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Monday Market Movement – Up We Go Again

Image result for fed money printingTrump says we're "talking with China" and that's all it takes.

The Dow is up 300 points (1%), pre-market, as are the other indexes but I think it's the Fed's Jackson Hole Conference everyone is looking forward to as the rumor is the Fed is going to give us MORE FREE MONEY!!! – and we do love MORE FREE MONEY!!! – don't we?  Not only are hopes high for Jackson Hole (Friday and over the weekend) but Asian Central Banks are expected to be easing as well and there are rumors that even fiscally conservative Germany is now talking about Government stimulus to boost the economy.

It's a very big deal if even Germany is going to start stimulating the economy – that should be enough to boost things though it's all rumor at the moment and why these Governments are in such a panic to support markets at or near their all-time highs is a bit of a mystery – because they already have negative interest rates and low unemployment, which means they have very little room to move if we do get into a real recession and, if you don't act during a Recession – things can get Depressing!

Weak economic data from Germany and China last week triggered a stock-market selloff and a bond-market rally, with yields on 30-year Treasury bonds falling to their lowest levels ever. The reaction illustrated the growing sensitivity of investors to worries about trade tensions and global growth.  Unfortunately, Trump only used the last Fed Cut to launch additional tariffs on China, which are the real problem and, if the Fed gives Trump more cuts at the Sept 18th meeting – that might be the signal for Trump to attack China again – and that's the real catalyst that's spooking the markets.

Still, for now, like last week, the Fed is generally quiet and the markets can run back up on rumors.  Only Randy Quarles speaks at 6pm tomorrow ahead of Powell's big speack from Jackson Hole Friday morning and it's a fairly light data week so not much to stand in the way of a good economic rumor as we bounce back towards recovery.

The Euro is back to it's August lows and it's the only currency that pretty directly affects the Dollar so if the Euro bounces back this week, the Dollar should get weaker and that too can boost our markets and commodities so it's a very good time to buy some Coffee (/KCN20) Futures and /KC is at 93 while next July (/KCN20) is at $105, which is a very good line to play off (with tight stops below).  I feel a lot more comfortable playing Coffee long than I do the indexes!

Nonetheless, we did make a lof of bullishly aggressive moves in our portfolios as we expected stimulus from Jackson Hole but, after that, we'll be adding to our heges once again – to lock in any gains all this stimulus talk might give us before people realize what a sham it is.  The White House spent all weekend  downplaying the notion of a Recession and that too gave us a positive spin this morning, but how long will it last?

White House Trade Adviser, Peter Navarro, disputed the entire notion that the Yield Curve had inverted (which is something that was once considered a fact).  Navarro claimed the curve was flat, not inverted and said that was a good thing because it meant foriegn money was flowing into the US as a result of "a very strong Trump economy."   Larry Kudlow also claimed we were in good shape, despite being confronted with a report that shows US Manufacturing at the lowest level since 2009.  

Navarro said the U.S. was winning the trade war and dismissed arguments that Americans were shouldering the burden, despite mounting complaints from American farmers, who broadly support Trump, that the trade war is hurting them.  If all the Administration has to do is declare that down is now up and 1 + 1 = 3 and the markets are going to react as if it's true – then rally on, I guess.  Nonetheless, here's a quick reality check from a Nobel Prize-Winning Economist:

Meanwhile, it's only Monday so nothing matters until we see if the moves stick but it's an impressive start to the week and we do still have some earnings reports to chew over:


Most importantly, we'll be looking to see if those 50-day moving averages get re-taken (Liam Neeson hates that) and, of course, we still have to take back the 200 dma on the Russell – so not all that impressive at the moment – even with the pre-morning pop.


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  1. Good morning!

  2. Good Morning!

  3. :)

  4. Oh, whew, you're okay, 1020 – thought we needed a sub greeter today.  ;)

  5. It's really fascinating to listen to people mentioning that this administration doesn't seem to have a plan in place to help prevent a recession. But how many tools do they have left to work with? More tax cuts – we already have a $1T deficit and they don't pay for themselves (or we would not have a $1T deficit), an infrastructure program ($1T deficit already), lower rates (already low). They have painted themselves in a bad corner.

