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Week of Sept 23 2016 Weekly Recap & The Week Ahead

September 26th, 2016

“A person who never made a mistake never tried anything new.” — Albert Einstein

1. OPEC and Non-OPEC Producers Are Close to Reaching an Output Deal — OPEC and non-OPEC producers are close to reaching an output stabilizing deal, Venezuelan President Nicolas Maduro declared, a day after Iran welcomed any move aimed at market stability. OPEC members may even call an extraordinary meeting to discuss oil prices if they reach consensus at an informal gathering in Algiers this month, OPEC Secretary-General Mohammed Barkindo said during a visit to Algeria.
2. U.K. Prime Minister Theresa May Visits Wall Street Over Brexit — UL Prime Minister May landed in New York to consult with some of America’s largest firms over how her country should proceed with Brexit. The prime minister held two gatherings: a roundtable discussion with big investors in the U.K. including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), BlackRock (NYSE:BLK), IBM, and Amazon (NASDAQ:AMZN). She then hosted a reception for about 60 American executives, as well as British businesses that invest in the U.S.
3. S&P Real Estate Sector Draws Interest – the official launch of the S&P 500 real estate sector – the first subdivision to be added since 1999. This sector is made up of 28 components. Below is a chart of the new sector courtesy of WSJ.

4. FOMC Sept Meeting — the Federal Reserve kept interest rates unchanged, but Chairwoman Janet Yellen said one increase is “appropriate” this year barring any major new risks to the economy. Janet Yellen gave a fairly strong indication that a hike will happen before 2016 is over. She said the labor market is strengthening and “risks to the outlook have become roughly balanced.” The FOMC has two more meetings — in November, shortly before the presidential election, and December, where Yellen gives her final post-meeting news conference of the year.
5. AAII sentiment survey — according to this week’s sentiment survey, bullish sentiment fell to 24.83% down from 27.94%. That’s the lowest weekly reading since late June, the 47th straight week that bullish sentiment was below 40%, and the 81st time in the last 82 weeks that we have seen sub-40% readings. Charts below courtesy of BIG.

Bearish sentiment also increased from 35.92% up to 38.28%. This is the first week that bearish sentiment has been higher than both bullish and neutral sentiment as well as the highest weekly reading since the February market lows.

6. Leon Cooperman, legendary trader, Indicted by the SEC on insider trading charges –Billionaire investor Leon Cooperman said he will fight the SEC’s insider trading charges against him after the agency accused his hedge fund, Omega Advisors, of trading Atlas Pipeline Partners (now part of NGLS) on private information six years ago.

The week ahead — Economic data from Econoday.com:

Week of Sept 16 2016 Weekly Recap & The Week Ahead

September 19th, 2016

“OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks. The other are July, January, September, April, November, May, March, June, December, August, and February.” — Mark Twain

