DHUnplugged #300: The DHFed…Giving Away Money!

DHFed_300Market comeback? Short-squeeze ahead of the Fed? Oil hitting bottom? Not so fast…

Apple’s (AAPL) earnings, facts about Oil and the million dollar Oprah Tweet – Just a few of  the important discussion points from this episode – and much more.

The big question is: Will this end up being the worst January for market in history or will the Yellen and her band of merry men be able to save the markets?

Oh – not to forget that we are having a special giveaway this episode – check the show notes below for more information.

Click HERE for Show Notes and Links

Announcing the DHFed - We give away money too! Special giveaway for the 300th show will be announced at the end of the show. (Scroll to bottom)

The first week up this year. With a good amount of chatter from Central Banks last week, the thought is that they are going to once again save markets. However, there is a palpable change in sentiment over whether they can do it this time.  (Draghi spoke last week and promised to do "everything possible" again and there is the hope floating that the Bank Of Japan will add stimulus.)

Several "big firms" are cutting their year end price target for the S&P 500. The latest was JP Morgan with a move from 2,200 to 2,000 by the end of 2016.

- Quick calc: EPS of $120 X PE 17 = 2,040 or 7% possible move from here...
- The above also assumes EPS grows by 10%+ for full year 2016

China continues to be the target of selling as the PBOC not trusted and massive flight of money out of the country. Some capital controls have been added to try to keep money from leaving.

Meanwhile, China is targeting further cuts in crude steel production capacity by as much as 150 million tons and “large scale" reductions in coal output as part of supply-side measures aimed at curbing overcapacity and excess labor in state-owned industries. The country has lowered steel production by about 90 million tons "in recent years" and will push to cut a further 100 million to 150 million tons, while "strictly controlling" steel capacity increases and halting new coal mine approvals. (LINK)

Don't believe China's economic data? The Communist Party’s anticorruption commission announced late Tuesday that it was looking into the head of the country’s statistics agency over what it called “serious violations.”

Markets following price of Crude. In 2016, 95% correlation of S&P 500 to the daily move in crude price. Usually only 50% over longer term period.

Post Close,  WTI oil futures sell off after the API reports a massive build of +11.4 mln barrels of oil vs. last week's build of 4.6 mln barrel (Briefing.com)

Big week for earnings - 150+ companies in the S&P 500 are reporting this week. So far a mixed bag. Amazon (AMZN) on Thursday.

Twitter (TWTR) - big management changes, very abrupt departures of heads of key areas of the company. And, Twitter Chief Executive Jack Dorsey announced Tuesday that American Express’s Leslie Berland will join the social media company as its chief marketing officer (AXP? Really???).

News out of Re/code that Twitter has stopped showing ads to their more valuable users.

Twitter Stopping Ads...

Apple (AAPL) out with earnings: (now holding $216 billion in cash)

- Q1 iPhones 74.8 mln vs 76.2 mln ests vs 74.5 mln last year.
- Q1 iPads 16.1 mln vs 19.1 mln ests vs 21.4 mln last year
- Q1 Macs 5.3 mln vs 5.7 mln ests 5.5 mln last year
- Q1 $3.28 vs $3.23 Capital IQ Consensus Estimate; revs $75.9 bln vs $76.60 bln
- Q2 gross margins of 39.0-39.5% vs 40.0% ests and 40.8% last year
- Q1 gross margin of 40.1% vs 39.9% ests and 39.9% last year (guidance 39-40%)
- Company issues downside guidance for Q2, sees Q2 revs of $50-53 bln vs. $55.38 bln Capital IQ
- Consensus; gross margins of 39.0-39.5% vs 40.0% ests and 40.8% last year.

Now here is a story: 35 restaurants across China have been found illegally using opium as seasoning in their food, state officials say. Good amount of Hot Pot restaurants are on the list. (LINK)

A new twist on competitive earnings calls: T-Mobile unveiled its “Verizon Earnings Call Drinking Game,” which encouraged anyone who tuned in for the company’s quarterly investors webcast to take a drink of “your beverage of choice” anytime Verizon executives mentioned words like “millennials” or “the young people.”

