Feb 23, 2017 - Market Update

Short recap

Asian stocks took a breather

Europe opened mixed

FOMC Minutes showing cautiousness (not to forget that the meeting took place right after Trump inauguration that was accompanied with huge uncertainty)

But lots has happened since then

May rate hike priced at 50%

10-yr US Trys yield at 2.40% after FOMC

FR elections: Bayrou pulling out and expressing support for Macron

GE-FR spreads down by 10 bps as a reaction

Demand for Bunds (politically driven vs strong momentum in stocks from good macro data)…something fishy here

EURUSD – experienced short squeeze on the news but jump was more about hitting strong support around psychological 1.0500 level

AUDUSD – not sure about the direction

Reflation and commodity story to push higher

Rate spreads to weight on the cross

Nissan Motors – Carlos Ghosn to step down as CEO after 15 yrs with the company

Airbus looking at easing penalties from EU govs for delay in military aircraft contract

Tesla to start Model 3 production in Sep, reporting smaller loss

Bayer expecting agri products (pesticides) business flat this year

Focussing on Monsanto takeover completion (USD 66 bln)

More HFs warning about Trump stock rally being overdone

While EU political risks not priced in

UK Brexit – Australia and Israel to expand trade and investments

US Trs Sec Mnuchin making vague comments about effects of strong USD

UK and Canadian regulators to assist FinTech

Goldman Sachs expecting crude oil stocks to keep falling

OPEC is tightening but US shale production is rising on better effectiveness and cheap funding

Don’t really see the signs of improved demand

Commodities need more real demand & lower inventories to rally further

Most vulnerable are copper and longs in oil

Data

GE: Gfk Consumer Climate Index – out slightly higher

UK: CBI Distributive Trades Index as a leading indicator for retail spending should point slightly higher

US: Initial/Continuing weekly unemployment claims – expected marginally higher

US: Chicago Fed National Activity Index – expected slightly higher

US: FHFA House Price Index

US: Kansas City Fed Manufacturing Index

ECB Praet speaking (0855)

Atlanta Fed Lockhart speaking (1335) – likely to provide a recap of his 10 yrs at Fed as he retires soon

Dallas Fed Kaplan (voter) speaking (1800)

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

  

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Feb 19, 2017 - Q4 Earnings - Week 6

Q4 Earnings – Week 2017-02-19

Markets are still heavily skewed to watching Trump headlines and professional investors are more and more often adding the so called “Trump factor” to their expected return calculations. Some valuations are overstretched, especially financials while the energy is on negative too with the heavy debt load and current outlook for oil.

On the other hand, the cost of protectionc and hedging is pretty low with VIX trading around 11.50. Such a low level provides us with an interesting opportunity to hedge stock portfolios in case Trump doesn’t deliver on Feb 28 when the joint committee session before US Congress takes place. Then we have Mar 15 with FOMC and G10 FinMin and central bankers meeting right after on Mar 17-18.

But what are we up to this week apart from FOMC Minutes that can provide some clues about potential Mar 15 rate hike that is priced at 40%?

Wall-Mart Stores – investors are curious about effects of pushing strongly e-commerce and consolidation of store sales with e-sales

Home Depot – expected to report better numbers as the real estate market and related sales are strong in US. As the chain is relying on imports from Mexico, any comments on Trump border tax initiative will be watched as it is the case of Wall-Mart Store as well.

First Solar – to report loss due to write-offs and restructuring

HP – market is expecting a rise in profit from increased stability in PC market, effects of job and cost cutting and strong sales of hardware

Tesla – investors are looking at increase in revenue on growing sales. What definitely, will not pass by unnoticed are the comments from Elon Musk on company plans for 2017 including update on its Gigafactory, Model 3and SolarCity developments.

