Last week was a tumultuous week for Blackberry, for my fellow BBRY bulls, we have not neglected the earnings report, you can rest assured knowing that some thorough analysis is being conducted and will be shared here on Trading book's blog and Twitter account.
Today's Daily Report
- Fears concerning Greeks economy begins to resurface, talk of an uncertain future by creditors have the Greek bond investors cautious about the region.
- Gold bud and commodities expert Jim rogers believes Gold is at a complicated bottoming phase, and advises to stay away from the yellow brick.
- In search for "fuel" for economic growth, The US and Europe will begin broad discussions on Asia-Pacific trade.
- Facebook will soon begin rolling out its new Search tools.
- Barron's Believes Carl Ichan's bid for DELL could send the stock price to $15 or thereabouts.
- A deadly explosion of an oil carrying train in Quebec claims the lives of at least 5 people, and sparks a need for increased regulatory oversight for crude transportation.
What we think
Today seems to be a mild day with regards to economic data being released, we do not expect heavy action in the broad market.
Europe faces multiple problems from an economic stand point, and until they manage to integrate fiscally they will suffer a slowing economy, and places like France and Germany will continue to hold the burden for the region.
Download the Full report here
That's all on this Lovely Monday.
Trade Well.
Monday 8 July 2013
Wednesday 26 June 2013
Market Report 26-06-13
Good Morning,
What's in the letter
The final revisions for Q1 GDP numbers will be released today, the markets are evidently excited about the numbers as futures have climbed in the pre market hours.
Moodys now has a neutral outlook for Japanese auto makers; sighting the weaker yen and a recovery from a natural disaster.
Gold and precious metals continue to tumble on the back of speeches by Federal reserve chairmen who routinely discuss the end to ultra easy monetary policy.
Blackberry has now opened up its service offering and will now provide security to companies with handheld devices other than BlackBerries. It seems as though the company has a contingency plan in case it's core operations in a saturated market fails to sustain growth.
What I think
The optimism behind today's GDP release raises questions about the rationale behind the market direction in the past few weeks.
The other day, Bernanke's speech outlining 3.4% growth this year was met with a market wide sell-off in what indicated perhaps a longer term market correction to come due to the fear of a taper. Whereas, this mornings GDP report is estimated to be 2.4% and is being met with a rally in the futures.
Are investors betting on a slower economy followed by a prolonged period of ultra easy monetary policy?
If you've followed this blog for any amount of time, you know that am a BlackBerry bull. We are only days away from the release of Q1 numbers from the smartphone provider, this will be the first complete quarter encompassing sales from the company's new BB10 hand sets. Analyst's estimated range from -$0.15 to $0.70 I'm leaning somewhere in the middle. a good earnings surprise should squeeze out shorts and give the stock a huge boost.
Download your full report
Till next time,
Trade Well
What's in the letter
The final revisions for Q1 GDP numbers will be released today, the markets are evidently excited about the numbers as futures have climbed in the pre market hours.
Moodys now has a neutral outlook for Japanese auto makers; sighting the weaker yen and a recovery from a natural disaster.
Gold and precious metals continue to tumble on the back of speeches by Federal reserve chairmen who routinely discuss the end to ultra easy monetary policy.
Blackberry has now opened up its service offering and will now provide security to companies with handheld devices other than BlackBerries. It seems as though the company has a contingency plan in case it's core operations in a saturated market fails to sustain growth.
What I think
The optimism behind today's GDP release raises questions about the rationale behind the market direction in the past few weeks.
The other day, Bernanke's speech outlining 3.4% growth this year was met with a market wide sell-off in what indicated perhaps a longer term market correction to come due to the fear of a taper. Whereas, this mornings GDP report is estimated to be 2.4% and is being met with a rally in the futures.
Are investors betting on a slower economy followed by a prolonged period of ultra easy monetary policy?
