DHUnplugged #308: Chatbots – Your New Best Friend

Earnings will be in the spotlight as the season has officially opened. It is time to find out if the fundamentals match the technical conditions.chatbots

Chatbots are the all the rage – Microsoft’s failure and Facebook’s foray are on the list of topics we discuss.

Crude surges as inventories see the biggest drawdown for 2016 and rumors are floating about regarding the potential for a production freeze by Russia and Saudi Arabia.


Click HERE for Show Notes and Links

Oil surges above $42 on hopes of a production freeze (again) and the 4+ million barrel drawdown we saw last week. Also, rig counts keep falling and short sellers of the commodity are getting squeezed. Equity markets were not that happy - losses of 1%+ across major indices.

Weekly Crude Inventories

Oil Price Surge Chart

NYC Birthday Update - JCD

-- News: Headlines today that Saudi Arabia and Russia have come to a consensus on an oil output freeze; Markets and oil spiking in reaction (WTI Crude spikes to $41.60+ or 3.5%)

Earnings season begins! Alcoa (AA) beat the $0.03 estimate by $0.04 but revenues missed and guided down aluminum production for the coming year. Many of the big banks start to report this week as well. (JPM) (BAC) (WFC)

Goldman Sachs (GS) finally has been forced to pay up for their part in deceiving investors about the mortgages that were sold leading up to and during the mortgage meltdown/crisis. $5 billion is the cost - stock was up on the news...

Tesla (TSLA) - Took deposits on more than 350,000 Model 3 the first week. Production problems? (Just announced, a recall of 2,700 Model X)

-- Base price of the Model 3 ~ $35,000. With a $7,000 tax credit, that makes cost of car very very cheap!

IMF Fund sees world GDP expanding 3.2% in 2016, 3.5% in 2017 (They have poor record of forecasting and usually err on the optimistic side)

 


dh_CTPANNOUNCING THE WINNERS of the
DHUnplugged Closest to the Pin Contest for US Steel (X) and Michael Kors (KORS)

Currently week CTP = Transocean LTD

ANNOUNCING - GoPro (GPRO)

us_ctp2

kors_ctp3

Winners will be getting great stuff like the new DHUnplugged Shirts (Designed by Jimbo)

Sunglasses from Spitfire and more!dh_CTP2

DHU's Official Model - Vivi Jugo

U.S. government putting together regulations to stop/inhibit inversions. Allergan/Pfizer deal is busted.
-- Obviously there is now the overhang that U.S. will be putting the clamps on corporate tax avoidance - what is next? Overseas profits?
-- U.S. citizens must pay tax on worldwide income - but U.S. corporations do not --- yet.

Panama papers - that is something that is going to be a thorn in the side of some politicians for some time. Iceland PM resigned last week after he was found to have secret offshore account.
-- HOW DID 1 million pages of documents get hacked/leaked?

Goodbye Privacy - Uber Technologies Inc released its first ever transparency report detailing the information requested by not only U.S. law enforcement agencies, but also by regulators. The ride-sharing company said that between July and December 2015, it had provided information on more than 12 million riders and drivers to various U.S. agencies.

Back to the negative rate fiasco - Japanese loan growth slowed to the weakest pace in three years in March, signaling the central bank’s introduction of negative interest rates has yet to spur credit in the world’s third-largest economy.

Technology research and advisory company Gartner released data pertaining to first-quarter PC shipments. The report showed a continuation of a downtrend as quarterly shipments fell 9.6%, representing the sixth consecutive quarterly decline.

WSJ: When big banks announce earnings starting on Wednesday, the spotlight will be on massive unfunded energy loans that most investors didn’t know much about until recently.

-- These unfunded loans have been promised to energy companies that haven’t yet tapped the money. Many banks historically haven’t disclosed these loans but have begun to recently following the extended slide in oil and gas prices.
-- $147 billion in unfunded loans have been disclosed by 10 of the largest U.S. banks

Unfunded Energy Loans

Brazil - A congressional impeachment committee voted to recommend a Senate trial for President Dilma Rousseff on charges of manipulating public finances.

What is wrong with people? An airliner flying from Hawaii to Japan was forced to turn back and land in Honolulu after a passenger insisted on doing yoga in the galley in defiance of the crew, an FBI spokesman said on Thursday.

New craze? Coloring books, once seen only as a pastime for children, have become a growing craze for American adults looking to unwind or test their creativity with coloring pencils.

Microsoft's BadBot: Almost a week after being shut down for spewing racist and sexist comments on Twitter, Microsoft Corp's artificial intelligence 'chatbot' called Tay briefly rejoined Twitter on Wednesday only to launch a spam attack on its followers.
-- (JUST IN - Facebook is building a chatbot) - what is this all about?

