Week of Jan 13 2017 Weekly Recap & The Week Ahead

January 16th, 2017

“A 60:40 allocation to passive long-only equities and bonds has been a great proposition for the last 35 years,” …”We are profoundly worried that this could be a risky allocation over the next 10.” — Sanford C. Bernstein & Company Analysts on Diversification

1. China Forex Reserves Drop To The Lowest Level Since March 2011 — China’s foreign exchange reserves fell for the sixth the consecutive month in December, but held just above the critical $3T level, as authorities stepped in to support the weakening yuan. According to PBOC data, the world’s largest stockpile of foreign currency plunged by $41.08B to $3.01T, the lowest level since March 2011.
2. Self-Driving Cars Are a Focus for Major Auto Makers — self-driving cars are a big theme at the North American International Auto Show, which kicked off late last week in Detroit. Alphabet’s (GOOG, GOOGL) Waymo revealed that it has built all of its sensor hardware in-house and was ready to offer its autonomous-drive technology in “millions” of vehicles at a competitive price. A package of LIDAR sensors and radar, which used to run approximately $75,000 a few years ago, has fallen by more than 90%.
3. Oil Discoveries Seen Recovering After Crashing to 65-Year Low — oil companies found only 3.7 billion barrels of so-called conventional crude in 2016, 14 percent less than the previous year and the lowest amount since 1952, according to Bloomberg. Oil companies reduced spending on exploration to about $40 billion last year from $100 billion in 2014, and could invest as little as $35 billion this year. Lower budgets meant fewer wells drilled: 431 in 2016, or about a third of the activity two years earlier. Total expenditure on exploration could rise to $40 billion to $45 billion in 2018 and further in 2019 if the oil price recovery endures.
4. Apple Sets Its Sights on Hollywood With Plans for Original Content — WSJ reported that Apple is planning to build a significant new business in original television shows and movies, in a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads. Programming would be available to subscribers of Apple Music (NASDAQ:AAPL), which already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming the company is now seeking.
5. Trans Mountain Pipeline Expansion Gets Approval from British Columbia — British Columbia has given the green light to Kinder Morgan’s (NYSE:KMI) plan to nearly triple its Trans Mountain oil pipeline, which runs from Canada’s oil sands through the province to a marine terminal on the Pacific Coast. The federal government approved the $6.8B expansion in November after the National Energy Board recommended moving ahead with the project based on the fulfillment of 157 conditions.
6. Stocks Market May Weaken After Trump Swearing-in Ceremony — based on historical records, the market rally that has followed a new President election victory has already factored in potential upside, leaving the market ripe for at least a near-term downturn. In post-inauguration, stock-market performance since Dwight D. Eisenhower’s first oath of office in 1953 found that the S&P 500 (SPX) index, +0.17% or its predecessor, the index actually tended to strengthen in the two weeks after a new term had begun. However, the one-month return has tended to be negative for the last 11 Republican inaugurations (see charts below)

