, at least 12 years of age, with at least one F508del mutation, which should cover 90% of CF sufferers, the FDA said in its approval statement, less than 2 weeks ago. Also Thursday, Apple launches its streaming video service, Apple TV+, which will be free with the purchase of almost any new Apple product, and to Verizon customers, for one year, if they sign up for unlimited services. Even then, at $4.99 p/month, and possibilities to throw it in as a perk with the Apple/Goldman Sachs credit card—say for cardholders who spend $200 per/month or more on their card, one can see how subscribers could start piling up pretty quickly. And in the end, its subscribers they're all after—albeit paying ones, ultimately.
The last event I want to mention is AWDA, starting Nov. 2nd, which precedes SEMA & AAPEX, the large automotive aftermarket, care/crash/repair conventions, AWDA for the Warehouse Distributors, so think General Parts Co, Interstate Batteries, and more. But also, knowing SEMA & AAPEX start after this week, is prep for what's coming, including the Gabelli Automotive Aftermarket Conference. Just remember, before going to bed, next Saturday night, turn your clocks back one hour, and enjoy the extra hour rest—even as you might hate the earlier darkness, daily, not to mention the myth of power savings that have been proved untrue, yet the change persists, 2x a year. Europe, for the record, no longer changes its clocks, and Arizona never did—just in case you're traveling.
There wasn't much spooky about October, so far, but that could change if the FOMC decides it would like to see the prior interest rate cuts work through the economy, for a few months, before adding a third. I'm not saying that's what's going to happen, because I never got the FOMC right when I used to try and predict their moves. I'm just saying, there could be a Halloween surprise, yet, for investors, that none are prepared to handle. Since the President is still pressuring the FOMC, and some 97% of the Market placing bets is convinced the FOMC is going to cut, it probably will. But just think if it doesn't—that would explain rates backing back up a little, and the strength in banks, with JPMorgan Chase making more new all time highs, last week. JPM's new highs and rates backing up could be an expression about the strength the economy will be able to manage, if the FOMC does cut, again but we'd see the same reaction should the FOMC decline to cut again, this week, avoiding another shrink of banks' NIM.
In investing, the best defense is to prepare for all possibilities, not ignore an elephant in the room. IF I were Powell, I'd want to appear to be defying the President, and probably believe waiting to cut right before Xmas, at December's meeting, would be celebrated, too. Will Powell defy the markets and the President? Probably not—if for no other reason than an attempt to shrink the yield differential to try and ease the strains in the REPO market, I've read. The problem with that theory is that the yield differential has been around for years, and the REPO market only recently started flying off the handle—since the first of the 2 most recent interest rate cuts. Chew that for a few minutes before deciding whether your portfolio would be best served by some protection.
ECONOMIC: (Highlights only, below. Full International Economic Calendar here)
October 21—25, 2019 ANOTHER EARNINGS CRUSH It's a tamer Economic Calendar than the one we've seen for a couple of weeks. And it appears that most of the FOMC is observing a quiet period a week prior to its own meeting, Even though the NY Federal Reserve Bank (NYFRB) is partnering with the World Bank Group (WB) for a Jt International Seminar on U.S. Dollar Liquidity Management & Payment Operations, as of this moment, it offers the most compact schedule we've ever seen for a 4-day conference, yet not a single big headliner. It will cover the transition from LIBOR to SOFR, offers twice daily tours of the Gold Vault, will discuss US Treasury REPOS (operations extended through Jan 2020), and Reverse REPOS. Speakers include individuals from SWIFT, SIFMA & the US Treasury, JPMorgan, S&P, DTCC, and especially interesting to us, US Treasury Office of Debt Management, just as the US debt has grown by almost $1 trillion in 2019. It starts Monday, when Fed Gov. Bowman, newly confirmed by the Senate, is in Frankfurt speaking at an ECB Conference on Gender & Career Progression—not exactly a place where one expects comments on interest rates. Also Monday, Canada will be holding Parliamentary elections that may sees current PM Trudeau exit stage right.
The marquee event of the week is the ECB Monetary Policy Committee meeting, and follow up press conference that's destined to be Mario Draghi's last as head of the ECB. He leaves on 10/31, and Christine Lagarde, the recently departed managing director of the IMF steps into his shoes at the ECB. Aside from the ECB meeting, the US Economic Calendar is filled, mainly, with housing data including September Existing Home Sales on Tuesday, New Home Sales on Thursday, along with preliminary Durable & Capital Goods Orders & Shipments.
The Earnings Calendar includes many airlines, lots of small banks we don't cover, some of the bigger biotechs, Discover Financial, Capital One Finanical, and Visa, for a read on consumers. I A&D, General Dynamics, Raytheon, Lockheed Martin, and Northrup Grumman all report, along with Microsoft Wednesday, and Amazon Thursday, when Mohawk, the flooring company will weight in, along with Stanley Black & Decker, along with Comcast, in advance of reports from Charter Communications & Verizon, the latter two reporting Friday. Several Railroads are reporting, also, though it's companies like McDonald's Restaurants, Tuesday, and 3M Thursday, to keep in the back of your minds because they're both Dow stocks, and the Dow was the laggard last week. If there's too much confidence in one stock, that may be McD. On the reverse, 3M has disappointed over a few quarters, a repeat anyone's guess. Also keep in mind Boeing, Wednesday, another Dow stock that risks more disappointment. There's an attitude that with only 2 major commercial airline manufacturers—Boeing & Airbus—to choose from, Boeing will once again soar once the 737 MAX is recertified but that doesn't tell the whole story. Its costs to make good to clients who've had to trim their schedule due to the MAX being out of service keeps rising daily, as the plane remains on the ground. Plus, it may be building planes while the MAX is grounded but it can't collect since it can't deliver them, and it's possible airlines with grounded planes have stopped paying for those, as well.
It's curious to me that two long rumored acquisition targets—Citrix Services & LogMeIn—both report Thursday, and remain independent. A few homebuilders report, this week, along with Whirlpool, that supplies most of buyers, as does Sherwin-Williams, like WHR, reporting Tuesday when Pulte Homes will, as well.
If your favorite newspaper features articles on next spring's colors and furnishings, that's because the High Point Furniture Market started meeting this weekend. Mobile World Congress, in Los Angeles, starting Tuesday, seems like less of a deal than Vanity Fair's New Establishment Summit in L.A., starting Monday. It sounds an awful lot like Old Establishment, based on the speakers. They include, aside from Vanity Fair reps, USC's Annenberg Center, Katie Couris, Viacom's Bob Baksih, Disney's Robert Iger and Jon Favreaux, NBS' Lester Holt, Greycroft's Alan Patricof—you with me on "old" establishment? But, also, Facebook's Sheryl Sandberg, Discovery's David Zaslaw, CNBC's Julia Boorstein, RuPaul, Coinbase, Peleton.
Fortune's MPW—its International version of Most Powerful Women promises a really stellar cast of speakers, including Kohl's CEO Michelle Gass, ULTA Beauty's CEO Mary Dillon, Morgan Stanley's Carla Harris, Lockheed Martin's CEO Marilyn Hewson, Brandeis University Professor Anita Hill, and that doesn't even scratch the surface. The rest is here. The HDA for Pharmaceutical Distributors meeting is focused on Traceability—something I'm sure those least guilty in the opioid distribution chain wish they could prove they aren't responsible for all the drugs that wound up doing harm. BIO Investor, starting Tuesday, leans towards smaller names but draws a big crowd, along with some smaller I-banks that host conferences at nearby hotels, taking advantage of all the biotechs & investors hanging out together. Business Aviation is in Las Vegas, while Aerospace & Defense is in Dallas. The latter, too, draws I-banks who want in on the act, UBS hosting the reception, Hart Energy hosting a parallel event.
The Tokyo Motor Show starts in the 23rd, subtitled "Open Future." It's hosted by the Japan Automobile Manufacturers Ass'n, the press days the 23rd & 24th, and not where non-Japanese manufacturers debut their hot new line of cars. While American manufacturers compete with the locals & makers of vehicles from every other country in the world, trying to sell to the Chinese, non-Japanese automakers recognize the dominance of Japanese companies in Japan, and aren't trying to dislodge them. And even then, the problem is the Japanese sales tax hike, postponed for a couple of years, was instituted on 10/01/2019, which probably pulled forward sales, and will hurt end of year sales.
Friday, the American College of Gastroenterology starts its Annual Scientific Meeting & Expo, even as the Cleveland Clinic opens its Sleep Disorders Center. With another big week of earnings the week after this one, it will be awhile before I-bank conferences return in great numbers but when they do, it'll make your head spin because they'll be so numerous, rushing to get into the act before the holidays start drawing PM's out of town.
If you missed it, Trump has backed down, saying the G7 will look for a new location, rather than hold its June 2020 meeting at his Doral Hotel & Golf Course, I'd say that's good news for the G7, since the property is so big, it's a nightmare to secure. And with planes constantly flying overhead, to get to Miami International Airport, preventing a terrorist strike would be nearly impossible. I got married there, pre-Trump ownership, so I'm very familiar with the property. It's so large, with so many buildings, that no sooner does renovation of a building finish, than it winds up on the list of buildings to be renovated next. The proximity to the airport is exactly what makes it so ill-suited to a meeting with all the leaders of the 7 major economies in the world—ex-China. The funniest part of the whole affair is how foolish Mick Mulvaney looks for defending the Doral's selection so fiercely. Then again, no more ridiculous than the major indices, ex-the DJIA, flirting with new all time highs on Trump's word that he has a phase one deal with China—though nothing's in writing, and none of the terms are detailed, beyond the purchase of more ag products than US farmers can produce. It that doesn't define a market determined to rise on any whiff of what could be good news, I don't know what does.
© Sandi Lynne, 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
October 14—18, 2019 EARNINGS SEASON RETURNS to a VERY CROWDED ECONOMIC CALENDAR It's hard to imagine a bigger week. The Earnings Crush of Financials reporting has arrived again. The NY Federal Reserve is hosting its 42nd Central Banking Series, "The New Normal—Navigating a Low-Rate Environment in an Uncertain World" which starts on the 14th, and runs through the 18th. Not just US Central Bankers but a few from overseas are speaking as well as JPMorgan's CEO, Jamie Dimon, and even, Bridgewater's Ray Dalio. But that's not all!
The IMF and World Bank Group are holding their Annual Fall Meetings, separately, then jointly, wrapping it up on the 20th. Again, Central Bankers gathering there, along with their Press Briefings, individually, and together, along with the G20 & G24 who are planning press briefings, also. Just to be clear, the Joint World Bank Group/IMF (Int'l Monetary Fund) Joint Fall Meeting doesn't see an opening keynote until the 17th, because each of those institutions hold their own fall meeting, separately, before the Joint Meeting begins. And the Joint Meeting itself goes on for 4 days, through the 20th but most of the poobahs attending leave after the Per Jacobsson lecture, this year to be delivered by former BoE Gov Mervyn King. And if the organizations named, so far, aren't sufficient, with their several times a day press conferences, JPMorgan, Citi and UBS host I-bank "seminars," for investors, concurrent with those meetings. The IIF—International Institute of Finance hosts its own concurrent meeting but in NY. And so it's said, both the World Bank Grp & IMF have new leaders, the latter because Christine Lagarde, the former managing director, takes over the ECB on Nov. 1st. Her replacement at the IMF is Kristialina Georgieva, who started October 1st, and is a Bulgarian economist, the first time the managing director isn't from one of the G-7 countries. The new World Bank Group chief is David Malpass, a one-time (or long-time) economist at the late Bear Stearns. He was hand chosen by Pres. Trump and his advisors.
And then, if that weren't enough the Dallas Kansas City Federal Reserve Banks host a joint conference on "Energy & the Economy: Markets in Transition, at which both will speak. At the risk of sounding like an infomercial, but wait there's more: Fed Governor Brainard will speak on the Future of Money in the Digital Age, Wednesday, at a Joint Peterson Institute/Princeton University Center for Finance event, Wednesday, and the chairwoman of the FDIC will open its 9th FDIC Consumer Research Conference, on Thursday. But wait, there's even more.
Super Dove St. Louis Fed Pres. opines on "Monetary Policy Options," @2019 Monetary & Financial Policy Conference, in London, with a Q&A, in London at 4:25am Tuesday morning, or as we prefer, Monday overnight. Can you see why a Fed speaker would have to go overseas, because the IMF & World Bank meeting in D.C., the 42nd NY FRB Central Banking Series, and Dallas & K.C. Fed Conferences isn't quite enough? Me neither but that's what he's doing. And so it's said Fed President Evans is also speaking, Wednesday & Thursday, while the NY Fed Chief John Williams will keynote the Managed Funds Ass'n Outlook Conference, Thursday, in NY, and Fed Vice Chairman Clarida is discussing "US Economic Outlook and Monetary Policy," Friday, at the CFA Institute Fixed Income Management Conference, 2019. Williams is participating in a fireside chat at the NY FRB 42nd Central Banking Series Conference, as well, Tuesday.
And with all that on the Economic Calendar, we'd be remiss if we didn't point out some Economic data coming, though Monday is a holiday for data, though hot for Equities, which trade regular hours, despite the bond market being closed for Columbus Day. Tuesday's tariff increases were suspended last Friday, when Trump announced a partial deal with the Chinese, after saying he wouldn't accept a partial deal. Trump is perhaps the greatest flip flopper in Presidential history, and that may be one of the nicest things we can say about him. Tuesday, the NY Fed releases the Empire State Manufacturing Survey, not that there's much manufacturing in the state, anymore. Wednesday, look for MBA Mortgages & Refinance Applications, US Sept Retail Sales, August Business Inventories, Nat'l Ass'n of Home Builders Oct Housing Market Index, and at 2pm, the Fed's Beige Book. Thursday, in addition to the usual weekly Jobless Claims, we'll see the Philly Fed Oct Business Outlook Survey, Sept Industrial Production/Capacity Utilization, and the EIA weekly Petroleum/Gasolne/Distillates Report, delayed one day by the Columbus Day holiday.
So the fact that nearly every money center bank in the country is reporting earnings, this week, a short week at that,. those reports shouldn't take a back seat to the rest of the week's activity. We have Charles Schwab reporting but its business update on Friday, which doesn't make much sense but that's the scheduling, as best we could confirm it. The mass market brokers are of particular interest after they all announced elimination of commissions for trades of US stocks, ETFs, and options traded online. Schwab is the only one with an expanded business in wealth management, compared to E-Trade & Interactive Brokers but still, all of them will have to adjust forward guidance, given the surrender of trading commissions. Also, we could NOT confirm Goldman Sachs' report on Tuesday. It usually reports a week after its fellow brokers so I wouldn't count on that occurring Tuesday, either, even though the providers who list it then are usually very reliable.
One could assume the week is all about financials, and they do dominate but they're not the sum total of the earnings reports coming. For instance, Tuesday, alone, there's also JB Hunt, a trucker, Omnicom, the massive ad agency, Prologis, REIT owner of warehouse spaces, United Airlines, and United Health. Wednesday, non-banking reporting are expected from Abbot Labs, ASML, the chip designer, cell tower operator Crown Castle Int'l, IBM, Kinder Morgan, Netflix, Steel Dynamics, and United Rentals. Thursday's notable non-financial earnings are expected from General Parts, Honeywell, Intuitive Surgical, Philip Morris International,, PPG, the paint company, Snap-On, & chipmaker TaiwanSemi Microelectronics. With the ramp to 5G wireless networks, and the many devices that will require new chips, modems & routers to handle 5G, TSM which makes private label chips for its fabless chip clients, the road ahead looks paved with coins, if not gold, ahead. Friday, non-financial reports are expected from Coca-Cola, Gentex (the dimming rearview mirror company), Kansas City Southern, a railway, Manpower, the employment company, Schlumberger, the oil service company, and Sensient, the fragrance & spice company. All in, a huge and significant list of reporters, in a week filled with financial companies reporting en masse.
Which brings us to the Event Calendar, the Edison Electric Institute meeting underway Sunday, the part about "Mutual Assistance" something here, in South Florida, we know well, since it is only with neighboring states sending in their electric utility workers to help that can be credited with restoring services within 7—days of a storm-related outage. The AGA—American Gas Association—Executive Conference starts Monday. It's natural to look at MIPcon, the Entertainment Content Market, in Cannes FR, and assume it has little to do with US markets but that would be wrong. US TV Shows often originate overseas, while US Shows are sometimes adapted to foreign markets. And the keynote list, alone, establishes how influential US companies are. The featured speakers are from Amazon Studios, RuPaul Charles (Drag Race), Darren Star (Sex & the City), Twitter, AT&T's WarnerMedia Entertainment DTC Robert Greenblatt. Also, for those who don't think 4K or 5K is enough, Sony will introduce a Bravia TV with 8K resolution.
One of the larger of the week's events, other than the events mentioned on the Economic Calendar is G2E or Global Gaming Expo in Las Vegas. Now, with many states passing mobile gaming laws, it's a very different world than it used to be when Las Vegas Sports Book was the sole, legal, option for betting on sports events. NAB, the National Association of Broadcasters is meeting in NY, starting Wednesday, co-locating with AES—the Audio Engineering Society Convention. But as should be obvious, with a quick glance at the Events schedule, Investment Bank events are mainly surrounding the IMF/World Bank Grp event, rather than heavily on the schedule. Wednesday offers a few, I-bank events unrelated to any of the economic events on the schedule but domestic I-Bank events will be mostly MIA until the bulk of Earnings season is over. Then, there'll be one last mad dash to host events before the holiday season closes in.
Over the weekend, Boeing board decided to separate the CEO & Chairman roles, Mullenberg remaining as CEO/President and a board member, lead independent director on the board, David Calhoun, becoming chairman. Many think Mullenberg should be shown the door, altogether, the 737 MAX grounding a black eye from which he won't recover—especially as the bill for the grounding continues adding up. Also notable, a judge, Friday, agreed that Trump had no right to divert funds allocated by Congress to his 'build-a-southern border wall" project. Where was Congress on that issue? It should have been an item of impeachment, since Trump, representing the legislative branch overrode Congress' allocation of funding. And just as the President can't write all kinds of laws by "executive order," it can't constantly declare "National Emergencies" where there are none.
It'll be the longest short week in history, except for equity traders who will get no day off for Columbus Day. Friday's rip roaring rally on the partial—"phase 1"—trade deal with China is likely to look a whole lot smaller, in retrospect, in the coming weeks. Still, the suspension of additional tariffs that were due to be assessed Tuesday is a welcome relief to businesses & consumers, who are already paying the price for "tariff man," the self-proclaimed fan in chief of tariffs, otherwise known, in polite circles, as the flip-flopping President who, it seems, can do nothing to deter his rabid fans. That's something it might pay the Democratic candidates for his job debating on Tuesday night, on CNN. Good luck maneuvering through this week which is looking like a week to remember, no matter how you slice it. A better buying opportunity is sure to arrive sometime this month.
October 07—11, 2019 EARNINGS WARNINGS COULD SUPPORT THE BEARS Gotta give a hand to the Bulls, who pulled the averages out of the abyss—perhaps because both Trump & Kudlow expressed optimism about this week's trade talks with the Chinese, in D.C. Trump, on the other hand, just doesn't get what being the President of the United States means. After US House Impeachment proceedings were initiated, he invited the Chinese to investigate Joe Biden and his son, Hunter, also, claiming it's about corruption, wherever it's found. Coming from a President many find corrupt, himself, that sounded rich. But, like Michael Jackson, who just couldn't understand why anyone would object to him sleeping with little boys, Trump just doesn't 'get' what how the President of the United States is supposed to conduct himself. And that's a shame for the U.S.
Even with PPI, CPI, and JOLTS on the Economic Calendar this week, 2 other items stand out more. First, the Jewish High Holy Day of Yom Kippur, which starts at sundown on Tuesday, the 8th, and runs until sundown on Wednesday, the 9th. Even the most casual of Jews acknowledge Yom Kippur—the Day of Atonement—in some way, even if it's merely lighting memorial candles for lost, close relatives. You won't find most Jews in supermarkets, restaurants, or trading on Wednesday, until after Sundown.
The second item that stands out on the Economic Calendar, is the number of Central Bankers speaking this week. Fed Chairman Powell & K.C. George President George, obviously, weren't cognizant of the Jewish Holiday when scheduling the Fed Listens event in Kansas City, Wednesday, which the two will co-host. Then, again, only the Jackson Hole Economic Summit can rival the list of speakers at the 61st NABE—National Association of Business Economics Annual Meeting. The event is star-studded as few non-FRB events are—Economists, possibly, enjoying a period of celebrity unmatched at any other time in history. On the 6th, K.C. Fed Pres George speaks, as does Arthur Laffer (of the Laffer Curve), and David Kotok of Cumberland Advisors, who's well-known for running Camp Kotok mid-summer, by invitation-only. On the 7th, Ed Lazear—a former White House NEC leader, Ellen Zentner—Morgan Stanley's Chief US Economist, and Christine Romer of UCal Berkeley all speak @NABE. On the 8th, in addition to Goldman Sach's Jeff Curie, (on Oil & Gas), FOMC Chief Jerome Powell will speak (at 2:30pm). Also on the 8th, Richard Curtin, the long-time compiler of the University of Michigan's Consumer Sentiment Surveys, in which Wall Street puts much more significance than this long-time consumer observer does. The U.M. Interim Surveys, mid-month, may be based on fewer than 250 respondents, though they aim for 500. The final monthly survey is based on up to 2,500 respondents. However, the problem is consumers sometimes fib, and other times, go shopping exactly when they feel the worst. Other times, they feel so bad they don't shop at all. Knowing when that line is crossed is art more than science, making surveys of so few consumers all but worthless. Then, there are parents who must shop, even when their hearts and wallets aren't in it, at all—like for new shoes, because the kids have outgrown or shredded their old ones.
Also prominently speaking, this week, is the Bk of England's Governor Carney, including at a Tokyo Summit on Climate-related Financial Disclosures, an issue US SEC filings may soon have to include. Overnight, Tuesday, the BoE will publish the Financial Policy Summary & Record of the Monetary Policy Committee Sept Meeting. Hard to imagine there won't be more on Brexit in that document. Also this week, the Nobel Prize winners will be announced, the schedule we couldn't find last week, finally posted for this week, and duly noted on the Economic Calendar. Of one thing I'm sure, Trump will not be named the winner of the Peace Prize, as he hoped to be last year, strong-arming Japan PM Abe to nominate him. ECB's Lane is a panelist at the ECB Conference on Monetary Policy, subtitled 'bridging science & practice.' Powell pops up again, this week, making brief remarks before the premiere screening of the KUED film, "Marriner Eccles: Father of the Modern Federal Reserve," taking place Monday, in Salt Lake city UT. On Wednesday, the ECB publishes its account of the Sept 11—12 Governing Council MPC Meeting.
Minneapolis Fed's Kashkari is, also, prominent this week, first at NAFOA (Native American Finance Officers Association), for their Annual Finance & Tribal Economies Conference, participating in a fireside chat on what his Fed has done in Native American areas, Monday. Tuesday, he speaks at a Town Hall at St Cloud State University. Then, Thursday, he participates in another fireside chat with Q&A on the Federal Reserve, the economy & markets at a Yahoo Finance All Markets Summit, in NY. Thursday is the day the Chinese delegation, led by Premier Liu, arrives in D.C. for trade negotiations. Also Thursday, Fed's Mester participates in a fireside chat w/Q&A @John Carrol University, in Ohio. Then, there's ECB's Lane, again, at a CEPR Research & Policy Network Workshop, occurring late in the evening, in Frankfurt, Germany. Then Friday, there's Kashkari, again, for a fireside chat at the Council of Foreign Relations, w/Q&A, at an 8am breakfast. Also, Friday, Fed's Rosengren & Kaplan speak, separately, even as the Federal Reserve Bank in D.C. opens its doors to students, on "Exploring Careers in Economics."
Which brings us to the Earnings Calendar, as slim as any, ever, in any quarter. The highlight is Delta Airlines, Thursday, Domino's Pizza Tuesday, the same day Helen of Troy Ltd (HELE) Reports. HELE was originally scheduled to report and hold its conference call, after the close on the 8th. Perhaps because of the Jewish Holiday, it switched the timing to pre-market, on the 8th. Fastenal, Friday, could suffer from the slowdown of 737 MAX plane building, at Boeing. As those who remember Rosie the Riveter know, it takes a lot of bolts to build an airplane.
Which brings us to the Events Calendar where NABE remains the Even of the Week. But, a nod to AAAE's North American Airports Conference, and Edison Electric Institute's Key Accounts Workshop, starting Sunday, when the aforementioned NAFOA starts, along with ABA's A.I. in Banking, and SNAC Int'l Executive Leadership Forum, Pepsi setting the stage for some snack winners. The American Trucking Association Management Conference and Expo, ATA MC&E started earlier this weekend but Wolfe Research won't get around to its Trucking Forum until Monday. Note Microsoft, IBM & Oracle are all hosting separate customer events, this week, while Monday's biggest even is the elimination of commissions on US stock & ETF trades at all the discount brokers except Fidelity, for now. Interactive Brokers was first to drop commissions 2 weeks ago but the hammer didn't fall at E-Trade & TD Ameritrade until Charles Schwab dropped commissions last week.
It shouldn't surprise that John Deere, Mondelez & Tyson are speakers at the Wall Street Journal's Global Food Forum but just as the aforementoned big tech companies all holding customer events simultaneously, it's a little surprising that Arm, Hitachi, and NXP Semiconductor are all hosting Tech User events, Tuesday. That's 6 large tech companies picking the same week for their customer events, which makes it difficult for a dual customer to attend more than one. Hormel, which sounds like a perfect fit for the WSJ event, instead, is hosting its Investor Day on Thursday.
WASET the World Academy of Science of Engineering & Technology, starting Tuesday, covers Biomedical tech & Biomechanics but, also, Aerospace, Avionics, & Aeronautics, Aeroponically Grown Food, Biomaterials, Veterinary Medicine, Art & Design, Animal Genetics, Auditory Brainstem Transplants, Food Engineering, and so many other topics it would be impossible to list them all. Over 2 dozen subconferences, including an Anti-Fashion & Styles Conference, so it's said.
Last week, the Nasdaq Comp was the only index to finish higher but the other major indices slashed their losses with Friday's celebration of a meh September Unemployment Report. Friday's rally snowballed into the close, and exhibited more fear of missing out, than fear of losing, as if someone was afraid that if they waited until late in the month, the train would have already left the station. It's that fear of missing out on the next rally that's characterized the past 9 months of trading—which quite honestly, scares the beheezus out of me. We have an unstable leader in the White House, who has no sense of decorum, and has picked a fight with our friends and enemies alike, while praising the world's most fearsome dictators to the rafters. Given October's well-deserved reputation for scary sell-offs, that are rescued sometime between the 25th and 31st, it's foolhardy to believe the downside we saw, early last week, is the last of the selling. It's the kind of market that's better for selling puts on stocks you really want to own at lower prices, rather than buying stocks, straight out. I'll note the strength in homebuilders' charts, which are usually a better sell, this time of year, than a buy. Other charts that stood out include Apple, which broke out above resistance, and Edwards LifeSciences, that surged to a new high, even as Texas Instruments looks poised to break out like Apple. PG also looks like it wants to go higher, though it's become a fairly expensive stock, as it is.
If I was a betting person—which I'm not, I'd bet on more swoons before the month ends—perhaps another early exit from the Chinese negotiators, like we saw last month, when their trip to farm country was canceled—by Treasury Secretary Mnuchin, to hear him tell it, 5 days after they left. And bear in mind, if you're eager to buy stocks, right now, recall that impeachment proceedings are ongoing, and likely to reveal more unsavory goings on in the White House. I wouldn't say you should sell everything here, because the bulls have repeatedly proved themselves persistent. But I see no reason to jump in to buy, at the moment either. It's earnings warnings season, if you see nothing else to deter to.
September 30—Oct 04, 2019 QUARTER ENDS, OCTOBER SPOOKS, & CENTRAL BANKERS EVERYWHERE Central Bankers seem to be out in force again, along with US House subpoenas as the Democrats seek to wrap up the impeachment proceedings with speed, so as not to poison the 2020 election against their team. Here's what puzzles me: Why didn't Congress speak up about impeaching when Trump diverted funds Congress duly authorized to other military purposes billions towards building his wall? Didn't he usurp Congress' power of the purse, then?
As if it weren't enough for our current central bankers to be speaking, starting Tuesday, at the Federal Reserve Bank in D.C., starting Tuesday, when Fed Vice Chairman Clarida makes introductory remarks, the St. Louis Fed is hosting a conference that day too, that promises Fed Pres. Bullard, new Fed Governor Bowman, and FDIC Chairwoman Jelena McWilliams, and on the 2nd day, a keynote from Fed Pres. Harker, Wednesday. Later that day, at UCal, Sa Diego, NY Fed Pres/CEPO John Williams will speak. He's the one Fed President we can count on to tow Chairman Powell's line, and emphasize data dependence. Later that night, Fed President Evans speaks alongside ECB's V. President, de Guindos, at the Global Interdependence Center (GIC) Central Banking Series in Madrid Spain, at 3:45am. eastern time. Along the way, Wednesday, we may hear September Vehicle sales, even from Ford & GM, who announce sales, now, only quarterly.
Thursday's Central Bank speakers include Vice Chairman Quarles on "Financial Stability at 10 Years, and Fed President Mester, on inflation's implications for monetary policy. Even more interesting, to us, is the fact that her speech at the Hutchins Center of the Brookings Institution, includes, also, former Fed Chairpeople Janet Yellen & Ben Bernanke, along with Olivier Blanchard, the conference "What's (not) Up with Inflation." Given the berating Powell and his fellow board members has taken from President Trump, you have to wonder if Janet Yellen isn't comfortable with the fact that she was passed over in favor of Jerome Powell. Surely, the past Chairpeople have to be relieved that Trump is a complication they don't have to deal with. That evening, Fed Vice Chair Clarida speaks at the Wall Street Journal's Future of Markets, about the same time the French-American Chamber of Commerce Foundation Gala gets underway. For the most part, that organization's main mission is to promote French Apparel, Cosmetics, Accessories and shoes, which turns out to be mainly luxury goods sold in the US.
Friday's September Unemployment Report is the day stocks may spend the week marking time until, awaiting that number. Last month returned a weak number which the Street largely shrugged off. In fact, while stocks did finish off small, for the week but seemed to shrug off Iran's attacks on Saudi Arabian oil assets, and the House's plans to impeach the president, and even more significantly, the president's attempt to use his position to get Ukraine to investigate the son of a political rival. The thing about our current president is that nothing he does surprises anyway, anymore, and even with farmers getting the short stick most obviously, in the trade fight with China, his base of support seems unwavering. It's quite incredible, donchya think?
And after the September Unemployment Report, there are more Fed speakers, including Rosengren at the Federal Reserve Bank of Boston 63rd Economic Conference, "A House Divided: Geographic Disparities in 21st Century America," and Fed's Bostic, on the economy, with Q&A, at the 40th Tulane Business Forum, the URL to stream any of the speeches duly noted for each conference, where such broadcast is available. Later, in the afternoon, Powell will open a Fed Listens on Perspectives on Maximum Employment & Price Stability, so be followed, ten minutes later, by Fed Gov Brainard on "Gauging Maximum Employment in a Changing Labor Market,", followed by Fed Vice Chair Quarles on "The Importance of Price Stability & Low Inflation in Today's Economy," which is ironic, since the Fed has tried, for 10 years, to boost inflation to 2.0%, even as its preferred measure of inflation, PCE, came in at 1.4% late last week when final Q2 GDP was announced. Anyway you slice it, there are, perhaps, too many central bankers speaking this week, and they're no on the same page.
The Earnings Calendar is slim with just a few highlights, McCormick is often seen as a proxy for the number of restaurants opened across the country. The more commercial kitchens, the more spices needed to perk up the food. United Natural Foods has usually been seen as a proxy for Whole Foods but, today, more supermarkets are beefing up their Natural & Organic Foods sections—just ask Beyond Meat & Impossible Foods, the former the most visible proxy for vegan and vegetarian adherents, if not Natural or Organic foods. Today, I still wonder who's eating all those Beyond & Impossible burgers, since this non-beef eater has no desire—let alone yearning--to eat either. Perhaps there'll be more about restaurant chains at Restaurant Point East, in Austin, TX, starting Sunday.
Other notable earnings reports will come from Bed Bath & Beyond, a quickly shrinking retailer, Lennar, and Paychex, Wednesday, and Constellation Brands, CostCo & PepsiCo Thursday. All in, a snapshot across a few sectors that could lift or slam stocks, depending on the performance of these companies in their most recent quarter.
Which brings us to the Events Calendar. TCT, is often a boost to Edwards LifeSciences, who was first to get a valve replacement approved via transcatheter delivery. Ultimately, Medtronic developed more valve sizes, that settled a pressing issue, and wound up a licensee of EW's method but it's still EW that tends to react most, at TCT. Cancer Immunotherapy, in Paris, France, is another hot topic in healthcare, with many drugs working towards FDA approval but few attaining that status, yet. vb2019 and ID Week (Infectious Disease) both start Wednesday but vb2019 is for digital viruses, so by definition, involves digital security companies that thwart virus and malware attacks. ID Week, on the other hand, is for infectious diseases in humans. Monday & Tuesday are notably light because of Rosh Hashana. Even the least observant Jews observe Rosh Hashana and Yom Kippur (next week), in some way, even if they don't go to a place of worship. But I-banks pick up the pace by Wednesday, with Cantor Fitz & Barclays concentrating on Healthcare, Credit Suisse Minerals, & Wolfe Research Utilities & Energy. The Cell & Gene Meeting on the Mesa is an annual, that often gets PM's more excited about Biotechs which have mostly suffered, this year, along with healthcare, as Congress seems intent on bringing down drug prices.
Thursday, Wells Fargo is hosting a guided tour though the NACS Show. Not only does that show start on the first, Tuesday, but how could clients need a host to get through the show? Exhibitors are either chains of convenience stores, looking for franchisees, or suppliers, like Pepsi, Coca-Cola, Hershey's, Nestle, Hostess Brands, and yes, both cigarette & vaping companies, the latter under severe fire, even though some 80% of those sickest indicate they're not using tobacco vaping products, alone, or at all, but instead, are using black market CBD & THC warming products. One of the most interesting events of the day may not be B RileyFBR's Annual Consumer & media, or Berenberg's US Stockpicker but, instead, HITS: Hollywood Innovation & Technology Summit, since all the coming Netflix competitor streaming companies are changing the face of Hollywood Innovation. Of course, to hear CNBC tell it, you'd think the only events this week are the release of Apple's new 10.2 inch iPad, Monday, Clorox Company's Analyst Day (Highlighting New Corporate Strategy), Wednesday, or perhaps, the many corporate events Thursday, involving Amazon, CBS, HP Inc, Intuit, or perhaps IBEX Boat Builders.
With the Quarter ending Monday, and the September Unemployment Report out Friday, and members of the US House dragging in whoever they can, related to Trump & the Ukraine phone call, it will be very hard for stocks to hold near where they are, let alone rise. And given we're entering October, a notoriously rocky month for stocks, it won't be surprising if stocks sell off a bit. And don't expect it to get easier, next week, either. Not only should earnings warnings be expected, during the coming 2 weeks but there'll be more Fed speakers galore, next week, too. The National Association of Business Economists' meeting starts next Saturday. That assures that the next Outlook is as filled with Fed Reserve speakers as this one is. The downside could work out to be the easiest path for stocks.
September 23—27, 2019 TOUGH to LIMIT PRESSURE TO CONSOLIDATION at END of QUARTER Central Bankers, ex-Jerome Powell, are out in full force this week. Even the ECB's Mario Draghi, who's seemed like a missing person, of late, will be speaking at events this week. After three FOMC members dissented at last week's meeting, 2 against a rate cut, one in favor of a cut twice the size of the 25bps delivered, it's possible the rest of the FOMC speakers will explain what brought them to agree with the cut delivered. Interestingly, NY Fed's Williams will speak at the US Treasury Market Conference, Monday, jointly sponsored by the US Treasury, the Board of Governors of the Federal Reserve Bank, the SEC & CFTC. With main Fed Bank enlisting the NY Fed, last week, to pump out liquidity and all the stops, so overnight rates were dragged back into the range designated after the most recent rate cut—1.75%--2.0%, At one point, overnight rates soared near 10%, last week, so the NY Fed's fire squad had its work cut out to rein them back in.
What will be different, this week, is the United Nations back in session, with Monday's Climate Action Summit. We can all be sure that Pres. Trump won't be showing up for that. I was a little surprised that he didn't try and stop the testimony by the teenage, Norwegian activist who spoke before Congress last week. Perhaps, if Trump's winter White House, Mar-a-Lago, on the Island of Palm Beach, winds up underwater, one day, the realty of climate change will hit him.
Alongside the U.N.'s annual sessions, the Foreign Policy Ass'n meeting, Wed., timed to coincide features Lt Gen Veralinn Jamieson (US Air Force Deputy Chief of Staff for Intelligence, Surveillance, Reconnaisance & Cyber Effects Ops), and speakers from GS, JPM, World Bank Grp, Squire Patton Boggs, FT US Eco Editor, Lawrence Summers, and more
Fed Pres Bullard offers the welcome remarks at The Fed Reserve Bank of St Louis Conference, "Banking & the Economy: A forum for Minority Bankers," co-sponsored by every FRB but NY & Dallas. Other speakers include Liberty Bank CEO McDonald, SDS Global Enterprises Pres Dr Shirley Davis, Capital One (COF) Deputy Chief Information Security Officer, Commonwealth Business Bank, DirectorCorps, Industrial Bank St Louis FRB Memphis Branch, Abascus Federal Savings Bank, Citizens Financial Grp, Nat'l Bankers Ass'n, JPMorgan Chase, Fed Reserve System Chief Information Security Officer, his counterpart at MasterCard, and similar from LinkedIn, Simmons Bank, and many back office workers & researchers from the St Louis Fed, Atlanta Fed, K.C. Fed, Louisville branch of the St Louis Fed, and others. Dallas is hosing its own event, on Trade & Immigration, which explains why it begged out of the St Louis FRB event.
