Barrons weekend summary

Barrons weekend summary: positive on PNC, USFD; cautious on WAAS 

Cover story: Barron's looks at the best and worst places for investors to find income in a rising-rate world in sectors that include European dividend stocks and funds (FDD, VGK, VOD, RDSA), electric utilities (UTG, DUK, SRE, XLU), U.S. dividend stocks and funds (NOBL, VYM, KO, BUD, PFE), junk bonds (OSTIX, HYT, VTA, JNK), municipal bonds (NAD, BTT, VWIUX, PHMIX), real estate investment trusts (SPG, BXP, EQR, VNQ), preferred stock (BAC Pfd L, PFF, JPI), Treasuries (TIP, TLT), telecom (T, VZ), and MLPs (EPD, AMLP, BWP). 

Features: 

1) Positive on PNC: Bank has a steady mix of fee income and a solid strategy for loan growth, and shares could generate a return of 15% during the next 12 months; 

2) Positive on USFD: Company, the second-largest food distributor in the U.S., has focused on small chains and independent restaurants, which are faster growing than larger rivals, and shares could rise 14% in 2017; 

3) Cautious on WAAS: Tampa-based group of desalination plants and water-cooler providers is unprofitable and its "water-as-a-service" concept remains questionable, both of which should be of concern to investors.

Tech Trader: Looking back on 2016, columnist Tiernan Ray says his bullish case on AMZN, NFLX, GOOGL, and FB was wrong, while he underappreciated AMD and NVDA, two of the best-performing stocks of the year. 

Trader: Fourth-quarter results will show better growth for the first time in five quarters, says Bucky Hellwig of BB&T Wealth, thanks to strength in the energy sector and an improved U.S. economy; Fears in January that China's economic growth would materially slow proved unfounded; The column's "many bullish reviews of financial stocks, particularly big banks, panned out" in 2016, while healthcare stocks were a weak spot. 

Interview: Ron Eptsein of Merrill Lynch predicts growth in defense spending in 2017, but urges caution in the commercial-jet sector (picks: GD, TXT, TDG, RTN). 

Profile: Anton Schultz, manager of the RMB Mendon Financial Services fund, says that based on his current portfolio of around 60 stocks, smaller banks are the way to earn money (top 10 holdings: BNCN, YDKN, ACBI, OCFC, OPB, FBK, TBK, FFWM, LION, ABCB). Penta: BNY Mellon Wealth Management chief investment officer Leo Grohowski says the real play in the municipal bond sector is with riskier second-tier offerings. 

Follow-Up: Positive on AMD: Stock was the best-performing in the Russell 2000 in 2016, and could add 15% or more during the next year, though there might be a brief pullback. 

European Trader: "Eurozone stock markets appear to have suffered more from Brexit than the U.K. on concerns that other members might follow suit, potentially destroying the EU and taking the currency with it." 

Asian Trader: Asia strategist Mixo Das of Nomura sees more pain ahead for the region's markets, but thinks India could distinguish itself from other countries with strong gains. 

Emerging Markets: Donald Trump's presidential victory, higher U.S. interest rates, and a strong dollar have weakened the prospects for global trade and emerging-market exporters. 

Commodities: "Zinc, nickel, and copper were the biggest winners as Donald Trump's presidential victory in early November kindled fresh optimism about U.S. infrastructure spending and economic growth." 

Streetwise: The column looks back at 2016, noting it made good picks in industrials, energy, and infrastructure but was wrong on financials and biotech. 

The Reflation Trade Exhales Into Year End

TradeTheNews.com Weekly Market Update: The Reflation Trade Exhales Into Year End
Fri, 30 Dec 2016 16:10 PM EST

The last week of trading saw a mixed global reaction to the year's end. The FTSE managed to reach new all-time highs and closed the week up 1.4%, while the Shanghai and Hang Seng also finished up on the week. The US instead had a hard time during the last four sessions of the year as profit taking and pension fund rebalancing, in a high vacation period, took its toll. Trading volumes have reflected the absenteeism with average volumes on the NYSE at 35% below the 3 month average. For the week, after getting to within 20 points of the 20,000 milestone the DJIA lost 0.8%, while the Nasdaq dropped 1.5%, and the S&P500 fell 1.1%, causing the S&P to fall just short of a double digit percentage gain on the year.

US Treasury yields have declined as investors bought low-risk fixed income assets, sending 10-Year Treasury yields to a 2-week low. However, going short continues to be the smart-money play. As the market continues to short sell Treasuries, Repo rates for some specific bonds have become extremely expensive, reaching negative yields on many parts of the curve.

The US dollar reached new highs not seen for 14 years against various currencies before retracing to lower prices on Friday. Against the Euro, at one point the US dollar had lost 1.6%. Various FX brokers reported a lack of liquidity during Asian trading hours causing automatic orders to be set off. As price continued to move higher, stop loss orders to cover shorts were sparked, increasing the upward momentum.

China has had a hard week defending its currency against further devaluation, as the Yuan is set to finish the year with its biggest 1-year decline since 1994. The government has said it will redesign the Yuan currency basket to include another 11 currencies in an attempt to water down the effect of the US dollar and camouflage the ongoing capital outflows.

The Italian government eventually did need to step in to save the oldest banking institution in the world, Monte dei Paschi, mainly to avoid the NPL crisis of Italian lenders from spreading any further. The lender was unable to find private backing to re-capitalize and was given an estimate of €8.8 billion of funding by the ECB. The Italian central bank has said it sees the cost of saving Paschi at €6.6 billion, lower than the ECB estimate, but higher than the €5 billion sought by Paschi initially.

In a slow corporate news week, a few headlines stood out. On Tuesday, Amazon reported over 1 billion items shipped with Prime this holiday season worldwide, noting their Echo Dot was the best-selling, most gifted item on Amazon.com. It was reported on Wednesday that Kate Spade was mulling a sale, and analysts noted that Coach and Michael Kors both have adequate cash to fund a potential acquisition. And on Friday, Nikkei estimated that Apple would reduce its iPhone production by 10% in Q1 due to sluggish sales, sending shares of some Apple suppliers lower to end the week.