The week ahead — Economic data from

Week of Jan 6 2017 Weekly Recap & The Week Ahead

January 9th, 2017

“It’s what you learn after you know it all that counts.” — Earl Weaver

1. OPEC Starts Oil Production Cuts — the official start of the deal agreed by OPEC and non-OPEC member countries in November begin in Jan. 1, 2017 to reduce production by almost 1.8M barrels per day. Officials from Oman and Kuwait told local media they’re cutting oil production in January, fulfilling pledges that they and 22 other producers made on Dec. 10.
2. Ford Details EV Plans, Cancels Mexico Plant Project — by canceling plans to build a new $1.6B plant in Mexico, Ford (NYSE:F) said it will invest $700M in Michigan instead. Michigan plant will create 700 new U.S. jobs. CEO Mark Fields said the investment is a “vote of confidence” in the pro-business environment being created by Donald Trump, but stressed Ford didn’t cut a special deal with the President-elect. The automaker was a frequent target of Trump’s election campaign for its “south of the border” manufacturing and payment of low tariffs.
3. Retail Names Warnings Of Weak Christmas Sales from Macy’s and Kohl’s — the retail sector is on watch after Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) cut earnings estimates due to weak holiday sales. Macy’s also added details on its previous announcement to close 100 stores, saying the moves will result in 10K job cuts and a $575M reduction in 2017 sales. Department store names Nordstrom (NYSE:JWN), J.C. Penney (NYSE:JCP), Dillard’s (NYSE:DDS) and Sears Holdings (NASDAQ:SHLD) are all lower premarket, while Coach (NYSE:COH), Michael Kors (NYSE:KORS), Kate Spade (NYSE:KATE), Target (NYSE:TGT) and Ross Stores (NASDAQ:ROST) could also see selling pressure.
4. China’s Central Bank Lifted the Exchange Rate Against the USD – China’s central bank lifted the exchange rate against the greenback by the most since 2005, stepping up efforts to support the currency amid concerns over capital outflows from the world’s second-largest economy. The PBOC set the official midpoint for the yuan at 6.8668 per dollar prior to the market opening, 639 pips or 0.9% firmer.

The week ahead — Economic data from

Week of Dec 30 2016 Weekly Recap & The Week Ahead

January 2nd, 2017

”Money cannot consistently be made trading every day or every week during the year” – Jesse Livermore


1. Tesla to Manufacture Solar Cells in Buffalo NY — as part of a solar partnership first announced in October, Panasonic (OTCPK:PCRFY) and Tesla Motors (NASDAQ:TSLA) have agreed to begin production of photovoltaic cells and modules at a factory in Buffalo, New York. The two companies plan to start manufacturing in the summer of 2017 and increase to one gigawatt of module production by 2019.
2. Qualcomm Hit With Antitrust Fine In South Korea — the Korea Fair Trade Commission has fined Qualcomm (NASDAQ:QCOM) 1.03T won ($854M) for what it called unfair business practices in patent licensing and modem chip sales. Qualcomm said it would challenge the antitrust regulator’s decision in the Seoul High Court. The fine is the largest ever levied in South Korea.
3. Ford to Triple Size of Autonomous Test Fleet — it’s been three years since Ford (NYSE:F) launched its fleet of 10 first-generation Fusion Hybrid autonomous research vehicles, which have seen advancements like driving on snow-covered roads and operating in the dark without headlights. Joining the team in 2017 will be 20 next-generation autos (featuring new hardware, electrical controls and sensor technology) that will triple the Blue Oval’s stable of self-driving vehicles.
4. Twitter Starts 360-Degree Live Video Streaming — Twitter (NYSE:TWTR) has joined YouTube (GOOG, GOOGL), Facebook (NASDAQ:FB) and others in offering panoramic live views, marking a greater use of real-time video that is part of a broader trend of immersive experiences and virtual reality. Twitter (NYSE:TWTR) has joined YouTube (GOOGL), Facebook (NASDAQ:FB) and others in offering panoramic live views, but not everyone can post for now. Live 360-degree videos will be marked with a “LIVE 360″ badge and users can change the angle of their view by either moving their phones or swiping their screens.
5. GOP Readies Swift Obamacare Repeal With No Replacement Ready – the first major act of the unified Republican government in 2017 will be a vote in Congress to begin tearing down Obamacare. However, the Republicans and President-elect Donald Trump have no agreement thus far on how to replace coverage for about 20 million people who gained insurance under the health-care law. Republicans are debating how long to delay implementing the repeal. Aides involved in the deliberations said some parts of the law may be ended quickly, such as its regulations affecting insurer health plans and businesses. Other pieces may be maintained for up to three or four years, such as insurance subsidies and the Medicaid expansion. Some parts of the law may never be repealed, such as the provision letting people under age 26 remain on a parent’s plan.