1. NYSE Set to Eliminate ‘Rule 48′ — the New York Stock Exchange (NYSE:ICE) is instituting new procedures today that would eliminate “Rule 48,” which allows market makers to delay opening a stock when markets are volatile. Under the changes, NYSE (NYSE:ICE) pre-open price indications will be simplified and adjust for volatility. Values will also be published on both proprietary and other feeds under all market conditions.
2. IEA Cuts Global Oil Demand Forecast — according to the International Energy Agency, global oil demand growth is slowing at a faster pace than first thought. “For 2016, a gain of 1.3M bpd is expected,” the IEA said in its latest market update, equating to a downgrade of 100K bpd from its previous forecast. The prediction will be worrying for oil markets at a time when a delicate rebalancing of supply and demand was thought to be taking place.
3. Walmart Working On a Self-Driving Shopping Cart – Walmart (WMT) claimed that customers would be able to hail an Uber (Private:UBER) like shopping cart that possibly through a smartphone app. Not only has the retailer filed a patent for a cart that has a motor and video cameras, but it would be able to return itself from customers’ cars to the store. The system may also help Walmart (NYSE:WMT) manage inventory by scanning store shelves to ensure products are there.
4. Initial Quantities Of iPhone 7 Plus Sold Out — Apple has confirmed initial quantities of the new iPhone 7 Plus have sold out in all colors. The brand new jet black shade of the smaller iPhone 7 has also sold out around the world. Speculation over strong sales out of the gate and impressive initial reviews sent shares in the tech titan sharply higher.
5. Federal Prosecutors In Early Stages of Wells Fargo(NYSE:WFC) Probe — Federal prosecutors are in the early stages of a Wells Fargo (NYSE:WFC) investigation, WSJ reports. The probe is focusing on figuring out whether higher level executives directed employees to fraudulently open accounts or if poorly-performing employees were just “trying to save their jobs.” Whether prosecutors decide they have a case, or whether that may be criminal or civil is still a ways off.
6. Tesla Using Its Own Vision System Replacing Mobileye (MBLY)– Tesla (NASDAQ:TSLA) will be using its own vision system in upcoming versions of Autopilot. TSLA accused Mobileye (MBLY) “attempted to force Tesla to discontinue this development, pay them more and use their products in future hardware,” .

The week ahead — Economic data from Econoday.com:

Week of Sept 9 2016 Weekly Recap & The Week Ahead

September 12th, 2016

“Move on, understand what happened in the past but do not have an emotional attachment to it.” — unknown

1. G20 Meeting Communique From China — the heads of the world’s top economies declared in a joint communique following a summit in Hangzhou, China that “We are determined to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth,”. G20 leaders also reiterated their support for “international tax cooperation, a transparent financial system, environmentally sustainable growth strategies, energy collaboration, and opposition to protectionism on trade and investment in all its forms.”
2. Chinese Trade Improves in August — China logged stronger-than-expected trade data in August as imports unexpectedly climbed for the first time in nearly two years and the slump in exports abated. In U.S. dollar terms, imports rose 1.5% compared to a year ago, a significant improvement from the 12.5% decline in July, while exports fell 2.8% on-year, following last month’s 4.4% drop. That brought a trade surplus to a seven-month high of $52.05B, slightly below July’s $52.31B.
3. Senate Panel To Probe EpiPen Pricing — the U.S. Senate’s permanent subcommittee on investigations will be the next to probe Mylan’s (NASDAQ:MYL) pricing of the EpiPen, describing the review as a “preliminary inquiry.” Despite heat over the allergy auto-injector’s cost, EpiPen sales recorded a 32% increase in the first three weeks of August compared to the same period of 2015.
4. North Korea Conducts Fifth Nuclear Test — just hours after multiple global agencies detected a magnitude 5.3 earthquake near North Korea’s nuclear test site, Pyongyang declared it had conducted its fifth nuclear test and was now able to produce miniaturized nuclear warheads. South Korea’s vice finance minister said the government will closely monitor financial markets and guard against geopolitical risks linked to the North’s actions.
5. American Association of Individual Investors (AAII) Latest Sentiment Survey – In the latest survey from AAII, bullish sentiment increased from 28.6% up to 29.75%. This week’s sub-30 reading also represents the 45th straight week where bullish sentiment was under 40%. below 30%, it is generally a sign of pessimism.

The latest survey also showed that bearish sentiment declined from 31.52% to 28.48%. With that decline, bearish sentiment is now once again lower than bullish sentiment for the first time in three weeks.

