Archive for January, 2018

Week of Jan 26 2018 Weekly Recap & The Week Ahead

Monday, January 29th, 2018

There will not be any re-cap for the week of Jan 26 208. We are away for some needed R&R.

Have a good week.

The staffs at EGS.

Earnings for the week of Feb 2 2018

Week of Jan 19 2018 Weekly Recap & The Week Ahead

Friday, January 19th, 2018

“By living the philosophy that my winners are always in front of me, it is not so painful to take a loss.” – Marty Schwartz

1. Ford Ups Electrification Investment to $11B — Ford will significantly increase its planned investments in EVs to $11B by 2022 and have 40 hybrid and fully electric vehicles in its model lineup. “We’re taking our mainstream vehicles, our most iconic vehicles, and we’re electrifying them,” Chairman Bill Ford told reporters. Ford (NYSE:F) also showed off its 2019 Ranger, after pulling the midsize pickup off the market in North America eight years ago.
2. China Crackdowns on Crytocurrency — South Korea stating a ban on trading was now “a live option” and China reportedly raising the bar on its cryptocurrency crackdown. Bitcoin dropped eventually tumbling to under $11,000 for the first time since Dec. 6 from the high of nearly $20,000. PBOC Vice Governor Pan Gongsheng says authorities should ban centralized trading of virtual currencies as well as individuals and businesses that provide related services.
3. U.S. Plans New Nuclear Weapons — the Pentagon is planning to develop more “low-yield” nuclear warheads and a sea-based nuclear cruise missile, according to a leaked draft of the 2018 Nuclear Posture Review. It follows reports that Russia has developed an unmanned underwater nuclear drone that has a range of 10,000 kilometers and can carry a 100-megaton nuclear warhead. Companies affected are: BW, HON, ACM, JEC, SAIC, OA, COL, LMT, BA, NOC, GD, AJRD, HII.
4. U.S. Considers ‘fine’ on China for IP Theft — the U.S. is considering a major “fine” as part of a probe into China’s alleged theft of intellectual property. “We’re talking about big damages,” President Trump told Reuters. “We’re talking about numbers that you haven’t even thought about.” American businesses claim to have lost billions of dollars to Chinese firms that force them to turn over intellectual property as part of the price of doing business in the country.
5. US World’s Next Largest Oil Producer According to IEA — the IEA said in the latest monthly report that “2018 promises to be a record-setting one for the U.S.,”. “Relentless growth should see the U.S. hit historic highs above 10M barrels a day [in production], overtaking Saudi Arabia and rivaling Russia during the course of 2018 – provided OPEC and non-OPEC restraints remain in place.”

Majority of company earnings will be announced next week.

The week ahead — Economic data from Econoday.com:

Week of Jan 12 2018 Weekly Recap & The Week Ahead

Monday, January 15th, 2018

“If you personalize losses, you can’t trade.” – Bruce Kovner

1. SEC Crypto Crackdown Continues — the SEC continues to crack down on cryptocurrency trading, halting shares of UBI Blockchain Internet (OTCPK:UBIA) through Jan. 22. The regulator cited potentially inaccurate disclosures and unusual market activity. The stock spiked to $87 on Dec. 18 from just $9 on Dec. 11 and has since fallen back to $22.
2. Intel Unveils Self-Driving Car, Security Ipdates at CES — Intel showcased its first self-driving test car at CES, announcing a number of automaker tie-ups and stating Mobileye’s autonomous tech will be used in 2M vehicles. Also, Intel (NASDAQ:INTC) said it will form a new cybersecurity group and expects to issue processor updates by the end of January. Also, Intel (NASDAQ:INTC) capped its keynote address at this year’s CES by letting an 18-rotor air taxi fly across the stage. That marks the first time the Volocopter VC200, which can cover a distance of 27 kilometers and charges in less than 40 minutes, flew in North America.
3. China Diversifying Forex Reserves — China is diversifying its foreign exchange reserves in order to safeguard their value, according to the country’s currency regulator, while dismissing a Bloomberg report stating the government was halting or reducing its U.S. debt purchases. Chinese officials were said to have recommended the move amid a less attractive market for Treasury bonds and rising U.S.-China trade tensions.
4. S.Korea Plans Trading Ban Cryptocurrency via Exchanges — South Korea is planning to ban cryptocurrency trading via exchanges, according to Justice Minister Park Sang-ki, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil. It’s a major development as the country is one of the biggest markets in the crypto space. The news also follows warning from Warren Buffett that speculation in bitcoin, and other cryptocurrencies, “will have a bad ending.”
5. S&P Cuts Brazil Rating Deeper into Junk — citing the government’s failure to pass key fiscal reforms, Standard & Poor’s has downgraded Brazil’s credit rating deeper into junk territory, to BB-, or three notches below investment grade. It’s a disappointed move for the administration of President Michel Temer, which has been touting Brazil’s progress in recovering from its worst recession on record.

