More Vol Thursday

Dec. 06, 2018 9:50 AM ETAAPL, BKLN, HYG, BBWI, MO, SIG, C, TK
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

REITs, Special Situations, Bonds, Preferred Stock

Contributor Since 2008

Rubicon Associates is headed by a Chartered Financial Analyst charter holder with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in both public and private companies around the world as well as advised institutional clients on fixed income strategies and manager selection. The principal has been responsible for managing nearly seven billion dollars in credit investments across the capital structure and overseeing the research and trading of credit market activities. Rubicon Associates has written for Seeking Alpha, Learn Bonds, a newsletter and in addition to advising institutional and private investors.


  • Hang onto yer hats.

Did folks really think that arresting the CFO (and daughter of the founder) of Huawei was going to help trade talks with China?  

Expectations of rate hikes continue to grind lower (while visions of neutral danced in their heads).



2s/5s inversion, anyone?

Again, not sold on the "always followed by a recession" theory, but it certainly doesn't make one optimistic about growth/inflation, does it?

High yield (HYG) vs Levered loans (BKLN).   U.S. high yield valuations offer an attractive risk-reward profile even heading into a year of decelerating global growth, Wells Fargo strategists led by Winifred Cisar wrote in note on Thursday. They recommend investors increase their exposure to junk bonds over leveraged loans.  

HYG Total Return Price data by YCharts

Personally, I like the covenants offered by loans (admittedly diminished), but the LIBOR nature, if the Fed pauses isn't beneficial - especially if rates fall further as you don't have the duration effect.

But two sides make a market:

U.S. leveraged loans will beat junk bonds next year, according to Citi, which expects higher volatility amid flattening yield curves, flagging global growth and increasing political uncertainty.  Citi forecasts a 2.7% total return for high yield bonds, 3.3% for leveraged loans in 2019: strategists led by Michael Anderson wrote in report published Thursday

L Brands (LB) reported an unexpected rise for the November Victoria’s Secret comp sales. 

  • November Victoria’s Secret comp sales +2%, estimate -1% (Consensus Metrix, average of 13 estimates).  
  • November comparable sales +9%, estimate +2.8% (CM, average of 13 estimates).
  • November Bath & Body Works comp sales +18%, estimate +8% (CM, average of 13 estimates).
  • Month Comp Sales up 9% vs. Est. up 2.8%.

 Ok, this one surprised me.  Holiday season?  Folks going old school?  No line-up revamp, no product changes, same wings and lack of interest by many younger folks.  I sold my shares on the premise that tastes are changing and L Brands isn't.

Article in the Economist today on LB:  

Focusing on the need for comfort rather than male taste is good business; women purchase the vast majority of female underwear. “The repeat business is in basics,” says Heidi Zak, Thirdlove’s founder.

An Apple (AAPL) a day pushes price targets away.   Wall Street analysts are likely to keep cutting estimates for Apple Inc.’s first-quarter 2019 iPhone shipments, Rosenblatt’s Jun Zhang writes in a note cutting the firm’s price target for the shares to a Street-low of $165 from $200.  

Working on an Altria (MO) note.  I should really start just writing on the same company and changing up the order of my investor presentation cut 'n paste.  Seriously, how is that useful or fun?  Hidey ho, buy O.  You gotta go and buy O. Oh no, don't miss O.  ugh.

Here's a great article from Wyco Researcher on why to pay attention to bankruptcy cases.  I have run into the make-whole issue in various jurisdictions and it is never easy or straightforward. 

Signet (SIG) forecast adjusted earnings per share for the full year; the guidance midpoint missed the average analyst estimate.

  • Sees FY adjusted EPS $4.15 to $4.40, estimate $4.28 (range $4.11 to $4.45)
  • Sees 4Q comparable sales -1.5% to +1%
  • 3Q comparable sales +1.6%, estimate +0.1% (Consensus Metrix, average of 10 estimates)
  • 3Q Zale comparable sales +2.8%, estimate +5.4%
  • Raises 2019 Comp Guidance to Flat to up 1%
  • Sees '19 Comp Flat to up 1%, Saw Down 1.5%-0%
  • So far in 4Q, SIG is seeing a "more competitive environment as department stores continue to invest in the category and consumers are highly responsive to value"
  • As a result, SIG will have additional promotional activity in 4Q to support holiday sales

Why do we care about Signet?  3,500 locations, many in malls and shopping centers.  Shares down over 15% today.

SIG data by YCharts

So where am I getting hammered today, you ask.  Well, CenturyLink (CTL) -4.6%, Costamare (CMRE) -4.6%, Glencore (OTCPK:GLNCY) -5.7%, Teekay (TK) -5.9% (when will I throw in the towel on TK???), Tencent (OTCPK:TCEHY) -4.8%.  Top five RA dogs 'o the day.  yee ha!

Ugh, banks lower again on deal volume and trading prospects for 2019, lead by Citi (C) -5.25%, BAC down 3.9%, Wells -2.8%.  Come on, being outperformed by Deutsche -2.5%.

XLF data by YCharts

Maybe Citi should buy Deutsche - I hear two turds equal 1 better turd.

C data by YCharts

Recommended For You


To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.