Markets pause as Brexit and China trade negotiations go into overtime

TradeTheNews.com Weekly Market Update: Markets pause as Brexit and China trade negotiations go into overtime
Fri, 01 Mar 2019 16:09 PM EST

Equity markets took a breather on fairly low volatility despite another heavy week of corporate earnings to be digested. Potential progress on some global issues hit snags as President Trump cut short his Hanoi summit without reaching any new agreement with North Korea, and as PM May reportedly conceded that the Brexit will have to be delayed from March 29 even if the Parliament supports her plan later this month. Washington was gripped by Congressional testimony from former Trump fixer Michael Cohen, as well as hearings with Fed Chair Powell and US Trade Rep Lighthizer who agreed that the economy looks healthy and would be helped by a resolution to trade tensions.

The dollar index dipped mid-week but basically ended flat, while the British pound was strong through most of the week as fears of a ‘no deal’ Brexit receded. WTI crude futures moved sideways until Friday when they dipped 2.5% following disappointing US manufacturing and consumer confidence indicators, and a tepid first look at Q1 GDP from Atlanta and New York Fed officials. The week was capped off with a risk-on rally sparked by some better than expected data out of China and Europe, and on reports that the White House is seeking to reach an endgame in China trade talks within weeks. For the week, the S&P gained 0.4% and closed above 2,800 for the first time since November 8, while the DJIA was flat, and the Nasdaq rose 0.9%.

In corporate news this week, some key earnings emerged from the retail space. JCPenney shares lifted after posting stronger than anticipated earnings and laying out a plan to shutter some stores. L Brands tumbled after missing on earnings and guiding a disappointing FY19 EPS number. Macy’s Q4 beat on the top and bottom line and the company announced it would trim 100 management positions and cut $100M in annual costs. Gap Inc. notched a profit beat and announced plans to spin off its Old Navy division to separate into two independent publicly traded companies. A spate of M&A deals hit the corporate news space this week. Roche boosted its gene therapy portfolio with its acquisition of Spark Therapeutics for $4.3B. GE sold off its life sciences business to Danaher for $21.4B. eBay initiated a strategic review of its asset portfolio amid pressure from investors. The grocery store sector slumped on Friday after a report that Amazon is reportedly launching a new line of grocery stores with a lower price point than its Whole Foods division. Shares of Tesla sold off sharply after the car company made good on its long-promised $35K price point for a pared down version of the Model 3 sedan.

SUNDAY, FEB 24
(UK) PM May said to be considering plan that would delay Brexit by 2-months; rules out meaningful vote on EU withdrawal in Commons this week - Telegraph

MONDAY, FEB 25
ONCE To be acquired by Roche for $114.50/share in cash valued at $4.8B
GE Danaher to acquire the biopharma business of General Electric Life Sciences for $21.4B
*(US) FEB DALLAS FED MANUFACTURING ACTIVITY INDEX: 13.1 V 4.7E
(US) Atlanta Fed raises Q4 GDP forecast to 1.9% from 1.4%
TSLA SEC said to ask judge to hold Musk in contempt for violating deal, cites Feb 19th Tweet by Musk regarding production - US financial press

TUESDAY, FEB 26
BAS.DE Reports Q4 adj Net €348M v €502Me, Adj EBIT €630M v €552Me, Rev €15.6B v €15.1Be; raises dividend
*(DE) GERMANY MAR GFK CONSUMER CONFIDENCE: 10.8 V 10.8 PRIOR
HD Reports Q4 $2.09 v $2.16e, Rev $26.5B v $26.6Be; Announces $15.0B share buyback; Raises Quarterly dividend 32% to $1.36 from $1.03 (indicated yield 2.86%)
M Reports Q4 $2.73 v $2.51e, Rev $8.46B v $8.46Be; launches restructuring program to fund reinvestment in the business; streamlines management structure
*(US) DEC HOUSING STARTS: 1.078M V 1.256ME (lowest since Sept 2016); BUILDING PERMITS: 1.326M V 1.290ME
*(US) FEB RICHMOND FED MANUFACTURING INDEX: 16 V 5E
*(US) FEB CONSUMER CONFIDENCE: 131.4 V 124.9E

WEDNESDAY, FEB 27
RIO.AU Reports FY18 underlying Net $8.81B v $8.63B y/y; EBITDA $18.1B v $18.6B y/y; Rev $40.5B v $41.9B y/y; declares $4.0B special dividend
TSLA CEO Elon Musk tweets: Thursday 2pm. California. Some Tesla news
*(EU) EURO ZONE FEB BUSINESS CLIMATE INDICATOR: 0.69 V 0.66E; CONSUMER CONFIDENCE (FINAL): -7.4 V -7.4E
LOW Reports Q4 $0.80 v $0.80e, Rev $15.6B v $15.7Be
(US) President Trump and North Korea leader Kim meet in Hanoi; Kim says have "overcome obstacles" since last meeting
BBY Reports Q4 $2.72 v $2.57e, Rev $14.8B v $14.7Be; Raises Quarterly dividend 11.1% to $0.50 from $0.45 (indicated yield 3.32%)
*(US) DEC FINAL DURABLE GOODS ORDERS: 1.2% V 1.2% PRELIM; DURABLES EX TRANSPORTATION: 0.1% V 0.1% PRELIM
(US) Association of American Railroads weekly rail traffic report for week ending Feb 23rd: 522.6K, -1.1% y/y
CELG Wellington Management does not support Bristol-Myers Squibb’s acquisition of Celgene
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.75%; AS EXPECTED

THURSDAY, FEB 28
ABI.BE Reports Q4 $0.80 v $0.90e, Rev $14.3B v $13.9Be
(KR) White House: Hanoi Summit ends, no agreement reached but talks constructive ; US and North Korea teams to meet in future
*(FR) FRANCE FEB PRELIMINARY CPI M/M: 0.0% V 0.4%E; Y/Y: 1.3% V 1.5%E
*(DE) GERMANY FEB CPI SAXONY M/M: +0.3% V -1.0% PRIOR; Y/Y: 1.4% V 1.4% PRIOR
(DE) GERMANY FEB PRELIMINARY CPI M/M: 0.5% V 0.4%E; Y/Y: 1.6% V 1.5%E
*(US) Q4 ADVANCE GDP PRICE INDEX : 1.8% V 1.7%E; CORE PCE Q/Q: 1.7% V 1.6%E
(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 2.6% V 2.2%E; PERSONAL CONSUMPTION: 2.8% V 3.0%E
(US) Nevada reports Jan casino gaming Rev $984.5M, -3% y/y; Las Vegas strip Rev $532.2M, -4% y/y
GPS Reports Q4 $0.72 v $0.68e, Rev $4.62B v $4.71Be; to spin off Old Navy; to close 230 stores over next 2 years
TLSA Confirms Model 3 with a 220 mile range will now price as low as $35K

FRIDAY, MARCH 1
(CN) US officials said to be preparing a final trade deal that President Trump and his Chinese counterpart Xi Jinping could sign in weeks - financial press
*(ES) SPAIN FEB MANUFACTURING PMI: 49.9 V 51.7E (first contraction in 64 months; lowest since Nov 2013)
*(DE) GERMANY FEB UNEMPLOYMENT CHANGE: -21K V -5KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(UK) FEB PMI MANUFACTURING: 52.0 V 52.0E (31st month of expansion)
*(EU) EURO ZONE JAN UNEMPLOYMENT RATE: 7.8% V 7.9%E (matches lowest level since Dec 2008)
*(EU) EURO ZONE FEB ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.5%E; CPI CORE Y/Y: 1.0% V 1.1%E
*(US) JAN PERSONAL INCOME: -0.1% V +0.3%E
*(US) FEB FINAL MARKIT MANUFACTURING PMI: 53.0 V 53.7E (lowest since Aug 2017)
*(UK) FEB PMI MANUFACTURING: 52.0 V 52.0E (31st month of expansion)
*(US) FEB ISM MANUFACTURING: 54.2 V 55.8E; PRICES PAID: 49.4 V 51.8E (lowest manufacturing PMI since Nov 2016)
(US) New York Fed Nowcast: cuts Q1 forecast to 0.9% from 1.2%
(US) Atlanta Fed forecasts initial Q1 GDP growth at 0.3%
AMZN Reportedly readying to launch new grocery store chain at a lower price point than Whole Foods - press
(UK) EU's Barnier: we are ready to give Britain further guarantees that Irish backstop is only temporary - German press

US/China trade talks push towards the finish line; Central Bank Hawks have reason to hibernate

TradeTheNews.com Weekly Market Update: US/China trade talks push towards the finish line; Central Bank Hawks have reason to hibernate
Fri, 22 Feb 2019 16:08 PM EST

Stocks spent much of the week on a continued upswing, largely on lingering hopes for a breakthrough in US-China trade talks. By week's end, reports had circulated that the two sides were drafting a six-point MOU related to key structural issues after reaching a consensus on main topics in principal. Some of those expectations were tempered by subsequent reports suggesting the two sides remained far apart on intellectual property and other important structural differences, but there was enough movement -- namely China’s commitment to purchase $1.2T in US goods -- to discuss the planning of a potential summit in late March. The Yuan moved up after Chinese officials reiterated that the currency would not be used as a pawn in the trade debate. Ultimately President Trump at an Oval Office meeting on Friday reiterated openness to extending the March 1 China tariff deadline should progress continue to be made after the Chinese Vice Premier Liu announced his delegation would be staying in DC for two additional days of trade talks.

