Monday 6/24/19=DJIA +26 NASDAQ -22
All in all, it was a very quiet day in the market today. We are in-between earnings seasons and the market is looking ahead to President Trump’s big meeting with President Xi, later this week.
I begin a new week with 728 B+ or better ranked stocks from my database of 5,146 stocks, etfs and mutual funds. This indicates a very healthy market. The B+ or better list very select list. This proprietary ranking is based on a combination of value, momentum, and safety. If a valuation cannot be calculated, then it is based solely on momentum and safety. In addition to this, I begin a new week with 338 A+ or better Momentum stocks. I check this list every day.
Here was the mood of the market as we started a new week.
Stocks set to test all-time highs
• U.S. equity index futures are pointing to gains of 0.3% at the open, meaning the DJIA (NYSEARCA:DIA) will only need to gain another 70 points during today’s session to top its record close of 26,828 posted last October.
• While investors continue to bet on central bank support and a breakthrough in U.S.-China trade talks at this week’s G20 summit, a profit warning from Daimler overnight weighed on European equities, with the Euro Stoxx 50 (NYSEARCA:FEZ) off by 0.3%.
• Meanwhile, crude topped $58/bbl as the U.S. prepared to announce “major additional sanctions on Iran,” while gold resumed its rally, pushing further past $1,400.
Stocks start little changed ahead of this week’s G-20
• Wall Street treads water in the absence of new developments in the Middle East while investors wait for any trade updates prior to the G-20 summit at the end of this week; Dow +0.2%, Nasdaq +0.1%, S&P flat.
• The White House is expected to announce new sanctions on Iran today, which is helping oil prices, but Pres. Trump said last week that new sanctions were coming; WTI crude +0.3% to $57.59/bbl.
• European markets are mostly lower after a disappointing German business survey, with U.K.’s FTSE +0.1% but France’s CAC -0.1% and Germany’s DAX -0.5%; in Asia, Japan’s Nikkei +0.1% and China’s Shanghai Composite +0.2%.
• In the U.S., most S&P 500 sectors show little change, with information technology (+0.4%) and consumer staples (+0.3%) outperforming while health care (-0.4%) and materials (-0.3%) underperform.
• U.S. Treasury prices edge higher, pushing the two-year and 10-year yields down 3 bps each to 1.75% and 2.04%, respectively; U.S. Dollar Index -0.1% to 96.13.
A prediction by Barron’s
Dow 30,000 by 2021 – Barron’s
• The S&P 500 is up 18% YTD and powering toward its biggest first half since 1997. For bulls, the next question is “how long until Dow 30,000?” writes Jack Hough in Barron’s.
• “In early 2017, when the DJIA hit 20,000, Barron’s wrote in a cover story that 30,000 by 2025 looked likely, assuming a cut to corporate taxes, and no trade war. A 50% gain over nine years is 4.6% a year, compounded. Investors got the tax cut, but also the early salvos of a trade war. Yet the Dow has already climbed by one-third since our cover story. That’s a rip-roaring 12.7% a year. It doesn’t count dividends.”
• “The real wild card is interest rates, or more specifically, how investors respond to them. Futures markets show near-certainty of the Fed returning to rate cuts this year. Looking at seven initial rate cuts since Ronald Reagan, the market has returned a median of 14% over the following year.”
• “U.S. stocks trade at 17 times forward earnings estimates, about where they were in early 2017. Assuming they hold that valuation, the earnings outlook implies potential for yearly gains of 5% or so from here.”
• “Where does that leave us on the Dow? So long as we can agree that precise targets are folly, we’ll drop our date but stick with our 4% to 5% yearly return. From here, that means 30,000 by the end of 2021.”
Getting tougher on Iran
‘Major’ sanctions against Iran coming Monday
• President Trump will impose “major additional sanctions on Iran on Monday” in an effort to prevent Tehran from obtaining nuclear weapons, after calling off military strikes against the Islamic Republic over concerns about the loss of life.
• “We want to be proportionate,” he told reporters, adding that military action was still a possibility following the downing of a U.S surveillance drone.
• Oil surged last week on concern that tensions between Washington and Tehran could disrupt the flow of oil, with WTI crude jumping more than 9% and Brent advancing by 5%.
Bitcoin flies past $11K
• Along with the truly bizarre state of global interest rates, the rebounding crypto market is shaping up to be the largest finance-related story of 2019.
• On watch Thursday and Friday for re-crossing the $10K threshold, Bitcoin (BTC-USD) overnight not only blew through that level, but took out $11K as well. It’s currently sitting at $11,065 – nearly tripling in price YTD.