New York - potential legislation to have roadside checks after accidents to see if driver was texting. Under the first-of-its-kind legislation proposed in New York, drivers involved in accidents would have to submit their phone to roadside testing from a textalyzer to determine whether the driver was using a mobile phone ahead of a crash.

See this week’s stock picks HERE

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DHUnplugged # 307: The Soft Dove Does it Again!

Another day, another speech. This time from Chairman Yellen who now says that inflation readings are transitory and the Fed has more scope for further accommodative actions. In other words : MORE STIMULUS as their outlook is looking wrong again. So, if at first (or second, third etc) you don’t succeed, try try again.yellen1

Whether or not markets continue to hold on to the notion that a carrot dangle will magically propel the economy is uncertain, but what other choices are there?

GDP revisions, employment report on the horizon and plenty of news you need to know…. All packed into this episode.


Click HERE for Show Notes and Links

Markets have been trading sideways - up to resistance and then slowly stagnating. Volume has been anemic. Monday volume lowest of the year. Then....

Yellen speaking today in NY - dovish as can be... Here are a few of the highlights

  • Importantly, this forecast is not a plan set in stone that will be carried out regardless of economic developments. Instead, monetary policy will, as always, respond to the economy's twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals assigned to us by the Congress.
  • Looking forward however, we have to take into account the potential fallout from recent global economic and financial developments, which have been marked by bouts of turbulence since the turn of the year.
  • The Committee continues to expect moderate economic growth over the medium term accompanied by further labor market improvement.
  • There is a consensus that China's economy will slow in the coming years...
  • The inflation outlook has also become somewhat more uncertain since the turn of the year, in part for reasons related to risks to the outlook for economic growth.
  • Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy. This caution is especially warranted because, with the federal funds rate so low, the FOMC's ability to use conventional monetary policy to respond to economic disturbances is asymmetric. If economic conditions were to strengthen considerably more than currently expected, the FOMC could readily raise its target range for the federal funds rate to stabilize the economy. By contrast, if the expansion was to falter or if inflation was to remain stubbornly low, the FOMC would be able to provide only a modest degree of additional stimulus by cutting the federal funds rate back to near zero.

Naturally, post comments markets shot higher - except banks

Bank Stocks

What the Yellen commentary is saying is that there is a lot more to fear about the global economy than we think... Her speech had plenty to say about it and it is not usual that the Fed discusses things so overtly if they are not big issues.

Another example: Japan’s industrial production dropped the most since 2011 in February, as falling exports sapped demand and a steel-mill explosion halted domestic car production at Toyota Motor Corp. Output slumped 6.2 percent after rising 3.7 percent in January, the trade ministry said on Wednesday. Economists surveyed by Bloomberg had forecast a 5.9 percent drop.

Small business hiring hot spots. See chart below...

Small Biz Hiring in USA

Crafty plan: Canadian energy companies with surplus cash are buying back bonds on the cheap to help shore up balance sheets amid the worst oil downturn in decades. “If they can go out and spend $100 in cash and buy their bonds at 60 cents on the dollar, it’s a reduction in net leverage,” said Nicholas Leach, a high-yield portfolio manager at CIBC Asset Management Inc.

Virgin America (VA) — The airline's stock continues to be on watch today, after multiple reports Monday said JetBlue and Alaska Air were planning bids for their rival airline. Reuters is also reporting that various Asian airlines may also be interested in Virgin America.

The FBI caved - now THEY have the means to unlock the iPhone...

*** Is there growing apathy about terrorist acts? Quite the week we have had... Brussels, Iraq and a passenger falsely claiming he was armed with explosives hijacked an EgyptAir plane carrying 71 other people and forced it to land in Cyprus.

  • Limited response from markets on any of the latest events.

 


dh_CTPANNOUNCING THE WINNER of the
DHUnplugged Closest to the Pin Contest for Ford (F)

US Steel (X) and Michael Kors (KORS) announced as well... Coming up end of this week -Transocean LTD

ford_CTP

Winners will be getting great stuff like the new DHUnplugged Shirts (Designed by Jimbo),
Sunglasses from Spitfire and more!
dh_CTP2

DHU's Official Model - Vivi Jugo

Well known hedge fund manager Kyle Bass - reportedly owns $20 million of nickles and has advocated owning physical gold and platinum rather than financial instruments tied to the precious metals. (where do you keep all those nickles?)
*-*-*- Bonus Question: How much does $20 million of nickles weigh?   4,464,285.71 pounds

Nippon Telegraph & Telephone Corp., the former telephone monopoly in Japan, agreed to buy technology services businesses from Dell for $3.055 billion as the company seeks to expand overseas to counter an aging domestic market.

Last week we discuss how Lumber Liquidators (LL) shot up on report of settlements that appeared fishy. Since then stock retraced all of the move.

SunEdison (SUNE) - In real trouble now - SEC investigation about their recent report on company liquidity in question. Stock down 50% on the news.