Housing data stars, this week, with the FHFA July House Price Index, and the S&P Case-Shiller 20-city Home Price Index due Tuesday, along with Aug New Home Sales on Wednesday, before Thursday's Nat'l Ass'n of Realtors Aug Pending Home Sales. Also Thursday, we get the final look at Q2 GDP, which includes, among other subsections, Business Investment and PCE—the consumer version of inflation the FOMC has preferred since the days of Ben Bernanke. Overseas, Thursday, Mario Draghi will open the 4th ESRB Annual Conference. That stands for the European Systemic Risk Board, at which BoE's Cunliffe is, also, a speaker, while the ECB's Enria will keynote with "Future of Stress Testing." As if to make a lie of Jerome Powell's comments, at last week's post-FOMC meeting press conference, at which he denied the Fed Reserve has any place in politics or policy, Fed Pres Kaplan opens the Dallas Fed's "Forging a New Path in North American Trade & Immigration," with Q&A.
Later Thursday, Fed Gov. Clarida will speak at the Fed Reserve Bank of San Francisco, on "The Federal Reserve's Review of its Monetary Policy Strategy." But you could peruse any day this week, and find a handful of central bank speakers, on both sides of the Atlantic, when the one entry that might influence stocks, the most, is the fact that Friday is the last day under T-1 to trade for the month and the quarter. It is the Shadow Open Market Committee's Fall 2019 Meeting, Friday, where Fed Pres. Harker who tackles another angle in answer to the President, will speak on "Strategies for Promoting the Fed's Independence & Accountability."
It's a week that can made our head spin, as we pulled out event after event, for the Economic Calendar, never mind the few high profile companies reporting, this week, that includes AutoZone, the former BlackBerry, now BB, CarMax, Jabill Circuits, Nike, and Synnex—the latter a large reseller of computers and servers, a VAR, as they're called, a value-added reseller who knows more about which companies are adding IT workers than, perhaps, any company but Dell Inc or Hewlett-Packard Inc. The companies reporting Tuesday, along, cut across the economy more than sufficiently, and could set the tone for the entire 3rd quarter earnings season. Wednesday, K.B. Homes and steel manufacturer Worthington Industries. Thursday, Accenture, ConAgra, FactSet, Micron Technology, and Vail Resorts round out the week's reports, again more insight into the economy, FactSet binoculars on the Street, itself, Vail a window into how the well off are spending their money—whether they're already buying season ski passes, or condos on Vail Mountain. For a short list of reporters, most of them Tuesday through Thursday, one could do worse picking out a list of companies who can best illustrate where the consumer & businesses are, right now, economically and sentiment-wise.
Which brings us to the Events Calendar, which winds down towards the end of the week, as the Jewish Holidays—specifically, the Jewish New Year--start Sunday, at sundown, and run through Tuesday, at sundown, except for those not either Orthodox or Conservative, which celebrate the Jewish New Year only through Monday, at sundown. But eight days later, starting on October 8th, at sundown, the highest holy day in the Jewish religion begins, Yom Kippur, the day of atonement. On that day, starting at sundown, Jews start fasting, and don't eat or drink again, until the following day, Wednesday, October 9th, at sundown. So, not only does this week's calendar wind down, towards the end of the week but the week of October 6th, will be light, as well—Daylight Savings Time arriving on the 6th, also, despite years of protests, scientists proving the semi-annual clock changes don't save a dime in electricity but do put kids are risk, walking home from the school bus in total darkness.
As a rule, we start each day's Event calendar with the I-bank Conference that will attract the most attention, if there is one. After listing domestic I-bank conferences, we list domestic industry conferences, then foreign ones, starting with London, because of the language ease, moving east towards the Asian countries last, before providing a list of company-specific events, in alphabetical order. When I diverge, it's because of who is presenting, and the news expected. So, last week, JPMorgan's 10th U.S. All Stars Conference, in London, was the 3rd item listed on Tuesday, while this week, Bk of America Merrill Lynch's 24th Annual Financials CEO Conference leads off Tuesday, because of the global nature of both banks & insurers, who'll be presenting. Yes, it's in London, so ordinarily would be the first non-domestic event listed, after all the domestic events but as it was last week, for JPM, most of the presenters have sufficient US presence to warrant its placement at the top of Tuesday's list, and note BoE's Gerkin speaking before we open on Tuesday, at BAML's 24th Financial CEO Conference.. But it's not only I-bank conferences that prove prominently newsworthy; The Lodging Conference, in Phoenix, starting Monday, features every hotel company one can think of, and should turn out to be pre-Q3 earnings announcements. Yes, there'll still be a full week of Q3 to go, but in hotels,. Unlike in software, there's not generally an end of the month, or quarter, last second clinched deal that can clinch the quarter for hotels—unless a hurricane brings in busloads of FEMA workers to sort out the damage, and even then, a hotel or two, or half a dozen, in a particular region, can save the quarter for a hotel company.
Conferences, like ROTH's 7th Annual Solar & Storage Symposium, timed to coincide with Solar Power International, both in Salt Lake City, Utah, can pick up extra attention because of the affiliation. But go down the Events Calendar, and it's hard to ignore how many conferences & expo's there are—I-bank or not. A list like Monday's suggests there's some rush to squeeze in events before the next Earnings Season begins, when portfolio managers become more reluctant to leave town, even though they know the value of face-to-face meetings with management, the ability to gauge the confidence management has in their comments, or how tired an IR rep looks—perhaps because closing the quarter has them stressed out. Somewhat lost in Monday's list. However, is the AGA/IEEE/INGAA Joint Security Conference, which includes several committee meetings and related events. Normally, the American Gas Association would be one of the more significant events but not this week. I'll also flag Wells Fargo's Consumer Conference & Beauty Forum, Wednesday, timed perfectly to capture the back-to-school shopping season that, for all intents and purposes, is done, for 2019.
As irony would have it , Alibaba (BABA) is hosting an Investor Day, or 2 days, really, starting Monday, in China. Altaba (AABA), the former Yahoo investments that weren't sold when the main Yahoo web assets were to Verizon (in July 2016), is being liquidated, Monday when checks for $51.50 p/share goes out to AABA shareholders, the pre-Dissolution liquidating distribution. For the record, Verizon got rid of Yahoo mail, which went to AT&T. In what universe would Verizon do the same, today? So it's said, a good portion of the specific corporate events listed, this week, are related to SIBOS, the conference organized by SWIFT, the secure payment & messaging system used by central banks, and the largest international banks to transfer funds around the world. You might recall when someone lifted funds that belonged to Pakistan, by hacking into the SWIFT system.
But having said all this, note that Monday is the first day of trading, post-Quadruple Expiration, and the S&P rebalance, while, by Friday, markets will be facing the end of the month and quarter, especially given that the actual last day of the month/quarter, a week from tomorrow, is a Jewish holiday, that will seriously cut into trading volume. That will make Friday seem like end of month, which it is for anyone booking to market with T-1. So expect volume spikes on both Monday & Friday, and some downside pressure on stocks, into quarter's end, as profits are booked, and funds raised are not immediately redployed, with the worst month of the year, October, yet to arrive. Do not be afraid to take profits—other PM's will.
ECONOMIC: (Hghlights, only, below. Ful International Economic Calendar here)
September 16—20, 2019 WHAT IF THE FED DISAPPOINTS? I'm not really sure why one and all is convinced the Fed will cut rates, again, this week. Granted, the August Employment Report was weak, the Manufacturing sector appears to have slowed, considerably, but it seems fair to accuse Trump's trade war for that result, and move on. Another quarter point cut in rates won't solve anything—and probably won't spur any more borrowing than is already occurring. And the one rate that's fallen considerably—mortgage rates—hasn't spurred as much housing activity than most would have expected, because rates have hit rock bottom a number of times, over the past 7 years, and most who wanted to refinance have probably already have done so. My next door neighbor, here only 2 years, is refinancing because he had too little to put down, originally, so was forced to buy mortgage insurance in order to get a loan. His monthly nut will fall by a little over $200 a month but that's all the mortgage insurance premium, his interest rate, otherwise, no lower than he's paying now. And the only reason he can afford to refinance without mortgage insurance is because the software company he works for was bought out by a P.E. for cash, forcing him to cash out his stock options.
New Yorkers will be in a sour mood, this week, as the new United Nations General Assembly is dead ahead, Tuesday "opening day" for the assembly but not for heads of state, who arrive later. Also this week, The Empire State (NY Fed) Sept Manufacturing Survey, and Tuesday, US Aug Industrial Production/Capacity Utilization, plus NAHB's (Builders) Housing Market Index, a sentiment index that, if it reflects anything at all, reflects traffic into builders' communities. Wednesday, we'll get Aug Housing Starts & Building Permits, EIA weekly Petroleum/Gasoline & Distillates data, Facebook Google & Twitter testimony at the Senate Banking Committee, on whether they're doing enough to prevent or remove violent or inappropriate content, and the FOMC meeting decision, referenced in our title.
There are a few strong voices opposed to any more immediate rate cuts, defying a President who's demanding them. Of course, a President who owns a real estate-related company would demand rate cuts, because interest rates impact the profitability of his company, even as he's managed to add another $1 Trillion dollars to the US's already crushing debt load. Is he envious of the negative rates European countries are paying? Of course he is but low rates have been crushing seniors for years, so even lower rates will make it even worse. And, given how unconvincing Powell's last press conference and explanation for the July rate cut ("mid-cycle adjustment") stuck us, what's he gonna say this time? Just taking back the 2 late 2018 rate increases that, retrospectively, turned out to be a bad idea? And much as I'd love to see Powell & company defy the president and hold ammo this meeting, that's unlikely to happen because he knows, as we all do, that Trump will try to fire Powell, and cause a constitutional crisis in the process. Given funds allocated by Congress were diverted to Trump's border wall, and the number of executive orders he's issued eschewing Congressional power, I'm surprised there hasn't, already, been a Constitutional crisis, and how much Congress has let Trump get away with.
Thursday, we'll get the Philly FedOutlook, US Q2 Current Account, Aug Existing Home Sales, and an Auction of 10-year TIPS. Elsewhere, Vice President Mike Pence and SEC Chairman Jay Clayton will be among the speakers at CNBC's Delivering Alpha Conference, in NY, along with leading investors like Jim Chanos, Nelson Peltz, PG CEO David Taylor, Leon Cooperman, and high level execs (some founders) from Ares Mngmnt, RockCreek Grp, JPM Asset Mnmgnt, Apollo Global Mngmnt, PIMCO CEO, State Street Global Advisors, Marathon Asset Mngmnt, and more. On the 19th, long before the US opens, the BoJ will weigh in on Rates, and perhaps, more stimulus. Later that day, the SNB, Norges Bank, & BoE wil also weigh in on rates--all just hours after the FOMC has unveiled its latest decision. A big day, by any stretch of the imagination.
Personally, I like NY Fed Pres. John Williams topic, Friday, in Zurich, since he'll discuss the 'Lower Bound on Interest Rates" but, of course, the Quadruple Witch will rule the day, and probably late Thursday, also, as Quarterly Options, Index & Futures Expire, Friday, the Indices rebalanced, as they are, after Friday's Close. Also Friday afternoon, Z1---the Fed's Q2 Financial Accounts of the U.S., which includes Household Net Worth—any rise for which Trump will take credit.
Earnings are slim and far between, which will have the effect of elevating most the coming reports to an importance they wouldn't have in a more crowded week—FedEx excluded. FDX would be closely followed no matter when its report arrived, as PM's look for how big an impact Amazon's newly issued fleet of delivery trucks has had on FDX. Don't know about your neighborhood but, around here, I see Prime trucks with the smiling arrow zipping in and out of traces a few times a day. That hasn't eliminated the number of P.O., FedEx or UPS trucks I see zipping around my neighborhood, by any means, but it would be hard to miss all those smiling arrow Amazon trucks, too. As for other reports, Chewy is noted because it's newly public while Adobe, IMO, is one of the most overvalued stocks out there. Not that it isn't a crucial cog in the internet wheel, or profitable, it is both, and a little hard to believe it wasn't scooped up by a major player years ago, but at its current valuation, I can't imagine any company ponying up now
Which brings us to the Events Calendar, Goldman Sach's 27th Annual Communacopia Conference, starting Tuesday, the biggest of the I-bank conferences, and a reason not as many others are scheduled, as there were last week. JPMorgan is hosting its 10th U.S. All Stars Conference, starting the same day, in London, but is mentioned early on Tuesday because it's top US companies presenting, and starting earlier than out markets open, leaving plenty of time for analyst comments before our markets open. Wednesday, Jefferies is hosting Consumer Investor Relations, while Thursday, Credit Suisse hosts a similar event—a Consumer IR 1-on-1 Conference, through Friday. The C-S event includes a number of Cannabis companies, which remains quite unusual, still, except when cannabis is the prime focus of an event. Tuesday through Thursday are heavily populated by I-bank events but I still expect Communacopia and JPM's U.S. All Stars to dominate the conversation.
Speaking of JPMorgan, it made a new all time high last week. About 2 weeks ago, the stock was under $107 p/sh, and last week crested $120 per share—that's quite a comeback, no? Also, note Friday, that the movie version of "Downton Abbey" is opening, picking up where the BBC TV program ended, distributed in the US by Comcast's Focus Features. I never, personally, saw the show, because I'm not into period pieces. And it's rare for me to get involved in a TV program, of the appointment-TV kind, other than "60 Minutes," or "CBS Sunday Morning." So it was a surprise to me when so many of my neighbors and friends mentioned not being able to wait for "Downton Abbey," to open—friends and neighbors, I might add, who are more likely to talk about the "Housewives" reality shows, if they mention TV at all. When I had 3 tennis, ski & swim stores in NY & Long Island, there was no time for TV, at all. I spent my evenings working, then transported stock between stores and the warehouse—an apartment in Great Neck NY. Anyway, of all the movies opened this summer and coming for the holidays, Abbey was not one I expected to be met with so much anticipation.
Which wraps up this week, except to repeat, "What if the Fed Disappoints?" I think Powell can make a better case for standing pat—though I NEVER get the Fed right, so my position is probably totally off base. Another 25bps rate cut is surely on its way. But what if???????????
ECONOMIC: (Highlights, only, below. Full International Economic Calendar, here)
September 09—13, 2019 THEY FELL for it AGAIN! Between the destruction on the Bahamas, and the anniversary of 9/11, it's difficult to look at the week ahead with much optimism—especially since it's quite hard to believe that equity traders, once again, fell for Trump's suggestion that the trade war is making progress. Granted, the fact that a Chinese ministry has confirmed the coming October talks make them see more legitimate, against the several lies Pres. Trump has told about trade negotiations with China. But still, given a capricious President who doesn't understand the nuances of other cultures, it's hard to believe that the coming talks will make more progress than those in the past.
Note, also, that Congress reconvenes, Monday, which is often a source of additional D.C. tensions—especially as some Democrats are pushing for impeachment proceedings. Incoming Data includes July Consumer Credit, Monday, JOLTS on Tuesday, when Atlanta Fed Pres Bostic will also, speak, then Wednesday, PPI, a FINRA Conference, July Wholesale Trade, and EIA Petroelum/Gasoline & Distillates Report, back on schedule after last week's holiday delayed the report.
Thursday morning, in the wee hours, we'll hear if Draghi & Company is going to lower rates even deeper into negative territory, while boosting QE, the press conference after the meeting prior to when US markets open, Thursday. ECB staff will, also, update their Macroeconomic Projections for the Euro area, just as US FOMC members will, the week after this one, when they meet, again. Also Thursday, Aug CPI, and the Senate Banking Committee holds a hearing on Insurance Company Supervision. Friday, we'll get Aug Retail Sales & Business Inventories, as well as U. Michigan's preliminary Sept Consumer Sentiment, a poll of 500 people which hardly seems worth the listing on any Economic Calendar. I'm not sure why the head of the FDIC, Jelena McWilliams will transmit her speech to a Joint Stanford/Journal of Financial Services Research Conference from Univ. of Stanford, when the meeting is being held in Arlington VA, but perhaps the FDIC reversed her location, and the city in which the conference will be held.
I'll note the anniversary of 9/11, a part of me hoping that the President doesn't, since he seems incapable of doing so without injecting braggadocio that's completely uncalled for. As the NY Times pointed out last week Trump has variously claimed to have been on the ground, at the World Trade Center, participating in the recovery, at other times claimed he watched the activity via his gold telescope from Trump Tower.
The Earnings Calendar winds down, with retailers dominating the list, along with HD Supply, and Broadcom. OXM, for those who don't know, is Oxford Industries, an apparel manufacturer whose brands include Tommy Bahama—an opportunity to help support the islands from which the brand drew its name, no? The week also promises New York Fashion Week, now mainly moved to Lincoln Center and the Piers on the west side of the city.
Investment Bank events return in force, Morgan Stanley's 17th Global Healthcare Conference probably the largest, Monday, though Tuesday's Deutsche Bank Technology Conference, out in Vegas, could be a close competitor. Note, also, Barclays Global Financial Services and Credit Suisse's Basic Materials, also Monday, along with a re/code Conference, for which the National Retail Federation (NRF) is the co-sponsor. Meanwhile, PCB Design, out in Santa Clara, revs up chip talk, just as Apple prepares to introduce new products, on Tuesday--many betting it won't just be iPhones, this time. Some hope it will, finally, reveal a launch date for its Apple TV Streaming Service, for which stars like Jennifer Anison have signed up.
I-banks are not confining themselves to US events, as the Events Calendar makes clear. On Monday, UBS will host Business Services, Leisure & Transport, in London, where Credit Suisse is hosting, separately Global Steel & Mining.
In addition to DB's Tech Conference, Tuesday, RBC Markets is hosting Global Industrials, Bk of America Merrill Lynch Global Real Estate, Wells Fargo Securities' 8th Net Lease REIT Conference. In Indianapolis, FTR is the annual Forecasting Transportation Conference that usually moves transport-related companies. In Canada, Tuesday, BMO will host its 20th Annual Media & Telecom Conference, Peters & Co Ltd its 2019 Energy Conference. Farther East, JPMorgan will host, in London, Pan-European Small/Mid Cap Conference, and Jefferies Specialty
Pharma Leadership Summit, & Raymond James North American Equities, even as BBVA hosts Iberian Day, all in London.
And so it goes for the rest of the week, Wednesday, Morgan Stanley's 7th Annual Laguna (Industrials) Conference is the largest event Wednesday, but we shouldn't ignore BMO Capitals' 19th Annual Back-to-School Technology & Business Services Conference, Jefferie's Automotive Technology & Commercial Mobility Summit, and SVB Leerink's West Coast Biopharma Summit. Commercial events worth noting, Wednesday, also, include Boston Biotech Week, and the several sub-conferences, Multifamily Housing council Fall Board of Directors & Advisory Committee Meeting, IPAA for Independent Oil Companies, and All Things Organic—a Natural Products Show, just as the fight over calling liquid products from soy, almond, and other plans "milk."
Overseas Wednesday, Berenberg hosts Food Ingredients and Chemicals, even as Carriers World and the Retina Sciety meet in London, Phama Sciences meets in Glasglow, Kepler Cheuvreux host its annual Autumn Conference in Paris, Seatrade Marine Interiors Cruise & Ferry meets in Hamburg DE, and Pareto Securities hosts its 26th Oil & Gas Offshore Conference. You'd think the schedule would start winding down on Thursday but it doesn't, much. Raymond James will host The Connected Consumer, Jefferies Fitness & Wellness, Credit Suisse Women in Finance: Perspectives on Leadership, in NY, and European Industrials in London, where Citi will host Argentina Day. Note, too, MasterCard's Investment Community Meeting, & STM Microelectronics' Developers Conference, even as US Bancorp hosts an Investor Day, too.
Friday, it's all industrial events, including the Heart Failure Society, in Philadelphia, Ovarian Cancer Research in Atlanta, MSK—Memorial Sloan Kettering its 2nd Symposium on Interventional Cancer Pain. In NY, and London Fashion Week, in London, obviously, even as IBC2019 is the largest Broadcast Content, Media, Entertainment, & Technology Event outside Broadcast Asia. That's in Amsterdam, while Credit Suisse hosts Australia Corporate Day in Tokyo. I-banks are rushing to get in their most well-attended conferences before the Jewish holidays start on September 29th.
Meanwhile, for sheer fun, on the 14th, Target hosts a retrospective of its 20 years of Product Collaborations with designers from around the world. You could try your neighborhood target but will probably be luckier online. Either way, the hundreds of items on offer at reasonable prices should bring throngs of shoppers into its stores—though only some of those will actually have pieces from the collection available for pick up and purchase.
Given the President of the United States is so capricious, and flip flops on his positions regularly, it's quite amazing to me that stocks mounted the kind of rally they did, Friday, especially, on plans for a trade talks on an unspecified date—even if the Chinese did confirm the plan. Trump thrives in chaos and could change his mind a dozen times between now and then, yet Equity Traders seem determined to look on the bright side—no matter how insane that might strike me. But even given that, the financials, especially, have soared and crashed so regularly, you could do worse than sell the rips in that group, then buy the dips. JPMorgan, alone, has traded in a better than 10 point range on the rips and dips, and you could do worse picking JPM over other financial choices. MasterCard's Investor Meeting is less sure a bet. It's hardly undiscovered, and really hasn't range traded—more a one way street up. Be careful out there. A President who thrives on chaos cannot be trusted, as if you didn't know that, already.
September 02—06, 2019 Whew!!! THAT WAS CLOSE! IT appears Dorian's impact on Southern Florida will be glancing, at worst, though this is one storm we've been preparing for, for over a week, and its path keeps zigging and zagging. Therefore, the so-called "error cone" continues to include our location. And if past is prologue, which it seems to be with FPL, unlike fund returns, if the power goes out, we'll be out for at least a week. Makes me wonder where FPL (NEE) spent the $20B its customers have paid since 2006.
If you didn't know Mario Draghi's term atop the ECB was done October 31st, and didn't know Christine Lagarde was his replacement, you might be forgiven for thinking de Guindos, the V.P. of the ECB, was auditioning for Draghi's position, given the number of times he's speaking, or presiding over a panel at a conference, this week. Seems he's everywhere. Also notable, Mersch's hearing on his nomination to be Vice Chair of the ECB Supervisory Board, Wednesday. In that position, he'll be supervising US banks doing business in the ECB's region of control, which is all of the European continent but not the UK, Ireland, & Scotland.
Some Economic Calendars list Minneapolis Fed Pres Neel Kashkari s hosting a Town Hall on Sept 5th but we discovered that's not what's happening. The Minneapolis Fed will host a Town Hall, at 7pm on 09/05, but it's with one of its economists, Rob Grunewald, speaking for the Fed, on "Investing in Minnesota's workforce infrastructure: Early care & education as economic development" (Minneapolis).
So what is on our Economic Calendar? August Vehicle Sales, though neither Ford nor GM announced monthly sales, anymore. We'll get the PMIs & ISMs, all leading up to Friday's August Unemployment Report, and Powell's speech from Switzerland, on the "Economic Outlook and Monetary Policy," which will be streamed at the link provided, or at the Federal Reserve Bank's D.C. Hdqtrs.
Before then this 4-day work week includes a busy Wednesday, with the Fed's Beige Book, the NY Fed's John Williams keynoting "Real Return XIII: The Inflation-Linked Products Conference, in NY. Also speaking, Fed Gov. Bowman and St Louis Fed's Bullard at his Fed Bank's Fed Listens event. Later in the day, after the Beige Book, Fed Pres Evans opens "Forging a New Path for North American Trade: The Auto Sector," at the Chicago Fed's Detroit branch, which will last through the 5th. August data will be the feature of many overseas countries' Economic Calendar, also. Focus has been on the UK, creeping into Brexit, on 10/31, and now, Germany, which posted some weak July data the EU can't afford to continue.
Earnings are still dominated by Retailers, again, but that's not all, since Navistar, Palo Alto Networks, Ciena, Meredith, and Hovnavian report. And among retailers, none are more eagerly—perhaps nervously—awaited than Lululemon, especially after Ulta Beauty, last week, posted a rare disappointing outlook. For retailers on a roll, the question is, always, when will they stumble? LULU has been on a roll since it recovered from a spate of manufacturing misses but like all things fashionable, fads end, at some point. Remember Fila and Ellesse? Few do but in the mid-1980's, they were the sportingwear brands to beat. Today, they're owned by Korean companies that were able to pick up the brands on the cheap, their dominance long gone, Nike the one to beat. And if you watched any US Open tennis, this past week, you know Nike gear and its swoosh are everywhere. Nike, however, stopped renting a booth at the US Open years ago—perhaps a decade ago, despite collaborative lines with Roger Federer & Rafael Nadal, the #1 & 2 players in the sport, for years. Roger is now with Fast Retailing, Rafa still with his trademark bull horns, at Nike. Also with Nike, collaborating on her own line, Serena Williams, back from a difficult and nearly deadly child birth making a serious run for her 24th title in a major.
Which brings us to the Event Calendar, which stands out for the number of Investment Bank events taking place in the US, even though we all know plenty of traders will delay returning to New York until after this week. Of course, those with kids in public school have no choice, school resumes on Tuesday, everywhere but Eastern Florida, which canceled classes last week, even though it didn't appear then, that Hurricane Dorian would make a direct hit. (With 185 mph sustained winds, and 225 mph gusts, hurricane sounds so much less serious than cyclone, which is generally reserved for storms that originate in the Pacific Ocean.) So what stands out within all the I-bank conferences? Barclays Global Consumer Staples, does, because of the strength in that group's charts. With yields higher than Treasuries, it's been a favorite since July. Deutsche Bank's Aircraft Finance & Leasing Conference is another highlight, given the airlines pushing out when the Boeing 737 Max will return to their schedules. Barclays CEO Energy—Power Conference is another, notable event, along with UBS's Chemicals, Barclays' Media & Telecom, and we only just finished up Tuesday.
Wednesday, Goldman Sach's Global Retailing Conference, Citi's Biotech, Wells Fargo's Healthcare, and Baird's Global Healthcare will all be well attended—even if that's via webcasts, rather than portfolio managers attending, in person. Also note, Cowen's Global Transportation, Citi Global Technology, D.A. Davidson's Technology, and KBW's Insurance Conference. Citi, very busy this week, is also hosting a GEM Conference, Global Emerging Markets, for those whose brains are still checked out. What's surprising, is how many overseas conferences these same names are hosting this week, too. The I-banks are everywhere, Wednesday the busiest day for them, locally plus overseas. By all means, study the rest of the Event Calendar, because it's an exceptionally busy week and unlike some years, the Jewish Holidays (Rosh Hashana 09/29, Yom Kippur 10/08, about as late as they've ever been.) aren't until the end of the month, which shifted lots of scheduled events into slots earlier in the month. What surprised me about the stock charts I haven't looked at in a few days, was the strength in four retailers, notably Target and Walmart, as well as TJ MAxx & Ross Stores. Even then, smaller names like Zumiez have charts a lot less awful than I expected. ZUMZ reports this week, Thursday, though, and I have no sense of what it's report will look like. So please don't interpret the mention as an endorsement. It tends to do well for Back to School shopping, and is a summer retailer, given the skateboards and surfboard apparel it sells but with many mall stores, it's surely suffering a lack of traffic, like the rest of retail.
So, tell me what Trump's next tweet will be, and I can tell you what stocks are likely to do. Otherwise, I'm firmly in the downtrend camp, amazed at the Street's bullish response to every Trump Tweet™ claiming the Chinese either called him, or are desperate for a trade deal. The Chinese have called him out as a liar, point blank denying they called, as Trump alleged, while in Biarritz France for G7. And since Orientals tend to think in 100 year blocks. Whether Trump is kicked out of office in 2020 or gets a 2nd term, and has 5 more years matters little to Xi, whose leader for life. He might even dial up his resistance to a deal, if the Democrats manage to nominate a candidate he finds more palatable and malleable.
So, first, expect volume to be fairly low, as PM's continue to remain out of town. And watch out for the downside. September is notorious for being a bad month for stocks, and there are more than a few statistic mongers who say September is even worse after a treacherous August. PM's with first half gains may just decide to sit out this month, hoping for more downside so they can pick up stocks on the cheap, in October—late October, if history is any guide.
August 26—30, 2019 CONSOLIDATION—EVEN a COUPLE of HUNDRED POINTS RALLY BEFORE DOWNSIDE REUMES A family emergency keeps me from completing the Outlook, this week. I believe stocks could see a bit of a rebound off last week's slam but more in the order of short covering in advance of a long, holiday weekend, rather than a desire to load up on stocks, now, cheaper. The path of least resistance, at the moment, remains down, especially this time of year, into what's often the worst months of the year. So below, the Outlook that was in progress before my mom went into the hospital, and before she signed herself out, just presuming I'd move into her house to take care of her, Sunday and nights, until she's better.
Equity markets erased losses of as much as (-121) in the DJIA on Friday morning, after Powell's Jackson Hole speech, becoming neutral, if anything. Then Trump started bashing Powell again, and with all the stupidity and crassness he's become infamous for, questioned in a tweet whether the US's worst enemy isn't Powell rather than Xi (of China), and before you could say supercalifragilisticexpialidocious ({©} "Mary Poppins"), the DJIA was down more than (-400) points the S&P down (-55.58). The Fed and markets know it's Trump's trade war causing corporate hesitation despite very low rates and Trump, afraid of getting blamed, is completely underestimating the American people by hoping to convince us that it's interest rates set by the Fed, not his trade war, that's slowing the US economy, responsible for some of the slowing globally, and probably going to push the US and the rest of the world into recession. Trump can tweet all he wants to make Powell & the FOMC his scapegoat but we—the American peopole--are not stupid enough to believe him.
Stanford U, U of Chicago Booth School of Business, and the FRB Atlanta publish a Survey of Business Uncertainty, monthly, published by the Atlanta Fed. The next one is out this week, at 11am et, on the 28th. A full explanation of the Survey is at Econoday here.
EARNINGS: How's this for hot news? I went to check when Autodesk is reporting its quarter and was met with an ad to buy its software for 20% for the last 4 days of August. Any quarter reported should have ended before the last 4 days in August, so it's probably not a last ditch effort to "make" the quarter but, now, I wonder how often ADSK runs such end of month promotions? And for how many days? Also FYI, for the first time, this back to school season, my local Target store was selling Dell Technologies laptops and a desktop. DBI is Designer Brands formerly DSW reporting Thurs, NCI Bldg Systems & PlyGem merged to form Cornerstone Building Products CNR NOT reporting this week but listed by some systems including Thomson Reuters. Reported 08/07.
One of the Tennis World's 4 Slams, and the biggest tennis tournament in the US, the U.S. Open, debuts on Monday, through September 8th. However, sharp-eyed tennis fans could have caught the qualifying matches, as well, some of which were broadcast by Walt Disney's ESPN and/or ESPN 2, as the tournament will be most of the next 2 weeks. Ralph Lauren outfits the officials and volunteers, like ball girls & boys, while Tennis Channel plays repeats of matches all week. Discovery broadcasts in 68 European countries on Eurosport; Tencent broadcasts in China, beside CCTV, JPMorgan's Chase, Daimler's Mercedes-Benz, IBM and American Express are exclusive sponsors, which means MasterCard & Visa are not accepted at Flushing Meadow Park (NY, the site of the 1964 World's Fair), though Naomi Osaka, vying for #1 or #2 in the world, prominently displays the MA logo on her visors and elsewhere. Under Armour (UAA) is one of the few athletic companies allowed to sell U S Open apparel on the grounds, other than Ralph Lauren, and has some of the best designed shirts of anyone, RL designing "Pony" shirts rather than the detailed NYC buildings & Tennis-specific designs UAA puts out (Though their polyester shirts pill, over the years, the designs are so terrific, I forgive them.). Sky (CMCSA) and Fox Sports carve up other parts of the world, like India, Australia, and the Caribbean, while WOWOW is Japan's satellite broadcaster. Emirates Airlines is the official airline, not just for the tournament but for the entire tour, the whole year round. There's much drama in the sport, this year, as Serena Williams tries to comeback from a difficult pregnancy and post-birth scare, accused of cheating with her coach at last year's US Open—her fight with the referee over that accusation lacked "Dallas" or "Dynasty" hair pulling and drag into the pool but was loud and acrimonious enough to rob Osaka the joy of winning. Andy Murray, who all the top players bid tearfull farewells, a couple of years ago, when it appeared his hip ended his career, consulted with the Bryan Brothers' surgeon, had the same surgery as one of them, and is making his bid for his first, singles championship in a major in almost 16 months. Fifteen year old Coco Gauff is the youngest player entered and a talent to behold, just as Boris Becker was at Wimbledon in 1984 or '85, and the best American youngster since Jennifer Capriati, whose dad owns a sports bar in Delray Beach FL. (She just beat current #1 female, Ashley Barti in a Winston-Salem exhibition, taking a tie-breaker 10-8.) Meantime, the dominant male players are all over 30—in the case of Roger Federer, well over 30 as he's about to turn 39, and still a top 4 player, many younger top 15 players of the belief that the 4 old guys' refusal to retire has cost them many a title. But Rafael Nadal won his 12th French Open this spring, and would win more tournaments if his body only kept up with his head and desire. If you have the time, Sunday the 25th is Kids Day at Flushing Meadow, and free, providing a wonderful opportunity to participate in planned events for kids or a mere walk around the grounds to see the pro's practicing. You wouldn't believe how beautiful a park in Queens could look, if you haven't been to the Open. (Remind deBlasio's tourism agency to send me that check for promoting the Open! LOL! Only writing all this down made me realize the Open is nearly as commercial as a stroll through a Disney or Universal park. )
Daiwa Research Tour on the West Coast covers IT, consumer, & Healthcare companies.
TUESDAY, 08/27, Jefferies Semis, IT Hardware & Communications Infrastructure 1x1 Summit in Chicago confirmations from GLW, CSCO, CEVA, GLW, CSCO, Akoustis Tech, GSI Tech, ASML, Adtran (ADTN), AVX, LSSC, Radware, QUIK, Everspin (MRAM), STM, FORM, Photon Control, NXPI, AMDEverspin, Omeros Corp, Calix, Adesto, confirmed. And now would be an opportune time for me to explain why certain events are listed more than once. Every time an event is listed, it means I searched out participants. Sometimes I find a couple but, increasingly, lately, I find more if I wait until the last minute. Other times, especially for overseas events, I find so little information I go back to the prior year's event, and provide previous confirmed corporates, as guidance. Likewise, if I'm entering an event on this week's outlook, and see several entries for a single event, I might conclude I've already done my darnedest to search out participants, and more time should not be devoted.
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
August 19—23, 2019 K.C. Fed Jackson Hole Symposium The highlight of the week should be the K.C. Fed's Jackson Hole Economic Symposium, we know Powell is speaking on the 23rd, at 10am, and the RBA's (Aussie) Lowe on the 24th but to learn more, one had to wait until after the event began, on the 22nd, which is when the Agenda is released. Esther George, the Pres of the K.C. Fed Reserve, by the way, was one of the 2 dissenters to the "mid-cycle adjustment" rate cut on July 31st. She is likely to open the event on the 22nd. The ECB's Couere, Lane & Lautenschlager are panelists on Thursday, according to the ECB's weekly schedule on its website.
The G7 Heads of State Summit is about "Inequality," a subject Trump doesn't seem to know much about, or have any sympathy for. Empathy is not his strong suit in the best of times but surely not on the subject of Inequality, when he just ordered ICE to base entry on a means test. Wonder if his ancestors would have been admitted had there been a means test, back then? The G7 Presidency lies with France (Macron presiding); until January 1st, 2020, when the US takes over. Attendees include: Pres. Trump, Germany's Merkel, Italian P.M. Conte, Japan's P.M. Abe, UK's P.M. Johnson, and Canada's Trudeau. The shindig is in Biarritz France, thru 26th. A nice place to ski in early or late winter.
Some may wonder whether scheduling the G7 Summit starting the last day of the K.C. Fed Economic Summit, in Jackson Hole, causes divided loyalties. The answer is 'no.' The G7 Summit is for heads of state, the K.C. Symposium for Economists, who may be academics, central bankers, or similar. The irony is that the leader of the most influential central bank in the world, the US Federal Reserve Bank chief Jerome Powell, may be the only participant who isn't an economist—other than some journalists invited to attend. At G7, it's all heads of state, plus the leaders of the EU Commission & European Council who are invited as guests, to observe, only, As it is, the EU is well represented, anyway, with the leaders of France, Italy, and Germany, EU members who are, also, members of the G7. For that matter, the U.K. is also an EU member—at least until October 31st.
Beyond those meetings, Wednesday, the FOMC will release its Minutes of the July 30—31st meeting, at which the Fed cut rates 25bps, with 2 dissenters. I think what most want to read is any insight into whether any members advocated for half a point cut (50bps), instead of the quarter of a point delivered, and if so, how many. Fed Vice Chairman for Supervision, Quarles, is speaking but it's at a Community Development Anniversary Event, so not likely a place or topic appropriate to discuss Fed policy on "mid-cycle adjustments," as Powell preferred to call the rate cut. Also this week, July Existing Home Sales on Wednesday, and New Home Sales on Friday. Also, note, overnight into the 20th, a new Monthly Lending Rate China is starting to unveil, for the first time, this week, then on the 20th of each month, thereafter. I learned of this through Rockefeller Strategic Currency Briefing, without which, I probably would have missed it, since I didn't see it on NYTimes.com, Reuters, or CNBC, either Sunday night or Monday morning. Write Barbara Rockefeller for a trial and/or access to past daily Treasury newsletters at, ber@rts-forex.com
Retailers are heavily represented on the Earnings Calendar. Most won't be as bad as Macy's was, but few will be winners, either. Then, again, weather hit retailers that should have been enjoying spring—like Home Depot, Tuesday and Lowe's Wednesday. The wet weather and floods that kept farmers from planting probably interrupted spring garden planting, too. On the other hand, some retailers, like Nordstrom, TJMaxx, Ross Stores, and Target, may have benefited from Back-to-School (BTS) shopping, and in particular, the Sales Tax Holiday celebrated in 11 states the first weekend in August, after the end of the quarter being reported, Q2 but timed to provide some optimism for the BTS season. I was in TGT to observe BTS shopping on 2 of the 5 Sales Tax Holiday shopping days in early August (Southern Florida) and the place was jammed. TGT was well organized with class supply lists for hundreds of nearby school teachers/classes, each of its stores equally equipped for the schools near those stores. PLUS, I had to buy a new phone system and found the best price for the system I settled on at OfficeDepot/OfficeMax—even better than Amazon. However, all the school supplies I spotted at ODP, which I'd already noted at TGT, were as much as 50% more at ODP than they were at TGT. If I wasn't certain I'd done thorough due diligence, I would have doubted my findings of the best price for the phones at ODP.