  6. StJ, one item I read up on this morning was federal spending. The budget bill beginning Oct 1 increases discretionary non-defense spending by 4.5% and defense spending by 3% and that should provide some assistance (then add the non discretionary social sec + medicare increases). Also, the debt ceiling limit was suspended for a long time, so no worries about issuing more debt.

  7. Good morning!

    Watching for the 200 dma on the RUT at 1,518 – that's a key point and I doubt we take the 50 dmas on the other indexes today but will be impressive if we do.

    26,607 – no way

    2,944 would take a 2% gain:

    7,728 is our best chance but still about a 2% gain for the day but AAPL is up 2.5% at the open (Trump said he met with Cook and sees his point on tariffs) – so why not?

    As I said, I'd rather play /KC on any Dollar weakness below 98.

    Euro already over 110.

    Hard to imagine Yen getting worse:

    Bad Corner/StJ – Most likely it will be the Democrats' problem in 2020 and then the GOP can blame them for the Recession and any deficit spending that needs to be done to fix it.  Think of it psychologically, they did it with Obama as he tried to fix Bush's mess and now, they know they can't win 2020 (please God, no!) so the set up the next Pres to have to spend to fix the economy, and they'll have to raise taxes to pay for it and increase regulations to reign in climate change – so the Dems become the "tax and spend" party the GOP likes them to be for the next election.  So it's the Dems who get painted into a corner as the GOP has a great big, irresponsible party and sticks them with the check and the clean-up costs – again!  

    No worries/Mike – That's what people say who are maxed out on their credit cards but they get approved for another one – "No worries, now we can spend our way out of debt!"  

    Image result for federal deficit spending

    Image result for federal deficit spending

  8. Irresponsible / Phil – I am hoping (not a governing model) that voters will finally realize what a bunch of irresponsible morons the GOP are. They are taxing people with tariffs and spending more than the Dems – but these are facts and they don't matter anymore. Enough people voted for Trump even knowing that the guy was a sexual predator so hope is thin right now! 

  9. debt/Phil, I agree with you on that, I was referring to no red team blue team arguments over raising the debt ceiling to pay for the spending. I am thinking in a world where the following can be true the US has some debt limit room, "The return on benchmark Greek government debt has dipped below 2% for the first time ever and is now clearly below the yield on the 10-year U.S. Treasury note."

  10. Good takedown of WeWork here:

    I don't understand the valuation there! Just like CMG! This is a real estate company priced like a fast growing tech company who came up with a life changing system!

  11. Untouched LTP back at $1,369,807, that's up $142,033 from Friday's review (total taken early in the day).  That's a crazy 10% swing in a day!  STP holding on at $793,440 so all's well that ends well in our mini-correction (so far) but who knows what will happen tomorrow the way things keep changing?

    Voters/StJ – The problem is that Americans are educated to think that high taxes are bad and low taxes are good so promising low taxes always works.  We are financially children in the fiscal sense and unless we teach proper economics in the schools, the voters will keep going for whoever promises them the most candy…  

    Image result for child catcher children

    Debt Ceiling/Mike – It was a bi-partisan raise because no one wanted another Government shut-down but some Congresspeople are finally getting nervous about our debts.  Sadly, it's most likely the rest of the World that tells you when you are getting cut off – not your own politicians.  Greece is 180% of their GDP in debt and we're only 110% and Japan is 250% so yes, in theory, we could go a lot further in debt but if the entire World is more in debt than the entire global economy – then what is money actually worth?  If you say something, then the cost of going another 100% into debt (same pace) is going to go up and, if you say nothing, then money is pretty worthless and inflation is likely to skyrocket.  Can't have it both ways in the long run, but we are having it both ways for the moment.

    WeWork/StJ – It's one of those beanie baby companies that's popular enough among the Top 20% that they shouldn't have any problem raising $1,000 from 1M people ($1Bn) regardless of how stupid of an investment it actually is.  It's actually the perfect profile for that kind of trade since they have 527,000 members (renters) plus their employees who all think WeWork is a pretty cool thing and I'm sure WeWork has pushed them to "get in" on the IPO.

    Despite the silly value, they are very impressive as they only started in 2010 and now they have 528 locations in 111 cities (29 countries) and, you might not know this, but they also run Meetup – which is a very popular event platform that hosted 4 MILLION events last year.  They also started a coding bootcamp in NYC which is going to expand to other cities.    