Oil prices continued upward to levels not seen since November even though US domestic production reached 12M bpd for the first time. The Greenback edged lower, which coincided with a further breakout in gold prices. Apr gold futures crossed $1,340 for the first time since May 2018 before backing off late in the week. Global Treasury yields largely stayed suppressed, with the US 10-year ending back below 2.65% and the Bund staying below 10 bps. Wednesday’s FOMC minutes and a slew of Fed speakers that followed affirmed the 'patient' narrative has been adopted by a consensus and many view the balance sheet unwind coming to an end sometime this year. Central bankers had little reason to feel hawkish as continued sluggish economic readings were turned in by key European and Asian economies while the US data softened notably, as well. For the week the S&P rose 0.6%, the Dow added 0.6% and the NASDAQ gained 0.7%.

The focus was on more quarterly earnings in corporate news for this President’s Day-shortened week. Walmart’s holiday quarter came in ahead of expectations on both top and bottom line, as well as on same store sales, despite the poor Dec sales data released by the Commerce Dept last week. Avis Budget lifted on an earnings beat, helping Hertz shares, noting lower fleet costs and improved pricing. Domino’s dropped on disappointing same store sales and margins hit by inflationary pressures. Kraft Heinz fell precipitously after announcing a weak earnings report that included news of an SEC investigation and a dividend cut. Stamps.com market cap was nearly halved after it said it would discontinue its exclusive partnership with USPS.


SUN 2/17
(CN) China Jan Vehicle Sales Y/Y: -15.8% v -13.0% prior (7th straight decline) - Industry Association CAAM

TUES 2/19
*(UK) DEC AVERAGE WEEKLY EARNINGS 3M/Y: 3.4% V 3.5%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 3.4% V 3.4%E
*(UK) JAN JOBLESS CLAIMS CHANGE: +14.2K V +20.8K PRIOR; CLAIMANT COUNT RATE: 2.8% V 2.8% PRIOR
*(DE) GERMANY FEB ZEW CURRENT SITUATION SURVEY: 15.0 V 20.0E; EXPECTATIONS SURVEY:-13.4 % V -13.6E
(US) US Senator Bernie Sanders said he will run for President in 2020 - CNN
WMT Reports Q4 $1.41 adj v $1.33e, Rev $138.8B v $139.3Be; Raises Quarterly dividend 1.9% to $0.53 from $0.52 (indicated yield 2.12%)
(US) FEB NAHB HOUSING MARKET INDEX: 62 V 59E
(CN) US officials reportedly seeking a stable yuan pledge as part of China trade deal talks - press

WEDS 2/20
(CN) China Foreign Ministry Spokesperson Geng: Reiterates China does not engage in competitive devaluation of its yuan currency (CNY), hopes the US does not politicize currency issue
(US) Association of American Railroads weekly rail traffic report for week ending Feb 16th: 523.9K, -3% y/y
(US) Special Counsel Mueller report may be finalized next week - CNN
*(US) FOMC MINUTES FROM JAN 30TH MEETING: MEMBERS NOTED THAT FINANCIAL CONDITIONS HAD TIGHTENED SINCE SEPT AND GLOBAL GROWTH HAD MODERATED
(UK) PM May and EU's Juncker had a productive meeting; talks focused on potential guarantees around Irish backstop - joint statement
*(CN) CHINA PBOC OFFERS CNY71.9B THROUGH PSL (PLEDGED SUPPLEMENTARY LENDING) OPERATION V CNY60.5B PRIOR

THURS 2/21
DTE.DE Reports Q4 adj Net -€ 431M* v €1.3B y/y, Adj EBITDA €5.6B v €5.8Be, Rev €20.3B v €19.9Be
BA.UK Reports FY18 adj EPS 42.9p v 42.1p y/y, adj EBITDA £1.93 v £1.97B y/y, Rev £18.4B v £18.5B y/y
(FR) FRANCE FEB PRELIMINARY MANUFACTURING PMI: 51.4 V 51.0E (2nd straight expansion)
*(DE) GERMANY FEB PRELIMINARY MANUFACTURING PMI: 47.6 V 49.8E (2nd straight contraction and lowest since Dec 2012)
(EU) EURO ZONE FEB PRELIMINARY MANUFACTURING PMI: 49.2 V 50.3E (1st contraction in 68 months and lowest since Jun 2013)
(UK) Govt official: Long way from getting what is needed on Irish backstop; Brexit deal next week is unlikely (**Note: downplays recent optimism on talks)
*(US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: -4.1 V +14.0E
*(US) FEB PRELIMINARY MARKIT MANUFACTURING PMI: 53.7 V 54.8E (lowest since Sep 2017)
*(US) JAN EXISTING HOME SALES: 4.94M V 5.00ME (lowest since Nov 2015)
F Ford is investigating US fuel economy and emissions compliance - press
BIDU Reports Q4 $1.92 v $1.69e, Rev $3.96B v $3.82Be
KHC Reports Q4 $0.84 v $0.93e, Rev $6.89B v $6.95Be; discloses SEC subpoena related, recorded $25M increase to costs of products sold as a result
KHC Cuts dividend 36% to $0.40 from $0.625 (3.32% indicated yield); plans to conduct additional divestitures to further deleveraging and reduce debt
STMP CEO: Have decided to discontinue our exclusive partnership with USPS as our strategy

FRI 2/22
(DE) GERMANY Q4 FINAL GDP Q/Q: 0.0% V 0.0%E; Y/Y: 0.6% V 0.6%E

Barrons weekend summary

Barrons weekend summary: cover story on cannabis stocks; positive feature on Loews (L) 

Cover story: Investors interested in U.S. cannabis stocks face a number of challenges: Although marijuana is legal for recreational or medical use in many states, it remains illegal under federal law, so cannabis companies—with the exception of those that only sell in Canada such as CGC and TLRY—can’t list on American exchanges; Top contenders in the U.S. market include Acreage Holdings, Green Thumb Industries, MedMen Enterprises, Harvest Health & Recreation, Trulieve Cannabis, iAnthus Capital Holdings, which are pursuing varied strategies, with only Acreage and iAnthus profitable so far. 

Features: 1) The patchwork of marijuana regulation in the U.S. makes it hard for cannabis companies to manage legal issues, but a broader federal reform would result from the States Act, proposed in June 2018, that would exempt cannabis from most federal drug laws in states that have legalized it; 2) Positive on EQIX, COR, IRM, INXN: Barron’s found four leading companies in the data-center sector whose shares look compelling after an industry slowdown that weighed on investor sentiment—the shares are staging a comeback and seem poised for further growth; 3) Positive on Fanuc, ABB, Yaskawa Electric, Kuka, TER: Major robot makers offer investors a good opportunity to gain exposure to a technology that is part of what manufacturing executives say will be the next industrial revolution—and of the five, Teradyne is particularly attractive; 4) Positive on L: The home-improvement company is a $15B conglomerate that “flies under Wall Street’s radar,” and is “a conservatively run, value-oriented company, with decent growth prospects, that trades at a nice discount from its net asset value.” 

Tech Trader: An executive order from Donald Trump banning Huawei Technologies gear in the U.S. would be good for the company’s rivals—including NOK, ERIC, and Samsung Electronics—problematic for foreign telecom operators, and worrisome for U.S.-China trade relations. 

Trader: “The market’s rally has forced investors to rebuild positions they may have sold off during December’s tumble—and they may not be finished just yet,” while hedge funds and risk-controlled portfolios still have little exposure to the market relative to history and retail investors haven’t put much money back in since the downturn; Positive on YETI: Maker of outdoor gear such as coolers, jugs, wine tumblers, and more has low brand recognition, but as more people learn about it, shares could rise by as much as 60%; Cautious on XPO, FDX, UPS, KR, FAST, GWW: As AMZN “eats the economy,” its influence continues to expand, and no sector—from shipping to groceries to industrial distribution—seems safe from its disruption, leaving investors the challenge of finding which industries could benefit from its growth. 

Interview: Matt Diserio and his partners founded Water Asset Management in a bid to solve environmental problems while making good returns, but he doesn’t think all sustainable investments are winners, and he likes water more than renewable energy (picks: PRMW, AOS, RXN, Suez). 

Profile: Vivian Wohl, one of eight co-portfolio managers at the $1.7B Federated Kaufmann Small Cap fund, focuses on medical devices and healthcare software and services, spends a lot of time on Facebook following patient groups to see what users are saying about new devices and services (top 10 holdings: VEEV, INSP, DXCM, TNDM, HZD, GKOS, PRAH, NEO, IRTC, XENT). 

European Trader: Positive on AMS: Swiss company that produces 3-D sensors and laser technologies used in smartphones was one of several AAPL suppliers hit by slowing iPhone sales, but it is trying to diversify into other consumer areas and industrial applications, which should eventually boost sales. 

Emerging Markets: Chinese companies are increasingly defaulting on their bonds, a good thing in the long term, but also in the short term for investors who know what they are doing—but they can’t navigate these assets from an armchair.

Commodities: “Volatile prices make gasoline a particularly risky investment, but the fuel’s importance to drivers hasn’t wavered” and most consumers consider it to be a more important household expenditure than expenses such as health care and savings.

Streetwise: For AMZN, the decision to pull out of a planned New York headquarters is a financial nonevent. But shareholders should remember that its surging profits could invite a backlash—and from devout capitalists, not just progressive protesters.