If you've followed this blog for any amount of time, you know that am a BlackBerry bull. We are only days away from the release of Q1 numbers from the smartphone provider, this will be the first complete quarter encompassing sales from the company's new BB10 hand sets. Analyst's estimated range from -$0.15 to $0.70 I'm leaning somewhere in the middle. a good earnings surprise should squeeze out shorts and give the stock a huge boost.
Download your full report
Till next time,
Trade Well
Thursday 20 June 2013
Market Report 20 June
What's on the report
Markets around the world continue to fall on the back of Ben Bernanke's speech yesterday which indicated a strengthening economy.
Market Participants fear the fed will begin to taper its stimulus program which is supposed to keep the economy afloat.
PMI numbers indicate contraction in China at a growing rate as well as in the Eurozone including Germany.
UK retail sale look to have improved in the last month.
What I think
There is an obvious disconnect between current market movement and the fundamental drivers of the market as a whole. Economic expansion and GDP growth of 3 - 3.5% are impressive numbers and should indicate a probable expansion of company earnings. This sentiment is clearly not shared by markets around the world as indicated by their reaction to Bernanke's speech yesterday.
On the other hand, this sell off is matched by an increase in 10 year interest rates, This increase forecasts the end of cheap money for corporations therefore an expansion of interest expense across the board and a shrinking of bottom lines.
Analysts have been touting to no end the demise of the recent 30 year bond bull market, It's worth nothing that if they are right, the bond market has typically been a predictor of the direction a stock market should go. Owing to the interest rate theories and the bond market direction, it is easy to see this market fall into a 5-10% correction in the medium term. However, if we believe the Fed's assessment of the economy, we should see growing earnings in the coming quarters which will bolster the stock market further.
Download the complete report
Trade Well!
Markets around the world continue to fall on the back of Ben Bernanke's speech yesterday which indicated a strengthening economy.
Market Participants fear the fed will begin to taper its stimulus program which is supposed to keep the economy afloat.
PMI numbers indicate contraction in China at a growing rate as well as in the Eurozone including Germany.
UK retail sale look to have improved in the last month.
What I think
There is an obvious disconnect between current market movement and the fundamental drivers of the market as a whole. Economic expansion and GDP growth of 3 - 3.5% are impressive numbers and should indicate a probable expansion of company earnings. This sentiment is clearly not shared by markets around the world as indicated by their reaction to Bernanke's speech yesterday.
On the other hand, this sell off is matched by an increase in 10 year interest rates, This increase forecasts the end of cheap money for corporations therefore an expansion of interest expense across the board and a shrinking of bottom lines.
Analysts have been touting to no end the demise of the recent 30 year bond bull market, It's worth nothing that if they are right, the bond market has typically been a predictor of the direction a stock market should go. Owing to the interest rate theories and the bond market direction, it is easy to see this market fall into a 5-10% correction in the medium term. However, if we believe the Fed's assessment of the economy, we should see growing earnings in the coming quarters which will bolster the stock market further.
Download the complete report
Trade Well!
Wednesday 19 June 2013
Before today's announcement
Business insider published this poem that traders are passing around before today's announcement by Fed chairman Ben Bernanke. I thought it was interesting enough to share.
Our Ben,
Who art in heaven,
Hallowed Be-nanke,
Thy auctions come,
Thy Bill's be done,
In Two's as they are in Sevens,
Give us this day our daily Fed,
And forgive us our Treasuries,
As we forgive us who default against us,
And lead us not into recession,
And deliver us from deflation,
For thine is the borrowing, the easing, and the printing.
Forever and ever
Amen.
It's obvious that today's announcement will be a market mover. Traders are waiting on an indication on when the dreaded taper will begin and how it will affect the market. Stay tuned and pay close attention. However, the skeptic that I am expects nothing today, no change in plans. Bernanke will reaffirm the link between QE purchases and economic growth (unemployment in particular).
Till later.
Trade well.