    They have $50Bn worth of lease commitments, though that's meaningless without time-frames and just the cost of furnishings (and they do a nice job) has got to be crazy.  They've raised $12Bn so far and seem to have spent all of that.  Last year, revenues hit $1.8Bn but losses were $1.9Bn though I get the impression there's a lot of depreciation in the losses – so we might have to look at them like a Real Estate company in the early stage of asset-building.

    In any case, they could squeeze higher simply because $1Bn is not a lot of money and not a lot of shares so the people who buy may have no intention of selling and I wouldn't bet against a company that has such a huge base of people who think they provide a great service because, like Uber Eats, you never know what they can add on that gets widely accepted.  

  12. Trump 2020: Be Very Afraid

  13. Comment content omitted because it is too long.

  14. It's another one of those days where we jump up at the open and then flatline at the top.  Volume is anemic so far but hard to tell this early in the day though certainly silly that 23M shares traded on SPY vs 80M normal day could have pushed the entire market up 1%.

    Date Open High Low Close* Adj Close** Volume
    Aug 19, 2019 292.19 292.71 291.45 292.48 292.48 23,139,367
    Aug 16, 2019 286.48 289.33 284.71 288.85 288.85 83,018,300
    Aug 15, 2019 284.88 285.64 282.39 284.65 284.65 99,556,600
    Aug 14, 2019 288.07 288.74 283.76 283.90 283.90 135,622,100
    Aug 13, 2019 287.74 294.15 287.36 292.55 292.55 94,299,800
    Aug 12, 2019 289.96 291.61 287.02 288.07 288.07 62,629,500
    Aug 09, 2019 292.58 293.24 289.65 291.62 291.62 93,730,000
    Aug 08, 2019 289.62 293.62 289.01 293.62 293.62 87,713,900
    Aug 07, 2019 284.40 288.82 282.04 287.97 287.97 140,572,300
    Aug 06, 2019 285.91 288.04 284.28 287.80 287.80 120,711,700
    Aug 05, 2019 288.09 288.21 281.72 283.82 283.82 178,745,400
    Aug 02, 2019 293.85 294.12 290.90 292.62 292.62 116,749,700
    Aug 01, 2019 297.60 300.87 293.96 294.84 294.84 142,646,600
    Jul 31, 2019 300.99 301.20 295.20 297.43 297.43 104,245,200
    Jul 30, 2019 299.91 301.17 299.49 300.72 300.72 45,849,000
    Jul 29, 2019 301.88 302.01 300.85 301.46 301.46 38,126,500
    Jul 26, 2019 300.76 302.23 300.62 302.01 302.01 45,084,100
    • President Trump says cutting the current Federal Funds rate by at least 1%, "with perhaps quantitative easing as well", "over a fairly short period of time" would make the U.S. "even better".
    • Also, "the World Economy would be greatly and quickly enhanced — good for everyone!" he wrote in a tweet.
    • Stocks touch new session highs, with the Nasdaq climbing 1.6%, the S&P 500 up 1.3%, and the Dow rising 1.1%.
    • 10-year Treasury falls, lifting yield by 3 basis points to 1.59%; yield had touched as high as 1.628% earlier.
    • U.S. Dollar Index increases 0.1% to 98.25.
    • The Federal Funds target range currently stands at 2.0%-2.25%.
    • The CME FedWatch Tool puts a 46% probability on the Fed cutting its key interest rate by 75 bps to 1.25%-1.50% at its December policy-setting meeting.
    • For the September meeting, traders put the probability of a 25-bp cut at 95%, up from 75% a week ago.
    • Trump points out that the economy is strong "despite the horrendous lack of vision of Jay Powell and the Fed."

    • "Tariffs, for the most part, have not been paid by the consumers," U.S. Secretary of State Wilbur Ross said in an interview on Fox Business Network's Mornings with Maria program.
    • "It’s been seen that a lot of the Chinese vendors absorb all or part of the hit themselves," he added.
    • That contrasts with a recent report from JPMorgan that estimates the tariffs will cost the average American household $1,000 per year.
    • Like President Trump, Ross is in favor of significant interest rate cuts, to make U.S. Federal Funds rate more competitive with those of other countries.
    • "We think that our interest’s ridiculous — our interest rates are high relative to many other countries," he said.
    • He didn't answer, though, Maria Bartiromo's question on whether cutting interest rates now would give the Fed less to work with when a recession hits.
    • Instead, he contends that a recession isn't imminent. "Look, eventually there’ll be a recession, but this (yield curve) inversion is not as reliable in my view as people think," Ross states.
    • "Anything that takes 22 months to affect the economy, and in some cases the inversion has taken that --that’s a long ways and a lot of the variables come in during 22-month period," he said.
    • Tanker and shipper stocks are rallying after DryShips (DRYS +35.4%agreed to be purchasedby a group controlled by CEO George Economou, which is buying the shares it does not already own for $5.25/share in cash.

