Wednesday 9/11/19=DJIA +227 NASDAQ +85
Minnesota Oct. 15-16-Bill will be at the Radisson Bleu-Mall of America. Call or visit our website to make an appointment.
A very nice rebound in the market today!
Daily Wrap: It was a very nice rebound in the market today. The firing of John Bolton seemed to turn the market around from its vicious sell-off on Monday. Oil has also backed off since that event. I will leave it at that. Once again, this recent sell-off has presented us with yet another buying opportunity.
Every sell off in the leadership stocks over the last ten-plus years has been a buying opportunity. It does not look any different this time around.
Trading: I was once again busy adding to several positions for new clients today. A few of my current positions like Square still make me nervous. ROKU, AAPL, and SHOP were my best gainers today. The mobile payment stocks did not participate in today’s market rally. Boeing had an outstanding day.
Tweets: I was active on Social Media today. I sent out tweets on RH, NFLX, IRDM, IJR, GME, FNKO, BA, ATHM, AKG, and AAPL.
Dem Debate on Thursday
This was the mood of the market as we got ready to start a new day of trading.
- U.S. stock index futures are slightly in the green, up 0.1%, after China exempted 16 American products from higher tariffs ahead of trade talks planned for next month.
- The exemption will include whey and fish meal, which are fed to animals, as well as some lubricants, starting Sept. 17.
- Hopes for a September rebound are also getting a boost on expectations for fresh monetary stimulus from the European Central Bank tomorrow and the Federal Reserve next week.
- U.S. crude oil futures (USO -0.6%) suddenly turn lower after Pres. Trump said he fired national security advisor John Bolton; WTI -0.2% to $57.74/bbl, Brent +0.3% to $62.80/bbl.
- Bolton's ouster "dials back fears of an attack on Iran," Again Capital analyst John Kilduff tells CNBC.
- But the energy sector (XLE +1.9%) remains at the front of the pack again today, as crude oil prices compile their fifth straight day of gains after Iraq said it would cut production to comply with OPEC.
- Including today's gain, the energy sector is up 4.1% this week and 6.3% YTD, ceding its position as the year's worst performing sector to health care.
- At 16.1x forward 12-month earnings, the sector is trading at a 21% discount to its 10-year average, according to FactSet, and the group's dividend yield is 4.11%, which exceeds all U.S. Treasury yields by a large margin.
- Japan +0.96%.
- Hong Kong +1.78%.
- China -0.41%.
- India +0.23%.
- London +0.83%.
- Paris +0.27%.
- Frankfurt +0.27%.
PPI a little hot.
- August Producer Price Index: +0.1% M/M in-line with consensus, +0.2% prior.
- +1.8% Y/Y in-line with consensus, +1.7% prior.
- Core PPI +0.3% M/M vs. +0.2% consensus, -0.1% prior.
- +2.3% Y/Y vs. +2.2% consensus, +2.1% prior.
- Busy on Twitter this morning, the president calls Jay Powell and his fellow central bankers "boneheads," and urges them to get interest rates down to "ZERO, or less." Then, he says, "we" (does he mean the "Royal we") could refinance debt, while lengthening the term.
The market seemed to like Apple’s new products. The stock had a very good day.
- Trade-in program: Apple (AAPL +1.2%) launches a trade-in program in many countries that offers monthly payments. Note that trade-in programs saved iPhone sales in recent quarters, helping to offset the weakness in China.
- iPhone 11 Pro: As expected, the iPhone 11 Pro has three rear cameras and two OLED panel sizes: 5.8-inch and 6.5-inch Pro Max. Apple calls the display Super Retina XDR, which boasts 2M to 1 contrast, 1200 nits of brightness, and 15% better energy efficiency. The surgical-grade stainless steel and glass 11 Pro comes in four colors.
- The 11 Pro also contains the new A13 Bionic processor. The CPU can perform 1T operations per second. The 7nm transistors offer high performance with low power. The 11 Pro offers up to 4 hours more battery life and the Pro Max up to 5 hours more. Apple is including a fast-charge 18w adapter in the box.