MON 12/26
6502.JP: May take an extraordinary loss of ¥100B ($860M) on US nuclear ops - Nikkei
*(JP) JAPAN NOV NATIONAL CPI Y/Y: 0.5% V 0.5%E (2nd straight rise); CPI EX FRESH FOOD (CORE) Y/Y: -0.4% V -0.3%E

TUE 12/27
*(US) DEC RICHMOND FED MANUFACTURING INDEX: 8 V 5E
*(US) DEC CONSUMER CONFIDENCE: 113.7 V 108.5E (highest since Aug 2001)

WEDS 12/28
*(UK) NOV BBA LOANS FOR HOUSE PURCHASE: 40.7K V 41.4KE
(US) Association of American Railroads weekly rail traffic report for week ending Dec 24th: 496.6K carloads and intermodal units, +27% y/y
(CN) China Commerce Ministry (MOFCOM) Spokesperson Shen: More concerned about future Fed rate hikes; Expect to see slower growth in auto sales in 2017
KATE: Reportedly considering sale of the company; has hired advisers to contact potential buyers - press

THURS 12/29
*(EU) EURO ZONE NOV M3 MONEY SUPPLY Y/Y: 4.8% V 4.4%E
*(US) INITIAL JOBLESS CLAIMS: 265K V 265KE; CONTINUING CLAIMS: 2.10M V 2.03ME

FRI 12/30
(RU) Russia President Putin refutes earlier reports that Russia will expel diplomats in retaliation; will consider Trump's actions on any measures
(US) DEC CHICAGO PURCHASING MANAGER: 54.6 V 56.8E
AAPL: May reduce iPhone production by 10% in Q1 due to sluggish sales - Nikkei

Markets Go Quietly Into Holiday Weekend

TradeTheNews.com Weekly Market Update: Markets Go Quietly Into Holiday Weekend 
Fri, 23 Dec 2016 16:02 PM EST

US indices largely marked time heading into the final trading sessions of 2016. Volumes were commensurate with the seasonal slowdown associated with holiday trading schedules, running significantly below their 3-month averages. The hope that has manifested itself as the 'Trump bump' appears to be fading as the reality sets in that his administration is only week's away from taking the reins. Concerns about a potential trade war with China and Trump's tweet about expanding the nuclear arsenal raised questions about how aggressive the new government will be in global affairs, nevertheless the VIX volatility index moved below the July low in a continued sign of investor complacency. Stocks remain just below the recent all-time highs while the Dollar index seems to have stalled out around 1.03. In general, currencies, fixed income, and commodities remain confined within their recent ranges with the US 10-year yield consolidating in the mid 2.5% range. Central Banks including the BOJ and Riksbank kept policy on course at their scheduled meetings and it appears the ECB is likely to wait until after Germany's October election before making any significant policy moves. FedEx and Nike headlined the late December earnings reports and neither generated much in the way of excitement, but Micron shares surged and helped put a bid under other names in the semiconductor space after beating Q1 expectations forecasting Q2 results well above the analyst's consensus. For the week the DJIA rose 0.5%, the S&P500 gained 0.2%, and the Nasdaq added 0.5%.

SUN 12/18
*(AU) AUSTRALIA MID-YEAR ECONOMIC AND FISCAL OUTLOOK (MYEFO): Maintains FY20/21 target for return to surplus; Cuts FY16/17 & FY17/18 GDP Outlook
*(CN) CHINA NOV PROPERTY PRICES M/M: RISE IN 55 OUT OF 70 CITIES VS 62 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 65 PRIOR

MON 12/19
*(DE) GERMANY DEC IFO BUSINESS CLIMATE: 111.0 V 110.6E (highest since Feb 2014); CURRENT ASSESSMENT: 116.6 V 115.9E
DB: Reportedly nearing DOJ settlement on RMBS case; agreement could come as early as Weds; set to pay less than $14B settlement - press
*(US) DEC PRELIMINARY MARKIT SERVICES PMI: 53.4 V 55.2E (lowest since Sept)
(TR) Russia Ambassador to Turkey Andrey Karlov reportedly has been shot in Ankara, with his condition unknown - press
(DE) Several dead, at least 50 reportedly injured after truck drives into Christmas market in Berlin, Germany; local police spokesman points to terrorism as motive - press
*(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Maintains 10-year JGB yield target around ~0%

TUES 12/20
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 8.00%; AS EXPECTED
NKE: Reports Q2 $0.50 v $0.43e, R$8.18B v $8.08Be
FDX: Reports Q2 $2.80 v $2.91e, R$14.9B v $14.9Be

WED 12/21
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED; EXTENDS QE BOND BUYING PROGRAM BY 6 MONTHS IN AMOUNT OF SEK30B
*(US) NOV EXISTING HOME SALES: 5.61M V 5.50ME (highest since Feb 2007)
MU: Reports Q1 $0.32 v $0.28e, R$3.97B v $3.78Be
(US) President-elect Trump and transition team said to be considering a 5% tariff on foreign imports - financial press

THRS 12/22
*(US) Q3 FINAL GDP ANNUALIZED Q/Q: 3.5% V 3.3%E; PERSONAL CONSUMPTION: 3.0% V 2.8%E
*(US) NOV PCE CORE M/M: 0.0% V 0.1%E; Y/Y: 1.6% V 1.7%E
(US) US President Elect Trump tweets U.S. must greatly expand nuclear capabilities until world comes to senses regarding nukes
DBK.DE: Reaches settlement in principal with DoJ on RMBS; $3.1B penalty and $4.1B in consumer relief in US; Sees Q4 pretax charge of ~$1.17B

FRI 12/23
CSGN.CH: Reaches settlement in principle with US DOJ on RMBS; Will pay $5.3B in Mortgage accord
*(DE) GERMANY JAN GFK CONSUMER CONFIDENCE: 9.9 V 9.9E (3rd straight reading below the 10 level)
*(UK) Q3 FINAL GDP (3RD READING) Q/Q: 0.6% V 0.5%E; Y/Y: 2.2% V 2.3%E

Barrons weekend summary

Barrons weekend summary: cautious on DIN, NKE 

Cover story: Barron's suggests that president-elect Donald Trump should take steps to make U.S. trade policy freer than it is now after a backslide during the past 15 years; Any aggressive push by Trump to hike tariffs will face resistance from a Republican-dominated Congress that has traditionally supported trade liberalization.

 Features: 

1) Story says the bull market has legs, and that after a strong post-election really, Wall Street's top strategists see stocks rising by 5% in 2017; 

2) Cautious on DIN: Shares and profits are down this year on sluggish traffic and menu misfires, and the stock could lose up to 30% more during the next year as management implements a turnaround.

Tech Trader: Consumer technology is faltering, while the building of what's known as infrastructure for companies to use for data processing is on the rise-and 2007 should see a sharper divided than usual between the two sectors. 

Trader: "Stocks look ready to deliver double-digit gains in 2016, but 2017 could be the year of living dangerously"; Since 1928, a Republican has taken the White House from a Democrat four times, and after each occurrence the market fell by about 10% during the new president's first year; Cautious on NKE: Apparel giant seems unable to keep pace with a changing footwear landscape, and could find itself on the wrong side of Donald Trump's policy goals; A strong dollar puts U.S. investors in a bind when it comes to global investing. 

