Tuesday 8/20/19=DJIA -100 NASDAQ -34
Daily Wrap: The market just could not get any traction today. Gold stocks did well today. The bond market also had a very good day. Many Best Stocks Now also had a good day despite the overall weakness in the market. My biggest winners today were RUBI, HD, LOW, SHOP, and TTD.
Trading: I did quite a bit of buying of stocks that I already own today for new clients. Many of them have pulled back to very attractive levels recently. I also found a brand new stock for my Ultra Growth Portfolios.
Seeking Alpha, Stocktwits, Twitter: I was very active on social media today. I sent out tweets on the following stocks: SHOP, RUBI, DXCM, CCI, BIO, BABA, ARWR, APPS, APLS, and AAPL.
Here was the mood of the market as we began a new week.
Futures steady after earlier gains
• Wall Street rose sharply on Monday as a rebound in bond yields continued, easing ongoing recession fears. While the rally continued overnight, stock index futures have now given back gains and are hugging the flatline.
• Traders remain focused on U.S.-China trade relations after a temporary reprieve for Huawei, and on monetary policy, after President Trump said the central bank showed "horrendous lack of vision."
• He also called on the Fed to instigate a rate cut of 1%, as well as a package of QE measures to stimulate the economy and efforts to address dollar strength.
Ask for the moon! Why not?
Trump calls for 'at least' 100-basis point rate cut by Fed
• President Trump says cutting the current Federal Funds rate by at least 1%, "with perhaps quantitative easing as well", "over a fairly short period of time" would make the U.S. "even better".
• Also, "the World Economy would be greatly and quickly enhanced -- good for everyone!" he wrote in a tweet.
• Stocks touch new session highs, with the Nasdaq climbing 1.6%, the S&P 500 up 1.3%, and the Dow rising 1.1%.
• 10-year Treasury falls, lifting yield by 3 basis points to 1.59%; yield had touched as high as 1.628% earlier.
• U.S. Dollar Index increases 0.1% to 98.25.
• The Federal Funds target range currently stands at 2.0%-2.25%.
• The CME FedWatch Tool puts a 46% probability on the Fed cutting its key interest rate by 75 bps to 1.25%-1.50% at its December policy-setting meeting.
• For the September meeting, traders put the probability of a 25-bp cut at 95%, up from 75% a week ago.
• Trump points out that the economy is strong "despite the horrendous lack of vision of Jay Powell and the Fed."
More “Fiscal” stimulus on the way. I told you that Trump will do everything possible to keep the economy growing into the 2020 presidential election.
White House eyes payroll tax cut to tackle slowing economy - Washington Post
• White House officials have been considering a temporary payroll tax cut as a way to offset an economic slowdown, the Washington Post reports, citing three people familiar with the discussions.
• The discussions only began in recent days and officials haven't yet decided on whether to formally push Congress to approve such a cut, they told the newspaper.
• The Obama administration temporarily cut the 6.2% tax used to finance Medicare and Social Security programs to 4.2% to encourage more consumer spending in the last economic downturn.
• The tax was reset back to 6.2% in 2013.
Turmoil in Argentina.
Argentine names plunge amid economic turmoil
• Argentina stocks (ARGT -2.7%) see continued volatility after the country's Treasury Minister resigned over the weekend, saying the government's economic team is in need of "significant renewal."
• The departure is the latest fallout from last surprise primary defeat of Pres. Macri to a left-wing populist ticket.
• Among U.S.-traded Argentina stocks: GGAL -11.2%, BMA -9.3%, EDN -8.9%, LOMA -8.7%, SUPV -7.6%, TGS -7.1%, YPF -6.9%, TEO -6.4%,
Pimco offloads ultra-hot bonds after rally
• Pimco has pared its positions in government debt on fears that a breakthrough in U.S.-China trade talks could trigger a violent selloff, putting an end to one of the biggest fixed income rallies in history.
• Several big Pimco funds controlled by investment chief Dan Ivascyn, including the $128B Pimco Income Fund (PONAX, PIMIX), have therefore been lightening up on their positions.
• "We're a lot more defensive," he declared. "Even if we get a narrow trade agreement [between the U.S. and China] we could see a pretty powerful snapback in yields."
Where an I sign up?
Germany set to sell 0% interest, 30-year bond
• A number of sources report Germany tomorrow will offer €2B of zero-coupon, 30-year paper, with a 0% coupon.
• A buyer at par could thus expect thirty years from now to receive back exactly what he/she paid, and not a dime more. The current yield on German 30-year bonds is -0.04%.
• A zero-coupon, 0% long-term bond is not without precedent - Germany sold 10-year, 0% paper in April 2015. The lack of demand at that sale is sometimes credited with sparking a sizable selloff in bonds, but that was before the ECB moved rates into negative territory and bought up every asset in sight.
Another threat to Netflix? The chart of Netflix is very weak right now.
Apple TV Plus targets $9.99 price, November launch - Bloomberg
• More (and juicier) tidbits dribbling out tonight about the launch of Apple TV Plus (NASDAQ:AAPL), from Bloomberg: The company is looking at a November debut and a $9.99/month price point after a free trial.