You gotta love this - just as predicted: Oprah Tweets about her 25 lb. weight loss while still eating bread on the Weight Watcher's diet - stock pops 17%

Michael Bloomberg may be throwing his hat into the Presidential race. IF Sanders and Trump get the party nominations.

More information on the extension of car loan terms: Credit-tracking firm Experian says loans with terms lasting 73 to 84 months accounted for nearly 28% of all new vehicles financed in the third quarter of last year, up 17% from the same quarter a year ago. More expensive cars on longer-term loans.

Subprime car loan originations jumped to nearly $40 billion in the second quarter, dipping only slightly in the third quarter, according to the New York Fed.

Car Loan Chart

SAT exam cheating in China? The future of standardized tests is again under the microscope after Ivy League scholars called for the tests to be made an optional part of university admissions, while renewed fears of widespread cheating in Asia has cast a pall over the exam’s integrity.

How about that snow? It snarled Northeast over weekend, what will that do to retailers?

On a sad note... Abe Vigoda Died. Famous for his role as Det. Fish in Barney Miller and "Sal" in the Godfather.

For the 300th DHUnplugged Show - We have a Giveaway! Guess how much money is in the picture below and the winner gets $100 Amazon Gift Card. (Entries open through 12am (ET), Sunday January 31, 2016)

Guess the Amount of Money In This Image

Take a look at the  image in the above link and then guess the amount. The winner will be announced next show. (First entry with exact amount will be the winner - one entry per person, earliest entry is the only one that counts - no funny stuff. An email will be sent to you to confirm your entry.)

 - Login/Register to access and view the entry form -

Registered Users Only - Please Register/Login to view

 

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DHUnplugged #299: Blood In The Streets

dh_299There has been no let up of the selling pressure. Even with an overnight pop, stocks lost most of their luster as the correction continues.

Earnings season is now in full swing and even as we see some decent beats, that is not helping. Banks are expecting big losses on energy related debt and few companies have bright outlooks to share.

Click HERE for Show Notes and Links

Three Powerball winners - Since we are still doing the show, assume that neither of us won?

Market update: At the end of last week, January 2016 moved up to the #1 worst January since 1966. While it came off the bottom Friday, it is still in the Top 3. Oil dropping, concern over rising provisions at banks for bad debt, consumers spending less and the outlook for earnings still has a cloud hanging over markets. Today we are seeing a bit of a relief rally from an oversold condition - will it last? (All major indices in correction territory now)

BIG reversal (again) today. Futures on S&P 500 were up 24 handles pre-market. By mid-day they were flat. Sellers are not kidding around. (By 2pm, all major indices in the red)

Slowest growth in 25 years! China GDP 6.8% - world markets watching this closely as concern over the growth of the country's economy could be a problem for the rest of the world. Lowest GDP since 2009. The question is: Do we believe it?

- Several analysts out saying that GDP may really be well below, possibly 5%

- China may need to continue to devalue the Yuan to reduce debt and stoke growth

China GDP Trend

Iran economic sanctions lifted. Iran immediately added 500,000 barrels per day to oil production. Sent Brent crude under $29. Current forecasts are all over the place - see chart.

Brent Crude Forecast

Over five million jobs will be lost by 2020 as a result of developments in genetics, artificial intelligence, robotics and other technological change, according to World Economic Forum research. (But there are over 3 billion employed worldwide, is this a big deal?) (LINK)

Seems that there is not just one cockroach. Renault SA shares plunged the most in 17 years after a union said French fraud investigators seized computers from the automaker, apparently as part of a probe into emissions testing. (Seems that Europe is not very concerned and wants to possibly change emissions rules as their auto sector could be hit by these findings)

Problem for the big ticket housing market? The Treasury Department’s Financial Crimes Enforcement Network said that it will seek out the identity of individuals behind limited-liability companies that pay cash for high-end residential real estate in Manhattan and Miami-Dade County. Starting in March, title insurers will be required to name the true “beneficial owner” behind the anonymous entities.