- Cameras: New wide angle camera, tele, and ultrawide (120-degree field) on back with three optical zoom settings. New Deep Fusion camera feature coming in upcoming software update uses machine learning to merge images (including 8 taken before you hit the shutter) to create the best image. All three cameras shoot 4K60.
- The iPhone 11 Pro starts at $999 and the Pro Max at $1099. Pre-orders start Friday at 5 AM PT with shipping on September 20.
- iPhone 11: The $699 iPhone XR successor (standard iPhone 11) has a 6.1-inch display, dual rear cameras including an ultra-wide (120-degree field of view), an improved TrueDepth front camera for 12MP shots, and comes in six colors. The details line up with prior media reports.
- Other picture features include the semantic rendering, which detects images or people and optimizes accordingly, and a Night Mode feature for low-light settings (similar to what's found in Google's Pixel models). The phones get a quick-launch video recording and slow-motion video.
- The iPhone 11 packs the new A13 Bionic processor, which Apple calls the fastest CPU and GPU in a smartphone. Battery life is 1 hour longer than the XR. The XR offers 25 hours for wireless talk and 15-16 hours for internet and video.
- The $699 pricing is $50 less than the XR.
- Apple Watch: Watch Series 5 has an always-on display that dims then comes back to full brightness with a tap, 18-hour battery life, built-in compass using the Maps app, and an international emergency calling feature on cellular models even without an iPhone. Cases include 100% recycled aluminum, two titanium models, and the expected ceramic version.
- Series 5 GPS models start at $399 and 4G at $499. Orders start today with in-store availability on September 20. Pricing for the Series 3 now drops to $199.
- iPad: Apple will launch a new 9.7-inch seventh-gen model with the forthcoming iPadOS, a 10.2-inch retina display, Apple Pencil support, smart connector, and a faster A10 Fusion processor (ARM-based SoC manufactured by TSMC). The enclosure is made out of 100% recycled aluminum for the first time. Prices start at $329 and orders start today with shipping starting at the end of the month.
- Apple TV Plus: The first shows launch on November 1 in over 100 countries with new shows coming every month. The service will cost $4.99/month for the whole family, less than the rumored $9.99. One year of Apple TV Plus will be included with new Apple device purchases. Netflix (NFLX -2.8%) shares are dipping after the announcement.
- Apple Arcade: Apple Arcade will cost $4.99/month for the whole family after a one-month free trial (matching earlier reports), becomes available September 19 in over 150 countries, and will include a new Frogger game (among others) at the launch.
- Apple's fall event will kick off at 1 PM ET with a webcast available here. The company will also likely announce pricing for its Apple TV Plus and Arcade services and unveil the new Watch model.
- Suppliers to watch during the event: LG Display (LPL +0.3%), Lumentum (LITE -0.5%), Finisar (FNSR +0.6%), II-VI (IIVI +1.9%), Skyworks (SWKS -0.7%), Cirrus Logic (CRUS -0.1%), Qualcomm (QCOM +0.7%), Broadcom (AVGO +0.3%), Qorvo (QRVO +0.2%), TSMC (TSM +0.2%).
Another Amazon probe.
- FTC investigators have started interviewing small businesses that sell on Amazon's (NASDAQ:AMZN) e-commerce platform, according to Bloomberg sources.
- The team includes several attorneys and at least one economist.
- Questions have included how much revenue the small businesses receive from Amazon sales versus other e-commerce platforms, suggesting investigators are skeptical that viable AMZN alternatives exist.
- Saudi Aramco (ARMCO) is planning a two-part listing on the Saudi domestic stock market to ensure that the exchange can easily absorb the massive IPO, WSJ reports.
- Aramco is considering a 1% offering of the company this year and another 1% next year on the local market, with the aim of eventually listing 5% in an effort to raise billions of dollars to diversify the oil-dependent Saudi economy, according to the report.
- JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS) and Saudi-owned National Commercial Bank are expected to be the lead underwriters on the listing, according to the report.
- Crown Prince bin Salman has indicated he wants a $2T valuation for the company, although analysts peg the value at closer to $1.5T; even at the lower estimate, a 1% sale likely would raise $15B from Saudi and international investors.