Baidu – markets are expecting smaller revenue growth due to new regulation in advertising and will listen closely to upcoming projects and artificial intelligence efforts

Barclays – investors will be interested to see how the UK based banks cope with upcoming Brexit negotiations. With this respect Barclays has already put Berlin on the top of its preferred location list for its HQ covering EU activities.

Name	Exchange	Date	Estimated EPS	Estimated Revenue
Anglo American	UK	Tue	…	9,600
BHP Billiton	UK	Tue	…	15,940
First Solar	US	Tue	…	0.528
HSBC	UK	Tue	0.04	24,180
Home Depot	US	Tue	1.33	21,793
Intesa Sanpaolo	IT	Tue	…	…
Macy's	US	Tue	1.96	8,624
Medtronic	US	Tue	1.11	7,224
Wall-Mart Stores	US	Tue	1.29	131,218
Airbus Group	FR	Wed	1.35	…
Bayer	GE	Wed	0.44	13,050
Gazprom	RU	Wed	…	…
HP	US	Wed	0.37	…
Iberdola	ES	Wed	…	…
Lloyds Banking Group	UK	Thu	0.01	8,650
Tesla	US	Wed	-0.42	2,240
BAE Systems	UK	Thu	…	9,860
BASF	GE	Thu	…	…
Baidu	CN	Thu	0.90	18,660
Barclays	UK	Thu	0.01	8,560
CIBC	CA	Thu	1.92	…
Centrica	UK	Thu	…	13,570
Glencore	UK	Thu	…	79,890
Henkel	AU	Thu	…	…
Vale	US	Thu	0.26	20,680
Veolia Environment	FR	Thu	…	…
Husky Energy	CA	Fri	-0.01	4,440
Magna International	CA	Fri	1.79	9,140
RBS	UK	Fri	…	5,630
RBC	CA	Fri	1.77	…
Standard Chartered	UK	Fri	…	3,610
Telefonica	ES	Fri	…	…

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Feb 16, 2017 - Market Update

Short recap

Asian stocks still supported by Wall Street

US stocks still at highs, valuations adjusted for inflation at 1997 levels

USD did some woo-doo after very strong US data yesterday when profit taking erased all the gains

Yellen’s comment about “growth being quite disappointing” likely scared some traders

Despite US GDP growing very closely to Fed predictions

DXY dropped significantly from yesterday’s high, 50 DMA at 101.37 acting as resistance now

10-yr Trys yields printed 2.52% yesterday but retreated to 2.48% (as of writing)

Mar 15 hike probability at 44% from 34% yesterday

Oil lower on concerns coming from record high crude/gasoline stocks

Car registrations in EU up more than 10% what may benefit Volkswagen as it regains its share

Peugeot-Citroen acquisition of Opel/Vauxhall not welcomed in Germany/UK amid fears of loosing jobs

Tesla printing the highs

Nestle in line with estimates, EM markets still focus

US stock investors favoring international markets over “America First”

Canada Prime Minister Trudeau to address the EU Parliament before meeting Merkel

Will be definitely watch in Canada in the light of tweaking NAFTA as well as on EU side, as a free trade message to Trump

FX Options

EURUSD – likes 1.0600, scared of 1.0500

Trending lower (4 hour chart) despite a small break

RR favoring more and more EUR puts

Strikes with expiry on May 8 (FR elections on May 7) well bid

USDJPY

Vols supported by 10-yr Trys yields between 2.48%-2.52%

Not moving higher but should accelerate once spot moves higher

AUDUSD – good employment data

Small break above 0.7700 doesn’t look like lasting long

Vols trading at low levels, still have room to decline slowly

Implied vols lower vs realized

Data

EZ: ECB Minutes

US: Housing Starts – to increase slightly

US: Initial Jobless Claims – to increase slightly

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Stocks - Q2 Earnings note – Week 4

Q2 Earnings – Week 4

By the end of the last week 314 out of S&P 500 companies reported what gives us a pretty decent overview of how the companies and economy is doing. The overall expectations declined as more companies from real economy and consumer staples reported. A sort of mirror view of the US economy in the form of Q2 GDP miss just underscored the real situation on Friday. Actually, the worse Advance Q2 GDP figure was a bit of surprise as the US data of late would point to +2.6% growth while the actual number was +1.2% only. At the same time the final Q1 was revised down to +0.8% from +1.1%. In other words the US GDP rose less than 2% over the past three quarters. The revenue of US companies is slightly higher, EPS stay negative while their EU peers reported even gloomier picture with both revenue and EPS declines.