Monday 17 June 2013
Today's Daily Report
In todays Daily Report, US futures remain largely sideways while Asian markets traded mostly upwards as currencies took a hit on increased safe haven demands.
These are your headlines
Tensions in Syria forced the US government to take forceful actions in arming Syrian rebels, this is bolstering commodity prices especially WTI crude oil.
The Federal Reserve bank meets today to discuss monetary policy actions, the market remains on edge as talk of taper could send stock prices spiraling down.
Japanese stocks begin to rise again as the yen loses value, conversely the Chinese Yuan has been seen to appreciate and adversely affect Chinese stocks.
Finch Ratings agency fears a Japanese style deflation crisis arising in China.
Download your report
Have a Great Day !!!
These are your headlines
Tensions in Syria forced the US government to take forceful actions in arming Syrian rebels, this is bolstering commodity prices especially WTI crude oil.
The Federal Reserve bank meets today to discuss monetary policy actions, the market remains on edge as talk of taper could send stock prices spiraling down.
Japanese stocks begin to rise again as the yen loses value, conversely the Chinese Yuan has been seen to appreciate and adversely affect Chinese stocks.
Finch Ratings agency fears a Japanese style deflation crisis arising in China.
Download your report
Have a Great Day !!!
Thursday 13 June 2013
News Letter.
Going forward, I will make an endeavour to frequently create and upload a newsletter. However, logistically I do not think this blog is the appropriate medium to share the news letter. In the interim it will have to do until we are able to develop a solution.
The link below contains MyTrading Books first news letter, be advised that it is a beta test and frequent updates to style and formats are to come in the following days.
The gist of this letter is to update you on daily macro and micro news that have a bearing on the markets and are reflected in my other blog entries.
Today we have a look at the effects the "taper" discussion is having on the market, world banks revised world GDP forecast and various acquisition and micro news. Please enjoy in the link below
Download
The link below contains MyTrading Books first news letter, be advised that it is a beta test and frequent updates to style and formats are to come in the following days.
The gist of this letter is to update you on daily macro and micro news that have a bearing on the markets and are reflected in my other blog entries.
Today we have a look at the effects the "taper" discussion is having on the market, world banks revised world GDP forecast and various acquisition and micro news. Please enjoy in the link below
Download
Sunday 9 June 2013
Returning to the unfamiliar
Since I've been buried in six volumes of riveting finance concepts developed by the CFA Institute, the markets have gone on quite a rally. Whenever it seemed to have reached some sort of exhaustion point and a correction was imminent, there was some sort of force pushing the indices to new all time highs. Perhaps irrational exuberance or a justified rally, this market has been quite different than what we've seen in the last two years. But what has defined this market rally, similar to previous ones, is investor risk appetite. This behavior has been fueled by various statistical evidence that proves that we are indeed experiencing a gradual economic recovery which has been fed by the federal reserves' determination to provide liquidity and increased risk appetite in the economy.
These events have fueled this market for several months and continue to destroy the accounts and patience of investors with decidedly short positions, and strangle fixed income investors who rely on yield. During this interesting market rallies we have seen some quite exciting stories; Japanese stocks have soared with the debasement of the yen, and then pull back slightly, Google has continued to inch towards world domination (My friend actually referred to the whole internet as Google), the tech giant Apple has been humbled in the markets, Elon Mosks' Tesla has defied EV critics and proved "profitable", precious metals have been destroyed while other commodities have seen incredible pull backs in certain areas and volatility in others, and finally the highly anticipated "tapering" of the QE initiative is being discussed extensively in the media.
Of course the main measure of the integrity of any market move is the quality of the companies earnings. Q1 earnings reporting were average overall; 65.2% of the companies in the S&P 500 beat bottom line expectation, but top line figures saw an average decline of 1% and only 49% of companies reporting above expected revenues. Furthermore, analysts revised down earnings expectations for Q2 but left estimates for earnings growth for the year at approximately 6%. The news has not been overwhelmingly bullish nor bearish , but the underlying feeling of economic expansion has led to a broad market rally.