    • The Philadelphia Semiconductor Index is up 2.2% and the tech sector (NYSEARCA:XLK1.6%after President Trump indicates making progress in the US-China trade talks. Trump will reportedly meet today with U.S. Ambassador to China Terry Branstad.
    • The U.S. also gave Huawei another 90-day extension before the full ban takes effect, which pushes the date back to around November 19. An additional 46 Huawei subsidiaries were added to the ban list, bringing the total up to over 100.
    • China-exposed semi companies on the move include Qualcomm (QCOM +2.1%), Micron (MU+3.9%), Texas Instruments (TXN +1.8%), Marvell (MRVL +1.8%), and Xilinx (XLNX +2.5%).
    • Investors should wait until next month before returning to stocks despite any one-day bounces, say JPMorgan Chase strategists led by Mislav Metejka.
    • Better seasonal data, central bank easing, and possible postponement of tariffs could lift the market in September, they said.
    • See new all-time highs into H1 2020.
    • “At the overall market level, we continue with our tactical cautious stance, advocating a market pullback during August,” Matejka wrote in a note.
    • The yield-curve inversion that took place last week may be more of "an indicator of extreme market nervousness at present, of increasing central banks action, skewed bond ownership, and of a global search for yield, rather than a sure sign that U.S. is about to enter a recession," he wrote.
    • Previously: Should investors be worried about the yield curve? (Aug. 15)
    • Crude oil futures (USO +1.2%move higher as risk-on trade resumes and following this weekend's drone attack on one of Saudi Arabia's largest oil fields; WTI +1.2% to $55.52/bbl, Brent +1.1% to $59.28/bbl.
    • The attack on the Shaybah oilfield by Yemen's Houthi rebels on Saturday caused a fire at a gas plant, although Saudi Aramco said there were no disruptions to output at the field, which produces ~1M bbl/day of oil.
    • "The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions," says UBS oil analyst Giovanni Staunovo.
    • In a statement emailed to investors this morning, General Electric (GE -0.9%) disputed many of the allegations raised by forensic accountant Harry Markopolos.
    • The company continues to stand by the accounting for its troubled long-term care insurance business and said it doesn't need to add $29B in cash – a key claim made Markopolos – to meet future insurance claims.
    • "Our future liabilities depend on variables that will play out over decades, not years, and are dictated by rigorous testing processes, sound actuarial analysis, and the application of regulatory and accounting rules," reads the company's statement. "The correct analysis of insurance reserves comes from our extensive annual process where key assumptions informed by claim experience are updated and reviewed in conjunction with independent actuarial partners, auditors, and regulators."
    • It also adds that GE is a reinsurer, and that reinsurers are "not responsible for 100% of every risk." The company's contracts "are with a variety of originating companies and cover a variety of risk percentages and contractual elements that impact both our reserve per life and premiums per life."
    • An important note is out from JPMorgan's Asia Pacific desk this morning on the Macau sector.
    • The JP analyst team thinks the protests that have been taking place for several weeks in Hong Kong will only have a minor negative impact on Macau's casino gross gaming revenue for August in comparison to the impact on visitations.
    • On-the-ground checks by the firm suggest that there has not been a discernible slowdown in casino traffic yet, although that could be due to strong seasonality around the summer holiday. The firm also reminds that high-stakes play by a relatively small number of visitors is still an important component of the Macau market and GGR tallies.
    • Macau casino stocks are on the move after Nomura Instinet estimates daily GGR rose 7% sequentially last week despite all the headlines about the Kong Kong protests.
    • "August should mark the last of the tough comparisons in Macau," observes analyst Harry Curtis.
    • Curtis and team expect positive GGR growth to resume in September given much easier one-year growth comparisons after August GGR comes in at around -0.5% Y/Y.
    • In early trading, Wynn Resorts (NASDAQ:WYNN) is up 3.94% and Las Vegas Sands (NYSE:LVS) is 3.38% higher. Melco Resorts & Entertainment (NASDAQ:MLCO) is up 4.89% and MGM Resorts (NYSE:MGM) is sporting a 2.44% gain.
    • Previously: Macau sector sized up amid Hong Kong disruption (Aug. 19)
    • HelloFresh (FRESHannounces the addition of Beyond Meat (NASDAQ:BYND) burgers to its menu. The new plant-based options will be available to customers the week of September 14.
    • Beyond Meat's partnership with Blue Apron (NYSE:APRN) began today.
    • Shares of Beyond Meat are up 1.98% premarket to $147.77.
    • Gold prices are solidly lower as risk appetite is upbeat to start the trading week; Comex gold -1% to $1,507.40/oz, silver -1.1% to $16.92/oz.
    • Safe-haven assets are under pressure following reports over the weekend that China plans to further stimulate its economy with interest rate reforms, combined with news late last week that the European Central Bank plans further monetary policy stimulus in September.
    • “The rally in bond markets seems to have paused at least for now and we’ve seen some additional gains in stocks over the weekend, so a bit of a more optimistic start to the week is helping to attract profit taking in gold,” says Saxo Bank commodity strategist Ole Hansen.
    • Classic car auctioneer RM Sotheby's is coming off what's being called the biggest blunder in recent auction history.
    • A 1939 Porsche Type 4 failed to sell after an auctioneer at RM Sotheby's in Monterey, California called out $70M as a bid to create confusion over what was to be expected to be a $20M auction. It appears to be that the auctioneer meant to say $17M.
    • The company said it was an “unfortunate misunderstanding" amplified by excitement in the auction room.
    • Sotheby's (NYSE:BID) owns a 25% stake in RM Sotheby's, but wasn't directly involved in the auction.
    • CannTrust Holdings (NYSE:CTST) has received a notice from the Ontario Cannabis Store (the "OCS"), stating that certain of its sold products are Non-Conforming Products under the terms of the Master Cannabis Supply Agreement and that the latter has elected to return these products to the Company.
    • Under the terms of the Master Agreement, any product that does not comply with applicable law is considered to be Non-Conforming Product and the OCS may elect to exercise its right, among others, to return such product to the Company at the Company's expense.
    • The products listed in the OCS return notice are valued at ~$2.9M in the aggregate. The Company intends to fully perform its obligations under the Master Agreement.