Risk-on rally resumes on technical strength and progress in China trade talks

TradeTheNews.com Weekly Market Update: Risk-on rally resumes on technical strength and progress in China trade talks
Fri, 15 Feb 2019 16:08 PM EST

This week’s trading was predominately focused on headlines out of Beijing. Investor sentiment was buoyed by apparent progress made in trade talks culminating in positive overtures from both President Trump and President Xi. Enough progress was achieved to extend talks into next week with representatives scheduled to meet in Washington D.C. Separately, President Trump ultimately signed on to a border funding agreement hashed out on Capitol Hill, avoiding another shutdown, but he also declared a national emergency pledging to come up with roughly $8B in wall funding from various government resources. Earnings season chugged along into the latter innings and overall managements remained reluctant to go out on a limb in terms of FY19 forecasts given macro uncertainties.

Treasury yields moved up during the first few trading sessions with the positive trade vibes largely propelling risk-on flows out of bonds, only to come under some modest pressure after a very poor, delayed December US retail sales report. The largest monthly drop in that series going back to late 2009 resulted in economists substantially downgrading GDP forecasts. Overseas economic data stayed generally squishy with the relative weakness allowing the US dollar to firm up. The Dollar Index drifted up to retest the 97 mark and the S&P climbed back above its 200-day moving average. WTI crude futures moved up to the mid $50s area with both the Saudis and Russians jawboning prices by alluding to the potential of a more formal OPEC+ production arrangement in the future. For the week, the S&P gained 2.5%, the DJIA added 3.1%, and the Nasdaq rose 2.4%.

In corporate news this week, Coca-Cola shares experienced their worse day in a decade after the company guided slowing organic revenue and flat comparable earnings in the coming year, affected by FX headwinds and structural items. Investors reacted positively after Nvidia's FY forecasts came in better than expected. Newell Brands’ outlook disappointed the market again, as the consumer goods firm pointed to tariffs, commodity inflation, and FX volatility as particular hurdles. EA surged after it announced its new ‘Apex Legends’ free-to-play game surpassed 25M users, growing faster than rival game Fortnite. Toy makers Mattel and Hasbro saw shares slide sharply on Friday as they both gave strategy updates that indicated they continue to struggle in the post-Toys R Us world. Mortgage software developer Ellie Mae agreed to be acquired by PE firm Thoma Bravo for $99/share in a $3.7B all-cash deal.


SUNDAY 2/10
(CN) China Minsheng Investment halts trading of bonds, volatility cited as 2020 CNY bonds traded near record low – US financial press

TUESDAY 2/12
TKA.DE Reports Q1 Net €136M v €81M y/y, Adj EBIT €333M v €227Me, Rev €9.74B v €9.54B y/y
*(US) DEC JOLTS JOB OPENINGS: 7.335M V 6.846ME (record high)
(UK) PM May adviser Oliver Robbins reportedly was overheard saying that MPs will be given choice between PM May's deal or lengthy delay to Brexit - ITV News
(US) California Gov Newsom proposes a 'digital dividend' for state consumers that would target large tech firms - press
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 1.75%; AS EXPECTED
(CN) China President Xi to meet with US trade delegation Friday including Lighthizer and Mnuchin in Beijing - SCMP

WEDNESDAY 2/13
HEIA.NL Reports FY18 Net €2.42B v €2.34Be, Op €3.87B v €3.84Be, Rev €22.5B v €21.9B y/y
*(US) JAN CPI M/M: 0.0% V 0.1%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI NSA: 251.712 V 251.617E
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.25%; AS EXPECTED; maintains rate path outlook
DB1.DE Reports Q4 adj €1.25 v €1.25e, Adj EBITDA €419.9M v €338.3M y/y, Rev €740.4M v €710Me
CTL Reports Q4 $0.37 v $0.36e, Rev $5.78B v $5.80Be; Cuts annual dividend 54% to $1.00 from 2.16 (new implied yield 6.8%)
*(CN) CHINA JAN TRADE BALANCE: $39.2B V $34.3BE

THURSDAY 2/14
AIR.FR Reaches agreement with Emirates on A380 fleet, order reduced from 162 to 123; consequence of reduced order largely embedded in FY18 results, will stop delivery of A380 in 2021
AIR.FR Reports FY18 Net €1.6B v €2.87B y/y, Adj EBIT €5.8B v €5.1Be, Rev €63.7B v €67.0B y/y; raises 2018 dividend 10% to €1.65
ACA.FR Reports Q4 Net €1.01B v €795Me, Rev €4.85B v €4.80Be
CSGN.CH Reports Q4 (CHF) Net 292M v -2.13B y/y, adj Pretax 4.2B v 569M y/y, Rev 4.8B v 4.75Be
*(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.6% V 0.7%E
KO Reports Q4 $0.43 v $0.43e, Rev $7.10B v $7.06Be
AZN.UK Reports Q4 Core EPS $1.58 v $1.48e, Rev $6.42B v $6.16Be
*(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(US) JAN PPI FINAL DEMAND M/M: -0.1% V +0.1%E; Y/Y: 2.0% V 2.1%E
(CN) Reportedly US/China trade talks remain deadlocked as Beijing refuses to eliminate coerced technology transfers or government subsidies to Chinese companies - WSJ
(US) Atlanta Fed cuts Q4 GDP forecast to 1.5% from 2.7%
AMZN Amazon will NOT build second headquarters in New York City after opposition; plans to move ahead with its Northern Virginia and Nashville campuses
(US) White House Press Sec Sanders: confirms Pres Trump will sign govt funding bill and declare a national emergency to build a border wall
AMAT Reports Q1 $0.81 v $0.79e, Rev $3.75B v $3.72Be
NVDA Reports Q4 $0.80 v $0.75e, Rev $2.21B v $2.37Be

FRIDAY 2/15
RBS.UK Reports Q4 Net +£436M v -£415M y/y, adj Op +£572M v -£583M y/y, Rev £3.06B v £3.06B y/y
(CN) China President Xi meets with US trade delegation in Beijing (as speculated)
(UK) JAN RETAIL SALES (EX-AUTO/FUEL) M/M: 1.2% V 0.2%E; Y/Y: 4.1% V 3.2%E
(CN) US-China trade talks to continue in Washington DC during the week of Feb 18th - press
*(US) FEB EMPIRE MANUFACTURING: 8.8 V 7.0E
(US) JAN INDUSTRIAL PRODUCTION M/M: -0.6% V 0.1%E; CAPACITY UTILIZATION: 78.2% V 78.7%E
*(US) FEB PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 95.5 V 93.7E
(US) Pres Trump: China trade talks are going extremely well; we're a lot closer than we ever were to have real trade deal with China; Confirms declaring national emergency at the border - comments at White House
(US) New York Fed Nowcast: cuts Q4 forecast to 2.2% from 2.4%; cuts Q1 forecast to 1.1% from 2.2%
MAT Guides FY19 gross sales flat y/y (cc); Q1 gross sales to be lower y/y - Toy Fair presentation

Barrons weekend summary

Barrons weekend summary: positive feature on WAB; cautious on MYGN 

Cover story: Barron’s and Calvert Research and Management unveil their second annual list of the 100 Most Sustainable Companies, based on hundreds of environmental, social, and governance factors; The list is topped by BBY, CSCO, A, HPQ, TXN, VOYA, CLX, GWW, MSI, and MAN; Story says the “personal passions” of a company’s chief executive are a key factor in pushing it toward sustainability. 

Features: 1) Barron’s and Calvert’s ranked the 20 Most Sustainable International Companies, a list topped by Accenture, Brambles, Accor, Telenor, and Whitbread; 2) Positive on WAB: Shares of the passenger train equipment maker dropped after its proposed deal with GE Transportation failed to materialize, but the bearishness appears to be overdone and the shares look cheap; 3) Cautious on MYGN: Investors and scientists continue to debate the merit of the company’s GeneSight process, which analyzes genes associated with antidepressant drugs’ effectiveness, then guides doctors in the choice of treatments—and the shares aren’t likely to rise until a stronger consensus is formed; 4) Positive on BBT, STI: The banks’ tie-up makes sense: both are tightly managed and didn’t play any major role in the financial crisis, but though the deal may prompt more regionals to go shopping, suitable partners are rare; 5) The recent underperformance of Bill Gross provides raises a longstanding question about him: Was he a great investor, or just the beneficiary of a four-decade rally in the things he happened to trade, a lucky sailor on a current of declining rates and credit expansion?; 6) In a little noticed move, Steve Mandel of Lone Pine Capital, the most successful fundamental stock picker of them all, quietly stepped down after generating tens of billions of dollars in gains for his clients over the past two decades and establishing one of the best investment track records ever.

Tech Trader: Cautious on T: Telecom has been running a national advertising campaign promoting a new 5G service and is pushing to roll out the moniker to the top of smartphone screens, but new 5G chipsets aren’t available, so the company is essentially re-badging an improved 4G technology known at LTE Advanced—a move that’s bad for investors and consumers. 

Trader: One puzzle for investors comes from the bond market, where yields have been steadily falling—the 10-year Treasury yield dropped 0.058 percentage point, to 2.632% last week—even as risk appetite and economic data have started to improve; Positive on BA, EL, MTB: Companies whose earnings estimates have been rising for the first quarter and beyond could be demonstrating resilience in the face of a slowdown; “The impact of the Sino-American trade conflict could be felt in currency markets if a deal isn’t reached on schedule by March. No deal would mean higher tariffs on Chinese goods—which could also mean additional, unexpected upward pressure on the U.S. dollar.” 