The week ahead — Economic data from Econoday.com:

Week of Jan 5 2018 Weekly Recap & The Week Ahead

Monday, January 8th, 2018

“If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.” – Paul Tudor Jones

1. Iran Unrest Lifts Crude Prices — crude oil benchmarks, Brent and WTI, have both started the year above $60 per barrel for the first time since January 2014. “Growing unrest in Iran set the table for a bullish start to 2018,” the U.S.-based Schork Report said in a note to clients. Iran is the third-largest producer in OPEC, which agreed last year to extend its oil output cuts through Dec. 31, 2018.
2. China Became Biggest Importer of Natural Gas — Beijing’s crackdown on pollution has put China on track to overtake Japan this year as the world’s biggest importer of natural gas. Already the largest importer of oil and coal, China is the world’s third biggest user of natural gas behind the U.S. and Russia, but has to import around 40% of its total needs as domestic production can’t keep up with demand.
3. Trump to ‘Sharply’ Expand Offshore Drilling, Including Pacific Ocean — looking to boost domestic energy production, the Trump administration has proposed opening nearly all U.S. offshore waters to oil and gas drilling, including in the Atlantic, Arctic and Pacific oceans. That would reverse the Obama-era order placing 94% of the Outer Continental Shelf off limits to drillers.
4. Attorney General Sessions to Allow State Attorneys Decide on Federal Pot Enforcement Law — Attorney General Jeff Sessions has rescinded an Obama-era policy that had discouraged prosecutors in states where marijuana was legalized from bringing pot-related charges, unless they involved distribution to minors, revenue sale benefiting gangs and a few other federal priorities. In its place, prosecutors will be given discretion (not guidance) to pursue marijuana-related prosecutions.
5. AAII Weekly Sentiment Survey — According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment increased to 59.75% from 52.65% last week. Not only is this the third straight week where bullish sentiment has been above 50%, but it’s also the second-highest reading in bullish sentiment of the bull market!

Also, Bearish sentiment dropped from 20.63 down to a paltry 15.56%. The only week where bearish sentiment was lower was in November 2014, when it dropped to 15.05%.

The week ahead — Economic data from Econoday.com:

Blackstone ‘s Byron Wien Ten Surprises for 2018

Tuesday, January 2nd, 2018

courtesy of Blackstone, Byron R. Wien, Vice Chairman in the Private Wealth Solutions group at Blackstone, issued his list of Ten Surprises for 2018.
Byron’s Ten Surprises for 2018 are as follows:

1. China finally decides that a nuclear capability in the hands of an unpredictable leader on its border is not tolerable even though North Korea is a communist buffer between itself and democratic South Korea. China cuts off all fuel and food shipments to North Korea, which agrees to suspend its nuclear development program but not give up its current weapons arsenal.

2. Populism, tribalism and anarchy spread around the world. In the United Kingdom Jeremy Corbyn becomes the next Prime Minister. In spite of repressive action by the Spanish government, Catalonia remains turbulent. Despite the adverse economic consequences of the Brexit vote, the unintended positive consequence is that it brings continental Europe closer together with more economic cooperation and faster growth.

3. The dollar finally comes to life. Real growth exceeds 3% in the United States, which, coupled with the implementation of some components of the Trump pro-business agenda, renews investor interest in owning dollar-denominated assets, and the euro drops to 1.10 and the yen to 120 against the dollar. Repatriation of foreign profits held abroad by U.S. companies helps.

4. The U.S. economy has a better year than 2017, but speculation reaches an extreme and ultimately the S&P 500 has a 10% correction. The index drops toward 2300, partly because of higher interest rates, but ends the year above 3000 since earnings continue to expand and economic growth heads toward 4%.

5. The price of West Texas Intermediate Crude moves above $80. The price rises because of continued world growth and unexpected demand from developing markets, together with disappointing hydraulic fracking production, diminished inventories, OPEC discipline and only modest production increases from Russia, Nigeria, Venezuela, Iraq and Iran.

6. Inflation becomes an issue of concern. Continued world GDP growth puts pressure on commodity prices. Tight labor markets in the industrialized countries create wage increases. In the United States, average hourly earnings gains approach 4% and the Consumer Price Index pushes above 3%.

7. With higher inflation, interest rates begin to rise. The Federal Reserve increases short-term rates four times in 2018 and the 10-year U.S. Treasury yield moves toward 4%, but the Fed shrinks its balance sheet only modestly because of the potential impact on the financial markets. High yield spreads widen, causing concern in the equity market.