    Weighing The Week Ahead: Yield Curve Inversion And The Jackson Hole Agenda 

    Google/Alphabet Is A True Compounder With A Long Runway And Attractive Valuation 

    • Target (NYSE:TGT) introduces a new food and beverage brand called Good & Gather.
    • The company says the flagship brand will offer a wide range of food and beverage products that prioritize taste, quality ingredients and ease, at a great value.
    • Good & Gather will be available in stores and online for same-day delivery beginning September 15. By the end of 2020, it will include more than 2K products across food and beverage from dairy to produce, ready-made pastas and meats to granola bars and sparkling water. Good & Gather will also include a number of product extensions including kids, organic, seasonal and signature lines. Target plans for Good & Gather to phase out its existing Archer Farms and Simply Balanced food brands and reduce the number of product offerings under the Market Pantry brand.
    • Source: Press Release
    • Germany could muster €50B of extra spending in an economic crisis, according to Finance Minister Olaf Scholz, putting a number on a possible fiscal stimulus for the first time.
    • While action isn't imminent, he signaled that domestic and global warning signs are increasing pressure on Angela Merkel's government to consider suspending its balanced-budget policy.
    • They include an economy that contracted in the second quarter and the risk of expanded trade conflict with the U.S.
    • Following a weekend dinner, President Trump said CEO Tim Cook made a "good case" that it would be difficult for Apple (NASDAQ:AAPL) to pay tariffs, when Samsung does not face the same hurdle because much of its manufacturing is in South Korea.
    • "I thought he made a very compelling argument, so I'm thinking about it," he told reporters.
    • Apple's MacBook laptops and iPhones won't face additional tariffs until Dec. 15, but some of the company's other products, including its AirPods, Apple Watch and HomePod, will be subject to the levies on Sept. 1.
    • Hong Kong is gearing up for more protests this week after hundreds of thousands of anti-government demonstrators braved heavy rain to rally peacefully on Sunday, marking a change to what have often been violent clashes.
    • The scenes showed that the movement is far from fizzling out, triggering fears about retail, tourism and business confidence, as well as worries over the city's stock and property markets.
    • The Hang Seng index still rose 2.2% overnight following a healthy lead from Wall Street and key interest rate reforms from the People's Bank of China.