Interview: Abhay Deshpande of Centerstone Investors fund will park money in cash or gold if he can’t find enticing stocks, since avoiding losses is a top priority—but he’s optimistic about stocks now, and is on a major shopping spree (picks: CIOXY, Genting, FAST, MHK, ISS, Compagnie Financiere Richemont). 

European Trader: Positive on Pirelli: The tire-maker’s stock looks set to go up during the next 12 months, propelled by rising earnings as the company shifts to higher margin products and benefits from the increased demand for performance tires.

Emerging Markets: With a nearly 16-fold gain, Indonesia has been Asia’s best-performing market over the past 20 years through January, far outpacing China and India, and it is likely to maintain its long-term lead over regional rivals this year. 

Commodities: “Lumber prices have made quite a comeback this year, climbing by 25% in January and nearly erasing the decline suffered in 2018, as the market gets a boost in demand ahead of the spring building season. Looking ahead, however, analysts urge caution.” 

Streetwise: A proposal by senators Charles Schumer and Bernie Sanders to impose tests on corporations before they engage in stock buybacks “is just one of a series of bad ideas emanating from Washington. Others include a wealth tax and a 70% top income-tax rate.”

Market rebound pauses to assess weaker data and progress on trade and other macro issues

TradeTheNews.com Weekly Market Update: Market rebound pauses to assess weaker data and progress on trade and other macro issues
Fri, 08 Feb 2019 16:08 PM EST

US indices opened to week supported by renewed buying vigor coming on the heels of the strong January jobs report. US/China trade hopes were also lifted as it became clear US officials were indeed set to travel to Beijing next week. Stock markets lost momentum though as investors continued to sift through a barrage of corporate earnings reports and as the furious five-week long rebound in equities ran up against resistance near 200-day moving averages. Global growth worries were amplified by continued softness in the economic data, particularly in Europe which coincided with the European Commission decision to slash economic growth forecasts for the region. Potentially adding the growth jitters were a series of communications from central banks, that in some cases, were unexpectedly dovish in the wake of similar posturing by the Fed and ECB last week. Risk flows turned decidedly defensive through the final two trading sessions, helped in part by US officials tempering expectations ahead of next week’s trade talks in Beijing. Government bond yields pushed lower globally. The 10-year Bund fell back below 0.1% and the Gilt to 1.15% for the first time since May. LIBOR followed up its largest daily drop since 2009 on Thursday by resetting lower once again on Friday. The US 30-year traded sub 3.00%. For the week, the S&P rose less than 0.1%, the DJIA added 0.2%, and the Nasdaq gained 0.5%.

On the corporate news front this week, the earnings season peaked, highlighted by reports from GM and Google parent Alphabet. GM impressed the market by beating estimates on both the top and bottom line, though sales in Asia showed some signs of slowing. Alphabet also beat expectations but some analysts fretted over weaker operating margins and rising costs at the search giant. In M&A news, the cloud sector was bolstered by the announcement that Ultimate Software would be acquired by an investor group led by Hellman & Friedman for about $11 billion. Meanwhile, BB&T announced a combination with SunTrust, a $66 billion transaction that would mark the largest banking merger since the financial crisis. Shares of Arconic slid into the end of the week as it further confirmed it will not pursue a sale, instead focusing on costs cuts including a dividend reduction.

MONDAY 2/4
*(EU) EURO ZONE FEB SENTIX INVESTOR CONFIDENCE: -3.7 V -1.3E (lowest since Nov 2014)
ULTI To be acquired by an investor group led by Hellman & Friedman for $331.50/share valued at ~$11B (going private)
*(US) NOV FINAL DURABLE GOODS ORDERS: 0.7% V 1.5%E; DURABLES EX-TRANSPORTATION: -0.4% V 0.0%E
GOOGL Reports Q4 $12.77 v $11.08e, Rev $31.8B (ex $7.4B TAC) v $31.3Be
*(AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED

TUESDAY 2/5
BP.UK Reports Q4 adj Net $3.48B v $2.64Be, Rev $75.7B v$60.7Be
*(UK) JAN SERVICES PMI: 50.1 V 51.0E (30th month of expansion but lowest since July 2016)
(EU) ECB Policymakers reportedly hesitant to change interest rate guidance as it would impact term of next ECB president - press
*(US) JAN ISM NON-MANUFACTURING INDEX: 56.7 V 57.1E
(RU) Reportedly Saudi Arabia and other Persian Gulf nations seeking to formalize partnership with Russia on oil production - press
SNAP Reports Q4 -$0.13 v -$0.08e, Rev $390M v $378Me
7203.JP Toyota reports 9M Net ¥1.42T v ¥2.01T y/y; Op ¥1.94T v ¥1.77T y/y; Rev ¥22.48T v ¥21.80T y/y

WEDNESDAY 2/6
ALO.FR EU rejects Alstom-Siemens rail merger (as speculated)
GM Reports Q4 $1.43 adj v $1.21e, Rev $38.4B v $37.0Be
(US) Q3 Nonfarm Productivity revised lower from 2.3% to 2.2%; Q4 data postponed
(IT) IMF sees Italy growth below 1% in 2019 and 2020; notes government strategy could leave them vulnerabl
*(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED

THURSDAY 2/7
*(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.25%; NOT EXPECTED
SAN.FR Reports Q4 Business EPS €1.10 v €1.06 y/y; Business Net €1.36B v €1.40Be, Rev €9.0B v €9.04Be
*(DE) GERMANY DEC INDUSTRIAL PRODUCTION M/M: -0.4% V 0.8%E; Y/Y: -3.9% V -3.4%E
*(EU) ECB ECONOMIC BULLETIN: Incoming information has surprise to the downside; economic indicators signal a moderation in global growth momentum (in-line with Draghi press conference)
(EU) EU Commission Winter Economic Forecasts: Cuts EU-19 GDP from 1.9% to 1.3%
STI To combine with BB&T in all-stock deal valued at ~$66B
*(UK) BOE LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
*(UK) BANK OF ENGLAND (BOE) FEB MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.75%
TWTR Reports Q4 $0.31 v $0.25e, Rev $909M v $873Me; will discontinue disclosing MAU after Q1'19
(EU) EU's Donald Tusk: No Brexit break through in sight, talks to continue
(US) Pres Trump confirms he will not meet with Xi before the March 1 tariff deadline; may meet later
*(US) DEC CONSUMER CREDIT: $16.6B V $17.0BE
HUAWEI.CN Trump likely to sign order banning Chinese telecom equipment next week - US press
*(AU) RESERVE BANK OF AUSTRALIA (RBA) QUARTERLY STATEMENT ON MONETARY POLICY (SOMP): REITERATES INTEREST RATE OUTLOOK MORE EVENLY BALANCED THAN PREVIOUSLY THOUGHT

FRIDAY 2/8
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES KEY 1-WEEK AUCTION RATE UNCHANGED AT 7.75%; AS EXPECTED
ARNC Reports Q4 $0.33 v $0.30e, Rev $3.47B v $3.41Be; issues strategy update to cut costs, cut dividend, buyback $500M in shares
AMZN Said to reconsider NYC as second headquarters site - press

Risk assets rise on Fed’s dovish turn and as corporate guidance not as bad as feared

TradeTheNews.com Weekly Market Update: Risk assets rise on Fed’s dovish turn and as corporate guidance not as bad as feared
Fri, 01 Feb 2019 16:06 PM EST

Markets opened the week in a bit of a holding pattern ahead of several key catalysts. Earnings season took center stage and some key disappointments on Monday helped push up volatility and pressure risk assets. Some reports suggested industrial corporations have been struggling to contend with slowing growth — particularly in China — along with rising material costs and the strong US dollar, which kept FY19 forecasts on the conservative side and in some cases below analysts' consensus estimates. Some of those concerns abated after Dow component Boeing’s results soared past analyst expectations on Tuesday. Also on Tuesday the UK Parliament voted on various non-binding Brexit amendments which set the stage for what UK officials hope will be another round of negotiations with EU officials in February. Crude and gasoline prices jumped after the US announced sanctions on Venezuela and amid reports US refiners were scrambling to find crude ahead of brutally cold weather forecast to take hold of the middle and eastern parts of the US.

Wednesday saw the defining catalyst of the week when the FOMC tilted decidedly further to the dovish side in its updated policy statement. Language alluding to further rate rises was removed from the statement and Chair Powell affirmed they were prepared to adjust balance sheet normalization in light of future economic and financial developments. US stocks surged, ultimately pushing key indices back towards the 100-day moving average by Friday, while the VIX dropped precipitously. Bond markets rallied sending yields to the lowest levels in weeks as well as pressuring global interest rates. Gold prices firmed and the Greenback softened as many contended the ‘Powell put’ had been resurrected and in all likelihood the Fed was done raising rates. The improving sentiment was further aided by what appear to have been constructive high level US/China trade talks in Washington D.C. Reports even speculated that enough progress had been achieved to allow for the potential of another Trump/Xi summit in early March. Friday’s economic data was the cherry on top for most bulls when stock futures rose again following an ostensibly favorable Dec employment report before the opening bell. Non-farm payrolls came in well above expectations, topping 300K, while wages held steady and the labor force participation rate unexpectedly ticked up for the second straight month. That data was followed by a stronger than expected ISM manufacturing print, which included receding prices paid pressure. For the week, the S&P gained 1.6%, the DJIA added 1.3%, and the Nasdaq rose 1.4%.