I believe this puts the market at a disequilibrium and presents active investment professionals some trading opportunity. Owing to the idea that all stocks are not created equal, I put it to you that there are some stocks showing tremendous value potential and others that are generously valued, and a stock picker with great market timing will be able to take advantage of this disequilibrium. Over the next few weeks i will look to profile some companies which i believe fit into these categories and give my rationale behind each thesis.
That is not to say that this is an active managers market in the least bit, Passive investment strategies will find ample opportunity to re-enter this market in pull-backs, but as we have recently witnessed, pull backs come scarce and shallow in this medium term bull market. The 3 weeks from May 20th to June 6th was the largest pull back the market has experienced since april, with stocks barely retreating 5%. The Dow barely broke below its 50 DMA before employment numbers released on June 6th lent a beacon of hope to which investors hung on and ignited a rally.
This new paradigm bags the question "is this market doomed to succeed ?" I say this because it seems that regardless of the tenor of news that is released, a market rally occurs. Bad economic numbers briefly quenches the exuberance, until investors realize that the Fed has basically guaranteed free money until numbers improve, this is followed by a rally. Conversely, good economic data is initially met with market excitement and the prospect of "tapering" or the Fed cutting the proverbial umbilical cord is completely thrown out of the window. While there are clear forces supporting the market, what will cause the ceiling to reveal it self, and how will the market retreat?
Please look out for a daily news letter coming soon to My Trading Book as well as various reports on companies and macroeconomic themes.
Till then
There's always a Bull Market somewhere.
These events have fueled this market for several months and continue to destroy the accounts and patience of investors with decidedly short positions, and strangle fixed income investors who rely on yield. During this interesting market rallies we have seen some quite exciting stories; Japanese stocks have soared with the debasement of the yen, and then pull back slightly, Google has continued to inch towards world domination (My friend actually referred to the whole internet as Google), the tech giant Apple has been humbled in the markets, Elon Mosks' Tesla has defied EV critics and proved "profitable", precious metals have been destroyed while other commodities have seen incredible pull backs in certain areas and volatility in others, and finally the highly anticipated "tapering" of the QE initiative is being discussed extensively in the media.
Of course the main measure of the integrity of any market move is the quality of the companies earnings. Q1 earnings reporting were average overall; 65.2% of the companies in the S&P 500 beat bottom line expectation, but top line figures saw an average decline of 1% and only 49% of companies reporting above expected revenues. Furthermore, analysts revised down earnings expectations for Q2 but left estimates for earnings growth for the year at approximately 6%. The news has not been overwhelmingly bullish nor bearish , but the underlying feeling of economic expansion has led to a broad market rally.
I believe this puts the market at a disequilibrium and presents active investment professionals some trading opportunity. Owing to the idea that all stocks are not created equal, I put it to you that there are some stocks showing tremendous value potential and others that are generously valued, and a stock picker with great market timing will be able to take advantage of this disequilibrium. Over the next few weeks i will look to profile some companies which i believe fit into these categories and give my rationale behind each thesis.
That is not to say that this is an active managers market in the least bit, Passive investment strategies will find ample opportunity to re-enter this market in pull-backs, but as we have recently witnessed, pull backs come scarce and shallow in this medium term bull market. The 3 weeks from May 20th to June 6th was the largest pull back the market has experienced since april, with stocks barely retreating 5%. The Dow barely broke below its 50 DMA before employment numbers released on June 6th lent a beacon of hope to which investors hung on and ignited a rally.
This new paradigm bags the question "is this market doomed to succeed ?" I say this because it seems that regardless of the tenor of news that is released, a market rally occurs. Bad economic numbers briefly quenches the exuberance, until investors realize that the Fed has basically guaranteed free money until numbers improve, this is followed by a rally. Conversely, good economic data is initially met with market excitement and the prospect of "tapering" or the Fed cutting the proverbial umbilical cord is completely thrown out of the window. While there are clear forces supporting the market, what will cause the ceiling to reveal it self, and how will the market retreat?