Aside from retailers, Monday brings earnings reports from China's Baidu, Sina & Weibo, plus Estee Lauder. Tuesday, reports from non-retailers are expected from BHP Billiton, , Madison Square Garden, Medtronic, ScanSource, and Toll Bros. ScanSource's bar codes and scanners should be booming with al the online sales. Thursday, RBC and CIBC of Canada report, along with Hormel, Hewlett-Packard, Intuit & VMware. Last week's rumor du jour was VMW making a bid for Pivotal, another division of Dell Inc. Friday, it's FootLocker I'm most interested in hearing from since I was shocked when it last reported a quarter so much worse than it looked like it should have enjoyed, based on traffic and sales in our local mall. FL won't have benefited from the BTS Sales Tax Holidays to the extent one might presume, because so many sneakers, today, exceed the limits set by each state. Here, Florida raised the limit to $60 from its many year $50 limit but even that isn't enough to encompass as many sneakers as one might assume.
Typically, when an Earnings Season ends, I-bank conferences pick up but it's the end of summer, with Labor Day Weekend and school in northern states soon to resume, so I-banks are mostly overseas, if they're hosting clients, at all. In fact, the Canadian Security Traders Ass'n Conference, in Quebec, finishing up Sunday, was a bit surprising only because schools in the northern territories are on similar schedules to those in the US. On the other hand, eTail East, in Boston, seems very ill-timed, not just because the time of year is prime for BTS shopping but because the largest apparel & shoe show wrapped in Las Vegas, on the 14th. What buyer is going to want to be away again, so soon?
On the flip side, Digital Dealer 27, in Las Vegas, starting Sunday, is timed during older model clearance season, as Auto dealers here are desperate to clear not just 2019 models but 2018's, as well. Tuesday, NextGen Automotive Manufacturing/8th Lightweight Materials Summit starts in Detroit, Wednesday, AV19 is on Autonomous Cars, also in Detroit, plus Automotive Cockpit HMI (Human-Machine Interaction) also in Detroit, the same day, making for a concentration of automotive-related conferences during this week. GATS—The Great American Trucking Show, in Dallas, starting Thursday, promises the biggest samples of any show, anywhere—no matter the time of year.
Wednesday, Raymond James hosts a SMID Cap Growth Conference in Chicago, and supposedly, a Bank of America Merrill Lynch an Energy Bus-less Tour though we could only find 2 names confirmed for BAML's event, making us suspicious of whether it's a current event.
Healthtech hosts what's often the largest conference in number of attendees because it's not a single conference, at all, but several conferences held from Tuesday through Thursday, simultaneously. And while on the subject of healthcare, TSE is Total Store Expo hosted by NACDS, Chain Drug Stores. Walgreens and CVS has, sometimes, held auditions there, for new products but neither showed such meetings on their IR sites, as of last Thursday morning.
So with, FOMC Minutes out Wednesday, the K. C. Fed Economic Symposium opening on Thursday, and the agenda not available until the event starts, there are enough earnings to occupy traders waiting until Powell's speech on Friday. The question before that is whether any retailers can deliver reports worth celebrating for more than a few hours. I seriously doubt it, though would note that Amazon & FedEx have often taken off starting in late August, anticipating the holiday online shopping season. With FedEx dropping Amazon, it will be tough for FDX to replace AMZN's business, this shopping season, unless other retailers with whom it has contracts boom online.
After Jackson Hole, Trump will be in France, tweeting off hours, as the Democrats seize on his "causing a recession." The Street has been working for days to convince traders that the Fed Chief won't deliver what the Street wants—promises of more rate cuts. And he can't, because I believe the FOMC members won't make up their minds about what action to take at their next meeting, in mid-September, until they've seen what the data looks like by then.
On the other hand, G7 is UK Prime Minister Boris Johnson's best shot at endearing himself to the other European heads of state, and perhaps opening any discussion of concessions that will avoid a hard Brexit, on 10/31.
All of which is to say the week sort of won't start until Wednesday afternoon, when the minutes are released, at the earliest, and perhaps not until Thursday, when the Jackson Hole Economic Symposium Agenda is released. Retailers will be a tough buy, no matter what they report. Almost all lease more brick and mortar space than their future needs are likely to warrant. There's probably no sector in worse shape, right now, justifiably. Don't be fooled by a good report—no matter who delivers it! (Yeah, I prefer TJX's business to any other retailer's but, even then, I'd be cautious. Once someone gets used to NOT shopping, it's like a diet—the more you adhere to the plan, the better one feels about themselves, and the more visible the results. As new credit card bills arrive with small balances, not shopping is very self-reinforcing. I hear such conversations all the time.)
ECONOMIC: (Highlights, only, below, Complete International Economic Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the
author's, alone, and should be just one factor in more complete due diligence.
August 12—16, 2019 STILL A CHANCE of THE BOTTOM FALLING OUT How late are we into summer? Public schools reopen Monday in the South—including in Florida, Texas, and many other Southern states. From here until late October, markets have, traditionally, had trouble keeping the bulls happy. And it doesn't help when a President is bashing his Central Bank, fanning the flames of racism, and bailing out farmers but none of the other industries destroyed by the trade war he started and nurtures. Is it any wonder gold has broken out?
The Economic Calendar is a bit light, with US July CPI out Tuesday, July Retail Sales on Thursday, then Housing Starts & Building Permits for July on Friday. And if that weren't enough, Thursday is the 15th, and a potential deadline for many hedge funds redemption requests, if investors want their money back at the end of the third quarter—or even, by the end of the year, depending on the rules of any given hedge fund.
Otherwise, most of the data on the Economic Calendar is more sentiment than actual, verifiable data, whether NFIB, a small business Optimism Index, NAHB's Housing Market Index, or U.M.'s preliminary August Consumer Sentiment. The outliers are on Thursday—Q2 Productivity & Costs, July Industrial Production/ Capacity Utilization, and June Business Inventories at Manufacturers, Wholesalers and Retailers. Growth in Productivity has been the missing link that's kept companies hiring more workers. But at least there's something to look forward to, beyond Central Bank meetings—the Kansas City Fed's Jackson Hole Economic Symposium, still more than a week away, starting the 22nd, but a place at which plenty of Central Bankers are likely to be speakers—if past is prologue, at any rate. The actual Agenda won't be released until after the event has started. Still, tune into Bloomberg, NY Times, Wall Street Journal, and CNBC for rumored invitees and rumored scheduling, since one can only attend if invited and the K.C. Fed keeps a tight lid on its plans, in an effort to keep the event a significant contribution to Economic Theory rather than another media circus like Allen & company's Annual Media event.
The Earnings Calendar is still flush with the volume of expected reports but significant for just a handful of expected releases. Wednesday promises Agilent, Cisco Systems, and Macy's. Thursday, Applied Materials, JCPenney, nVidia, Tapestry (formerly known as Coach), and Walmart. Friday brings Deere and, I assure you, $28B in payments to farmers from the US Government, in reparation for Trump's Trade War, isn't reason enough for said farmers to order new heavy equipment—especially when fields were flooded during optimal planting weeks. Whatever Applied Materials reports, Citi's upcoming Pan-Asia Semiconductor Trip will round out the outlook. Citi is taking clients to visit Taiwan Semiconductor, Mediatek, Novatek, ASEH, Chipbond, Vanguard, Unimiron, Kinsus, ZDT, GWC, Win Semi, in Taipei. From there, on the 13th visits Samsung Electronics, SK Hynix, LG Display, Wonik IPS, SK Materials, Soulbrain. On the 14th, in Tokyo, visiting Tokyo electron, HOYA, DISCO, Shin-Etsu Chemical, Sony, Renasas Electronics, Advantest, SUMCO. The 16th was TBA but probably a travel day home.
If you do a quick scan of the Event Calendar below, you'll see quite a few I-bank names popping up again—confirming the fact that most of the analysts—except those covering retail, apparel & shoes—have started to move on. Even then, MAGIC starts this week, along with something, now, called NY Now, which was previously the New York International Gift Fair, often appearing as NYIGF, dropped in favor of NY NOW. Still it's a table top, gift ware & Housewares show at its heart, and includes Ex*Tracts for scents that show up in perfumes, candles, and even detergents. Accompanying NY NOW & Las Vegas located MAGIC are a slug of affiliated shows, conferences, and expos, that can fill any analyst's calendar. Off-price is getting a head start on the other MAGIC-related shows, opening a day in advance of any other. And don't bother looking for World Shoe, though NSRA for Shore Retailers and FN Platform still meet at MAGIC but the new owner doesn't use World Shoe or, even MAGIC, at this point. But find me a retailer or manufacturer attending and you'll find a business person who still refers to what's going on in Las Vegas as MAGIC.
But it's the I-bank events that bear watching, since there's a mini-flurry this week that should be noted. The biggest is EnerCom's The Oil & Gas Conference, running the 11th through 14th. All you might want to know about the Denver even is here. KeyBanc is hosting a Technology Leadership Forum, started Sunday, in Vail Colorado, and transitioning to using initials—KBCM-for KeyBanc Capital Markets—in case you encounter that set of initials. BTIG is hosting Biotechnology on Monday, when Cowen hosts its 3rd Annual Communications Infrastructure Summit, and Wells Fargo its Technology Services Forum, in Newport, R.I. Gurney's Newport Resort is reason enough to attend the Wells event.
On Tuesday, JPMorgan is hosting an Auto Conference, in New York—a city, ironically, starting to do its best to ban autos from mid-town (Makes me wonder why Bloomberg didn't think of that—or fining cars entering or driving through Manhattan.). SVB Leerink—the new name for Silicon Valley's division that bought out Leerink Partners, is hosting a bus tour through the "Heart of Healthcare Facilities," in Nashville TN. Wedbush is hosting PacGrown Healthcare, while Wolfe Research is setting up at EnerCom and hosting an E&P Summit with attendees and clients who'll already be in Denver, anyway. Susquehanna is hosting Energy & Industrials, in NY, and D.A. Davidson a West Coast Bank Tour, the details for which I'll be happy to send to anyone who needs them. Raymond James is hosting Park City Telecom Summit, in Utah, while Goldman Sachs is hosting some form of Power, Utilities, MLPs & Pipelines, it would appear from the 3 confirmed attendees we found—fewer than the subsectors mentioned in the event's name.
Wednesday, Bk of America Merrill Lynch is hosting an A.I. Conference, with many private companies speaking. Citi is hosting a 1x1 for Midstream/Energy Infrastructure, and Raymond James Aspen Energy Summit, in Aspen, as the name implies but could well have invited many of the EnerCom attendees. The Heikkinen Energy Conference is new to us but on Schlumberger's IR schedule. I'd also take not of GMA—the Grocery Manufacturer Ass'n--Leadership Forum, also starting Wednesday, given how many farmers elected to ski planting this past spring. Also, note the Hotel Data Conference hosted by Hotel News & STR—the latter formerly Smith Travel Research. So it's said, Intellisight from the CEA Society of Minnesota is what used to be InvestMN. It remains about companies with headquarters campuses in Minnesota, so I don't' know why the change but change it did.
Thursday, Oppenheimer is hosting Midwest Corporate Access Day, even as Canadian Security Traders Association are attending their 26th conference, in Quebec. Friday, Jefferies hosts Technology Disruption Across Consumer Summit, in Hong Kong but that's all we've got on that one.
So, as the Earnings Calendar slithers towards retailers dominating the schedule, Back to School shopping is over for the first wave, in the south, and will take a short hiatus until kids in schools farther north stare down Labor Day weekend. Before that we'll have the focus switch to Jackson Hole but, until then, the market is the star of the show—and that show is getting too scary for many retail investors, and those professionals looking to protect their Year-to-Date gains. That's often a combination that causes funds to flow out of stocks—a condition that may well endure until the latter half of October. Be forewarned.
ECONOMIC: (Highlights, only below. Full International Economic Calendar here)
August 05—09, 2019 ANOTHER EARNINGS SLAM & REACTION TO MORE POTENIAL TARIFFS While it may feel like all the important companies have reported earnings, so the season should be winding down, that isn't the case, at all. There's another Earnings slam this week, with hospitality & media companies, in particular, dominating the names that stand out. Of course, fresh off this weekend's big Back-to-School Sales Tax Holiday, retailers will have to weigh sell through against reorders, with additional tariffs coming Sept 1st, on those $300B in Chinese items that escaped tariffs until now. That means it will hurt retailers and toy, apparel & shoe manufacturers, just as their deliveries of Holiday goods are due to hit US ports. Granted, the Tariffs of the past weren't assess on goods in transit, so there's a chance most of what was ordered for Holiday will arrive unscathed but even that is little comfort. Strong sales require fresh orders to fill the racks & shelves cleaned out, so tariffs will catch up sooner or later, unless they're withdrawn before they're assessed. It's not impossible—Trump threatened fresh tariffs as of July 1st, if Xi didn't agree to meet with him at the G20 in Japan. They met, and those tariffs never appeared. But as long as Trump is under the mistaken impression that it's the Chinese paying the tariffs, he'll boast about being Tariff Man and follow through with the new tariffs. An analyst, or two, last week, posited that a company like Walmart could force its suppliers to eat the new tariffs but I wouldn't count on that indefinitely. While manufacturers may be forced to uphold prices for contracts already signed, sooner or later new contracts will reflect the higher costs, and WMT shoppers will pay the price, just like the customers of other retailers will be forced to do, as well.
And one other thing: I thought Powell was totally unconvincing trying to claim the mid-cycle adjustment in rates was due to continuing low inflation and global trade tensions. I think he needed to 'it' give to Trump as directly as Trump has been heckling him, and say: As long as the President intends to damage business confidence and investment by threatening additional or higher tariffs, the FOMC board will re-examine its policies and decide if more accommodation is necessary. Did Trump toss out the Sept 1st tariffs because the FOMC cut only 25bps? Possibly but he could have waited to say so, or more quietly entered his plan into the Federal Register, instead of criticizing the too small rate cut and tweeting about new tariffs moments later.
If retailers weren't facing enough stress with the newly threatened tariffs, we take this opportunity to point out RayJay's CECL Conference, on the 6th, which we believe refers to Current Expected Credit Losses, on which the FASB (Financial Accounting Standards Board) has released new guidelines for banks & finance companies, weighing in with ASU No.2018-19, codification topic 326. It's a new way of valuing potential future credit losses directed at banks, savings associations, credit unions and financial holding companies, regardless of size, that file regulatory reports that conform to US GAAP. And it applies to all debt instruments whether held to maturity or for investment, and to all trade receivables, like the receivables apparel or shoe manufacturers might hold against goods shipped from their suppliers or to their retail customers. It is likely to limit the amount of credit extended to shakier retailers, whether JCP & Sears, or the latest rumored troubled retailer, Forever 21.
We stand corrected: Florida, for the first time, this year, is allowing computers (not smartphones) that cost up to $1K tax free as part of its Back-to-School Sales Tax Holiday. New Gov. DeSantis also raised the limit on sneakers to $60 from $50 but left all other supplies at $15. (A friend with 4 kids has them line up to buy their own, for $15 each, then has the ones finished scurry to the back of the line to pay again, for more stuff. Her school lists for each kid was over $200.)
The Economic Calendar promises some interesting Chinese data, including Caixin's July Services & Composite PMI, overnight Sunday, then overnight Thursday into US Friday morning, China's PPI & CPI, along with New Yuan Loans & Aggregate Financing, plus the BoP Q2 Current Account. The UK's Data dump will, also, be Thursday night, into our wee hours on Friday morning. Canada's Jul Unemployment Rate/Change/Participation etc is out early Friday morning.
AS for US Data, it's a bit of a slow week. Monday, it's the Markit July US Services & Composite PMI, plus the ISM non-Manufacturing Index, too. Tuesday, June JOLTS—Job Openings & Turnover, kind of moldy data which hasn't changed significantly in 2 months. Regional Fed'Chiefs Harker & Bullard are speaking at separate events Tuesday, also. Wednesday its Fed's Evans on the US Economy at his own Fed Bank so perhaps expounding on the economy. More interesting that day could be the Federal Trade Commission hearings on video game loot boxes and they way they're "hooking kids on spending their allowance." Just the portion in quotes tells you everything you need to know about what the FTC thinks about loot boxes. Though Activision Blizzard & Take-Two Interactive report this week, it would be wise to bear in mind the hearings.
Also Wednesday, the New York Federal Reserve Releases its Regional Household Debt & Credit Snapshots (credit cards, auto loans, mortgages, student loans, delinquencies for NYC & other state metro areas, Fairfield CT & Northern New Jersey). The problem with the Fed's latest rate cut is how many borrowers were able to refinance their mortgages or other loans at low, low rates over the past 5 years. Mortgage rates may have fallen recently but that's only put them back where they were in 2016 and later. That's why a 25bps rate cut, or even 50bps, won't make that big a difference. I'm probably the only one who never refinanced a, relatively, high cost loan when 30 year mortgages were down near 3.78% but, then, I did one better—I paid off a 30 year mortgage in 14 years, eliminating a slug of interest I'd have to have paid, otherwise. On the other hand, NY real estate has been week since the 2017 Tax & Jobs Act capped the amount of real estate taxes that can be deducted on Federal Tax Returns to $10K, which may put some homeowners in a bind even paying their taxes. That's often encouraged homeowners to turn to the home equity ATM to pay bills beyond their means, though as housing values slip, that could make it hard for people to manage additional loans.
Thursday, in addition to weekly Jobless claims, we'll get June Wholesale Trade—Inventory & Sales, s well as July Chain Store Sales, from the 9 who still report that and from some who report that information only quarterly, though most of those wait until the week after to weigh in. Friday, the IEA will issue its Monthly Report on Energy, before US PPI is released at 8:30am, and the Rig Count at 1pm in the afternoon.
The Earnings Calendar is duly emboldened to highlight the number of hospitality & media companies reporting, this week, along with the occasional biotech, healthcare supplier, insurer, and semiconductor name. And by hospitality we don't mean just hotels, though are those, and casinos but, also, restaurants, especially some of the smaller chains. And by Media, we don't just mean TV networks but, also, radio & newspapers, and some internet companies, though it's Viacom & CBS most are waiting to hear from (Thursday), since many an analysts has posited that they will announce their merger, Thursday, since both are reporting that day.
Which brings us to the Events Calendar, which isn't busy with too many I-banks, given summer holidays but a few are creeping back in. Sunday, is one of the biggest Meat events of the year, in Orlando. Two other notable events continuing over the weekend, State Insurance Commissioners meeting at NAIC Summer, and GBTA the Global Business Travel Professional event, that runs through Wednesday. Odd as it seems Stephens Building Materials Plane Trip is starting Sunday. Speaking of Restaurants, The National Food Service Loss Prevention & Security Association gets underway in Nashville, along with the FAME, MODA & MRKT Fashion shows in NY, just as many buyers and manufacturers will be packing to make their way to Las Vegas, in a week, for MAGIC.
Monday, Flash Memory & American Solar are the headline events, though for some, Immuno-Oncology & Stem Cell World Congress, in Boston, will be the headliners. On Tuesday, UBS is hosting Financial Services, in Chicago, and Oppenheimer its 22nd Annual Technology, Internet & Communications Conference, even as Jefferies hosts Global Industrials, and UBS Genomics in Park City UT. The Annual Space & Missile Defense Conference will be in Huntsville AL.
Wednesday, SVB Leerink Spotlight Series is on Rare & Genetic Disease, in Boston, while CanaccordGenuity is there, also, for its 38th Annual Growth Conference. Also on the 7th, NAM CMA is the National Association of Manufactures Council of Manufacturing Associations Conference, Strategies for the Future. Unfortunately, it didn't name what it claimed were "world-class speakers," but we're quite sure the latest threatened tariffs will be a prime topic of conversation. Some within the Council have already been hit with Steel & Aluminum tariffs.
Thursday, Jefferies is hosting its Financials Investor Relations 1x1 Summit in NY, which sounds like UBS' Tuesday event, which is in Chicago but they're separate. Thursday, Citi is hosting Insurance 1:1 Forum, while Anadarko shareholders will vote on Occidental Petroleum's takeover offer. The second cardiology event of the week is really about the radiologists who scan hearts for tracking disease, more than the cardiologists, themselves. Friday, the Am Orthopaedic Society for Sports Medicine Annual Meeting starts in Chicago, while Gynecological Surgical Fellows meet for a boot camp in Austin TX.
Saturday, what used to be called the New York International Gift Show is opening, somewhat newly named New York NOW, which is totally unsatisfying to me. Many of the manufacturers who used to exhibitors at New York Now, disappeared in the 90's or 2001. Out in Vegas, the first of the shows connected to MAGIC opens, Off-Price Apparel, an event that has become more an eBay and Amazon seller event, rather than a Burlington, TJMaxx or Ross Stores event, because theybig off-price retailers don't need to make deals in Vegas with any apparel suppliers. Rather, suppliers come to them, or see their New York buyers. BURL, TJX & ROST go to Vegas to shmooze and see new, small and upcoming manufacturers that they ought to know about, if not keep an eye on. And it doesn't hurt to get a feel for the colors and styles that seem most prevalent in Vegas where lots of California, Hawaiian and Asian manufacturers may make a rare appearance. With new Tariffs now looming, it's Vietnam, Laos, and other smaller Asian countries benefiting.
There was nothing in the weekend charts to suggest the selling is done, yet. And there has to be a good reason to buy—which TINA isn't until prices become more attractive, still.
ECONOMIC: (Highlights, below, focused on US. Full International Economic Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed re the author's, alone, and should be just one factor in more complete due diligence.
July 29—August 02, 2019 FOMC TO CUT OR NOT TO CUT? BACKED INTO A WALL For some, it's a question of a quarter point cut or a half point cut. For others, it's why cut at all? As a reminder, I am NEVER write about the FOMC but feel Powell has backed into himself into a wall, the only way out, this week, a quarter point cut, at least. He's justified it by saying he's interested in assuring the expansion lasts more years, given weaker global data and signs of some slowing in the US too. So, despite at least 3 members lined up against a rate cut, the FOMC is likely to deliver one, this week, which leaves the biggest mystery the post-meeting comments. I'd like to think Powell has the nerve to return to data dependence, at the very least, if not say flat out the committee will be patient, again from here.
Forget the second busiest week of Earnings releases by volume. Forget all the data to come, including Friday's July Unemployment Report. After all, it'll arrive after the FOMC has already released its rate decision and post-meeting comments, so data can only confirm the FOMC was correct if it cut—of make people question whether it was Trump's taunts, after all, that caused the FOMC to cut. But either way, Friday will be after the FOMC decision, so nearly immaterial to the markets, this week. We'll note the BoJ is also meeting this week, with its decision in the week hours of New York's Tuesday. The BoE is meeting, too, it's decision following the FOMC's decision, with BoE Gov. Carney's post-meeting press conference in the early hours before the US 0pens Thursday.
I know I said Forget Earnings, just a paragraph ago but, of course, that's hard to do with Apple reporting Tuesday. But that just scratches the surface with Illumina, NXP Semiconductor Sanmina, Voradano Realty Trust, Armstrong World, & Beyond Meat reporting Monday. Tuesday, in addition to Apple, AMD, Akamai, Allstate, Altria, ConocoPhillips, Cummins, Danaher, Eaton, Ecolab, HCA, MasterCard, Merck, Penske automotive, Pfizer, Waters Corp, Wellcare Group, and Yum China, just a few other Tuesday reports. Wednesday, American Tower, Apache, Automatic Data Processing, Avalon Bay, Cheesecake Factory, CME, Churchill Downs, DdinEquity, Enterprise Products, Equinix, Ethan Allen, General Electric, Humana, Hyatt, Lam Research, MetLife, MolsenCoors, Prudential Financial, Qualcomm, Scotts-Miracle-Gro, Taloy Morrison Homes, Twillo, Western Digital, some of Wednesday's standouts.
Thursday, reports are expected from AmerisourceBergen Brunswick, ADM, Beazer Homes, Cigna, Clorox, Corteva (the ag business spun-out from DowDuPont), DaVita, General Motors, Hanes Brands, the Hartford Insurance, Holly Frontier, Ingredion, Intercontental Exchange NYSE, Kellogg's, Mettler-Toledo, MSCI, Pinterest, Post Holdings, Remax (facting a Realogy/Amazon partnership), S&P Global Intelligence, US Steel, Verizon, Wayfair, William Lyons Homes, XPO Logistics, and YUM Brands. Which brings us to Friday, when the most important earnings will come from ExxonMobil & Chevron but, also, Cinemark Holdings, a movie theater owner, Seagate Technology, and Berkshire Hathaway.
As for Events, I-banks are mostly on holiday for the summer, with a few exceptions we'll note as they arise. This week, on Tuesday, Wells Fargo is hosting Biotech Corporate Access in Boston, and then, on Thursday, repeating it in San Francisco. KBW Tuesday is hosting a Community Bank Investor Conference, and Sprott a Natural Resource Symposium, it's affinity for gold, apparently, paying off this year. Credit Suisse is hosting its 13th Annual Midsummer LatAm Equities Conference, in New York, starting Wednesday.
This past weekend was Camp visiting weekend, and next weekend, most of the states offering Back-to-School Sales Tax Holidays will be offering them Friday through Sunday. Tuesday, so it's said, Cheesecake Factory hosts is annual half price Cheesecake day, when you can order any slice of cheesecake for half price with an entrée. I cannot get anyone to go with me so I can order Godiva Chocolate Cheesecake because I'm the only one in my circle who doesn't watch her waist. Or hips. And speaking of camps, Cumberland Advisors' Camp Kotok, named for David Kotok, we believe, will be hosting its annual fishing and economics invitational, next weekend, in Leeds, Maine. And somewhat ironically, in a season when Beyond Meat has been the hottest IPO of the season, reporting this week, too, The Int'l Congress of Meat Science & Technology + Reciprocal Meat meets starting Friday, too. And by 'meat science,' they don't mean meat made from green peas and other vegetables but, rather, derived from cows, steer, and other meat. Though I did notice, this weekend, 2 other vegetable based faux meat products are, suddenly, being advertised on TV, Pinnacle Foods' Gardein one of the brands advertised, ConAgra having bought Pinnacle Foods in a nearly $11B deal that closed last fall. Tyson Foods, which sold off its stake in Beyond Meat, promised analysts, on its recent conference call, that it was prepared to start marketing its protein alternatives, too. I don't eat meat and can't understand why someone who doesn't eat meat would be so desperate to eat a burger that they'd eat a vegetable one that tastes like meat and bleeds like it too. The bleeding is one of the reasons I gave up meat.
So, despite all the items on Earnings and an Unemployment Report pending, this week, it's really the FOMC meeting decision and statement that will drive stocks. Typically, stocks sell off after the FOMC meets, even when the committee delivers exactly what the Street has been hoping for. Bear that in mind if you're tempted to buy a post-meeting or earlier dip.
July 22—26, 2019 ANOTHER WEEK of CONSOLIDATION AS EARNINGS DELUGE HITS While Sec'y of State Pompeo will meet with his Mexican counterpart in Mexico City, starting Sunday, I don't suppose Pres. Trump will be very pleased when Russian Foreign Minister Lavrov meets with Cuba's Pres. Canel, in Havana, starting Tuesday.
Meanwhile, closer to home, there'll be a bit of housing data out, starting Tuesday, with FHFA's May House Price Index, and June Existing Home Sales. Wednesday, June New Home Sale, while the former Special Counsel, Robert Mueller III will endure back to back sessions at the US House with Judiciary & Intelligence. I imagine he will read from the text of his report, rather than contribute anything new, even as Cmte Chair Nadler wants him to read from his text, those items that make Trump sound like the scoundrel the Dems believe him to be.
The ECB will meet on rates, on the 25th, Draghi's press conference to be heard very early Thursday morning, prior to the market opening. Many believe Draghi will either lower rates or add more stimulus—but somehow set up Europe to be more energetic, economically, than it's been in the past half year. And if the US is going to cut at the end of the month, perhaps it makes sense to the leader soon leaving to goose the EU, a bit, rather than allow the US to pull even farther ahead.
We're also going to get the first guesstimate of Q2 GDP, which will be far weaker tan the 3.1% annualized growth reported for Q1. Even Q1 sounds like a stretch, at 3.1%, given how weak Q1s have been for the past 6 years. Note, also, APEC is meeting starting Tuesday, and ASEAN starting next Saturday. Those are organizations that by their very regional nature exclude the US. Time was the US might have been invited to observe but not under Pres. Trump.
Which brings us to Earnings, which are the be all and end all for the week. We won't detail the reports coming, here, since we've taken pains to emboldened those names you shouldn't miss but we'd be remiss if we didn't mention a few. I.e. AutoNation Tuesday, along with Chipotle Mexican Grill, Coca-Cola, Harley-Davidson, Hasbro, JetBlue, KeyCorp, Lockheed Martin, Paccar, Pulte Homes Quest Diagnostics, Sherwin-Williams, Snap Inc, Stanley Works, Travelers, UBS, United Technologies, and Visa, all Tuesday. Thursday, at the least, we should point out 3M, Alphabet (GOOGL), Amazon, ABInBev, Anheuers-Busich, Boston Beer, Comcast, Hershey, Intel, Invesco, Mattel, Mohawk Flooring, Newmont Mining, Nokia, Raythheon, Republic Services, Sleep Number Beds, Southwest Airlines, Starbucks, Stryker, Taubman Centers, Temper Pedic, Valero, Verisign, Visteon, Waste Management, and Wyndham Hotels. And that's just the briefest of highlights for the week. Before we eeven tough on Friday, when Charter Communications, Colgate Palmolive, Goodyear Tire, ITW, Lear, McDonald's, Twitter, Yandex & Zimmer Biomet all report, plus more.
The big earnings list explains the light Events Calendar. I'll note VOICE on the 22nd, Amazon's Alexa the Diamond Sponsor because the event is about Voice as the computer-human interface.—the next frontier, if you will. Only Elon Musk is working on brain waves as the interface, for now, perhaps because it requires a chip installed in the brain. For the rest of us, Voice as a substitute for a keyboard is advance, enough.
New York will be home to Men's Fashion week, while the NRF's Deep Dive NXT in Las Vegas is more about technology that supports retailers, rather than retail, itself. There's a Cannabis Summit in San Jose, which is the epi-center of tech but not usually weed. Tuesday's Casino Marketing & Technology Summit will see some scrambling of players, as Caesar's is being bought by the smaller Eldorado Resorts. The big event is the American Society of Retina Specialists Annual, which doesn't start until next Friday. Likewise, the International Congress on Lung Cancer doesn't start until Thursday. Also Thursday, The American Academy of Dermatology Summer Meeting. Those are the biggest events, while I-banks are mostly silent, given the heavy Earnings Calendar, which will distract most portfolio managers, whether in real time, or when the replays are dialed into later in the day.
That makes Earnings what should be given full attention. And no matter how they roll, it's another week of consolidation that should be seen, not just this week but a week afterwards, as well. Ready for millions of shares to trade and go nowhere? Especially with the Fed meeting still another week out.
© 2019 Sandi Lynne Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
July 15—19, 2019 NOT JUST BANK EARNINGS While the media will be trying to fan a debate between those who believe the Fed will cut by half a point in 2 weeks, and those who believe it will be only a quarter of a point, I'd maintain there is no debate. The FOMC is going to go with a quarter point, partially persuaded by the outlooks from banks reporting, this week, which will take into account lower net interest margin—NIM to the trade—because the FOMC is widely expected to cut by a quarter point. Think about it: an interest rate cut hurts savers and banks, especially, and not something usually done when unemployment is at 3.6%, and stocks are making new all time highs. Furthermore, if Powell is hoping a quarter point cut will silence the President, he's going to be rudely awakened to the foolishness of that thought.
Powell, it turns out, is speaking in France, Tuesday, at Bretton Woods 75 Years Later: Thinking About the Next 75, in Paris. His topic is, "Aspects of Monetary Policy in the Post-Crisis Era." The conference is a joint undertaking of the ECB and Banque de France. Powell won't be alone, with BoE Gov.Carney and World Bank's freshly minted President, David Malpass, speaking there, too, as well as the IMF Managing Director, David Lipton, Carmen Reinhart, Jean-Claude Trichet, and the French Minister for Economy & Finance. Most of them are all on their way to the G7 Finance Ministers & Central Bank Governors meeting, also in France, the 17th & 18th. ECB's Draghi & Coeure are also attending.
But there'll be plenty of Fed speakers at home, too. Monday, the NY Fed Pres/CEO Williams keynotes SIFMA's "LIBOR: Transition Briefing: The Transition to Alternative Reference Rates," a half day workshop. Fed's Evans will speak at CNBC's @Work Series, in Chicago, late in the day, while Fed's Bostic kicks off Tuesday, at another Fed Listens Event, in Augusta GA. Between those Tuesday speakers, Facebook will appear at the Senate, which is holding hearings on its proposed Libra cryptocurrency. At the US Judiciary's Antitrust Subcommittee, representatives from Facebook, Alphabet's Google, Amazon & Apple will defend themselves against charges that their dominance impacts not just online platforms but stifles innovation & entrepreneurship, besides. Congress will quite the attraction this week: former Special Counsel, Robert Mueller III is scheduled to testify, Wednesday, even after his press conference was intended to be the last word from him on his investigation.
And that's not all, for the Economic Calendar. Overnight, Sunday, China's Statistics Bureau will dump a ton of June data, including New Home Sales, Fixed Asset Investment, Industrial Production, Retail Sales, Jobless Rate, and both Q2 and YTD GDP. The BIG slowdown Trump keeps insisting his tariffs are causing are sure to be nowhere in sight. The Chinese would never give him the satisfaction, and surely don't want the populace to worry that anything's wrong. US data includes surveys, like the Empire State Manufacturing one, Monday, and the Philly Fed's version on Thursday. We'll also get US June Retail Sales, Business Inventories—for wholesalers, retailers, and manufacturers, NAHB's July Housing market Index, June Housing Starts & Building Permits, the Fed's Beige Book Wednesday, Also Thursday, NY Fed Pres/CEO Williams is back to keynote CEBRA—the Central Bank Research Association Annual Meeting in NY, co-sponsored by Columbia University, and the NY Fed. Fed dove Bullard is speaking Friday, as are Fed's Rosengren and the BoJ's Kuroda on Friday.
Other items of note on the Economic Calendar include the Apollo 50th Anniversary Gala, on Tuesday night, with Cisco's Webex connecting the host NASA center in Florida, Mission Control in Houston, and the satellite Tracking Agency in Australia, without whom the many Apollo missions could not have succeeded. Also that night, a data dump from the UK, which will make clear how the drawn out Brexit negotiations are impacting the country's economy. Today, as Roger Federer & Novac Djokovic battled it out for Wimbledon Champion, not only were Kate & William there but so, too, was Prime Minister May, sitting in the royal box. I believe anyone who saw the first walk on the moon will never forget where they were when they saw it. Also on the Economic Calendar, Tankan Surveys for Japan, and ZEW's for the Eurozone & Germany.
If all of this sounds exhausting, get a load of the Earnings Calendar. Unlike when Q4 was reported, and the first week of Earnings came from 16 banks an just about no one else, this week, even those companies like Goldman Sachs & Microsoft, which usually report the 2nd big week are, instead, reporting this week. Citi is first out of the gate, on Monday but, even Wells Fargo, usually a Friday reporter is, instead, reporting Tuesday this week, along with JPMorgan, CSX, Goldman Sachs, Johnson & Johnson, and United Airlines. With a competing and larger oil refinery deciding to shut down, after a major fire, UAL is looking prettier all the time. Normally, other Tuesday reporters like Canadian Pacific Railroad, and Cintas would be no match for the banks reporting that day but CTAS is a good read on factory activity.
Wednesday, we'll hear from Bk of America, Bank of NY Mellon, Kinder Morgan, Netflix, Omnicom, PNC Financial, & US Bank but of exceptional interest is IBM's first report since closing on Red Hat last week, which will inform its outlook. Thursday, reports are coming from Alliance
Data Systems, .Ally Financial, BB&T (soon to be renamed the unfortunate Truist, when its merger with SunTrust closes), Blackstone, Capital One Financial, newly public Chewy.com, Danaher, E Trade Financial, Honeywell, Microsoft, Morgan Stanley, homebuilder NVR, Philip Morris International, Pook Corp, paint company PPG, SAP, Skechers, Snap-On, SunTrust, Union Pacific, and United Health. Friday, American Express, Autoliv, BlackRock, Charles Schwab, Citizens Financial, Cleveland Cliffs, Gentex, Kansas City Southern, Manpower, Regions Financial, Schlumberger, Sensient, State Street, and Synchrony Financial.
My heart be still but if no one else were reporting for the rest of the month, we'd have a pretty broad view of the market, overall. Again, It's financials that may disappoint the most. Not only might trading be weaker than usual but bank outlooks can't be strong, given they have lower rates to look forward to, just as they're finishing the first six months of better rates than they've enjoyed for 10 years. So, not only might Q2 reports disappoint but Q3 & 2H outlooks are sure to be weaker than they were last year. But heck! Who cares?
So it's said, and with all due respect to the guys who risked their lives going into space, NASA is pulling out all the stops for the Apollo 50th Anniversary Gala, on the 16th, at the NASA Kennedy Space Center in Florida. In addition to 500 guests at the space center, there will be astronauts Mike Collins (Apollo 11), Charles Duke (Apollo 16), Rusty Scweickart (Apollo 9), Gerry Griffin (Apollo flight director at Mission Control for 3 lunar missions), and hooked up by Cisco Webex (teleconference) will be the USS hornet & the Satellite Trackers in Canberra Australia, 3 members of their crew, who kept Apollo communications connected to Florida and the Houston Space Center. The USS Hornet crew is who rescued the Apollo 11 astronauts after they splashed down in the Pacific Ocean, on 7/24, 1969. Included in that crew is Sgt Joe Holt who provided security to Pres. Richard Nixon, as he watched splashdown aboard the Hornet, before helicoptering off. We've also be told, on the QT, that Webex will connect the Int'l Space Station to the festivities, as well.