Profile: Tom Bohjalian, manager of the Cohen & Steers Real Estate Securities fund, screens REITs to identify those with the highest standard deviations, based on price-to-net-asset value and price-to-dividend-discount (top 10 holdings: SPG, PLD, UDR, HCP, BRX, AIV, EQIX, DLR, ESS, ARE). 

Interview: Robert Willens, a leading tax and financial-accounting expert on Wall Street, talks about the potential impact of Donald Trump's tax cut proposals on individuals and corporations. 

Small Caps: Barron's top picks for 2017 include, AMC, SSP, HMHC, RELY, EQC-the sole holdover from last year's list-all of which are likely to deliver gains for investors. Follow-Up: Positive on CBS: Investors should hold onto the network's shares, which could return another 10% during the next year, but sell VIA shares, which are likely to go down.

European Trader: "The outlook for European equities is surprisingly bright going into 2017, given the political clouds gathering around the eurozone and the broader European Union" (Positive on Wolsely, BTI, Inditex, EUFN).

Asian Trader: "In 2017, conversations about Asia will be dominated by the Japanese yen and the Chinese yuan, as Asia's two most important currencies continue their race to the bottom," offering opportunities in both the Nikkei and China's A shares. 

Emerging Markets: The one near-certainty for emerging markets is that there will be volatility, providing equity investors with buying opportunities. 

Commodities Corner: "Commodities should deliver their best annual performance in years, and traders think the rally will roll on in 2017." 

Streetwise: Uncertainty next year could be further complicated if the unwinding of a 35-year bond bull market becomes unruly.

FOMC Charts 2017 Course, Trump Administration Fills In

TradeTheNews.com Weekly Market Update: FOMC Charts 2017 Course, Trump Administration Fills In
Fri, 16 Dec 2016 16:13 PM EST

The week opened with US stock markets riding at fresh all-time highs ahead an all but certain FOMC rate hike. Global economic readings continued to improve led by better than expected readings in the US which only solidified Fed expectations, as well as kept upward pressure on interest rates and the Dollar. Though the 25 basis point hike was widely telegraphed, markets still spent much of the latter half of the week calibrating to what it heard from Chair Yellen in the FOMC statement and her press conference. Most FOMC members now expect three rate hikes in 2017 from two previously. By emphasizing she never favored running high pressure economy some perceived the news was ultimately a bit more hawkish then what markets were expecting. The Dollar Index extended to fresh 14 year highs and the US 10-year yield topped 2.6% while stocks sold off into Wednesday's close as aggressively as we had seen since the Nov election. Buyers though quickly returned when concerns surrounding the rising US dollar and higher interest rates were pushed aside by another round of accelerating economic data and performance chasing into years end. Friday's options expiration saw generally muted trade as Treasury prices stabilized and the Dollar rally lost momentum. The Euro closed the week at the lowest levels seen in more than 13-years and gold prices finished below $1150 for the first time since February. For the week the Dow rose 0.4%, while the S&P and NASDQ finished marginally lower.

In corporate news, Donald Trump again took center stage to start the week, tweeting on Monday that Lockheed's F-35 costs were 'out of control' and he planned to save 'billions' from the aircraft program, sending LMT down 4%. In less contentious fashion, Trump met midweek with prominent tech leaders, promising he's here to help the industry and will make trade deals 'fair.' Also on the regulatory front, gaming names were boosted this week when the Japanese parliament gave final passage to its casino bill, setting the stage for potentially large-scale investment into Japanese casinos in the coming decade. Shares of General Motors and Ford took a hit Wednesday when a Chinese official said the government was considering penalties on an unnamed US automaker for monopolistic behavior. Many key names reported or held Analyst Days as well this week: Athena Heath shares surged on its initial 2017 outlook, where it guided strong bookings and revenue growth. Adobe reported a strong finish to FY16 but its guidance came in slightly below consensus due to FX headwinds.

In M&A news, the long-running Viacom-CBS merger saga came to an abrupt end when Shari Redstone on Monday called off the deal, choosing instead to support CEO Bakish's plans to turn Viacom around. In addition, Sumner Redstone announced he would no longer vote in Viacom board meetings and would step down from board in Feb. Rupert Murdoch's 21st Century Fox agreed to a £10.75/shr bid for European TV provider Sky, taking advantage of the weaker pound to grow Fox's global media reach. And foreign press reports of a Kraft Heinz bid for Mondelez were denied by the company, but a New York Post report indicated Brazil's 3G Capital may be raising funds to pursue Mondelez.

SUNDAY 12/11
BA: Boeing and Iran Air announce agreement for 80 airplanes with estimated value of $16.6B

MONDAY 12/12
Four major cities (Paris, Mexico City, Madrid and Athens) move to ban diesel vehicles by 2025 (update)
(CN) China Association of Automobile (CAAM) Nov Vehicle Sales y/y: 2.59M units, +16.6% v +18.7% prior; YTD: 24.9M units, +14.1% v +3.3% y/y - CAAM
*(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.2% (3-month high) V 6.1%E; YTD Y/Y: 6.0% V 6.0%E
*(CN) CHINA NOV RETAIL SALES Y/Y: 10.8% (11-month high) V 10.2%E; YTD Y/Y: 10.4% V 10.3%E

TUESDAY 12/13
*(UK) NOV CPI M/M: 0.2% V 0.2%E; Y/Y: 1.2% (highest since summer 2014) V 1.1%E; CPI CORE Y/Y: 1.4% V 1.3%E
*(UK) NOV PPI INPUT M/M: -1.1% V -0.5%E; Y/Y: 12.9% V 13.5%E
*(DE) GERMANY DEC ZEW CURRENT SITUATION: 63.5 V 59.0E; EXPECTATIONS SURVEY: 13.8 V 14.0E
(US) Both UPS and Fedex said to be struggling to keep up with record holiday shipping demand - financial press
*(US) NOV IMPORT PRICE INDEX M/M: -0.3% V -0.4%E; Y/Y: -0.1% V 0.0%E
*(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 10 (1-year high) V 10E; MANUFACTURERS OUTLOOK: 8 (1-year high) V 9E; ALL-INDUSTRY CAPEX: 5.5% (3-quarter low) V 6.1%E
(CN) NDRC to penalize an un-named US automaker for monopoly - China Daily

