Soos Global Market Musings

Wednesday, September 4, 2013

Morning Memo: Wednesday, September 4, 2013

ICYMI.....our latest post on global market views and portfolio positions:

Soos Global Investor Newsletter, August 2013

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"Morning Memo" begins below this "NOTE for NEWCOMERS" to "Morning Memo"...... Each morning, we 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!!
4:40 a.m. ET....

Asia markets mixed on heightened concerns about Syria intervention.
Japan...earthquake measuring 6.9 hits northern Japan. No tsunami warning.
Australia GDP slightly better than expected at up 2.6% annualized rate. AUD better bid. The report did, however, show some weakness in construction and investment, raising concerns that growth is not impacting broader areas of the economy away from traditional reliance on mining industries.
China...HSBC/Markit services PMI hits five month high.
Eurozone...Services PMI (Markit) mixed across the region, composite slightly lower than expected, but Spain returning to growth for first time in two years.
US...late yesterday, US Senate and Congressional support for President Obama's Syria intervention started to grow for a limited strike. This raised tensions in global markets, subduing the stronger sentiment in markets on Mon and Tues.
more later....

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, September 3, 2013

Soos Global Investor Newsletter, August 2013

Following our debut of the Soos Global Investor Newsletter in July, we have just published our August edition!!

This month's edition incorporates many of the valuable suggestions offered up last month by investors and other readers. Please continue to share your thoughts directly with me.

We're excited to hear your feedback!

Soos global investor newsletter 2013 08 from SoosGlobal

Morning Memo: Tuesday, September 3, 2013

"Morning Memo" begins below this "NOTE for NEWCOMERS" to "Morning Memo"...... Each morning, we 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!!
5:30 a.m. ET....

Monday (Labor Day in US) was a strong day in Asian equity markets following China's Manufacturing PMI data released on Sunday. It was better than expected @ 51.0, highest level in 16 months.
Eurozone PMIs also better than expected (yesterday's data), which helped rally markets while the US was closed for Labor Day. Monday's rally was best daily percentage performance for the broad European market index in almost two months. Tuesday morning, European markets opening slightly lower.
Yen weakened overnight, with USD approaching the 100 level. That helped push the Nikkei up 2.6%,
China's Non-manufacturing PMI @ 53.9 slipped slightly from July's 54.1 but still shows expansion (>50).
Australia...left rates unched, as expected.
Big M&A deals over the long weekend: Verizon buying Vodafone's stake in their wireless jv. Microsoft buying Nokia's mobile device unit.
Syria...will the US go it alone re a military strike in retaliation for use of chemical weapons? Will the President get Congressional support? Pending....
US...employment data coming on Friday.
US..ISM Mftg data strongest pace in two years.
more later...

Friday, August 30, 2013

Morning Memo: Friday, August 30, 2013

ICYMI...Later yesterday, we posted our latest in the series on the 'Obesi-fication" of America. Take a look! Share with others!! Comment back to us!! Thanks.

The "Obesi-fication of America": Part 2- DaVita HealthCare Partners (DVA)-Congress May Not Trim All The Fat

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

"Morning Memo" begins below this "NOTE for NEWCOMERS" to "Morning Memo"...... Each morning, we 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!!
5:30 a.m. ET....

Late yesterday, the UK gov't of David Cameron lost a vote in Parliament to take action against Syria!! Equity markets initially appeared relieved by the news, though it leaves the US preparing to act without much company.

Asia....UK's stepping back from supporting an attack on Syria sent gold prices lower and led to mixed equity markets with Nikkei off by 0.5%, but other markets slightly higher ahead of the long weekend in the US and in the context of monthend portfolio adjustments (aka 'window dressing').

Japan inflation highest level in five years as Yen pushes up prices of imported goods. The Nikkei, however, did not respond well as there was little sign of strong domestic growth, rather, mostly from exports. July CPI rose 0.7% y/y vs 0.6% exp. Industrial Production data fell short of expectations @ 3.2% vs 3.6% exp.
India..Q2 GDP disappoints @ 4.4% y/y vs exp of 4.6% and previous quarter's 4/8%

German retail sales disappoints, falling 1.4% vs expectations of a rise of 0.5% m/m.

Italy..unemployment eases to 12%, slightly better than expected (record high was hit in May @ 12.2%) but youth unemployment rises to 39.5% up from 39% in June.

Eurozone Unemployment rate @ 12.1% in July, stable vs June and up from 11.5% last year.

Eurozone Inflation data better than expected at 1.3% vs 1.4% exp.
US..Michigan Consumer Sentiment in August revised up to 82.1 vs 80.0 exp.but fell from July's reading of 85.1.
US..Personal Income in line @ +0.1%, Spending disappoints @ up 0.1% vs 0.3% exp.

more later.....

Thursday, August 29, 2013

The "Obesi-fication of America": Part 2- DaVita HealthCare Partners (DVA)-Congress May Not Trim All The Fat

Last week, I posted the first part of a series on the topic on the "obesi-fication" of America. (See link above or Tweet below)

Soos Global Market Musings: The "Obesi-fication" of America http://t.co/ivTnsVFgKc
— Ed L (@SoosGlobal) August 22, 2013

This post is Part 2 and updates some thoughts on DaVita HealthCare Partners (DVA), a major player in kidney dialysis centers. For starters, here's a Morningstar research description of DVA's business and a succinct statement of the pros and cons:

DaVita HealthCare Partners Inc operates kidney dialysis centers and provides related lab services mainly in dialysis centers and in contracted hospitals across the United States. It also operates other ancillary services and strategic initiatives.