Last Week

Caterpillar Inc – its results pointed to lower global demand for its products, thus indicating that world economy has still some bumps ahead.

As mentioned last week, consumer names face some headwinds and despite the better headline figures from McDonald’s, the closer look revealed some issues.

Ford Motor Co – as the market was checking on North American sales that were strong in Q1 and good results from Europe, we learnt from the CEO that the US market is still under pressure and company may have difficulties to keep up with its plans and forward guidance.

The tech giants Alphabet Inc, Amazon.com Inc and Facebook Inc briefed the market on their business model Brexit resistance, cloud business and web services. All of them beat the market expectations on internet services.

Apple Inc – the lower iPhone sales translated to lower revenue already 2^nd consecutive quarter but apparently, the company is gaining optimism on new smartphone cycle. Here, we should stay very cautious as Samsung and especially Chinese manufactures can offer the same if not better devices at much lower price.

Chevron Corp & Exxon Mobil Corp – the market was not expecting any deviation from industry trend on weaker commodity prices and both companies experienced the 20% decline in revenue, while Exxon also suffered the 60% fall in profits on y/y basis.

Enbridge (pipelines) and Imperial Oil (integrated refiner and oil producer) were hurt by wildfires what was seen in the earnings reports as well.

This Week

Well, after last week’s avalanche of earnings reports from big names we keep going with smaller companies despite more summer kind of mood everywhere.

The biotech or health care names will be watched from their valuation and regulatory perspective, especially in US in the light of upcoming US presidential elections (Obamacare).

EU banks – not only Italian banks but the whole Eurozone banking system that is still under stress will catch some attention of market even after Friday’s stress results. There are also signs of some issues with USD funding of EU banking system appearing.

One would think that ECB is helping banks by providing them liquidity and buying bonds but on the other hand all the liquidity provisions are being sterilized via other channels and keeping the interest rates extremely low is not helping the banks at all as it bites into their profitability.

Let’s see how it goes….check the below:

Monday

Heineken Holding NV (NL) – estimated EPS 3.34, +15.0% Y/Y; Revenue 21 225 mln

Loews Corp – estimated EPS 0.57, +26.9% Y/Y; Revenue … mln

Veolia Environment SA (F) – estimated EPS 0.51, +9.9% Y/Y; Revenue 11 952 mln

Tuesday

BMW AG (DE) – estimated EPS 2.67, +0.6% Y/Y; Revenue 24 552 mln

In case of BMW the German precision and technology combined with Italian kind of emotions is still perfectly working. But really is? The emerging markets (especially China) are still strong as Daimler-Chrysler showed.

Ferrari NV (IT) – estimated EPS 0.44, …% Y/Y; Revenue 773 mln

Tuesday

CVS Health Corp – estimated EPS 1.30, +6.8% Y/Y; Revenue 44 281 mln

METRO AG (DE) – estimated EPS 0.19, +272.0% Y/Y; Revenue 13 816 mln

Procter & Gamble Co – estimated EPS 0.75, -25.5% Y/Y; Revenue 15 832 mln

The market will be interested in seeing how the company copes with its product portfolio vs cost cutting.

Saputo Inc (CA) – estimated EPS 0.40, +18.5% Y/Y; Revenue 2 662 mln

American International Group Inc – estimated EPS 0.92, -33.7% Y/Y; Revenue 13 217 mln

The recent market volatility and lower investments in hedge funds will definitely leave a print on earnings.

