Sunday, June 30, 2013

Morning Memo: Sunday, June 30, 2013...Editorial changes based on "Bloggee" feedback

"Bloggee" feedback makes a difference!   

Several bloggees have noted that the Morning Memo is very helpful and the 'color coding' makes summary assessments quite efficient.  Apparently, however, on certain computers, the red highlight makes reading the copy difficult.  So we will change to a lighter shade of red.  If anyone is still having problems with legibility, please let us know.  (fyi...we tried various font colors instead of highlighting, but the 'blogger' software options are limited and highlighting appears to be more striking).

Also, where possible, we will add links to articles related to some of the highlights.  Often the cryptic memo points come from subscription research services, so links may only provide 'teaser summaries'....but where articles are readily available, we will try to provide links for more detail.

Please keep the feedback coming in!  We appreciate it!!

Friday, June 28, 2013

Morning Memo: Friday, June 28, 2013

  • Asia mostly higher heels of US strength, calming words from Fed governors yesterday, and less concern about imminent tapering by the Fed.
  • Nikkei up 3.5% on mixed economic data....household spending missed, CPI inline, and retail sales and ind prod missed.
  • China...PBoC official calms markets saying economy is now in check.  SHIBOR < 5%.
  • European data mixed...markets giving ground.
  • US Tsys had rallied overnight, but early hours saw selling, pushing 10s up in yield to 2.528% from 2.48% earlier.  Equity futures give up gains and turn negative.
  • Fed's Lacher 'doubts more stimulus effective'
  • Fed's Stein mentions September as possible tapering date
Please continue to visit Soos Global Market Musings for updates.
(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Thursday, June 27, 2013

Red Islands in a Sea of Green!

Today's third straight day of triple digit gains in the Dow painted the screens in green, but for a few exceptions that didn't get the rally memo.

For one, Paychex (PAYX), who reported earnings today, missed expectations and guided lower.  The market was merciless!  How much more of a beating it takes should be watched closely, especially considering its debt-clean balance sheet and the prospect for further improvements in employment growth as the US economy continues to recover.


Next..Walgreen (WAG), which got tagged the other day due to missed earnings, continues to struggle to find its footing.  Their reconciliation w/Express Scripts last year and their acquisition of the Boots chain in Europe were powerful forces pushing the stock higher until the recent earnings miss.  Question:  Was the recent miss enough of a negative to offset all of the positive features from the Express Scripts and Boots deals that were touted as long-term strategic game-changers???


Next...Gold....and/or related companies.  In this case, Yamana Gold (AUY), whose core business is in gold and copper, has gotten shellacked along with the trashing of the underlying metals.It had a bit of a bounce today, despite gold losing further ground.  Question:  Is this a bounce that will hold?  If not, how much more of a beating does it deserve?  Is the dividend secure?  Is the current pressure on metals enough to wipe out longer term demand, especially with regard to copper, from commercial activities around the globe?  
While contemplating those questions, consider this response that I recently made to a query re gold:


I don’t own physical gold.  And I got out of miners a long time ago, and lightened up on gold/copper related companies.  The selloff has been dramatic!  And definitely smells of more than a fundamentally driven move….I am confident that all the folks who when gold was 1,700/oz were calling for 2,000, were long and wrong and are now selling aggressively as the margin calls come in!
I’m eyeing it here as a buy, though I’m more likely to add to a company in the space.  I’ve owned Yamana (AUY), to varying degrees, for some time.  I’m looking at buying more at or around these levels.  (chart below).  But I want to wait for the final ‘whoosh’ of wrong-levered-longs who are selling out.  Feels like we could be close….
While Yamana (AUY) is my only direct gold/copper related holding currently, I do have other stocks in that sector (Materials) that have fared better.  MeadWestvaco (MWV) which used to thought of as a paper company, is really a specialty packaging company for all kinds of products, having sold off their paper division.  They own lots of land and lumber, which while lumber prices currently have been hurt, over time should play well w/the housing rebound.  Also, Nucor (NUE) a steel company in the US….again, as the economy improves in the US (which seems more likely than in other places on the planet), NUE stands to benefit from that….and also to be less vulnerable to the usual Chinese steel dumping in Asia that often compresses steel prices.  I also have NewMarket (NEU) which is a specialty chemicals company that makes all kinds of additives for engines that improve performance and gas efficiency…this is especially key as global growth particularly in EM countries is dependent on machines running well and being sparing on expensive gasoline and oil.
My overall weighting in Materials is roughly 6%+/-.  I’d like to take that up a bit, but want to see more of a solid base develop, rather than the maniacal swings of the past couple of days.




 Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including AUY, MWV, NUE, NEU, MCD, PAYX.  Positions may change at any time without notice.

Morning Memo: Thursday, June 27, 2013

  • Asia markets higher on heels of US rally yesterday sparked by weaker economic data that augured well for no imminent Fed 'tapering'.  Also on heels of PBoC assuring calmer money market rates.
  • China industrial firms' profits rose 15.% in May and Industrial Output rose 12.3% from Jan to May....both data points helped industrial and material stocks trade up overnight.
  • S Korea current account surplus @ record high in May.  And gov't raises GDP est for yr to 2.7% fr 2.3%
  • Australia traded up on heels of yesterdays victory by Rudd over Gilard for party leadership and PM-ship in advance of Sept elections.
  • India Rupee hits record low.
  • European Ministers reach deal on bank failures....still needs EU Parliament approval.  Calls for shareholders, bondholders and depositors (>100mm Euros) to take first hit in case of crisis before Gov'ts step in to bail out.
  • Mixed data generally positive throughout EZ...Consumer & Business Confidence rose (less pessimism)..German unemployment bte
  • EZ Peripheral country rates continue to rise!  Italian 10s,approaching 5% (4.73% yesterday) fr a low of 3.68% in May.  Spain 10yr, yest @ 4.91%, up fr low of 3.94% in May, broke 5% earlier this week.
  • Jobless Claims... inline...fell 9k to 346k in June vs 355k prior and vs 345k exp.  Continuing Claims drop fr 2.966mm to 2.965mm.
  • Personal Inc up 0.5%, bte (Better Than Expected) vs 0.2% exp.  Spending inline @ 0.3%.  PCE incr 0.1% inline.
  • Pending Home Sales @ three yr high! Much bte!
  • Fed Govs Dudley and Lockhart try to calm markets re tapering concerns.
Each morning, we'll post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!
Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Wednesday, June 26, 2013

Is Hurricane Tapernanke in the Rear-view Mirror???

Maybe.  

Today's solid 150 point move to the upside is certainly compelling.  And it begins to chip away at the drubbing that the markets have taken in the past week.



But, caution is likely to prevail among many given that the market is seemingly in a mode where it trades up on bad economic news…today’s Q1 GDP downward revision was quite notable, yet the market loved the ‘non-tapering’ implication.  At some point, that slower growth and depressed consumer spending is likely to damage corporate earnings!  And earnings are what should drive equity prices, with a splash of emotion…not the other way around!
 




One standout from today's rally was Gold (GLD) and related companies, such as Yamana (AUY).  Is the rout in Gold over?  Coming to an end?  Or more to go?

The price action certainly has the stench of a forced liquidation....a wrong-levered-long who at $1,700/oz saw $2,000/oz as a "no-brainer", and was forced to bail when margin calls emerged.  Whether that's the case or something else, the reality is that Gold (and other metals) have been hammered to lows not seen in years!  At times like this, it's generally the case that one final "whoosh" of a sell program drives out the nervous-nelly-longs, and gets us to a bounce-able level.  We're on the lookout for that.....

 Finally, many of the higher dividend paying stocks, aka "bond substitutes", bounced a bit today.  But the volume numbers on the upside were dwarfed by the tidal wive of selling that got them to these levels in recent days.  Again...watching for signs of relenting on the downward pressure.....










Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including AUY, OHI, XLU.  Positions may change at any time without notice.





Morning Memo: Wednesday, June 26, 2013

  • Shanghai Stock Exch remains under pressure, though PBoC tries to calm money market rates.  Interbank lending rates dropped after PBoC provided liquidity (allegedly).
  • Asian equity markets mixed, with Nikkei off 1%, but others closer to unched-positive on heels of US data yesterday.
  • Australia...Kevin Rudd returns to power taking PM spot from Julia Gillard in Labor party leadership vote.  She had ousted him in a party revolt in '10. General elections are in Sept where Labor is currently expected to lose (big!) to rival center-right Liberal Nationals.  Rudd will face task of keeping his minority party gov't in office.  Raises political uncertainty.
  • India...the Rupee hits 60, a record low. Bk of India being watched for intervention...none seen yet. 
  • European stocks generally higher early on heels of US data yesterday.
  • Treasuries firm overnight...US 10s @ 2.577%.
  • Gold continues to get hit hard!
  • Italy may suffer billions in losses on restructured derivative contracts dating back to their accession into the Euro in the late '90s!
  • US Q1 GDP revision...cut to 1.8% from 2.4%. Consumer spending rose less than orig estimate.  Personal consumption only up 2.6% vs orig 2.4% est.)