DaVita's dominance in the U.S. dialysis market makes this company a standout provider in the health care industry, but the merger with HealthCare Partners, which now represents nearly one-fourth of revenue, has shifted a portion of its business model. The merger acknowledges the evolution of health care delivery in the U.S. and may offer some competitive advantages over the long term, but we're skeptical this deal will create shareholder value, as it also adds considerable operating risk. Despite the merger risks, we believe DaVita's strength in the U.S. dialysis market will remain the near-term foundation of the company's earnings potential and economic moat.

The stock peaked in May and took a serious tumble in early July on word that Medicare cuts could take a close to 10% bite out of their business. Subsequent reports on America's struggle with obesity (which has been found to lead to diabetes which, in turn, often leads to kidney problems and the need for dialysis) did little to help the stock, especially in the face of the overall equity market's malaise in recent weeks.

Today, however, there was a report which could augur well for the stock, reported in the NYTimes regarding many in Congress who are now not in favor of budge cuts that could hit dialysis patients so strongly. To quote from the NYT article:

Eight months ago, Congress ordered the Obama administration to eliminate a stark example of federal government waste: more than $500 million a year in excessive drug payments being sent to dialysis clinics nationwide. But in a demonstration of just how hard it is to curb spending in Washington, more than 100 of the same members of Congress who voted in January to impose the cut are now trying to push the Obama administration to reverse it or water it down.

Reimbursement risk is a reality that virtually all companies in the medical and pharma related spaces face, and DVA, being one of two dominant players in the entire dialysis centers market in the US is clearly front and center with a reimbursement risk target on its back. But Morningstar research makes a noteworthy point on this:

Patients covered by Medicare and Medicaid comprise 90% of DaVita's treatments and 66% of revenue, but margins on these patients are razor thin. The company's 10% commercially insured treatments therefore make up most of DaVita's reported profits.

There's nothing to say for sure that the stock has found a floor at the 108/109 area, but coming off the highs of close to $130/sh with DVA being one of two companies that collectively dominate almost 3/4s of the market share in the US, expanding their business internationally, and facing the opportunity (sad though it is) noted in the obesity statistics and charts that were posted in part 1 of this series (sourced from the Centers for Disease Control), DVA is worthy of close consideration.
(Disclosure: We have an "entry level" position of 1.5% of the portfolio).
Stay tuned for updates on Washington's budget negotiations in coming weeks and on how that could impact DVA.

Morning Memo: Thursday, August 29, 2013

Asia equity markets rebounded, especially those that have been battered during August on tapering fears and more recently on Syria. Philippines, Thailand and Indonesia, among the hardest hit this month, all traded up on the view that any US attack on Syria would be delayed, and on US economic data, mostly in the housing sector, that has been weaker than expected, thereby reducing fears of imminent Fed tapering.
Japan's Nikkei up close to 1% despite July Retail Sales missing expectations, blamed on stronger Yen through the month. Retail sales fell 0.3% despite expectations of a gain, and this is in the face of plans by the gov't to initiate a consumption tax in order to raise revenue!
Indonesia...raised rates 50bp to 7% in further attempts to support the battered Rupiah.
India's Rupee rallied on gov't program to swap USDollars to oil importers in exchange for Rupee's, mitigating the need for oil importers to sell Rupees in the open market in exchange for USD.
Philippines Q2 GDP @ 7.5%, better than expected.
Brazil..late yesterday, raised rates 50bps to 9% in order to fight inflation and to support the weakened currency. Fourth rate hike since April.
(Editorial note: just a reminder regarding the 'counter-cyclical' policy responses that we continue to see in Emerging Market countries as they grapple with weak currencies, higher inflation and high current account deficits. A question to consider: could this be the early signs of a currency or debt crisis in the making?)
Germany...number of unemployed climbed 7k, first time in three months.
Spain..confirming initial estimates of Q2 GDP declining 0.1% q/q, 1.6% y/y. These numbers are actually an improvement on previous quarters, so the country remains mired in recession, but slightly less so.
Italy..business confidence data is stronger than expected.
US...Q2 GDP revised up to 2.5% from initial 1.7%.
US...Jobless Claims in line @ 331k. (Editorial note: before the open, equity futures gave ground on what appeared to be good GDP and Jobless Claims data, suggesting that the market is still in a "good economic news = more imminent tapering = bad for equities" mode. But since opening, equities have been stronger, suggesting the economic data and the implied impact on earnings might be trumping tapering fears...at least for now! The market appears to be increasingly divided over which argument should prevail).
more later....

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, August 28, 2013

Morning Memo: Wednesday, August 28, 2013

Asia markets hammered! Why? Syria: namely, likely US military intervention in response to Syria's use of chemical weapons. Not much more needs to be said re why markets are selling off. Among the notable moves, India's Rupee hits new lows (could be worse one-day fall in 20 years, as per Financial Times), Indonesia's stock market drops another 3% after Monday's 4% fall, Nikkei down 1.6%, etc. Emerging Market equity and currencies generally pummeled again! While Syria is the word-de-jour, concerns of 'tapering' still present a key reason for why high current account deficit countries are suffering currently.
Emerging Market indexes (& ETFs) hitting 7-week lows.
Oil and Gold continue upward price moves.
Bonds mixed: US 10yr Tsys @ 2.74% higher yield by 3bps, but Bunds @ 1.84% better by 1bp.
European equity markets generally lower on the heels of US and Asia selloffs.
Merkel..says Greece should not have been allowed into the Euro, blaming her predecessor. (Editorial note: of course, this was stated at a political rally ahead of September 22 elections, in a country which has grown weary from bailing out peripheral Eurozone countries).
JPMorgan...US gov't is reported to be demanding a $6B settlement in their suit against JPM for allegedly mis-selling mortgage backed securities with false claims of meeting proper guidelines.
more later...

Please continue to visit Soos Global Market Musings for updates.