The week ahead — Economic data from Econoday.com:

Week of Aug 26 2016 Weekly Recap & The Week Ahead

September 8th, 2016

Two rules for investing/trading:
Rule number one : most things will prove to be cyclical
Rule number two : some of the greatest opportunities for gain and loss come when other people forget rule number one
— Howard Marks

1. US New Home Sales Race To Near 9-Year High in July — the Commerce Department reported new home sales surged 12.4 percent to a seasonally adjusted annual rate of 654,000 units last month, the highest level since October 2007. Residential construction was a minor drag on economic growth in the second quarter. Housing market strength, marked by rising home values which are boosting household wealth, is helping to buoy consumer spending, cushioning the blow on the economy from a downturn in business spending as well an inventory correction.
2. Delphi Automotive and Mobileye to Partner In Self-Driving Car Push — key driving partnership between Delphi Automotive (NYSE:DLPH) and Mobileye (NYSE:MBLY) to be a leader in Self-Driving Car. The two auto suppliers want to pool investment and execution risk amid the rapidly developing self-driving car push in the industry.
3. Senate Judiciary Committee To Hold Hearing on Ag-Chemical Merger Deals — the U.S. Senate Judiciary Committee plans to hold a hearing in late September to discuss the merger of Dow Chemical (NYSE:DOW) and DuPont (NYSE:DD), and ChemChina’s purchase of Syngenta (NYSE:SYT). Committee Chair Senator Grassley of Iowa has expressed concern that the deals would result in farmers paying more for seeds, pesticides and herbicides, and reduce the companies’ incentive to innovate. However, the committee has no formal say over whether the deals can go forward; the Justice Department is reviewing the Dow-DuPont merger, while the FTC is looking at ChemChina’s purchase of Syngenta.
4. House Republican To Propose New Tax Rule for Internet Commerce — a leading House Republican plans to introduce a proposal over how to tax inter-state Internet transactions. Bob Goodlatte wants the rules affecting a transaction to be based on where the retailer is located but the tax rate to be set by the consumer’s state. For example, an Ohio company selling a pair of trousers to a buyer in Maryland would use Ohio’s regulations for taxing clothing and Maryland’s tax rate. This contrasts with the current rules in which a sale is taxed only if the seller has a physical presence in the shopper’s state.
5. Fed’s Yellen Sees Stronger Case for Interest-Rate Rise — Federal Reserve Chairwoman Janet Yellen said the case for another interest-rate hike is strengthening, sending a strong signal the U.S. central bank is preparing to increase rates as soon as next month. She stated “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months,”.

The week ahead — Economic data from Econoday.com:

Week of Aug 19 2016 Weekly Recap & The Week Ahead

August 22nd, 2016

“Markets are never wrong – opinions often are.” — Jesse Livermore.

1. Ford’s Push for 100% Self-Driving Car By 2021 — a major announcement from Ford that it will develop a 100% autonomous vehicle by 2021 could have far-reaching effects in a variety of sectors. “The first application of the fully autonomous vehicle will be commercial applications, whether it’s ride-hailing or parcel delivery,” Ford (NYSE:F) CEO Mark Fields told Recode. Companies that could be eyeing purchasing self-driving car fleets include FedEx (NYSE:FDX), Amazon (NASDAQ:AMZN), UPS (NYSE:UPS), Domino’s Pizza (NYSE:DPZ), Papa John’s (NASDAQ:PZZA), Avis (NASDAQ:CAR) and Hertz (NYSE:HTZ).
2. Federal Reserve’s July Meeting Minutes — Fed officials were divided over the urgency to raise interest rates in July meeting Minutes. A gauge of the greenback struggled to extend its rally from a three-month low as the chance of a Fed rate increase before the year is out fell back below 50 percent, according to futures prices tracked by Bloomberg. Fed’s Williams wants a rate hike as Williams isn’t a voter on the FOMC this year.
3. U.K. Financial Sector Targets Swiss-Style EU Deal — the City of London has relinquished hopes the U.K. will retain full access to the European single market for goods and services, according to the FT. Officials from the financial sector have concluded that a Norway-style deal is untenable, and are now looking to imitate and build on Switzerland’s deal with the EU, where only some industries have full access to the single market.
4. Dept Of Justice (DOJ) To End Use of Private Prisons — the Justice Department announced plans to phase out its use of privately operated prisons, calling them less safe and a poor substitute for government-run facilities. Shares of the two leading U.S. private prison companies plummeted on the announcement: GEO Group (NYSE:GEO) ended down 39%, while Corrections Corp. of America (NYSE:CXW) sank 35%. The greater impact of the DOJ decision may be its trickle-down effect on state prison systems, which house the majority of U.S. prisoners.