The week ahead — Economic data from

Week of Dec 23 2016 Weekly Recap & The Week Ahead

December 27th, 2016

“The Market Can Remain Irrational Longer Than You Can Remain Solvent” — John Maynard Keynes

1. Scotland’s Plan to Stay in European Single Market — in trying to avoid the “national disaster” of a “hard Brexit,” Scotland will publish proposals for how it can remain in the European single market after Britain leaves the EU. The plans are expected to outline new and substantial powers for the devolved parliament in Edinburgh, allowing for free movement of goods, services and people.
2. IMF Leadership in Question as Lagarde Found Guilty — IMF Managing Director Christine Lagarde won’t face punishment and will keep her job, despite being convicted of negligence charges relating to a state payment made during her time as French finance minister in 2008. The court ruled that Lagarde failed to contest a €400M award to billionaire tycoon Bernard Tapie, but decided against sentencing owing to her preoccupation with the 2008-09 financial crisis and strong international reputation.
3. Apple in Talks to Manufacture in India — Apple is discussing with the Indian government the possibility of manufacturing its products in the country. In a letter last month, the company outlined its plans and sought financial incentives to move ahead, the WSJ reported. Making goods such as iPhones locally would allow Apple (NASDAQ:AAPL) to open its own stores in India, helping build its brand in a country where it has just a tiny slice of less than 5% – of a booming smartphone market.
4. Italy/World Oldest Bank Monte dei Paschi Moves Closer to Collapse — Italy’s parliament has approved a government request for a 20 billion euro rescue loan to prop up the country’s ailing banking sector, including Banca Monte dei Paschi di Siena SpA. Italy third biggest Italian lender after it warned that it would run out of cash in 4 months. Monte dei Paschi had previously said that its 10.6 billion euro ($11.5 billion) liquidity position could last for 11 months.
5. U.S. GDP Growth Revised Up to 3.5% Rate in Third Quarter — the Commerce Department said the economy expanded at a seasonally adjusted 3.5% annualized rate in the third quarter. This is above the government’s prior estimate of 3.2% due to upward revisions in consumer spending and business investment. Consumer spending, which added 2 percentage points to GDP, rose at a 3% annual rate, up from the prior estimate of 2.8%. Business investments rose at a revised 1.4% rate, much stronger than the previous estimate of a 0.1% rise. The trade sector was a big positive for growth in the third quarter. Exports spiked 10% helped by a temporary boom in U.S. soybean shipments.
6. Deutsche Bank, Credit Suisse Settle U.S. Subprime Probes — the DOJ has reached a $7.2B provisional deal with Deutsche Bank (NYSE:DB) and a $5.3B agreement in principle with Credit Suisse (NYSE:CS). Barclays (NYSE:BCS) is also feeling the heat from U.S. federal prosecutors after the British lender balked at paying the amount the government sought in negotiations.
7. S&P 500 Index Broke-out of 2-Year Trading Range — chart below shows the S&P 500 Index broke out of a 2-year consolidation. Courtesy of BIG.

The week ahead — Economic data from

Week of Dec 16 2016 Weekly Recap & The Week Ahead

December 19th, 2016

“Buy when others are despondently selling and sell when others are greedily buying” — Mark Mobius