- The IPO will commence "very soon," Aramco President and CEO Amin Nasser said today at the World Energy Congress in Abu Dhabi, adding that the company was prepared to list in multiple markets.
Citi like Gold.
- Citigroup says gold prices may rally to a record $2,000-plus per ounce in the next two years, citing rising risks of a global recession and the potential for the Federal Reserve to reduce interest rates to zero.
- "We expect spot gold prices to trade stronger for longer, possibly breaching US$2,000 an ounce and posting new cyclical highs at some point in the next year or two," the firm writes.
- "For now, the U.S. consumer and potential growth story is holding up," Citi says, but "we remain more concerned about market signals - three-month to 10-year yield curve inversion - and leading indicators that are weakening at the fastest pace since the Great Recession."
- Comex gold, which hit a six-year high earlier this month, now -0.6% at $1,501.10/oz.
As expected, California goes after Uber and Lyft.
- Reshaping the gig economy, California lawmakers have approved a landmark bill that requires companies like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) to treat contract workers as employees.
- Some estimates suggest costs for those firms would increase by 30% as a result, while opponents of the bill say it will hurt those people who want to work flexible hours.
- The bill, known as Assembly Bill 5, may also influence other states. A coalition of labor groups is pushing similar legislation in New York, and bills in Washington State and Oregon could see renewed momentum.
DeBlasio goes after Chipotle.
- The city of New York files a lawsuit against Chipotle (CMG -5%) for violations of the Fair Workweek Law.
- "Every worker has the RIGHT to a predictable schedule and a pathway to full-time employment. New York City will not tolerate any businesses that violate that right," tweets the Office of the Mayor.
- The mayor's office is seeking at least $1M in restitution for workers plus civil penalties and future compliance.
- It's the first action against a corporate-owned restaurant chain under the law.
- In general, the "fair" workweek laws are a bigger deal in NYC than other places due to the cost and time factor for many employees to get to work.
The company is hemorrhaging money.
- Uber's (NYSE:UBER) announced layoffs include 170 people from the product team and 265 from the engineering team.
- Sources tell TechCrunch the cuts have no impact on Uber Eats or Freight.
- The cuts represent about 8% of Uber's workforce. Some jobs were eliminated due to overlapping or duplicate roles, and others due to performance.
- Uber shares are up 3% to $33.20.
- planes in August, taking its YTD total to 500.
The stock broke out to new highs.
- RH (NYSE:RH): Q2 Non-GAAP EPS of $3.20 beats by $0.50; GAAP EPS of $2.86 beats by $0.22.
- Revenue of $706.51M (+10.3% Y/Y) beats by $8.78M.
- Shares +4.2%.
I personally have a small short position in Gamestop. I shorted it at $10 per share.
- GameStop (NYSE:GME): Q2 Non-GAAP EPS of -$0.32 misses by $0.10; GAAP EPS of -$4.14 misses by $3.96.
- Revenue of $1.29B (-14.0% Y/Y) misses by $50M.
- Shares -16.3%.
- Shares of GameStop (NYSE:GME) slump after Q2 sales fall short of expectations.
- New hardware sales fell 41.1% during the quarter with consumers waiting on the next generation console launches in 2020. New software sales were down 5.3% as growth in Nintendo Switch software titles were more than offset by weaker title launches across other consoles. Accessories sales decreased 9.5%.
- Looking ahead, GameStop sees a comp sales decline in the low teens vs. -10% to -5% prior view and -9.0% consensus. EPS of $1.15 to $1.30 is expected vs. $1.61 consensus.
- GME -10.75% AH to $4.75.
- Previously: GameStop EPS misses by $0.10, misses on revenue (Sept. 10)
KLA-Tencor was our featured stock of the day.
- UBS analyst Timothy Arcuri maintains a Buy rating on KLA (NASDAQ:KLAC) and raises the target from $150 to $165.
- Arcuri cites the excitement around the analyst day scheduled for September 17.
- The analyst says the key is where the long-term financial model will land. UBS sees EPS of $16+ is possible for 2022.
- KLAC shares are up 0.3% pre-market to $149.17. The company has an Outperform average Sell Side rating.