Saturday, January 24, 2015
- "I don’t see how the Fed can justify hiking rates when economic growth will disappoint, employment growth will fade, and inflation will overshoot on the downside," says Felix Zulauf at the Barron''s Roundtable. He wouldn't be shocked to see 2016 also pass by without tighter policy.
- The iShares 20+ Year Treasury Bond ETF (NYSEARCA:TLT) is the largest position in his portfolio (the 30-year yield was 2.53% when the Roundtable took place earlier this month; it's 2.37% today). "The U.S. bond market is mispriced," he says, noting long-term yields on these shores tower over those in Europe (they tower far more after the ECB's QE this week).
- Zulauf is also bullish on the dollar (NYSEARCA:UUP) - not exactly a contrarian view - but he says most don't understand the real reason for the greenback's strength: Basically the world is massively short greenbacks thanks to dollar weakness policies pursued by the Greenspan and Bernanke Feds. When the dollar corrects later this year on realization the Fed won't be lifting rates, it will be a good spot to get long.
- Expecting a correction in U.S. stocks, Zulauf would then put money to work in the Market Vectors Retail ETF (NYSEARCA:RTH) - a strong dollar allows retailers to benefit by buying their overseas supplies cheaper.
- Related ETFs: TBT, TLT, TMV, TBF, EDV, TMF, TTT, ZROZ, SBND, TLH, VGLT, DLBS, UBT, TLO, TENZ, LBND, TYBS, DLBL, UUP, UDN, UUPT, FORX, UDNT, USDU
Friday, January 23, 2015
- McDonald's (NYSE:MCD) reports global comparable-store sales fell 0.9% in Q4 on soft traffic trends across geographic segments.
- The U.S. comp was down 1.7% in a restaurant sector heading in the other direction (see: Restaurant comps ignited off of $2 gas effect).
- The APMEA comp fell 4.8% on a steep traffic decline amid continued blowback from supplier issues.
- SG&A expenses +5.5% to $662.5M due in part to spending on "positioning" for the future.
- The company heads into 2015 with its lowest capital expenditure budget in five years at $2.0B.
- CEO Don Thompson uses the words "adapting" and "evolve" again in his summary, but warns on further pressure on sales through the first half of the year.
- MCD +1.7% premarket to $92.44.
- Despite testing the nation’s booming energy sector, a collapse in oil prices is leaving more money in consumers' pockets with one of gasoline's swiftest price declines on record.
- Gas prices appear headed below a nationwide average of $2 a gallon in the coming days, with average pump prices — $2.04 a gallon Thursday — down more than 40% since last June, according to the auto club AAA.
- Through last week, pump prices have declined for 16 straight weeks, breaking the last record set in 2008.
- ETFs: UGA
Thursday, January 22, 2015
- Freddie Mac's latest weekly survey shows average fixed mortgage rates falling again amid declining bond yields and oil prices, with the 30-year fixed-rate mortgage averaging 3.63% for its lowest level since May 2013; the 30-year fixed averaged 3.66% last week.
- The 15-year fixed mortgage averaged 2.93% vs. 2.98% a week ago.
- The 30-year and 15-year fixed rates averaged 4.39% and 3.44% last year at this time.
- U.S. stock index futures are now higher by about 0.75% across the board after the ECB launches a €60B per month QE program (a leak yesterday suggested €50B).
- 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, BXUB, QQEW, QQQE, SPLX, BXUC, SFLA, QQXT, SPUU
- Previously: ECB launches €60B per month QE (Jan. 22)
- The10-year Treasury yield is up six basis points at 1.93%. TLT -1.6%, TBT +3.2%
Wednesday, January 21, 2015
- December housing starts of 1.089M were up 4.4% from November and 5.3% from a year earlier. Single-family starts of 728K gained 7.2% from November.
- Building permits of 1.032M actually fell 1.9% from November, but were 1% higher than a year ago. Single-family permits of 667K were up 4.5% from November, and multi-family permits fell 12.4%.
- Full report
- ETFs: ITB, XHB
- For years sovereign debt has been the globe's most-hated asset, but that title now goes to junk bonds, according to a Bloomberg poll. Of those surveyed, 18% - if given one asset class to short - would short high-yield. Least-favored shorts at just 3% and 4% respectively are G-7 currencies and real estate.
- Searching for an after-the-fact reason: Slowing global growth makes it harder for the lowest-rated companies to pay their bills.
- ETFs: HYG, JNK, HYLD, SJB, IHY, ANGL, HYLS, PGHY, UJB, HYXU, XOVR, QLTC, IJNK
- As for the most-favored, it's developed market stocks, with 24% willing to go long if given the opportunity to buy just one asset class. Just 3% would choose junk bonds.
- "The verdict is clear — middle-class economics works. Expanding opportunity works. And these policies will continue to work as long as politics don’t get in the way," said President Obama in his State of the Union address last night.
- As he heads into his final two years in office, Obama called on Congress to impose new taxes and fees on high-income earners and large financial institutions and make community college free. Other topics included foreign policy, healthcare and the internet.
- With regards to Keystone XL, Obama declared, "let's set our sights higher than a single oil pipeline," saying an infrastructure package could create more than 30 times as many jobs per year.
Tuesday, January 20, 2015
- "Sliding oil prices will give global growth a brief jolt, but the benefits won’t be strong enough to keep the world economy out of a deepening long-term rut," announced the International Monetary Fund in its latest World Economic Outlook report.
- As a result, global growth is projected at 3.5% for 2015 and 3.7% for 2016, said the Washington-based lender, lowering its forecast by 0.3 percentage points for both years.
- The U.S. was the lone bright spot in an otherwise gloomy report for major economies, with its 2015 projected growth raised by half a percentage point to 3.6%.
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