WEDNESDAY 12/14
(CN) China end of Nov Yuan forex positions CNY22.3T, lower by CNY382.7B m/m (Largest monthly drop this year and marks the 13th consecutive month of decline)
*(UK) OCT AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.3%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.6% V 2.6%E
*(UK) NOV JOBLESS CLAIMS CHANGE: +2.4K V +6.5KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
*(UK) OCT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
*(US) NOV ADVANCE RETAIL SALES M/M: 0.1% V 0.3%E; RETAIL SALES EX AUTO M/M: 0.2% V 0.4%E
*(US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.1%E; Y/Y: 1.3% V 0.9%E
*(US) NOV INDUSTRIAL PRODUCTION M/M: -0.4% V -0.3%E; CAPACITY UTILIZATION: 75.0% V 75.1%E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.6% on Dec 9th
(US) US govt reportedly files first criminal charges in generic drug price fixing investigation - press
(US) Association of American Railroads weekly rail traffic report for week ending Dec 10th: 538.9K carloads and intermodal units, -1.1% y/y
*(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 0.50-0.75% (AS EXPECTED); Average Fed official looking for three hikes in 2017
*(US) FOMC UPDATED ECONOMIC FORECAST FOR DEC MEETING
MDLZ: Kraft Heinz said to consider acquiring Mondelez; Berkshire, Lemann may join acquisition - Swiss press
YHOO: Identifies data security issues concerning certain Yahoo user accounts; believes 3rd party stole data from 1B user accounts in Aug 2013
*(AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +39.1K (1-year high) V +17.5KE; UNEMPLOYMENT RATE: 5.7% V 5.6%E
*(KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED (6th consecutive month of holding rates)

THURSDAY 12/15
*(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 53.5 V 51.8E (3rd month of expansion and highest since May 2011)
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
*(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 55.5 V 54.5E (25th month of expansion)
*(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 54.9 V 53.7E (42nd month of expansion and fastest pace since April 2011)
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED; maintains rate path
*(UK) NOV RETAIL SALES EX-AUTO/FUEL M/M: 0.5% V 0.0%E; Y/Y: 6.6% V 6.0%E
*(UK) NOV RETAIL SALES (INCLUDING AUTO/FUEL) M/M: 0.2% V 0.0%E; Y/Y: 5.9% V 5.9%E
EUR/USD: *EURO MOVES BELOW $1.0460 FOR ITS LOWEST LEVEL SINCE JAN 2003
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
*(UK) BOE DEC MINUTES: VOTED 9-0 (UNANIMOUS) TO LEAVE POLICY UNCHANGED AT 0.25%
*(US) INITIAL JOBLESS CLAIMS: 254K V 255KE; CONTINUING CLAIMS: 2.02M V 2.00ME
*(US) NOV CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI INDEX NSA: 241.353 V 241.413E
*(US) DEC EMPIRE MANUFACTURING: 9.0 V 4.0E
*(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: 21.5 V 9.1E (highest since Nov 2014)
*(US) DEC PRELIMINARY MARKIT MANUFACTURING PMI: 54.2 V 54.5E (highest since March 2015)
*(US) DEC NAHB HOUSING MARKET INDEX: 70 V 63E (largest one month gain in 20 years)
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.75%; MORE THAN EXPECTED
*(US) OCT TOTAL NET TIC FLOWS: +$18.8B V -$152.9B PRIOR; NET LONG-TERM TIC FLOWS: +$9.4B V -$26.2B PRIOR
ORCL: Reports Q2 $0.61 v $0.61e, R$9.07B v $9.11Be
*(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
*(US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.91 PRIOR; 2nd straight month below parity

FRIDAY
*(EU) EURO ZONE NOV CPI M/M: -0.1% V -0.1%E; Y/Y (FINAL): 0.6% V 0.6%E; CPI CORE Y/Y (FINAL): 0.8% V 0.8%E
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES 1-WEEK AUCTION RATE UNCHANGED AT 10.00%; AS EXPECTED
*(UK) DEC CBI INDUSTRIAL TRENDS TOTAL ORDERS: 0 (nil) V -5E
*(US) NOV HOUSING STARTS: 1.09M V 1.230ME; BUILDING PERMITS: 1.20M V 1.240ME
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.4% on Dec 14th
(CN) China Navy reportedly seizes unmanned underwater US Navy vehicle in South China Sea international waters - press
(US) Weekly Baker Hughes US Rig Count: 637 v 624 w/w (+2.1%) (5th straight weekly increase)
(US) Fed's Bullard (FOMC voter, Dovish): in a revision to policy view, now sees an additional rate hike in 2017

Barron's weekend summary

Barron's weekend summary: positive on GT, DVA, JNJ 

Cover story: The Dow Jones Industrial Average has risen by 8% since Donald Trump won the presidential election, and the index is up 13% for the year, topping the S&P 500 and the Nasdaq-and is rapidly approaching the historic 20,000 mark, which it could soon hit; The rally has been led by GS, UNH, and CAT. 

Features: 
1) Positive on GT: Key concerns about the stock seem overstated and more than priced in, and while low materials costs are helping the company, efficiency gains are the key driver; shares could rise by 25%; 
2) Positive on JNJ: Company has a diverse range of businesses, steady earnings growth, and a dividend yield near 3%-and shares could rally by 20% as operating improvements spark earnings growth; 
3) Stock picks from the Sohn Investment Conference include CHTR, MBLY, ALV, Leonardo-Finmeccanica, Ferrrovial, and Euro Disney, all of which should see gains next year; 
4) Positive on DVA: Shares of kidney dialysis machine maker are down on worries its operating income will be cut by new CMS guidelines, making them cheap for a company that continues to spin out cash. 

Tech Trader: Positive on CSCO: With company's traditional networking gear business slowing, Cisco is focusing on the security sector, where it has sizable revenue and sales growth; its subscription-based network-security software could give shares a 25% boost. 

Trader: If Donald Trump's tax cuts and spending plans become reality, a virtuous cycle could result in which "the gain in animal spirits could amplify the boost to the economy from fiscal stimulus," says BAC's Michelle Meyer; When markets are moving fast, some stocks become mispriced, says Societe Generale strategist Alain Bokobza, meaning next year "will be the kingdom of stockpickers"; "Without something new to propel the stocks higher, banks remain at risk of a sharp pullback"; among those with $50M or more in total assets, KWB analyst Frederick Cannon recommends JPM, BK, COF, and CFG. 

Interview: Value investor Mohnish Pabrai of Pabrai Investment Funds likes autos and airlines, including GM, FCAU, and LUV. 