In corporate news this week, earnings releases continued apace. Caterpillar opened the week with a miss on both its top and bottom line, while its outlook fell short of expectations. Nvidia cut its guidance, blaming deteriorating macroeconomic conditions, especially in China. Apple shares lifted despite guiding lower than anticipated after reassuring commentary from management. Boeing rocketed higher after a huge earnings beat, and the company forecast it would shatter delivery records in FY19. Facebook surged on an EPS and revenue beat, with CEO Zuckerberg noting the Instagram Stories feature now has 500M daily active users, 25% higher than six months ago. Amazon rolled over during its earnings conference call when the CFO said he would expect investment spending to increase this year.


MONDAY 1/28
(US) NABE Business Conditions survey suggests $1.5T in US tax cuts had little impact on Capex plans: 84% of respondents said they had not changed their investment or hiring plans due to the tax package (vs. 81% in Oct survey) – financial press
VALE5.BR Confirms to suspend dividend and bonuses for executives; to form two independent committees
CAT Reports Q4 $2.55 v $2.98e, Rev $14.3B v $14.4Be
(US) JAN DALLAS FED MANUFACTURING ACTIVITY INDEX: +1.0 V -2.7E
(US) US govt said to be considering release of oil from US Strategic Petroleum Reserve in order to coincide with possible sanctions imposed on Venezuela exports - Platts
WHR Reports Q4 $4.75 v $4.30e, Rev $5.66B v $5.74Be
(CN) China NDRC: To continue improving new energy vehicle (NEV) subsidy structure; to support consumption of green and smart home appliances
*(CN) CHINA PBOC PLANNING OFFSHORE YUAN (CNY) BILL SALE IN FEBRUARY - US PRESS
(CN) China press notes that recently National Development and Reform Commission (NDRC) in conjunction with 10 other govt departments, announced plans to optimize and promote steady growth private consumption

TUESDAY 1/29
SAP.DE Reports Q4 Non-IFRS EPS €1.51 v €1.55e, Non-IFRS Op €2.55B v €2.57Be, Rev €7.43B v €7.23Be
066570.KR Reports FY (KRW) Net 1.47T v 1.87T y/y, Op 2.70T v 2.47T y/y, Rev 61.3T v 61.4T y/y
LMT Reports Q4 $4.39 v $4.39e, Rev $14.4B v $13.8Be
*(US) JAN CONSUMER CONFIDENCE: 120.2 V 124.0E (lowest since July 2017)
AAPL Reports Q1 $4.18 v $4.17e, Rev $84.3B v $84.1Be
VALE CEO: Decided to deactivate all 19 dams similar to the one that burst at Brumadinho (upstream method); estimated impact of the production stoppage is about 40Mt

WEDNESDAY 1/30
SIE.DE Reports Q1 Net €1.12B v €1.01Be, Industrial Business profit €2.07B v €2.15Be, Rev €20.1B v €20.3Be
*(EU) EURO ZONE JAN BUSINESS CLIMATE INDICATOR: 0.69 V 0.77E; CONSUMER CONFIDENCE (FINAL) : -7.9 V -7.9E
(DE) Germany Economy Ministry updates its economic forecasts
BA Reports Q4 $5.48 v $4.52e, Rev $28.3B v $26.7Be
*(DE) GERMANY JAN PRELIMINARY CPI M/M: -0.8% V -0.8%E; Y/Y: 1.4% V 1.6%E
GD Guides initial FY19 $11.60-11.70 v $12.04e, Rev $38.5B v $39.0Be, operating margin 11.7% - earnings call
*(US) DOE CRUDE: +0.9M V +3ME; GASOLINE: -2.2M V +2.5ME; DISTILLATE: -1.1M V -1.5ME
(US) Association of American Railroads weekly rail traffic report for week ending Jan 19th: 543.1K, +6.9% y/y
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; REMOVES REFERENCE TO GRADUAL RATE INCREASES
(MX) Mexico Pres Lopez Obrador (AMLO): would like to see bank fees adjusted to global levels; we're not going to legislate fees banks charge
*(CL) CHILE CENTRAL BANK (BCCH) RAISES OVERNIGHT RATE TARGET BY 25BPS TO 3.00%; AS EXPECTED
MSFT Reports Q2 $1.08 v $1.09e, Rev $32.5B v $32.5Be
FB Reports Q4 $2.38 v $2.17e, Rev $16.9B v $16.4Be
V Reports Q1 $1.30 v $1.25e, Rev $5.50B v $5.40Be; Board authorizes $8.5B in buybacks (3% of market cap)
TSLA Reports Q4 $1.93 v $2.08e, Rev $7.23B v $7.01Be; to ramp Model 3 production to annualized 500K units by Q2 FY20
005930.KR Reports final Q4 (KRW) Net 8.3T v 10.3Te; Op 10.8T v 10.8T prelim; Rev 59.3T v 59.0T prelim

THURSDAY 1/31
ROG.CH Reports FY18 (CHF) Core EPS 18.14 v 17.80e, Core Op 20.5B v 20.3Be, Rev 56.9B v 56.4Be
NOKIA.FI Reports Q4 €0.13 v €0.12e, Op Profit €1.12B v €1.1Be, Rev €6.87B v €6.66Be
RDSA.NL Reports Q4 Basic CCS EPS $0.69 v $0.64e, adj CCS Net $5.81B v $4.40B y/y, Rev $102.2B v $86.9Be
UNA.NL Reports FY18 Core EPS €2.36 v €2.24 y/y, Op €12.5B v €8.8B y/y, Rev €51.0B v €53.7B y/y
DGE.UK Reports H1 adj Op £2.45B v £2.19B y/y, Rev £6.91B v £6.53B y/y; approves incremental share buyback of £660M
*(DE) GERMANY JAN UNEMPLOYMENT CHANGE: -2K V -10KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
(EU) EURO ZONE Q4 ADVANCE GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(IT) ITALY Q4 PRELIMINARY GDP Q/Q: -0.2% V -0.1%E (technical recession); Y/Y: 0.1% V 0.3%E
*(EU) EURO ZONE DEC UNEMPLOYMENT RATE: 7.9% V 7.9%E
DWDP Guides Q1 Rev down mid-single digits %, Op EBITDA down low-teens % - earnings slides
GE Reports Q4 $0.17 v $0.18e, Rev $33.3B v $32.2Be; Reached agrement with US DoJ to settle FIRREA investigation
UPS Reports Q4 $1.94 v $1.91e, Rev $20.0B v $19.9Be
GE Guides FY19 industrial organic revenue to grow low to mid single digit, with cash flow growing substantially in 2020 and 2021 - earnings call
(US) Nevada reports Dec casino gaming Rev $999.7B, +4.1% y/y; Las Vegas strip Rev $566.2M, -0.9% y/y
*(US) NOV NEW HOME SALES: 657K V 570KE
(EU) ECB's Weidmann (Germany): process of ECB policy normalization is likely to take several years; exit should be slow and we shouldn't lose time unnecessarily
(US) Atlanta Fed maintains Q4 GDP forecast at 2.7%, unchanged from 1/22
(CN) President Trump: China's Xi wrote in letter that he hopes both sides will meet each other halfway to reach early trade agreement; Xi wrote in letter that he made arrangements on agricultural product purchases

FRIDAY 2/1
DBK.DE Reports Q4 Net -€425M v -€292Me Pretax -€319M v -€345Me, Rev €5.58B v €5.73Be
*(UK) JAN PMI MANUFACTURING : 52.8 V 53.5E (30th month of expansion)
MRK Reports Q4 $1.04 v $1.03e, Rev $11.0B v $10.9Be
*(EU) EURO ZONE JAN ADVANCE CPI ESTIMATE Y/Y: 1.4% V 1.4%E; CPI CORE Y/Y: 1.1% V 1.0%E
*(US) JAN AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.3%E; Y/Y: 3.2% V 3.2%E; AVERAGE WEEKLY HOURS: 34.5 V 34.5E
*(US) JAN CHANGE IN NONFARM PAYROLLS: +304K V +165KE
*(US) JAN UNEMPLOYMENT RATE: 4.0% V 3.9%E
*(US) JAN FINAL MARKIT MANUFACTURING PMI: 54.9 V 54.9E
*(US) JAN ISM MANUFACTURING: 56.6 V 54.0E ; PRICES PAID: 49.6 V 54.3E (lowest since 2016)

Barrons weekend summary

Barrons weekend summary: positive features on BPY and TW.UK; Says AMZN is unlikely to acquire FDX FT: 
Cover story: “As recently as the end of September, Wall Street analysts had been predicting 10% growth in S&P 500 earnings in 2019. Today, the latest 2019 consensus estimate is just under 6%, compared with a hefty 21% in 2018. Analysts expect S&P 500 component earnings to $170, compared with an estimated $161 for 2018. For the first quarter of 2019, the outlook is dismal”; Amid all this, investors should consider SYK, MSFT, APTV, SAVE, BUD, and BLL to “outsmart a dimming outlook for profits.” 