Intesa Sanpaolo SpA (IT) – estimated EPS 0.04, -39.0% Y/Y; Revenue 4 034 mln

The results may brief us on the situation in Italian banking sector coping with excessive amount of troubled loans. For those looking at having an exposure to European banks that are trading at lowest levels in more than two decades, of course after considering all the risks even after stress test results, the better option in Italy may be Unicredit.

Pfizer Inc – estimated EPS 0.62, +11.1% Y/Y; Revenue 13 005 mln

The investors will check the comments on unfinished merger with Allergan Inc and the cash flow from off patent drugs.

Deutsche Lufthansa AG (DE) – estimated EPS 0.69, -42.2% Y/Y; Revenue 8 167 mln

Mitsubishi Corp (JP) – estimated EPS 40.46, -12.6% Y/Y; Revenue 1 734 520 mln

Wednesday

Continental AG (DE) – estimated EPS 4.10, -2.7% Y/Y; Revenue 10 534 mln

Tesla Motors Inc – estimated EPS -0.56, -16.7% Y/Y; Revenue 1 647 mln

For more on Tesla and SolarCity you can check our Trade idea: http://landoftrading.blogspot.sk/2016/07/trade-idea-tesla-short.html

Twenty-First Century Fox Inc – estimated EPS 0.37, -5.4% Y/Y; Revenue 6 683 mln

Tesoro Corp – estimated EPS 1.76, -61.8% Y/Y; Revenue 6 146 mln

AXA SA (FR) – estimated EPS 1.08, -10.4% Y/Y; Revenue … mln

HSBC Holdings PLC (GB) – estimated EPS 0.13, -45.7% Y/Y; Revenue 13 602 mln

ING Groep NV (NL) – estimated EPS 0.28, -10.8% Y/Y; Revenue 4 214 mln

Komercni Banka a.s. (CZ) – estimated EPS 14.16, -15.5% Y/Y; Revenue 8 076 mln

May be a nice exposure to CEE region via bank name. Komerni Banka is a traditional retail bank from Czech Republic offering complete services to retail or corporate clients.

MetLife Inc – estimated EPS 1.35, -13.3% Y/Y; Revenue 17 266 mln

Societe Generale SA (FR) – estimated EPS 1.18, -27.9% Y/Y; Revenue 6 777 mln

Standard Chartered PLC (GB) – estimated EPS 0.29, -41.0% Y/Y; Revenue 6 697 mln

Unicredit SpA (IT) – estimated EPS 0.13, +9.6% Y/Y; Revenue 5 714 mln

Check the comment at Intesa Sanpaolo SpA above (Tuesday).

Humana Inc – estimated EPS 2.22, +33.2% Y/Y; Revenue 13 594 mln

First Solar Inc – estimated EPS 0.54, +5.1% Y/Y; Revenue 869 mln

Check the comment for more at Tesla above (Wednesday)

Rio Tinto PLC (GB) – estimated EPS 0.80, -49.6% Y/Y; Revenue 16 520 mln

Thursday

Toyota Motor Corp (JP) – estimated EPS 145.46, -29.2% Y/Y; Revenue 6 583 510 mln

Kraft Heinz Co – estimated EPS 0.72, +17.3% Y/Y; Revenue 6 802 mln

Manulife Financial Corp (CA) – estimated EPS 0.46, +4.5% Y/Y; Revenue 12 158 mln

Merck KGaA (DE) – estimated EPS 1.52, +17.2% Y/Y; Revenue 3 817 mln

LinkedIn Corp – estimated EPS 0.78, +41.82% Y/Y; Revenue 898 mln

The acquisition from Microsoft and especially rising demand for hiring services will be of interest.

Nokia OYJ (FI) – estimated EPS 0.04, -64.3% Y/Y; Revenue 5 872 mln

The company once the leader of the segment now benefits from extensive portfolio of patents that brings a steady cash flow and its corporate business.