Profile: Nick Kaiser and Scott Klimo of shariah-focused Saturna Capital won't hold stocks that derive more than 5% of sales from alcohol, tobacco, gambling, pornography, or pork processing (top 10 holdings: ADBE, AAPL, CHD, INTU, AMGN, TJX, LOW, EL, QCOM, LLY). Penta: Profile of Fiduciary Trust's new chief executive, John Dowd, who wants to double the number of clients and assets under management during the next five years through tapping next-gen clients, digitization, global expansion, and rebranding; The IRS is closing wealthy families' biggest tax break, the ability to pass on shares of family-owned businesses, LLCs, and/or limited partnerships to heirs at a discounted value. 

Follow-Up: Cautious on X: Earnings estimates are widely scattered, and investors may want to take profits now and wait until the anticipated infrastructure steel boom turns into something realistic. 

European Trader: Italy's rejection of proposed constitutional reforms hasn't sparked a crisis, mainly because pollsters predicted the outcome and because of the country's improving economic prospects. 

Asian Trader: Positive on Samsung: South Korea's presidential corruption scandal could be a blessing in disguise for the electronics giant, pushing it further toward the restructuring called for by Elliott Management. 

Emerging Markets: The key focus for growth at a revamped AVP is mostly in emerging markets such as Brazil, Mexico, Russia, Colombia, and Turkey-and a turnaround effort is already showing promising signs. 

Commodities: "Silver may have been clobbered in recent months, but the price of the widely used metal is likely to strengthen gradually over the next year or two." 

Streetwise: "Rates are rising from extraordinarily low levels," says JPM chief global strategist David Kelly, "and fixed-income investors will not have the buffer of juicy yields" to protect against capital depreciation of falling bond prices.

ECB Extends QE and Reflation Rally Continues

TradeTheNews.com Weekly Market Update: ECB Extends QE and Reflation Rally Continues
Fri, 09 Dec 2016 16:02 PM EST

Stocks had a positive week in the US and globally, with many hitting new all-time highs and the S&P 500 posting consecutive record levels over the past three sessions. On the week, the S&P and DJIA each gained 3.1%, while the Nasdaq surged 3.6%. After the historic OPEC agreement and talks with non-OPEC producers this weekend expected to be fruitful, cuts set by the oil cartel last week seem to be real. And with a Fed rate decision also on the horizon, the markets have heavily discounted a likely hike in December. In the past, the dark shadow of higher rates pushed stock prices down, whereas now expected corporate tax cuts and deregulation have more than offset the higher cost of money.

The market rally was also given extra fuel by the hoped-for extension of the ECB asset buying program. The market reacted positively after Thursday's meeting, which saw the ECB extend purchases, but at a reduced amount. ECB President Draghi said purchases will continue through Dec 2017, an extension of 9 months, while the size of purchases will be reduced to $60B from $80B as of April 2017. Under the current macro narrative, bonds are the target, with the inevitability of higher interest rates and a larger federal budget pushing prices lower. Over the week, 10-year Treasuries gained 7bps in yield going from 2.39% to 2.46%, while 30-year bonds were hit harder, gaining 9bps, from 3.06% to 3.15%.

In corporate news, President-elect Trump gained some market attention by targeting both the pharmaceutical industry and Boeing in some pointed comments. On Tuesday, Trump told Boeing through Twitter that the price of its next delivery for Air Force One was too high and would have to be renegotiated, and on Wednesday, the president-elect stated in an interview that drug prices would have to come down, which sent pharmaceutical sector plunging and the NASDAQ Biotechnology Index down 3% on the day. The financial sector was one of the big gainers this week, rising 4.4%, helped by interest rate normalization and a high probability of easier capital requirements. The Italian financial sector was an exception, with banks selling off after Italian voters said "no" to constitutional reforms that would have smoothed capital raising by Monte Paschi and other banks. Energy deals were busy this week: Glencore is said to be in the final stage of a deal to buy 19.5% of Russian Rosneft at €10.2B, while a Macquarie-led consortium plans to buy a 61% stake in the UK National Gas grid for $7B, with the Qatari Government involved in both deals. Also Sky disclosed it received a takeover approach from 21st Century Fox, which already hold a 39% stake.


SUNDAY 12/4
(CN) CHINA OCT CAIXIN CHINA SERVICES PMI: 53.1 V 52.4 PRIOR (16-month high)
*(HK) HONG KONG NOV COMPOSITE PMI: 49.5 V 48.2 PRIOR; highest since Mar 2015; 21st consecutive month of contraction
(IT) Italy PM Renzi: My govt ends here (resigns as promised); Turnout was higher than anyone expected; Italian people have spoke
(IT) Italy referendum early exit polls shows "no" vote ahead on PM Renzi's proposed Constitutional reforms
(AT) Austria Presidential election: Center-left candidate Alexander Van der Bellen defeats far-right Norbert Hofer by 53.3% to 46.7% margin

MONDAY 12/5
*(EU) EURO ZONE DEC SENTIX INVESTOR CONFIDENCE: 10.0 V 14.3E
*(US) NOV FINAL MARKIT SERVICES PMI: 54.6 V 54.9E (lowest since Sep 2016)
*(US) NOV ISM NON-MANUFACTURING COMPOSITE: 57.2 V 55.5E
(US) Nov Labor Market Conditions Index Change: 1.5 v 0.2e
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET (OCR) UNCHANGED AT 1.50%; AS EXPECTED

TUESDAY 12/6
*(DE) GERMANY OCT FACTORY ORDERS M/M: 4.9% V 0.6%E; Y/Y: 6.3% V 1.6%E
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.6%E
*(US) Q3 FINAL NONFARM PRODUCTIVITY: 3.1% V 3.3%E; LABOR COSTS: 0.7% V 0.3%E
(US) OCT FINAL DURABLE GOODS ORDERS: 4.6% V 3.4%E; DURABLES EX TRANSPORTATION: 0.8% V 0.5%E
LNKD: EU approves Microsoft-LinkedIn merger with conditions, as expected - press
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.6% from 2.9% on Dec 1st
VA: Justice Department approves Virgin-Alaska merger, as expected
9984.JP: President-elect Trump tweets: "Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs"
*(AU) AUSTRALIA Q3 GDP Q/Q: -0.5% (first contraction in 5 years) V -0.1%E; Y/Y: 1.8% V 2.2%E (lowest annual pace since 2008)