The week ahead — Economic data from Econoday.com:

Week of Aug 12 2016 Weekly Recap & The Week Ahead

August 16th, 2016

“When you come to a fork in the road, take it!” – Yogi Bera

1. Marc Faber Calls For Ugly Stock Market Crash — the legendary bearish investor, Marc Faber, is forecasting a 50% crash in the S&P that would reverse all gains from the past five years. He’s unconvinced by the recent run-up in equities and warned central bank actions would increase volatility despite U.S. stock markets reaching fresh intraday highs and the Nasdaq just posting a new record close.
2. Wall Street Bonuses Expected To Decline — Wall Street bonuses are expected to decline this year for both bankers and traders as new regulations on trading and capital curb profits. Year-end compensation will be down 5-15% for investment bankers that advise on M&A, according to a widely followed report by Johnson Associates. Bankers who help companies raise equity and debt could see their compensation drop as much as 25%, while stock and bond traders could see a fall of as much as 15%.
3. Valeant (NYSE:VRX) Under Criminal Probe For Allegedly Defrauding Insurers Over Philidor — Federal prosecutors are investigating whether Valeant Pharmaceuticals (NYSE:VRX) defrauded insurers by shrouding its ties to the Philidor mail-order pharmacy that boosted sales of its drugs. The relationship between the two has been under scrutiny since last October; However, Dow Jones reports the new criminal probe is based on an unusual legal theory and could lead to criminal charges against former Philidor executives and Valeant as a company.
4. US Retail Sales Flat In July vs. 0.4% Increase Expected — the Commerce Department reported the unchanged reading last month followed an upwardly revised 0.8 percent increase in June. Retail sales in June were previously reported to have increased 0.6 percent. Sales rose 2.3 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales were also unchanged last month after an unrevised 0.5 percent increase in June.
5. China Data Offers More Evidence Of Slowdown — a number of readings on China’s economy decelerated in July, offering further evidence of a slowdown in the mainland. Retail sales and industrial production rose but were below expectations, while fixed asset investment fell to its slowest rate in more than 16 years. The data sharpens the dilemma facing the nation’s policy makers – boost growth with cheap credit that risks undermining financial stability, or curb debt expansion even if that slows the economy.

The week ahead — Economic data from Econoday.com:

Week of Aug 5 2016 Weekly Recap & The Week Ahead

August 8th, 2016

“If you want to catch a wave you need to grab a board and get in the water!” — strategist Stan Salvigsen

1. Japan Cabinet Approves $130 Billion In Fiscal Steps As Part Of Stimulus — Japanese Prime Minister Shinzo Abe’s cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures as part of efforts to revive the flagging economy. The stimulus package ranks among Japan’s biggest since the global financial crisis, and to increase GDP by 1.4%, include childcare benefits, provide $150 handouts to 22M low income people, loan ¥10.7T for infrastructure and provide ¥7.5T for direct fiscal spending.
2. New Zika Cases Prompt Miami Travel Warning — Federal health officials have advised pregnant women to avoid a Miami neighborhood – marking the first time the CDC has warned against travel to any area within the continental U.S. – as a Zika outbreak led to 10 more local cases. CDC Director Tom Frieden said that extensive spraying of insecticides in the area over the past several weeks has not reduced the local population of mosquitoes capable of transmitting the virus.
3. BOE Cuts Key Rate For The First Time In Over Seven Years to 0.25% — the central Bank Of England has made its biggest quarterly downgrade of growth forecasts, reducing expectations for 2017 growth from 2.3 percent to 0.8 percent, citing “substantial uncertainty” after the referendum on the U.K.’s membership of the European Union (EU) in June. The bank also slashed growth forecasts and launched a new monetary policy weapon in the battle to stop a post-Brexit slump in the U.K.
4. US Created 255,000 Jobs In July vs. 180,000 Jobs Expected — the economy added 255,000 positions, according to the Labor Department. The headline unemployment rate held steady at 4.9 percent, though a more encompassing measure that includes those not actively looking for work and those working part-time for economic reasons moved up a notch to 9.7 percent. Economists had been looking for an increase of 180,000 and a decline of the unemployment rate to 4.8 percent.
5. S&P 500 Index Traded To New All-Time Highs — chart below shows the index breaking out to the upside of a reverse head-and-shoulders bottoming formation. In the process it has traced out a bullish “flag” formation in the charts.