Features: 1) Positive on BPY: Company, one of the world’s largest property owners, has a powerful strategy and a lofty yield, and comes at a depressed price because of debt, complexity, and an expensive external management structure, as well as exposure to malls—but shrewd management should help it overcome those challenges; 2) The political pressure and a broader public backlash against drug price increases have rattled the pharmaceutical industry, and several companies that have raised rates in past years are backing off, leaving no easy path for investors paying the sector (+ MRK, REGN; +/- ABBV, NVO); 3) Exchange-traded funds pose a serious threat to actively managed mutual funds, but more important than the active versus passive debate is the issue of tax efficiency and fund structure, and the annual—but somewhat hidden—costs for actively managed mutual funds. 

Tech Trader: Positive on AMD: Chip stock could be “the next product-led story that could overcome brewing macro worries,” and the company may be just starting a multiyear roll as it continues to build the foundation for PCs, servers, and graphics cards. 

Trader: “The Institutional View’s Andrew Addison notes that the S&P 500’s cumulative advance/decline line—a measure of the number of stocks trading up versus those trading down—hit a new all-time high last week”—and will follow its A/D to new highs eventually; Even in the age of exchange-traded funds that let people buy diverse portfolios for cheap, there may still be some appetite for buying stocks, according to BAC strategists who’ve seen clients moving to single stocks over ETFs; AMZN is unlikely to acquire FDX, says Barron’s, because of market issues and business issues—FedEx is “a completely different, economically sensitive company.” 

Interview: Steve Romick, who runs the FPA Crescent fund with Mark Landecker and Brian Selmo, is a consummate stock picker, but the fund also holds cash and bonds, reflecting broader views (picks: AIG, JEF, CHTR, CMCSA). 

Profile: Scott Moore, manager of Nuance Mid Cap Value, Nuance Concentrated Value, and Nuance Concentrated Value Long-Short, is a value investor with an intense focus on specific companies and risk control (top 10 holdings: XRAY, SAFM, SNN, TRV, EQC, SJW, RGA, UNM, APH, Edison International 5% Perpetual Preferred). 

Follow-Up: + GLW: Share of the company—which makes optical fiber, glass used in LCD display panels for TVs and computers, and Gorilla glass for cellphones—should have room to run even after recently beating Wall Street expectations. 

European Trader: + Taylor Wimpey: Shares of British homebuilder could provide a solid foundation for a portfolio, offering a double-digit dividend yield, the chance of capital appreciation, and a possible boost from the U.K. government’s favorable homeownership policy. 

Emerging Markets: In Brazil, the unorthodox presidency of Jair Bolsonaro, who took office Jan. 1, is off to a market-friendly start overall, but the market is pricing in reform more or less on the government’s terms—far from a done deal, and a potential problem. 

Commodities: “Venezuela is home to the world’s largest crude-oil reserves, but the sorry state of its oil industry means that U.S. sanctions on the country may have only a limited impact on the global crude market.”

Streetwise: “The U.S. is the most polarized it has been in 40 years (as is the United Kingdom on the issue of the European Union). The two sides are further apart than ever, and centrists are finding themselves having to stretch themselves further and further to cover the distance.”

Barrons weekend summary

Barrons weekend summary: positive feature on DELL 

Cover story: A look at 15 companies whose facilities have the greatest exposure to climate change and extreme weather, according to market intelligence firm Four Twenty Seven; scores are based on operations risk, market risk, and supply chain risk, based on databases of corporate facilities, as well as climate and weather data (cautious on NCLH, WDC, NEE, MU, EMN, ED, STX, MRK, AMAT, PEG, D, RCL, INCY, TROW, BMY). 

Features: 1) Companies with low debt are a good bet for investors facing an environment of slowing economic growth and elevated macro risks; Barron’s screened for companies with attractive valuations and strong returns on assets, and which have more cash than debt (Positive on GILD, KLAC, TER, GNTX); 2) Positive on DELL: Company is one of the most intriguing value plays in the market today because of its 81% stake in VMW, a fast-growing software company, as well as interests in PVTL and SCWX, worth a combined $53B, or about $19B more than Dell’s current market value of $34B; 3) In a year when most tradable assets declined in value, Barron’s had a mixed record of pointing investors toward the winners and warning them away from the losers; bullish picks trailed benchmarks by about a percentage point, but bearish calls were often spot-on. 

Tech Trader: Venture capitalist Marc Andreeson’s claim that software would disrupt large portions of the economy and nearly every industry because of the transformative effects of the cloud’s cheaper computing power has proven correct—and in a tumultuous market, enterprise software firms such as CRM remain a powerful secular investment story. 

Trader: The market has already made back a large portion of its December losses, and while the easy money has been made, valuations suggest more upside, says Citigroup chief U.S. equity strategist Tobias Levkovich. 

Interview: Shawn Kravetz of Esplanade Capital Partners manages $30M and likes what he calls OUCH stocks: out-of-fashion, undiscovered or underfollowed, cheap, and hated, which has recently included gaming stocks (picks: PENN, GDEN, CNTY, AZRE). 

Profile: Dan Davidowitz, lead manager of the Polen Growth fund, one of Barron’s top-ranked sustainable mutual funds, doesn’t focus specifically on ESG investing, but looks for companies with strong financial performance that have the resources to be good stewards and employers (top 10 holdings: MSFT, GOOG, V, FB, ORLY, ADP, ADBE, NKE, SBUX, ZTS). 

Emerging Markets: Cautious on Tencent Holdings: Investors seem unconvinced that the maturing company can maintain the youthful growth spurt that its stock valuation reflects, and U.S. giants may be a better buy after their recent selloff. Economy and Policy: The Chinese economy has done an exemplary job of boosting its labor and capital inputs since Deng Xiaoping began the process of “reform and opening up” in 1978, but the long boom is over: Persistent weaknesses in productivity growth and a looming demographic catastrophe will hobble the country for decades to come.

Commodities: “Palladium started the year on a positive note, with futures prices already up by more than 10% after hefty gains in the last three years. Better yet, analysts are upbeat about the long-term prospects for the metal.”

Streetwise: CEOs in banking, manufacturing, and retail say they have made expensive operational changes to prepare for worst-case trade war and Brexit scenarios—moving production from China to Vietnam and India, or relocating London-based trading and banking operations, which are sunk costs that won’t be reversed, even if 25% tariffs or a hard Brexit don’t come to pass.

Global growth concerns mount; US government agrees to reopen

TradeTheNews.com Weekly Market Update: Global growth concerns mount; US government agrees to reopen
Fri, 25 Jan 2019 16:11 PM EST

Investor sentiment remained buoyed for much of the holiday shortened week despite the US government shutdown looming large. Amid reports of air traffic controller shortages causing airport disruptions on Friday, President Trump agreed to a three week spending bill to reopen the government and to return to the negotiating table on border security funding. Global growth concerns stayed front and center after China GDP data confirmed deceleration for that economy and the IMF took down its world growth outlook. By Thursday the ECB officially acknowledged the growing impediments to economic activity, saying risks had moved to the “downside” from balanced. On Friday, the PBOC launched its first ever perpetual bond after announcing a new bill swap program to provide additional liquidity while US press speculated Fed officials were considering an earlier-than-expected end to the bond portfolio runoff. With the US/China trade talks set to resume next week in Washington conflicting reports surfaced about behind the scenes progress and was at least partially attributed to mid-week stock volatility. Bond yields stayed confined well with in the recent ranges offering further support for stocks with most of the major US indices finding traction above their 50-day moving averages with the middle of Q4 earnings season approaching. The Greenback lost momentum into week’s end resulting in buying pressure in precious metals markets while emerging market stocks exhibited relative strength globally. For the week, the S&P fell 0.3%, and the DJIA and Nasdaq each rose 0.1%.

As earnings season got into high gear, a stream of quarterly reports led corporate headlines this week. Stanley Black and Decker topped on profit and revenue, but its 2019 guidance disappointed, pressuring the home hardware sector early on in the week. United Technologies beat estimates by a wide margin on strength in the aerospace sector. IBM’s quarter came in above consensus, and the tech giant announced solid FY19 guidance. Proctor & Gamble reported its Q2 organic sales rose 4% and saw its sales outlook rise, noting it hasn’t seen a slowdown in the China market. Starbucks beat consensus and reported better than anticipated global comp growth. Xilinx and Lam Research lifted the semis sector after posting solid earnings results and commentary, but they were somewhat undercut by cautious guidance from Intel, which blamed headwinds from geopolitics and slowing smartphone sales.


