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Bank EPS Lifted Ahead Of The Fed Rate Hike

The S&P 500 Financials sector has been a focus sector for the markets in recent weeks. This past week, the Federal Reserve Board increased the target range for the federal funds rate. Earnings for banks and other companies in the Financials sector are particularly sensitive to higher interest rates. In addition, this sector has recorded the largest increase in value (+22.2%) of all 11 sectors in the S&P 500 since the start of the fourth quarter (September 30). Given these developments, have analysts been increasing their 2017 EPS estimates for banks and other companies in the S&P 500 Financials sector over the past few months?

The answer is yes. In terms of EPS estimate revisions, 38 of the 63 companies (60%) in the…

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The Obamacare Post-Trump Dilemma

If you're like me, we're all wondering what is going to occur with ACA (Obamacare) once Donald Trump takes office and the charts from Healthcare (XLV) and Biotech (XBI) certainly reflect the concern.  With the proposed 21st Century Cures Act, due for Senate passage this week, be the $5Billion dollar "game changer"  the sector is waiting for...........or will we be waiting until Congress replaces the unpopular components of Obamacare to see an impact in stock price?

Repealing or replacing Obamacare is fraught with at least six major issues, but perhaps the most significant one is a lack of decisiveness within the Republican party itself. What would Obamacare be replaced with, and how would that change be implemented?

Interestingly, there are at least…

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Admin

The Future Is Here With Amazon Go

Imagine shopping with no lines and no check out?  All you need is a smart phone with the AMZN app and you're ready to go.  Welcome to Amazon Go.  The first Amazon Go store in Seattle sells ready-to-eat meals, snacks and locally-prepared bakery items but just imagine if this came to your local grocer?  Amazing what technology will bring.

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Admin

Amazon By the Numbers: Cyber Weekend Spending

Some may say that technical analysis is 'bunk' but it's just that which caused me to short AMZN.  Now you can say they're #1 when it comes to online sales but my question is, has their growth hit a plateau?  Trading at 170x p/e, anything is possible. (click chart to enlarge).  Talk is that MSFT is bringing the smart home to Windows. The feature will allow Cortana to be summoned on any Windows 10 PC lock screen.  It's expected to appear in Win 10 updates starting in 2017 and this software-only feature could trump AMZN Echo and GOOG Home due to the obvious convenience of screen access.  From an investor point of view, I would definitely take some off the table at this point and invest it in banks, industrials and insurers.  But let's take a look at sales.  No growth in…

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Admin

Thanksgiving Weekend E-Commerce Roundup

When Americans started celebrating Thanksgiving in the 19th century, it was about cherishing the blessings of the year, particularly the year’s harvest. These days however, it appears as if many people spend the holiday thinking about what they might need rather than what they already have.

Over the past few years, Thanksgiving weekend has grown to become a huge shopping extravaganza both on- and offline. Retailers try to outdo each other in offering the best Black Friday / Cyber Monday deals and consumers willingly jump at the chance to kick off their holiday shopping and snap up some bargains.

Not surprisingly, this year’s Thanksgiving weekend saw online shopping records shattered once again. According to…

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Admin

Bonds Haven't Even Begun To Price In Trumpflation

Since the election the financial markets have been trying to price in “Trumpflation.” This is the idea that the combination of infrastructure spending, tax cuts, rising deficits, immigration curbs and protectionist policies could reverse the disinflationary trends we have witnessed over the past few decades and more dramatically since the financial crisis. The selloff in the bond market amid surging interest rates might be the single most important piece of evidence in this regard.

Over the summer I noted we were likely witnessing the final blow-off stage of the bond bull market (see this and this). Since then the long bond has fallen nearly 15% leading many pundits to conclude it has already begun pricing in…

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Admin

Retail Earnings Estimates Now That Black Friday Is Here

With “Black Friday” here, the performance of retailers will be a focus for the markets. As of today, which retailers in the S&P 500 are projected to see the highest and lowest year-over-year earnings growth for the fourth quarter? Which retailers in the index have seen the largest upward and downward revisions to earnings estimates for Q4 over the past two months?

In terms of year-over-year earnings growth, seven of the 13 retail sub-industries in the S&P 500 are predicted to report growth in earnings for the fourth quarter, led by the Internet & Direct Marketing Retail (23.6%), Food Distributors (14.3%), and Home Improvement Retail (13.8%) sub-industries. On the other hand, six of the 13 retail sub-industries in the S&P 500 are predicted to report declines in earnings, led by the Home Furnishing Retail (-16.0%), Hypermarkets & Super Centers (-13.5%), and Food Retail (-9.8%) sub-industries.

Revisions…

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Admin

Big Tech Lost A Boatload When Trump Killed TPP

The giant international trade deal known as the Trans-Pacific Partnership died last week. It was supposed to be the largest regional trade deal in history.

The TPP itself was a massive 30-chapter lawbook that would have freed access to markets for things like car manufacturing, data storage, online commerce, intellectual property and medicines.

Hoards of technology and media companies supported the trade deal. Google…

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Admin

Industries Most At Risk In A Trade War With China

The U.S. and global economy has reacted in mixed fashion since the election of Donald Trump as 45th President of the United States. One of the most significant potential fallouts though, is a trade war with China. Trump has spoken out against the current situation with China on a great number of occasions. Now he is in a position to potentially see through his pledges, some fear the emergence of a tit-for-tat trade war between the two countries. As the infographic below shows, the industries most endangered by any such war would be transportation and tech.…

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Admin

Repeal Of Obamacare Not A Simple Task

As the market partied this week, believing that Obamacare would be smashed and their premiums would revert back to lower levels, I sat and chuckled.  You're already spending money you haven't received in terms of lower premiums but there's always a price. Always. Already the "costs" of repealing ACA are being calculated and surprise surprise, it won't be free or easy.  In fact QZ ponders it will cost "us" Billions but let's examine the possibilities.  From…

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Admin

Is The Stock Market Rally Over?