Bank earnings are flowing in - while they look good on the surface, there is concern over the outlook and loan loss provisions. Bank of America (BAC) reported and stock down again. (Also concern about banks in Europe as potential for banking crisis rising again) For 2016:

- Bank of America (BAC): - 16%
- Goldman Sachs (GS):  -13%
- Morgan Stanley (MS): -17%
- Wells Fargo (WFC): -10%
- JP Morgan (JPM): -14%

Signs that the high end shopper/International consumer is pulling back: Tiffany & Co. said Tuesday that sales during the holiday period softened, prompting the luxury jeweler to reduce staff and cut its outlook for the year. The New York company said "challenging and uncertain global economic conditions" have resulted in restrained consumer spending, and a stronger U.S. dollar continues to dent foreign tourist spending. For the crucial holiday shopping season, Tiffany reported a 3% currency-adjusted drop in world-wide sales and a 5% decline in sales at stores open at least a year.

This story is making the rounds - apparently there is a desire to kick up the "Occupy Movement" again: Last year, just 62 individuals held wealth equivalent to the amount owned by 3.6 billion people, about half the world’s population. In monetary terms, that club of 62 has seen its riches climb by $542 billion, or 44%, to $1.76 trillion since 2010. That’s as the less-fortunate half has seen its wealth slide by 41%.

What is going on? Penthouse Magazine, the long-running and raunchier rival of Playboy, said Friday that it is ending its print edition after 50 years on the newsstand and will now only be offered in digital format.

- Didn't Playboy Magazine discontinue publishing nude pictures recently? Must be that FREE WebSex is very easy to access...

The new Showtime Series: Billions... Pretty wild look at the inside of Hedge funds and the govy.

Twitter (TWTR) - Experienced widespread outage today. 1-2 hours depending on the area. Twitter blaming glitch in software update, now under $17 (- 7%)

Some in U.K. government are trying to ban Donald Trump from coming to the country. Since he said that all Muslims should not be able to visit, they want to do the same to him.

From the ridiculous files: Pamela Anderson, will grace members of the French national assembly with her presence on Tuesday to support proposed legislation that would outlaw methods used in foie gras production. Force feeding ducks and geese aka "gavage" is a process by which food is pumped into the bird’s stomach to enlarge its liver in order to produce the popular French delicacy. (LINK)

Netflix (NFLX) reported earnings tonight after the close. Stock has traded up virtually every January report. Expectations are for EPS of $0.02 on $1.83 billion of sales. (Stock up 14% after hours)

-Netflix reports Q4 Domestic Sub adds of 1.56 mln vs 1.65 mln and guidance; International subs 4.04 mln vs 3.50 mln guidance

-Netflix prelim Q4 $0.10 vs $0.02 Capital IQ Consensus Estimate; revs $1.82 bln vs $1.83 bln Capital IQ Consensus; sees Q1 EPS $0.03 vs. $0.03 Consensus

IBM reported earnings today as well. Beat on EPS $4.84 vs. $4.81, light on revenues. 15 straight quarters of revenue declines. Needless to say, stock at 52-week low...($123.14 after hours)

Sara Palin endorses Donald Trump - bet he is happy about that... (LINK)

 

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DHUnplugged #298: 2008 Part II ?

dh298It was a historic week on Wall Street. 2016 started with a nasty blow to markets. Investors liquidated as they ran for cover and headlines are painting a bleak picture.

Earnings season, China, crude and the major news that will move markets are all discussed. We also confirm our car sales theory with data that backs it up.

The Iranian affair and the State of The Union Address are up for commentary as well.

What is that coffee company that John can’t recall?

