Archive for October, 2016

• Utes Vs. Financials
  Eddy Elfenbein, October 4th, 2016 at 2:04 pm

  Here’s a point I want to stress that’s a bit difficult to explain. In the last year, the financial markets have become increasingly focused on the direction of short-term interest rates.

  The chart below shows the relative strength of financial stocks (blue) and the relative strength of utilities (black). Notice that the two lines start to move in opposite directions about a year ago. Prior to that, the lines don’t appear to be terribly correlated.

  

  After about the first of this year, the lines really become mirror images. What this means is that the axis of debate in the market has shifted towards short-term rates. If rates go up, that’s good for financials (in a relative sense). If not, that’s good for utilities and other high-yielding stocks.

  It’s interesting that as recently as late 2014, the two lines appear to move the same way. Not so for 2016. On the chart above, notice the correlation difference between 2014 and 2016. It’s a changing market.

• Gold Drops 2% as Fed Doves Retreat
  Eddy Elfenbein, October 4th, 2016 at 11:12 am

  Gold is down about 2% today. It’s now at a post-Brexit low. I think this is due to a few things. For one, I think the holdouts against the Fed raising rates in December are starting to give in. The Fed has been a lot more careful about telegraphing their intentions. Remember, there were three dissents at the last meeting.

  Gold’s had a pretty strong run since late last year. However, it hasn’t been able to breakout to a new high in several weeks. That could be a bad omen. I also think the good ISM from yesterday is also working in the December Hike camp. The futures market now says there’s a 63% chance of a December hike. I think that’s too low.

  Prior to Brexit, gold had been losing momentum and the Brexit vote may have given the gold trade more legs this summer. Prime Minister Theresa May has pledged to go ahead with the Brexit negotiations. Today, the pound touched a 31-year low against the U.S. dollar.

• Morning News: October 4, 2016
  Eddy Elfenbein, October 4th, 2016 at 7:19 am

  Existential Threat to World Order Confronts Elite at IMF Meeting

  Oil Prices Fall on Skepticism Over OPEC’s Efficacy

  FTSE 100 Rises as Pound Slumps on EU-Exit Date

  Indian Central Bank’s New Regime Cuts Rates

  The Supreme Court Will Hear Its First Insider-Trading Case in 20 Years

  U.S. Tech Giants Are Investing Billions to Keep Data in Europe

  Apple Launches Apple Pay Payment Service in Russia

  Ericsson to Cut 3,000 Jobs in Sweden as Network Demand Wanes

  LVMH to Pay Over $700 Million for a Stake in This High-Tech Luggage Maker

  Olive Garden Pushes Darden’s Results Past Expectations

  Salesforce Agrees to Buy Marketing-Data Startup Krux

  GoEuro Banks Another $70 Million to Keep Building Out Its Travel Planner Platform

  Cantor Fitzgerald Gambling Affiliate Settles Investigation

  Roger Nusbaum: What the FARC?

  Cullen Roche: Do Trump’s Taxes Matter?

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• Companies Tend to Show Election Anxiety
  Eddy Elfenbein, October 3rd, 2016 at 4:37 pm

• Macau Number Boosts Casino Stocks
  Eddy Elfenbein, October 3rd, 2016 at 4:36 pm

• 30 Years of Church & Dwight
  Eddy Elfenbein, October 3rd, 2016 at 11:28 am

  Here’s a great long-term chart of Church & Dwight (CHD). Apparently, condoms are profitable.

  

• The Morning Market
  Eddy Elfenbein, October 3rd, 2016 at 11:08 am

  Shares of Cognizant Technology Solutions (CTSH) are walking back some of their big losses from Friday. There doesn’t appear to be any new information here. CTSH is currently up 7% today.

  Ford Motor (F) said that its sales were down 7.7% last month. That actually beat expectations. Overall, the auto industry is still doing well. Last month, Ford’s truck sales fell a bit but they’re still near record levels. Shares of Ford are up today.

  Two econ reports this morning. The ISM Manufacturing Index for September came in at 51.5. That’s more than I had been expecting. That’s up from 49.4 in August.

  The Commerce Department said that construction spending fell 0.7% in September. Wall Street had been expecting an increase of 0.2%.

  In Britain, Theresa May said she’s pushing forward with Brexit plans. That caused the pound to fall to a near-30-year low.

• Morning News: October 3, 2016
  Eddy Elfenbein, October 3rd, 2016 at 7:09 am

  Oil Prices Rise on OPEC Optimism

  Japan Big Manufacturers’ Mood Flat in Fragile Economic Recovery: BOJ Tankan

  Sterling Sinks to Three-Year Low on Brexit, European Banks Struggle Again

  U.K. Chancellor Plans Investment as Brexit Creates Business Uncertainty

  U.K. Factories Boom as Pound’s Brexit Plunge Boosts Exports

  World Bank: Boosted Spending Can Expand Philippine Economy

  Shanghai Regulators Fine OSI and Unit More Than $3.6 Million for Meat Scandal

  What Should and Shouldn’t Worry Us About Deutsche Bank

  Macau Is Back In Black Thanks To New Adelson, Wynn Launches — But Will It Last?

  Here’s Who Is Expected to Buy the Cabela’s Sporting Goods Chain

  AstraZeneca Licenses Inflammatory Disease Candidate to Allergan

  Rebel Teens Are Killing America’s Clothing Giants

  Janus to Merge With Henderson, Forming Asset Management Giant

  Jeff Miller: Time To Look Past The Gloom?

  Howard Lindzon: The IPO Process – It Is Time to Fix It

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