CEBRA, Columbia U SIPA (School of Int'l & Public Affairs), & NY Fed Reserve co-sponsor the Annual meeting. NY Fed's John Williams keynotes on Monetary Policy. Also speaking: Greg IP (WSJ), IBM, profs from Harvard, Brookings institution, Stanford U, Columbia Um Fed Banks of St. Louis, Cleveland, & San Francisco, SNB, ECB, Bundesbank, IMF, Norges Bank, BoJ's Kuroda, Bk of Israel and many more. Larry Summers & Ben Bernanke will participate on panels organized by the IMF on Monetary Policy in the New Normal, Fri, starting at 9am. About half the governors of the Central Bk of Ireland will participate in panels on Understanding Market Based Finance & Non-Bank Financial Institutions, one topic of which is Empirical Network Contagion for US Financial Institutions. Economists Carmen Reinhart & Ken Rogoff participate in the Evolution of Monetary Policy Frameworks: Past, Present & Future, Exchange Arrangements entering the 21st Century: Which anchor will hold? When you navigate to the link provided for the CEBRA meeting, click on the program link, then be sure to get to subsequent pages. Initially, it looked like there was only a partial page and nothing else. Paging down several times took us to the subsequent pages. CEBRA may have a more impressive group of participants than G7's FinMins & Central Bankers in France—especially given anyone can link to the streams from CEBRA, which they can't do for G7.
The Allen & Co conference wraps Sunday, so be looking out for the next deal. Some think the buy is what remains of Fox, while I keep looking at LionsGate and think it's just too cheap for words, given its library, and the number of companies hungry for content to feed their planned streaming services. I'm scratching my head over ALPA—Airline Pilots Ass'n Air Safety Forum in D.C., starting M,onday, while the APSCON—Airborne Public Safety Ass'n meetings in Omaha, and that's before I even contemplate anyone other than Berkshire Hathaway meeting in Omaha, in the summer, or any other time of year. For that matter, why would the Sports Medicine division of the Orthopaedic Ass'n meet in Boston, while APMA—Podiatrists—meet in Salt Lake city? Well, OK, that one I can more easily understand—doctors don't consider Podiatrists as well educated, anymore than they think chiropractors are doctors.
But forget all that, and all the other Events, for that matter. National Dental Ass'n meeting start Wednesday, in D.C., while they Academy of General Dentistry meets starting the next day, in Uncasville, CT (Mohegan Sun). The 15th & 16th are Amazon Prime Days, so the 14—17th are Walmart Deal Days, the 15th eBay Deal Day, and Target's competing Deal Days on the 15th & 16th, but really all week, if you want to pre-book a deal with a Target Red Card. So forget all the other events, and maybe forget all the Earnings, too. Likewise, Nordstrom starts its Anniversary Sale on the 19th, which runs though August 4th—just long enough to capture Sales Tax Holidays in 11 states on 08/02—08/04, alone. To hear CNBC tell it, there's likely to be nothing but Amazon to watch all week, wager whether its servers can handle the surge of customers, and whether any of the competing deals, in the end, were competition, at all. I can't wait for the estimates of how many billions AMZN booked in sales. Last year, in a single day—11/11, Singles Day--Alibaba booked $11B in sales, while AMZN will never say how much it booked. It doesn't even like providing quarterly sales and wouldn't if the SEC didn't force it to.
Meanwhile, another Monday, another Healthcare deal, This time, Gilead Sciences is expanding its stake in Galapagos NV (GLPG), with an agreement that includes a $3.95B upfront payment & and additional $1.1B investment into GLPG. It gives GILD "access to all current & future compounds in Galapagos' rich pipeline while Galapagos is able to expand its research activities and build commercial infrastructure," GILD CEO Daniel O'Day said in a statement. GILD's latest investment, at 140.59 euros ($158.43) p/share boosts GILD's stake in GLPG to 22% from 12.3%; at a 10% premium to Friday's close. The original deal, in 2015, gave GILD access to filgotinib, an experimental compound getting good buzz in rheumatoid arthritis & inflammatory bowel disease, whose submittal to the FDA for approval is expected before year end. Simultaneously, future development costs for filgotinib will be shared equally, replacing the 80/20 split provided by the earlier deal.
How long can the bulls keep pushing stocks to new highs? Well, the summer rally usually peaks the first or 2nd week of August, which is just in time to capture one more flurry to the upside, after the FOMC cuts rates at their meeting, at the end of the month. It's financials that may be the odd men out, this earnings period, which is why I'd take profits on any additional gains they can manage. About the only group whose results have utter despair written all over them are retailers, and that still doesn't make them a buy. I find the market exceptionally expensive. How 'bout you?
July 08—12, 2019 JEROME POWELL, STAR OF THE WEEK Fed Chief Powell opens the Federal Reserve Board's Conference on Stress Testing: A Discussion & Review, Tuesday. Then Wednesday & Thursday, he's offering his semiannual testimony in Congress, Wed. to the House Financial Services Committee, and Thursday at the Senate Banking Committee. To those expecting him to all but promise a rate cut in July, he'll be disappointing. He'll acknowledge last Friday's stronger than expected employment report when 224K workers were added, in payback for May's weak 72K, but offer that as proof that the data has been conflicting—too conflicting to conclude his monetary policy committee must commit to a rate cut at the end of the month. Surely, at least one Republican will ask whether the December 2018 hike was one too many. Just as surely, a Democrat will ask whether he feels pressured by the President who's broken form on the FOMC, like he has on so much else, in an attempt to pressure the FOMC to cut rates. By now, Powell should be well prepared for both questions.
While Powell will be the most prominent of Fed speakers, he won't be alone. Vice Chairman for Supervision, Randall Quarles is, also, speaking at the Fed Board Stress Testing Conference, Tuesday, while lone dissenter, St Louis Fed's Bullard, speaks both Tuesday & Wednesday at the OMFIF Foundation Forum on Monetary Policy, Bostic is speaking at OMFIF Tuesday, also. Then Thursday, Barkin, Bostic, Williams, Quarles, again, and Kashkari all speak after assorted events around the country, as detailed in the Economic Calendar below. They are, respectively, from the Richmond Fed, the Atlanta Fed. NY Fed, and Minneapolis Fed, skipping Quarlies already detailed. That's a lot of Fed speaks in a week, let alone a day, since many of them are speaking Thursday, mostly. And there is some data of interest to Fedheads, this week, especially June CPI on Thursday, and PPI on Friday.
Other Economic items of interest pale in comparison to Powell & Co., and the inflation data named. Having said that, doesn't dismiss data expected from other countries. I.e. China's June CPI & PPI, expected overnight, Tuesday, a Bank of Canada rate setting meeting that will end on Wednesday, hours before the FOMC releases Minutes of its June 18th—19th Meeting. Overnight, Wednesday, the Bk of England will release its Semiannual Financial Stability Report, followed by the Minutes of its MPC Meeting of June 5th—6th. For the US, there could be more on how close the FOMC was to lowering rates, when it last met, while the BoE is barely hanging on, awaiting the terms of Brexit to be finalized. While there's consensus, across the pond, that a non-deal Brexit would be very bad for the Brits, it doesn't appear that all the MP's agree with that opinion. Rather, some believe a "hard" Brexit poses no great risk and might even free the Brits from having to make a "divorce" payment to the EU.
The Earnings Calendar won't shake anyone up, but surely there'll be most interest in LEVI (Levi Strauss), so soon after its IPO, PepsiCo, and even LNN—Lindsay, since its sprinkler heads are a fixture of lawns around new homes, and restorations of lawns ripped up by snow plows and weather damage. Delta, reporting Thursday, has already released its Quarter's vital stats in the form of monthly data. Owning a refiner when the largest one on the East Coast is closing puts it in a uniquely advantageous position. Fastenal could be impacted by Boeing's grounded 737 MAX jets though production has been reduced, rather than halted, altogether. Yarenai is one of the cheapest Chinese companies which won't, necessarily, make it that much more attractive after earnings.
SEMICON could be the most well covered semi-equipment event in a long time, as Trump lifted the Huawei ban, though no one knows for how long. Citi and others are offering hosted meetings at Semicon, which is typical for the event. Also expected, this week, is the Allen & Company Annual invitation-only Sun Valley Conference. While tech & media execs are the most prominent invites, word is Warren Buffett is a guest, this year, too, while the head of Viacom—possibly the head of a combined Viacom & CBS, Bob Bakish, was "snubbed," as Variety & BuzzFeed put it. Shari Redstone, on the other hand, who controls both firms and wants them to merger won an invite. We estimate it will take place from the 10th through the weekend but are willing to be wrong. It's not like we're invited, or anything. We've seen discussion of the event on Variety, BuzzFeed, Bloomberg, and the NYTimes but no one provided the exact dates. Given that CNBC and Bloomberg both employ writers/anchors who were invited, and both set up interview chairs in front of the host hotel, even when not invited, there'll be coverage of the event and attendees, whether Allen & Co intends for that to happen or not. We'd guess they'd be disappointed if no one cared.
If that's not enough to distract, there's Miami Swim Week, this week, AHS—the American Headache Society meeting, starting Thursday, with 3 new migraine drugs winning FDA marketing rights this year. Wednesday, New York is hosting a ticker-tape parade to honor the US National Soccer team, which just won the FIFA World Cup, on Sunday, then Friday, Formula E-Prix starts in Brooklyn. Sounds like a crazy week to be in NY.
Since stocks made new highs despite widespread awareness that the Q2 Earnings Season will disappoint, and is already counting on a rate cut, at the end of the month, what's left for stocks to rise on? I ask because I genuinely don't know—and just don't feel the love traders are showing stocks, which Barron's claims is the Street already building in a 2020 Trump win of a 2nd term. Ya think? I'm open to better theories. And I would watch CPI since it seems that everything in the supermarket costs a heck of a lot more than it used to. And wouldn't that be the greatest irony of all—if inflation finally showed up just when the Street was counting on rates being cut! I realize the FOMC prefers to look at PCE rather than plain vanilla CPI but still, wouldn't that be a hoot, if inflation finally took a stand?
July 01—05, 2019 HOLIDAY WEEK SHOULDN'T AMOUNT TO MUCH Pres. Trump delivered even more than the Street was expecting from the rapid fire speed dating with world leaders he conducted at the G20 meeting in Osaka, Japan. Not only did he and China's Xi agree to continue talks but, unexpectedly, Trump agree to lift the ban on sales to Huawei. That should have semiconductor stocks celebrating—short lived though that celebration may be. In shortened weeks, everyone wants to get out of town, so even a sell off Tuesday, before Wednesday's shortened session that's recovered Friday wouldn't surprise. Thursday, as no one need remind anyone, is July 4th, a US holiday across the board. Apple also may see a brief celebration of Trump's dialing down the rhetoric on Huawei & China but, the damage is already done. How fast do you think QCOM is going to ship 5G chips out the door before Trump flip-flops, again? And flip-flop he will, getting impatient for decisions to be made as fast as he did as CEO of a construction company who's, evidently, forgotten how long the permitting process can take, especially in city's, like NY, where he built so many of his buildings (no, that wasn't the word I was going to use but what did come to mind didn't fit perfectly, either.)
So, enjoy the week, and whatever rise the bulls can manage. Just remember, it's all going away as soon as Trump gets impatient with progress in the Chinese talks—or if Powell & Co fail to lower rates when they meet at the end of July, given the easing in trade tensions. Any worries about Friday's June Unemployment Report? We'll know soon enough
June 24—28, 2019 CCAR, RUSSELL INDICES REBALANCED & RECONSTITUTED Oh My! Last Friday, after the close, Fed Stress Tests for the MegaBanks were released. Never has such a costly (to the banks) test received such a shrug of shoulders. And perhaps that was the very idea behind releasing the results on Friday, after the close, instead of Thursday, into the S&P & Russell Indices Rebalance-Reconstitution, as it will be this week, after Thursday's close. The CCAR tests—Comprehensive tests of Capital Adequacy is the test which determines how much dividends and buybacks can be adjusted. The Fed discusses with the banks the CCAR results prior to their release, allowing the banks to jump the gun—announcing new or raised buybacks and/or dividend increase plans before the CCARs were even out.. We'll soon learn if that will be the case, again, or whether the Fed, somehow, embargoes discussion of the results—orders the banks to keep their plans secret until after the CCAR release, at 4:30pm et.
So, in addition to the CCAR, Dow Jones S&P Indices & Russell Indices to be Rebalanced & Reconstituted, respectively, it means it's not just Month's End, and Quarter's End but, also, Half Year's End, which is when Portfolio Managers tinker with their holdings—even lighten up on equities, altogether, because most know, June through mid-October is often a terrible time to stay invested in stocks-— possible rate cut in the period notwithstanding. One thing we can say with near certainty is that volume will be the one aspect that won't be lacking, this week. Plus, Reuters says Eldorado Resorts may have closed a deal to buy Caesar's for $18B cash. There's nothing like another takeover to get the bulls' juices running. And to top it off, the week is flush with housing data, Case/Shiller's 20-city April Home Price Index, FHFA April House Price Data, and May New Home Sales all out on Tuesday. Fast Forward to Thursday, and the Nat'l Ass'n of Realtors will release May Pending Home Sales. Also Thursday, the final look at Q1 GDP, along with Business Investment and Consumer PCE—the data the Fed watches most closely. Plus, we have a number of Fedheads speaking this week, including NY Fed's Williams Tuesday, hours before FOMC Chief Powell will be speaking at the Council of Foreign Relations, specifically, on Challenges Facing the US Economic Outlook & Monetary Policy Review. Hours later, the lone dissenter, tee Fed's Bullard, will offer brief opening remarks in introducing Carmen Reinhart who's delivering the Homer Jones Memorial Lecture, with Q&A, at the St Louis Fed, which he heads up.
If you haven't heard, there are 24 declared Democratic 2020 presidential candidates vying for attention and funding. The first Dem debate is on the 26th, with 10 of the 20 who "qualified" by either raising enough money from enough people, or placing high enough in polls to enter the debates NBC is broadcasting from Miami Florida. On the 27th, the 0ther 10 "qualifying" hopefuls will debate, in Miami, for broadcast, both days, beyond NBC TV, also on Telemundo, MSNBC, YouTube & Facebook. Given how the press follows Trump's every breath & tweet, let us hope the candidates actually get more press than the tweets Trump will spew, in all likelihood, minute by minute during the debates.
The Earnings Calendar is extremely compact but not without interest. Tuesday, I'd posit, every company reporting has much to tell us. Start with Aerovironment which makes parts of Boeing, and drones, FactSet, a read on Wall Street, FedEx, Lennar, Micron Technology, and Synnex, the last one of the major PC & Mobile device suppliers to enterprises—a VAR, or Value-Added-Reseller, that bought and closed CompUSA, among other failed tech distributors. What's most notable about Wednesday, to me, is not General Mills, IHS Markit, K B Homes, Paychex, Rite Aid or Schnitzer Steel but Pier 1, whose stock price might look shocking to some who aren't away that it recently executed a reverse split, which generally means the stock is in a death spiral from which it won't be able to pull itself. Thursday, reports are expected from Accenture, ConAgra, Herman Miller, McCormick (spices), Nike, and Walgreens Boots Alliance. For most, Nike's comments on tariffs will be the highlight of the week. Friday Constellation Brands is expected to report results, although not yet from CBD infused products.
Then, there are the Events, which are winding down into summer holidays in July & August—July just one week away. One event to take not of, UBA—the Utah Bankers Association, might seem insignificant but isn't. Started Sunday, UBA includes Industrial Banks, Utah home to the most credit card & industrial bank headquarters. Just as Delaware is the corporate capital of the US, Utah is the Industrial bank headquarters of the country, and will fight fiercely to make sure cryptocurrencies won't usurp its position in the payment processing world. Also starting Sunday, NASFT for Fancy Foods, for years more about flavored waters & alcoholic beverages than much else but, surely, starting as soon as this year, CBD infused food and plant derived products.
Paris, where the Air Show was finishing up, this past weekend, by welcoming the public, is hosting Men's Couture Fashion Week, which will be prominent in newspapers this week. Women's immediately follow Men's, so the sex will change but not the fashionable names. Speaking of Europe, the Consumer Technology Ass'n (CTA) CEOs are gathering for their annual summer retreat in Prague, in the Czech Republic.
Citi is hosting Asia Internet Corporate Days in NY. It will be interesting to see how chilly the reception is, given those who claim nationalistic pride has caused Chinese consumers to turn inward for their devices, away from the US which they see as starting the tariff war. If you were going to host a Cloud Computing Expo, Santa Clara would surely be at the top of the list of cities in which to host it. So it is, Monday. But, as Monday makes clear, most of the I-bank action is moved to Asia, where school ending and camp beginning, or July 4th is of no concern to anyone. ICANN, for those who think it sounds familiar but can't remember why is the Internet Corporation for Assigning Names which governs the backbone of the internet—all the named domains, and dot.whathaveyou's which seem to be sprouting like weeds all over the place.
RetailX is an umbrella for a series of retail-related conferences that covers online commerce (IRCE Internet Retailer), GlobalShop, which was often more store environment than 'shopping,' per se, now claims it's the largest RFID & E-Commerce trade show, though its attendees, if they're online stores, do not need the accoutrements of a store. But, among its keynote speakers are Walmart's Sr VP of Digital Consumer Brands, and a strategic advisor to Airbnb. Oppenheimer is so enamored with life sciences/biotech, that it's hosting a traveling conference, this week, which starts in Stanford Tuesday, moves to Montauk Wednesday, and wraps up there Thursday. Wednesday will host a flurry of I-bank conferences, beyond OpCo, including 2 from JPMorgan, one from Stephens, one from Wells Fargo, and another from SunTrust. SunTrust RH—toying with using, simply, STRH—is hosting Clinical Day, which literally takes clients into the Clinic to hear from doctors at various medical schools heading up studies at those locations or their hospitals, mostly in hematology. Wells Fargo's Bricks to Clicks Digital Conference "starts" on the 26th but that's only a reception & registration. The event really takes place on the 27th, with private companies like Rent the Runway & Warby Parker, plus public ones: Carbana (CVNA), FarFetch (FTCH), Stitch Fix (SFX), and Zalando (ZAL.DE). Still, none of the I-bank conferences are likely to override either the CCAR results, or the Index rebalances/ reconstitutions in the noise department.
You'll note there's not a bank delivering earnings, this week, yet banks will be in focus before Friday, especially if they jump the gun on CCAR result releases by announcing changes to their dividends and/or buybacks. And while there's plenty of historical data to support enthusiasm for stocks at rate cuts first get underway, I think the bulls who have pushed stocks to new all time highs are smoking something they should distribute more widely to the masses. Somehow, I'm not feeling it, and wonder how stocks at new all time highs will look when tepid earnings are delivered with tepid outlooks—the threat of still more tariffs still hanging over the economy. And, as someone once said, "It's the Economy, stupip!"
June 17—21, 2019 FED FAR FROM READY TO CUT Despite a coming FOMC Meeting, it's really the ECB that's busier than the FOMC, hosting an annual Forum on Central Banking—20 years of European Economic & Monetary Union, in Sintra, Portugal. Attending are the Central Bank heads from Ireland, the BoE, and even Janet Yellen & Larry Summers—the latter on the rate cut bandwagon, suddenly. The Bk of England is meeting on rates but we know there's going to be nothing done there, because of still unsettled Brexit, not ot mention the lack of a Prime Minister.
I am never right about the FOMC but here goes—Wednesday, I expect the FOMC to say what everyone expects—that it is watching and evaluating the incoming data closely, and if its necessary, it will cut rates if the need should arise. But I don't expect a promise of a rate cut, because the data isn't, yet, negative enough to require the cut. The last Unemployment Report, with job adds falling over 100K shy of expectations, wasn't the first time to disappoint. In fact, the more than 75K jobs added were a heck of a lot better than the 33K added one month in recent history. Aside from employment—which many would argue already reached the commonly believed "full employment" level, anyway, the data hasn't just been weak enough to justify a rate cut—Pres. Trump's insistence, aside. In fact, the Service side of the economy—the largest portion of economic output, has strengthened, rather than weakened, in recent months.
And given that mortgage rates have been easing down, it's quite possible even the housing data out this week will be improved, as well. Monday, the NAHB sentiment data is out—the June Housing Market Index. Tuesday, May Housing Starts/Building Permits, and Friday, May Existing Home Sales. And, if you really want to know the most important data out this week, it might well be the Stress Test Results of the eleven largest banks, Friday, after the close—just before the FTSE Russell Company releases the Final Adds & Deletes for Russell Indices that will be reconstituted after the close on the 28th—the same day the Fed Reserve will release the CCAR results, which determine the amount of dividends & buybacks the megabanks can conduct over the next year. Of course, it pays to remember that under Powell, the FOMC has become a kinder, gentler regulatory, who not only has let a number of banks off the Stress Test/CCAR test hook but also seeks less to trip up the banks than assure they're prepared to weather the next economic storm.
Other than all the above, and despite Fed Gov Brainard and Fed Pres. Mester talking 2x, it should be a very quiet week. The Earnings Calendar is nearly dried up. A couple of big tech companies are scheduled to report, including Adobe, Jabil Circuit, and Oracle, along with Korn Ferry, which would be one of the first companies to see a drop off in hiring, if there's one on the horizon. To round out the reports, Darden Restaurants, and Kroger, with CarMax wrapping up the week on Friday. Its worth mentioning that former parent, AutoNation declared its intent to expand into used cars, encroaching on KMX's business but, so far, KMX seems to have nothing to worry about, other than the collapse in sales of sedans, which has long been the bread and butter for KMX.
As for events, the week's biggest curiosity is supposed to be Facebook introducing its cryptocurrency this week. Backers, who each invested a meager $10m to support the effort (cause FB needs the money, right?), include Visa, Uber, MasterCard, PayPal & Stripe, according to the WSJ. Some will act as "nodes," it's reported, that verify and document transactions using the currency, marketed as a "stablecoin," whose value is tied to a basket of government currencies, to escape the wild swings Bitcoin's pricing sees. Some supporters, it's said, worry Libra could be used to launder money or finance terrorism, a problem seen in other cryptocurrencies. FB is expected to publish a white paper on Libra, this week, to detail the concept more completely.
The Event Calendar otherwise slows, as summer, which officially arrives on the 21st, sends traders & portfolio managers on vacation. Sunday AAAE Aviation Conference kicks off in Boston, while Monday, Marine Money Week gets underway in NY, Jefferies a co-host with Capital Link. Speaking of AN & KMX, Independent & Minority Auto Dealers meet, NIADA, in Vegas, for one of the bigger conventions of the week, who must be thrilled that rates are backing off again. Not that they will, necessarily, offer lower rates to their customers but because it makes it easier for them to round up the financing they need to be able to offer to customers, and to stock their showrooms. Speaking of airports, the Paris Air Show kicks off Monday, too. So does ICSC—Shopping Centers Strategic Leadership Summit, in D.C.
JPMorgan is hosting its Annual Energy Conference, starting Tuesday. Jefferies hosts Consumer IR the same day, while Oppenheimer host Consumer Growth & E-Commerce, in Nantucket MA & Boston, respectively. That's a lot of Consumer companies reporting, many retailers who are struggling to figure out the new retail, for many, closing stores. Credit Suisse's 4th Annual US West Coast Yankee Bank Conference + IR Day, is the most misleading conference name in history because the banks appearing are about as far from Yankee as could be—they're European banks. JEFF & OpCo aren't the only nearly duplicate conferences. Raymond James, starting Tuesday, is hosting Life Sciences & MedTech, while Wednesday, JMP Securities is hosting Life Sciences. Meanwhile, Stephens' Cloud Communications Bus Tour may be one of the more tradable events, because it's so finite: FIVN, TWLO, VG & ZM on the agenda. Speaking of misleading Conference names, there's Pioer Jaffray's Heartland Summit. At one time, it featured companies based in the heartland, Minneapolis, to be exact but, this year, the only companies we could confirm were biotechs, none of them based in Minneapolis or anywhere else in the Heartland. Speaking of biotechs, Merck & Co is hosting an Investor Day Thursday, but it's Tyson's Investor Day, Thursday, worth keeping an eye on—especially if you own the recent IPO, BYND (Beyond Meat) because TSN is sure to detail its roll-out of meat substitute chicken nuggets and other products. I'm personally curious about who Beyond Meat and other non-meat similars are aimed out. I haven't eaten beef or lamb in over 50 years and have no interest in tasting a fake burger, which I haven't missed, at all. So just curious.
So let's generously call last week a consolidation week—an outcome that would be a gift this week since that rarely happens when the FOMC doesn't deliver exactly what the market wants—a promise of a rate cut at the July FOMC meeting. And while I'm NEVER right about the FOMC, I just don't see anything in the data that would justify a cut, or a concrete promise of one in July. And the one thing we know about the FOMC it's that it reacts with a lag, even as its rate moves cause the economy to react with a lag. That means the economy is likely to be far softer before the FOMC institutes a rate cut.
Storms have been wreaking havoc on our communications and work schedule: this was updated late 06/09, and early 06/10. Also check the free calendar for items posted there that didn't make it here, due to power and/or internet connections failing in storms.
June 10—14, 2019 Boy! DID WE EVER BLOW IT LAST WEEK!!!! You'll note, Fed speakers are MIA, this week, in a quiet period before the FOMC Meeting starting on the 18th. Chairman Powell's press conference will be on the 19th, at 2:30pm. I've read that he and Treas. Sec'y Mnuchin are attending the G20 Finance Ministers & Central Bank Governors' Meeting, in Fukuoka Japan—not that the FOMC Calendar says so. On the contrary, the FOMC Board of Governors claim no speeches or meetings this week but the NYTimes.com featured a picture of the 2 Americans in Japan with other leaders. ECB's Draghi & Coeure + BoE's Carney are also attending the G20 FinMins & Central Bankers Mtg, featured on their respective central bank calendars. In addition, the US & Japan are scheduled for trade talks, Monday & Tuesday, though I was shocked to learn there's a dispute there, at all. Aren't Japan's Abe & Trump golf buddies?
And that's not all: US May PPI and CPI are due on Tuesday & Wednesday, respectively, along with May Retail Sales Friday, in addition to Industrial Production & Capacity Industrialization. In addition to the US data, we'll get the UK's A1 GDP, Trade Balance and other significant data, in addition to similar data from China, that includes May Foreign Direct Investment, Vehicle Sales, CPI & PPI Monday & Tuesday, respectively. The Swiss National Bank monetary policy committee will announced its interest & deposit rate decision, in the wee hours of Thursday morning, east coast time. While ECB Pres Draghi, and co-officers on their MPC will be busy with CESEE, encountered on the Eco Calendar, on Wednesday, which refers to central, eastern & south-eastern European countries, the subject of an ECB organized conference, at the ECB headquarters, in Frankfurt, Germany. When all is said and done, though, it's the IEA monthly energy report that may move markets more.
And, alas, there are lots of big events on this week week's calendar, beyond those events. First of those is EEI—Edison Electric Institute--Feel the Power. Keynotes include the former House leader, Paul Ryan, the founder/CEO of Girls Who Code, Reshma Saujan on closing the Gender Gap, US Sec'y of Energy Rick Perry, IHS Cambridge Energy founder Daniel Yergin, Duke Energy CEO Lynn Good, Exelon CEO Crhis Crane, Xcel Energy CEO Ben Fawke, Chef and humanitarian Jose Andres, Sugar Ray's Mark McGrath, former Journey lead singer, Steve Augeri, Berlin lead singer, Terri Nunn, and Kool and the Gang veteran Skip Martin, plus AEP CEO/Pres/Chairman Nick Akins on drums with West Quave and the Live 61 Band. There are tracks in Clean Energy, Customer Experience, Smarter Infrastructure, & What's Next, but who'll notice given the line up of keynotes and special guests? The American Gas Association, AGA, hosts a Technology Advisory Committee (TAC) Meeting at the event, which is a mass power producers' event.
Some will say Stifel's Cross-Sector Insights Conference is a leading event but it's hard to pin a tail on that donkey—Cross-Sector is an excuse to pull in corporates from every sector, at will, without regard to market cap, region, or any other criteria that other conferences may rely upon. In NY, starting the same day (Monday)? HSBC GEMS—Global Emerging Markets Investor Forum in NY doesn't include an abundance of US-traded tickers, and even when it does, HSBC offers the home-country ticker instead. Emerging Markets Banks stand out as a large group, but then, there's AB InBev, ASML, CEMEX, both China Telecom & China Unicom, plus Despergar.com (DESP), Globant S.A. (GLOB), Interactive Asia Group Ltd (ICLK), Jianpu Technology Inc (NYSE ADR: JT), Make My Trip (MMYT). PPDAI Group Inc (ADR: PPDF), Quotoutiao Inc (ADR: QTT), and troubled miner VALE.
Morgan Stanley is hosting Financials, for the 11th time, and Barclays MediaComm Visionary, another NY summit, Visionary" a term that should severely limit the number of speakers but, evidently, doesn't much. The biggest event in terms of suit and tie attendees is, undoubtedly, Goldman Sach's 40th Global Healthcare Conference, in Rancho Palos Verdes, CA. Wells Fargo is out west, too, for West Coast Energy but THE event of the west coast is, undoubtedly for some, E3—the Electronic Entertainment Expo, an event that, in my mind, should some day merge with Licensing, which recently wrapped. At E3, eSports is a hot topic, as it is at Variety's TV Summit (L.A. Wednesday, and then in the UK, right afterwards). It is, also, at East Coast Gaming Congress & NexGen Gaming (aka eSports), starting Wednesday. So it's said, The E-League "Gears of War 5" Documentary, due to debut on TBS network, on the 14th, is a collaboration between AT&T's Turner division and Microsoft's Xbox Studios, producing a 6-part series that IMG helped put together by getting WarnerMedia (Turner a subdivision) together with ELeague, which is an IMG brainchild. The 1st Gears 5 eSports tournament isn't until July
Overseas, it's JPMorgan that will rule, with what it's calling Industrials Week in the UK. In truth, that's an umbrella for a few subconferences taking place, this week, in the UK, that includes, on the 11th, European Automotive; on the 12th, European Materials, both in London, and on the 13th—14th, European Capital Goods CEO, instead of in London, in Surrey, UK, to wrap up the week. Also in London, the NASDAQ 40th Investor Conference, which highlights some leading American companies to UK/European Investors.
As for Earnings, more consumer facing names, the most significant of which are Lululemon & Oxford Industrials, both reporting Wednesday. Non-consumer names include HD Supply, the former wholesale division of Home Depot, and Broadcom, (AVGO), which took the ticker of one of its large merger partners.
With Trump suspending, indefinitely, the threatened tariffs on Mexico, which were slated to go into effect on Monday, the 10th, there's reason for stocks to celebrate, which futures suggest they're apt to at the outset, Monday. That's when traders will have their first chance to react to the FTSE Russell preliminary additions & deletions from the Russell Indices. But after the week of fireworks stocks shot off last week, the upside would seem the more difficult direction. But then, I expected Trump to back off Mexican tariffs at the last minute, therefore anticipating stocks probing lower levels until the end of last week. Instead, Wall Street threw a party the likes of which isn't often seen. Expecting a repeat this week could well be asking too much, though a celebration, in light of the merger of Raytheon, with United Technologies' aerospace division, seems required by those who see renewed M&A activity.
June 03—07, 2019 FRESH APPLE NEWS FOR CNBC TO BORE US WITH Maybe it's just me but it seems like CNBC has a very limited conversational stream. There's Apple, Uber, and Lyft. Even when Trump is riling China and, more recently, Mexico, CNBC is the Apple Uber, & Lyft channel the way Fox News is the Trump Channel. Granted, Apple has often been the largest market cap company in the US so influential to how the S&P 500 moves but, still, I'll be grateful for Apple's WWDC, this week, and fresh news, rather than rehashed opinions from their "Fast Money" traders. WWDC19 starts Monday, a day when many of the players @ASCO have, also, scheduled cance3r pipeline Analyst Meetings that will be webcast. One other analyst meeting is worthy of mention; that's Prudential Financial's. Wednesday. The insurers have not suffered a setback the money center banks did while rates have been falling. That's curious. Likewise, both Capri Holdings & CVS Health are meeting with Analysts Tuesday. Capri, until the end of last year, was known (better known) as Kors—Michael Kors but changed as it closed on the acquisitions of Jimmy Choo & Versace. Also that day, Goldman Sachs is opening its headquarters to clients of Wolfe Research. Outsiders get all starry eyed at GS Headquarters, while Analysts are lining up behind CVS.
Now to the Economic Calendar, because Fed speakers are frequent, again, this week, after the Memorial Week off, last week. Simultaneously, Trump is headed for the UK and France, for state visits and to honor the anniversary of D-Day. Unfortunately, that won't stop Trump's tweeting, which means any number of Democrats will be hanging on with baited breath, waiting for embarrassing moments. Fed Chief Powell speaks Tuesday, to open the Chicago Federal Reserve Conference on the Fed Framework for Monetary Policy, Strategies & Communications—a bid topic for the Fed Board, at the moment. In addition to Powell, Fed Gov Brainard is a panelists and Kaplan a dinner speaker at the Fed Conference in Chicago. Fed Vice Chair Clarida opens Day 2 of the Fed Conference on Monetary Policy. Likewise, the transition away from using Libor to set consumer rates is a to9pic of interest on both sides of the Atlantic. Fed Vice Chairman for Supervision, Quarles has the stateside duties. Fed Gov. Bowman testifies at the Senate Banking Cmte but I don't expect any wild fireworks. Ditto BoJ Chief Kuroda's & BoE's Chief Carney appearances at the Institute of Int'l Finance (IFF) Spring Membership meeting, taking place in Tokyo.
It's also a new month which means a data deluge in both the US & Canada. Both countries release May Unemployment data on Friday. ADP will release its private sector Employment Report for both countries, before those reports. Analysts will be watching for a sudden spike in applications., Fed's Bostic speaks about affordability at an Atlanta Regional Housing forum, just in time for mortgage rates to print sub-4.0%, raising affordability. Wednesday is the 30th anniversary of the Tianmen Square uprising. It's a day many of us expected to change China but, instead, has been erased from Chinese history. Also expected, both PMI's & ISM's, along April Int'l Trade Deficit, and US Q1 Productivity & Costs. G7 Meets later in the week, as well as the G20 Finance Ministers & Central Bank Governors, though there's no confirmation that Powell plans on attending. Unemployment Friday is the biggy, along with FTSE Russell's preliminary changes to its indices, which will be announced after the close Friday, based on May 10th closing prices. Analysts have already been handicapping the additions & deletions.
Earnings are a mix of retailers, and others, including Ambarella, Navistar & Salesforce.com, Tuesday, Brown Forman Wednesday, along with Unifi, Wednesday, the Ciena, Hovnavian, and Vail Resorts, Thursday. The biggest names in retail reporting include Calares, formelry Brown Show, which must be losing some business with the closing of Payless Shoes. Tiffany is a near obsession for some, reporting Tuesday, which downscale competitor, Signet reporting Thursday.
Which brings us to Events. How serious has the African Swine Fever become, even though it's mainly in China? The World Pork Expo, originally scheduled for June 5th in Des Moines, Iowa, has been canceled out of the utmost caution, for the first time in over 4 decades, due to the international nature of attendees & contestants. While we celebrate the protections taken to preserve the US pork supply chain, it's a lost opportunity for TSN, HRL, SAFM, BOBE, PPC, ZTS, and others normally involved.
NYU's 41st Int'l Hospitality Industry Investment Conference, Jun 2nd to 4th, is huge. In addition to every hotel company, and half the REIT Index, I-bankers and analysts from Deutsche Bank. Goldman Sachs, Morgan Stanley, JPMorgan & Credit Suisse are speakers, along with the Governor of Puerto Rico, and actor/restauranteur Robert De Niro Jr (Nobu) and his partners, including Chef Nobu Matsuhisa. Another feature we believe is new, are concurrent workshops, which easily explains the enlarged list of speakers. And expect it to be widely covered by CNBC, since both Kelly Evans & Andrew Ross Sorkin are moderators of panels. While we'd expect to see Smith Travel, now using STR, only, Apollo's co-chair of Hotels/Leisure is not typical, and neither is Google Travel, side by side with Expedia (EXPE). Overlapping this event, is Goldman Sachs' Lodging, Gaming, Restaurant, & Leisure Conference, also in NY, who'll draw on many of the NYU attendees as well as Sysco, Hertz, Six Flags and other hospitality companies not expected at NYU. On the other hand, PegaWORLD, from PegaSystems, a widely used hotel reservation & restaurant software, is hosting its annual DevCon in Las Vegas, on overlapping days. Probably booked long before it knew many customer CEOs would be attending the NYU & GS shindigs.
SaaStock EastCoast in NY is for SaaS founders, top execs and investors, though details were lacking when we tried to update. HubSpot & Zendesk are the sum total of public participants.
Tuesday is again the day that proves how many I-banks are striving to get in all the face time they can with clients and prospective ones. Almost all of them are hosting meetings @NAREIT's REITweek, also starting Monday, in NY, with its Investment Symposium, a pre-NAREIT event for analysts. Bk of America Merrill Lynch is the next biggest Conference of the week, though in California, which will put some of the presentations after Wall Street closes. Sandler O'Neill Global Exchange & Brokerage Conference is a well attended annual event. Still, I'm just touching the surface. Almost 90% of Tuesday's events are I-bank events, which is unusual on the face of it. Licensing Expo, Tuesday, is now bigger than E3 and other one-time highly anticipated events. For Mattel & Hasbro, it's become raison d'etre, though most of their deals are done back at their NY Showrooms, and Licensing moved from NY to Las Vegas, a couple of years ago.
