Comment by phil

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phil
January 12th, 2018 at 9:49 am

You know things are crazy when:



Notice the main difference between the OOP and the LTP is the hedge and the hedge, as it's supposed to, is costing us about 25% of our profits.  

In the LTP, we still have so much cash that that's essentially our hedge – the willingness to DD and adjust any position as we have ample buying power to do so while, in the OOP, we might not be as comfortable pressing our positions in a sharp correction (are these 15 stocks going to be our whole portfolio if we are forced to DD on all of them?).  

Aflac down more than 3% on fraud allegations

• "Aflac (NYSE:AFL) has exploited workers, manipulated its accounting, and deceived shareholders and customers, according to nine former employees," reports David Dayen at The Intercept.
• The story is based on interviews with current and former employees, as well as three lawsuits, says Doyen, with the lawsuits already leading to a number of regulatory investigations. Management and the board, says Doyen, have known about the issues for more than a year, but have disclosed little-to-nothing to shareholders.
• Shares down 3.15% in active early trading.

Core CPI beats estimates with 0.3% gain

• December Consumer Price Index: +0.1% in-line with consensus, +0.4% prior.
• Core CPI +0.3% vs. +0.2% expected, +0.1% prior.
• Core CPI +1.8% Y/Y vs. +1.7% expected, +1.7% prior.

Two-year yield tops 2% after fast CPI



• Core CPI rose 0.3% in December vs 0.2% expected. On a year-over-year basis, core CPI is up 1.8% vs. 1.7% in November.
• The news has helped send yields back on the rise, with the two-year Treasury yield topping 2% for the first time since September 2008. One year ago at this time, it was just north of 1% – there's been three rate hikes since.
• Short term rate markets a short time ago had been pricing in just two rate hikes in 2018. Following some very hawkish comments from outgoing FBRNY President Dudley yesterday and this morning's CPI, they may want to skip pricing in three, and just go to four.

Retail sales stay in uptrend

• December Retail Sales: +0.4% M/M vs. +0.5% expected. The reading for October was revised up to a 0.9% gain.
• Ex-autos: +0.4% M/M vs. +0.4% expected, +0.8% prior
• Control group +0.3% M/M vs. +0.3% expected.
• Retail sales tracked higher in December, with nine out of twelve categories posted positive growth. A slight miss from the consensus economist estimate was probably offset by the upward revision in the tally for November retail sales.
• On a year-over-year comparison, the categories showing the biggest pop in December were furniture/home furnishings (+9.9%), building materials/garden equipment (+9.9%) and nonstore retailers (+12.7%).
• December marked the fourth consecutive month of positive retail sales.
• The month saw a good showing for restaurants, with sales up 0.7% M/M and 4.2% Y/Y. Department store sales lagged (-1.1% M/M, +0.5% Y/Y) during the crucial holiday month.

Wells Fargo down 1.8% after earnings miss, taking $3.25B legal charge

• Q4 net income of $6.2B or $1.16 per share vs. $5.3B and $0.96 a year ago. This year's quarter, however, was boosted by $3.35B or $0.67 per share after-tax from the tax bill, as well as an $848M or $0.11 per share pretax gain from the sale of the Wells Fargo Insurance. Offsetting was a $3.25B or $0.59 per share pretax litigation charge. Adding it all up sounds like a miss vs. non-GAAP estimates for $1.06. Revenue of $22.1B was light by $240M as well.
• Net interest margin of 2.84% slips two basis points from Q3, and three from a year ago. The decline is attributable to one-time effects from the tax law.
• As for taxes, the bank's full-year 2017 tax rate was 18.1%, and it's expected to be 19% in 2018.
• Loan growth looks like it's returned, with year-end total loans of $956.8B down $11B from a year ago, but up $5B from Q3 (first quarterly rise this year).
• Net loan charge-offs of $751M or 0.31% of all loans vs. $717M and 0.30% in Q3. Total NPAs of $647M vs. $512M.
• Checking retail banking, average deposits of $738.1B were up about $3.5B for the quarter and about $28B for the year. Primary consumer checking account customers edged higher on a Y/Y basis. Debit card POS purchase volume up 6% Y/Y; credit card purchase volume also up 6%. Home lending originations of $53B fell $6B during quarter.
• Conference call at 10 ET
• Quarterly supplement
• WFC -1.8% premarket

Inside JPM results: $143M loss to single customer

• JPMorgan (NYSE:JPM) in Q4 booked a $143M mark-to-market loss in its equities unit on a margin loan to an unidentified customer. That loss turned what would have been a 12% Y/Y rise in equities revenue to a flat quarter.
• Bloomberg is reporting that client as troubled South African retailer Steinhoff, whose stock plunged in early December after disclosing accounting issues.
• Concerned more with underlying trends in the bank's business, Hedgeye bull Josh Steiner is liking what he sees, noting overall revenue growth was up Q4 vs. Q3 despite a plunge in FICC revenue. Loan growth was higher as well, as was NIM, which rose to 2.42% vs. 2.37% a quarter ago, and 2.22% a year ago.
• Shares are currently flat in active premarket trading.
• Previously: JPMorgan tops estimates even as trading revenue tumbles (Jan. 12)

Historic low snowfall impacts Vail Resorts

• Vail Resorts (NYSE:MTN) updates on ski season metrics.
• The company reports season-to-date total lift ticket revenue at North American mountain resorts was up 1.6% through Jan. 7.
• Season-to-date ski school revenue was down 4.5% and dining revenue was down 8.7% compared to the year-ago period.
• Retail/rental revenue for North American resort store locations was down 11.5% Y/Y.
• CEO update: "Given the truly historic low snowfall across our western U.S. resorts, we are pleased with our results to date, which reflect the stability provided by our season pass program and the investments we have made in our resorts. The 2017/2018 ski season had a very challenging start across our western U.S. resorts due to poor conditions in the early season that continued through the holiday period, reducing both local and destination visitation and spending."
• Snowfall season to date in Vail, Beaver Creek and Park City was the lowest level recorded in over 30 years.
• Source: Press Release

Alaska Air Group updates December and FY2017 traffic

• Alaska Air Group (NYSE:ALK) reports revenue passenger miles up 9.2% to 4.505B in December.
• Capacity rose 10.3% to 5.475B available seat miles.
• Load factor slipped 80 bps to 82.3% for the month, where as it rose 20 bps to 84.3% for FY2017.
• Press release

Twitter +2.9% as BTIG sees takeout coming, raises target

• Twitter (NYSE:TWTR) is up 2.9% premarket with BTIG eyeing it as a takeout target, saying it's "too valuable to remain independent."
• Analyst Richard Greenfield has boosted his price target to $30 from $25, matching a Street high, and says the company's in the "early stages of a multi-year turnaround."
• The company could grow revenue in the mid-high teens in 2018 and EBITDA could grow over 20% vs. competing single-digit estimates. (h/t Bloomberg)
• Shares have risen 42% over the past 12 months, and hit a 52-week high on Dec. 21.