Yahoo — Yahoo has given possible suitors until Apr. 11 to submit bids for its assets, according to the Wall Street Journal. Yahoo is said to be shopping both the core web business and its stakes in Alibaba and Yahoo Japan.(Will MSFT be in the deal?)

A California judge ordered a now-defunct for-profit college chain to pay more than $1 billion Wednesday over claims the company misled students and investors. (How are they going to pay that?)

 

See this week’s stock picks HERE

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DHUnplugged #306: The Blackout Looms Large

As earnings season approaches, companies will be in their blackout periods, unable to buy their stocks through certain repurchase plans. Without that added liquidity, what will result?blackout

U.S. markets are flirting with unchanged for the year as the massive rally  over the past few weeks has pushed valuations back into the danger zone, but with central banks showing more desire to stimulate, it may not matter… or will it?

Just last week, the Fed sent a confusing message to markets, now we are “only” to expect 2 rate hikes this year – so much for following the economic indicators.

All this and the winners of the latest Closest to the Pin…..


Click HERE for Show Notes and Links

Terrorists hit Belgium... Once again Europe is the center of attention - just days after the capture of the Paris bombings "mastermind". Two separate attacks, ISIS claims responsibility. U.S. Markets shrug off - Europe modestly lower.  (Recall that the last couple of attacks saw massive market rallies)
-- Of course the usual rumors of other potential acts circulated today as shorts/bears try to push on the news - none were confirmed.

Global Economics - Take a look at the stats for Manufacturing..

Markit PMI Table

Valaent Pharma (VRX) - Remember last week, we questioned whether the CEO's 2-month leave for "pneumonia" was for real? Well... Monday it was announced that CEO Pearson will be leaving the company. Ackman was appointed to board. Stock up 15% in reaction. (Note: CEO leaving does not seem to be good news as it may lead to more revelations about some of the internal issues with the company...)

VRX Chart

Nike (NKE) has announced that a self-tying ( or self adjusting) shoe will be out by the end of the year. Now that seems to be progress!
-- Nike earnings released today  (stock down 5%++ after hours...)
- NIKE Q3 EPS $0.55 vs. $0.48 Capital IQ Consensus; rev $8.032 vs. $8.2 bln consensus
- NIKE Futures Orders +12%; +17% in constant currency vs. estimates in the mid to high teens ex-FX
-- Futures as reported (ex-FX): North America +10%, W. Eur +16% (+23%), C & Eur +5% (+14%), China +28% (+36%), Japan +23% (+24%), Emerging -3% (+14%).

IMPORTANT: Sales will increase by a high-single-digit percentage during the next fiscal year, the company said on a conference call Tuesday. Analysts had projected a rate of about 10 percent for that period. Earnings will rise in the low teens, Nike said, compared with an estimate for growth of about 15 percent.

Nike's "Back to the Future" Shoe

Will liquidity dry up like it did the first quarter before and during earnings season? Retail still pulling out of equities?
Deutsche Bank reports:

Buyback blackout period starts Monday. An increasing number of S&P 500 companies will enter into their blackout period starting next week, about a month before the earnings season kicks into high gear in the third week of April.

If there is any truth to the notion that much of the recent rally was due share repurchase programs, liquidity will start to dry up starting today and we may see some additional volatility and downside potential for markets. Depending on how many institutional investors positioned for the ramp higher, it may create an interesting environment over the next few weeks.

 


dh_CTP** ANNOUNCING THE WINNER of the DHUnplugged Closest to the Pin Contest **
Tesla (TSLA)

John C. Dvorak !!!!!

Ford (F) and US Steel (X) announced as well... Coming up end of this week - Michael Kors (KORS)

teslaCTP

Chirag G. $ 224.21 Winner $ 2.17 0.96%
Charles F. $ 229.07 Runner up $ 2.69 1.19%

Winners will be getting great stuff like the new DHUnplugged Shirts (Designed by Jimbo),
Sunglasses from Spitfire and more!
AH_DH_CTP_Shirts


Markets closed Friday in observance of Good Friday


Thinking about Twitter (TWTR) - some recent changes makes it a more viable platform. Videos, gifs and other feature enhancements... Worth a look?

Some Apple news: (Smaller is better??? - Seems that size is the company's only innovation)

Apple at event unveils new bands for the Apple Watch; says Apple Watch will now start at $299 starting today (prior price was $399)

New iPhone released - 4 inch model

  • iPhone SE will feature 'hands free Siri' and improved battery life.
  • iPhone SE will start at $399; will start shipping on March 31
  • iPhone will feature the 64-bit A9 chip, introduced in iPhone 6s and iPhone 6s Plus, offers iPhone SE customers two times faster CPU and three times faster GPU performance compared to iPhone 5s.