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Tuesday, June 25, 2013

Hurricane "Tapernanke" Leaves An Ugly Wake of Destruction...Some Visuals....



Today's 100-point rally in the US is welcome relief after the recent storm.  Coming days will be key as to whether the worst is behind us, or if today was just a respite before further assault! 

Consider some market damage done so far....
Start with the overall S&P.....


 

...then consider what's happened to Copper and Emerging Markets (VWO) relative to the S&P....

 ....then focus on a classic Industrial name, Deere, whose growth is very much reliant on global demand...

 ....Asia ex-Japan......
 .....how about a classic Transport in the US, heavily involved with transporting coal and other items related to global economic growth and infrastructure build-out....


...more EM....



Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs, including DE, NSC.  Positions may change at any time without notice.

Morning Memo: Tuesday, June 25, 2013

Each morning, we'll post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.

This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  


We hope you find this useful and informative....and as always, that you'll share feedback!!

 Tuesday, June 25, 2013
  • China opens down 5%..rallies back to near unched on rumors that PBoC would restore calm to money markets.
  • PBoC...no action (explicitly).   But pledges support for cash-strapped banks.  "Will keep rates reasonable"
  • European markets generally higher.  Mixed data. Mkts breath sigh of relief on China.
  • Italy's PM reminds markets that  EZ crisis is not over.
  • US..Case-Shiller in April up 12.1%.  bte (better than expected). 
  • Durable Goods bte.  (very volatile series.  Heavily influenced by big-ticket items such as aircraft.) Ex-def and aircraft bte +1.1%.  Core capital goods +1.7%.
  • New Home Sales...jumps to 5yr high!
  • Consumer Confidence highest since '08!

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Thursday, June 20, 2013

"It's Something Far Worse!!!!" (That's the answer to the question posted on Monday, June 17, 2013)

If you haven't already read our post from Monday, June 17, 2013 (two days before Ben Bernanke's press conference), it may be late, but not too late!  The title was "Is It Really All About Tapering? Or Something Far Worse".  I'd recommend a read...and then a re-read....

I believe that the price action of the past two days suggests that the answer is the latter....something(s) far worse!!

One of our investors  just asked if I was planning on putting the unusually high levels of cash that we've had on hand to work into this sell off.  The response, both cryptic and to the point, was:
As you can imagine, having been defensive for some time, and sitting on unusually high levels of cash, there  is a part of me that is ok w/what has happened here.  But the bigger sentiment is still chock full of "scaredyfraid" issues.....if it were just Bernanke's speech and the rush out of fixed income in the US that was behind this multi-asset class sell off, I might say, yes...let's start buying.
But there's more to it....the May 22 Bernanke 'tapering' talk unleashed a massive paradigm shift from a "gee this is an easy, low-to-no-interest rate environment in which carry trades are no-brainers"....to one in which all those folks now are rushing to the exit doors trying to be among the first to unload EM local bonds and currencies..then to buy USD and unwind the carry trades. 
The problem is that the unwind has crushed many EM currencies, which in turn has led EM Central Banks to have to implement policy responses that are defensive of their currencies instead of being supportive of promoting growth...witness Brazil and Indonesia's hike in rates recently (both should have lowered rates for growth reasons) and Bk of India that left rates unched when they too should have cut.
I think these kind of 'crisis era' type of policy responses are likely  to throw more of a dislocation into global markets as flows of funds continue to challenge EM central banks.  And EM growth prospects will be hurt, which in turn, should hurt corporate earnings outlooks especially for globally active companies.
Finally, add to the mix, some familiar issues, such as Italy and Spain...two hotbeds of potential trouble w/recession economies, massive unemployment, and now rising yields on suffocatingly large amounts of debt. 
Bottom line? I'd like to see some dust settle before I put cash to work.

For now, while many of our holdings are global companies, and in some cases heavily dependent on their businesses in EM countries for meeting sales and earnings goals, when the time comes to get the cash off the bench and onto the field, the leaning is likely to be towards companies with more US-centric businesses, somewhat less exposed to EM countries.  This, of course, will depend largely on just how robust the 'dislocations' that we've seen in recent days turn out to be.

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

.

Wednesday, June 19, 2013

"Tapering" Talk Tags High Dividend Stocks (aka: "Bond Substitutes")

The pictures tell a thousand words!! 

Also, refer to our post from Thursday, June 6, 2013, "Bond Substitutes" Have Fallen Victim to the Now "Usual Suspect" (Fed Tapering)
Fyi....
(Please note: This post is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including OHI, SNH and XLU. Positions may change at any time without notice