Please look out for a daily news letter coming soon to My Trading Book as well as various reports on companies and macroeconomic themes.
Till then
There's always a Bull Market somewhere.
Monday 25 February 2013
Pull Back in the Markets, Over Exhausted Rally
Recent Market activity has brought on the realization that the market has overextended its recent rally. Current market conditions lack a catalyst in either direction for the immediate future, therefore investors need to weigh the probabilities of a decided bearish pull back or continued rally in the $SPY. Below are arguments for and against a significant 5-10% pull back in current indexes ($SPY, $DIA, $QQQ)
PULL BACK
The Fed signaled a need to revise the longevity of its asset purchase program in its latest FOMC meeting, citing inflation, asset bubbles and possible complications to withdrawing stimulus as material risks of ongoing easing. Gold, crude oil and stock futures are down on the news, while the VIX, a measure of market volatility, is up 20%. The market has rallied despite a lack of indication that the economy is improving materially, with 4th quarter GDP down 0.1% and the unemployment rate holding at 7.9%. While corporate profitability has risen, it has been more a result of cost cutting programs than revenue growth, which strengthens the notion that the market has improved faster than the overall economy, which is growing at a steadier pace.
With the S&P 500 near an all time high, there seems to be no real catalyst driving traders to buy in further, especially as the primary catalyst, QE 3, and Bernanke's recent promise to continue to buy $85 billion of securities a month until employment and the overall economy improves come into doubt. And while equity inflows started off the year positively, recent data shows an net outflow in February as investors started to lock in profits and get more defensive in anticipation of a pullback that it this point seems inevitable. Market sentiment is becoming increasingly negative and more investors are taking the short side of the trade. Hedge fund manager David Einhorn reduced his long positions and increased his short positions. His reason, an advancing market without the presence of an advancing economy to support current valuations. The truth of the matter is, we are not yet out of the wood works. The European situation has improved and is relatively stable but downside risks remain and improvements in the European economy have yet to materialize, with recent economic gauges coming in less than expected. The U.S economy is stronger and optimism is up, but the market has gotten ahead of its self. While there is room for growth, especially as 2013 rolls forward, a pull back in equities to a level that makes valuations more in line with current business and economic conditions is inevitable and near. This market leaves no room for material gains on the long side and investors are paying a lofty price for earnings. A pull back of 5 - 10% in the near term is a more probable occurrence than a 5 - 10% near term rise, which makes taking the short side a better bet especially as global economic readings are coming in less than expected and will compound to trigger sell offs in equities.
Continued Rally
While recent developments from the Fed signaled a need to revise its asset purchase program, the need for continuous asset purchases was never questioned. The underlying factors causing the Fed to continue its asset purchase program is the pace at which the economy is recovering. Economic growth is being threatened by increasing interest rates, therefore as long as 10 year treasuries continue to increase there will be a growing threat to the recovery that was spurred by Bernanke's aggressive monetary policy. An increase in household and business debt costs as a result of increasing rates could serve to derail an already sluggish economic recovery, therefore as 10 year treasuries creep over 2% in the short to medium term there will be added pressure on the Fed to keep policies intact in order to keep rates relatively low and protect this slow recovery from derailing.
While increasing rates threaten the Bernanke "recovery" thus forcing the Fed to leave its asset purchase program as is, the market is also supported in large part by higher than expected corporate earnings; recent earnings reports show that 65% of the 433 companies in the S&P 500 have reported better than estimate revenue. Furthermore, the stock market valuation is still not overbought with a price to earnings ratio just less than 14 which is well below an historic overbought valuation of 16.