Of course, we can all wonder whether CNBC will be able to pull its anchors & reporters away from Apple's WWDC 19 (Worldwide Developer Conference), long enough to acknowledge these other events. Many weeks, it seems, CNBC has a one- or few-track mind, and that's focused on Apple, Facebook. & Uber, topics that make my eyes glaze over, at this point. WWDC has always been about software, not hardware but the integration of the two has become essential to AAPL's results, so it would be foolhardy to expect it to focus exclusively on software. In fact, many are expecting updates on Apple TV—something we've heard about for over a decade without much coming to fruition.
The Trend appears to have changed. Bulls are cowering in hiding. Bears are flexing their muscles and won't see anything in the charts to dissuade them from continuing their full court press. Some will say that stocks are getting near attractive levels. Really??? I don't think so, and won't until they successfully test the December lows. We're not near there yet. And there's no reason to be a hero.
ECONOMIC: (Highlights, below, only. Full International Economic Calendar here)
May 27—31, 2019 UNWISE to EXPECT MUCH of a RECOVERY Central Bankers are quieter this week than they've been in a few, despite the Bank of Canada meeting and announcing a rate decision on Wednesday, likely in the morning. BoJ's Kuroda spoke Sunday and will, again, overnight Tuesday, Fed Vice Chairman Clarida speaks Thursday, as does NY Fed's Williams Friday but, otherwise, none of the recent deluge. Of course, with both the Case-Shiller 20-City March Home Price Index Tuesday, and FHFA's HPI version the same day, and Thursday's NAR Pending Home Sales for April, attention will be paid to house prices and sales. Then, Thursday, another look at Q1 GDP, followed by Friday's April Personal Income & Outlays, both of which have a PCE component—the FOMC's preference for PCE diffusion index over CPI made clear. I'm not particularly fond of either the Conference Board's Consumer Sentiment reading (Tues.) or U of Michigan's (Fri.) but consumers too often say what they think the inquirer wants to hear rather than what they really feel. Other times, consumers do what their mood suggests they won't—like when they shopped 'til they dropped after 9/11, when everyone thought they'd hole up in their homes and never step out—and that was before consumers shopped until they dropped online, without ever stepping out of their houses. That last makes it harder than ever to match sentiment with activity.
The Earnings Calendar is remarkable, this week, for the number of retailers reporting, and within that group, 3 whose name and/or ticker has changed in the past year, if not the past few months or weeks. For instance, the former DSW Shoe Warehouse operator, is now Designer Brands (DBI), reporting Thursday, who's name change arose from its purchase of Vince Camuto and other brands, that's driven it more deeply into the design and manufacture of shoes. The former New York & Company ticker, (NWY), is now (RTW), Wednesday, which stands for Ready to Wear, for those who don't follow apparel manufacturers, which is the origination. Last, Capri Holdings Ltd, was formerly Michael Kors, with ticker (KORS), reporting the same day, but now (CPRI). KORS made the change after buying Versace & Jimmy Choo. It's getting to the point where we'll need either footnotes or a legend to decipher the Earnings Calendar, which to casual observers, is now Greek. And honestly, we can't say the change in names and/or tickers has, necessarily, improved results for all the reporters. Before Kors morphed into Capri, competitor Coach became Tapestry, to recognize its added brands—Stuart Weitzman & Kate Spade New York. Many of us didn't love Tapestry, at the time the change was announced but it strikes me as more appealing, now, than Capri Holdings, even though I do have fond memories of the Casino & risotte on the Isle of Capri. Kors said the island "…has been recognized as an iconic, glamorous and luxury destination. The island's spectacular 3-rock formation, formed over 200 million years ago, is symbolic of the timeless heritage and strong foundation that is at the core of each of the three founder-led brands." That, of course, refers to Kors, Choo & Versace.
In addition to the many retailers reporting, Dell Technologies, Marvell Technologies, Tech Data, and VMware will, also, report (all Thursday), along with SaaS company Workday (Tues.), and China's electric car maker Nio, also Tuesday. Note, too, a couple of Canadian banks weighing, Bk of Nova Scotia Tuesday, and BMO on Wednesday. The highest hopes lie with CostCo Warehouse Stores, with less high hopes but still optimism for Canada Goose (Wed.) and Burlington Stores and Ulta Salon & Beauty (both Thurs.) Of course, the higher the hopes, the bigger the fall if they disappoint, the quarter GOOS is reporting one in which all its fall/winter shipments are paid but not much new is ordered.
The Events Calendar shows some respect for traders' tendency to extend long weekends beyond the agreed number of days, often turning them into an entire week out of town. Still, Deutsche Bank's Global Financial Services, starting Tuesday, along with KeyBanc's Industrial & Basic Materials Conferences should be noted. Likewise, Bernstein's Strategic Decisions CEO Conference, in NY, which features a diverse group of companies like Albermarle and Las Vegas Sands, from Walmart, and Medtronic to Williams Co, to General Dynamics & Lockheed Martin, to Estee Lauder & Citigoup's CEO Michael Corbat, plus Home Depot and Boeing's Dennis Mullenberg, which I think it's fair to say, will be one of the highlights. Cowen & Co's 47th Annual Technology, Media & Telecom Conference, also in NY, and like Bernstein, starting Wednesday, gets the nod because it's survived 47 years, which ain't chopped liver! And talk about an eclectic group of presenters that doesn't even have location to justify their presentations, the 16th Annual Craig-Hallum Institutional Investor Conference first the bill. It promises First internet Bancorp, Famous Dave's of America, Upland Software, Misonix, QuinStreet, NeoGenomics, Akoustis Technologies, Everi Holdings, Leaf Group, DiaMedica Therapeutics, Spartan Motors, Skykline Champion, SMTC Corp, ACM Research, nLIGHT Inc, BioScrip, PDF Solutions, Ultra Clean, LivePErson, 8x8, TrueCar, eHealth, Zix Corp, Mark Capital One, Boingo Wireless, Plug Power, Silicon Motion, and about 100 more companies confirmed. Some, like Extreme Networks, will be dual presenters, EXTR at both Craig-Hallum & Dowen.
Unlike prior weeks, when Tuesday was a flood of I-bank conferences, this week, because of the Monday holiday, it's Wednesday before the I-banks crank it up full steam. Jefferies is hosting Japanese It, Internet & Services companies in NY, while UBS is doing the same for the Best of Europe, in a 1-on-1 format. Note, too, that Book Expo America is in NY, starting Wednesday, which means so is BlogWorld & the New Media Expo. Usually, I obtain a long list of author's hosting talks and book signings but the BEA website was so overwhelming, this year, I could hardly get it to load, let alone reveal details. Observe, too, that it wasn't a holiday in France, where the French Open got underway, Sunday (to squeeze out an extra day of ticket sales, instead of starting Monday), and where SocGen is hosting its annual Nice Conference, which starts Tuesday. And so it's said, ASCO—the American Society of Clinical Oncology—Annual Meeting gets underway, in Chicago, starting Friday, so expect analysts to line up behind their favorite biotech and/or pharmaceutical.
MoffettNathanson is hosting Payments, Processors & IT Services (Wed.) on the heels of Global Payments (GPN) speaking up for Total System Services. (TSS) You might recall I mentioned PayPal, Square, and other processors being bait for larger players—especially ones like Capital One, who like to control every aspect of a transaction. I got the group right but the principals wrong, for now. I still think neither Square nor PayPal remain independent, because owning the network is so lucrative, as the multiples on Visa & MasterCard prove.
Stocks were whacked fairly hard, last week but there's little reason to expect too much of a rebound this week. He carries a big stick one day, and a carrot the next, as he did first banning Huawei, then giving it some time to transition, and finally saying it can be part of a China trade agreement, proving nothing if not unpredictable. We've all heard how markets hate uncertainty, and the chief of chaos sits in the White House now, and tweets out whatever comes to mind, without a thought to consequences. I don't doubt that a trade deal with China will, ultimately, be reached but what markets will be battered with in the meantime remains unknown but unlikely to be smooth. Should markets bounce, I'd expect those who still held out hope for a continuation of the bull market to lighten up on stocks. It's a bad time of year to own stocks, made worse by the uncertainty Trump creates.
May 20—24, 2019 USE CAUTION IN FRONT of a POSSIBLE 3-DAY WEEKEND TWEET STORM Central bankers are everywhere, this week. Atlanta Fed's 24th Financial Markets Conference is presented by its Center for Financial Innovation & Stability and subtitled, "Mapping the Financial Frontier. What does the Next Decade Hold?" Atlanta Fed Pres. Raphael Bostic is a speaker, as one would expect but so is Jerome Powell, on the 20th, at 7pm et. Others speaking range from Simon Johnson of MIT, to speakers from Chicago Booth School, Stanford U, US Census Bureau, Freddie Mac, Moody's Analytics, BofAML's Ethan Harris, and Kevin Warsh, currently from the Hoover Institution. @Stanford. NY Chicago Fed Pres. Evans will wrap that conference the next day.
Fed Bank Pres. Williams and Fed Vice Chairman Clarida participate at a "FedListens," rooundtable on monetary policy strategy, tools and communications practices"—the latter a heavily discussed internal debate at the Fed Board. Boston Fed Pres. Rosengren is speaking at a luncheon at the Economic Club of NY, Tuesday, his topic undisclosed, but probably not groundbreaking. St. Louis Fed Pres. Bullard will speak in Hong Kong, 1am et, on Wednesday (or overnight Tuesday, as I prefer), on the US Economic Outlook & Monetary Policy, with Q&A. Hours after he speaks, ECB Chief Draghi will speak at the ECB Collquium: "Monetary Policy in an incomplete Monetary Union," a topic the ECB seems to be getting more serious about. But with 750 members of the EU Parliament to be voted on from the 23rd, through the 26th—including in the UK, because of delayed Brexit—whether pro-Euro members will hold sway remains the burning question. More and more, it seems, nationalism is seeping into the conversation, and pro-Euro countries are a little harder to find. At the same ECB Colloquium (@the ECB, in Frankfurt), which is to honor ECB chief economist, Peter Praet, Praet will speak, too, on "Challenges to the single monetary policy and ways forward."
Wednesday, Fed Presidents Bostic & Kaplan speak at the Joint Atlanta & Dallas Feds' "Technology-Enabled Disruption: Implications for Business, Labor Markets & Monetary Policy," being held in Dallas, through the 23rd. At 2pm, that day, the FOMC Minutes of the meeting that ended May 1st will be released, though will less mystery surrounding the conversations, given every voting member has endorsed "patience," on rates. Half a day later, the ECB will release both its Financial Stability Review, and the Account of Monetary Policy of the April 9th—10th Meeting. Almost simultaneously, Draghi speaks again, at the 81st Plenary Meeting of the Group of 20, in Madrid Spain. His V.P., de Guindos, is speaking at AFME (Ass'n for Financial Markets in Europe) on Opportunities for European Banking & Capital Markets. Then, Thursday, S.F. Fed Pres. Daly & Richmond Fed Pres. Barkin, join Bostic & Kaplan for a panel at the Atlanta/Dallas Fed Banks Joint Conference on Technology-Enabled Disruption (noon, Dallas). That's a lot of central bank speakers on the slide into a the long Memorial Day weekend, which officially kicks off summer and the great escape from offices everywhere. Only the bond markets close early Friday, at 2pm et. Equities are scheduled to trade regular hours, until 4pm et, though it should be like watching paint dry, if you're looking at your quote systems after the treasury market closes.
Outside central bankers, and central bank meeting minutes, what stands out on the Economic Calendar is a light week for Treasury issuance, and Existing Home Sales, Tuesday, and New Home Sales Thursday. Friday morning, the week will wrap with April Durable Goods Orders & Shipments, which includes Capital Goods Orders & Shipments.
The Earnings Calendar is a crush of consumer names—retailers, especially, as is easily gleaned from a quick scan of the emboldened tickers below. While many might assume it was a strong quarter for Home Depot & Lowe's, it's quite possible that floods in the middle of the country, and late snow storms seriously delayed the spring planting season. Furthermore, a relative had to buy a new fridge, and it seems to me prices haven't changed in the 8 years since I bought my French door one (which cut my electric bill by $40 a month, inspiring me to replace all my appliances, over the following 8 months.. None of the successive purchases made as big a difference to my power consumption except the water heater, which in combo with the new dishwasher, cut another $80 a month off my monthly electric bill.) Yes, today, you can buy much more upgraded models that cost more than 3 times as much as my early French door fridge—including models with inner and outer doors, so someone who wants to choose a soda can or water bottle doesn't have to open a fridge at all—only the outer door. But. From the bottom to about half way up the ladder, prices have been in the same place for 10 years, despite tariffs on some metals for a year. Home Depot & Lowe's sell appliances too, along with Best buy, also reporting this week, and probably benefited from the closure of so many Sears stores, in the past year but spring planting season didn't get underway for the home improvement retailers, until the current quarter, and for people like me, painting the house in the next month (depending on rain days), there'll be no planting until much later in the season. I'd imagine all the floods seen this past spring delayed a lot of exterior painting projects too.
Then, there are the department stores, including JCPenney, Kohl's, Nordstrom, from whom I don't' expect rousing results. In fact, I think JCP needs to prove it can survive. Period. Some hope Kohl's relationship with Amazon, has boosted its sales. After all, the two just announced expansion of the pick up and drop off Amazon packages relationship to the rest of the KSS stores that weren't involved in the test. But at least some analysts claim the relationship hasn't benefited KSS as much as some hope, while others say the same relationship with AMZN's owned Whole Foods has meant nothing to Whole Foods because people picking up or sending back packages there don't spend more than 5 minutes in the store. If that's true at KSS, one can wonder how the relationship is benefiting KSS, unless cash is changing hands. On selected other retailers I do have an opinion.
Urban Outfitters's reports Earnings on Tuesday, which probably won't account for the tremendous amount of goods its Anthropologie division is shipping to Nordstrom's home department. I don't' know during which quarter the shipments fell, or were paid for but I couldn't help but notice what a large percentage Anthro home goods can be seen at JWN—even acknowledging how small a portion of Nordstrom's overall floor space its home department occupies—space that's grown since Anthro goods were added to the mix, even though an Anthropologie store, here (Boca Raton FL, at Town Center [SPG] mall), is a mere 100 yards away. Not many seem to notice because the Anthropologie store, here, has been a mistake from the beginning, available to be entered, only, by walking outside the mall, even though there's a large window in the mall that could have easily included a doorway. Last Tuesday, the high temperature was 104 degrees, already, so imagine how many customers are motivated to walk outside the mall. And even though I don't know when the shipments & payments took place, they either fell during the quarter being reported, or will inform the outlook, so URBN could have significant upside that analysts aren't yet talking about.
I'm not equally stoked about JWN's earnings. The full-price Nordstrom store never seems to have enough merchandise to blow the cover off the ball, unless the Rack division and online sales are going to get the job done. On the other hand, I have more confidence in Nordstrom's margins than I do, say Macy*s, because there's no department store in the world that uses more restraint in markdowns than Nordstrom—and that includes European retailers who are only allowed to offer 'disconti' when the gov't says so. On the reverse side of that coin, is the editing skills of JWN's buyers, for its full-price store. Planning on buying my mom dark chocolate dipped fresh strawberries for Mother's Day, I was on the way to the ladies room via Nordstrom's dress dept, and couldn't resist a little capelet with 5" crocheted sleeve "hems" for $49. As illustration, the same garment at, say Bloomingdale's, would be marked at $98, then discounted by 40%, if not more. At Nordstrom, it looks like a steal for the legitimate, retail price, so even a cynic like me could forget dipped strawberries in a flash of impulse.
The retailer that may more important than the others, this week, is Target, Wednesday, whose last report pleased in good part because so little was expected. Now that Walmart topped the Street handily, there might be higher expectations building on TGT, which can be dangerous. I never saw evidence, in Q4, to bear out the please report it delivered, and have yet to see anyone park in the "pick-up" section to retrieve goods pre-ordered. Furthermore, the one time I attempted to order and pick-up, I was told 12-packs of soda aren't available for that service, which may be 75% of what I buy at TGT, when it's on sale, only. Beyond TGT, keep an eye out for TJMaxx, Tuesday, and both Best Buy & Ross Stores, Thursday, which have done so much to install confidence, in recent quarters, though I can't imagine what anyone needs to go to Best Buy for, and worry that the mass closures of Office Depot/Office Max stores, with the clearance sales that accompany stores closing, hurt BBY's sales in any office equipment. On the other hand, like LOW & HD, BBY may have benefited from Sears closures. If not, it will in the future.
Other Earnings Reports are coming from Int'l Game Technology, Monday, Toll Brothers on Tuesday, Analog Devices, Ctrip, NetApp, and Synopsis Wednesday, followed by Hewlett-Packard Enterprise, HP Corp, Intuit, Lenovo, and Medtronic, on Thursday. I'm bullish on VF Corp, after a frigid, snowy winter, and worry more that The North Face couldn't fulfill all the reorders retailers may have submitted. I still believe FootLocker is a destination store both in the mall and online, and don't think Nike will put it out of business selling directly to consumers. On the contrary, if a service person or their family want sneakers, it's FL that has long advertised a standing discount for them. Plus, FL can increase purchases with adidas, Reebok, Puma, and other brands, if NKE is stepping on its toes, too much. In fact, I remember a time NKE couldn't sell me its sneakers for my stores, because I was renting additional storage to stock all the Reebok high tops my customers demanded, in 9 colors.
Which brings us to the Event Calendar, which is a gold mine. Start with the EPG (Electrical Products Group) Annual Spring Meeting which started Sunday, as I wrote. It's a mass analyst meeting for companies connected to the group, from 3M to W.W. Grainger, with even more companies participating than those listed on the main schedule. Likewise, ICSC RECon is a mass meeting for Retail Real Estate—the very group that rents to all the retailers reporting results, this week. That started Sunday, too. Then Tuesday, the AGA (American Gas Ass'n) Financial Forum starts, a mass analyst meeting for Utilities that use natural gas, and the gas producers that supply them. All 3 of these events have analysts hosting companies and their clients. If it was just those 3 events, this week would be huge but there's even more, including the National Restaurant Association annual spring meeting. And the AAPG (American Petroleum Geologists) Annual Meeting, also.
And, because I-bank analysts not involved in those events need to get a last face-to-face with clients, before the summer exodus, the number of I-bank Conferences remains large, as it's been for the past 3 weeks. Notable among them—beyond those set at the aforementioned events, include UBS' Global Healthcare and UBS' Global Oil & Gas Conferences, in New York & Austin TX, respectively. Barclays is hosting Emerging Payments in NY, starting Tuesday, where many of the participants aren't public. Starting the same day, SunTrust is hosting its 20th Annual Financial Services Conference, and RBC Capital its own Global Healthcare Conference, both in New York. Macquarie is hosting TMT Corporate Day, also in NY, the same day, while Wells Faro is hosting an IT Boot Camp, whatever that is. Wednesday, Wells Fargo hosts Financial Services, while B.RileyFBR starts its 284 company Annual Investor Conference, most of the presenters very small—smaller than we usually discuss. Capital Link is hosting its 18th Annual Closed End Funds & ETFs Forum in NY, Wednesday, while Morgan Stanley is hosting ChemTech, that day in London, and Citi's hosting Chemicals in the same city, the same day. Goldman Sachs knows a Hamptons weekend approaching when it sees one, so is off in Hong Kong for its 5th Annual TechNet AsiaPacific, that day. Barrington Research, perhaps known, of late, more for activism than traditional I-banking is hosting its 13th Spring Investment Conference, starting Thursday. Barrington presenters are even smaller than the previously mentioned small caps.
JPMorgan, which hosted a big TMC meeting in the states, last week, is in London for European Technology, Media ^ Telecoms CEOs. Most of the rest of the I-banks, are decamping for Asia, the rest of the week, with Citi planting itself in Hong Kong, Korea, and China, starting Tuesday.
WSJ's Future of Everything Festival is notable for the number of speakers named for a single day event, which by my count, provides about 7 minutes for each. They range from Disney Media's James Pitaro, to Olivia Wilde, Waze, Iconix, Ted Banna (Father of 401[k]), former CVS/AET CEO, Warby Parker's Neil Blumenthal, Eileen Fisher, Jennifer Fleiss (RentTheRunway), Match Grp's Mandy Ginsberg, IEX Grp's Brad Katsuyama, Ted Leonsis, Steve Ross (Related Cos), and that's just a taste which, surely, illustrates my point.
For many, a Loyalty Expo brings to mind casinos, Caesar's the one-time near inventory of Loyalty programs but the one that starts Monday has more hotels, retailers & restaurants—in fact, not a casino among them. Likewise, "Collision Technology" starting on that day has nothing to do with car crashes but, rather, technology, with speakers as diverse as Canadian P.M. Justin Trudeau and Re/code's Kara Swisher, along with comedian Seth Rogen, Union Square Ventures, Oculus VR, US Dept of Health, GE, Microsoft Exec VP Peggy Johnson, and many more.
Parks Associates Connections offers as many homebuilders as communications companies, as well as alarm companies, KB Home the keynote. If it were up to me, and I had not family obligations locally, I'd be jetting over to Nice for a weekend at the beach, cause it's a week when all the action will be in Monte Carlo, at the Formula 1 Grand Prix de Monte Carlo, currently owned by Liberty Media, and publicly traded (FWONA). The race helps clear out Nice' beaches, many named after some of the most famous beaches in the US, like Jones Beach & West 1.
I doubt bulls are going to be brave enough to boost stocks significantly, before a 3-day weekend during which no one knows what kind of tweet storm Trump can conjure. As it is, I'm seriously worried that he's backing the Chinese into a wall from which he leaves them no way to save face, as I've said previously. One chart that did catch my eye, this weekend, though, was Hartford Financial (HIG), because it's breaking from the rest of financials, rising even when the banks are falling, and outperforming competitors. If something's up with HIG, I'd sure like to know—if you know. Meanwhile, I keep looking at MasterCard, Visa, Discovery Financial Services, PayPal, and Square, and can't help feeling that a deal is coming within that group, Capital One, perhaps, a buyer. The thing about Capital One, is that it keeps its defaults minuscule, because a large proportion of its cardholders are still at the $500 credit limit they start at. Yes, I know people with $50K credit limits but COF has been tighter with credit limits than any other bank I've ever researched. COF, though, remains a distant follower to JPMorgan, Citi, Bank of America, and other competitors, a position it's not comfortable maintaining. Therefore, I think it's most likely to make a move, unless PYPL goes for SQ. A deal is more likely than the stocks seem to suggest, perhaps because nothing is imminent. Still, it's a group I'd watch very carefully, for hints in volume or options of a deal coming down.
Happy , healthy holiday, to all.
May 13—17, 2019 AVOIDING A SELLING PANIC WILL BE GIFT How do you know Earnings season is all but over, for most traders? The Events Calendar kicks into a higher gear, as it did last week. And how do you know that, in addition to Earnings season being about over, a long summer break is fast approaching? Other than gasoline/crude prices rising, it's a schedule like this week's, where Tuesday is the best demonstration of how insanely packed the I-bank conference schedule has become! And ironically, after last week's volatility, and last minute saves before the markets closed, especially on Friday, even those content to listen into webcast presentations from the comfort of their own desks, really don't want to be pulled away from their quote and chart screens, to examine the charts accompanying presentations from even the most august events, like JPMorgan's 47th Annual TMC Conference.
JPMorgan's 47th Annual TMC Conference includes these confirmed presenters, and probably more: CDW, CAMP, MDC, CTL, ST, IBM, FFIV, MSFT, WEX, ADTN, QRVO, PROS, (BNFT), VIA.B, IPG, CRTO, LAMR, ALTR, MDSO, SBAC, UNIT, EVER, W, TRUE, I, EVOP, TWLO, AEIS, OUT, WK, EGHT, CREE, AVLR, DLB, AMCX, NEWR, LOGM, Tenable, WWE (Gargano fireside chat), AAXN, GDDY, SWCH, GDDY, BR, DISCK, (CEO David Zaslav keynote), FTNT, CONE, BKNG, TTMI, FIVN, BAND, JBL, KN, CHTR, CCOI, PAYC, MXL, GDOT, SEDG, LRCX, FLT, PS, FTCH, NYT, GLW, MDSO, CY, VZ, WIFI, T. American Tower's (AMT) IR website would NOT load presentations or press releases. AMD doesn't show this event on its IR site, as of 05/12, perhaps because it just held an analyst conference, on May 1st, to celebrate 50 years in business. The odd thing about the presenters, is how many of them waited until after the market close on the 10th, to confirm their appearance at JPM, and in one case, not until Sunday, 05/12. Meanwhile, others announced participation so many months ago, their press release hit too many months ago to pop up in a current search. We checked a few companies, individually, like Alphabet (GOOG) but did not find an announcement regarding participation in this, or any other, I-bank conference since Morgan Stanley's Feb conference. Then, again, many of JPM's Media presenters will pull double duty at the MoffettNathanson Media Conference,
The (now) Annual Center for Inflation Conference ---Inflation Drivers & Dynamics--starts at the Cleveland Federal Reserve Bank, on the 15th, and runs through 17th. As recently as Wednesday, there was no agenda to be found, and even the e-mail addresses offered on the Cleveland Fed's Center for Inflation Research website offered non-existent mailboxes. That stinks, and it's the only Fed Bank Conference at which we've encountered that problem researching. Usually, we can pull up the entire agenda and sort by speakers. Cleveland does it differently—ineptly and offensively, as if it doesn't realize our tax dollars are paying for that bank and its conference.
May 15—17, 2019.
Fed bank speakers will be heard, even if not from the Cleveland Fed. Sunday, San Francisco Fed Pres Daly delivered the Syracuse University commencement address. Monday, it's a twofer, with Rosengren & Vice Chairman for supervision, Clarida speaking at a New England FedListens event. Much later, in the wee hours of Tuesday, NY Fed Pres. Williams is a panelist on Past-Lessons Learned from an Evolving International Monetary System," at a joint Swiss National Bank and IMF High-Level Conference @Past, Present & Future of the International Monetary System, in Zurich, a quarter after 3am, eastern time. Tuesday, Fed Pres George speaks at the Economic Club of Minnesota. Wednesday, Fed Pres Barkin takes part in a discussion at the New York Association for Business Economics, even as Vice Chair Clarida testifies at the Senate Banking Cmte, at 9:30am et. He's in charge of bank supervision, so square that with the committee he's before, and you get the gist. Thursday, Fed Gov Brainard talks about the economic outlook and monetary policy outlook at the National Tax Association 49th Symposium in D.C. Friday, NY Fed Pres Williams is speaking again, at the Community League of the Heights, even as Clarida speaks again, at another FedListens, this time on Education, Employment & Monetary Policy in the 3rd District, at the Federal Reserve Bank of Philadelphia. Then Williams speaks, again, at Equitable Growth Meeting in Chinatown, at 2pm. Even Saturday offers up a Fed speaker, Dallas Fed's Kaplan who's delivering the keynote at SABEW, a society for Business Editors & Writers, holding their annual meeting.
Of course, as interesting as all that may be, it's probable data from China will be more influential, if the FedHeads haven't changed their tunes. Tuesday, especially, Fixed Asset Investment, Industrial Production, Retail Sales & Property Investment will provide clues to how badly US tariffs are hurting China's economy. Of course, we could say the same for US data, including Aoril Retail Sales, and Industrial Production & Capacity Utilization, along with EIA Crude data. NAHB's May Housing Market Index is out Wednesday. Though weather has wreaked havoc on some big states, like Texas, lower mortgage rates should have continued to boost buyer traffic at builders' new communities. April Housing Starts & Building Permits will be backward looking, Thursday, compared to the builders' own sentiment, Wednesday.
The Earnings Calendar has some potential blow-ups in store. Ralph Lauren Polo reports Tuesday, along with Agilent, Amdocs, Tencent Holdings, and pot company Tilray. Wednesday, reports are expected from Alibaba, The Children's Place, Cisco Systems, FarFetch, Flowers Industries, Jack in the Box, Macy's, and NetEase. Thursday promises Applied Materials, Baidu, Nice Syste3ms, nVidia, Pnterest (its first report as a public company), and Walmart. Friday, there's Deere. Of them all, I fear most the report from Macy*s which had better be ringing the register online since it's not doing so in stores. In fact, I've never seen fewer Macy*s shopping bags in the mall than I have the last 5 times I've paid a visit. Walmart is still as filthy as ever, around here, which makes me wonder where the analysts have been that has so impressed them with improvements. And worse, it's so busy pushing its own "house" versions of brand name products, it barely has any brand name products on its shelves.
Which brings us to the Events Calendar, where Monday and Tuesday are insanely packed with I-bank events. JPMorgan's TMC will be the headliner starting Tuesday, but MoffettNathanson's Media & Communications Conference will double down on many of JPM's presenters. There should be strong interest in JPM's Homebulding & Building Products Conference, also starting Tuesday, with Wells Fargo's Tuesday Gaming, Hospitality & Leisure Conference bolstering the comments made at Instinet's nearly identical conference, which starts Monday. Normally, China Conferences are prevalent during the US Memorial Day week but, this week, Credit Suisse hosts its Annual China Conference in Shenzhen, starting Wednesday, which is when Macquarie opens Greater China, also in Shenzhen, even as HSBC starts its 6th Annual China Conference, also in Shenzhen. Does that strike anyone else a bit odd?
If you want to know what's really going on this week, you can consult either the Events Calendar, or isolate the Earnings Calendar to the two handfuls of tickers emboldened there. Unless all the Fed speakers are going to sing a new tune, there won't be much to hear from them, this week. But the handful of earnings reporters we've highlighted, and the far too busy Events Calendar hold the key, beyond the trade war—which it's time to call the tiff with China. And so it's said, there's little reason to jump in and buy shares, here, unless you're convinced the US-China Trade Agreement is going to be hammered out, right away. I don't think that's about to happen. Rather, it's more likely the Chinese will answer Trump's raised tariffs with punitive measures of their own. Trump, who's culturally ignorant, doesn't realize that pushing China against the wall will get him the opposite of what he seeks. And Trump will push because he enjoys bullying people—women especially but men, too.
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just factor in more complete due diligence.
May 06—10, 2019 ANOTHER WEEK OF CONSOLIDATION WEEK WOULD BE A GIFT It's another week of too many Earnings Reports, albeit of lower impact, peppered with Fed speakers, especially starting Thursday, and rush of I-bank conferences, Tuesday a prime example. I'd like to expound endlessly on the coming week but torrential rains, perhaps, waterlogged my energy, leaving me shy of the task.
Federal Reserve Board Workshop on Monetary & Financial History, which starts on the 6th, has no brand name Fed speakers. Most are university professors, with a couple from the FDIC. The Keynote, at 5pm on the 7th, is William Goetzmann of Yale Univ, his subject "Money Changes Everything." Even those speakers from the Fed Reserve are background people not commonly known, even in the financial industry. Similarly, the ECB's An innovative Single Market for the Euro mostly lacks high profile speakers, though ECB Executive Board Member Sabine Lautenschlager is a speaker. Otherwise, speakers hail from European banks, SWIFT, the Payment Council, and even IKEA.
Satellite 2019 (D.C. thru 9th) bills itself for Government, Broadcast, Broadband, Innovation & Mobility. Jefferies holding meetings there, just as Raymond James will wet up at Waste Expo.
IndEx Industrial Exchange (Miami Beach thru 8th) subtitled "value Creation Reimagined," and aims to connect industrials execs, Private Equity Investors & Technolgoy. Oddly, both Wells Fargo & Oppenheimer are hosting Industrials at home, JPMorgan in China.
On the 7th, former White House Communications Director, for 8 days, Anthony Scaramucci, hosts another SALT—Skybridge Alts Conference, in Las Vegas. Among the speakers, former UN Ambassador Nikki Haley, Steve Case, Gen John Kelly, HUD Sec'y Dr. Ben Carson, Re/Code's Kara Swisher, Mark Cuban, Carlyle founder David Rubenstein, Valerie Jarrett (Obama Sec'y), Mark Cuban, Dr. Nouriel Roubini, Sam Zell, Marc Loasry, Dr. Peter Diamandis (X-Prize), Gen. David Patraeus, and too many more to name them all. CNBC is usually a partner, so expect widespread coverage of the event. The Sohn Conference is also this week, Once again, Value Investors the stars, many of which who have redeemed themselves in the past half year.
I think the markets will get lucky to eke out another consolidation week, after Trump's surprise threat to raise tariffs on Chinese goods, again, if a deal is not reached by this Friday, 05/10. So far, we've see no signs that traders are eager to sell, but Trump could be the inducement. And, it's the downside that few are prepared to see, and that makes it the trade to keep an eye out for.
April 29—May 03, 2019 EARNINGS + FOMC MEETING This is, unquestionably, the busiest week for earnings, of the quarter, in terms of the sheer number of reports scheduled. The importance of the reports may be inverse to the number of reporters, but there remains some significant companies to report, with potential to influence the equity markets.
Ordinarily, the FOMC meeting, mid-week, would be the pivotal event of the week but we doubt that's the case, this week. Granted, Friday's 3.2% print for GDP was a big surprise, and belies the flip-flop FOMC Chief Powell took in January. Then, again, few were impressed with the details of the report, and the headline number left me doubting the bean counters can count. March would have been one heck of a month for Q1 GDP to have played out as advertised, especially since the government was closed until January 22nd. For more on personal views from FOMC members, other than Jerome Powell's, a surprising percentage of FOMC members will be speaking Friday, most at the Stanford University's Hoover Institution conference on Monetary Policy. In fact, on Friday, Bullard, Daly, Kaplan, & Mester will be panelists, together, on "Monetary Strategies in Practice."
Speaking of that shutdown, on Monday, the government will report Feb final and March preliminary Personal Income & Outlays, a report that has individuals' savings rates & PCE embedded. Two months aren't usually reported together but delayed data gathering after the shutdown results in two reports being delivered at the same time. ECI on Tuesday is one to watch, given wages on the low end rising towards $15 per hour, and benefits being lathered on to keep employees in place, at a time when labor markets are tight. Tuesday, also, promises Case-Shiller's 20-city House Price Data and Realtor's March Pending Home Sales. There was some fairly horrendous weather across much of the country, in March, yet the data that's been released, so far, proves that mortgage rates slipping back down was a magic elixir to housing activity.
Mid-week, PMI & ISM data is on tap, hours before the FOMC statement & Powell's press conference. April Motor Vehicle sales data, Thursday & Friday will be mostly foreign makers, service GM & Ford no longer report monthly. After Ford reported a surprise upside, last week, anticipation may be building towards a set-up for GM disappointing, this week. Not saying it will happen, just pointing out it could. Then Friday, the April Unemployment Report will be released, with most economists expecting the rate of Unemployment to fall to 3.6% from 3.8%.
Of the Earnings reports scheduled, none loom larger than Alphabet's Google, on Monday, and Apple on Tuesday. Yes, there are others on the schedule but given their influence on the NDX & Compq, those two are the wall the Street must walk through. After them, check out any and all the emboldened tickers we highlighted, because there's no doubt that AMD, Akamai, Amgen, BP, Charter Communications, Chubb, Cummins, Eaton, GE, GM, HCA, Lab Corp, MasterCard, McDonald's, Merck Mondelez, Oshkosh, Paccar, Pfizer, Ryder, Seagate Tech, Simon Property, Taubman Centers, Twillo, WellCare Group & Welltower are all significant reports, and that's just some of the tickers highlighted, for Tuesday, alone. Be my guest and peruse the rest of the Earnings Calendar for many more influential reports.
The Events Calendar is less impressive, as might be expected during a week when so many earnings reports are scheduled for release. Not only that but Japan is celebrating Golden Week, for the week, and will watch one emperor abdicate, as his son is elevated, giving Asian countries plenty to watch besides US Equity markets. Meantime, May Day is celebrated in most Western countries plus Russia, and in a lot of South & Latin American countries, too. Like Mexico, which makes up 98% of Banco Santander's Cinco de Mayo Conference, on the 2nd, in NY. As for corporate events of note, outside earnings, note Facebook's developers' conference, F8, Tuesday, and Berfkshie Hathaways Woodstock for Capitalists, starting Friday. Saturday is the day Buffett & Munger will subject themselves to 6—9 hours of questioning from shareholders, holding court at the Omaha Convention Center.
Which brings us back to markets that remained remarkably compartmentalized, last week. While 3M, most notably, soured the DJIA, it did not stop the S&P & Nasdaq Comp from making new highs. Even with Intel's blown outlook, Semi's were surprisingly resilient. That was most telling to me, about last week, and reason to give the nod to the bulls, even if there's more consolidation, over the next 2 weeks, before markets celebrate making it through another earnings season, with the bull market intact, as they typically do. Still, there's a reason "sell in May" is so well regarded as the prudent thing to do. Markets perform so much better from November through April, than they do in May through October. Statistically, that's numerical fact. So whaddya going to do about it?
April 22—26, 2019 ALL ABOUT EARNINGS There's some Housing Data due this week, including March Existing Home Sales from the Nat'l Ass'n of Realtors, Monday, FHFA Feb House Price Index & March New Home Sales, both Tuesday. There's a good possibility that the Mortgage Applications data oout Wednesday will be impacted by last week's holidays. Friday, especially, people preparing for Passover or Easter were unlikely to have been out bidding on houses, and likely had much more on their minds than applying to refinance their mortgage. Bear in mind, most of the Western World, ex-the US, will be closed Monday for Easter Monday.
Pres. Trump, fresh off reacting to the full Mueller report with weekend tweet storms will be out Wednesday, with the 1st Lady, addressing the Rx Drug Abuse & Heroin Summit in Atlanta, and then Thursday, Trump will address the NRA, one group recent Democratic Presidents weren't wont to do. There's never been a President so closely followed by the press, which lies in wait for the next faux pas to come out of him, or those close to him, like Giuliani, Sunday, stating there's nothing wrong with taking stolen information from the Russians, a position from which he immediately backtracked, saying it's not something he, as a lawyer would recommend or do, or advise his client to do. Ah huh!
Also this week, the Bank of Canada, & Bk of Japan will weigh in with rate decisions, the BoJ possibly adding more QE, to get its economy really moving. Sweden's Riskbank, also, holds a Monetary Policy Meeting. Even more important, will be Thursday's March Durable Goods Orders & Shipments, which includes Capital Goods Orders & Shipments, Boeing's grounded 737 MAX, perhaps, already impacting shipments. Then, Friday, US Q1 GDP will be released, estimates ranging from 1.7% to 2.2%, anything in that range stronger than it was looking in March.