Show Notes and Links

President Obama's final State of the Union... and?

THE WORST FIRST WEEK OF YEAR EVER - that is the headline that is being pushed around. Also seeing many compare the future to 2008.... Yes, it was bad.... How bad?

Some Stats:

XHB SPDR S&P Homebuilders -9.13%
XLB S&P Sel Materials Spdr Fd -7.74%
XTL SPDR S&P Telecom ETF -6.92%
XLF S&P Sel Finl Spdr Fd -7.26%
XLE S&P Sel Energy Spdr Fd -7.08%
XLK S&P Sel Tech Spdr Fd -6.40%
XLI S&P Sel Industrial Spdr Fd -6.21%
XLY S&P Sel Consum Discretion'y Sp -5.82%
SPY SPDR S&P 500 ETF -5.86%
XLV S&P Sel Health Care Spdr Fd -5.57%
XLP S&P Sel Consum Staples Spdr Fu -2.91%
XLU S&P Sel Utilities Spdr Fd -0.39%

Other markets around the world fared even worse last week:

China -13%, Africa -11%, Australia, -11%, Mexico -9%, Brazil -8%, Canada -6.75%....

Sectors that are getting beat up so far in 2016:

Homebuilders -9%, Materials -7.75%, Telcom -7%, Financials -7%, Energy -7%...

Utilities and Consumer Staples held up the best with only fractional losses.

Technical Conditions at end of last week:

  • At the close of the week, only 101 stocks in the S&P 500 were above their 200 day moving average
  • At the close of the week, only 61 stocks in the S&P 500 were above their 50 day moving average
  • S&P 500 is under the 10-month and 12-month moving average
  • Our Key Reversal Indicator (KRI) is flashing "oversold levels" consistent with near-term market turning points
  • The Spearman Indicator is close to a low point that shows bottoming

Key Reversal Indicator

From Tom McClellan this week: "In a Dec. 11, 2015 Chart In Focus article, I posed the rhetorical question about whether the market was reliving its past from 2012, or from 2008.  The financial panic in China seems to have settled the question for us, and the market has decided on the 2008 scenario."

Market Doomsday Chart

China is trying to get a grip on markets. After falling 7% and triggering circuit breakers on the first trading day of the year, the govy spent $20 billion to try to keep a bid under markets. In addition, the expiration of the share sale regulations is going to be moved further out. (not to mention that the govy may look to make selling a criminal action (of course the next 7% drop and market halt scared them into removing the halt rule) . (LINK)

Click Here to View Yuan Chart

Crude is also causing consternation. WTI Crude today low $29.93

According to Bank Of America, Railroad cargo in the U.S. dropped the most in six years in 2015, and things aren't looking good for the new year. Overall the DJ Transports are down 8% this year, 16% last 3 months and 21% 1-year. They are often a good read on economic activity.

POWERBALL - $1.5 billion. That would be a 20 year annuity of $75 million per year for 20 years. After taxes it would be a cool $45 million per year. Here are the odds: Grand Prize: 1 in 292,201,338

Click Here to View Powerball Odds

Earnings season is here! Alcoa (AA) announced earnings of $0.02 versus $0.04. However, the outlook is still bleak as prices are sliding causing their outlook to be reserved. Stock down 10% on the news. Hit many of the materials stocks, like Freeport (FCX) - now below its 2008 low... Sitting around $3.88

CSX reported and the outlook for transportation was not so good....

Starbucks said it expects China to eventually overtake the U.S. as the coffee chain's largest market. company said it is on track to open 500 stores in China this year. (Is this a bad time to be opening so many stores in China?)

Still at it... Turkey - A suicide bomber believed linked to the Islamic State in Syria set off a powerful blast Tuesday in one of Istanbul's most popular tourist districts, killing at least 10 people and injuring 15, officials said.