WEDNESDAY 12/7
*(CN) CHINA NOV FOREIGN RESERVES: $3.052T V $3.061TE (5th straight month of decline and largest monthly amount since January; Lowest level since Mar 2011)
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; NOT EXPECTED
*(UK) OCT INDUSTRIAL PRODUCTION M/M: -1.3% V 0.2%E; Y/Y: -1.1% V 0.5%E (largest decline since 2012)
*(UK) OCT MANUFACTURING PRODUCTION M/M: -0.9% V +0.2%E; Y/Y: -0.4% V +0.7%E
*(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) President-elect Trump: will bring down drug prices - Time Magazine
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
ALR: Abbott seeks to terminate $56/shr cash Alere acquisition; files complaint seeking termination in the Delaware Court of Chancery
(US) Association of American Railroads weekly rail traffic report for week ending Dec 3rd: 553.1K carloads and intermodal units, +2% y/y (third straight week of gains)
COST: Reports Q1 $1.17 (ex $0.07 benefit from legal settlement) v $1.19e, R$28.1B (including member fees) v $28.4Be
*(JP) JAPAN Q3 FINAL GDP Q/Q: 0.3% V 0.5%E; ANNUALIZED GDP: 1.3% V 2.3%E (3rd straight expansion both quarterly and annualized)
*(CN) CHINA NOV TRADE BALANCE $44.6B V $46.9BE

THURSDAY 12/8
(CN) China Passenger Car Association (PCA): China Nov retail auto sales at 2.42M, +19.8% y/y
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE SEEN UNCHANGED AT 0.00%, AS EXPECTED
*(EU) ECB POLICY STATEMENT: EXTENDS ASSET PURCHASE TARGET UNTIL DEC 2017 (9-month extension); SCALES BACK PURCHASES TO €60B AFTER APRIL
*(US) INITIAL JOBLESS CLAIMS: 258K V 257KE; CONTINUING CLAIMS: 2.01M V 2.05ME
(EU) ECB chief Draghi: To buy €60B in QE from Apr until Dec; reiterates that program can be amended if needed - prepared remarks
*(EU) ECB chief Draghi: discussed option of continuing QE at full €80B for 6 months, decided instead to reduce QE to €60B in April - Q&A
(US) Fed reports Q3 Financial Accounts: Household Change in Net Worth: $1.59T v $0.84T prior
*(CN) CHINA NOV CPI M/M: 0.1% V 0.7% PRIOR; Y/Y: 2.3% (7-month high) V 2.2%E
*(CN) CHINA NOV PPI Y/Y: 3.3% V 2.3%E (3rd straight y/y positive print; 5-year high)

FRIDAY 12/9
*(FR) FRANCE OCT INDUSTRIAL PRODUCTION M/M: -0.2% V +0.6%E; Y/Y: -1.8% V -0.6%E
*(FR) FRANCE OCT MANUFACTURING PRODUCTION M/M: -0.6% V +0.7%E; Y/Y: -1.5% V +0.1%E
LLY: Provides detailed study from failed Alzheimer's drug Solanezumab trial
*(US) DEC PRELIMINARY MICHIGAN CONFIDENCE: 98.0 V 94.5E
SKY.UK: Discloses possible offer for Sky plc by 21st Century Fox at £10.75/shr in cash; forms independent committee to consider proposal terms
(US) Atlanta Fed maintains Q4 GDP forecast at 2.6%, no change from Dec 6th
(US) Weekly Baker Hughes US Rig Count: 624 v 597 w/w (+4.5%) (4th straight weekly increase)

Barrons weekend update

Barrons weekend update: positive on ARCH 

Cover story: A federal debt that's nearly $19T leaves less flexibility for the U.S. to fund infrastructure projects, but that doesn't mean they shouldn't be undertaken-failing to do so would be more expensive in the long run because of the affect crumbling infrastructure has on productivity; Historically low rates and the possibility of 100-year bonds should provide incentives for the government to act. 

Features: 

1) Barron's list of the top 10 stock picks for 2017 includes GOOGL, AAPL, C, DAL, Deutsche Telekom, MRK, NVS, TOL, UL, DIS; 

2) The lower corporate tax rates the Trump administration plans to impose will help retailers such as TJX and FL more than struggling ones such as GME, AEO, JCP; 

3) Positive on ARCH: Coal company emerged from bankruptcy having made significant changes, and should benefit from the shifts in supply and demand as it picks up orders for thermal and metallurgical coal.

Tech Trader: T's DirectTV NOW "looks to be a great product, but selling 60 channels of live video at close to, or below, cost seems unwise; Less media regulation under the Trump administration could make vertical integration for media companies such as VZ, DIS, VIA, FOXA, DISH an imperative. 

Trader: Investors are no longer buying stocks whole hog, but are rotating their money from one part of the market to another, keeping a lid on the S&P for now, says Michael Shaoul of Marketfield Asset Management; The recent OPEC deal is a game changer, creating the possibility the oil glut will fade as early as the first quarter of 2017, says MS analyst Evan Calio; The market has accepted that tax cuts are a given under Donald Trump, but Wall Street is trying to figure out how much companies will gain from lower tax rates. 

Interview: John Levin and Jack Murphy of Levin Capital looks for value-priced stocks with potential catalysts, and they see plenty of opportunities in the market (picks: DOW, DD, Nestle, NOK; pan: XOM). 

Profile: Jenny Jones, portfolio manager of Hartford Schroders U.S. Small/Mid Cap Opportunities fund, looks for mispriced companies and companies that grow earnings consistently (top 10 holdings: ARMK, PVH, VWR, VNTV, KAR, SPB, ROL, GHC, XRAY, CPHD). 

Small Caps: Positive on EVC: Broadcaster stands to benefit from a growing Hispanic market in the U.S., and its valuable spectrum holdings could help send shares higher. Follow-Up: "If the past is prologue, the Trump Treasury could go ahead with 50- or 100-year bond sales without further market disruption"; "Double-digit prices for crude oil are here to stay. But $100 crude is likely gone for good, as is OPEC's dominance of the market." 

European Trader: When it meets on December 8 amid a backdrop of downside risks to economic growth from political uncertainty, the European Central Bank's governing council could signal more quantitative easing. 

Asian Trader: China Unicom will invite BIDU, BABA, and Tencent to become shareholders, but investors should be cautious about rushing after the threesome into the stock because of Beijing's uncertain role. 

Emerging Markets: Many emerging markets face a bumpy ride ahead following the presidential election, but countries such as Brazil, India, and Poland have corporate-earnings strength. 

Commodities: Arabica futures prices fell in November as new data pointed to higher-than-expected supply in the current season, which could weigh on prices through next year. 

Streetwise: The Trump administration isn't looking like the anti-establishment outfit the president-elect's working-class voters might have expected, but that doesn't matter to investors-especially those holding financial services stocks.