The markets show signs of normal fatigue that will not amount to more than a 2-3% correction from its current levels. Having rallied 6% this year and already pulled back 1%, short term fatigue and some profit taking may occur, but longer term investors can rest assured that the breadth of this rally is still intact. The impressive earnings and Bernanke's need to bolster the economic recovery will serve as support for this market and protect it from an excessive or elongated correction.
Disclosure: We have no current position in any stocks listed above, however we may decide to enter one within 72hours of this article.
This blog post was written in collaboration with Samer Sweidan
PULL BACK
The Fed signaled a need to revise the longevity of its asset purchase program in its latest FOMC meeting, citing inflation, asset bubbles and possible complications to withdrawing stimulus as material risks of ongoing easing. Gold, crude oil and stock futures are down on the news, while the VIX, a measure of market volatility, is up 20%. The market has rallied despite a lack of indication that the economy is improving materially, with 4th quarter GDP down 0.1% and the unemployment rate holding at 7.9%. While corporate profitability has risen, it has been more a result of cost cutting programs than revenue growth, which strengthens the notion that the market has improved faster than the overall economy, which is growing at a steadier pace.
With the S&P 500 near an all time high, there seems to be no real catalyst driving traders to buy in further, especially as the primary catalyst, QE 3, and Bernanke's recent promise to continue to buy $85 billion of securities a month until employment and the overall economy improves come into doubt. And while equity inflows started off the year positively, recent data shows an net outflow in February as investors started to lock in profits and get more defensive in anticipation of a pullback that it this point seems inevitable. Market sentiment is becoming increasingly negative and more investors are taking the short side of the trade. Hedge fund manager David Einhorn reduced his long positions and increased his short positions. His reason, an advancing market without the presence of an advancing economy to support current valuations. The truth of the matter is, we are not yet out of the wood works. The European situation has improved and is relatively stable but downside risks remain and improvements in the European economy have yet to materialize, with recent economic gauges coming in less than expected. The U.S economy is stronger and optimism is up, but the market has gotten ahead of its self. While there is room for growth, especially as 2013 rolls forward, a pull back in equities to a level that makes valuations more in line with current business and economic conditions is inevitable and near. This market leaves no room for material gains on the long side and investors are paying a lofty price for earnings. A pull back of 5 - 10% in the near term is a more probable occurrence than a 5 - 10% near term rise, which makes taking the short side a better bet especially as global economic readings are coming in less than expected and will compound to trigger sell offs in equities.
Continued Rally
While recent developments from the Fed signaled a need to revise its asset purchase program, the need for continuous asset purchases was never questioned. The underlying factors causing the Fed to continue its asset purchase program is the pace at which the economy is recovering. Economic growth is being threatened by increasing interest rates, therefore as long as 10 year treasuries continue to increase there will be a growing threat to the recovery that was spurred by Bernanke's aggressive monetary policy. An increase in household and business debt costs as a result of increasing rates could serve to derail an already sluggish economic recovery, therefore as 10 year treasuries creep over 2% in the short to medium term there will be added pressure on the Fed to keep policies intact in order to keep rates relatively low and protect this slow recovery from derailing.
While increasing rates threaten the Bernanke "recovery" thus forcing the Fed to leave its asset purchase program as is, the market is also supported in large part by higher than expected corporate earnings; recent earnings reports show that 65% of the 433 companies in the S&P 500 have reported better than estimate revenue. Furthermore, the stock market valuation is still not overbought with a price to earnings ratio just less than 14 which is well below an historic overbought valuation of 16.
The markets show signs of normal fatigue that will not amount to more than a 2-3% correction from its current levels. Having rallied 6% this year and already pulled back 1%, short term fatigue and some profit taking may occur, but longer term investors can rest assured that the breadth of this rally is still intact. The impressive earnings and Bernanke's need to bolster the economic recovery will serve as support for this market and protect it from an excessive or elongated correction.
Disclosure: We have no current position in any stocks listed above, however we may decide to enter one within 72hours of this article.
This blog post was written in collaboration with Samer Sweidan
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