1. Saudis Eye Deeper Cuts While Non-OPEC Joins Deal – OPEC and non-OPEC producers signed their first deal to cut output since 2001. Led by Russia, non-OPEC nations agreed to reduce production by 558K barrels per day, falling just short of the 600K target envisioned by OPEC. But following the meeting in Vienna, the Saudi Energy minister Khalid Al-Falih said everyone is committed to making sure the levels are enforced.
2. Bill Gates Pushes Green Energy on Call With Trump, While Building $1 Billion Fund — Bill Gates starts a new investment fund he and other billionaires started called Breakthrough Energy Ventures. Gates has tapped his vast network of technology and energy bigwigs to raise more than $1 billion that will be at the fund’s disposal, starting in 2017. The goal is to increase investments in energy-related technologies that will reduce, if not eliminate, greenhouse gas emissions. Investors in Breakthrough Energy Ventures include Jeff Bezos, chief executive officer of Inc., Richard Branson, the founder of Virgin Group Ltd., and Michael Bloomberg, the founder of Bloomberg LP. There are also prominent venture capitalists like John Doerr and Vinod Khosla, who have pumped a lot of money into green tech companies in the past.
3. Fed Raises Rates, Boosts Outlook for Borrowing Costs in 2017 Bloomberg, Federal Reserve officials raised interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017, saying inflation expectations have increased “considerably” and suggesting the labor market is tightening. New projections show central bankers expect three quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September, based on median estimates.
4. U.S. Challenges China’s Grain Import Quotas at WTO — the U.S. has launched a challenge to China’s use of tariff-rate quotas for rice, wheat and corn at the WTO, charging that China’s administration of the program breached its WTO commitments and hurt U.S. farm exports. The tariff-rate quotas for rice, wheat and corn were worth $7B-plus in 2015, and China would have imported up to an additional $3.5B of the crops last year if the quotas had been fully used, the Office of the U.S. Trade Representative said. It was the second challenge to China’s agricultural policies by the U.S. Trade Representative since September and the latest in an escalating number of trade disputes between the two countries.
5. Euro Currency Recorded a 13-year Low Versus the USD — the euro recorded a 13-year low, just above $101.51, but has remained above $1.0. The US rate premium is also consolidating. The US two-year premium rose this week above 200 bp for the first time since 2000. The Euro/USD is targeted to reach par in early 2017. Below is the weekly chart going back to Dec 2011 to Dec 16 2016.

The week ahead — Economic data from

Week of Dec 9 2016 Weekly Recap & The Week Ahead

December 12th, 2016

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” – Bruce Kovner

1. Renzi Quits as Italy Referendum Defeat Deepens Europe’s Turmoil – with virtually all the ballots counted, 59.6% of Italians voted to block the Prime Minister’s constitutional reform plans in a closely-watched referendum. Among the biggest winners of the referendum is the anti-establishment 5 Star Movement, which has called for a nonbinding plebiscite on Italy’s euro membership and might favor printing a parallel currency. The nation has already seen 63 governments in just 70 years.
2. AT&T Starts 5G Business Customer Trial — AT&T (NYSE:T) has started testing the technology inside of one of Intel’s (NASDAQ:INTC) offices in Austin, TX. The company is particularly interested in how the new network will stand up to streaming 4K video, but will also test a wide variety of uses, including VPN, VoIP, “unified communications applications” and good old internet access. However, AT&T stated that 5G and its multi-gigabit cellular speeds probably won’t hit the market until 2020.
3. China’s Forex Reserves Fell to New Lows — another blow to China’s foreign exchange reserves fell for a fifth straight month in November, tumbling $69.06B to $3.052T – the lowest since March 2011. Authorities struggled to shore up the sliding yuan in the face of a relentlessly rising dollar. Adding to pressure on the currency, President-elect Trump has vowed to label China a currency manipulator on his first day in office and threatened to impose huge tariffs on Chinese goods.
4. Moody’s Affirms Italy’s Rating at ‘Baa2′, Revises Outlook To Negative — Moody’s Investors Service affirmed Italy at Baa2 but revised down the outlook on the country’s rating to negative from stable after Italian voters rejected a referendum on constitutional changes over the weekend. Moody’s cited “the slow and halting progress on economic and fiscal reform in Italy, the prospects for which have diminished further following the ‘no’ vote in Sunday’s constitutional referendum” as the main driver behind its decision. The ratings agency also expressed concerns that Italy may be exposed to “unforeseen shocks” for an extended period due to its tepid growth outlook and the recent deterioration in its fiscal position.
5. U.K. Parliament Backs Timetable To Trigger Article 50 (process of leaving the EU) – British MPs have voted in favor of government plans to trigger Article 50 by March 31, 2017, meaning Britain will formally initiate the process of leaving the EU before that date. However, both the government and opposition said the motion didn’t affect a case at the Supreme Court over whether the government has the authority to start negotiations without legislation in parliament.
6. Microsoft Chip Pact with Qualcomm Expands Efforts in Mobile — Microsoft is working with Qualcomm to spawn a new breed of tablets and notebooks that promise to diversify the software giant’s tech base and give the chip maker access to new markets. The partnership will result in an update of Windows 10 (NASDAQ:MSFT) that runs on a chip in Qualcomm’s (NASDAQ:QCOM) widely used Snapdragon line of processors, the first Windows 10-Snapdragon pairing.
7. S&P 500 Index Overbought — chart below shows the S&P500 weekly is overbought. Pullback in the index is expected.