Unveils iOS 9.3 - Software will feature light and dark mode, new enhancements to notes and news applications, and new educational applications.  iOS 9.3 will be available immediately.

Apple confirms ResearchKit advancements; also confirms new healthcare application 'CareKit' - Available April 2016

Apple at event unveils 9.7 inch iPad Pro (current iPad Pro is 12.9 inches)

--- FBI/Justice dept drops their calls for Apple to create a backdoor - they say they have another solution. Really?

Interesting news. SunEdison (SUNE) rumors are that the company is looking for debtor-in-possession financing. This is a tactic used by distressed and bankrupt companies that need financing. This type of debt is AHEAD of all other debt, equity or other assets that can be claimed. How great is that?

Lumber Liquidators Holdings Inc.'s stock soared 14% in midday trade Tuesday, after the wood flooring maker announced an agreement with the California Air Resources Board that "fully" resolves previous inquiries into its laminate flooring products sourced from China. As part of the agreement, Lumber Liquidators will pay CARB $2.5 million, and will implement voluntary compliance procedures to ensure all of its flooring products comply with CARB's formaldehyde standards.(Didn't they have 3X the expected amount of carcinogens?)

Kazakh officials and their visitors will have to leave their smartphones at the door of government buildings from March 24 in line with a new policy aimed at preventing leaks of sensitive documents, a leaked document showed on last Thursday.

Minnesota officials seized a "FMUSLMS" license plate and apologized for issuing it at a driver's request, saying on Wednesday that approval procedures for so-called vanity plates were under review.

Cuba is gaining opportunities for travelers - Carnival Cruise line wins approval to sail to Cuba. We going? DHU Trip?

Poor Elon Musk - He an wife are divorcing for 2nd time. Why marry again after divorce in the first place?

See this week’s stock picks HERE

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DHUnplugged #305: From Unicorn to UniCorpse

It has been a busy couple of weeks while DHunplugged was on a short vacation. Markets rally, oil climbs and central banks are getting more aggressive.unicorpse

China is still in terrible shape, but investors are still looking for more stimulative actions to come to the rescue.

It will be a big week upcoming with a busy economic calendar and the Fed’s rate decision on Wednesday…

And.. What is with the Unicorns? Write-downs happening quickly as there is a sense that valuations are way to rich for many of these names.


Click HERE for Show Notes and Links

Trip to Panama - had some interesting foods and experiences. (Plenty of Ceviche, Cow Foot Soup, Tripe and more...)
- Panama casinos... 5.5% cash check out charge!
- Diving 2 oceans on one day!

Daylight Savings Time is here! Happy? - Plenty of stories about problems related to the time change... More accidents, less productivity. Really? LINK

Prem Watsa, the investor who heads Fairfax Financial Holdings Ltd. and foretold a drop in technology company shares two years ago, is now saying “I told you so.” In his annual letter to shareholders, Watsa said he expects tech stocks from Twitter Inc. to Yelp Inc. to fall even further -- as much as 90 percent from their peak in the last two years. Now calling former UNICORNS = UNICORPSES

Weird story - A day after indited on violations of Sherman Act, U.S. shale pioneer Aubrey McClendon dies in suspicious auto accident.
-- Data shows he hit speeds of 89 miles an hour seconds before his Chevy Tahoe slammed into a concrete bridge earlier this month in a fatal crash, according to a report issued Monday afternoon by the Oklahoma City Police Dept. McClendon’s SUV, which was fitted to run on compressed natural gas instead of gasoline, crossed the center lane more than 60 yards before the crash. He wasn’t wearing a seat belt, the Oklahoma City Police said. Data recovered from the vehicle’s black box showed that McClendon tapped his brakes several times before the crash, but didn’t truly brake hard. His Tahoe hit the bridge at roughly 78 miles an hour.

Just as the markets turn, several big brokerages are slashing the year-end price target for S&P 500. Morgan Stanley is the latest with a price target of 2,050. Do we view this as a contrary indicator?

OOFAH - The massive rise for some energy and materials companies over the past couple of weeks has been amazing. (and the fall this week)

-- Past 30 days: Halliburton +22% , Helmrich & Payne +29%,  Chesapeake Energy +176%, Marathon Oil +49%, Linn Energy +157%,  Continental Resources +43%.... (Some relief as companies get reprieve with advancing oil prices and secondary offerings)

Politics: Trump rallies cancelled as violent protests have begun. This is going to be a nightmare... What happened today? Who will drop out?

TwitterheroTwitter and social media - how to make sense of the financial world? So many players trying to advance their own agendas...
-- Afterthefact'ers, toldyouso'ers, vague range gang, complainers, pumpanddump'ers, pompous parade, clickandsell'ers, negative nellies, positive posse...

Auto-Upgrade? As Microsoft auto-upgrades more PCs to Windows 10, some users are complaining that they weren't adequately notified. Reports of unwanted Windows 10 upgrades have been circulating for the past few days on Reddit and Twitter, etc.

New trend? After years of relying on the Amazon cloud to store its users' files, Dropbox has shifted gears and begun using primarily its own technology instead.

Japan's central bank issues statements during their two-day meeting that was a bit of a surprise. While many did not expect any further stimulus actions this meeting, there was also thoughts that there would at least be a some commentary about the potential for something in the future. Not only did they have nothing to say on that matter, there was a clear omission about the negative interest rate policy that led some to believe that they may actually be rethinking the tool. In response, the Yen climbed sharply and that created a negative bias for equities.

Yen Rises on Comments

 


dh_CTP** ANNOUNCING THE FIRST WINNER of the  DHUnplugged Closest to the Pin Contest **
Walt Disney (DIS)

Tesla (TSLA) and Ford (F) announced as well.

CTPWin_03152016


Busy couple of weeks - Central banks ! Europe went more negative on deposit rates, ramped up asset purchases and now including some corporate debt. What next?


HOOSICK FALLS, NY: More than six weeks after declaring an environmental emergency in this upstate village, Gov. Andrew M. Cuomo made his first visit here on Sunday, announcing that a new filter system had successfully cleared a toxic chemical known as PFOA from the municipal water supply.

Valeant (VRX) - Stock got crushed after earnings report. While company had a good quarter as compared to analyst estimates, the outlook was very poor - showing a sharp reduction in revenue and earnings. Plus a big write-down of the Philador unit.
-- How did smart guy like Ackman get bamboozled with this name? (Akman's Hedge fund estimates are showing a loss of $1 billion+ on today's plunge)
-- CEO Pearson is now back after months of "pneumonia"  (who has pneumonia for months?)

VRX Chart

Anyone see the video with the guy urinating into the Rice Crispies?

Not a surprise - Chipotle (CMG) posted some nasty numbers - sales down 25%+

See this week’s stock picks HERE

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DHUnplugged #304: An Infestation of Raccoons and Bears

The debate over the effectiveness of central bank actions is raging on. Once an investor’s best friend, confidence is waning and markets are reacting. Following the best week of 2016, equities are once again seeing weakness as oil falls on OPEC comments.meancoon

The bearish position is strengthening, but should this be a sign to start to nibble again on stocks? Is this a contrary indication or something that we should heed?


Click HERE for Show Notes and Links

Markets moved out of the correction as of Monday, only to slump again on Tuesday. Oil to blame? Iran essentially saying that they think price freeze is stupid/Saudi Arabia won't cut production. Oil got smoked on that news as well as fact that yesterday's rally was not what it seemed....

Market Update Midday 2/23

Coming into the last few days of the month - do you think that the markets will be able to turn green? Most major indices are off slightly...
- Indices are trading very technical, the 2,050 level was key resistance and that was hit with selling. Today, markets stopped on daily   support and held

Not surprised: Consumer confidence falls in latest reading. Middle income confidence fell the most since October 2008.
- Still, Fed officials are talking up more rate hikes for this year.

Listening to the news, TV, reading... Bearish commentary is everywhere.... What does that mean?

Fitbit (FIT) announced earnings. Stock down 19%on weak guidance. (Looks like same game-plan as GoPro)
- Look for these one-hit-wonders as potential rally and fade candidates in the future.

Politics - Jeb Bush is out!

Lumber Liquidators (LL) Unbelievable: The U.S. Centers for Disease Control and Prevention said earlier this month that tests on the company’s products showed minimal health risks, which renewed confidence in the chain as the stock rebounded. Now the agency has corrected those findings because of the math error (used feet instead of meters?) , saying formaldehyde exposure is three times higher than previously projected, although the risk of cancer remains low. Stock was crushed on Monday.

Home Depot (HD) out with earnings - company still looking good. Lowes (LOW) out tomorrow... Which do we prefer?

Do we want to chime in about the Apple/Feds rigmarole?

Oil plunge is starting to hit banks and energy sector companies. While stocks were suffering,  not much in the way of bankruptcy or otherwise. Now starting to see headlines about sales, div reductions, massive earnings shortfalls... (Massive build after the close tonight)

JP Morgan investor day - investment banking fees down 25% over year and sees some need to add to the reserves for bad debt related to oil related debt. Stock down 4% on the negative commentary from company

 


dh_CTP** ANNOUNCING THE FIRST (new and improved)  DHUnplugged Closest to the Pin Contest **
Walt Disney (DIS) ...  Listeners will be  completing against John and Andrew

Now Open for entries through March 2nd (Final Price Date: March 11)


Some oddball Andrew stories:

Saw a raccoon in front of my house last night - called wildlife control and they gave me a sure fire way to get ride of it.

Had a very nice Uber driver. Woman driver had to take me to a boat ramp to pick up my car. She had no idea where she was and told me: " I got to tell you, you are taking me to places that no one has ever taken me before... "   NICE!

Quick update - bought the exercise bike from Sears (bought online then picked up for better price)


Macy's reported a better quarter - Stock up 3% and into a "hole" that could see it break to $50. So much bad news was already priced in to these big-box retail stores.

Don Matingly (Coach of Miami Marlins) enforces no-facial hair rule. What is that? What about ridiculous hair in the NFL?

Yahoo! - more layoffs and now looking to sell itself. Mayer clearly looking to get big payday before the ship goes down. (also closing divisions)

- Time Inc is looking into possible bid.

Google is closing Google Compare - what was that anyway?

China government is "telling" media only to write financial stories that play within their rules. They want to stop any negative views or there will be consequences. (Some on Twitter seemed surprised)

On China - devalue of the Yuan - how to play?  (China started to devalue again Monday... Looks like they are setting the Yuan fix lower again)

Yuan Creeping Lower

Tesla - Musk finally gets the Tesla.com url after years of fighting for it. (now redirects to www.teslamotors.com)

There has been some murmurs from big institutional investors saying that now may be the time to start buying emerging market debt again (PCY, EMB)

Time to go to the U.K. for a little vacation? The Pound is down 18% against the USD since July 2015. Hitting 1.40 for the first time since 2009 on Brexit fears. Is this possible?

UK Pound Plunge Chart

See this week’s stock picks HERE

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DHUnplugged #303: Waiting on China’s Left Hook

Oil soars on news that there will be a production cut, then sours after the announcement of a production freeze. Waiting on the “left-hook” devaluation from China after they pledged to keep the Yuan strong.dh_lefthookb

Draghi promises the world that more stimulus is on tap and Japan continues to believe that negative rates are the answer to their economic woes. Meanwhile, there is some chatter that the Presidential candidates are the reason that markets have been in a downward spiral. More on this and other important topics.


Click HERE for Show Notes and Links

Good is bad, Bad is good - Japan markets finished last week down 14.5% after the Yen rallies to 111/USD. GDP drops 1.4% YoY and that was enough to drop the Yen back to 114/USD and markets rally 5%.

Japan GDP Chart

U.S Markets finished lower for the week, even with the Friday surge of 2%. This week starts off on a different note as central bankers are jawboning the markets. ECB's Draghi once again stating that he may add stimulus in March and Japan's Kuroda talking up the benefits of negative deposit rates.

The 2-Speed economy - Manufacturing related continues to suffer:February Empire Manufacturing -16.6 vs -9.9 consensus; January -19.4

Meanwhile.... China is out with commentary that the RMB (YUAN) should not weaken from here. Yuan had one of its best rallies (strengthen) on record after markets re-opened from the New year holiday. Waiting for the left-hook devaluation... (Skeptical?)

Yuan Fizzle Chart

China loves the movies.... China’s retail sales over the Spring Festival holiday rose 11.2 percent from the same vacation period a year earlier, with cinemas posting sharp increases in box-office sales, the country’s Ministry of Commerce said in a statement Saturday.


** More info and an Update... Announcing the DHUnplugged Closest to the Pin Contest -
The first CTP will start in March... 
Listeners will be  completing against John and Andrew **


 

The ECB Council voted today to scrap the €500 note. They say that they are doing this to counter black market and nefarious uses for higher denomination bills. The reality is that taking it out of the system will effectively reduce the cash in circulation by upwards of 30%. (Will this help gold, metals and alternatives like Bitcoin?) *** Larry Summers floating the idea of scrapping the $100 bill.

Oil... Check out inventories: (note - Saudi Arabia and Russia met and implemented a FREEZE rather than production cuts)

Crude Inventory Chart

Chatter that current Pres candidates are the reason that markets are acting poorly. Now on the front cover of Barrons this week...

Barron's Cover

Here we go... Apple (AAPL) planing massive bond sale. 30-year bond may yield 2.15 percentage points more than similar-maturity Treasuries (To benefit shareholder return plan) - $10 - $12 billion

At the same time: Carl Icahn reduced his stake in Apple by 7 million shares to 45.7 million shares in latest quarterly release.

Splinters: Acting on a tip, agents of the U.S. Food and Drug Administration paid a surprise visit to a cheese factory in rural Pennsylvania on a cold November day in 2012. They found what they were looking for: evidence that Castle Cheese Inc. was doctoring its 100 percent real parmesan with cut-rate substitutes and such fillers as wood pulp and distributing it to some of the country’s biggest grocery chains.

And so it begins:  The US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans. Paul Aker says he was arrested at his home last week for a $1500 federal student loan he received in 1987. He says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the 29-year-old school loan.

Comcast outage - massive system failure on Monday. Still not sure if all fixed and how many affected.

Comcast Outage Map

**Extra - Just got the Sony 65" Bravia 4k - Android TV - NICE! (AMAZON Prime 4k and Netflix 4k movies!)


See this week’s stock picks HERE

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DHUnplugged #302: Take a Ride on the Titanic II?

CDS – Credit Defaults Swaps blowing out in Europe as negative deposit rates are having a terrible impact. Tech stocks blowing up as earnings and outlook are really concerning investors.titanic

Oil continues to get hammered and now below $30 per barrel – even with the rumors flying around that there will be a special/emergency meeting with OPEC/Non-OPEC countries in an effort to stabilize prices.

Japan market crumble, bond yields are dropping and all eyes are on the Fed’s next move. Listen in as we dive deep into the real news that matters most for investors.


Click HERE for Show Notes and Links

Japan reeling after the BOJ implements negative rate policy - Yen up 5% since 1/29/16 and markets tanking (Nikkei dropped 5.5% last night) -- Japan 10-year falls below 0% for first time

FACT - Negative rates are not good for markets - Central Banks are now tinkering with tools they have no idea what outcome will be. (Yen rallying again tonight - now at 114.31)

Yen Chart

The biggest concern right now may be that  China devalues the Yuan after the Chinese New year Holiday.

The global financial situation is getting worse as seen by the Contingent Default Swaps (CDS) - remember those?

CDS Spreads Chart

Interesting: Last year, the number of dividend reductions far surpassed 2008.

Dividend Reduction Trend

Goldman Sachs Abandons Five of Six 'Top Trade' Calls for 2016 - Inflation, dollar bullish call, Emerging market stocks, U.S. banks and a few others. So much for the big boy's being right...

There has been a lots of talk about a potential U.S. recession. There are lots of voices that are protesting that concept. There are some areas that are clearly in recession.

ISM Composite Chart

Oil at $30 a barrel is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash. Companies including Marathon Oil Corp., Noble Energy Inc., Callon Petroleum Inc., Pioneer Natural Resources Co., Rex Energy Corp. and Bonanza Creek Energy Inc. used a strategy known as a three-way collar that doesn’t guarantee a minimum price if oil falls below a certain level, company records show. While three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines.

May be some market moving potential as Janet Yellen is giving testimony to congress over the next few days. Will the Fed dare to hike rates again anytime soon? (U.S. yields have slid since the rate hike)

What is this all about? A record 4,279 individuals renounced their U.S. citizenship or long-term residency in 2015, according to data released by the Treasury Department.

LinkedIn (LNKD) stock tumbles 50% after earnings release. Are advertisers feeling the pinch and finally giving up on some social media? (FB, TWTR follow lower after report) - We should have seen this coming - we knew Facebook had a new business service that was competition to LinkedIn.

SolarCity (SCTY) comes in way ahead of estimates, but the outlook is awful - stock down 25%   -31%  -35%  -37%

Disney (DIS) beats on both earnings and revenues...Stock slumps after hours.

** Announcing the DHUnplugged Closest to the Pin Contest - The first CTP will start in March...
Listeners will be  completing against John and Andrew *****

WHILE in attendance at the Super Bowl, Apple chief executive Tim Cook snapped a photo of the post-game festivities and shared it to his almost two million Twitter followers. BLURRY photo and followers gave him lots of crap about it.

Cook's Blurry Photo

India’s telecom regulator said Monday that service providers cannot charge discriminatory prices for Internet services, a blow to Facebook’s global effort to provide low-cost Internet to developing countries. Facebook’s “Free Basics” program provides a pared-down version of Facebook and weather and job listings to some 15 million mobile-phone users in 37 countries around the world. When it debuted in India in April, however, Free Basics immediately ran afoul of Internet activists who said it violated the principle of “net neutrality,” which holds that consumers should be able to access the entire Internet unfettered by price or speed. (LINK)

Daimler recalls 840,000 cars - potentially due to Takata Air bags ---- When will someone put an end to this company manufacturing bad airbags?

Deutsche Bank (DB)doing a massive bond repurchase program - stock up a bit on the announcement. What does this mean? (I think they are eating their own cancerous debt)

Is this a good idea? The Titanic II, an exact replica of the original is being built and will be ready to sail (or sink) in 2018. (LINK)

Sanders and Trump will New Hampshire - oh my (possible markets don't like any of the candidates?)


Results from the DHFed - WE HAVE A WINNER! - Max Humphreys guessed $4,650.00 (Within $3)


See this week’s stock picks HERE

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DHUnplugged #301: Groundhog Day, Again…

philMarkets are still contending with cross currents and the free-fall in commodity prices. The most recent earnings from Apple (AAPL) and Google (GOOG) are pushing and pulling investors in different directions.

We delve into the recent move by the Bank of Japan, earnings and the latest news that are shaping the investment climate. Plus, we reveal the winning entry from our 300th Anniversary show.

Plus, we take a look at negative interest rates and the potential for the Fed to restart QE.


Click HERE for Show Notes and Links

Results from the DHFed - No one got it exactly right - but close... (Scroll to bottom)

The Bank of Japan shocked markets last Friday with the announcement that they are moving toward negative rates. (Only for new money deposited at the BOJ and will not hurt bank profits) Yen drop 2% on the news after initially soaring. Negative rates are a really bad experiment.

Tonight, in response to the selloff in US and oil hitting $29.45 (down 23% YTD), Japan markets down 3%, Hang Seng down 3%, and futures running lower)
* Tomorrow may be ugly.... However, probably a good amount of potential bounce opportunity ahead of Friday. **

Crude oil now back to $30... Nasty fall after big move up.  markets following step-by-step. DJIA dropped 300 points today and NAZ and S&P ugly. Where to next?

Google/Alphabet (GOOG) unseats Apple (AAPL) as the most valuable company in the world. With the recent earnings announcement, Google's market cap is larger than Apple. WOW!

- Google had more paid clicks at a lower cost per click and beat by a wide margin.

Yahoo! laying off 2,500 employees. But, is Marissa Mayer one of them .. NO!
WAIT!!! 3:30pm, some chatter about yahoo! looking for.... "Strategic Alternatives" - stock ramps (smells like desperation).

Yahoo! also announced that they are going to explain a major restructuring after the earnings announcement tonight - that led me to believe that there is the potential for a significant miss in their quarterly report. (There is also some discussion out there are lawsuits against Yahoo! regarding their stacking process for employee reduction)

Natural gas getting whacked! Below $2.00 now and off by 14% YTD, 13% in Feb. Maybe because Punxsutawney Phil sees no shadow, predicts early spring??

The 10-year Treasury is 1.87% now, the recent low was 1.5% in 2012 when the Fed was pressing rates. Does this mean that markets do not believe that the Fed will be raising rates again AND may be moving toward additional stimulus? Or something else under the surface...

BANKS: This is bad..Click to see recent performance

Click For Bank Performance

Iowa Caucus - Clinton and Cruz. WOW... Trump must be pissed.

What is with this Zika virus - really picking up steam. WHO now calling this a global emergency. (LINK)
-- Report that the first spread through sexual contact in the US just hit the wires.

Comcast - Xfinity - I have service and they opened up their WiFi so wherever I am it picks it up, piggybacking off of others Wifi. Is this right?

It is starting.... Exxon Mobil profits down 58%, BP down 90% or so..... The longer oil stays here the worse it will get (Junk bonds continue to show distressed status)

Flint Michigan - how bad is this? (LINK)

Eagles trained in Netherlands to take down drones (LINK)

https://www.youtube.com/watch?v=qJQ3xDUO_30

Chipotle (CMG) - CDC has ended its investigation of the food chain and found nothing... Really? Also, earnings after the close tonight...
Earnings - company beas on EPS but misses on revenue. Part of the beat on earnings was the fact that there was a major reduction in non-cash stock compensations.

Remarkable - German jobless rate falls to the lowest on record. We will be looking this week to the ADP private payroll report on Wednesday (190k is consensus) as well as the big BLS employment report on Friday. (Estimates are for 183k and 5% unemployment rate)

- Will there be a surprise waiting? A much worse number? Remember, the December number was juiced because of annual adjustments and thee was some thought that the actual number was closer to only 11k jobs added.

Here is how you cash out.... Ferrari (RACE) came public in October 2015.. Stock went to $60+, now at $34 after missing earnings and complaining about slow sales. Push the crap to the little guy....

Ketamine, popularly known as the psychedelic club drug Special K, is a staple anesthetic in emergency rooms, regularly used for children when they come in with broken bones and dislocated shoulders. It’s an important tool in burn centers and veterinary medicine, as well as a notorious date-rape drug, known for its power to quickly numb and render someone immobile. Now being used to treat severe depression... (LINK)

Dude: Legal Marijuana Sales Projected to Reach $6.7 Billion in 2016

Seriously? Amazon (AMZN) is planning to open hundreds of physical bookstores according to a large mall CEO who spoke to Dow Jones.

Rule 48, which the NYSE declares on volatile days with the goal of ensuring orderly trading. But it may have backfired on Aug. 24 by leaving traders in the dark about prices. Now they want to scrap it. (LINK)


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 11:59 pm (ET), Sunday February 7, 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.)  * Note: Login/Register required to access and view the entry form.

Registered Users Only - Please Register/Login to view


See this week’s stock picks HERE

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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


 

See this week’s stock picks HERE

Follow John C. Dvorak on Twitter

Follow Andrew Horowitz on Twitter

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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)

 

See this week’s stock picks HERE

Follow John C. Dvorak on Twitter

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