BCE Inc (CA) – estimated EPS 0.91, +4.7% Y/Y; Revenue 5 383 mln

Bell Canada is the largest telecommunication company in Canada that will provide us with an insight on how this sector performs in maple leaf country.

Duke Energy Corp – estimated EPS 1.01, +6.2% Y/Y; Revenue 5 682 mln

Friday

Magna International Inc (CA) – estimated EPS 1.34, +4.1% Y/Y; Revenue 9 217 mln

Allianz SE (DE) – estimated EPS 3.60, -20.8% Y/Y; Revenue 28 218 mln

Power Corp of Canada (CA) – estimated EPS 0.74, -19.2% Y/Y; Revenue … mln

For those who search for a Berkshire Hathaway kind of diversified across many sectors company focussing on finding the value deals, this Canadian peer to Warren Buffet’s imperium may be a good choice.

Royal Bank of Scotland Group PLC (GB) – estimated EPS 0.05, -62.2% Y/Y; Revenue 3 055 mln

Novo Nordisk A/S (DK) – estimated EPS 3.88, +20.0% Y/Y; Revenue 28 360 mln

Bombardier Inc (CA) – estimated EPS -0.03, -153.3% Y/Y; Revenue 4 183 mln

A short of cash company that had troubles to finalize their CSeries jets will be under the scrutiny of the market especially, after receiving a hand from Province of Quebec. The green light for CS 300 jets was awarded, so let’s see how they can fly…

LafargeHolcim Ltd (CH) – estimated EPS 0.82, -46.2% Y/Y; Revenue 7 622 mln

The results of the merger company having a significant market share in producing construction materials can give us some hints on how the construction business in Europe looks like.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Trade Idea - TESLA short

There were several rather negative stories around Tesla recently and despite I´m a big fan of the company and its founder Elon Musk, currently the Technical picture also looks to the downside. The stock formed lower high (H2) on the weekly charts last summer followed by a lower low this February. From this low it recovered pretty rapidly after the release of the Model 3 however the momentum was enough to form another lower high (H3) in April from where it started to fall again. So the big picture says the downtrend was confirmed and last week a shooting star doji was completed which is a very powerful pattern especially if we check where it happened to appear - at the top of the descending trend channel on the daily chart. Let`s catch the wave!

The daily chart shows very similar picture as the weekly. The lower highs were followed by lower lows. Last week was full of signals the minor uptrend from the beginning of July is ready to make a U-turn however we waited until the weekly pattern is finished. Here is the overview:

Tuesday – Doji Shooting Star

Wednesday – Engulfing pattern with a low 220.29

Friday – retested low of the engulfing pattern and event the shares couldn`t close below the Wednesday min., it created a lower low at 219.64

Our bearish view  could be strengthened strengthened by the fact that while the shares closed lower the last three days, the US stockmarket closed higher making all time highs during the day. A potential overall correction of the overbought stocks may help to push the negative monentum further on Tesla. Given these facts our call is to short Tesla on Monday with the following parameters:

Entry:

Sell Stop Limit – stop 219.60 limit 219.45

Protective stop – exactly at the high of the last week 227.50, the market shouldn`t go so high again but if then be prepared to reentering the position. We will post an update if conditions allow repeated entry.

Target 1 -  at $190 just above the last low which will be likely tested if we are right with this call

Target 2 - at $170 which is $6 above the lower channel line.

The company will release earnings beginnignof August. If the figures would be worse than expected, the shares may retest also the lows from february around $142.

Few words about risk management:

Trading stocks means you may face huge gap risk (20-30%). Therefore you need to adjust your position size to this kind of reality: no leverage, the notional amount of the  trade shouldn`t be higher than 20% of your equity. Even the situation may look like a great opportunity, don`t be gready!

Watch your risk and be consistent!

Mr. TechMan

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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