• The timing is a critical point amid thinking that Apple wants to race to get its subscription video service out alongside the launch of Disney Plus (NYSE:DIS), set for Nov. 12.
• And pricing is also key, as the streaming market starts to fill up with big spenders competing hard for a rapidly growing universe of cord-cutters and other content consumers. Disney plans to charge $6.99/month for its offering, while the least expensive plans from Netflix (NASDAQ:NFLX) and Amazon Prime (NASDAQ:AMZN) are $8.99/month.
I do not agree!
Investors should look to dividend stocks, Goldman says
• With interest rates falling, Goldman Sachs advises clients to look for high-dividend stocks, which are trading at their cheapest levels in almost 40 years relative to stocks with low yields, wrote Goldman's chief U.S. equity strategist, David Kostin in a note.
• “With the 10-year Treasury yield at just 1.5% and the Fed likely to cut two more times this year, investors should look for opportunities in dividend stocks,” he wrote.
• S&P 500 dividends have increased by 9% in H1 this year; Goldman sees S&P 500 annualized dividend growth of 3.5% during the next 10 years.
• Among stocks in Goldman's dividend growth basket and their 2019 dividend yields: AT&T (T +0.8%) at 5.9%; Kohl's (KSS +4.8%) at 6.1%; AbbVie (ABBV +2.8%) at 6.8%; Seagate Technology (STX +1.7%) at 5.7%; and Simon Property Group (SPG +1.2%) at 5.6%.
Here are two dividend payers that Goldman Sachs should be looking at instead.
Jefferies forecasts Broadcom dividend boost
• Jefferies analyst Mark Lipacis thinks Broadcom (NASDAQ:AVGO) will announce a dividend increase of nearly 30% in early December, noting the company's policy of returning half of the previous year's FCF to shareholders.
• The firm forecasts FCF to reach $10.9B for FY19, which would translate to an annual dividend of $13.72 or $3.43 quarterly, representing a 4.9% yield on current stock prices.
• Lipacis maintains a Buy rating and $324 price target. Broadcom has an Outperform average Sell Side rating.
Strong outlook sends Estee Lauder to new high
• Bank of America Merrill Lynch says Estee Lauder's (EL +11.1%) strong guidance is impressive based on the concerns around Hong Kong, China and U.S. department stores.
• "EL tends to issue an outlook that seems conservative to start the year," notes analyst Olivia Tong.
• Shares of Estee Lauder carved out a new 52-week high of $199.28 earlier in today's session.
• Previously: Estee Lauder EPS beats by $0.10, beats on revenue (Aug. 19)
• Previously: Estee Lauder beat estimates in Q4 (Aug. 1
Wow, JP Morgan thinks that the valuation makes sense. I do no agree.
JPMorgan a believer in Beyond Meat
• JPMorgan takes Beyond Meat (NASDAQ:BYND) to an Overweight rating from Neutral as it points to the potential for the company to acquire new food service customers. The analyst team also makes the case that valuation on Beyond Meat is attractive on a long-term view.
• The firm is also positive on the near term with new chains selling Beyond Burger products. "We thus think the potential for sales to keep beating consensus estimates is legitimate," advises JP.
• JP assigns a price target of $189 to BYND vs. the sell-side average PT of $160.14.
• Shares of Beyond Meat are up 7.15% premarket to $154.84.
Musk getting desperate?
Tesla offers new solar power rentals
• Tesla (NASDAQ:TSLA) is once again offering to rent solar panels to homeowners in a bid to revive its slumping home solar business.
• Rentals will be available in six states - Arizona, California, Connecticut, Massachusetts, New Jersey and New Mexico - starting as low as $50 per month (plus tax) with no upfront costs or long-term contract.
• Once among the largest installers of renewables through SolarCity, the company is now a distant third in U.S. solar power behind SunRun (NASDAQ:RUN) and Vivint Solar (NYSE:VSLR) which deployed 103 and 56 megawatts of new installatio
A huge beat by Home Depot. I did my part!
Home Depot EPS beats by $0.09, misses on revenue
• Home Depot (NYSE:HD): Q2 GAAP EPS of $3.17 beats by $0.09.
• Revenue of $30.84B (+1.2% Y/Y) misses by $140M.
• Shares +0.02% PM.
Arrowhead up 8% on optimism with high cholesterol candidate ARO-ANG3
• Arrowhead Pharmaceuticals (ARWR +8.4%) is up on below-average volume. Shares have rallied 14% since Regeneron announced positive results from a late-stage study of evinacumab in patients with an inherited type of high cholesterol called homozygous familial hypercholesterolemia (HoFH).
• Evinacumab is a fully human monoclonal antibody that binds to a protein called ANGPTL3 that plays a key role in lipoprotein metabolism via inhibiting two enzymes called lipoprotein lipase and endothelial lipase.
• Arrowhead is developing an RNAi therapeutic for high cholesterol/high triglycerides called ARO-ANG3 which is also designed to reduce the production of ANGPTL3. It has Orphan Drug status in the U.S. for HoFH. A Phase 1 study involving healthy volunteers and dyslipidemic patients should wind up later this year.