Week of Oct 16 2015 Weekly Recap & The Week Ahead
“Buy when others are despondently selling and sell when others are greedily buying” — Mark Mobius
1. China Trade Data Shows Further Weakness in — China’s trade slump has extended into September. Dollar-denominated imports plunged 20.4% Y/Y last month, while exports slipped 3.7%, translating into a trade surplus of $60.34B.
2. US Retail Sales Rose 0.1% in Sept Smaller than Expected — Retail sales excluding automobiles, gasoline, building materials and food services slipped 0.1 percent after a downwardly revised 0.2 percent gain in August. Cheaper gasoline weighed on service station receipts, but gains in purchases of automobiles and other goods pointed to solid domestic demand that could shield the economy from slowing global growth.
3. IPO Market Remains Under Pressure — following in the footsteps of Neiman Marcus (NMG), Albertsons (NYSE:ABS) has delayed its IPO due to Wal-Mart’s (NYSE:WMT) lower guidance weighed heavily on the U.S. market and pummeled retailers’ shares. Separately, payments processor First Data (NYSE:FDC) priced its initial public offering at $16/share, below its previously indicated range of $18-$20/share.
4. Square (SQ) (Mobile Card-Reader/Payment Service Provider) Files for IPO — Square has filed a public S-1. The mobile card-reader/payment service provider is listing on the NYSE under the symbol (SQ). Square generated $23.8B in gross payment volume in 2014 via 446M payments, and had over 2M sellers accepting five or more payments in the 12 months ending in June. 1H15 payment volume totaled $15.9B (+53%).
5. Fitch Downgrades Brazil to One Notch Above Junk — Fitch has cut Brazil’s credit rating to the brink of junk, warning the country could soon lose its coveted investment grade due to the “rising government debt burden, increased challenges to fiscal consolidation and a worsening economic growth backdrop.” The rating agency left a negative outlook on the new rating, suggesting it eventually could follow Standard & Poor’s recent downgrade to junk. Brazil’s economy is the 7th largest in the world at $2.4Tn – that’s above Italy, India, Russia, Canada, Australia and just under France ($2.8Tn) and the UK ($2.9Tn). S&P cuts Brazil credit rating dropped to BBB- by last month as well.
6. AAII Bullish Sentiment Dropped — According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 37.5% last week to 34.1%. This week also marks the 33rd straight week that bullish sentiment has been below 40%, which is also the longest streak on record. Oh well, maybe next week. Chart below via courtesy of BIG.
The week ahead — Economic data from Econoday.com:
