Friday, December 19, 2014
- U.S. automobile sales are forecast to increase 11% in December to an annual selling rate of 16.6M units, according to a fresh forecast from TrueCar.
- The research firm says the industry benefited from lower gas prices and a better month of weather than was seen a year ago.
- For the full year, TrueCar expects total U.S. vehicle revenue to be up 8.3% to close to $1T.
- Transaction prices on new cars are up 1.9% to $31,831 YTD.
- Used vehicle sales are up 3.3% for the year.
- Related stocks: GM, F, TM, FCAU, HMC, OTCPK:NSANY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTCQX:VLKAY, OTCPK:FUJHY, KMX, CRMT, AN, LAD.
- The age of connected cars appears closer with Google pushing forward with its next-gen Android M software designed to be integrated into automobiles.
- The industry has a bit of an uneasy relationship with Google, despite the company's open-source approach to the technology.
- Though most major automakers collaborate with Google through the Open Automotive Alliance - which aims for a common platform to drive innovation - the self-driving car initiative of Google and their own infotainment ambitions keep them wary.
- Analysts originally forecast vehicle-to-vehicle communication would be part of the connected car concept and be integrated into some models by 2016, although that timetable now appears unlikely.
- What to watch: Before any major breakthrough occurs, the DOT needs to weigh in on next-gen connected cars. That gets trickier with safety and security concerns teed up again after the high-profile GM recall debacle and crippling Sony hacking incident.
- Automaker stocks: GM, F, TM, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTCPK:MMTOF, OTCPK:PEUGF, OTC:RNSDF, TTM, OTCPK:MMTOF, OTCPK:SZKMY, OTCPK:FUJHY, OTC:RNSDF, OTCPK:GELYF, FCAU.
- Analysts expect a mixed holiday season for the retail sector in Hong Kong.
- While mass market retail is forecast to hold up with the level of demonstrations in the region moderating, there's some concerns on the luxury sector.
- The corruption crackdown by Beijing and the weak Yen are two potential drags on tourist traffic.
- Consumer confidence on the high end has also been weakening.
- What to watch: The critical Chinese New Year begins in February giving the luxury sector scant time for the environment to improve.
- Luxury sellers in HK: Gucci (OTC:GUCG), Prada, Louis Vuitton (OTCPK:LVMUY), Coach (NYSE:COH), Ralph Lauren (NYSE:RL), Michael Kors (NYSE:KORS), Swatch (OTCPK:SWGAY), Burberry (OTCPK:BURBY), and Tiffany (NYSE:TIF).
8:00 AM| Comment!
- World markets are ending their last full week of the year on a high, as Wall Street boasted its biggest two-day advance since late 2011 and European shares headed for their strongest week of the year.
- The gains came amid the Fed's "patient" approach to raising interest rates and as investors began to see the advantages of lower oil and fuel costs that should ultimately help global growth.
- Brent crude is above the key $60 mark, up 1.5% at $60.14 a barrel. WTI is also up 1.5% at $54.90.
- U.S. futures are also pumping higher: Dow +0.4%, S&P +0.3%, Nasdaq +0.5%.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, PSQ, IVV, SPXU, UPRO, TQQQ, SPXL, RSP, QID, SQQQ, DOG, QLD, DXD, RWL, EPS, UDOW, SDOW, DDM, ONEQ, BXUB, QQEW, QQQE, SPLX, BXUC, SFLA, QQXT, SPUU
- Russia's ruble strengthened today after Finance Minister Anton Siluanov confirmed his ministry had sold foreign currency and on expectations that exporters will step up dollar sales.
- Siluanov said he was also certain that the ruble would firm at the beginning of next year.
- Russia's central bank has spent over $80B defending the currency in 2014 amid a collapse in oil prices and Western sanctions over Ukraine.
- The ruble is 2.3% stronger against the dollar at 60.22.
- ETFs: RSX, RUSL, RUSS, RSXJ, ERUS, RBL
- Asian shares continued their rise today, after Wall Street boasted its biggest two-day advance since late 2011 amid the Fed's "patient" approach to raising interest rates.
- Concluding its last policy meeting of the year, the BOJ kept monetary settings unchanged, but offered a more upbeat view on the economy.
- China has revised up the estimated size of its economy for 2013 by 3.4% to $9.6T, but said the revision would not affect economic growth this year, which has been close to 7.4% for most of 2014.
- ETFs: FXI, DXJ, EWJ, EWH, KWEB, PGJ, YINN, GXC, FXP, ASHR, HAO, TAO, YANG, CHIQ, CQQQ, DFJ, CHIX, MCHI, QQQC, PEK, NKY, DBJP, XPP, YAO, EZJ, EWV, YXI, JPNL, DXJS, CHXF, ECNS, FCA, CN, CHII, SCJ, CHIE, CHIM, JSC, EWHS, ITF, FCHI, JPP, ASHS, KFYP, CNXT, CHNA, KBA, HEWJ, FHK, FJP, QJPN, JPMV, DXJT, DXJR, DXJH, DXJC, DXJF
Thursday, December 18, 2014
- Oil price drops similar or greater in magnitude than what's recently been seen have occurred a number of times over the past 30 years, say new Pimco CIO Daniel Ivascyn along with Saumil Parikh. Some have coincided with major recessions and others with faster global growth. So what gives for 2015?
- The short answer: This drop in oil is supply-, not demand-driven, they conclude, and thus should foster faster economic growth than otherwise next year.
- As for inflation, expect negative headline prints in developed economies next year, but these should bounce back later in 2015 and into the following year.
- Investment themes: 1) The outlook for easier monetary policy (in all but the U.S.) has been priced in, making for limited upside for high-quality duration 2) TIPS are attractive as their prices have more than discounted the coming negative inflation prints 3) Globally, eurozone peripheral bonds are the pick 4) In the U.S. non-agency mortgages (see Ivascyn's PDI) are poised for outperformance, but agency paper is overvalued, particularly as the Fed's purchases have ended.
- Ivascyn also manages the Pimco Income Fund (MUTF:PONAX) and (formerly managed by Bill Gross) the Pimco Unconstrained Bond Fund (MUTF:PUBAX).
- ETFs: AGG, BND, BOND, SCHZ, LAG, SAGG, DI, GBF, FBND, LDUR, FWDB, IUSB, VBND, TIP, VTIP, SCHP, IPE, LTPZ, STPZ, TIPZ, STIP, TPS, TDTT, TIPX, TDTF, SIPE
- After two weeks of "relentless selloff," emerging markets are enjoying day 2 of a bounce, but "bounce" is the operative word, says Deutsche. The next move in EM "is almost still a punt on oil," and the underlying forces for a bear market are still in place.
- "This and likely reduced liquidity into year-end argues for a neutral stance."
- EEM +1.35%, VWO +1.6%
- ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, ADRE, EET, EUM, GMM, EEME, DBEM, EMCR, FEM, EWEM, EMLB, HEEM, EMSA, EMFT
- General Motors (NYSE:GM) suspends making deliveries to Russia due to the volatile situation with the ruble exchange rate.
- The company operates in the region through Opel-division GM Russia.
- Jaguar Land Rover (NYSE:TTM) and Audi (OTCQX:VLKAY) have also halted sales in the nation in reaction to the currency crisis.
- The above automakers - along with BMW (OTCPK:BAMXY), Daimler (OTCPK:DDAIF), Hyundai (OTC:HYMLF), and Renault (OTC:RNSDF) - face large hits in Q4 due to exposure to the Russian currency.
- Some estimates on ruble losses range over the $100M mark.
- Attempting to defend its CHF1.20 floor for the euro, the SNB cuts its deposit rate to negative 0.25%, and expands its target range for three-month Swiss libor to -0.75% to 0.25%. Negative rates will be imposed on balance above CHF10M.
- "The SNB reaffirms its commitment to the minimum exchange rate of CHF 1.20 per euro, and will continue to enforce it with the utmost determination."
- Against the dollar, the franc (NYSEARCA:FXF) is off 0.65% to its lowest in more than two years, and it's weaker by 0.3% vs. the euro to CHF1.2046.
- The Swiss stock market (NYSEARCA:EWL) is higher by 2%, inline with a broad European rally.
- Addressing Russia in his annual speech, Vladimir Putin said that the country's current economic difficulties could last for the next two years but the situation could improve faster.
- Putin also declared that the central bank and government were taking adequate measures to support the ruble and that Russia's current economic situation was caused by external factors, mainly from the price of oil and gas.
- The ruble is more than 2% weaker on the day at 61.72 against the dollar.
- ETFs: RSX, RUSL, RUSS, RSXJ, ERUS, RBL
- An early general election in Greece is looking more likely after the first round of a snap presidential election failed to win support for Greek Prime Minister Antonis Samaras’s candidate - Stavros Dimas.
- There is a great possibility that the left-wing, anti-austerity party Syriza could win such a vote – potentially putting the country's international bailout into jeopardy.
- Greece appears to be on track for a primary budget surplus in 2014, but the country still has an enormous debt pile of 175.5% of GDP.
- ETFs: GREK
- Japanese shares rallied today following the Fed's upbeat assessment on the U.S. economy and report that the country will spend up to $30B in stimulus.
- Prime Minister Shinzo Abe plans to finalize the stimulus package on Dec. 27, as part of efforts to lift the economy out of a recession caused by the hit from a sales tax hike in April.
- Pulling away from a 6-1/2-week low, Japan's Nikkei share average jumped 2.3%, ending up 17,210.
- ETFs: DXJ, EWJ, DFJ, NKY, DBJP, EZJ, EWV, JPNL, DXJS, SCJ, JSC, ITF, JPP, HEWJ, FJP, QJPN, JPMV, DXJT, DXJR, DXJH, DXJC, DXJF
Wednesday, December 17, 2014
- While travel to Cuba strictly for tourism purposes remains prohibited for now, the U.S. is now allowing visits for a long list of other reasons, including family visits, journalistic activity, professional research, and educational and recreational activities.
- Also as part of the deal, American travelers will be allowed to import $400 worth of Cuban goods, including up to $100 of tobacco products. The products will not be allowed to be resold.
- This two-year-old profile of Thomas Herzfeld and his Caribbean Basin Fund (CUBA +35.8%) will be of interest. At the time of the article the fund held stakes in a number of companies who would likely see brisk additional business from an opening to Cuba, along with a number of securities - currently valued at zero thanks to the Castro's confiscations - which could rise from the ashes.
- One sector of interest is cruise ship operators: Royal Caribbean (RCL +3.4%), Carnival (CCL +2.7%), Norwegian Cruise (NCLH +1.6%).
- Other holdings of CUBA at the time of the article: Seaboard (SEB +0.7%) and Watsco (WSO +0.6%).
- Previously: U.S. and Cuba move to normalize diplomatic relations (Dec. 17, 2014)