Auto Sales - highest ever in history. But, our thought that some of this is based on longer-term loans and discounts may be a reality. New survey shows that the average new car loan is 5.6 years. Autonation (AN) reported earnings last week and commented that margin pressure is growing. Stock tumbled. (Note: Delinquencies on car loans have increased by nearly 120 percent, from just over 1 percent in 2010 to 2.62 percent in 2014)

Sharp is toast... Japanese government-backed fund has offered to invest 200 billion yen ($1.71 billion) to help bail out electronics maker Sharp Corp.

CES - heard from a few people that drones, GoPro style cameras and personal health devices were big. What else?

Shipments of personal computers fell 10.6% during the fourth quarter to 71.9 million units, the largest year-over-year decline in PC sales on record, according to industry tracker IDC. (LINK)

Ford Motor Co (F) announced after the close that it was declaring a $1 billion supplemental cash dividend and that it expected to have operating profit of at least $10 billion in 2016, roughly the same as its earnings in 2015. (stock down in after hours on the news.... maybe due to lack of growth)

From an article about the decline in PC sales... Look at this chart.. Such idiots writing news...

Click Here to View HP/AAPL Price Chart

So, Iran is holding two small Navy ships and their crew - accused of snooping as they drifted into Iranian waters. The theory that the U.S. is offering up is that it is possible that the boats lost propulsion and drifted into Iranian waters... Both boats lost engines at the same time???????  Of course, this is after U.S. agreed to a deal that is very favorable to them.

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DHUnplugged #297: New Year Cheer or Fear?

The New Year is upon us and markets are seeing heightened volatility. With the recent rate hike by the Fed, what will be in store for 2016? More of the same as 2015 or clear sailing to new highs? We will help to take the clarify some of the confusion.penquin1

John and Andrew take a look at markets, the news that is moving markets as well as an update on our stock picks.

 

Show Notes and Links

2015 ended on a sour note. The DJIA and the S&P 500 finished in the Red, the NASDAQ was positive. The mega-cap trade helped to keep the S&P 500 from a much worse situation (4% differential between S&P 500 cap-weighted and equal-weighted). 2016 saw a tightening as the trade flipped a bit. NFLX, GOOG, FB, etc, all got chopped at the start of the year.

China is trying to get a grip on markets. After falling 7% and triggering circuit breakers on the first trading day of the year, the govy spent $20 billion to try to keep a bid under markets. In addition, the expiration of the share sale regulations is going to be moved further out. (not to mention that the govy may look to make selling a criminal action. (LINK)

China has also been involved in a serious game of currency devaluation since July.

Click Here to View Yuan Chart

Global markets dropped on the first day of the 2016 year as China worries (economics) and tension in Middle East sent traders running for cover. (China PMI once again missed expectations as did some U.S. economic reports).

There has been a great deal of discussion over the latest Fed move to hike rates. Now many are saying that is was totally wrong and timing was terrible. Thoughts?

Crude prices could not even hold onto the gains from the Mid-East tensions for the day - that is a bad sign...

Overnight, the Baltic Dry Index slid 5 points to hit a new all-time low of 468. The index has hit a few new all-time lows in recent months. From a year ago, rates are 39% lower!

Click Here to View BDI Chart

New York City will begin this month replacing thousands of pay phones with free Wi-Fi hot spots that will sit atop a 9.5-foot tall box featuring electronic advertising screens and an Android tablet that can be used to place free phone calls.  (LINK)

Obama going to invoke Executive Order? Gun stocks rallied as investors again bet that new restrictions to be rolled out by President Barack Obama not only wouldn’t deter sales but would propel them. Smith & Wesson  shares surged 14% and Sturm, Ruger & Co. climbed 8% at the open. (LINK)

On the political front, Trump still in the lead. Have you seen his TV ads? Really doing some fear mongering.

The Big Three auto makers had some impressive December U.S. sales numbers, as car makers remained poised to report their highest annual sales ever, shattering the record set in 2000. Is this because of great demand or sales tactics (like longer term loans)? (LINK)

Virtual reality - been a big news item these days. Is it here to stay?