  15. Chinese pop stars publicly back Beijing on Hong Kong

  16. Shareholder Value Is No Longer Everything, Top C.E.O.s Say

  17. Just another manic Monday:

    • In tweet, President Trump says Google (GOOG +2.1%)(GOOGL +2.1%) should be sued for allegedly manipulating 2.6M to 16M votes for Hillary Clinton in the last presidential election.
    • Trump appears to cite a report from Judicial Watch, a conservative group.
    • All three major U.S. stock averages stay near their session highs as investors are cheered by the U.S. delaying its Huawei ban and as Treasury yields rise.
    • The Nasdaq gains 1.5%, the S&P 500 climbs 1.3%, and the Dow rises 1.1% in afternoon trading.
    • Energy (+1.9%), information technology (+1.6%), and communications services (+1.6%) leading the S&P 500 industry sectors, while real estate (+0.6%), utilities (+0.7%), and materials (+0.8%) lag the broader market.
    • Crude oil gains 1.6% to $55.73 per barrel.
    • Investors are clearly feeling less fearful as indicated by the Cboe Volatility Index, often called the "fear index", down 7.3% to 17.12; last week the VIX jumped as high as 24.10.
    • 2-year Treasury yield jumps 5 basis points to 1.54% and the 10-year yield adds 4 bps to 1.596%.
    • Dollar Index rises 0.1% to 98.25.

    HOV finally makes some gains:

  18. Yawn, I guess everyone is taking Monday off in the summer?  That's good I guess.

    Certainly there's not much happening.

    • Twitter (TWTR +3.1%) says it's disclosing a "significant" state-backed information operation, originating in China and focused on the protests in Hong Kong.
    • It's suspended hundreds of accounts after focusing on 936 accounts "deliberately and specifically attempting to sow political discord in Hong Kong."
    • "Based on our intensive investigations, we have reliable evidence to support that this is a coordinated state-backed operation," the company says.
    • Twitter is blocked in mainland China, and the company notes many of the accounts accessed Twitter using VPNs (and some through specific unblocked IP addresses from the mainland).
    • Facebook (FB +1.5%) has taken action to remove accounts, Pages and Groups involved in "coordinated inauthentic behavior" after getting a "tip shared by Twitter."
    • "Today, we removed seven Pages, three Groups and five Facebook accounts" that were part of a small network originating in China and focused on Hong Kong, the company says.
    • "They frequently posted about local political news and issues including topics like the ongoing protests in Hong Kong," Facebook continues. "Although the people behind this activity attempted to conceal their identities, our investigation found links to individuals associated with the Chinese government."
    • About 15,500 accounts followed one or more of the Pages in question, and about 2,200 accounts had joined at least one of the Groups, Facebook says.
    • Permian Basin production is the key driver for shares of both Chevron (CVX +1.4%) and Exxon Mobil (XOM +1.7%), but CVX has an edge over XOM because of its "superior" cash position, Barclays analysts say.
    • CVX is "well positioned to both return significant free cash flow to shareholders and fund its 3%-4% five-year growth [compound annual growth rate] guidance," says the Barclays team led by Jeanine Wai, which initiates coverage of CVX with an Overweight rating and $145 price target while XOM is started at Equal Weight with a $73 target.
    • XOM has taken a different approach that Barclays says will "eventually pay off," but one that leaves a near-term free cash flow deficit after dividend at Brent oil prices below $70/bbl.
    • Energy is currently one big 'Show-me Story' and the Permian is coming up on [free cash flow] inflection for both names, as XOM targets its Permian as FCF positive in 2021 at $60 flat real Brent, while CVX targets 2020 at $55" WTI crude, Wai writes.
    • Barclays also rates ConocoPhillips (COP +4.9%) and Hess (HES +5.3%) at Overweight while initiating Occidental Petroleum (OXY +2.2%) at Equal Weight.
    • The energy sector is among today's top gainers as crude prices rise but is a notable YTD laggard.
    • CVX's Sell Side Rating is Outperform, its Seeking Alpha Authors Rating is Bullish, and its Quant Rating is Very Bullish.
    • Boston Fed boss Eric Rosengren notably dissented from July's decision to trim interest rates, and – for now – sounds like he'll be doing the same in September.
    • Appearing on Bloomberg, Rosengren more or less says he wants to see the whites of slowdown's eyes before moving to ease policy. That the economies of other countries have weakened isn't excuse enough, he adds.
    • Meanwhile, Fed Chair Jay Powell is scheduled to deliver remarks at the Jackson Hole confab later this week, and he's overwhelmingly expected to signal a coming rate cut next month.
    • Sales at eating and drinking establishments are up more than 4% this year to surpass the 3% rise in grocery store spending, according to YTD data from the U.S. Census Bureau. Higher prices account for some of the growth.
    • "Generally speaking, the consumer — particularly the middle to upper middle-income consumer — is healthy. This group has benefited from stock market gains, stable asset markets, wage growth that is pretty healthy," notes Morningstar restaurant analyst R.J. Hottovy on the solid pace of restaurant sales.
    • While sales may be topping expectations, operators have felt some margin pressure on the labor front and from new tech/delivery costs.
    • The Turkish lira sinks 1.4% against the U.S. dollar after Turkey's central bank announces new reserve requirements that will inject ~5.4B liras ($957M) and $2.9B of gold and foreign-currency liquidity into the market.
    • iShares MSCI Turkey ETF (NASDAQ:TUR) also slides 1.4%.
    • The change defines the amount of cash that lenders are required to put aside depending on how much credit they extend.
    • WisdomTree Emerging Market Currency ETF (NYSEARCA:CEWdips 0.6%.