OPEC Cuts; Fed on Track to Hike

TradeTheNews.com Weekly Market Update: OPEC Cuts; Fed on Track to Hike
Fri, 02 Dec 2016 16:11 PM EST

Markets entered the week focused on Vienna, and growing doubts about whether OPEC and in turn non-OPEC producers could come to an accord. Ultimately the Saudis appeared to blink and an agreement was reached that would cut production by 1.2M bpd to 32.5M bpd as laid out in September's tentative framework in Algiers. Crude prices moved up into the closed door meeting on Wednesday and ended the week up 10% from the lows. The US oil patch saw a dramatic rally with some shale names jumping more than 20%. The 6-month production cut that goes into effect with the New Year is seen as a potential boon for well capitalized US producers who will not be participating in any quotas.

Global economic data continued to paint a solid picture heading into the final month of the year, particularly here in the US. November manufacturing readings largely topped estimates while new orders saw growth. Friday's Labor Department report saw several surprises in the details but the bottom line did not differ greatly from expectations. Job growth was steady, labor market slack continues to diminish, and the case for a December rate hike remains intact.

US Treasury yields hit fresh highs mid-week propelled by a continuation of the post-election reflation trade and the surge in oil prices. After making a run at 2.5% in the benchmark 10-year yield, Treasury prices were firming into the jobs numbers on Friday. Yields moved down despite the lowest print in the unemployment rate since 2007. The Dollar index drifted back below 101, but as with most asset classes, price action remains well within recent ranges and suggests post-election trends remain entrenched. Overall, stocks trended lower for the first time since the US election, and for the week the S&P500 dropped 1.1% and the Nasdaq fell 2.7%, while the DJIA eked out a 0.1% gain.

In corporate news, Caterpillar threw some dirt on the rotation into the infrastructure play, cautioning that FY17 analyst earnings consensus is overly optimistic given the expected headwinds. Starbucks shares took a hit after CEO Howard Schultz said he would cede the CEO role to his lieutenant Kevin Johnson in April. Luxury retailer Tiffany Co. blew out expectations for Q3, but merely affirmed FY16 guidance in part due to the drag on sales at its New York flagship store caused by security cordon around the adjacent Trump Tower.

MONDAY 11/28
STAN.UK: Reportedly set to unveil wider global job cuts as early as this week - financial press
*(EU) EURO ZONE OCT M3 MONEY SUPPLY Y/Y: 4.4% V 5.0%E

TUESDAY 11/29
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 0.42 V 0.60E; CONSUMER CONFIDENCE (FINAL): -6.1 V -6.1E
(IT) ECB ready to temporarily step up purchases of Italian government bonds if Dec 4th Referendum drives up borrowing costs- financial press
*(DE) GERMANY NOV PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.8%E
*(US) Q3 PRELIMINARY GDP PRICE INDEX: 1.4% V 1.5%E; CORE PCE Q/Q: 1.7% V 1.7%E
TIF: Reports Q3 $0.76 v $0.67e, R$949M v $923Me
*(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.2% V 3.0%E; PERSONAL CONSUMPTION: 2.8% V 2.3%E
(IR) Iran Oil Min Zanganeh: Iran will NOT cut oil production
*(US) NOV CONSUMER CONFIDENCE: 107.1 V 101.5E (highest since July 2007)

WEDNESDAY 11/30
*(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 0.6% V 0.6%E (Highest level since Apr 2014); CPI CORE Y/Y: 0.8% V 0.8%E
*(IN) INDIA Q3 GDP Y/Y: 7.3% V 7.5%E
*(US) NOV ADP EMPLOYMENT CHANGE: +216K V +170KE
*(US) OCT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
*(US) OCT PCE DEFLATOR M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.5%E
*(US) OCT PERSONAL INCOME: 0.6% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.5%E
*(US) NOV CHICAGO PURCHASING MANAGER: 57.6 V 52.5E (highest since Jan 2015)
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.4% from 3.6% on Nov 23rd
*OPEC Ministers comment after meeting concludes: confirms cutting output to 32.5M bpd, 6 month agreement starts in Jan and could extend it another 6 months at May meeting; seeks 600K bpd in cuts from non-OPEC producers
*(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 25BPS TO 13.75%; AS EXPECTED
*(AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -4.0% V -3.0%E
*(CN) CHINA NOV MANUFACTURING PMI (Gov't official): 51.7 V 51.0E (4th consecutive expansion and highest since July 2014)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 50.9 V 51.0E; 5th consecutive expansion
(HK) Macau Nov Casino Rev 18.8B Patacas v 18.4B m/m, +14.4% y/y (4th consecutive increase, largest gain since Feb 2014) v 8.8% prior

THURSDAY 12/1
GLEN.UK: Trading update: Raises FY16 Marketing EBIT at upper end of $2.5-2.7B; Guides initial FY17 illustrative cash flow $6.5B, EBITDA $14.0B; Cuts Long-term EBIT $2.2-3.2B (prior $2.7-3.7B)
*(UK) NOV PMI MANUFACTURING: 53.4 V 54.4E (4th month of expansion)
*(EU) EURO ZONE OCT UNEMPLOYMENT RATE: 9.8% V 10.0%E (lowest since Sept 2011)
*(US) INITIAL JOBLESS CLAIMS: 268K V 253KE; CONTINUING CLAIMS: 2.08M V 2.03ME
*(US) NOV FINAL MARKIT MANUFACTURING PMI: 54.1 V 53.9E (highest since Oct 2015)
*(US) NOV ISM MANUFACTURING: 53.2 V 52.5E; PRICES PAID: 54.5 V 54.5E
CAT: Guides FY17 R$38B v $38.1Be, sees FY17 EPS $3.25 consensus ex restructuring as too optimistic considering expected headwinds (Zack's FY17 consensus estimates is $3.36e) - investor presentation
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 2.9% from 2.4% on Nov 30th
SBUX: *CEO Howard Schultz to step down, to become exec Chairman; COO Kevin Johnson to take over as CEO; effective April 3, 2017

FRIDAY 12/2
*(US) NOV UNEMPLOYMENT RATE: 4.6% V 4.9%E (lowest since 2007)
*(US) NOV CHANGE IN NONFARM PAYROLLS: +178K V +180KE
*(US) NOV AVERAGE HOURLY EARNINGS M/M: -0.1% V +0.2%E; Y/Y: 2.5% V 2.8%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(CA) CANADA NOV NET CHANGE IN EMPLOYMENT: +10.7K V -15.0KE; UNEMPLOYMENT RATE: 6.8% V 7.0%E
DAL: Reports Nov Load factor 85% v 84.1% y/y; Affirms Q4 metrics guidance
(US) CMS report: 2015 US health care spending +5.8% y/y to $3.2T

Barrons weekend summary

Barrons weekend summary: positive on BHI, MGM 
Cover story: Donald Trump's proposal to slash the corporate tax rate form 35% to 15% might be too much, since it could significantly reduce the government's tax haul and add to the country's large debt burden, but a cut to 22% would be revenue-neutral, allowing businesses to produce just enough additional taxable income to offset the effect of the lower rate. 