• Alongside, Ether (ETH-USD) crossed over $300 for the first time in about a year. Others rallying include Litecoin (LTC-USD), Ripple (XRP-USD), and Bitcoin Cash (BCH-USD).
Sounds like a good idea to me!
• Kashkari wanted a 50 bp rate cut at Fed meeting
• Mapping out a strategy to re-set inflation expectations to the Federal Reserve’s 2% target, Minneapolis Fed President Neel Kashkari made a case for cutting the federal funds rate to 1.75%-2.0% at the Federal Open Market Committee meeting this week.
• He also wanted the central bank to commit to not raising rates until core inflation reached that target on a sustained basis.
• “Minneapolis Fed economists estimate that long-run inflation expectations are currently around 1.7%,” Kashkari wrote in a message on the Minneapolis Fed’s website. “While that may seem like a small miss from our 2% target, it means we will have less ammunition to respond to a future downturn because real interest rates, net of inflation, drive economic activity.”
• Kashkari isn’t a voting member of the FOMC this year. He dissented against rate increases in March, June, and December of 2017 and supported the January 2019 decision to pause rate increases.
• Previously: St. Louis Fed’s Bullard states his case for a rate cut (June 21)
Another good idea! Youth are getting hooked on this crap!
San Francisco set to ban e-cigs
• San Francisco is expected to become the first city in the U.S. to ban e-cigarettes this week, a move that will likely pit the city against one of its fastest-growing startups: Juul Labs (JUUL).
• The ban won’t be permanent, however, and will ultimately depend on an FDA assessment on the health risks of e-cigarettes, which is likely begin in 2022 after manufacturers submit their products for a health review.
• San Francisco’s decision won’t affect the sale of cigarettes, which will remain legal.
Good, make it even tougher!
Tough road seen for Juul
• Former FDA Commissioner Scott Gottlieb thinks Juul (JUUL) is in a tough bind as high-level government scrutiny ramps up.
• “They have so much historical youth use with their product. I don’t know how Juul gets through an application process,” stated Gottlieb.
• Even if the long-term plan at Juul is to sell a kid-proof product, Gottlieb noted that the documents to be reviewed by the FDA will reflect the marketing practices and selling trends from the last couple of years.
• Behind the scenes, Altria (MO -4.3%) holds a key 35% stake in Juul.
Stocks almost always come back to valuation. BYND is beyond ridiculous!
Slow thaw at Beyond Meat
• Beyond Meat (BYND -3%) dips below $160 for the first time in a week as the post-IPO buying frenzy finally takes a breather.
• Share of Beyond Meat still trade with an implied market cap of $9.1B, which works out to about 43X the company’s FY19 sales projection. For the full year, Beyond Meat expects adjusted EBITDA to be around break-even.
The Michaels Companies prices $500M senior notes due 2027
• Michaels Stores, Inc., an indirect wholly owned subsidiary of The Michaels Companies (NASDAQ:MIK) has priced $500M of 8.00% Senior Notes due July 15, 2027.
• The company to pay interest semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on January 15, 2020.
• The Issuer intends to use the net proceeds from the offering, together with cash on hand, to redeem its existing 5.875% Senior Subordinated Notes due 2020.
• The offering is expected to close on or about July 8.
Teledoc was my featured stock of the day on my Best Stocks Now Radio Show today.
TDOC ‘very close’ to UnitedHealth deal – Piper
• Piper Jaffray’s Sean Wieland praises Teledoc (NYSE:TDOC) after meeting with CEO Jason Gorevic.
• Wieland praises the Y/Y bookings growth “across all products and channels.”
• The analyst says the CFO search is over, and a UnitedHealth deal is “very close” with announcements expected soon on both matters.
• Piper reiterates an Overweight rating and $86 price target.
• TDOC shares are up 0.4% to $63.04.
• Teledoc has a Buy average Sell Side rating.
This report provides general information and is not an offer to buy or sell any security. It is the sole opinion of the author, Bill Gunderson. Bill is Gunderson is President of Gunderson Capital Mgt. Inc. located at 2072 Willbrook Lane, Mount Pleasant, South Carolina, 29466. (855)611-BEST.
Bill Gunderson is also the editor of the weekly Best Stocks Now Newsletter. Information in this newsletter comes from independent sources believed to be reliable, but accuracy is not guaranteed.
Bill Gunderson or Gunderson Capital Mgt. Inc. had not verified the accuracy of the information published by independent sources.