As befits a post-holiday week and one of the heaviest Earnings Calendars of the quarter, I-bank conferences are nearly non-existent. Those that will take place will be mostly in Asia. On Tuesday, the 23rd, VentureBeat hosts its GamesBeat Summit (Los Angeles CA thru 24th), with every game designer & publisher scheduled to speak, along with Wedbush's Michael Pachter. Notably, both Microsoft and Sony discussed their new consoles, last week. Microsoft's Xbox One S is set to debut on 05/07, for $249.99, without a slot to accept discs. For $50 more, one can buy it with a slot for discs, though MSFT has announced its future releases will all be streamed for download. Sony's next console, on the other hand, will accept discs, including legacy discs from PS4, though the console will not debut until 2020. Either way, the used game disc business that for so long provided the bulk of GameStop's profits is quickly reaching the end of the road. Even gamers have become comfortable having their games stored on hard drives, the Xbox One S to debut with a 1tb drive.
Other than GamesBeat, the biggest event of the coming week is likely the debut of "Avengers" Endgame," from Disney's Marvel, said to be the final film in the series. Anyone else doubt that resolution is going to last for more than a few years? And the other burning question is whether Sarah Huckabee Sanders shows at next Saturday's White House Correspondents dinner, which was a disaster last year, both for the WH Correspondents, many of whom did not find the main entertainment funny, and for Sanders, who was roasted, personally, which was widely criticized.
Which brings us back to the week's main Calendar—Earnings. Monday starts off slowly, which allowed us to highlight some stocks that might not, otherwise, be highlighted. Tuesday, the schedule picks up steam with an array of industries, including rails (CP), beverages (KO), consumer discretionary (HOG & HAS), metals (KALU, & NUE), defense (LMT & UTX), homebuilding (MTH & PHM), utilities (NEE), consumer non-durables (PG), employment (RHI), building supply (SHW), social media (SNAP & TWTR), custody banking (STT), medical devices (SYK), brokerage (AMTD), semiconductors (TXN), materials (VMI), communications (VZ), and water (WAT).
We could go through each day of the week highlighting the selection of industries featured the rest of the week, and it would be more of the same, as our emboldened tickers make clear. But there are a few that require special attention, like Wednesday's Boeing, Caterpillar, Chipotle Mexican Grill, General Dynamics, Lam Research, Microsoft, Nasdaq Exchange, Norfolk Southern Railroad, Northrop Grumman, PayPal, SAP SE, ServiceNow, Spirit Airlines, Stanley Works, Tesla, Thermo Fisher Scientific, Visa, & Xilinx.
Thursday, we couldn't help but notice 3M, healthcare companies lkike Abbvie, Alexion, Baxter, Bristol-Myers Squibb, and healthcare infotech Cerner, Amazon.com, Borg Warner, Capital One Financial, Colombia Sportsware, Comcast, D.R.Horton, Discover Financial Services, Ford Motors, Freeport McMoRan, ITW, Illumina, Intel, LogMeIn (mentioned in Barron's, as a takeover, because it blew last Qtr's earnings), March & McLennan, Mattel, Mohawk Industries, Newmont Mining, Penske Automotive Group, Raytheon, Reliance Steel, Starbucks, Silicon Valley Banc-shares (which recently closed on Leerink Ptnrs), UBS, United Parcel Services, Valero, Verisign, Visteon, Waste Management, and Yandex.
Friday, Chevron, ExxonMobil & Total would be enough but add in American Airlines, Archer Daniel Midland, Autoliv, AutoNation, Colgate-Palmolive, Deutsche Bank, Helen of Troy (which I always expected Jarden to make a run at before Newell fell on its face biting off more than it could chew), Lear, LyondellBasell, and Zimmer Biomet.
All in, if the markets can survive this week of Earnings, it will hold up to almost anything. That doesn't preclude a drawdown of any kind, as traders look to juggle their holdings to move with sectors rising and lighten up on those falling. But the market may well pull back a little or continue consolidating as it holds its breath for the next 3 weeks of Earnings season, before deciding whether to get fully invested, again, or not. It sure feels like time for a little caution.
ECONOMIC: (Highlgihts, only, below. Complete International Economic Calendar here)
(c) Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
April 15—19, 2019 A CRUSH OF EARNINGS IN A SHORT WEEK There are a few Fed speakers in the first half of the week but it's really the Earnings Calendar that will dominate the week. First, the Fed speakers, led off by Charles Evans, of the Chicago Fed, who'll spend around an hour on CNBC's Squawk Box, Monday. He speaks, again, later in the day, at the New York Association for Business Economic, with more Q&A. Also Monday, Boston Fed Chief Rosengren delivers the 33rd Cornelson Distinguished Lecture @ Davidson College, in Nortth Carolina. For the record, US Federal Tax Returns are due at Midnight, Monday. So, on the one hand you have people writing their final check to the IRS for last year's taxes but on the other hand, you have people making their last minute deposits into retirement accounts, that qualify for write-off on the 2018 taxes due at midnight, Monday.
Tuesday, Dallas Fed's Robert Kaplan is participating in a Q&A @Dallas Community forum, in El Paso Texas. Wednesday, St. Louis Fed's James Bullard delivers the 28th Annual Hyman P. Minsky Lecture @ The Levy Economics Institute (@Bard College) Annual Conference, subtitled: Financial Stability, Economic Policy & Economic Nationalism. The other speaker that caught my eye at the Bard College event is Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, which calls the beginnings & ends of recessions, albeit, all too often, with a lag of many months. Philadelphia Fed Pres. Patrick Harker also speaks Wednesday, on the economic outlook with Q&A, at the Greater Vineland Chamber of Commerce (Vineland, NJ). And if the aforementioned were not enough, the Fed's Beige Book is due out Wednesday, also, at 2pm. Thursday, "A Conversation with Fed. Pres. Bostic," (Atlanta Federal Reserve Bank) is the star at an Economic Roundtable & Tour of the Atlanta Fed brand in Jacksonville, Florida. A full slate, for a 4-day week, with markets closed on Good Friday, the 19th, which is also when the 8-day Jewish Holiday of Passover begins, at sundown. And it's a full slate of doves, even before the Chairman flipped his switch to ultra dove.
Not for nothing, some of the other notable Economic data includes US-Japan talks in D.C., starting Monday, which I hope does NOT mean another opportunity for Trump to offend an ally. Also out this week, March Industrial Production/Capacity Utilization, NAHB's April Housing Market Index, both Tuesday. Wed., the March International Trade Deficit, Feb Wholesale Trade (we believe it's Feb.). Thursday, March Retail Sales and the Philadelphia Fed Business Outlook Survey, plus Feb (we believe) Business Inventories.
As for Events, continuing Sunday, is AREAA Global & Luxury Summit, which stands for the Asian American Real Estate Ass'n of America, meeting in Beverly Hills, CA, natch. SIRS, on Schizophrenia, is just one of the pscyhopharmcology drugs advertised on TV nearly as often as insulin. Quarks & Cosmos, with Physicists (APS), is a bit above our head, though both ECCMID for Clinical Microbiology & Infectious Diseases and EASL, the International :Liver Disease Conference both seem timely, with Hepatitis A cropping up in Florida, and expanding exponentially, now that people know which symptoms should drive them straight to the doctor. Both, however, are across the pond, in Amsterdam & Vienna, respectively.
Both the Car Rental Show in Las Vegas & World Vaccine Congress in D.C. started Sunday, as I write. For a reported one billion people, globally, though, Sunday is all about the 8th & final season of HBO's "Game of Thrones," launches. Monday, Tax Day, the Commercial Card & Payment Industry meets in Miami, while ASA, Aging in America Conference, starts in New Orleans. IMN's Residential Mortgage Serving Rights will meet in NY, GE, belatedly, just settling its mortgage wrong doing last Friday, for over $1B. Meanwhile, the New York International Auto Show meets in New York, extending into Easter weekend, with J.D. Power hosting a forum at the show. IHS Markit hosts its Automotive Industry Briefing at the show, Thursday. A couple of I-Banks will also host clients in affiliation with the NY Auto Show, at one time, a New Year's weekend show.
Somewhat ironically, GMP Securities hosts a Cannabis Conference in Toronto, Tuesday, while Jefferies does the same, in NY, on Wednesday, when 2018 Federal Taxes are due in Massachusetts & Maine. Honestly, I thought 2018 taxes weren't due until Tuesday, because D.C. will celebrate Founder's Day on Monday but a recent re-check of the IRS 2018 tax site proved me wrong about that. While Founder's Day (Patriot's Day in Massachusetts) did postpone the due date for taxes a couple of times in the past, this year, it appears, that's only being observed, tax-wise, in Maine & Massachusetts, the latter hosting its annual Marathon that day.
Which brings us to the star of our week: Earnings. With Citi & Goldman Sachs Monday, Bank of America, and Black Rock Tuesday, there are still some very high profile financials to report, including Bank of NY Mellon, Morgan Stanley, and US Bank, along with property insurers RLI and Torchmark, on Wednesday. But, then, we'll also hear from CSX, IBM, JNJ, Netflix, Omnicom, United Airlines, United Health, and many more. Please consult the daily listings, below, to understand how many sectors reports will arrive from, in the, basically, 4 days reports are jammed into. And even after we highlighted a few financial names on Monday, Tuesday, & Wednesday, there's more on Thursday, including Ally Financial, American Express, Blackstone, BB&T, KeyBanc, Regions Financial, Synchrony Financial, and another insurer, Travelers.
In sum, if you thought last week wrapped up the financials, think again. They'll be heavily represented, this week, along with a broad brush of other sectors, that will tell the markets most of what it needs to know about the rest of the earnings season. Generally, gains posted during the first week of the reporting season are given back this week and next but with expectations as low as they are, perhaps there's room for pleasant surprises, this week, before the Street becomes more demanding in the weeks ahead. We've seen periods when analysts fell on each other tweaking numbers up after the first two weeks of beats. That sets up an inevitable disappointment by week three. One thing markets have going for them, into this week's much broader reporting calendar is the fact that good news celebrated was, largely, isolated, without broad impact on other sectors. So while JPMorgan and other banks kicked up their heels, last week (Looking at you, BAC!), for the most part, the rest of the market carried on as if nothing was going on—except for Disney. But there, again, what was great news for Disney was either taken as bad news for competitors (NFLX, looking at you), or merely ignored by the rest of the market That means there's still a little room for more good news to be baked into stocks, and equal room for some of last week's celebrants to ease up a smidge. Nothing is a given in this market, but it's a pretty good bet that most stocks won't celebrate as huge as JPM & Disney did, last week, If anything, there's room for BAC, GS, & MS, to look disappointing by comparison. That would be a shame, with bulls appearing to rule all around. At least financials had badly lagged the market, JPMorgan in particular. It's hard to say that about the competitors that got swooped up in Jamie Dimon's enthusiasm. As always: Be careful out there!
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor on more complete due diligence.
April 08—12, 2019 STOCK PRICES AHEAD of THEMSELVES AS EARNINGS SEASON OPENS For some the highlights of the week will be the World Bank Group & IMF Spring Meetings, held separately early in the week, before their Joint Spring Meetings start on the 12th, and run through the 14th. Their separate meetings start on the 8th and run through the 11th, then hold their Joint Spring Meeting 12th—14th. But ignore their claims to separate meetings—there's no avoiding the overlap, or the number of concurrently scheduled meetings by I-banks and, often, organizations like the Council on Foreign Relations. The Clinton Initiative used to meet concurrently but Bill was forced to wrap it up after Hillary declared her candidacy for president, back in 2015.
For others, the focus of the week will be the ECB Meeting, that concludes on the 10th, with Mario Draghi's post-meeting Press Conference, before markets open on Wednesday. The only question is whether Draghi & Company will do more to stimulate EU economies or just jawbones stimulation. Sometime between Wednesday and the 12th, we won't hear from FOMC Chief Powell on the economy but he will be speaking, behind closed doors, @ House of Representatives Democratic Caucus Retreat. Because it's not an official speech, or open to the public, Powell's speech isn't even on the Fed Reserve Board Calendar. The Retreat in Leesburg Va, ends on 04/12. Other high profile speakers include John Legend, his wife, Chrissy Teigen, Re/code's Kara Swisher, Union Chiefs (from SEIU, ASFSME, CWA), Fernando Garcia of Border Network for Human Rights, the subtitle of the Retreat: "100 Days In: Fighting for the People." Now throw in the FOMC Minutes from the March 19—20 Meeting, at which the Fed flipped its position, switching to a very cautious stance and more than patience before rates change. Powell's speech at the meeting is not unusual; Ben Bernanke did the same during his term as chief.
For an equity investor—especially one invested in financials, the focus of the week will be on Friday's Earnings, when JPMorgan, PNC Financial, and Wells Fargo report their Q1 results. Wells, of course, will be pressured by the not, yet, finished clean up of the consumer fraud scandals that, finally, resulted in Tim Sloan being tossed out of the top spot. I know many fell he was unfairly blamed but there's no avoiding the fact that he was a top executive during all the scandalous years, and therefore, bore some responsibility. In fact, now that Sloan is gone maybe CNBC can hire him as an advisor, too, as they did to his predecessor, continuing their unbroken record of aligning with scoundrels who should have been shamed out of finance, rather than turned to as wise guardians of advice. Ironically, the top 7 finance companies by assets are expected to send executives to the US Congress, on Wednesday, to testify before the House Financial Services Committee. Tim Sloan was expected back (he testified about Wells Fargo's issues on 03/12), but he's no longer available to speak for WFC. Perhaps the bank's counsel, serving as Interim President will show up in his place. Surely, the head lawyer will know as much about the scandals as anyone still working at the bank.
But the gigantic banks testifying, March CPI, the ECB, and the World Bank introducing its Interim President, Kristiana Georgieva making her debut Wednesday, is a lot to look forward to, for a single day. Throw in the EIA weekly Petroleum Stats, and the Fed's V. Chair Quarle's speech at a Roundtable on reforming Interest Rate Benchmarks (rather than LIBOR), the FOMC Minutes, and Medicare Advantage Rate Sheets for Federal FY2020 being released, possibly the same day, and one would be forgiven for overlooking Thursday's March PPI, Chain Store Sales from the 9 chains that still report monthly—inlcuing CostCo, speeches from Fed V. Chair Clarida, NY Fed Pres/CEO's Williams, Fed's Bullard & Fed Governor Bowman all expected Thursday. Then Thursday night, China should release its March Trade Data, including Imports & Exports, important information if one wants to know how badly flagging global economic growth is hurting the world's factory, and whether it's government's efforts to stimulate are working, or not.
As far as Events go, we're marching towards the Easter/Passover break, Good Friday a market holiday, on the 19th. That's going to rearrange a number of scheduled earnings releases, since it's been years since Easter & Passover were together, and so late in April. In fact, Passover started on March 26th & 27th, a number of years, and it's the first time in years that a friend of mine born April 4th can actually eat birthday cake on his birthday. If you've tasted Passover cakes you understand why that's such a big deal.
It's a big week for events to benefit those serving consumers, including the continuing NAB Show, for broadcasters, CLIA Cruise360, for cruise liners, and High Point, the Home Furniture Show held twice a year in High Point because that's where almost all American furniture used to be made, before much of it moved offshore to China. Today, though, the furniture showrooms to the trade remain in High Point, the semi-annual ritual of buyers arriving to write orders continuing. The 9th Annual American Banker Retail Banking Conference meets starting Tuesday. While Colorado Springs is a bit off the beaten track, it's the one A B Conference that usual makes waves—sending ripples far beyond its doors. SAE High Efficiency IC Engine +Connect2Car describes 2 different conferences @ WCX Symposium --World Congress (Consumer) Experience, Tuesday. Keynotes include Fox & Friends' Charles Payne, Samsung, Delphi, Harman, Ford, Toyota Motors, IBM, Cox Automotive, Bosch, Mobileye, and much more. The presence of Payne as a keynote suggests he's going to make the case for investing in autonomous cars—as if such a case still needed to be made. I can see how freeing a self-driving car might be to someone like my 92 year old mother but I can't imagine giving up the joy of driving, anytime soon. But should I ever get even close to my Mom's age, I'd probably prefer the independence of a self-driving car rather than waiting for a taxi or Uber, assuming they even exist by then. I'll skip CS Week the Customer Service Week because most would be hard pressed to find a consumer who was satisfied by the "Customer Service" they received calling one of those 800 numbers, Verizon excepted. I have never had anything but positive experiences with Verizon's customer service dept, live or by phone. Perhaps that's because I've always gotten what I've wanted, promptly, without having to repeat my "story" to 5 people before I'm promised someone will get back to me—which never happens. That, alone, is worth the few dollars extra I pay Verizon every month.
Topping the list of other notable events, must be EEI, the Edison Electric Institute National Key Acocunts Workshop, in Seattle, which started Sunday. Tiburon Advisors' CEO Summit, in NY, starting the 9th includes a host of both CEOs & CIOs of Asset Managers & Managed Assets funds. Seatrade Cruise Global is about the suppliers to the cruiselines, from fresh food to fuel, to furniture, and more. The National Space Symposium is the first with Trump's new "Space Force" officers speaking. It's quite a milestone for something that didn't exist one year ago. You'd be surprised how many commanders already exist, most drawn from the Air Force, rather than the former astronaut force, though half a dozen of them will be speaking, too.
Keystone Symposia's Antibodies as Drugs starting Sunday, and HealthTechs PEGS & Drug Discovery, both starting Monday, in Boston and Sand Diego, respectively, suggests there's be a large amount of drug news, especially since each of those conferences includes at least 4 sub-conferences, PEGS more like 8. And, then, there's BioCentury's 26th Future Leaders in the Biotech Industry, on Friday. It should come as no surprise that Needham & Co picked this week for its 18th Annual Healthcare Conference, starting Tuesday. It's a group that's lagged a bit this year, so perhaps there'll be some perking up, this week. Time was May & November were drug discovery conference months but, it seems, that's every month of the year, now, even as the head of the FDA, Dr. Scott Gottlieb quietly left office Friday.
JPMorgan hosts a Retail Roundup, Thursday, that remains a bit of a mystery, since retailers who have confirmed involvement are nearly non-existent. But this year, it maybe nothing more than a walk through the 6—7 new floors of retail shops at Hudson Yards, where some retailers are posting the kinds of record sales numbers they never dared dream were possible. (I'm not at liberty to divulge who in this forum.) OMFIF is the Official Monetary & Financial Institutions Forum. There's a Roundtable on the 12th, in D.C., on "The Costs & Implications of Adopting Central Bank Digital Currencies." On the 15th, in NY, there's a seminar called simply, Central Bank Digital Currencies, also in NY. Just whose Central Bank are they referring to? To the best of my knowledge, it's not a done deal, yet, at any Central Bank. And given the creeping disappoint-ment of Blockchain, to some in the banking industry, the topic seems a bit like the cart before the horse. I feel certain buyers will appear in advance of Walt Disney's Investor Meeting, Thursday. Analysts are so sure it will succeed in streaming, ESPN where it's starting, at least 6 months before it gets to Disney Entertainment. Well, Disney has certainly proven it can charge almost anything and get away with it. Last year, it raised entry prices at its Florida park 3x, once calling it surge pricing. Ask those people who paid top dollar and managed to get into only 3 rides in 10 hours, whether the price of admission was worth it.
It's quite stunning, to me, that the market still responds to Trump's every tweet on Chinese trade negotiations. Anyone who follows him knows he's forever boasted about everything he touches being the "greatest," and that's what he'll call the Chinese trade deal—no matter what it looks like in the end. Honestly, I often agree with what he's trying to do, just cringe at the way he goes about it. He's offended every ally the US has ever had, except Israel. The Street is expecting lackluster earnings yet stocks are acting like companies are going to crush estimates. The bond market is signaling trouble, the stock market nirvana. Sooner or later the two will converge. That probably means stocks have to cool, and bonds have to heat up a bit. What it doesn't justify is the relentless upside gains stocks have been managing. Not to be a party pooper but, lacking whatever it is Wall Street is smoking, time for caution as Earnings Season gets underway seems the prudent choice.
ECONOMIC: (Highlights, only, below. Full International Calendar, here)
April 01—05, 2019 NEXT UP EARNINGS WARNINGS Fed speakers are out in force, this week, none more tellingly than Fed's Kaplan, Tuesday, who'll discuss the Economic Outlook & Monetary Policy in light of the sharp downgrade of FOMC forecasts for rates this year and next. Yeah, that oughtta be interesting, donchya think? He's speaking, of call places, in Toronto.
I say of all places because the ABA—American Bankers Association—meets this week. The event is called a Legislative update, and among the speakers, Representative Maxine Waters, Chair of the House Financial Services Committee, Kevin Hassett who's either Trump's Chief of Staff or Chairman of the White Economic Advisors, as well as Senator Mike Crapo, chair of the Senate Banking, Housing & Urban Affairs Cmte, also Tuesday. Fed's Barkin Bostic & George will be panelisfs at the ABA Summit but, still, my vote goes to Kaplan on the FOMC forecast downshift. For posturing, you can always watch the PBM''s testifying on high prescription prices, at Congress Wednesday.
Of course, the week's highlight is supposed to be the March Unemployment Report, out Friday, after February's meager 20K adds—if that isn't revised away, Friday. Also Friday, the biggest banks have to submit their CCAR, or Capital Plans to the Federal Reserve by Friday. Also Friday, Consumer Credit—which is really debt—a number that either suggests how confident consumers are, or how extended their finances are—depending on which economists is viewing the data. Credit tends to spike in September, as payments for school-related expenses are booked, and again in December, around the holidays and vacations. Many consumers plan to pay off their credit card debt with tax refunds but, with refunds running smaller than in years past, under the December 2017 Jobs & Tax Law changes, many are seeing smaller refunds, even as the IRS took a while to gear up, after the Government partial shutdown that ended in January.
The Earnings Calendar is shrinking fast. There are just a few notable reports expected including Lamb Weston & Walgreens, Tuesday, Signet & Canada's Hudson's Bay, Wednesday, and Thursday, Constellation Brands, International Speedway, and Schnitzer Steel—one of the companies Trump intended to benefit with steel tariffs.
Hudson's Bay, owner of Saks 5th Avenue, Lord & Taylor, Gilt (being divested), among other US retail divisions announced on 02/21, it would close its Home Outfitters business in Canada and, after performing a fleet review of its Saks OFF 5th Ave's 133 stores, close up to 20 locations in the US. Well, that's exactly what it did with its Boca Raton FL OFF 5th store, which wasn't even open for 5 years. The store was open March 28th, and suddenly closed on Saturday, the 30th. Regarding Home Outfitters, Hudson's Bay said the "vast majority of markets" are served by nearby Hudson's Bay stores. HBC, traded in Toronto, reports earnings, Wednesday.
As for Events, the AACR got a lot less attention prior to the meeting than usual. In addition to the ABA Summit already mentioned, CBA Live is for Community Bankers. The Chemical Society meets just as Dow-DuPont is about to separate the Dow portion. It will begin trading as ticker DOW, starting Tuesday, after Monday's spin-off. Hamburg Germany hosts Aircraft Week which includes Interiors and Passenger Future Expectations, along with World Travel & Catering. Stateside, CLIA Cruise360 meets, starting the 2nd, with pre-conferences for two days prior. Cowen and Co's 5th Future of the Consumer includes some big names, including Ulta Beauty, Nordstrom & Walmart. Citi is hosting a 1x1 Forum in conjunction with the CapitalLink Int'l Shipping Forum, a one-day forum yet, on the 4th Deutsche Bank is, also, hosting a Shipping summit, perhaps taking advantage of all the shipping execs from Greece scheduled to speak at Capital Link and/or Citi, Monday.
I'm not used to seeing AASA—the Automotive After Market Suppliers meet at a time when SEMA is not meeting but that's the case, starting Tuesday. Also Tuesday, Jefferies hosts a Healthcare REIT Summit, in NY. It's a group small enough to be impacted by comments made at the summit. Obesity is meeting Wednesday, along with Spine Week & Pain Society—many can draw a straight line from Obesity to the latter two but, honestly, I weigh in at less than 90 pounds, and my Pain Management doctor is the one I see most often, my Spine surgeon, only when my lumbar is so bad I have to have epidurals. I.e. Pain is not just an obesity issue. Of not to some will be BMO Capital's Cannabis Conference, in Toronto, a subject many US I-banks won't touch, because it remains illegal on the Federal level. That's why Congress is trying to pass a bill that will open up banking to cannabis businesses in states where it's legal. The NAB Show, for broadcasters is scheduled to open next Saturday.
I am without charts, due to the failure to deliver by a long-standing data supplier. Seems every quarter, either at the start or in the last week before the quarter ends, the data supplier fails to deliver any data—alleging 'network problems' each time. Disgusted, I'll be in the process of switching this week, so will deliver an Outlook next weekend, only if I'm not too wrapped up in tweaking the new charts. For now, my sense watching tick trade closely is, at the least, stocks are consolidating. It's hard to imagine them resuming upside until banks report in a couple of weeks, unless all the end of quarter news is good news. The odds of that happening are slim to none.
ECONOMIC: (Highlights, below. Full International Economic Calendar here)
March 25—29. 2019 MORE DOWNSIDE LIKELY, EVEN IF THEY BOUNCE FIRST Talk about an about face, and there are few who make such a big turn around as Powell et al just did, last week. His attempt to fortify the opinion that the economy is "in a good place" fell flat on its face. Stocks spent the better part of the week pricing in a recession—at least for the financial sector. A group that was finally ticking towards the September highs gave it all back by Friday, and then some. An over reaction? Only if the markets' fears of a recession prove unwarranted. And if they do, it may mean the FOMC stopped hiking rates just in time. Market pundits, though, seem to think the FOMC needs to take back the Dec. 2018 rate hike, for that to happen.
How are global central banks feeling? We'll find out this week. Central bankers from around the globe are speaking publicly, and those that aren't, are hosting monetary policy meetings, as the schedule below makes clear. Heck! Even a Fed Governor rarely heard from—Bowman—is speaking Thursday, along with 2 Fed Board Vice Chairs and 3 other Fed Presidents. As for how portfolio managers are feeling, that will likely be disclosed this week, as well. The Quinnipiac G.A.M.E. stands for Global Asset Management Education, so no surprise, PM's are all headliners. Quinnipiac, many will recall, is better known for opinion polls during election years. About the only thing unclear is whether the UK can get its act together and pass an orderly Brexit agreement or be forced into a so-called "hard," or "cliff" Brexit. The whole Hard or Cliff Brexit threat reminds of Y2K and Ed Yardeni, especially, who warned that planes would fall from the sky and power plants would shut down if year 2000 upgrades weren't programmed into every computer in the world. Well, of course, none of that happened, and no one can convince me it's because every single computer in the world had been reprogrammed in time. I don't believe that ever happened, nor did I believe Yardeni's worst fears, either.
Don't look know but Uh Oh! Both the month and quarter end this Friday, which should make for volume and volatility. And should markets unravel the quarter's gains by Friday, that would be the 2nd quarter in a row that markets finished to the downside. Given how few retail investors have come to trust the markets, a 2nd down quarter would be a death knell for markets—no matter how many new ways ETF's slice and dice investing.
What we do get this week, is some housing data including Fed Housing Starts/Building Permits, Tuesday, along with Core Logic S&P/Case Shiller's Jan 20-city Home Price Index & FHFA's version for Jan, too. That all 3 data points are scheduled for release on Tuesday is just coincidence, as is another fairly, comparatively rare speaker, San Francisco Fed Bank Pres Daly. If Wed.'s MBA weekly Mortgage & Refinance Application numbers haven't picked up significantly, they will; Mortgage Rates are the lowest they've been in a year, or more. Cone Thursday, the Nat'l Ass'n of Realtors will release Pending Home Sales for Feb. plus the release of Commerce Dept numbers for Feb New Home Sales. And if that weren't enough about home sales, for one week, KB Homes reports Tuesday, and Lennar on Wednesday, which is as up to date as data can get.
Otherwise, the Earnings Calendar is most notable for being slight. RedHat (Mon.), Synnex (Wed.), and Accenture (Thurs.) will provide the most contemporaneous information we can get about enterprise spending but RedHat isn't likely to say much, given it's being acquired by IBM, while ACN has few contemporaries, while SNX's best comp is Dell or Hewlett-Packard Enterprise, without their software divisions, since SNX is mainly hardware. All in, McCormick is seen as providing the pulse of restaurants, though every home cook knows the brand well. Oxford Industries & PVH are both apparel manufacturers, OXM's Tommy Bahama, these days, as promotional as any store in the mall, which it never used to be. Lululemon is a special case—like Ulta Beauty, it's a name the Street has been waiting to see fail. They've forgotten, already, the see-through yoga pants that almost destroyed its name and credibility, which wasn't so long ago. The fact that it bounced back so strongly is testament to the strength of the trend—a trend that has, by the way, opened doors to imitators like Gap's Athleta & Kate Hudson's Fabletics. If they ring a bell at the top of a trend, some would say Levi's public debut, last Thursday, was probably that bell but don't bet on it. Unlike their parents and other generations before them, millennials either got fat as kids, or aren't about to now. They're the generation that made yogawear as streetwear popular, and drag boomers and other older generations into the trend. If it's already peaked, then I wouldn't see so many overweight women in yoga pants & crops. Those calling the end of athleisure are premature, though clearly, LULU didn't maintain the same momentum in the just completed quarter that it did earlier in the year. People are simply less inclined to buy skin-tight stretch pants when the 3rd polar votex busts through town. Weather in most of the country has been more conducive to Uggs than LULU's, except here in the deep south, where February was the warmest on record—temps in the high 80's not at all unusual, this year.
Which brings us to the Event's Calendar, where Aircraft Electronics jumps out, given the issues Boeing has been having with 737 MAX electronics systems. It starts Monday, in Palm Springs California. Ironically, SAE's AeroTech Americas starts Tuesday, but in Charleston SC. The 2nd big theme that pops off the schedule is Energy, with Scotiabank's Howard Weil hosting its 46th Annual Energy Conference starting Sunday. Unrelated to Weil, though it shouldn't be, is the Int'l Petrochemical Conference, starting the same day but in San Antonio (TX). Overlap? You bet! So why don't they meet concurrently? The latter is famous for its National Oil Company chiefs who attend.
APhA is the pharmaceutical discovery & development industry—the work that goes on in labs, already underway Sunday, though Tuesday. The lab work I'm rooting hardest for is on Alzheimer's & Parkinson's Diseases, For size & Fun, you can't beat the Nightclub & Bar/Beverage Retailer Conference & Expo, in Las Vegas, starting Monday. It once included a restaurant portion but that's not the case anymore—restaurants meet separately. The Border Security Expo is just that—an Expo. There doesn't appear to be any conference attached to it, so it wouldn't appear to be an opportunity for Pres. Trump to show up and bash Democrats over his wall. Another time. There is a Conference at the Precision Strike Annual Review, (both Tuesday) but military personnel are the only ones named as speakers.
Wednesday, CIBC hosts its 22nd Retail Consumer Conference, in Toronto, while Credit Suisse hosts Consumer/Retail Conference in London, where Retail Week Live Conference will also take place. That will be complemented by Fairchild Media/WWD's Men's Wear Summit, Thursday, which may be another excuse for Goldman Sach's changed dress policy to be mentioned. Friday, the Rock & Roll Hall of Fame will induct new members, at the Barclays Center, in Brooklyn, though the ceremony won't be broadcast until April 27th. Ya know, they need enough time to edit out the expletives. Friday is also opening day for the MLB's season. In reality, last year's World Series combatants played in Tokyo, last week on the 20th & 21st, which the MLB claims was the real opening to the season but the opening on US soil will be Friday, when 15 cities host 30 teams. That's in the heat of March Madness (NCAA Championship play offs) even as the Miami
Open Tennis Championship will be winding up with the last 4 of each sex playing for a spot in the weekend finals.
All of which makes for a busy schedule, and no reason, what so ever, for the downside momentum to reverse itself, especially if earnings warnings start spewing forth. It's not impossible to imagine the weight of so many central bank speakers all leaning towards the US being an island of good health having a positive impact on influence on shares to at least limit the downside. But a switch to the upside? Stranger things have happened but I wouldn't count on it.
ECONOMIC: (Highlights, only, here. Full International Economic Calendar here)
March 18—22, 2019 FOMC MAY NOT BE A Non-EVENT The Street presumes the FOMC meeting, ending at 2pm, Wednesday, will be a non-event but that's not guaranteed. True, rates aren't going to be raised, at this meeting but there's plenty still to come. For one, what members' forecast for rates on the SEP, otherwise referred to as dotplots. Second, members & Chairman Powell have mentioned discussions about winding down the balance sheet unwind. Even former hawks like Mester & George were both quoted as saying a decision about ending the unwind could be decided as soon as this meeting—not that they'll halt unwinding, necessarily but, rather, that they could announce a target balance, and end sales of their securities when that balance is reached. The Street largely assumes the forecast will be for one rate hike this year, at best, and some foresee a rate cut by the end of the year but what if that widely assumed consensus is not what the SEP reveal? What if most of the conversation is about expectations for the economy to pick second quarter, just as it has over the last several years, even when the first quarter was a disaster? Surely, there have been sufficient polar votex to expect better, more consistent activity once spring arrives—which it officially does, Wed, by the calendar, even if the weather up north isn't spring-like regularly, for the rest of the month. (They can have some of Florida's winter weather—it's been in the mid-to high 80's more days than it's been in the 70's, since January ended.)
We're almost into April and data coming from the government has only just crept into Jan. That makes much of it too old for me to care about. You? Whatever rolls your sox up and down. In addition to the FOMC decision, there's be Monetary Policy Decisions from Norges (Norway) Bank, SNB (Swiss), and the BoE which we all can safely assume won't be raising rates until after Brexit, at the earliest, and that's just been postponed—assuming the EU agrees to the postponement the UK House of Commons just voted for. And there's little reason to expect anything else—even though postponement entails an EU election that the UK will have to participate in, if it postpones. I expect added interest in the NAHB March Housing Market Index, since home sales have been a particular weak spot in the economy, lately but with rates as low as they've been in a year, pent up demand should start adding to activity, as the spring selling season gets underway, in earnest, if it ever will. Realtors (NAR) Feb Existing Home Sales are of less interest, Friday. Not only did February see some of the most severe weather in history but it's the shortest month of the year. Other than closings that might have been postponed from January, because of the partial government shutdown which deferred FHA approval for mortgages, for most of January. Also Friday, so it's said, Atlanta Fed's Bostic is supposed to be speaking at a Fed Reserve Bank of San Francisco Macroeconomic & Monetary Policy Conference, according to Reuters' Diary but I show that even in May, and couldn't confirm Bostic's speech or any event at the FRBSF, this week. So it's said.
Hudson Yards, a new complex in NY, on the extreme West Side of Manhattan, now boasts offices, residential units, and 1m sq ft of retail space that opened on Friday, March 15th. The retail tenants runs the gamut from Uniqlo, H&M, Zara, Madewell, Sephora, Lululemon, Tumi, and Athleta to luxury shops Dior, Fendi, Louis Vuitton, Cartier, and Tiffany. The property is anchored by Dallas-based department store chain Neiman Marcus, it's first Manhattan location, ever, at a time when it's more in the news for fights with bond holders. 'The Yards,' as my niece who helped set up a new Madewell (URBN) for Friday's opening, even has an area devoted to brands like men's athleisure company Rhone, tech hub b8ta, shoemaker M.Gemi and men's underwear retailer Mack Weldon, that were all born on the internet. The plaza at the property spills out onto the High Line, an elevated walkway on the West Side of Manhattan and a popular tourist attraction that runs all the way downtown through Chelsea, with more food places on that walkway. Equinox will be opening its first hotel ever, at Hudson Yards, this summer, that will include the biggest Equinox gym in the world. If you aren't a New Yorker and need an excuse to visit the city, this is sure to be a destination, until the first retailers start closing—as they, inevitably, will.
Speaking of retailers, if you don't know the ticker RTW, on the 21st, that's Retailwinds, formerly New York & Company, ticker NWY. Eva Mendes & Gabrielle Union are spokespersons, joining long-standing face of the company, Kate Hudson. So many women's apparel retailers have petite "shops," barely anyone pays attention but NY & Co goes a step farther with a "Tall Shop." I don't know of another women's apparel retailer that offers "tall" choices. Even if men's specialty shops it's rare, one of this week's reporting companies, DXLG, that standard bearer.
While we're discussing retail, I was in Macy*s earlier Sunday, 03/17, and expected big crowds because it's Friends & Family sale included 15% off cosmetics & fragrances. There were no crowds, despite weather that was conducive to indoor activities—high 80's with humidity at 91%--very oppressive air. There was only a single counter crowded, with more women waiting than the sales staff could accommodate—Estee Lauder (EL). I had no problem parking on lower level (thank goodness for covered parking on days like this, that are very sunny in addition to heat & humidity), 4 spaces from the East entrance to Macy*s. That says more than I could about the lack of crowds lining up for F&F—even when cosmetics are included—which is very rare. I'd actually bought my Shiseido needs last weekend—pre-sale, as all the stores refer to it, and then they couldn't find my paid purchase—even with my ticket. Meanwhile, this whole Last Act bargain basement within the store makes Macy*s look like John's Bargain Basement—which most of my readers are probably too young to remember. It is so low end I have no reason to walk in there ever again, except to secure 15% off expensive cosmetics, rarely on sale.
While Retailers dominate the Earnings Calendar, in volume, there are more important reporters expected, this week, including FedEx on Tuesday, General Mills & Micron Technology, on Wednesday, ConAgra, Darden, and Worthingon Industries on Thursday, and of all the retailers, Nike and Tiffany could be the most important, this week. TME is Tencent Music, Tuesday, it's first report as a public company. WAGE, on the other hand, is WageWorks which is seriously delinquent with quarterly and an annual SEC Filing, but has promised to report by the 19th.