8. Both NAFTA and the Iran agreement endure in spite of Trump railing against them. Too many American jobs would be lost if NAFTA ended, and our allies universally support continuing the Iran agreement. Trump begins to think that not signing on to the Trans-Pacific Partnership was a mistake as he sees the rise of China’s influence around the world. He presses for more bilateral trade deals in Asia.

9. The Republicans lose control of both the Senate and the House of Representatives in the November election. Voters feel disappointed that many promises made during Trump’s presidential campaign were not implemented in legislation and there is a growing negative reaction to his endless Tweets. The mid-term election turns out to be a referendum on the Trump Presidency.

10. Xi Jinping, having broadened his authority at the 19th Party Congress in October, focuses on China’s credit problems and decides to limit business borrowing even if it means slowing the economy down and creating fewer jobs. Real GDP growth drops to 5.5%, with only minor implications for world growth. Xi proclaims this move will ensure the sustainability of China’s growth over the long term.

Also-rans:

Every year there are always a few Surprises that do not make the Ten because either I do not think they are as relevant as those on the basic list or I am not comfortable with the idea that they are “probable.”

11. Investors recognize that the earnings of companies in Europe, the Far East and the emerging markets are growing faster than those in the United States while the price earnings ratios in those regions are lower than those in America. Global investments become more broadly represented in institutional portfolios.

The Mueller investigation of the 2016 presidential election fails to implicate any members of the Trump family in collusion with Russian operatives.

Artificial intelligence gains visible momentum. Service sector jobs are automated, particularly clerks in legal and finance professions, as well as workers in fast food outlets and healthcare. Economists begin to question the unemployment data because the rate drops below 4% while so many people still appear to be out of work and seeking government assistance.

12. Cyberattacks become more prevalent and begin to affect consumer confidence. A major money center bank suspends deposits or withdrawals for three days because its system is penetrated. Numerous retail organizations report that customer personal information has been obtained by hackers. Those invading corporate information systems appear to be smarter and more innovative than the internal employees protecting the computer data, suggesting that the systems themselves need to be upgraded.

13. The regulatory authorities in Europe and the United States finally get concerned about the creative destruction of Internet-related businesses. As a result of pressure from retailers and traditional media companies, they begin an investigation of anti-competitive practices at Amazon, Facebook and Google. The public begins to think these companies have too much power.

14. The risks in Bitcoin are so great that regulatory authorities restrict trading. Among their concerns are: no regulatory oversight; no safety and soundness measures; no recourse in the event of mistaken or miscalculated transactions; high cyber risk; no deposit insurance. (Risk source: Morgan Stanley.)

Week of Dec 29 2017 Weekly Recap & The Week Ahead

Tuesday, January 2nd, 2018

“The December Low Indicator — Forget all the noise you hear about the January Barometer; pay much more attention to the December low. That would be the lowest closing price for the Dow Jones Industrial Average during the month of December. If that low is violated during the first quarter of the New Year, watch out!” – Lucien Hooper

!!!HAPPY NEW YEAR !!!!

1. China Extends Tax Rebate For NEVs (New-Energy Vehicles) — China’s Finance Ministry will extend a tax rebate on purchases of new-energy vehicles from the end of this year until the end of 2020 amid a shift away from the internal combustion engine. The extension comes as automakers in China brace to meet strict quotas starting in 2019 that are sparking launches of NEV models and a flurry of new deals.
2. MasterCard (NYSE:MA) Released Strong Early Christmas Numbers — MasterCard (NYSE:MA) released strong early Christmas numbers. Excluding autos, sales rose 4.9% from Nov. 1 through Christmas Eve, marking the fastest pace since 2011. E-commerce naturally drove the gain, up 18.1%. Helping the figure was Christmas falling on a Monday, giving retailers a full weekend to reel in extra sales.
3. Israel Latest to Crack Down on Bitcoin — Israel has become the latest nation to crack down on cryptocurrencies, proposing regulation to ban companies trading in bitcoin from operating on the Tel Aviv stock exchange. The move follows last week’s warnings by FINRA against firms that “tout the potential of high returns associated with cryptocurrency-related activities,” as well as China’s decision to shutter bitcoin exchanges and ban ICOs in September.
4. Korea Also Crackdown on Cryptocurrency — S Korea eyed new regulations that would include prohibiting anonymous trading accounts and could give authorities the ability to shut down exchanges. The head of the country’s financial regulation agency also told reporters that the “bubble in bitcoin will burst later.” Bitcoin’s plunge comes after futures contracts started trading on CME Group’s exchange, giving investors new ways to bet on the digital coin’s price moves. Furthermore, India’s finance ministry is the latest global regulatory body to caution about the risks of trading in cryptocurrencies such as bitcoin, saying the investments are like “Ponzi schemes.”

The week ahead — Economic data from Econoday.com:

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