The week ahead — Economic data from

Week of Dec 2 2016 Weekly Recap & The Week Ahead

December 1st, 2016

“Letting losses run is the most serious mistake made by most investors.” – William O’Neil

1. Trump Responds to Recount Efforts — the Clinton campaign is backing Green Party candidate Jill Stein’s efforts to take a fresh look at voting results, stating it planned be a participant in recounts in Wisconsin, Pennsylvania, and Michigan. President-elect Donald Trump called the decision a “scam” and “nothing would change,” claiming he won the popular vote as well as the electoral college if “the millions of people who voted illegally” were deducted.
2. Cyber Monday 2016 Looks to Break Records – U.S. online sales gained momentum on Cyber Monday and looked set to surpass initial expectations by hitting a record $3.39B, which would mark the nation’s largest online sales day in history.
3. OPEC Reaches Deal to Cut Oil Production — OPEC group has agreed to lower output by 1.2 million barrels a day to 32.5 million barrels per day. If OPEC can agree on a cut, it will be its first since 2008. The production deal will last six months, according to Iraqi Oil Minister Jabbar al-Luaibi. He hopes the accord will push prices to over $55 per barrel. However, such an outcome would spur U.S. shale companies to produce more, eventually adding more supply to global markets and weighing on oil prices again.
4. EU Plans €5B Defense Fund — the EU plans to boost its defense budget to its highest level in over a decade, setting up a €5B fund and sending a signal to Donald Trump that it intends to pay for its own security. “This is not about an EU army,” European Commission Vice President Jyrki Katainen said. “We face multiplying threats and we must act.”
5. Iran Threaten U.S. Extension of Sanctions Violates Nuclear Deal — threatening to retaliate, Iran has called the U.S. Senate’s vote to extend the Iran Sanctions Act (ISA) for another decade a violation of the 2015 deal with six major powers that curbed its nuclear program. ISA was first adopted in 1996 to punish investments in Iran’s energy industry and deter its pursuit of nuclear weapons.
6. BP Approves $9B “Mad Dog” Project, First in Gulf of Mexico Since 2010 Spill — BP is planning to press ahead with a major deep water project in the Gulf of Mexico – the latest evidence oil companies are tentatively wading back into big-ticket projects amid signs a two-year crude market slump is ending. BP said it reduced the cost of phase 2 development of Mad Dog – as the project is known – to $9B, compared with an initial $20B estimate in 2013.
7. S&P500 Broken-Out — the SPX has broken out to the upside after a nearly two-year consolidation (See chart below).

The week ahead — Economic data from

Week of Nov 25 2016 Weekly Recap & The Week Ahead

November 28th, 2016

“Don’t look for the needle in the haystack. Just buy the haystack.” – John Bogle, founder of Vanguard

