Archive for Market

Donald Trump lobs a grenade from afar into the G7

By The Economist online…

FOR a moment, the Group of Seven (G7) leaders attending their annual summit, in a mountain village in Quebec, looked like they had managed to paper over their differences with President Donald Trump and present a united front. They found just the right wording to secure American agreement on matters that never used to be in question, such as supporting democracy, abiding by international-trade rules and fighting terrorism. Even Mr Trump professed himself pleased, calling the summit wonderful and rating his relationships with other leaders as ten out of ten.

Yet barely ten minutes after the official communiqué was published, he changed his mind. He tweeted from somewhere over the Pacific, en route to his “mission of peace” in Singapore with Kim Jong Un, North Korea’s despotic ruler, that he had instructed his officials not to endorse the communiqué. He attacked Justin Trudeau, Canada’s prime minister and host of the summit, for making “false statements” at his closing news conference, and renewed his threat to impose tariffs on automobiles supposedly “flooding
the U.S. Market!”.

It was a confusing outcome all round. A flummoxed spokesman said Mr Trudeau had said nothing at the news conference he had not already said before to Mr Trump, both publicly and privately. It was unclear whether Mr Trump’s reversal was because of Mr Trudeau’s confirmation that Canada would retaliate against America’s steel and aluminium tariffs (the two leaders had already discussed this). Or was it a rejection of Mr Trump’s claim that a new deal for a North American Free-Trade Agreement (NAFTA) would have a sunset clause? (This was also discussed, though it seems plausible that Mr Trump believed the Canadians to be moving closer to some sort of compromise.)

During the summit itself, which Mr Trump left early, the tone had been conciliatory. The other leaders spoke warm words of support for Mr Trump’s effort to persuade North Korea to give up nuclear weapons. There were even signs that the group had overcome their differences regarding Russia. Before leaving Washington, Mr Trump had said that Russia should be readmitted to the group that had excluded it in 2014 after its invasion of eastern Ukraine and annexation of Crimea. But in the end there was no invitation to join the group next year in Biarritz, France, and the final communiqué called on Russia to stop destabilising democratic regimes and start living up to its international obligations as a member of the UN Security Council.

On trade, at one point it seemed as though Mr Trump was in search of some sort of grand bargain, as he called for the end of all subsidies, tariffs and non-tariff barriers to trade. But this was more an indication of how poorly Mr Trump understands the global trading system than a serious summons to the negotiating table. Even so, combing through the joint communiqué, signs of genuine co-operation were to be found, including a commitment to agree on new rules regarding “market-distorting subsidies” and state-owned enterprises.

Read more here: Donald Trump lobs a grenade from afar into the G7…read more

Category: Business and finance, Approved, Business and finance, Finance and economics

Interest Rate and Trade Concerns Cast a Shadow Over Stocks

The S&P 500 index has traded in a narrow range for the past month, fluctuating between resistance at its 100-day moving average and support at its 200-day moving average, unable to establish any clear direction. The failure of stocks to push higher can be traced to a variety of concerns, including rising interest rates, trade tensions and signs of slowing global growth. At the same time, a strong first quarter earnings season has kept stocks from falling below their longer-term trend. The net result has been directionless trading, in search of a catalyst to break the stalemate.

We continue to believe that stocks can move higher, as economic growth accelerates from the modest first quarter and earnings growth remains strong, even though the rerating of earnings expectations following the passage of tax reform had been mostly discounted by the January rally. As it turns out, however, actual earnings this quarter are exceeding even those lofty expectations. According to Factset, by the end of March earnings expectations for the first quarter had risen to 17 percent. And as recently as last week, those expectations had edged higher to 18 percent. But now, after some better than expected results mostly from technology stocks, earnings are expected to grow by an astounding 23 percent. It seems unlikely that results that strong had been fully discounted by the January move, but that still has not been enough to pull stocks higher, suggesting that worries over trade and interest rates must recede to lift the cloud over stocks.

GDP and Inflation Ratchet Higher 

Last week we learned that GDP growth in the first quarter grew by an estimated 2.3 percent. And although that result continued the pattern of relatively weak performance to start the year, it was better than the 2.0 percent Bloomberg consensus. Improvements in both trade and inventories from the previous quarter were not enough to offset weakness in personal consumption, particularly in automobile sales. But compared to the 1.2 percent pace of growth in the first quarter of 2017, and 0.6 percent in 2016, this year’s performance looks rather healthy overall.

…read more

Read more here: Interest Rate and Trade Concerns Cast a Shadow Over Stocks

The real problem with pensions

By The Economist online…

PAYING for pensions is like one of those never-ending historical wars; a confusing series of small battles and skirmishes that can obscure the long-term trend. The latest conflict is in Britain where university lecturers are indulging in strike action over changes to their future benefits.

