Archive for Stocks

Disney Is Rising Along Its Reversion to the Mean

The Walt Disney Company released two consecutive better-than-expected quarterly earnings reports on Feb. 6 and May 8, and the stock has been slowly climbing its 200-week simple moving average since the week of Sept. 8, 2017. This “reversion to the mean” is now at $102.49. This is a longer-term indication that Disney stock may be losing its mantra as being dead money.

Disney shares closed Friday, June 8, at $103.98, down 3.3% year to date and 8.1% below the 2018 high of $113.19 set on Jan. 3. The stock is up 6.4% since it set its 2018 low of $97.68 on May 3.

Disney has been disappointing investors since setting its all-time intraday high of $122.08 back on Aug. 4, 2015. This report was the first that showed warnings for its ESPN franchise. Helping the Mouse House now is Disney’s planned deal to acquire significant assets from Twenty-First Century Fox, Inc. . The potential deal does not include Fox Sports or Fox Broadcasting. (See also: Can Disney Spend its Way to Content Dominance?)

Disney stock is reasonably priced based on its P/E ratio of 13.86 and dividend yield of 1.62% as its weekly chart is upgraded to positive. …read more

Read more here: Disney Is Rising Along Its Reversion to the Mean

Category: DIS, FOXA

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

The long arm of the dollar

By The Economist online….

FEW banks can match the quaint serenity of Banco Delta Asia’s headquarters in Macau. Housed in a pastel-yellow colonial building opposite a 16th-century church, its entrance is flanked by tall vases, depicting sampan gliding between karst hills. In the tiled square outside, men laze under a banyan tree and an elderly woman peels a boiled egg for lunch.

But in 2005 this backwater bank incurred the wrath and might of the world’s financial hegemon. America’s Treasury accused it of laundering money for North Korea, prompting depositors to panic, other banks to keep their distance and the Macau government to step in. The Treasury subsequently barred American financial institutions from holding a correspondent account for the bank, excluding it from the American financial system.

Macau is over 8,000 miles from Washington, DC. But it is hard to escape the long arm of the dollar. Its dominance reflects what economists call network externalities: the more people use it, the more useful it becomes to everyone else. One person’s willingness to accept dollars from another depends on a third person’s readiness to accept dollars from them.

The dollar also benefits from a hub-and-spoke model for the exchange of currencies, the invoicing of trade and the settlement of international payments, as the late Ronald McKinnon of Stanford University argued. If every one of the more than 150 currencies was traded directly against every other, the world would need over 11,175 foreign-exchange markets. If instead each trades against the dollar, it needs only 149 or so. If you cannot buy the afghani with the zloty, you can still sell one for dollars with which to buy the other.

Likewise, if every international bank keeps an account in New York, any bank can transfer funds to any other through the same financial hub. “The global financial system is like a sewer and all of the pipes run through New York,” says Jarrett Blanc of the Carnegie Endowment for International Peace.

This gives America’s Treasury great punitive power and jurisdictional reach. Many companies that do not buy or sell wares in America nonetheless make or collect payment through New York. Because these transfers pass through American financial institutions, the Treasury can claim jurisdiction on the ground that its banks are exporting financial services to the bad guy. It can also hit companies where it hurts. For many, exclusion from America’s financial system is a more potent threat than exclusion from America’s customers. Last month, for example, the Treasury threatened to seize dollars paid to Rusal, a Russian metals firm that is one of the world’s biggest aluminium producers, crippling it and upending the global aluminium market, until the turmoil forced a rethink.

Read more here: The long arm of the dollar…read more

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

Small Caps in Russell 2000 Break Out to Fresh Highs

Small-cap stocks in the Russell 2000 have outperformed the S&P 500Dow Jones Industrial Average and technology stocks in the NASDAQ Composite over the past three months. While many larger companies have been struggling to cope with a potential trade war, small caps conduct most of their business in the United States and aren’t affected by these risks. At the same time, these companies are well positioned to benefit from the lower corporate tax rate.

The iShares Russell 2000 ETF rose more than 1% to new all-time highs following its breakout from an ascending triangle pattern on Wednesday. According to iShares, the fund’s average P/E ratio clocked in at 20.91x, which is still lower than the S&P 500’s 24.78x P/E ratio. Many investors may be drawn to the lower earnings multiples for these companies compared with the lofty multiples seen at larger companies in the S&P 500 and DJIA. (See also: IWM vs. VTWO: Comparing U.S. Small-Cap ETFs.)