1. China and Russia Push For Free Trade in Asia-Pacific — China and Russia will push for a free-trade area in the Asia-Pacific region, China’s foreign ministry said after leaders of the two nations met during the APEC summit in Peru. The call for free trade in the region comes amid a protectionist mood in the U.S. following the election of Donald Trump, who is threatening to derail the TPP deal that excludes the world’s second-biggest economy
2. FDA Lifts Partial Clinical Hold on AstraZeneca H&N studies — U.S. officials have given a green light for two clinical trials testing AstraZeneca’s (NYSE:AZN) immunotherapy drug durvalumab in head and neck cancer to resume recruiting patients, lifting a hold imposed following cases of bleeding. News of the partial hold on the trials, imposed at the end of last month, had spooked investors since durvalumab is AstraZeneca’s most important pipeline medicine.
3. Stock Averages Hit Records & Dow Tops 19K — the four major U.S. stock market benchmarks again hit all-time highs, with the Dow closing above 19,000 for the first time, the S&P 500 also finishing above 2,200 for the first time, and the Russell 2000 ending higher for the 13th straight day. Treasury prices were little changed with the two-year yield finishing flat at 1.08% while the yield on the benchmark 10-year note slipped a basis point to 2.31%.
4. Black Friday Continues To Move Online — Black Friday isn’t as big as it once was due to earlier holiday deal hysteria, but it’s still a very significant day for retail. The National Retail Federation expects 137.4M Americans to hit stores at some point over the weekend, and around 74% of that population already went shopping on Thanksgiving Day. That’s about on par with last year’s figures as online sales become a bigger part of the holiday.

Week of Nov 18 2016 Weekly Recap & The Week Ahead

November 21st, 2016

“We want to perceive ourselves as winners, but successful traders are always focusing on their losses” – Peter Borish”

1. Trump Administration: Priebus, Bannon Given Key Roles — U.S. President-elect Donald Trump has made the first official appointments to his White House administration after a shake-up that saw VP-elect Mike Pence replace Chris Christie as the head of his transition team. RNC Chairman Reince Priebus has been selected as Chief of Staff, while Trump’s campaign Chairman and former head of news outlet Breitbart, Steve Bannon, will lead as Chief Strategist and Senior Counsel.
2. US Retail Sales Rose 0.8% in Oct vs. 0.6% Increase Expected — the Commerce Department reported retail sales increased 0.8 percent last month, also boosted by demand for building materials likely as households cleaned up and made repairs in the wake of Hurricane Matthew. The latest figure shows households bought motor vehicles and a range of other goods. September retail sales were revised up to show a 1.0 percent increase instead of the previously reported 0.6 percent rise. The combined September and October sales gain was the largest two-month rise since early 2014.
3. Buffett Buys Airlines In Latest 3Q Holdings — After famously shunning the airline industry, his holding company Berkshire Hathaway (BRK.A, BRK.B) invested $1.2B in American Airlines (NASDAQ:AAL), Delta (NYSE:DAL), United Continental (NYSE:UAL) and Southwest (NYSE:LUV). The Sage of Omaha did not share his rationale behind the trades, but he has long been bearish on the sector.
4. SEC approves Consolidated Audit Trail – despite years of delays, the SEC has finally approved a plan to introduce a vast surveillance system to oversee trading on the $23T U.S. stock market, in response to the 2010 “Flash Crash.” The creation of a Consolidated Audit Trail will establish a regulatory central database and monitor every trade order, execution, modification and cancellation in real-time.
5. AAII’s Weekly Bullish Sentiment — After a record 54 weeks where the AAII’s weekly bullish sentiment reading was below 40%, the Sentiment surged above 40% for the first time since October 2015 after Trump was elected.

The bearish sentiment also declined this week, falling from 29.3% down to 26.6%.