As technicians battle over whether our "hated" seven year rally still has legs, I continue to return and ask myself "has anything truly blown up?".  I do personally believe the US Dollar will continue it strength and that will continue to put pressure on commodities, dividend payers and discretionary.  Financials and insurers will push higher.  Can the rest of the boat survive?  Are earnings guidance showing a 'rosey' picture of the future?  Will Trump win?  Too many unknowns for me.  This post, using monthly charts, brings me back to earth.  While I have no need to catch the absolute top, it gives me specific areas which need to be defined.  I remain cautious and yes, have numerous short positions as well as…

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Admin

Energy Of The Future. Demand By 2050

When it comes to energy, there is one matter everyone agrees on. For the near future, at least, the world will need more of it—and how it is produced and used will be a critical factor in the future of the global economy, geopolitics, and the environment. With that in mind, McKinsey took a hard look at the data, modeling energy demand from the bottom up, by country, sector, and fuel mix, with an analysis of current conditions, historical data, and country-level assessments. On this basis, McKinsey’s Global Energy Insights team has put together a description of the global energy landscape to 2050.

It is important to remember that this is a business-as-usual scenario. That is, it does not anticipate big…

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Admin

Election Day in the United States is, at last, almost here. Similar to any other major event, investors will be looking to what effect the presidential election will have on the stock market for the rest of the year and beyond. One way we can predict this movement is to analyze the historical price performance of the S&P 500 and the Dow Jones Industrial Average during past election cycles. Here we'll examine:

  • How does the stock market perform in the final two months of presidential election years?
  • What effect does the elected political party have on stock market performance in the years following the election?
  • Which sectors are the top performers during election years and post-election?


S&P 500 and Dow Jones Industrial Average Underperform during Election Years

During presidential election years going back to 1928, the S&P 500 index has been in the positive 73% of the time (16 out of 22…

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Admin

Google's investment arm has quietly invested in Snapchat

Alphabet's investment arm, Google Capital, has quietly made an investment in Snapchat parent company, Snap Inc. 

The investment was only revealed after Google Capital rebranded itself to CapitalG on Friday and added the Snapchat logo to its portfolio page. Business Insider confirmed that it is a portfolio company of the growth equity arm of Alphabet. Snap Inc did not immediately respond to comment. 

The two companies have had a cozy relationship. In 2013, it was rumored that Google once tried to buy Snapchat for $4 billion after it turned down a Facebook acquisition. To this day, Snapchat remains one of the…

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Admin

Get ready for the era of augmented humanity.

Global research powerhouse IDC says the next era of IT transformation will marry technology with biology to take the human mind and body to unprecedented levels of mental and physical capability.

That was one of the top worldwide IT predictions for 2017 as outlined Tuesday by Frank Gens, senior vice-president and chief analyst at IDC.

Gens dubbed IDC’s augmented humanity concept its new “fourth platform.” Over the past few years, IDC has been laying out its view of a “third platform” consisting of cloud, mobile, social and big data/analytics. As described by Gens on Tuesday, the fourth platform of augmented humanity pushes the current wearable…

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Admin

The constant flow of goods from Asia to the United States was briefly interrupted last month after Hanjin, the South Korean shipping line, filed for bankruptcy, stranding several dozen of its cargo ships on the high seas.

It was a moment that made literal the stagnation of globalization.

The growth of trade among nations is among the most consequential and controversial economic developments of recent decades. Yet despite the noisy debates, which have reached new heights during this presidential campaign, it is a little-noticed fact that trade is no longer…

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Admin

The Market Deteriorates Further. 'Bout Time

The stock market continues to weaken, as evidenced by these ETF charts.    If you zero in on a sector you wish to short, I would bear in mind that ETFs are comprised of market leaders.  I would look for names "outside" of the ETF components; consider them leaders and you want the weaklings to short.

The reasons for weakness are numerous. 

Consider the election weight (a Trump win would weigh on equities but Clinton weighs on pharma pricing).  Then there are flat-to-dropping sales.  Of course the USD movement (up will weigh on commodities and large caps with overseas exposure).  Then there's those who feel we are already at or above maximum value and they're not buying here.  They're hedged, short some and long financials ahead of the Fed rate hike.  Then there's that Fed hike itself.  High dividend is flushing down the toilet (SDY) in September.  Overseas weakness with…

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Admin

India Will Have Seven Megacities by 2030 Says The UN

The noise and bustle on the streets of India’s biggest cities is a defining characteristic of a country that’s home to over a billion people.

Every year, millions more leave their traditional homes in rural towns and villages and head into urban areas. The United Nations World Cities Report 2016 says 9.6 million people will move to New Delhi by 2030.

To qualify as a megacity under the UN definition, an urban area must have a population of 10 million people. The UN takes into account urban sprawl and measures populations beyond official city limits. On these criteria, India currently has five megacities.

1. New Delhi The capital city has a population of 26.5 million people…

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Admin

Remembering The Impetus Of Irrational Exuberance

In December of 1996, Greenspan was clearly beginning to worry about the economic fallout of a bursting asset bubble. Back then he had a front row seat and, in fact, a strong hand in creating the dotcom bubble, whether he admits it or not. He was so worried about the consequences of “irrational exuberance” that he declared these concerns “must be an integral part of the development of monetary policy.” And this was before he had even witnessed any of the actual economic consequences we have now lived with for two decades. Clearly, his worries were well founded but he wasn’t quite worried enough.

The financial well-being of entire generations has been permanently damaged. Think of the Baby Boomers whose retirement dreams turned to nightmares through two stock market crashes in less than a decade.…

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