Small-cap stocks have been quietly outperforming the major indexes over the past three months, but traders will be watching these levels. …read more

Read more here: Small Caps in Russell 2000 Break Out to Fresh Highs

Category: IWM

Walmart Reports Oversold and Below ‘Death Cross’

Retail giant and component of the Dow Jones Industrial Average Walmart Inc. was a strong momentum stock as 2018 began, but that dynamic turned on a dime after the stock set its all-time intraday high of $109.98 on Jan. 29. At this high, Walmart stock was in an “inflating parabolic bubble” with a weekly stochastic reading above 90 on a scale of 0 to 100. This bubble popped as the stock crashed into bear market territory, where it remains today.

Walmart had been above a “golden cross” between April 21, 2017, when the stock closed at $74.94, and April 26, 2018, when the stock closed at $87.94. Then, a “death cross” formed. A “golden cross” forms when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. A “death cross” forms when the 50-day simple moving average falls below the 200-day simple moving average and indicates that lower prices lie ahead.

Walmart stock closed Tuesday at $84.52, down 3.7% year to date and up 3.1% since trading as low as $81.95 on May 11. The stock is in bear market territory at 23.1% below its 2018 high of $109.98 set on Jan. 29. Analysts expected Walmart to post earnings per share between $1.12 and $1.15 when the company reports earnings before the opening bell on Thursday, May 17. Most observers think that the key to a positive earnings reaction is growth in online sales to close the gap versus Amazon.com, Inc.. Same-store sales are a positive above a growth rate of 2.6%. (See also: Will ‘Survivor’ Walmart’s Global Approach Work?)

Dow component Walmart has a market-neutral P/E ratio of 25.85 and a reasonable dividend yield of 2.46%. …read more

Read more here: Walmart Reports Oversold and Below ‘Death Cross’

Category: WMT, AMZN

Caterpillar Stock Could Test 2018 Lows

Dow component Caterpillar Inc. reversed on Tuesday after failing to reach the high posted when April 24 earnings triggered an opening rally followed by a 17-point slide. In turn, this bearish price action could presage a decline to multi-month lows that also completes the last leg of a broad topping pattern, raising the odds for a breakdown that ends the equipment giant’s long-term uptrend.

Caterpillar needs cordial relations with China to continue on the fast track, but trade tensions are taking their toll. Meanwhile, the Asian nation just reported weaker-than-expected investment, along with a slowdown in retail and home sales. More ominously, business surveys noted a sharp decline in export order growth that may reflect local company efforts to avoid getting caught with unsold goods during a trade war.

In 2017, Caterpillar saw the first sales growth in five years, with the slump driven by a Chinese construction slowdown and weak oil prices. Meanwhile, first quarter U.S. GDP dropped to 2.3%, increasing reliance on foreign sales to keep Caterpillar stock within striking distance of all-time highs. Tariffs could drive a lethal nail into the company’s outlook, telling market players to keep a close eye on price action as we head into the summer months. (See also: Caterpillar Stock Whipsaws After Commentary Outweighs Guidance.)

 

Caterpillar shares reversed with the broad market on Tuesday and may head back to 2018 lows, completing a bearish top. …read more

Read more here: Caterpillar Stock Could Test 2018 Lows

Category: CAT

J. C. Penney Remains an ‘Option on Survival’ Into Earnings

Mall anchor J. C. Penney Company, Inc. reports earnings before the opening bell on Thursday, May 17, as an “option on survival,” as the stock is trading between $1 and $3 per share. Investors buying a stock in this trading range are betting that the company will survive its current woes and eventually thrive once again. In these situations, it is wise to invest only funds that you can afford to lose completely if the stock becomes worthless.

J. C. Penney stock closed Tuesday, May 15, at $2.91, down 7.9% year to date. Shares of J. C. Penney are solidly in bear market territory at 38.7% below the 2018 high of $4.75 set on Feb. 27. The stock is also 7.8% above its 2018 low of $2.70 set on May 8. (See also: Billionaire David Einhorn’s Greenlight Bought 6M J. C. Penney Shares: 13F.)

Analysts expect J. C. Penney to post a loss of between 19 cents and 22 cents per share when the company reports results in the pre-market hours on Thursday. The mall anchor reported better-than-expected earnings on March 2 but generated only a one-day bounce in the stock. It remains to be seen whether a larger-than-expected loss would be tolerated by investors, particularly in the case of worse-than-expected revenue. However, the retailer has had some success increasing online sales and improving the in-store shopping experience, which could make this “option on survival” a good investment choice.