The week ahead — Economic data from

Week of Nov 11 2016 Weekly Recap & The Week Ahead

November 14th, 2016

“Men who can be right and sit tight are uncommon” — Jesse Livermore

1. China Names New Finance Chief — China has appointed a new finance minister, Xiao Jie, as concerns grow over the country’s rising fiscal deficits and mounting debt, which has jumped to more than 250% of GDP. WSJ reports China is also considering allowing Wall Street banks to run their own investment-banking businesses on the mainland, dropping a requirement for U.S. banks to operate as minority partners in local joint ventures.
2. Commerce Department Opens New Chinese Steel Probe — the U.S. Commerce Department has formally opened a China steel tariff-dodging probe. A petition filed in September by ArcelorMittal (MT), Nucor (NYSE:NUE), AK Steel (NYSE:AKS) and U.S. Steel (NYSE:X) alleged that Chinese steelmakers shipped metal to Vietnam, made enough changes to it that they could then classify it as Vietnamese, and then shipped it to the U.S. under lower tariffs.
3. S&P Affirms U.S. Credit Ratings — Standard & Poor’s has given the all-clear to America’s credit rating, affirming it at ‘AA+’ with a stable outlook. “We assume the longstanding institutional strengths and robust checks and balances of the U.S. will support policy execution in a Trump administration, despite the president-elect’s lack of experience in public office,” the ratings agency said. Moody’s announced in September the election wouldn’t impact its ‘AAA’ rating for the U.S.
4. Trump Claims Victory Amid Roiling Markets — Donald Trump has been elected the 45th president of the United States, beating his opponent Hillary Clinton as well as a raft of pre-election polls. “Now it’s time for America to bind the wounds of division,” he said in a victory speech, calling on all Americans to come together. The GOP also kept control of both the Senate and the House, giving the party greater freedom to implement its policy platform.
— Donald Trump’s victory sets the stage for a series of radical policy reversals both at home and abroad. –
Banks: the core assumption the Fed will raise interest rates soon and follow with further gradual hikes over coming years will be called into question. Trump wants to spur bank lending by dismantling Dodd-Frank regulations.
Auto Sector & Trade: the industry has bet billions of dollars on globalized production and higher fuel efficiency, but Trump has been talking about moves to effectively re-shore jobs to the United States and has called climate change a hoax. The president-elect also opposes the Trans-Pacific Partnership and called for fundamental changes to the NAFTA pact with Mexico and Canada. Related stocks: TM -3.9%, F -1.1%, GM -0.4%, FCAU -0.4%, HMC, OTCPK:NSANY, OTCPK:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXF, TTM
Healthcare: the weakest sector this year may become winners as Obamacare reforms are set to be “repealed and replaced” and major legislation Clinton proposed is unlikely to be imposed on drugmakers. While Trump hasn’t set out a comprehensive alternative to the Affordable Care Act (which may see 22M Americans lose current coverage), he said he’ll encourage competition between markets in different states. Related tickers: MYL +5.8%, NVS +3.4%, SNY +2.9%, AZN +2.4%, GSK +1.9%, PFE +1.8%, CELG +1%, ABBV, MRK, BMY, LLY, JNJ, ABT, ACET, ZTS, BIIB, REGN, UNH, AET, ANTM, CI, HUM, WCG, CNC, MOH, GTS, HQY
Defense: Trump has called for eliminating the sequester on defense spending and initiate a military buildup, boosting troop levels and the number of ships and aircraft. He seeks to fully offset the cost through “common sense reforms that eliminate government waste and budget gimmicks” and from additional payments from countries where the U.S. has military bases, including Germany, Saudi Arabia and Japan. Related tickers: LMT +4.5%, RTN +1.7%, GD, BA, NOC, OA, HII, HON, UTX, ITT, TXT, LLL, COL
Tax Policy: Trump also call for a repatriation holiday of 10% for the more than two trillion dollars in corporate cash parked overseas is now closer to reality. He has also promised the biggest tax revolution since Ronald Reagan, pledging that no American business would pay more than 15% of their profits in tax, compared with a current maximum of 35%. Top 10 U.S. companies with cash overseas: MSFT -2.1%, GE -1.5%, AAPL -1.7%, PFE +4.5%, IBM -1.1%, MRK +1.5%, GOOG -2.2%, GOOGL -1.7%, CSCO -2.2%, JNJ, XOM
Immigration: One of the biggest beneficiaries might be Mexican cement company Cemex (NYSE:CX). Trump has campaigned to build a wall on the Mexican border and immediately begin the process of deporting illegal immigrants with criminal records. Private prison and detention center stocks are also getting a big boost.

The week ahead — Economic data from

January 2017
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