Apple (AAPL) is expected to reduce output of the iPhone 6s and 6s Plus by around 30% in the January-March quarter compared with its original plans, a measure that will deal a blow to Japanese and South Korean parts suppliers. Production is expected to return to normal in the April-June quarter, once inventory adjustment is complete. (LINK)

Blackrock - the world's biggest bond ETF player has a new warning: Bonds...

FitBit (FIT) announces the Blaze - $199 and will be available for pre-sale in March. On the announcement the stock plunged 18% - Pricing issues or is it because they are going against Apple with this product? (LINK)

Hedge Funds - 2015 was not the best year. Ackman's Pershing Square was down 20% and Einhorn's Greenlight was down about the same. Overall the hedge fund universe under-performed. (LINK)

Follow up on Volkswagen: Today the company reported December sales of 30956 units, down 9.1% year-over-year. Also, news that the U.S. is suing the company over the emissions scandal is not helping shares...

Chipotle (CMG) - Another outbreak and now people are taking pix of stores and sending around making fun of the fact that stores no longer have lines.

Click Here to View CMG Chart

The energy sector is still limping along - could be interesting contrarian trade for 2016. News out today that Pioneer Natural Resources (PXD) commences a public offering of 10.5 mln shares of its common stock. (JCD SHORT position in Weekly Picks)

Load of Crap: Malaysia Air Bans Checked Bags Over Fears Headwinds Could Leave Jets Short on Gas. (LINK)

DHUnplugged Stocks (LINK)

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DHUnplugged #296: Market In a Funk Over Junk

The countdown until the Fed rate decision is getting down to the last few hours. Markets seem “prepared” for a hike and then some very dovish commentary to follow. Will this cause the U.S. dollar to rally or will we see an unwind of risk assets?

On the table for discussion is the recent and massive sell-off in the junk bond sector. If history is any guide, this could be the tip of the iceberg for market volatility. Confusion remains along with some interesting investment opportunities.

dh296

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DHUnplugged #295: Central Bankers GONE WILD

It has been a wild ride for currency markets. Central banks may have actually gone too far and markets are starting to see notable price movements. Last week may have been the tip of the iceberg.

We also discuss some of the important news of the week as well as the market outlook.

dh295

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Charts discussed in this episode

 

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DHUnplugged #294: Santa or Grinch Markets?

The end of the year is just weeks away and there is plenty of news that will shape markets. Seasonally, this is a bullish time, but we discuss some of the potential headwinds that may hinder further upside.

China’s currency was approved by the IMF in the global Special Drawing Rights basket – what implications will that have for Asian markets?

dh_santaGrinch3

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DHUnplugged #293: Facebook (FB) Exploiting Your Misery

It will be a holiday shortened week, long on news. The recent geopolitical reports have had little effect on markets as end of year programs are set to buy mode.

Some interesting moves on a few stocks are discussed and what is really behind the new Facebook  Take-a-Break feature.

facebook_breakupsSee this week’s stock picks HERE

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Charts discussed in this episode

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DHUnplugged #292: The “We-Are-Fearless” Rally

With terrorist acts in Paris, most would have thought that global markets would have seen selling. Not so! We take a look at what is behind the buying frenzy and the potential winners are losers.

Japan is back in recession, copper prices are plunging and still no fear… BUY BUY BUY!

If you are wondering why Netflix (NFLX) caught a bid this week – we have some interesting theories.

fearless

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DHUnplugged #291: Wake Up – The Fed Already Raised Rates

The Fed has already tightened simply by voicing the potential to tighten. The U.S. Dollar has surged and the Euro and Yen have tumbled. That in itself will create tighter economic conditions for the U.S. markets.

Short sellers beware: The SEC wants to know more about your activity. Plus we take a look into the counting methodology with the supposed 8 billion videos that Facebook says are viewed daily.

wakeupcall

Charts discussed in this episode

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