J. C. Penney shares are not owned based on fundamentals – it’s a stock to own if you believe the store will survive at the mall near you. …read more

Read more here: J. C. Penney Remains an ‘Option on Survival’ Into Earnings

Category: JCP

3 Casino Plays Primed for Sports Betting Profits

The U.S. Supreme Court ended Nevada’s sports betting monopoly and opened that door for other states in a six-to-three ruling on Monday. Justices agreed that a 1992 Federal prohibition violated constitutional principles, triggering strong rallies in casino operations thousands of miles from the Las Vegas Strip. Meanwhile, Nevada’s biggest companies sold off or ran in place, held down by the threat of lost revenues

Market players scrambled to find stocks that could profit from the ruling, and three names have risen to the top of the heap – Scientific Games Corporation  Penn National Gaming, Inc. and International Game Technology PLC  New Jersey is likely to offer sports betting at race tracks within weeks because the state brought the lawsuit and will have infrastructure ready to go by Memorial Day. Pennsylvania, West Virginia, Mississippi and New York could follow suit quickly, while another 12 states have introduced related legislation. (See also: Understand Betting Odds and Gambling: The Math Behind It All.)

 

Middle America casino and race track stocks rallied strongly on Monday after SCOTUS opened the door to legalized sports betting. …read more

Read more here: 3 Casino Plays Primed for Sports Betting Profits

Category: SGMS, PENN, IGT

3 Charts That Suggest It’s Time to Buy Precious Metals

Precious metals tend to be the commodity segment of choice for those looking shelter against market volatility and uncertainty. Given the rising geopolitical tension, as evident by the stories that have dominated the headlines in recent days, traders will become more sensitive to headline risk, and a seemingly small story could act as catalyst for increased buying pressure in gold, silver, platinum and palladium. In this article, we take a look at the charts of three exchange-traded funds (ETFs) that are commonly used for gaining exposure to these metals and analyze how traders will look to position themselves for a move higher. (For further reading, check out: When in Doubt, Buy Precious Metals.)

PowerShares DB Commodity Index Tracking Fund

Some investors may not quite feel comfortable with an overweight position in precious metals and may prefer to have diversified exposure to a broad basket of commodities. One potential solution for this group of investors could be to look to the PowerShares DB Commodity Index Tracking Fund because it comprises futures contracts on 14 of the world’s most important commodities and happens to have a  weighting of approximately 10% in precious metals.

Taking a look at the chart below, you can see that the price is trading within a confined trading range and that it recently broke beyond the resistance of the dotted trendline. The breakout is a clear signal that the bulls are in control of the momentum and will likely be used as a buy signal. Stop-loss orders and other protective strategies will likely use the support of the lower trendline, 50-day moving average or 200-day moving average as guides. Regardless of the strategy, based on the chart shown below, the bias is undoubtedly to the upside. (For further reading, see: 3 Charts for Navigating the Commodities Market.)

 

Active traders are turning to the confined trading ranges shown on the charts of commodity-related ETFs for buying opportunities. …read more

Read more here: 3 Charts That Suggest It’s Time to Buy Precious Metals

Category: DBC, GLD, SLV

Airlines in America fail in their campaign against the Gulf carriers

By The Economist online

ON MAY 14th the United States and United Arab Emirates (UAE) announced a deal that should, at least in theory, put an end to their long-simmering dispute over what airlines in America allege are unfair subsidies provided by the Gulf state to its two major airlines. News of the agreement had emerged three days earlier, prompting both sides to claim victory. American representatives claimed that the UAE had admitted that it had unfairly subsidised its flag carriers and had agreed not to add further so-called fifth-freedom flights, which are routes to the United States that do not originate in the UAE. (Breitbart News ran a triumphant story under the headline “Trump’s America First Agenda Wins Trade Dispute With United Arab Emirates.”) Meanwhile, the UAE ambassador to the United States argued essentially the opposite, stating that he was “very pleased” that Emirati airlines could continue to add fifth-freedom flights.

So who is right? Mostly, the UAE side. When you look at the real substance of the agreement, it is clear that the American airlines did not get anything they wanted. The main thing they sought was to put an end to those fifth-freedom flights, which cut into their business when Emirates and Etihad, the flag carriers of the states of Dubai and Abu Dhabi in the UAE, fly from their home bases to the United States via places such as Europe. The American carriers got some language they could point to in order to declare victory: the Emiratis stated in the deal that they have no plans to add new fifth-freedom routes. But the American claim of victory rings hollow, because there is nothing to prevent Emirates and Etihad from making such plans in the future.

The Americans also claimed a win because the UAE airlines promised to publish yearly reports on their finances that are up to international standards. The American airlines hope this will force them to fess up to the unfair government subsidies that the Americans think keep their Emirati rivals afloat.

Read more here: Airlines in America fail in their campaign against the Gulf carriers…read more

Category: Business and finance, Gulliver

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