Features: 
1) Profile of Michael Petry, chief portfolio manager for Danske Invest Hedge Fixed Income Strategies, believes global bond investors will have to navigate markets in which more interest-rate hikes will follow the one likely to occur in December; 
2) Positive on BHI: The logic behind Baker Hughes' planned merger with GE's oil-and-gas unit makes sense, and could set up the new company-which would be less tied to oil-price cycles-to profit as energy prices rise; 
3) Under a Trump administration, more merger deals are likely to succeed, and M&A arbitrate could remain a profitable investment strategy, yielding annualized double-digit percentage returns; 
4) Positive on MGM: Company stands to benefit from Las Vegas' move to diversify beyond gambling into areas such as entertainment and professional sports, and it should continue to see strong earnings and cash flow. 

Tech Trader: Positive on PSTG, NMBL, NTNX: Promising flash-based data-storage-equipment vendors could be takeover targets for larger tech companies that are falling behind in innovation, such as HPE and CSCO; VEEV, TEAM, and NOW could also be of interest to bigger rivals. 

Trader: A cut of six to seven percentage points in corporate tax rates should result in a 10% increase in earnings-per-share for small caps, says Jason Pride of Glenmede; Short-sellers have been taken by surprise by the post-election rally, and don't seem as if they're going to fight the new upward trend for now; Cautious on AXP: Card company has lagged in boosting its rewards program and could be squeezed by a trend in which consumers are paying off their balances each month. 

Interview: Larry Jeddeloh, founder of TIS Group and publisher of the firm's Institutional Strategist newsletter, likes pipelines, defense stocks, and the dollar, and is betting against 10-year Treasuries (picks: UUP, ENB, ETP, ITA, GD, TBF). 

Small Caps: Positive on TRCO: Chicago-based broadcaster took a hit because of a drop in political advertising during the presidential election, but the company is asset-rich, the market doesn't appear to appreciate the value of its properties-and its asset value could be twice its current share price. 

Follow-Up: 
1) Cautious on PG: Company has narrowed its focus with the sale of many of its brands, but the shares, which are up since last November, could stall if these efforts don't prove sufficient, and investors may want to take profits; 
2) Puerto Rico's new governor, Ricardo Rossello, is viewed on Wall Street as a serious leader who wants to put the island on stronger financial footing, and his efforts to restructure its debt could benefit municipal bond holders. 

European Trader: Italy's December 4 constitutional referendum-which seeks to strip the upper house of much of its power-could fail, leading to the fall of prime minister Matteo Renzi's government, which would endanger banks and put more pressure on the plummeting euro. 

Asian Trader: The execution of the Indian government's unprecedented decision to take 500- and 1,000-rupee notes out of circulation was badly flawed, a situation that could derail the country's growth next year. 

Emerging Markets: A stronger dollar resulting from the election of Donald Trump means emerging market currencies are likely to weaken, traders will flee risky assets, and emerging-market stocks and bonds should get cheaper. 

Commodities: The cotton market has been heating up as winter "sweater season" approaches, but prices are likely to drop amid a global oversupply that hasn't been dented by shortfalls in India and bad weather in China. 

Streetwise: Sentiment is crucial to the way the market operates; the fact that it matters can be seen in a recent CivicScience consumer survey, which found that American voters changed their holiday-gift plans after the election.

Barron's weekend update

Barron's weekend update: positive on KMX 
Cover story: To help support his administration's ambitious spending and tax-cut plans at a time when the nation faces massive debt, Donald Trump may want to consider issuing Treasury bonds for the longest possible term, perhaps 100 years, as some other countries have done. 

Features: 
1) In the wake of Donald Trump's victory, bonds have sold off sharply, making prices more attractive for a variety of municipal-bond close- and open-end funds, taxable closed-ends, and preferred stocks; 
2) Positive on KMX: Country's largest used-car seller is likely to benefit from dropping prices for used cars and a flood of off-lease vehicles about to hit the market; shares could see 20% upside; 
3) Cautious on YERR: Company has secured $1B in financing from U.S. conglomerate Amanda Enterprises, but investors should be wary of the suspect track record of its CEO, George Wight.

Tech Trader: Positive on Tectonic Audio Labs: Washington-based startup has developed a technology for small speakers that can produce brilliantly clear sound, which could help the streaming-music sector. 

Trader: The combination of better jobless claims and retail sales numbers with Donald Trump's stimulus plan could drive economic growth up by 3% or more in Q4; Small-cap stocks may slow down a bit after a recent rally, but they could outperform large-caps in the next year; Positive on UAL: Shares of the airline look to be the strongest in its sector based on fundamentals, and operating profit margins should continue to rise because of reduced costs and better hub management. 

Profile: Danton Goei, manager of the Davis Globalfund, is concentrated, with 54 holdings versus more than 2,000 for its benchmark (top 10 holdings: AMZN, GOOGL, Encana, APA, Berkshire Hathaway, WFC, Naspers, Did Chuxing Series A, JPM, JD). Barron's Roundtable: Four top investors-Phil Blancato of Ladenburg Thalmann Asset Management, Bill Roach of Globalt Investments, Keith Goddard of Capital Advisors, and Ben Johnson of Morningstar - say investors will continue to face the same big issues even under a Trump administration. 

Small Caps: Positive on ATRO: Shares of aerospace-parts maker are down because of problems at an ancillary unit, giving investors a chance to take advantage of the weakness. 

Follow-Up: Positive on NVDA, AMD: Shares of chip makers are benefiting from the companies' growing strength in the cloud market and have more upside, while earlier optimism about MU has yet to pan out; Positive on HAR: Samsung's acquisition of the dashboard electronics company implies a 5% annualized return for Harman investors who hold on to their shares; Positive on SAVE: Shares still have 20% upside as new chief executive Robert Fornaro continues to make changes. 

European Trader: "Technology stocks have fallen out of favor in Europe in recent weeks, but the sector still offers value for long-term investors," and shares such as Temenos, SAP, and Legrand are good long-term plays. 

Asian Trader: CS global chief investment officer Michael Strobaek says Australian shares are reasonably priced, and that it isn't fair to call China a currency manipulator. 

Emerging Markets: In the long term, Turkey can expand its export base, and the weak Turkish lira only helps on that score. 

Commodities: The prolonged bear market in corn could soon end, because supply may be reaching a peak while demand is still growing. 

Streetwise: Donald Trump's election notwithstanding, "the dynamics that keep Treasury yields low haven't gone away. Inflation can't be willed into existence."