Let us start by making the long-term trends clear.

1. People are living longer and retirement ages have not kept pace. This increases the cost of paying pensions

2 Interest rates and bond yields have fallen. This increases the cost of generating an income from a given pension pot

3. Private sector employers have reacted to this cost by closing their defined benefit (DB) schemes (which link pensions to salaries) and switching to defined contribution (DC) schemes (which simply generate a savings pot)

British universities have reacted in a similar way; they are proposing switching future benefits to a DC basis. To avoid confusion, this means that past benefits will be unaltered; if you are 50, and have worked for 25 years, you will still have 25 years of DB benefits. But since pensions are deferred pay, it does mean that the total benefits of academics are being cut so one can see why they are upset.

But there is still plenty of confusion, as this piece in the Independentillustrates all too well (to cite just one example, in a piece about workplace benefits, it quotes OECD numbers on state-pension replacement rates). There are three big areas where the debate gets muddled.

Read more here: The real problem with pensions…read more

Category: Business and finance, Buttonwood’s notebook

Some hotels charge visitors for bad reviews

By The Economist online

Last March, a couple arrived at the suite they had booked at the Abbey Inn in Indiana only to find, they claim, a dirty bed, a foul smell, an insect infestation and no hotel employees on the premises to assist them. Upon leaving, they did what so many travellers do these days. They wrote an online review warning others about the hotel’s shortcomings. Sometimes, negative reviews prompt apologies and compensation from their subjects. But in this case, the coupleTRAVELLERS have grown accustomed to annoying hidden fees, from the baggage charges that bring airlines tens of billions of dollars a year to the resort fees that account for nearly a fifth of American hotels’ revenue. But a new one that has popped up in recent years might be the most irksome of all due to its sheer perversity: fees for leaving bad reviews.

…read more

Read more here: Some hotels charge visitors for bad reviews

Category: Business and finance, Gulliver

Lowe’s Stock Breaks Out After Activist Investor Takes a Stake

Lowe’s Companies, Inc. shares rose more than 5% on Friday afternoon after Bloomberg reported that an activist hedge fund was building a stake. According to sources familiar with the matter, D.E. Shaw has started building an activist stake in Lowe’s following the launch of its new activist platform under portfolio manager Quentin Koffey, who previously worked at Paul Singer’s Elliott Management Corp.

While the activist hedge fund’s specific plans weren’t immediately apparent, Lowe’s has been struggling to compete with The Home Depot, Inc. and continue its momentum following hurricanes Harvey and Irma, which boosted third quarter same-store sales. D.E. Shaw has previously proposed spinouts and other actions at other public companies with the goal of increasing short- and long-term shareholder value. (see also: The D.E. Shaw Group: Investment Manager Highlight.)

Lowe’s shares moved sharply higher after D.E. Shaw reportedly took an activist stake, but traders will be watching these key levels. …read more

Read more here: Lowe’s Stock Breaks Out After Activist Investor Takes a Stake

Category: LOW, HD

AK Steel Stock Could Reward Bottom Fishers

Steel stocks have surged higher since hitting 2017 lows in June and look set to challenge rally highs put in place following the post-election buying spree. Ohio-based AK Steel Holding Corporation (AKS Ak Steel Holding Corp AKS 5.88 +3.34%) has lagged badly during the summer bounce but could now play catch-up, joining its peers in a slow but steady uptrend that could last for several years. As a result, getting in on the ground floor could offer outsized returns for bottom fishers with long-term holding periods.

The fate of AK Steel is tied closely to the U.S. automobile industry, with that sector surging higher after Hurricane Harvey flooded Southeast Texas, destroying an estimated 500,000 automobiles that will require replacement in the coming months. Add the possibility of tariffs to protect the U.S. steel industry, and the group has the right chemistry to build on gains through the rest of 2017 and beyond. (See also: AK Steel Earnings and Revenues Beat Estimates in Q2.)

AK Steel could play catch-up, with the hurricane’s destruction generating intense demand for new automobiles. …read more

Read more here: AK Steel Stock Could Reward Bottom Fishers

Category: AKS, SLX

Watch for Triangle Breakouts in These Stocks

The triangle is a useful chart pattern, especially when it occurs in the context of a trend. A triangle is formed when the price makes converging highs and/or lows. It shows that movement in the stock is becoming smaller and provides some areas to watch for a breakout. If the price moves outside the triangle, it is an indication that the price could keep moving in that breakout direction. A breakout that occurs in the same direction as the overall trend is especially noteworthy if looking to initiate a new position. A breakout in either direction is noteworthy if already in a position, as it provides context for whether to keep holding the position or to consider exiting it.