  19. Phil/ Ferrari RACE has an interesting profile, is small but highly profitable, is “sexy” and inmune to weak car markets and has some interesting concept cars in the drawing board that can improve the sales even more ( most cars are sold before being produce), what is your opinion ?

  20. I will check them out later, good premise.  

  21. Good morning! 

    Flattish so far.  Not much happening although this could/should worry the Nasdaq:

    A group of state attorneys general is preparing to move forward with a joint antitrust investigation of big technology companies, adding another layer of scrutiny to an industry already under a federal spotlight

    RACE/Advill – Now I remember why I wasn't interested in them – $39Bn!?!  Yes, they make nice profits but only about $1Bn (earnings are in Euros) and how is that going to significantly change.  I'm pretty sure all the people who want a Ferrari and can afford one already have one.  Earnings per share are moving up due to buybacks moreso than profit improvements, though the new management has accomplished that as well – though it's possible they've cut quality to improve margin – that wouldn't show up for a while.

    China accounted for most of their sales gains – not sure how long that will last. US sales were down 5.5%.  They are counting on China in their forward projections.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue €m 2,335 2,762 2,854 3,105 3,417 3,420 3,607 3,690 4,021 +7.9%
    Operating Profit €m 363.5 389.5 444.3 595.1 775.4 826.5 869.4     +17.9%
    Net Profit €m 240.8 261.4 287.8 398.8 535.4 784.7 837.2 720.6 760.3 +26.7%
    EPS Reported 1.27 1.38 1.52 2.11 2.80 4.14 4.43     +26.6%
    EPS Normalised 1.27 1.38 1.52 2.25 2.80 4.15 4.43 3.73 4.06 +26.6%
    EPS Growth %   +8.6 +10.1 +47.6 +24.4 +48.4 +45.2 -10.2 +8.99  
    PE Ratio x           34.0 31.9 37.8 34.7  
    PEG x           n/a n/a 4.21 4.21

    There's nothing wrong with the company overall – they are just priced high but there's nothing wrong with a Picasso that sells for $100M – it's just that the buyer was an idiot (until he finds a bigger idiot to pay $120M).  I'd say they are worth watching and, if they pull back 30%, to $100ish and "only" 27x earnings – THEN it would be fun to get in for the ride but why be the sucker paying $160, just because you didn't buy it a year ago for $100?  That same buyer was smart because he didn't buy it for $150 in the summer of 2018…