SUNDAY 1/20
*(CN) CHINA Q4 GDP Q/Q: 1.5% V 1.5%E; Y/Y: 6.4% V 6.4%E

MONDAY 1/21
IMF updates its World economic Outlook (WEO): Cuts Global GDP growth forecast from 3.7% to 3.5% citing no-deal Brexit and trade concerns (three-year low)
*(UK) PM May: Presents ‘plan B’ on Brexit
(UK) Labour leader Corbyn endorsed plans for a second Brexit referendum, and wants the govt to provide MPs the final approval next week on a second vote - Telegraph

TUESDAY 1/22
UBSG.CH Reports Q4 Net $696M v $729Me, adj Pretax $860M v $1.08B y/y; Rev $6.97B v $7.21B y/y (1st quarter reporting in USD); targeting share buyback of $1.0B in 2019
*(UK) NOV AVERAGE WEEKLY EARNINGS 3M/Y: 3.4% V 3.3%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 3.3% V 3.3%E
*(UK) DEC JOBLESS CLAIMS CHANGE: +20.8K V +24.8K PRIOR; CLAIMANT COUNT RATE: 2.8% V 2.8% PRIOR
(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: 27.6 V 43.0E; EXPECTATIONS SURVEY: -15.0 V -18.5E
SWK Reports Q4 $2.11 v $2.11e, Rev $3.60B v $3.60Be
*(US) DEC EXISTING HOME SALES: 4.99M V 5.24ME (lowest level since Nov 2015)
(US) Trump Administration reportedly turned down Chinese offer to send ministers for preparatory trade talks - FT
(CN) White House Adviser Kudlow: earlier trade story about canceled China trade meeting is not true; there was never a planned meeting for junior ministers
IBM Reports Q4 $4.87 v $4.81e, Rev $21.8B v $21.7Be
*(CN) CHINA PBOC CONDUCTS CNY257.5B 1-YEAR TARGETED MEDIUM-TERM LENDING FACILITY (TMLF) AT 3.15% v 3.30% at last MLF (1st use of targeted MLF)
*(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

WEDNESDAY 1/23
UTX Reports Q4 $1.95 v $1.51e, Rev $18.0B v $16.8Be
PG Reports Q2 $1.25 v $1.21e, Rev $17.4B v $17.2Be
(US) JAN RICHMOND FED MANUFACTURING INDEX: -2 V -2E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 19th: 543.1K, +6.9% y/y
TSLA Spokesperson: Tesla reduced Model S, Model X production after dropping 75 Kwh version - press
CP Reports Q4 C$4.55 v C$4.25e, Rev C$2.0B v C$1.94Be
TXN Reports Q4 $1.27 v $1.24e, Rev $3.72B v $3.75Be
(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +21.6K V +18.0KE; UNEMPLOYMENT RATE: 5.0% V 5.1%E (lowest level since May 2011)

THURSDAY 1/24
(FR) FRANCE JAN PRELIMINARY MANUFACTURING PMI: 51.2 V 50.0E (moves back into expansion)
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 49.9 V 51.5E (1st contraction in 49 months and lowest since Nov 2014)
(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 50.5 V 51.4E (67th month of expansion but lowest since Nov 2014)
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.75%; AS EXPECTED
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(CN) China PBoC to introduce bills swap to provide liquidity support to perpetual bonds
FCX Reports Q4 $0.11 v $0.21e, Rev $3.68B v $3.85Be
(EU) ECB’s Draghi: Risks moved to the downside from broadly balanced; Reiterates forward guidance - Prepared remarks
*(US) JAN PRELIMINARY MARKIT MANUFACTURING PMI: 54.9 V 53.5E (2-month high)
*(US) DOE CRUDE: +8.0M V -0.5ME; GASOLINE: +4.1M V +2.5ME; DISTILLATE: -0.6M V +0.5ME
(CN) China PBOC: Banking system liquidity at 'relatively high' level after second stage of RRR cut

FRIDAY 1/25
VOD.UK Reports Q3 Rev £11.0B v £11.8B y/y; Service Organic Rev +0.1% v -0.7%e; affirms outlook
SNP Reports prelim FY18 Net CNY 62.4B v 51.2B y/y, Rev 2.88T v 2.36T y/y
(US) Fed official said to weigh earlier-than-expected end to bond portfolio runoff - financial press
(US) US President Trump former adviser Roger Stone arrested in Florida as part Mueller investigation this morning - statement
(US) FAA reportedly halts some flights into LaGuardia Airport in NYC due to air traffic controller staff shortages – press
(US) Atlanta Fed cuts Q4 GDP forecast to 2.7% from 2.8% prior
*(US) PRES TRUMP: WE HAVE REACHED DEAL TO END SHUTDOWN AND REOPEN FEDERAL GOVT for 3 weeks to allow negotiation on border security funding

Barron’s weekend summary

Barron’s weekend summary: positive on gold miners, select healthcare and office REITs 

Cover story: In the second installment of Barron’s Roundtable, 10 investors discuss the big-picture outlook for the economy, interest rates, financial markets, and concerns about tech disruption and government debt; Picks include EDU, NOC, Recruit Holdings, TRP, ICLN (Abby Joseph Cohen); EEM, GDX, VSGBX (Jeffrey Gundlach); WCN, MTN, SSNC (Henry Ellenbogen); HXL, LIN, Takeda, GOOGL, DWDP (William Priest); CCK, SEE, DLTR, ANIP (Oscar Schafer); Lanxess, PKG, OEC, Dart Group (Meryl Witmer); BATRA, FOX, HRI, MGM, NAV, GFF, ENR (Mario Gabelli); USB, ABBV, DIS, LMT, HTGC (Scott Black); CHL, Michelin, GILD, Roche Holding, Telefonika Deutschland (Rupal Bhansali); CDNS, SNPS, CERN, LIN, DIS (Tood Ahlsten). 

Features: 1) Positive on NEM, GOLD: Newmont’s acquisition of GG and the merger between Barrick Gold and Randgold Securities creates the two largest gold miners in the world, offering hope for one of the worst-performing sectors over the past seven years; 2) Positive on ILMN, TMO, DHR, A, TECH: Five companies are a good way for investors to play the healthcare sector—they are poised to capitalize on medical innovation and demand for care in emerging markets; 3) Positive on KRC, VNO: Though office REITs have faced pressure recently, Kilroy Realty and Vornado Realty Trust have solid prospects amid a U.S. economy that continues to grow, buoyed by strong job numbers and a low unemployment rate. 

Tech Trader: Epic Games’ hugely popular Fortnite videogame has stolen the spotlight from EA and ATVI—both of which have underperforming game pipelines and are down nearly 40% from last year’s highs—and even has NFLX concerned. Trader: The S&P 500’s rally has taken the index back above its 50-day moving average, and now it just has to stay there, says Randy Watts of William O’Neil; Positive on COST: Retailer has a voracious fan base and a renewal rate of more than 90%, and a slump in the shares since September creates a good buying opportunity; With GE shares up 18% year to date and up 34% from a 52-week low, investors seem happy with the company’s pace of change for the time being. 

Profile: Mark McKenna manages the BlackRock Event Driven Equity fund, which profits off mergers, spinoffs, restructurings, management changes, and other events, a strategy that succeeds because it is largely uncorrelated to the market. 

European Trader: Positive on BAE Systems: Shares of the U.K.-based defense system have taken a hit because of ties to Saudi Arabia, but the drop presents an opportunity for investors to buy shares with good prospects for capital gains and dividend growth. 

Emerging Markets: Cautious on Tencent Holdings: Though the company has a billion regular users and just issued a major upgrade to WeChat, investors aren’t convinced it can maintain the growth spurt its valuation reflects. 

Commodities: “Palladium started the year on a positive note, with futures prices up by more than 10% after hefty gains in the last three years,” and analysts remain upbeat about the metal’s long-term prospects. 

Streetwise: Columnist Lawrence Strauss discusses why he doesn’t bet on sports even as the gaming landscape evolves to include online and mobile-phone platforms.

Relief rally continues, fueled by trade hopes and early earnings reports

TradeTheNews.com Weekly Market Update: Relief rally continues, fueled by trade hopes and early earnings reports
Sat, 19 Jan 2019 15:46 PM EST

The 2019 recovery in equity markets continued this week and upside momentum accelerated into the long holiday weekend for the US markets. Major US indices retook their 50-day moving averages, which has been an overhead resistance level for months. Investors looked past the ongoing US government shutdown which saw the vitriol between the President and top Democrats ratcheted up considerably. Choosing instead to focus on reports that US and Chinese officials were exploring new avenues that could ultimately lead to some sort of trade détente. Earnings season commenced in earnest and initial trading has suggested the heavy discounting seen in equity valuations late last year may have already priced in slower earnings growth and rising uncertainties facing corporations in 2019. Oil prices continued to recoup a portion of their Q4 losses, showing particular strength late in the week. Dr copper rose back above its 50-day moving average for the first time since early December. Both commodities were helped by the improving narrative around US/China trade as well as growing speculation Chinese officials will provide further fiscal, and perhaps monetary policy stimulus to stem weakening growth. For the week, the S&P rose 2.9%, the DJIA added 3%, and the Nasdaq gained 2.7%.

This week in corporate news, major banking names reported earnings, with all firms noting sharp reductions in their bond-trading revenues. Morgan Stanley bore the brunt of the drop, as its fixed-income division posted its worst quarterly results in three years. Bank of America reported beats on both top and bottom line, while Goldman saw solid gains in its investing and lending unit. Netflix shares lost a little ground after reporting a Q4 miss on its revenue, but the company noted solid subscriber growth numbers ahead of an anticipated price increase this year. Miner Newmont scooped up its smaller rival Goldcorp in a $10B deal that would form the world’s largest gold producer. Fiserv announced it would acquire First Data in a $22B all-stock deal in one of the largest acquisitions ever in the fintech sector. PG&E filed notice for bankruptcy protection as it potentially faces over $30B in wildfire damage liabilities, though holder Blue Mountain argued the filing decision was too hasty. Tesla announced it would reduce its full-time staff by 7% in order to cut costs to produce the Model 3 more inexpensively.