IHS Markit Ltd. stock has had a great year, up 31% in 2017. After peaking in June at $47.92, the stock has been moving in a triangle pattern. The rising trendline (bottom of the triangle) intersects near $46 – therefore, a drop below that level, especially a closing price, would signal a downside breakout. A rally above the upper trendline at $47 would imply an upside breakout. The height of the triangle at its widest point is $4.58 (it then narrows). This can be added or subtracted to the breakout point to provide an approximate target point. If a downside breakout occurs, the target is $41.42, while an upside breakout would target $51.58. (See also: Corporate Inversions: IHS and Markit Merge.)
These charts show triangle patterns, and breakouts could signal the price direction for the next few weeks. …read more

Read more here: Watch for Triangle Breakouts in These Stocks

Category: INFO, DPS, QSR

3 Short Plays If NAFTA Crumbles

President Donald Trump has renewed his threat to kill NAFTA after criticizing Canadian and Mexican positions in ongoing negotiations. Many Wall Street analysts believe that the United States has more to lose than its northern or southern neighbors if the president follows through, as ending the trade agreement could trigger steep declines in a broad swath of publicly traded issues that depend on north-south trade for their quarterly and annual revenues.

Three potential short sale plays stand out if NAFTA collapses, but given mixed messages from the White House, no one knows when sell signals will go off. Even so, now is the right time to identify profitable strategies – not after a Tweet or executive order sends shockwaves through the U.S. financial markets. Railroads, auto manufacturers and truckers look like the biggest losers should NAFTA collapse, in turn shining a bearish light on the broader transportation sector. (See also: Tips for Trading the Dow Jones Transportation Average.)

These stocks could sell off if President Trump follows through on his threat to terminate the trade agreement. …read more

Read more here: 3 Short Plays If NAFTA Crumbles

Category: KSU, F, JBHT

Immunomedics Stock Breaks Out, Consolidation Likely

Immunomedics, Inc. shares have soared more than 40% over the past five sessions after preliminary data from its Phase 2 clinical trial showed a positive treatment effect. Patients that received a weekly dose of labetuzumab govitecan experienced median progression-free survival of between 3.6 months and 4.6 months, depending on the dosages. These figures were better than competing therapeutics that have achieved regulatory approval.

Given the stock’s multi-day run-up, traders could see some profit taking on Tuesday and Wednesday as early traders lock in profits. The good news is that many analysts were bullish on the stock even prior to these new Phase 2 results. For instance, Cowen & Co. analysts indicated that IMMU-132’s biologics license application (BLA) is on track. The analysts expect an update in the second half of the year while maintaining a robust $15.00 price target on Immunomedics stock. (See also: Immunomedics Breaks Out, but Will It Last?)

Immunomedics shares broke out to fresh highs, but some consolidation is likely given the five-day run-up. …read more

Read more here: Immunomedics Stock Breaks Out, Consolidation Likely

Category: IMMU

Biogen Stock Is Ready for a Breakout

A 2.78% percent loss this year for shares of Biogen Inc. (BIIB​) was accompanied by overwhelming institutional selling, thus leading this stock to underperform. But now it looks like the tide may have shifted in favor of institutional buying.

When looking for the strongest candidates for long-term upside, it often pays to look at companies with a history of solid fundamentals and then take advantage of their recently struggling prices.

Biogen, a biotech company in a leading sector with a strengthening technical chart, makes a strong case for bullish investors. For MAP, the strongest indicator of positive price momentum is by measuring potential institutional accumulation. Last month we flagged a potential institutional buy signal in Biogen, which is notable since prior to that signal there were six potential institutional sell signals for the year. We want to see evidence that the tide may be turning in favor of institutional buying when looking for new bullish candidates. In the chart below, Biogen recently shifted away from overwhelming distribution, and may start to see increasing accumulation.

Source: Tradingview.com

MAP’s process focuses on identifying companies with healthy fundamentals accompanied by outsized unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points we can hypothesize which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest quality stocks.

Many of the best-performing stocks over the years have exhibited continual institutional support, telling a story of where big firms may see opportunity. A company, like Biogen, which resides in a strong sector, is growing its revenues and growing its earnings, which may keep institutions holding for years to come.

When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for Biogen being:

  • Recent three-month closing highs achieved ($295.61 on July 26)
  • Three-month outperformance vs. the overall market (+~17.3% vs S&P 500)
  • Three-month outperformance vs. the sector (+~14.5% vs XLV)
  • And most importantly, institutional support

Institutional investors are showing buying signals for Biogen stock. …read more

Read more here: Biogen Stock Is Ready for a Breakout

Category: BIIB

%d bloggers like this: