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!)

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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)

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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.

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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

 

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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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