Which brings us to Events, during a week in which many school districts have scheduled spring break—despite a later than lately Easter holiday, which won't arrive until April 21st, after several years of late March and first week of April dates. That's why, you may notice, there were many more I-bank conferences last week than are scheduled for this week. Portfolio managers really don't want to dial into a heavy week of conferences when they're on vacation with their families. Additionally, after so many YTD conferences, there's hardly a subject that hasn't been covered extensively, even as events like Cardiologists, at ACC (ongoing through Monday), or the entire Cable Industry at ACA (Tuesday), or drugmaking at AphA (Friday) sufficient to deter I-banks, as well. It remains puzzling, to me, however, to see Jefferies hosting Animal Health & the Pet Industry in NY, Wednesday, when Global Pet is taking place in Orlando, starting the same day. Then again, PM's will be tuned in, especially, to IR Magazine's Global Investor Relations US Awards, that day, as well. In NY.
Having said that, there are a couple of non-I-bank & overseas events that might attract US PM attention. That includes the Consumer Healthcare Products Ass'n Executive Conference, starting Sunday, as I write, and GDC, starting Monday, in San Francisco, for Game Developers, whether traditional, social or mobile, and VR/AR. nVdia's GPU (Graphics Processing Unit) Technology Conference (started Sunday) is probably more important to PM's than it's analyst day at the event, Tuesday, at the GPU Conference. The International Vision Expo in NY and Hinman Dental Meeting in Atlanta (both starting Thursday), are industry events that will attract analysts & PM's. Then, there are two overseas I-bank conferences that will attract US PM's. The first is Bk of America Merrill Lynch's Global Industrials & EU Autos Conference may be in London but it is truly Global, so includes many US companies. Morgan Stanley's European Financials (London), on the other hand, will not offer US companies but European financials do have branches in the US. Both start Wednesday, as do Timberland Investment World Summit (in Amelia Island), and Hunter Hotel Investment Conference (Atlanta). Making that one very busy day.
The S&P 500 did take out 2800, last week but I'm not sure that will mean much this week. The week after a Quadruple Witch (Expiration of Equities & Index options & futures) is often biased to the downside. That doesn't have to mean stocks fall apart but it does call for more caution than might be expected after an index breaks out to the upside. Then, again, there are those question marks hanging over the FOMC meeting and updated financial forecasts, not to mention the time of the quarter when earnings warnings start sneaking out, after hours. .
ECONOMIC: (Higlights, only, below. Full International Economic Calendar is here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions are the author's, alone, and should be just one factor in more complete due diligence.
March 11—15, 2019 QUARTER FAST COMING TO A CLOSE Fed Chief Powell sat for an interview with CBS' "60 Minutes," Sunday. That's not unusual; both Bernanke & Yellen did before him but the timing seems odd to me, with Trump supposed to deliver his 2020 budget on Monday. Say this for Trump—the Federal Reserve Board has been filled more completely under his watch, then in any other time in recent years. Powell declared the Fed is independent, and doesn't believe the president has the authority to fire him. Many though he'd say the Fed Reserve Board is determined to do more to help the average American but he never quite worked it in. Then, again, perhaps unlike his predecessors, he chooses not to stoop to what people want to hear, unless it's something he can deliver.
China has removed a planned trip to President Trump's Mar-a-Lago Florida property, originally on Xi's schedule for late March, around the 27th. It was removed from Xi Jinping's calendar, Fox Business reported, without attribution, to save embarrassment if it had to be removed closer to the date because a deal still hadn't been reached. The report said Xi may still come in April but it was safer to wait until the deal was struck.
Aside from another near certain defeat for Prime Minister May's Brexit deal with the EU, the only suspense in the UK will be whether Parliament than votes to postpone Brexit from its current March 29th exit date. Some have called for a vote on canceling Brexit altogether but that's not about to happen, IMO. The UK will also reveal its Jan GDP, Trade Balance Industrial & Manufacturing Production and other data, this week.
Closer to home, Trump is scheduled to unveil his 2020 budget, Monday, with rumors that he'll ask for close to $9B for his wall, in that document. If he couldn't get an all Republican Congress to vote for $5.7B, and couldn't get such a vote from a split Congress, either, what makes him think he'll get $9B from that same split Congress? But Trump has trouble with reality—confusing a so-called "reality" program with the real thing, so why would a little thing like the facts of life deter him?
The data this week includes Jan Retail Sales (Mon.), Feb. CPI, (Tues.), Durable Goods Orders & Shipments, & PPI (Wed.), while Thursday promised Jan New Home Sales. Some of this data was delayed by the partial government shutdown, so a bit stale on delivery. Friday promises Feb Industrial Production/Capacity Utilization, the Empire State (NY Fed) Manufacturing Index, and Jan JOLTS.
Of course the most influential item on the Economic Calendar is Quadruple Witch, Friday. S&P Dow Jones Indices announced Dec 20, 2017 that it was considering rebalancing its indices not on close with the Quad Witch Expiration but, instead, rebalancing on the last business day of the rebalancing month. Alas, that was never changed. Despite all the fanfare with which news of the proposed changed date, S&P Dow Jones Indices released the 2019 Rebalancing calendar without any changes. When Quarterly Index Futures Expire, the indexes, themselves, will be adjusted on close. That's what makes the Quadruple Expiration such a big deal.
Please note all the bigwigs speaking on Tuesday: CFTC Chairman Giancarlo, SEC Chief Clayton, FDIC Chair McWilliams, and Comptroller of the Currency Otting among the speakers at the Institute of International Bankers, Tuesday, even as Wells Fargo CEO Tim Sloan will be testifying at the US House Financial Services Committee, at about the many scandals the bank has been ensnared in, plus the International Futures Industry will meet here in Florida, even as the UK Parliament votes on Brexit and a delay. Were it not for the Quadruple Expiration Friday, Tuesday would be the biggest day of the week.
Earnings a skewed heavily towards retailers but none of the giant companies that have reported previously. There are a number of radio firms reporting, mostly Tuesday, and a couple of large tech companies—Broadcom, Jabil Circuits, & Oracle most specifically, all three on Thursday, along with Adobe. I noticed, Sunday, for the first time, that ELF Beauty popped up in Target stores. The struggling make-up company announced with its earnings, last week, that it will be closing all its retail stores. Makes sense, if you've landed Target, Forever 21, and Ulta Beauty, the latter reporting Thursday. I've long waited for Ulta to stumble but it hasn't, really, yet. Sooner of later it will.
South by Southwest continues this week, the final weekend next week. Meanwhile the NCAA Division 1 men's basketball championship—aka March Madness—kicks off with the first round starting Friday. You wouldn't think anything could distract from a medical meeting as big as AAC (Cardiology) Scientific Sessions, starting next Saturday but March Madness can manage it. Meanwhile, Energy traders will want to tune in to CERA Week, which starts Monday. Also Monday, Deutsche Bank's 27th Media, Internet & Telecom Conference, and Cowen's 39th Annual Boston Health Care Conference—the preferred spelling at Cowen, who'll be competing with Barclays Global Healthcare Conference in Miami Beach.
Sunday, the Mortgage Bankers Association opened its Mid-Winter Housing Finance Conference, in Colorado, while Bank Innovation IGNITE19 starts Monday, in Seattle. Conversational Interaction Conference, also starting Monday, is about Connecting Humans & Machines, with Alexa the clear front runner, to day. Meanwhile, Healthtech's Molecular Medicine Tri-conference kicked off Sunday, in San Francisco, one of the biggest healthcare conferences of the year because of the several sub-conferences, including Microbiome-based Precision Medicine, and Cell-Based Cancer Immunotherapy, which reminded me that the real headliner on "60 Minutes" Sunday was not Powell but the doctors who explained how they used altered HIV viruses to insert a missing gene in patients suffering from sickle cell anemia. WOW!!!
Other Events of note include Bk of America Merrill Lynch's Consumer & Retail Technology Conference, Tuesday, RBC Capital's Financial Institution's Conference, the same day, and Susquehanna's SEMI & Technology Conference, also the same day and like RBC's, in New York. CanaccordGenuity's Musculoskeletal Conference, in Las Vegas, starting Tuesday, capitalizes on AAOS—Orthopaedic Surgeons meeting there, starting the same day. Usually, half a dozen orthopaedic device companies host analyst meetings at ortho conferences but not this year—for whatever reason. I checked about 8 device companies and not one scheduled an analyst meeting during the conference. Can't tell you why.
Thursday is the next big meeting day, with JPMorgan hosting Gaming, Lodging, Restaurant & Leisure Management Access Forum, also in Las Vegas, while Piper Jaffray will host a Security Symposium the same day, in Chicago, and Berenberg Design Software, in NY, even as Jefferies is hosting "Brands Still Matter (BSM)" in NY, JPMorgan its 7th Large Bank 1-on-1, even as Stephens hikes to the San Francisco, the same day, for its 11th West Coast 1-on-1, with 20 companies that range from EGHT, to ANDE, CSGP, to DPZ, FNF, FIVN, GLUU, HOMB, TREE, LMNR, LAD, NEWR, PKG, WTTR, SUM, SVMC, the coast the only thread that ties them together. Goldman Sachs, on the other hand, will be in London for European Chemicals. And if GE hasn't done enough to discourage investors, year-to-date, it's hosting an Outlook call, with its leadership team, Thursday morning.
The Bk of Japan holds a Monetary Policy Meeting, that will end in the wee hours of Friday, east coast time. I consider it such a hopeless case, I simply don't see what the BoJ could possibly say or do that will pull that country of its long-standing funk, especially when Europe is on pins & needles about Brexit and the US & China are struggling towards a lasting trade truce, with China's economy clearly weakening. What was stunning, however, last week, was the big pop in the US dollar, and the way the financials finagled their way out of losses, Friday, to close with a smidgen of gains. Of course, with Boeing sure to be under pressure, to start the week, after another 737 plane crash, any follow through by the financials may not be enough to force the indices into positive territory. Then, with a Quadruple Expiration at the end of the week, much of what happens to stocks, this week, may have little to do with actual corporate activity. But it might pay to bear in mind that the number of companies appearing at conferences, with the quarter fast coming to a close means, suggests that earnings warnings & upside statements could arrive in a flood. So, unless you're absolutely certain about the earnings about to arrive, lightening up may be the best course of action, for now.
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security, The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
March 04—08, 2019 EXPECT MORE CONSOLIDATION to START MARCH Trump's North Korean tet-a-tet failed to meet any goal; Trump canceled plans to raise tariffs on Chinese goods, even though there's not only no agreement with the Chinese but Trump, now, wants to throw out his negotiator's M.O.U.'s; and even the Senate will put together a majority to vote for the Democrats' bill seeking to block Trump's attempted money grab from other allocations to fund his border wall, which is nothing more than a campaign promise by a neophyte politician who still doesn't 'get' the idea of checks and balances, and Congress holding the purse strings. On top of all this, Trump has, now, demanded that China immediately remove all tariffs on US Agricultural products.
For me, it all adds up to expectations for stocks to continue to consolidate the year-to-date gains, albeit with an upside bias—at least until the FOMC meeting ends on the 20th. (Whether updated member projections—the dot plots—still show 2 rates hikes in 2019 will determine what stocks do afterwards.) The calendar will play a large role in another aspect of equity market action—retailers' likely inability to push spring merchandise with Easter not until a month after the FOMC meeting (April 21st)—about as late as it gets, after years of very early Easters. And, if that wasn't enough to deter spring shoppers, the reported lower Federal tax refunds will retard spending enthusiasm in March, too. For me, that all seems a prelude to a less celebratory market.
On the other hand, we may now have entered one of those perverse periods when bad news is good news for stocks. High Jan. Retail Inventories, Monday? Stocks celebrate. Weak Durable Goods Orders & Shipments? More celebrations! Though I don't think the market will be pleased if seasonally adjusted Dec New Home Sales are weak, Tuesday, or Jan. Factory Orders, on Wednesday. But whatever you do, don't hope for really weak numbers out of Friday's February Unemployment Report, though, clearly, a 28 day month that saw a polar vortex freeze and snow that blanketed a large part of the country won't offer up anything near the boffo job numbers reported in January—304K jobs added. But, for the most part, to a some extent, bad news will be good news, because it keeps the Fed on pause. IF the FOMC is going to change its tune, the first to reveal such changes might be either Esther George or Loretta Mester, since they were staunch hawks until the last minute.
FOMC Chief Powell will speak, Friday, prior to the SIEPR Stanford Institute for Economic Policy Research Economic Summit and dinner, March 8th, sponsored by Dodge & Cox and Heidrick & Struggles (HSII) but I don't think he'll flip flop that soon. The last thing he probably wants is to be accused of flip flopping, when data dependency requires not letting any single data point change his mind. Note, also, the ECB meeting, the Draghi post-Meeting press conference running into the early pre-market hours in the US Thursday. The RBA (Aussie) will weigh in on rates in the wee hours of our Tuesday morning, while the Bk of Canada rate meeting will end fairly early Wednesday afternoon. When FOMC members start talking about last December's market dip having little impact on the data (which is arriving late, because of the partial government shutdown), and appearing to be a minor glitch, rather than a sustainable problem to be addressed, that's when the pivot to a more hawkish stance will start making itself known.
The Earnings Calendar promises more retailers, the biggest of which are Target, Tuesday, followed by CostCo Warehouse Thursday, but it's not without some tech charms like.drone chip maker Ambarella, fiber optic manufacturer Ciena, China's Sina & Weibo all Tuesday's highlights. Also Thursday, reports range from Burlington Stores, to still shrinking Barnes & Noble, to tax preparer H&R Block, to casino supplier Int'l Game Technology, homebuilder Hovnanian Enterprises, chip designer Stratasys Ltd, and computer and server distributor Tech Data. Still, I don't see any real threats from the reports scheduled for release.
Which brings us to the Events Calendar, where the biggest event in terms of presenters and attendees is likely to be Raymond James' 40th Institutional Investor Conference. However, in terms of coverage of a sector, the award goes to Citi's Global Property CEO Conference in Hollywood. Citi didn't say whether that's West Coast or East Coast Hollywood but we're pretty sure it's Florida. Both RayJay & Citi started Sunday night. Next up, JPMorgan's Aviation, Transportation, & Industrials Conference, in New York, not starting until Tuesday, which may be just what NYC needs to recover from the snow storm aiming at it as I write. (NYC Schools scheduled to be closed, Monday, according to Florida news reports, Sunday late afternoon.) Also Tuesday, Evercore ISI's Annual Industrial Conference (NY), Wells Fargo's Homebuilding & Building Products Forum (NY), S&P Global Intelligence 32nd Annual Power & Gas M&A Symposium (NY), and several I-banks hosting meetings at OFC (Optical Fiber Communications) in San Diego.
Wednesday, UBS hosts Global Consumer & Retail Conference (Boston), and Evercore ISI Energy & Power Summit (Houston). Over in London, Credit Suisse will host Global Healthcare starting Tuesday, and Morgan Stanley, Wednesday, European MedTech & Services Conference, even as Jefferies hosts Paper & Packaging, also in London, also starting Wednesday.
But I want to circle back to Citi's Global Property CEO Conference because of the recent announcements about the slug of stores being closed. Mall REITs have, basically, ignored store closures, of late, instead rising because the Fed is on hold, which makes their yields more attractive, their cost of funds low. Gymboree is closing 800 stores. JCP is closing more stores, and Gap 230, over 2 years. Payless ShoeSource is the hammer of closures, with about 2.1K US & Puerto Rican stores closing shortly, by the end of March, its bankruptcy a liquidation. Granted, many of its stores are not in enclosed malls but, instead, in strip centers but, even then, there comes a time when the number of closures in a strip center reaches critical mass. If a Payless, Toys 'R US & Babies 'R Us all close in a Target strip center, it has to, ultimately, impact TGT.
Around here, some TOY stores were snapped up by Dicks Sporting Goods and Fresh Markets, the new retailers opening fairly quickly, the concessions offered to get them there unknown. But the large number of doors closing, so far this year, will unquestionably impact the mall REITs sooner of later. Where Sears left Town Center in Boca Raton FL. Simon Property was able to shut off the mall at its Sears' former entrance, and minimize the impact but that's a monster sized space to fill, and now Tesla is leaving a leasehold that's seen 5 different occupants in the past 12 years. Where Nordstrom is closing its fairly new store in the Wellington Mall, in Florida, it's hard to imagine a replacement coming quickly. There's already a Dillard's & JCPenney, the latter probably not done with store closures, yet. There's already an Ashley Furniture store there, and maybe it's high time auto dealers started taking a hint from Tesla and set up new car dealer showrooms in malls, as they do at Town Center about 4 times a year, offering a selection of cars to test drive in the parking lot. Heck! Sears had a Service & Tire Center in its mall store, while luxury dealers do put show cars in the hallways, to attract attention. Town Center, anyway, still draws a large contingent of tourists from the US, Canada and, especially, from South America and Europe. Nuts as it sounds, Children's Place bought the Gymboree & Crazy 8's names, IP, and related property (websites), while Gap bought Janie & Jack. I suspect PLCE bought the portion it did for $76m is a purely defensive move. GPS, on the other hand, might well like to mull its intent with Janie & Jack as it works towards separating Old Navy in 2020. Both Baby & Kids Gap are successful division of GPS, though their results are not broken out—mostly to keep the Street & Investors from learning just how poorly the GAP adult division is really doing.
All that said, at least until Friday's Employment Report, I expect stocks to continue consolidating year-to-date gains, with a slight upside bias. Of course, if you're smart, you should consider replacing stock with options, and socking away a lot of cash for a better opportunity. Next whiff of business slowing could well trigger a December swoon repeat.
February 25th—March 1st, 2019 FOMC CHIEF POWELL STARS FOMC Chief Powell's Semi-Annual Testimony before the US Senate & House (Tues/Wed) should not be dismissed without a 2nd thought. In fact, much as Powell is probably relieved that the equity markets have recovered so much of December 2018's losses, it's not hard to imagine him worrying that things are getting a little out of hand, again, and reminding the Street that rates could resume rising, if incoming Economic data warrant it. For now, I don't see that happening because Federal agencies are just starting to crawl back from their shutdown, so data arriving, even this week, are a little moldier than normal. I don't think Powell will want to freak out investors since, as FOMC member Bullard said on CNBC, Friday, US Rates are quite high compared to the rest of the developed world But, likewise, Fed Vice Chairman Clarida said, last week, he's not sure if the US Economy is slowing down or not, given that data hasn't been released. So, while I believe no one is a big rush to resume raising rates again in the short term, I do think Powell will remind the Street that rates are a two-way street, and could rise as easily as fall, depending on how the data unfold.
Powell won't be the only FedHead speaking this week. The NABE (National Association of Business Economists) hosts its 35th Economic Policy Conference (EPC) this week, featuring many Fed speakers as detailed below. Even past FOMC members William Dudley & Alan Greenspan are speakers, in addition to Clarida, and Bostic. But outside NABE, Fed speakers inclkude Harker, Kaplan, and Mester. And note, Housing Data Tuesday, from S&P CoreLogic Case-Shiller and the FHFA, in addition to Housing Starts/Building Permits, all for December, on Tuesday, plus Wednesday, NAR Pending Jan Home Sales. With mortgage rates backing off from 5.2% to 4.41%, according to some sources, there's reason to feel more optimistic about the spring selling season than there was a few months ago. Other big data this week includes 18Q4 GDP (which includes PCE), again data old enough it's barely helpful in gauging the economy's status, especially since it's reasonable to assume that non-essential government workers who knew they were marching towards a partial shutdown, and a lack of paychecks, probably started to pull back even before so-called 'non-essential' workers were told to stay home, on December 22nd.. Likewise, Friday, the government is supposed to deliver Jan. Personal Income & Dec. Spending, both sure to be influenced by the partial government shutdown. We've already been told that Dec Retail Sales declined (-1.2)%, to the Street's shock, so unless this fresh data is diametrically opposed, there may not be great news in that data, either; Most of January lacked paychecks to Coast Guard, and 800K other government workers, in what was one of Trump's worst calculations, having boasted of his pride in shutting down the government until Republican Congressional members started freaking out, and furloughed Federal workers started showing up at soup kitchens, told to go to their banks to get a loan by Wilbur Ross, another tone deaf member of the administration. Of all the data to be released, the ISM Manufacturing Index might offer the most contemporary and insightful information of all I'd also bet that Michael Cohen's testimony, this week, will be draw dropping—it's what he's set out to do. And who can blame him? Trump dumped him like a hot cake—none of the "good man" talk he reserved for Flynn & Manafort, or any of his other felonious cronies.
And not for nothing, Friday is the day the debt ceiling suspension ends, and Saturday the day Trump threatened to raise the tariffs on $200B of Chinese goods from 10% to 25%. I doubt tariffs are rising, since Trump has made clear he feels good progress is being made by negotiators, and even said, last week, March 1st isn't a magical date, in contrast to what he was saying in December. The Debt Ceiling, however, is another issue, altogether, for a President who, on the campaign trail, claimed he could wipe out the deficit in 4 years but instead increased it by another $1 trillion.
Which brings us to the Earnings Calendar. What are the odds that 3 fairly newly listed companies involved with "new" ways to sell cars would be reporting at the same time, on Thursday? They are: CarGurus (CARG), Cars.com (CARS)—the oldest of them all, and Carvana (CVNA). Welcome to the new world, just as new car sales, in general, are slipping, which may help used car markets—though that wasn't evident in AutoNation's report last week. Likewise, competitors, of a sort, Nielsen & comScore both report Thursday. It seems logical for NLSN to buy SCOR, for its own survival, since SCOR is the internet specialist, and networks were never satisfied with NLSN TV-viewing data, let alone its attempts to cull online data.
But the focus shifts to retailers, this week, includes, on Monday, Carter's and Etsy. Tuesday, Autozone, Big Five Sporting Goods, Home Depot, Macy*s, Office Depot/Office Max, and possibly, Dillard's, which still counts so many family members as owners and managers, it doesn't feel compelled to alert the Street long before its report is released. Also Tuesday, Carcker Barrel Old Country Stores, Papa John's, Red Robin Gourmet Burgers, and for that matter, Realogy, TiVO, and Toll Brothers. On Wednesday, reports are expected from Best Buy, L Brands & Lowe's, along with Booking.com, Carol's Restaurants, Churchill Downs, Monster Beverages, Qurate Retail and Steve Madden. Others will focus on Hewlett-Packard and Square. Thursday, retailers reporting include Gap Stores, JC Penney, JD.com, Nordstrom, and notably, Sea World & Sotheby's. Then, again, so will Marriott and Marriott Vacations Worldwide, Starwood Properties Trust, Hostess Bakery Products (personally addicted to the all chocolate Hostess Cupcakes), and Wingstop. Thursday will also be notable for the first returned to public markets Dell Technologies Report, along with VMware & WorkDay.Also prominent on this week's calendar, lodging companies, especially trusts, along with smaller restaurant chains. Also, lots of smaller Hoteliers, reporting this week, a couple of larger tech companies, including newly public Dell Technologies, the two largest global beer companies, and TV Station owners. Friday, look for FootLocker & TJMaxx, though FootLocker took away some of the suspense with a slug of announcements last week. Champs is a cash machine here, more so than the FootLocker brand while the House of Hoops is just a waste of space, so good that Nike is paying half the freight.
Which brings us to the Events Calendar, the star of which is likely Morgan Stanley's TMT, starting Monday, out in San Francisco. Even larger, in number of attendees and presenters, are the connected JPMorgan events in Miami Beach—High Yield & Leveraged Finance Conference, and Global Emerging Markets Corporate Conference. Other notable events include BMO Capital's 27th Global Metals & Mining, and the coincidental Personal Care Products Council Annual Meeting in Palm Beach FL (so soon after CAGNY, nearby), and the Global Beauty and Wellness Exchange in Blufton SC. Back to Monday, BAML hosts Animal Health, JMP Securities' 6th Technology Research Conference. The Aerospace & Defense Industries are mounting a Manufacturing Summit, in Las Vegas, the Mortgage Banking Association National Mortgage Servicing ,IQPC Autonomous Cars, and AMWA Convenience Retailing University.
The Fashion Industry will be taking over New York City, starting Monday, with FAME & Sole Commerce 2 of the related events. That usually makes city dwellers a little sour. Meantime, Mobile World Congress will be held in Barcelona Spain, a few I-banks hosting clients over there, even as Pret-a-Porter takes over Versailles, France.
Tuesday, it's more of the same, with BAML hosting Global Agriculture & Materials, in Ft Lauderdale, Berenberg a one-day NASH event, in NY, where Intercept should be the star, causing Gilead more pain. Also Tuesday, Piper Jaffray's Annual Energy Conference in Las Vegas, even as IP—International Petroleum Week is in London, and the Semi-Annual EnerCom Conference is in Dallas TX, starting Wednesday. Keybanc hosts Emerging Technology Conference in San Francisco, the 12th Annual Medicaid Managed Care Summit in D.C, along with the 3rd Opioid Management Summit.
Wednesday, Leerink is hosting its 8th Annual Global Healthcare Conference, in NY. Now owned by Silicon Valley Bank, Leerink is still one of the most respected Healthcare research houses. Citi hosts Asset Management, Broker Dealers & Exchanges Conference, also in NY. Wells Fargo hosts its 22nd Real Estate Securities Conference, also in NY, BTIG Medical Technology, Life Science & Diagnostic Conference, in Snowbird UT. The Entertainment Finance Forum in L.A. is a fish out of water, this week, as is ICSC's OAD—Open Air Center Summit, in Austin. Of course, Wednesday, you can tune into Powell, or Michael Cohen, a former fixer for Trump, also testifying at Congress. Likewise, as referenced earlier, NABE's 35th Economic Policy Conference starts Wednesday, while yet another Triumph of Ag Expo opens in Omaha NE, who leading light, Warren Buffett & Berkshire Hathaway took a sucker punch to the belly on its investment in Kraft Heinz, which wrote down its brands and lost a good chunk of its value, last week.
Thursday, I'll be curious to hear how busy Credit Suisse's Asia Frontier Markets Conference will be in NY. I have no doubts, however, about KBW's Cards, Payments & Financial Technology Symposium, also in NY, or Commodity Classic—Grow Beyond, in Orlando. While it doesn't get much attention in most corners of Wall Street, Society of Consumer Psychology should, also Thursday, in Savannah GA. ACTRIMS, a consortium of Multiple Sclerosis Centers meets starting Thursday, in Dallas, while Clinical Immuno-Oncology will be held in San Francisco. The International Congress on Hematologic Malignancies: Focus on Leukemia, Lymphoma & Myeloma will attract a lot of interest in Miami Beach, even as the Tokyo Auto Show opens to the
All in, the small gains eked out last week suggest a market consolidating, which seems long overdue. I'm not that optimistic about the coming Retailer earnings, because I found the post-Christmas mall traffic down significantly, y/o/y, and February has been a lot worse. And that's down here, in Southern Florida, where the weather has been no barrier to access, as the Polar Vortex has been in other parts of the country, storms again this weekend. Having said that, it's becoming harder to judge retailers by their mall traffic alone, as more of their sales move online. Still, post-Christmas sales & returns, as well as usage of gift cards generally boost traffic and that wasn't really a big factor, this year. That's quite troubling, especially with mall REITs so strong of late, as interest rates have backed down, and the Fed has paused. It's time for some caution or, at least, a little less enthusiasm.
February 18—22, 2019 FOMC MINUTES & WALMART HIGHLIGHT the WEEK The highlight of the week may be the FOMC Minutes due Wednesday—at least until the week after this, when Jerome Powell testifies before the Senate & House on 26the and 27th. The Minutes should be filled with discussion of re-examining more rate hikes this year, as well as the "automatic" run-off of the balance sheet in the background. Even Cleveland Fed president, Loretta Mester, last Tuesday, 02/12, stated the FOMC, at coming meetings, will be "finalizing our plans for ending the balance-sheet runoff and completing balance-sheet normalization." The next meeting isn't until March 19th—20th.
A long-time hawk, Mester's casual confirmation of rate hikes stopping and, at coming meetings, 'ending the balance sheet run-off,' is uncharacteristic. Maybe Mester's switch in posture will be explained at an event starting Thursday--the USDA 95th Agricultural Outlook Forum The Roots of Prosperity (Arlington VA thru 22nd). It's part of the USDA (US Dept of Agriculture) Office of the Chief Economist (OCE), and subtitled "Growing Locally, Selling Globally," with speakers including the USDA Chief Economist Robert Johansson, Sec'y of Agriculture Sonny Purdue, & Dpty Sec'y Steven Censky, plus a Plenary panel that includes the Governor of Nebraska, Pete Ricketts, NASDA (Nat'l Ass'n of State Departments of Agriculture) CEO Dr. Barbara Glenn, and others most wouldn't know outside agriculture. The heart of the conference is outlooks for the many ag subdivisions, like Oilseeds, China's Market, Sugar, Grains, Livestock, Sweeteners, Food Retailing, Dairy—even Indian Merchant's Chamber of Commerce (Native Americans, not the country in Southeast Asia). There are sessions on organic agriculture, led by the Organic Farming Research Foundation, as well as USDA subdivisions that includes the Forest Service, Grain Inspection, Ag Research, & both Animal & Plant Health Inspectors. So perhaps there's something in farm country that changed Mester's mind. And if not in Ag, perhaps something in auto land, as Cleveland is in the heart, also, of automaker country. More Fed bosses will be speaking this week, a number of them on "The Future of the Federal Reserve Balance Sheet" at the Univ. of Chicago's Booth School of Business 2019 Monetary Policy Forum, taking place in NY—which means a lot of opportunity for CNBC, Bloomberg & Fox business networks to interview out of town Fedheads.
The NAHB Feb. Housing Market Index, out Tuesday, will be torn between a polar vortex that kept people inside, and falling mortgage rates that beckon house hunters. Meantime, the OPEC and 10 non-OPEC oil producing countries are meeting in Vienna, at OPEC headquarters, to discuss quotas and, in all likelihood, extending them, if not strong arming more cuts, which only Russia, outside OPEC, is in position to do given its high production rate. Saudi Arabia's Saudi Aramco already shut down its largest field, last week, for an indeterminate time. The Saudi's have cut the most production, overall, since the first quotas were instituted. Given Pres. Trump's support despite Congress finding the crown prince responsible for Koshoggi's murder, the House of Saud, and therefore Saudi Aramco, walks on eggshells. Should the price of oil rise considerably, and draw comment from Trump, the Saudi's would be forced to do whatever it is he wants, putting them at odds with their intent to boost prices.
Speaking of Trump, he'll be speaking on Venezuela, in Miami, Monday evening, on his way home from Mar-a-Lago in Palm Beach, Trump was first to leap into the fray, for reasons that remain a mystery to us. We can find no reason other than his constant desire to be in the limelight and stir up the pot.
You might recall how bad reported Dec. Retail Sales were, when they were finally released. In fact, despite strong ecommerce gains reported by Amazon, Etsy, Target, and Walmart, the Retail Sales report claimed they rose only 3.9%?? No, Dec. Retail Sales claimed eCommerce sales FELL (-3.9)%. That should make Wednesday's 18Q4 eCommerce Sales, from the Commerce Dept. especially interesting. Lower oil prices have certainly helped consumers—especially those who heat with oil, rather than natural gas, after a polar vortex interrupted a warm winter. The polar votex has helped even those of us in Florida. My bill for January was the lowest in the history of owning this house, for 26 years, at just $70.66, despite running A/C on many afternoons when the sun heated up my office, along with running my dish washer, clothes washer & dryer, and oven. While we're having ridiculously hot days since the chill dissipated, with temps unseasonably warm—in the mid-80's—that polar vortex chilled us enough for my usage to drop by 132 kw, this year. It also helped that this year's "month" was only 29 days against 32 last year but still, that drop in usage put the bill $14+ below any bill FPL has ever sent before. So the Sauds & other producers want higher oil prices while Trump and consumers like the lower prices just fine—a 10 year run of new car leases & purchases putting millions of consumers in more energy efficient vehicles, just as Europeans were learning that the promised savings of their diesel power vehicles were all a mirage, cooked up by software engineers to fool regulators.
Speaking of cars, and industrials, the headline events of the week include Citi's Global Industrials Conference, starting Tuesday, in Miami Beach, as well as Barclays Industrial Select Conference starting Wednesday, also in Miami, Florida. That's a big odd because NAHB—the National Association of Home Builders is hosting its annual show in Las Vegas, starting Tuesday, with the Kitchen & Bath Industry, plus Pools & Spas meeting concurrently. Also not to be overlooked, is CAGNY—Consumer Analysts of New York, meeting in Boca Raton FL, starting Monday, a big event for the household products industry, along with packaged food and beverages. The Citi, Barclays, and CAGNY analysts could have arrived early to catch the Miami International Boat & Sail show, or still have time to see it Monday, a holiday. While we're in Florida, Outsourcing World meets in Orlando, starting Sunday, though ITSM (IT Service Management) meets in Las Vegas, also starting Sunday;. I suspect there'll be heightened interest in CanaccordGenuity's eSports 1x1 Thursday, though it's in Toronto. Then Friday, AAAAI starts—American Academy of Allergy, Asthma & Immunology, in San Francisco, one of the biggest pharmaceutical industry events of the year. Also Friday, Gabelli, then GameCo, now G, Research, is hosting its 28th Annual Pump, Valve & Water Systems Conference, in NY. Sounds like GameCo is working hard to figure out how to survive Mario Gabelli's someday retirement. Heck! Even Bill Gross is retiring, so Mario will someday, too, unless he can pull off a John Bogle (founder of Vanguard), never really retiring but going out still speaking out on index investing and low fees for investors.
As for Earnings, there are a couple of Tech laggards, including Himax Tuesday, Analog Devices and Synopsis Wednesday, Infineon, Intuit, and Hewlett-Packard Enterprise Thursday.I supposed we could include NetEase (Wed.), Baidu, and Zillow (both Thurs) could be considered tech companies, too but all three are consumer internet companies, and that's where we see the Earnings Calendar shifting towards--consumer names, Walmart on Tuesday, the biggest of them all in revenue terms. Restaurants step to the place, starting with Texas Roadhouse Grill Tuesday, Cheesecake Factory and Jack-in-the-Box (Wed.), and Thursday, BJ Restaurants, DinEquity, Domino's Pizza,. Take a look at the tickers emboldened on the Earnings Calendar. Other than a couple of chemical companies whose strong earnings expectations caught my eye, a few auto parts suppliers, and medical suppliers Medtronic (Tues.) & Henry Schein (Wed.), the rest are mostly consumer related, as the calendar creeps into the weeks when retailers will dominate, Walmart setting the tone. It remains the filthiest store I ever enter, my visits strictly to see what the heck analyst fans are talking about. Thursday, I found an elderly woman on the floor right in front of the pharmacy counter, and no one working there, or walking past her seemed to notice. The good news about that was that no one stole her Prada handbag sitting in the child seat of her shopping cart but not one person paused to ask if she needed help, until I did. When I asked pharmacy to call for help I was told they're separate, "tell them at the front of the store." Well, I certainly wasn't leaving her there, so stopped a woman who was nice enough to pitch in, and run to the front to snag an Ass't manager. He didn't know what to do other than to call 911, so I suggested he bring over a chair from the pharmacy dept, and help get her into the chair. I knew she didn't have any broken bones because I saw her attempt to rise, herself, moving her legs, feet & arms. The next analyst who says anything nice about WMT needs to have their eyes opened. It's an awful operation that doesn't train even assistant managers in protocol in case of an emergency, let alone any other worker—one of whom told me she couldn't stop moving the stuffed animals to the front of the store because Valentine's Day was only for a few more hours, and they needed to be sold before the day ended.
In sum, with the Fed out of the way, the Minutes Wednesday, should do nothing but confirm it. Then, the street will be examining somewhat moldy data, finally coming out of the reopened Federal government, and looking ahead to Powell's Congressional testimony the 26th and 27th. In between, well get Walmart's earnings, which I don't expect to excite. The rally, at 8 weeks old, is getting long in the tooth so, perhaps, time to seek out winners to exit, rather than worry about cash not being deployed.
February 11—15, 2019 BULL MARKET ACTION on CLOSE NOT IN CHARTS There should be a giant question mark floating above this week's Economic Calendar, given all the agencies working to compile data since the Federal Gov't partial shutdown. And the data being released, is sometimes November data, when December of January would normally be on tap. Frustrating enough for data to be a bit moldy when it arrives on time, it's all but worthless when it's delayed by a month or two. And maybe it's just me but it isn't hard to imagine some workers at these Federal agencies, urged to break their backs to getting delayed data ready, sitting around wondering 'why bother?,' when Trump might only shut them down again, this Friday, the 15th.
Nonetheless, if things proceed on plan, Wednesday should bring the US Jan. Consumer Price Index, Thursday Jan. Producer Prices and Final Demand, while both Jan Retail Sales & Nov Business Inventories are under the shadow of that enormous question mark, though Retail Sales is supposed to arrive, Inventories questionable. Note, also, how little Treasury issuance is expected, at the same time there's an abundance of Fed speakers. Fed's George, a former hawk, is sounding more hawkish again. Her position may seem more reasonable when the Fed's JOLTS release arrives Tuesday, many hours prior to her Kansas City speech, just as the January Unemployment Report at 304K jobs added in January must have made Jerome Powell's cheeks turn crimson, right after he pivoted to dove from hawk. Fed's Mester speaks Tuesday, also, even later in the evening than George, and again on Wednesday. Likewise, Fed's Bostic & Harker speak, separately, on Wednesday, also, Bostic in Ireland. In addition to his economic outlook speech on Wednesday, Harker speaks again on Thursday, though the topic of 'Leadership' doesn't sound conducive, at first glance, to opinions on rate hikes. But if Harker's view on 'leadership' includes the strength of leadership to hike rates in the face of the President and markets urging you to back off, then, he could turn the topic into a treatise on rate hikes. Conversely, San Francisco Fed Pres. Daly, Friday, could well include her views on rate hikes in her speech at the Economic Forecast Conference, since any view that includes faster growth, labor shortages that push up wages, or tariffs forcing companies to pass along higher prices could all feed into a hawkish view on interest rates. While the FOMC doesn't meet this month, at all, this week, alone, the central banks of New Zealand, Sweden, and Norway all are scheduled for monetary policy meetings. Granted, none are as influential as the Bk of England's meeting last week but, then, Parliament's debate on P.M. May's Brexit deal, Friday, is key, just as the possible partial US government shutdown, that day, is too.