The week ahead — Economic data from Econoday.com:

Week of July 30 2016 Weekly Recap & The Week Ahead

August 1st, 2016

..“It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind.”… Jesse Livermore

1. Oil Makes A Series of Lower Highs & Lower Lows So Far This Summer – the commodity has been under steady pressure, with a series of lower highs and lower lows since making its high in May. Normally, prices tend to rally in the early months of the year, then peak and level off around Memorial Day, before a late-year decline post Labor Day. Chart is courtesy of BIG.

2. Terror Attacks Weigh on Europe’s Travel Companies — a series of terrorist attacks in Europe is driving away tourists at the height of the summer rush, casting a pall over hotel chains, airline companies and luxury retailers that are already grappling with Britain’s vote to leave the EU. Germany was the latest country to get hit by a series of violent incidents over the last weekend, including a suicide bombing and stabbing by two Syrian refugees and a German-Iranian teenager that shot and killed nine people at a mall in Munich.
3. Fed Appears More Willing to Lift Interest Rates In September – the Federal Reserve on last Wed. meeting opened the door a crack to lifting interest rates at its next meeting in September. The statement said “Near-term risks to the economic outlook have diminished,”. The Fed kept its benchmark fed-funds rate unchanged in a range between 0.25 and 0.5%.
4. Crude Nears Fresh Bear Market — since crude prices hit a year-high above $52 a barrel in June they have slipped almost 20%, leaving them on the cusp of a new bear market. The latest EIA data unexpectedly showed a 1.7M barrel rise in U.S. crude inventories vs. what had been steady declines in previous weeks. “The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces,” Goldman Sachs said in a research note overnight, but predicted oil prices to remain in the $45-$50 range until mid-2017.
5. US Q2 Prelim GDP 1.2% vs 2.6% Expected –U.S. economic growth sputtered this spring—growing a meager 1.2% in the second quarter—with cautious business investment largely offsetting more robust consumer spending. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 4.2 percent rate. That was the fastest pace since the fourth quarter of 2014. Inventory accumulation by businesses fell $8.1 billion in the second quarter, the first drop since the third quarter of 2011.

The week ahead — Economic data from Econoday.com:

Week of Sept 2 2016 Weekly Recap & The Week Ahead

August 1st, 2016

“The essence of portfolio management is the management of risks, not the management of returns. All good portfolio management begins and ends with this premise.” — Benjamin Graham