SUNDAY 1/13
*(CN) CHINA 2018 TRADE BALANCE: $351.8B v $422.5B y/y
*(CN) CHINA DEC TRADE BALANCE: $57.1B V $51.6BE (largest surplus since 2015)
*(CN) CHINA DEC TRADE BALANCE (CNY-TERMS) 394.9B V 345.0BE

MONDAY 1/14
(CN) China Dec vehicle sales y/y: -13% v -13.9% prior; 2018 vehicle sales -2.8% y/y (1st annual drop since 1990) - Industry Association CAAM
GG To combine with Newmont in all-stock deal valued at $10B
PCG Confirms to file for Chapter 11 bankruptcy
C Reports Q4 $1.61 v $1.55e, Rev $17.1B v $17.5Be

TUESDAY 1/15
(IT) Italy Debt Agency (Tesoro) opens book to sell EUR-denominated Mar 2035 BTP bonds via syndicate; guidance seen +20-22bps to mid-swaps
JPM Reports Q4 $1.98 v $2.20e, Managed Rev $26.8B v $26.7Be
DAL Reports Q4 $1.30 v $1.27e, Rev $10.7B v $10.8Be
*(US) JAN EMPIRE MANUFACTURING: 3.9 V 10.0E (Lowest since May 2017)
*(US) DEC PPI FINAL DEMAND M/M: -0.2% V -0.1%E; Y/Y: 2.5% V 2.5%E
NFLX Reportedly raising its prices in the US by 13-18% for 58M subscribers - press
(US) Sen Grassley (R-IA): US Trade Rep Lighthizer told me he saw little progress in last week's talks with China on structural issues and IP protections

WEDNESDAY 1/16
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES ONE-WEEK REPO RATE UNCHANGED AT 24.00%; AS EXPECTED
F Reports prelim Q4 $0.30 v $0.33e, FY18 $1.30 v $1.35e, Rev $160.3B; CFO sees potential for improving metrics in 2019 - DB auto conf
BAC Reports Q4 $0.70 v $0.63e, Rev $22.7B v $22.2Be
FDC To combine with Fiserv for ~$22.74/shr in all stock transaction valued at $22B (0.303 shares per share)
GS Reports Q4 $6.04 v $5.37e, Rev $8.08B v $7.90Be
(US) JAN NAHB HOUSING MARKET INDEX: 58 V 56E
*(US) DOE CRUDE: -2.7M V -2ME; GASOLINE: +7.5M V +2.5ME; DISTILLATE: +3M V +1ME
(US) Atlanta Fed maintains Q4 GDP forecast at 2.8%
(UK) EU officials reportedly considering plans to delay Brexit until 2020 after Germany and France have indicated willingness to extend talks - UK's Times
*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY EXPANDED IN MOST OF THE US, WITH 8 OF 12 DISTRICTS REPORTING MODEST TO MODERATE GROWTH
*(UK) PM MAY SURVIVES 'NO-CONFIDENCE' VOTE IN PARLIAMENT (as expected); Vote 325 for May and 306 against
(US) Association of American Railroads weekly rail traffic report for week ending Jan 12th: 555.1K, +8.4% y/y
CSX Reports Q4 $1.01 v $1.01e, Rev $3.14B v $3.13Be; authorizes $5B share buyback (9% of market cap)
AA Reports Q4 $0.66 v $0.32e, Rev $3.34B v $3.35Be
AAPL Reportedly planning to reducing hiring in some divisions (unclear which yet) as iPhone sales slow - press citing his meeting with employees

THURSDAY 1/17
2330.TW Reports Q4 (NT$) Net 99.9B v 99.1Be; Op 107.1B v 108Be; Rev 289.8B, +4.4% y/y
GLE.FR Announces Q4 performance impacted by disposals and a challenging environment in global capital markets
(HK) Jiayuan International [2768.HK] has declined by over 70%; US dollar denominated (USD) bonds due 2020 trade at record low
*(EU) EURO ZONE DEC FINAL CPI Y/Y: 1.6% V 1.6%E; CPI CORE Y/Y: 1.0% V 1.0%E (Headline CPI back below the ECB target for 1st time in 7 months)
*(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: 17.0 V 9.5E
(CN) Treasury Sec Mnuchin said to support lifting China trade tariffs to break stalemate and calm markets, but Trade Rep Lighthizer is pushing back against easing tariffs - press
NFLX Reports Q4 $0.30 v $0.24e, Rev $4.19B v $4.21Be
RIO.AU Reports Q4 Pilbara Iron Ore production 86.6 Mt, -1% y/y; Shipments 87.4 Mt v Mte v 90.0Mt y/y
(HK) Jiayuan International [2768.HK] rebounds over 30% on today's session amid report of note repayment; Sunshine 100 [2608.HK] rises over 39%
(US) US President Trump said to have told his attorney Cohen to lie to Congress about Moscow tower project - Buzzfeed

FRIDAY 1/18
TSLA Reports prelim Q4 GAAP profit lower q/q; To cut full time positions by 7% along with a production increase aimed at getting Model 3 starting price to $35K - Tesla blog
*(UK) DEC RETAIL SALES (EX AUTO/FUEL) M/M: -1.3% V -0.8%E; Y/Y: 2.6% V 3.8%E
TIF Reports Holiday SSS -2% (two months ended Dec 31st)
SLB Reports Q4 $0.36 v $0.36e, Rev $8.18B v $8.06Be
STT Reports Q4 $1.68 v $1.71e, Rev $2.99B v $2.98Be; Initiated new $350M Expense Savings Program; Cuts senior management stuff by 1.5K positions (15% of total)
*(US) DEC INDUSTRIAL PRODUCTION M/M: 0.3% V 0.2%E; CAPACITY UTILIZATION: 78.7% V 78.5%E
*(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 90.7 V 96.8E (lowest since Oct 2016)
(CN) China reportedly offered a 6-year $1T import boost at Jan talks in order to eliminate US trade imbalances; US trade officials said to be skeptical

Barrons weekend summary

TradeTheNews.com Barrons weekend summary: Positive feature on BMY; positive on airline sector; Speculates Apple should make a big acquisition like Nintendo 
Cover story: Almost none of the members of Barron’s 2019 Roundtable expect a recession this year; they also believe the economy will continue to grow, that Donald Trump and Xi Jinping will strike a trade deal, and that the Fed will apply a light touch to monetary policy—all of which should add up to a good year for stocks. 

Features: 1) Positive on BMY: Investors worry the CELG deal will do little to improve prospects for the drugmakers, but a recent selloff makes Bristol shares inexpensive, and they could rally as the Street warms to the tie-up, or if the company becomes an acquisition target; 2) “The global interest-rate benchmark Libor could be going away after a manipulation scandal that rocked the big banks, but it threatens to cause problems for investors long after it dies”; 3) Investors are becoming more sensitive to risk, and fund managers who invest with an eye toward it could do well; five funds have generated returns and curbed losses in various market cycles (Positive on YACKX, IAUTX, PRBLX, NBGNX, VSEAX); 4) The days of low volatility and central banks working in tandem may be a thing of the past, posing challenges for investors loaded up on risk—but some overlooked funds may be the answer (Positive on MWTRX, PTTAX, SGENX, NEWFX); 5) The annual CES show in Las Vegas featured big themes such as artificial intelligence, smart homes, and robotics, but also lesser-known efforts such as DAL’s rollout of biometrics technology to help passengers navigate airports; 6) Positive on DAL, AAL: Weak pricing updates have stoked fears that a downturn is coming and that airline profits will suffer, but the outlook for the airline sector isn’t as bad as many think, and brave investors will find value. 

Tech Trader: Amid growing fears about iPhone growth, AAPL may need an acquisition to spark its next phase, and while NFLX and TSLA are possible candidates, the best fit might be Nintendo, which has “mountains of cash, gushing profits, beloved brands, loyal customers, and sticky ecosystems of software and services.” 

Trader: The market’s January effect is in full swing, says Chris Harvey of Wells Fargo Securities, and recent events suggest the same mindset that caused last year’s fourth-quarter selloff—rather than a shift in the fundamentals—is helping boost the market now; Positive on ICE, NDAQ, CBOE: A move by nine brokers and market makers to form a new exchange shouldn’t hurt existing players any time soon, though their long-term success hinges on their ability to evolve away from equity trading; Positive on AOS: Milwaukee-based maker of residential and commercial water heaters and boilers is growing faster than peers and targets seven percent topline growth in the future. 

Profile: Kristian Heugh, manager of the Morgan Stanley International Opportunity Portfolio, believes in concentrated long-term investing, and aligns his own financial future with fund shareholders (top 10 holdings: Moncier, TAL, HDFC Bank, DSV, BKNG, Reckitt Benckiser Group, EPAM Systems, Hermes International, Fevertree Drinks, Chocoladefabriken Lindt & Spruengli). 

International Investor: Positive on Legal & General: Firm, which specializes in general insurance, asset management, and mortgages, offers a fat dividend yield at a compelling valuation, and is an opportunity for investors amid Brexit-related problems. 

Emerging Markets: Emerging market stocks in aggregate are trading at a 27% discount to developed market peers on a price-to-forward-earnings basis, which could mean investors should expect some outperformance—though not everybody agrees. 

Commodities: The government shutdown is taking a toll on agricultural markets, preventing farmers and traders from accessing key pieces of U.S. government data they need to market and trade soybeans and other crops. 

Streetwise: Though the public probably won’t benefit from the creation of the new MEMX stock exchange, brokers and trading firms will get something they have long wanted: a seat at the regulatory table.