Which brings us to the Earnings Calendar, voluminous, if nothing else. And there are a few key technology companies expected to report, including Activision Blizzard, Akamai, Groupon, Twilio, NetApp, Applied Materials, Arris Networks, Cisco Systems, Equinix, CME, LogMeIn, Nice Systems, nVidia, Zebra Technologies, and Yandex. Don't agree that CME is a technology company? I'll be happy to debate the point, anytime.
In addition, the Earnings Calendar is spotted with homebuilders, healthcare providers, a few large REITs, hoteliers, 2 large mattress companies, along with the first earnings report as a public company of Yeti, if my memory serves me. Berkshire Hathaway hasn't reported, yet but, like all public companies gets extra time to prepare its annual report. Last year, that report was delivered on Feb. 24th. This year? There's nothing on Berkshire's website to suggest what day it will arrive but I'd use the year ago date as a guide, and expect it on the 22nd, after the market closes, rather than this Friday. It is always, though, surprising to me that a man who advocates for simplicity, manages to produce a 148 page annual report. Then, again, Buffett loves dividends, except when it comes to Berkshire Hathaway paying out any.
Which brings us to the Event Calendar, with investment banks creeping back into the schedule. Credit Suisse happens to wear the I-bank crown this week, for its Energy Conference, which started Sunday evening, in Vail Colorado, and its Financial Services Forum, which starts Monday, in Miami Beach—a good winter for southern meetings, given the frigid arctic vortex which has swept the country—not to mention day-time temps near mid-70's to low-80's predicted for this entire week, in Southern Florida. Stifel is hosting a Biopharma Ski Summit in Park City Utah, starting Monday, when the annual BIO CEO & Investor Conference starts in NY. Not great timing. Barclays is hosting Industrial Select, also in Miami Beach, starting Tuesday, while Goldman Sachs hosts Technology & Internet, in San Francisco. Morgan Stanley is hosting Chemicals & Agriculture Corporate Access Day, Thursday, when KBW is hosting Financial Services in Boca Raton FL, even as BMO Capital hosts Auto Financial Forum, in toronto.
It's the season for agricultural expos, two big ones starting Tuesday in Tulare California & Des Moines Iowa, even as Poultry, Feed, and even Pet Food takeover the Atlanta convention center. Note John Deere's earnings report scheduled for Friday. Other big industry events include New York Women's Fashion Week, which will tie up traffic all week. The Mortgage Bankers' Ass'n hosts a CREF (Commercial Real Estate Finance) Multifamily Housing Convention, so big UBS is hosting the convention reception. The IAB—Internet Ad Bureau hosts is Annual Leadership Meeting, HIMSS is the Annual Healthcare IT Conference, at which Citi hosts meetings. The NBAA Business Aircraft Leadership Conference used to be more Textron & General Dynamics than Boeing but with Boeing's partnership with Embraer, it's now a bigger player in the business airplane market than it used to be. Also of note, Womens Wear Daily's Beauty Forum (after Estee Lauder and Coty were post-earnings stars, last week), NASS, the spine organization Summit, AFCEA West, starting Wednesday, and the American Academy the Advancement of Science (AAAS) Annual meeting, starting Thursday, and the New York International Toy Fair, in NY, none as big as BIO, as mentioned earlier, for attracting analysts and investors.
Markets that open down but finish up, as they did last week, is said to be classic bull market activity. However, after 7 weeks rallying, the charts don't look as bullish as they should. In fact, there aren't many bullish charts, at all, which is quite troubling. Some that look the most positive, like retail REITs, haven't noticed that the bull market in retailers ended with Macy*s' warning back in early January. Then, there's the action is Amazon, itself, arguably the fastest growing large retailer in the world. After hitting an all time high above $2k p/share, and momentarily ranking as the largest market cap stock in the world, it's trading more 22.0% below that all time high, looking anything but bullish. But, at a still very healthy 25.0% above its 52-week low, there are probably many computers programmed to light up—perhaps to rush into activity--when its decline equals exactly 50.0% of the gain--the 50.0% mark a standard retracement in technical analysis. Then, again, if you're looking for a bullish leaning chart, gold might qualify, even without the inflation that usually triggers the metal's gain. So much for the gold replacement bitcoin was supposed to be. Gold, instead, is looking shinier. Please don't ignore the less than bullish charts that suggest the post-Christmas rally, for now, isn't all it's cracked up to be, yet not exactly hinting at imminent selling, either. Such indecision suggests caution, rather than throwing caution to the wind--at least not until the 200 day moving average is exceeded on a closing basis, and confirmed 2--5 days later.
February 04—08, 2019 ECONOMIC CALENDAR UNCERTAIN We'll start with the Economic Calendar, because it's contents are uncertain. During the partial government shutdown, many agencies didn't compile the data they release, which means the penultimate data that relies on components prepared by other agencies can't be produced. The top example would be GDP (Gross Domestic Product), due Wednesday but most likely to be rescheduled. There are components that weren't compiled during the shutdown, so GDP can't be produced until those items are updated. When the data chain will be complete remains an open question, making some items on the schedule either best guesses, or dates were know won't be met. Then, add to that China closed for the week—Golden Week—which incorporates the Lunar New Year which falls, this year, on the 5th. About the only things that will be running in China over the next 6 days are railroads and airplanes. Factories, shippers, etc? Nope! And we should say "Greater China," because Hong Kong, Taiwan, South Korea, and even Singapore will celebrate at least part of the week, if not the entire week. (The Najarian brother who recommended purchasing an option on FXI--the China large cap index--made a rookie booboo. How do you bet on an index that won't fully trade this week? Well, you don't, if you're more aware of your surroundings, rather than just the volume on an option.) But for what it's worth, the purchase of a call option just before Golden Week ends to capture activity when everything reopens usually pays off. FXI has a tendency to rise when the first trades after the holiday ends are booked.
What we do know for sure about the Economic Calendar is that the US Treasury has a heavy week of issuance planned, after one of the lightest weeks of the year. And it's possible demand may be strong, ex-the missing Asian governments—not just because so little was issued last week but because Powell's press conference comments were taken to mean the FOMC is on hold until June, at least, which makes current US Government rates rather appealing. If the FOMC were expected to raise rates at its next meeting, in March, then current rates would be less attractive. That's not the case now—and probably not for the next 5 months. So Wednesday's 10-year auction, and Thursday's 30-year, though small, aren't a worry at all. US rates, especially compared to those in the UK and Europe, are the tastiest yields on "safe" debt.
Other items on the Economic Calendar include Pres. Trump's rescheduled SOTU address, Tuesday, Speaker Pelosi making good on her promise to schedule it after the government was fully reopened. As with most Trump speeches, he'll speak to his base, which will be enraptured by every word, while the Dems will hear every word as stupidity, or worse. He is the most polarizing president in history, who so lacks social graces even people who agree with some of his positions can't support him because of the way he goes about expressing his position. Then, Thursday, the President's former personal attorney/fixer testifying behind closed doors at the US House—Democratic-controlled House. The shame is that it's been changed to a closed door session from open, broadcast hearing, after Cohen claimed the President and his current attorney, Rudy Giuliana threatened him and his family.
Other items of interest include expected central bank actions from Australia, Brazil, India, Russia, Mexico, and the Bank of England—the latter creeping ever closer to a no deal Brexit. If you're up early, Thursday morning, you'll probably be able to catch BoE Gov. Carney's post-meeting press conference on Bloomberg, or at least online. CNBC doesn't bother with more than snippets. So, the ASEAN world is closed for New Year celebrations while the Western world is heavily influenced by a slug of central bank monetary policy meetings.
Which brings us to Earnings, headlined by Alphabet's Google, on Monday. Beyond that, please peruse the Earnings Calendar, and those tickers emboldened because they tell the story for anyone who needs to know more than Google's report. If you're a CNBC fan, you won't hear much, if anything, about the other companies in bold, since CNBC is all about Apple. Facebook and Google, with an occasional side of Netflix. Speaking of FB, its "Communities Summit" takes place in Menlo Park, California, starting Thursday. Then, Thursday after hours, Twitter reports, another CNBC favorite obsession. The financial television network of record will, most likely, not note Mattel reporting Thursday, and Hasbro Friday, both geared up for analyst meetings, this week, at their NY showrooms, in advance of the opening of the New York International Toy Fair, at the Jacob Javits Center. CNBC has only 4—5 stocks on its mind, and HAS & MAT aren't them. If play time weren't enough, the TV Critics Winter Press Tour continues this week, with FX & FOX TV the lead-off presenters. Then, again, MAGIC, the semi-annual apparel show starts Tuesday, in Las Vegas, while in NY, Men's Fashion Week will occupy the week, bleeding into Women's Fashion Week, starting Friday—both involving runway shows for high-end designer lines, as opposed to the ready-to-wear lines presented at MAGIC. Speaking of the financial news network of record, CNBC, its parent, Comcast, is comping against the South Korea Winter Olympics in Pyeongchang started in February, 2018. That's going to make year on year comparisons of viewship and ad sales impossible to match. As well as Comcast just reported for Q4, for Q1 it will have an Olympic obstacle, that will make comparisons look weak. There's nothing that can be done to overcome that.
A couple of other items stand out, this week. That includes Raymond James' Chemicals Forum, in Toronto, Tuesday, and Cowen Group's Annual Aerospace/Defense & Industrial Conference, in NY, Wednesday through Thursday. Another big event is MD&M, concurrent with Electronics West/Advanced Manufacturing Expo & Conference, in Anaheim. MD&M concentrates on Medical Devices, in addition to every other kind of manufacturing represented at Electronics West. And here's one we don't encounter often; Both Swedish Match & Altria's smokeless tobacco products are before the FDA's Tobacco Products Scientific Advisory Committee, Wednesday & Thursday, respectively. While fears of FDA rejection have concentrated on flavors in tobacco—menthol especially—there's been very little discussion of smokeless products, though mouth, throat, & tongue cancer are directly related to smokeless—chewing tobacco.
I expect equities to meander, this week, looking for direction. There just isn't any reason to expect the companies reporting this week to trigger either a severe decline or another leg up in the post-Christmas rally. Sector changes are a different story, as homebuilders (i.e. BZH, MHO), health-care providers (i.e. CNC, HUM), insurers (i.e. ALL. CB, MET, PRU), auto-related (i.e. GPI, ABG, GM, FCAU, PAG), exchanges (ICE, CBOE), energy (i.e. APC, MPC, TOT), entertainment companies (i.e. EA, SFLY, VIA.B, DIS, LGF.A, NWS.A, TTWO), apparel & accessory manufacturers (i.e. RL, COLM, TPR, CPRI), need I go on? Clearly, any sector could be dragged down or boosted by the reports scheduled for this week but none are likely to trigger market-wide reactions. And truth be known, the one report I'm most curious about is NXP Semiconductor (NXPI). Qualcomm walked away from its bid to buy NXPI, when it couldn't obtain all the regulatory approvals it needed for the deal. Not weeks later, in its first concession after Trump tariffs were imposed, China said it could probably approve the deal. Yet, Qualcomm didn't come back, and no one else stepped in, either. That's a name I am watching, and contemplating a call option on, in expectation that someone makes an offer. When better to do that then when chips are out of favor, on a dip in smartphone sales?
And the, last but not least I'll keep reminding myself that ASEA celebrates the Lunar New Year most of the week, China all week, with markets & factories closed. That's the kind of week that encourages meandering, at least until late in the week, when the holiday being over is anticipated. Throw in the fact that data provided by Federal agencies will remain MIA, until it arrives, and there's little reason to get too bullish or negative. Meander should be the pace of the week.
ECONOMIC: (Highlights only below. Full International Economic Calendar here) *****Data from Federal Agencies will be rescheduled as available—some in need of more time before they're ready ****
January 28—February 1st, 2019 REOPENED GOVERNMENT MAY NOT DELIVER ALL DATA The Government was funded for three weeks, making it possible for government agencies, closed for 35 days, to reopen starting Tuesday. (Some museums were able to open as soon as Saturday, the day after the short-term funding deal was announced.) Given that computers were turned on for over a month, and cyber security encryption wasn't updated for over a month, there's little reason to believe that any data expected this week will arrive, and if it does, that it will be more than preliminary. Note, however, the slug of Treasury issuance that was planned, anyway, which may weigh on stocks if the erratic funding of the US Federal Government weighs on investors. Not that they have a lot of choices: US debt is still seen as quality, unlike Turkey's, or Argentina's, the latter suffering from dueling leaders. That means, the highlight of the week may be the FOMC meeting, rather than any data that may or may not arrive. I've left the notations next to questionable data, in case only the most preliminary numbers are announced, or data is postponed.
WSJ claims "Federal Reserve officials are close to deciding they will maintain a larger portfolio of Treasury securities than they'd expected when they began shrinking those holdings two years ago, putting an end to the central bank's portfolio wind-down closer. Officials are still resolving "details of their strategy, and how to communicate it to the public, according to their recent public comments and interviews." But is that Wednesday's news, or merely a discussion that won't be unveiled until the minutes are out in 3 weeks, or perhaps during the press conference? This news was enough to boost stocks Friday morning, so how much more legs equities get out of the concept remains to be seen..
All the Economic Data arriving from non-government agencies takes on more importance as data usually delivered by various government agencies has been lacking, while the partial shutdown continued. Also, last week the Treasury Auctioned virtually no debt and this week there's a surfeit. That might test the market, if buyers disappear--gov't restored or not, since the deal is only for 3 weeks, until February 15th, and Trump's insistence on funding for a border wall probably doesn't disappear. The border is something like 2.3K miles and Trump is demanding $5.7B, just enough for 240 miles. Does that make sense to anyone, or does it seem more reasonable to fund a more permanent solution for the entire border, rather than 240 miles?
With the government reopening, mostly Tuesday, some year on year comparisons, might make sense, for the record. In 2018, the IRS didn't open tax filing season until Jan 29th. This year it's opening on Jan 28th. In 2018, the Pres.'s State of the Union Address was delivered on the 30th. This year it was scheduled for the 29th, & probably gets rescheduled. Do you think Trump has had time to prepare a speech while railing against democrats, campaigning in farm country, and firing 12 illegal immigrants at his Westchester NY golf club that's employed those illegals for 12 years? In 2018, the gov't also shutdown, and reopened on Jan 29th. so, if you are experiencing a sense of déjà vu, you haven't imagined it. This year is a bit of Ground Hog day, most Federal agencies expected to reopen Tuesday, the 29th. Markets will be lucky to get the January Unemployment Report on Friday—confused as it might be with government workers who applied for benefits when furloughed, and contract workers who stood no chance of receiving back pay when government reopens, this week.. January Motor Vehicle Sales could be a nail biter, as consumer and business confidence waned as the 2 parties fought over border wall funding.
Which brings us to Earnings, where financials' importance will diminish, as some techs will rise to prominence along with pharma & biotech companies. On Monday, earnings crank up slowly, with Caterpillar, Celanese, Ethan Allen, Sanmina, and Whirlpool. On Tuesday, note 3M, AMD, Allergan, Amgen, Biiogen Idec, Boeing, Danaher, Ebay, HCA, KLA, Lockheed Martin, Paccar, Pfizer, Pulte Homes, Renaissance Re, Robert Half, SAP, Verizon, and drum roll please, Apple Inc. Some analysts believe the bad news is already embedded in Apple's price but I'm not as confident—not after Intel's report.
Wednesday, watch Alibaba, Ally Financial, Anthem, Boeing, Caci, Checkpoint Software, FaceBook, Fair Isaac (FICO), General Dynamics, Ingersoll Rand, Invesco, McDonald's, Meritage Homes, Microsoft, Mondelez, Murphy Oil, Nasdaq, PayPal, Qualcomm, Royal Caribbean, ServiceNow, Sirius XM, Thermo Fisher, US Steel, Visa & Wynn Casinos & Resorts. By now, it should be clear that earnings cut across every sector, this week, with the exception of Utilities.
Thursday, Amazon, AmerisourceBergen Brunswick, Aptiv, Blackstone, Celgene, Charter Communications, ConocoPhillips, Deckers Outdoor, DowDupont, Eaton Corp, Ferrari, GE, Hershey, Lancaster Colony, ManPower, MasterCard, Northrup Grumman, Parker Hannifan, Raytheon, Royal Dutch Shell, Sherwin-Williams, Sprint, UPS, Valero, Yum China. Which leaves Friday, when reports are expected from Chevron, Cigna, ExxonMobil, Honeywell, ITW, LyondaleBasell, Madison Square Garden, Merck, Simon Property, Virtus Investments, Weyerhaueser, and Zimmer Biomet. Again, if you wanted to know how the US economy is faring, you could do worse than concentrate are this week's reports which lack nothing but utilities. And I wouldn't worry about them, given all the snow, this winter season, with cold even gripping the deep south of Florida.
Which brings us to Industry and I-bank Events, and there aren't many of the latter, as Earnings usurp interest in events. One of the highlights of the week will be Tour d'Alis, a hotel/lodging investment event, whose keynote will be none other than Goldman Sachs' CEO, David Solomon, Monday. Citi is hosting meetings with clients, there. The program reads like a mass analyst meeting for the industry, the government shut-down one detriment the group faced the past few weeks as travel was canceled right and left. I must say I'm attracted to a conference that started Sunday for Bank diretors—"Acquire or be Acquired" in Phoenix. NobleCon15 is Noble Financial's annual small & microcap event, while Stephens' Regional Banks Investor Conference is just what it says it is. (We'd be remiss if we didn't mention more bank earnings expected this week than our Earnings Calendar belies—we cover only major money-center banks & the largest regionals, plus selected foreign banks. That leaves a lot in between.)
Health Benefits, ITXpo, Multifamily Housing, DesignCon (for chips & circuit boards), FIG Partners 23rd Bank CEO Forum, Credit Suisse's Latin American Conference in Brazil, Jefferies' Winter Consumer Summit (in Vail, CO), Laboratory Automation Science (SLAS), SPIE Photonics, and the early, pre-MAGIC events, like Off-Price, get underway before the week is over. So, despite a heavy Earnings Calendar, and a lack of I-bank events, there are still a few, along with some significant industry events that will add color to the earnings already reported. Toy Fair in Nuremberg, Germany may be the biggest event overseas.
All in, whether the post-Christmas rally can continue will depend on the quality of earnings. Yes, it will be nice to see government data return, but with an FOMC meeting, and the heavy Earnings Calendar, the government is more of the side show, as it's been while it was partially shut down, and data was MIA.
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any securities. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
January 21—25, 2019 ALL ABOUT EARNINGS for NEXT TWO WEEKS The Economic Calendar has some holes, because the US government partial shutdown has shutdown some of the data normally released. This week, Durable Goods Shipments & Orders, plus New Home Sales that aren't arriving on the 25th, Friday, if the government isn't fully reopened. And that doesn't look likely, since Trump offered the Dems a 3-year extension of their residency for Dreamers/DACA but no path to citizenship, and no amnesty. Needless to say that was a non-starter.
Meanwhile, in deference to Earnings season, the I-bank calendar of events is mostly overseas, while the World Economic Forum, too, would have limited the number of I-bank events on the schedule. Trump has not only canceled plans to attend WEF but also canceled the US delegation that was going to be lead by Treasury Sec'y Mnuchin. Likewise, yellow vest protesters in France have caused that country's leader, Macron, to cancel his plans to attend. That leads the door wide open to Xi Xinping of China to be the star leader in attendance. (If he's not going, it's nothing I've heard or read about.)
Speaking of China, it's big day of data arrives Sunday night, our time, Monday in China, when the National Bureau of Statistics will release a slug of data, including preliminary Q4 GDP. Weekend financial press was all about the "weakness" in China's economy, which is a little hard to swallow. Are they talking about growth in GDP of 6.0% instead of 6.7%? Do we even trust the statistics China releases? I hardly trust half the data the US releases, until the 2nd revisions, which are really the 3rd time data is offered. In fact, we might all be better off if the partial government shutdown spares us the first 2 attempted guesstimates and goes right to the final version, after the shutdown ends. For the record, the UK will dump a lot of data overnight Monday, Tuesday morning UK time.
Note the especially light US Treasury issuance, this week. Nothing longer than 6-months, something that happens, I guess, if you force people to work without paying them. Given the strength in the job market, at the moment, I wouldn't be surprised if some of the more run of the mill government job holders simply find something else. I don't mean air traffic controllers, since those are highly trained and fairly highly paid critical jobs but one more bureaucrat at the IRS, who hasn't already been deemed essential? You bet I'd work away, if I was in that position and could find a new job. Former government workers are often in high demand in industry, law, accounting, and other professions. In fact, show me an accountant and I'll show you someone who brags about former IRS examiners now working for them.
We might be off Monday for MLK Jr day but the rest of the world will be busier. Prime Minster May is going to resubmit her Brexit deal to Parlament, though not a word has changed. The BoJ Monetary Policy Committee will meet, it's decision out on Wednesday, Japanese time, which means in the wee hours of our Wednesday. Likewise, the ECB MPC is meeting, Draghi's post-meeting conference starting early our Thursday morning—times, I might add, so the US can tune in to watch and/or listen.
Earnings take a day off Monday but ramp Tuesday through Thursday. More Financials, including Capital One, Interactive Brokers, TD Ameritrade, & Discover Financial Services, along with Travelers, UBS, and Synchrony Financial. Away from Financials, there's IBM, JNJ, Abbot Labs, ASML, Comcast, F5, Ford Motor, Lam Research, Las Vegas Sands, Texas Instruments, Varian, Xilinx, and we're not even at Thursday yet. Be my guest: examine those featured below but understand, because we cover only the major money-center banks and largest regionals, like Zion Bank, Tuesday, there are several dozen more small banks reporting that are not listed on our calendar, at all.
Which brings us to the Event Calendar. NAVC: North American Veterinary Conference (Orlando FL thru 21st) will feature Brooke Shields and Rob Lowe—everyone but Ellen Degeneres & Betty White who were prior keynotes. Americans adore their pets. Speaking of Betty White, she is one of the honorees at NATPE—the Nat'l Ass'n of Television Programming Executives (22nd), along with Byron Allen (his new distribution company is turning up almost weekly, when we prepare the films opening list), Robert Greenblatt, Rita Moreno, and Henry Winkler. The best way to get big stars to show up is to offer to bestow upon them a special honor. Works for the Grammys, Oscars, and other less known events, including NAVC & NATPE.
France will finish up Men;s Haute Couture week, before the Women's version launches, on the 21st. Retina 2019, continues Sunday but runs all week. CIBC breaks with I-banks avoiding interference with earnings season, to host its Whistler Institutional Investor Conference starting Wednesday. Also starting Wednesday, the PGA Merchandise Show, which CNBC is likely to cover in one fashion or another. NBCUniversal, after all, is home to the Golf Channel. Also notable, the World Stem Cell Summit (22nd), and Argus' Crude Summit (21st). Thursday, the Sundance Film Festival starts Thursday—talk about star power and honoring those who want to show up; Robert Redford and his Sundance Festival manage that in spades. While we're talking stars, the 2018 Oscar Nominees will be announced on ABC TV, Tuesday morning.
And here's one we didn't expect to see. The Australian Open, a two-week tennis tournament—one of the 4 majors—is hosting a "Fortnite" day, on Saturday, Jan 26th. There's a championship that offers a $100K top prize, and another $150K in cash prizes for runners up. Also, there'll be a pro-am "Duos" tournament, where the top prize is $50K, a few tennis players eliminated earlier in the Open expected to compete for a spot. Saturday is Ladies Final Day, Men's on Sunday. Meanwhile, across the Pacific, in Hawaii, there's a major Dermatology Conference, even as Rheumatology is meeting in Snowmass Village CO. Why do dermatologists always meet where they'd recommend that patients lather up with sunblock, repeat every two hours?
At any rate, it's Earnings that will either release or hold stocks hostage. It was a lot easier, going into last week, when equity valuations were significantly lower. This week, earnings will have to impress, or stocks will likely stall, if not give back some of the last near month's gains. I wouldn't count on stocks being able to add to their post-Christmas gains immediately, unless earnings are a lot stronger than I expect, and a gov't partially shut down doesn't impact the outlooks. If that can happen, then perhaps the government doesn't need the 380K furloughed and not asked to come in and work without pay. Trump didn't clean up the swamp, perhaps he could drain some of the fat, instead.
ECONOMIC: (Highlights, only, below. Full International Calendar here)
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security,. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
January 14—18, 2019 A PIVOT IF NOT A PUT Well, the markets finally got from Powell what it wanted—a more data dependent Fed that's more receptive to exercising patience before its next moves. I'm sure Powell feels he was data dependent all along, and doesn't really intend to take the reduction of its balance sheet off autopilot, which it was Janet Yellen who set out. But he said the obvious—if the economy & data demonstrate something other than the strong economy we're in and foresee, the Fed can afford to be patient before the next rate hike, given inflation remains barely at the Fed's target, and, of course, can slow the reduction of its balance sheet if liquidity suggests money is getting too tight to support a growing economy. So, probably not a real about face or change in his stance but certainly a pivot in his expression of the FOMC's intentions. (Jeff Gundlach disagrees. He said Powell established his "put" last week, and that's that.) And if that weren't enough, one of the more "hawkish" Fed President's, Evans, last week, said the Fed could afford to be patient before the next rate hike, even though he forecast 3 hikes this year. The market, wearing its rose-colored glasses, heard patience not 3 rates hikes this year. Fed's Bullard, long recognized as one of the more dovish Fed members, in an WSJ interview warned the Fed could push the economy into recession, if it keeps raising rates. Furthermore, he said the Fed will cut sometime in the future, and recognized the FOMC coming to his view on this. The good thing about Bullard is he'll be a voter starting in February. (I'll thank Alfred Afstad for suggesting "pivot," for Powell's switcheroo, without whom I may have used pirouette.) One thing is for sure, Powell's comments were sufficient for the markets to stage a grand jete to the upside, even though Powell stated the Fed's balance sheet is 'far from' where it needs to go—"far from" the exact words he used, Dec 4th, to describe where the Fed Fund's rate was in relationship to neutral. And watch Fed's George, Tuesday, because she's been a staunch hawk who in her last appearance sounded a little less strident than she did up until then.
Monday's main stage event at the NRF (Nat'l Retail Federation) BIG SHOW starts at 8:30am, with former FOMC chief Janet Yellen, re/code's Kara Swisher, & CNBC's Steve Liesman discussing "Impact at Scale: Leading in prosperous yet uncertain economic times." Ironically, the entire mood surrounding retail reversed, this past week, as Macy*s, in particular, blew the quarter, as a prior Outlooks pointed out was likely. I had never seen so few Macy*s shopping bags around the mall—even after Christmas, when its Last Act was offering up to 80% off, a division carved into regular stores that makes the place look like an embarrassing mess. The same was true this past weekend—so few Macy*s bags I couldn't wait to walk by and see if it was even open. The BIG SHOW is about check-out systems, software, inventory management, and other machinations & apparatus used in retail but not about the retailers, at all. For that, you have to check out the ICR Conference, where public & private retailers & restaurant chains will present—the private ones not until the 16th. Note how many investment banks are hosting clients at ICR. In addition to the commentary from presenters, there will be buys and sells from portfolio managers, ICR a can't miss annual event though I'd posit that retailer have had their days in the sun, and it's time to move. That may be the upshot of the holiday sales updates from Signet Jewelers & Tiffany, both of which weigh in, on Thursday & Friday, respectively . For the record, the Mid-America Restaurant Expo, which started Sunday, was formerly the North American Pizza Expo, and is still heavily represented by pizza.
AFB—the 100th American Farm Bureau Convention likes slogans. This year, "when Mother Nature is your business partner, expect a few curveballs," a favorite. Not sure if the Director for Sustainable Development, Office of the Chief Economist of the USDA can show up, personally, for her appearance at the American Farm Bureau Foundation Convention, given partial government shutdown, or if she'll attempt a video conference, as FDA commissioner attempted at the JPMorgan Healthcare Conference, in San Francisco last week, to audio that no one could hear. Likewise, I don't know if Sonny Perdue, the US Sec'y of Agriculture, scheduled for Monday, will attend or be kept away by the budget fracas impacts but he can always ask for a ride on Air Force One. On 01/10, the Farm Bureau announced it will welcome back Pres. Trump to address the Centennial Convention, Monday, at 11:15 a.m. cst (subject to change), for a 30 minutes slot but he's usually late, and often rambles on, well past his allotted time, as prior presidents have before him. Others the French Embassy, and two EU Commissioners, several members of Congress, including the Chair of the Senate Ag Cmte, Pat Roberts (R-KS).
We've tried our best to keep up with which Federal Agencies are probably unable to deliver the Economic data the market thrives on. We made appropriate notes, below, where it's probable data won't be arriving. And we'll note, again, the number of FedHeads speaking this week, especially Tuesday, when even the ECB Chief Mario Draghi will be addressing the EU parliament sometime during our early hours.
The NAIAS—North American International Auto Show is a mass analyst meeting for automakers and their suppliers. If that wasn't true about the first 2 days of the meeting, itself, for trade only, it would be true, anyway, about the Deutsche Bank conference held coincident, which will be held starting Tuesday. Also that day, the IHS Markit Annual NAIAS Briefing, and the Automotive News World Congress @ NAIAS both also Tuesday. Other notable events include Peters & Co's Energy Conference, in Canada, augmented by TD Securities' Energy one in London, along with UBS Midstream, MLP, & Utilities 1-1 Conference. Needham's Growth Conference.
The highlight of the week, no doubt, will be all the Financials reporting earnings, this week, along with 2 airlines and 2 railroads. Often, Citi, JPMorgan, Bk of America, and Wells Fargo report one week, and both Goldman Sachs & Morgan Stanley the following the week. Not this time: We're getting themn all, including Bk of NY Mellon, BlackRock, Charles Schwab, US Bank, and State Street, along with BBT, M&T Bank, KeyBanc, Citizens Financial Group, PNC Financial, Regions Financial, & SunTrust Bank, large regionals. Then to spike it up, United Airlines, UnitedHealth Group, CSX, Kinder Morgan, NetFlix, PPG, Taiwan Semiconductor, Kansas City Southern, Schlumberger, and VC Corps. I'm not hot on retailers, right now but believe VF Corps' North Face division could have delivered a super quarter, as snow arrived earlier than usual and hasn't quit since.
While a Fed that's hiked rates 4 times in the past year is seen as positive for banks, the group has been acting terrible, and all of CNBC's technical gurus are predicting the worst yet to come. It doesn't make a lot of sense after a year in which the first 9 months of the year encouraged hanging in with the stocks you were already in, the final quarter of the year—and the last month, especially, encouraged wholesale dumping of equities, and a switch into bonds. That's the kind of equity that should have favored the banks with large equity divisions—JPMorgan, Bk of America, and Morgan Stanley, as examples. We'll see if that was borne out, and whether franchises like Goldman Sachs were able to maintain their winning trading ways. GS' stock is suggesting, absolutely, not.
Also Monday, the Australian Open starts, with Andy Murray announcing, 01/10, it is very likely to be his last appearance as a tennis player—his 'swan song,' he announced, due to hip problems that surgery hasn't resolved. For the UK, losing Murray is a big loss, since he was their best player in years. But, of course, Brexit without a separation deal with the EU, will hurt even worse. Parliament is supposed to vote on Prime Minister May's exit deal worked out with the EU Tuesday. Oddsmakers are betting Brexit will be postponed. Are you feeling lucky? If you are, then you won't be long stocks until the 4th week of Earnings season, or afterwards.
© 2019 Sandi Lynne Nothing contained this commentary should be construed as a recommendation to buy or sell any securities. The opinions expressed are the author's, alone, and should be just one factor in more complete due diligence.
January 07—11, 2019 FEDHEADS GALORE, I-BANK EVENTS & WARNING SEASON We thought the Joint AEA/ASSA reached a new high with all the Federal Reserve Bank Presidents speaking but this week will take the cake, especially Wednesday, where I've added some asterisks, and noted the speakers will be augmented, besides, by the FOMC Dec 18—19th Meeting Minutes, to be released that day. Thursday is another day of Fed-packed speakers, while Friday promises George, one of the few who didn't speak at AEA. Meantime, a US Delegation is in Beijing for high-level trade talks that, we hope, don't end like Trump's bipartisan talks on the border wall, which even he admitted haven't made progress. There's also some confusion about which government data will be released and which will be deferred because of the partial federal government shut-down.
US Nov Consumer Credit (3pm et), out Tuesday, will upset the applecart if growth in revolving debt didn't grow as much as the Street expects. If consumers waited to charge up a storm until Dec, then some will worry about the bare number, without context—especially since Thanksgiving week and Black Friday are such big days for consumers to spend. Others will worry that banks are trimming the sails of credit card debt, causing shrinkage. Let's remember the surveys that claimed retail sales rose +5.1% in Dec, so that's when the most credit (debt) was probably added.
I'd like to get excited about Thursday's US Dec. Chain Store Sales but few retailers still report those, and a few, like Tiffany, have said they'll report Holiday Sales, but not this week. Also notable, those FOMC Minutes of the Dec. meeting, out Wednesday because we'll get more insight into just when the Fed started changing its tune about this year's interest rate hikes. I suspect 2 more weeks of stiff equity selling into year's end was what flipped the switch for Powell & Co. US Dec. CPI, out Friday, is likely to dissuade anyone who fears inflation—especially since crude followed equities down, into year end.
CES (Consumer Electronics Show) and NAIAS (North American Int'l Auto Show) are the top Industry events of the week, both likely to be crawling with analysts and execs, both promising 2 days of press conferences before the events, "officially," open. Both include a day for "industryonly." We don't know why RayJay's calendar states it is hosting meetings at ICR Conference on Jan. 7th & 8th, since the public company conference doesn't start until the 13th, and the private company section until the 16th. Was it a place holder based on year ago information? We have no idea but there it is, on RayJay's 2019 calendar, starting the 7th. Maybe we're wrong and Raymond James has set up meetings with corporates presenting, for the week prior to the conference opening. It's just not the way it usually occurs, and plenty of other I-banks are sponsors, all of them hosting meetings during the ICR Conference, mostly the 14th—16th, rather than a week prior. On the corporate side, the big Kahuna of I-bank events is JPMorgan's Annual Healthcare Conference, in San Francisco. There are at least a half dozen Healthcare events scheduled to coincide, the most coveted by Leerink Partners. JPM can also boast of it's Tech Forum, @ CES, and Citi of its TMT @ CES, while Goldman Sach's Energy Conference is a headliner, too, especially for its Miami location, just as another deep freeze is supposed to sweep from the West Coast to the East.
If the National Banks of Eastern European Countries are an interest, then UniCredit has the Emerging Europe Winter Conference designed for you. In Kitzbuhel Austria, it's hosting officials from the National Banks of Hungary, Romania, Poland, Czech Republic, Russia, and Turkey, plus the FinMins from those countries and more.
On the other side of the globe, Citi is hosting a 7-day Nationwide (China) Luxury & NEV {sic} Dealership Channel check that starts in Shanghai on the 11th, moves to Nanjing/Suzhou/Wuxi on the 12th, then Beijing on the 18th, Tianjin on the 19th, Shenzhen on the 26th, and Shenyang from 02/01—02, in Mandarin, only. Deep dive into this week? On the 11th Citi will be visiting dealers of BMW, Benz (Citi's terminology, now ours), Audi, GWM (Wey), Geely (Lynk&Co), BYD, Hyundai. I'd protest that the hi-level "ministerial-level" trade talks will be much more significant for sentiment, at a time Trump really needs a win, and China needs to boost its economy, suffering from US Companies limiting the orders placed there. For China, the biggest risk is apparel & shoe companies finding alternate manufacturing in Vietnam, Cambodia, South Korea, Latin America, and elsewhere, and permanently moving some of their production away from China. The longer the trade stalemate endures, the more companies will diversify their production away from China—never to return.
I'd also tune into the American Farm Bureau Federation Convention and IDEAg Trade Show, starting Friday, because those were some of Trump's biggest supporters, his big idea to spend $12B on grants to farmers, to keep their support, as China cut back on orders of soybeans and other farm products. I'd be surprised if Farmers could be bought for so little, and question why no opponents are questioning the legality of the White House farmer bail-out, whe3n other industries aren't getting the same soothing.
Earnings from KB Home & Lennar will be watched carefully, though Constellation Brands (STZ) is reporting a quarter that ends before the bulk of holiday alcohol & wine sales kick into high gear but, still, with beer often a working man's drink and employment at some of the highest levels in decades, we can't say there's nothing to be learned from STZ's report. Likewise, Synnex (SNX) is an Enterprise supplier of technology and integration services, so one to watch, especially since last quarter it reported its first disappointment in years.
I'd also keep a sharp eye on England and the EU, since the Brexit deal Prime Minister May negotiated seems less likely to squeak through Parliament. In fact, there's more talk, of late, of the current status being extended for a period of time while negotiations continue. Many in the EU are dead set against such a result, and I sure don't want that to happen because I'm eager to buy British stocks, selectively, into the March 29th Brexit date. For instance, Tata Motors is almost 1/3 of its 52 week high, while oil is so soft, the foreign E&P stocks are suffering more than, say, Chevron, while Royal Dutch Shell "B" shares are design, specifically, for US investors, who won't have UK taxes taken out of B share dividends, never to be reclaimed again, without great expense.
How this week turns out could well depend on Earnings Warnings—how many as well as how big the miss. None may be as damaging as Apple's but enough of them would certainly do more widespread damage. Stay safe out there—I'm not at all certain that the selling is over—and can't readily say the opposite with any confidence, either. The charting program I've long used suddenly won't accept any dates past December 31, 2018. 2019 data comes in but isn't being integrated into my charts. That means I need to start fresh, with a new program, this week, and pray it won't be as painful as some new programs were to use. I still have nightmares of my dad upstairs, on hold for tech support, back when "small" business computers took up an entire room that required their own punch cards and air conditioners. Now that's a nightmare!
© Sandi Lynne 2019 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's, alone, and should be just one factor in complete due diligence. EARLIER, 2018 EXCERPTS HERE
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