1. Singapore Confirms Locally Transmitted Zika Cases — Singapore authorities have identified 41 Zika cases that were transmitted locally, and cautioned that they expect to find more. The cases appear to be the largest single beachhead the virus has made in Asia in the current epidemic, which has also been detected in countries like Bangladesh, Malaysia and the Philippines. Also, China added the U.S. to a list of Zika-infected countries, worrying U.S. exporters, who fear they will be required to fumigate containers destined for Chinese ports. Furthermore, the FDA has issued an Emergency Use Authorization for Roche’s (OTCQX:RHHBY) “Lightmix Zika” test, a quick diagnostic check that allows healthcare professionals to quickly detect the virus.
2. Apple Received $14.5B In Illegal Irish Tax Benefits — EU antitrust regulators have ordered Apple (NASDAQ:AAPL) to pay up to €13B ($14.5B) in taxes to the Irish government after ruling that a special scheme to route profits through the country was illegal state aid. Apple and Ireland said they would appeal the decision.
3. U.S. Banks Log the Most Profitable Quarter Ever — according to figures from SNL Financial and S&P Global Market Intelligence, U.S. banking industry just logged its most profitable quarter ever Despite an increasing regulatory burden and lackluster share performance. Earnings for the three-month period totaled $43.6B, compared to the $43.01B in Q2 of 2015, a 1.4% beat. On a sequential basis, the April-to-June period topped the previous quarter by $4.56B, an 11.7% rise.
4. Job Report – US created 151,000 jobs in August vs. 180,000 jobs expected — Nonfarm payrolls increased just 151,000 for the month as Wall Street economists were expecting the nonfarm payrolls report to show a gain of 180,000 in August, with the unemployment rate ticking down one-tenth to 4.8 percent. Wage growth slowed and the probability of a September hike drops from 27 percent to 12 percent.
5. World Leaders Prepare for G20 Summit — World leaders descended upon Hangzhou for the G20 summit to reaffirm their dedication to global growth. Developing an open financial system, promoting an economic recovery and coordinating monetary policies are among the main topics to be discussed under this year’s theme of “building an innovative, invigorated, interconnected and inclusive world economy.”

The week ahead — Economic data from Econoday.com:

Week of July 22 2016 Weekly Recap & The Week Ahead

July 25th, 2016

“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

1. Turkish Stocks Fall, Currency Rebounds After Failed Coup — the Istanbul 100 Index dropped sharply last week, while the Turkish lira rebounded 3% to 2.9274 vs. the dollar, following Friday’s failed coup attempt that left 290 people dead and over 6,000 arrested. NATO allies have thrown their support behind President Erdogan, but tension is still high over his demand to extradite a U.S.-based cleric whom he blamed for the overthrow attempt.
2. Trump Formally Wins GOP Presidential Nomination — Donald Trump officially clinched the Republican presidential nomination after securing enough delegates during the roll call vote at the GOP convention. “Such a great honor… I will work hard and never let you down! AMERICA FIRST!” Trump wrote on Twitter. The U.S. Federal Election Commission will separately release its June report today, with fundraising details of both the Trump and Clinton campaigns.
3. Florida May Have First Local Zika Case in U.S. — Florida health officials are investigating a possible case of Zika that wasn’t carried back by a traveler. If it’s confirmed, it would be the first evidence the virus has spread to mosquitoes in the continental U.S. All 1,306 American cases up to now have been in people who traveled to Zika-affected regions or who have been infected by their sexual partners.
4. ECB’s Draghi Signals ECB May Boost Stimulus Later This Year — Mario Draghi said the European Central Bank won’t hesitate to add fresh stimulus if needed once it has a clearer picture of the economic impact from the U.K.’s vote to leave the European Union. Draghi spoke after the 25-member Governing Council kept its main refinancing rate at zero, the deposit rate at minus 0.4 percent and asset purchases at around 80 billion euros ($88 billion) a month. Economists foresee the central bank waiting until its next monetary-policy meeting on Sept. 8 to add stimulus, most likely by extending quantitative easing.
5. IMF Calls For Urgent Fiscal Action From G20 –the IMF painted a dark outlook for the global economy, issuing an “urgent” call for the world’s largest economies to roll out more growth-boosting policies and act more aggressively. “I don’t think this is a moment that calls for the kind of coordinated action that occurred during the ‘great recession’ in 2008 and 2009,” said U.S. Treasury Secretary Jacob Lew.

The week ahead — Economic data from Econoday.com:

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