Huge profits and earnings surprises can lure you this earnings season. But rather than accumulating stocks later, investing in those that are yet to release their numbers and poised to beat expectations can fetch you more gains. This is because an earnings beat essentially serves as a catalyst and raises investors’ confidence in a stock. This leads to rapid price appreciation, ensuring more gains from one’s investments. Furthermore, buying an undervalued earnings play should translate into great returns when the stock eventually trades at a higher price. This brings us to the REIT industry, which has gained just 2.2% year to date compared...
Over two weeks ago I officially ended my bearishness on the Australian dollar (FXA). I made that call just in time. Against the weakening U.S. dollar, the Australian dollar has gone nearly parabolic. AUD/USD recently touched the 0.80 level, a new 26-month high. Source: FreeStockCharts.com The Australian dollar has powered higher against almost all major currencies and now threatens to retard the economy’s on-going adjustment away from mining investment. The Reserve Bank of Australia has consistently noted its reliance on a weaker currency. For example, in the July 4, 2017 statement: “The depreciation of the exchange rate since 2013 ha...
Since the Basic Materials sector is breaking out I would like to take an in-depth look at some of the stocks that make up the Basic Materials sector along with some commodities in general. Most commodities have had a tough go of it since they topped out in 2011, but there are some signs that they may be bottoming, which could lead to a substantial rally over the intermediate to the long term. As you will see some of the bottoming formations are very symmetrical while others are pretty ugly, but as long as they can make a higher high and higher low an uptrend is in place. Lets start with the CRB index which built out a one year bearish rising ...
Good news from the UK: consumers were more active in June. Retail sales are up 0.6% and this comes on top of an upwards revision. Year over year, sales are up 3%. Core retail sales are up 0.9% m/m and 2.9% y/y also ahead of expectations. All figures are better than predicted. GBP/USD recaptures 1.30 after the previous fall. The UK was expected to report a rise of 0.4% in monthly retail sales in June after a big drop of 1.2% in May. Year over year, a rise of 2.5% was on the cards. Similar figures were predicted for core sales: 0.5% m/m and 2.5% y/y. GBP/USD was tumbling down below 1.30 ahead of the publication. Contrary to normal activity ahe...
Last November, the USDA published a report that provides some insight into the kinds of food and drink items that recipients of its Supplemental Nutrition Assistance Program (SNAP), which used to be called “Food Stamps”, are buying up with their government-issued EBT cards. In the chart below, we’ve taken the Top 10 items from Exhibit 6 of the report, which lists the millions of dollars of eligible food and drink commodities that SNAP recipients were determined to have bought in transactions using their EBT cards, and shown how the spending for those items compares to the total amount of spending that was counted in t...
Looking at tomorrow’s main event, the much anticipated ECB announcement in which Draghi may (or may not) announce a hawkish shift to the centrral bank’s policies and/or reveal the bank’s tapering plans, Citi (whose titled we borrowed) gives the 30 second summary, and says that the market seems quite split on whether the ECB will remove the asset purchase program easing bias, but thinks that there’s room for mild disappointment. After all, it says, this meeting is just a warm up for the September meeting (and Jackson Hole). CitiFX Strategist Josh O’Byrne points out that the biggest market fear at the moment appears to be ...
When the People’s Republic of China (PROC) was granted full UN status in 1971, everything was then set in motion. The successor to Chaing Kai-shek’s nationalist government in the Republic of China (ROC, or what we call today Taiwan) was originally granted as a founding member and one of five Security Council seats. UN General Assembly Resolution 2758 instead recognized the PROC as the “only legitimate representative of China to the United Nations.” From there, the PROC would gain UN removal of Hong Kong from the list of “non-self-governing” territories. It was for the Communist Chinese an important step, for states and cities on t...
The Illinois debt saga continues. The state operated without a budget since 2015. In June, just before their fiscal year end, both S&P and Moody’s downgraded Illinois’ credit rating to one level above “junk bond” status. Moody’s said: “Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40% of the state’s operating budget. During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal c...
Asian shares hovered near decade highs on Thursday morning, supported by strong U.S. corporate earnings and optimism about Japanese and European central bank meetings later today. The Bank of Japan is expected to end its two-day policy meeting with an intention to cut its inflation forecasts again and to project a delayed cutback of its economic stimulus program. If the stimulus program is delayed it would be the sixth time it was postponed since it was proposed by BOJ Governor Haruhiko Kuroda in 2013. Analysts expect the BOJ to confirm that there is no need to ease policy at the moment because the continually strengthening economy can increa...