stock alerts

  • 4 Jan 2018 5:19 AM | Jocelyn dela Dingco (Administrator)

    Security Flaws Found in Computing Devices

    According to security researchers, chips from Intel Corp., Advanced Micro Devices Inc. and ARM Holdings were found to have a set of major chip flaws. The weaknesses could let hackers steal sensitive information from every modern computing device containing chips from the said manufacturers. The warning was issued on Wednesday.

    One of the discovered bugs is specific to Intel. Another one affects desktop computers, laptops, smartphones, tablets and internet servers. Intel and ARM asserted that it was not a design flaw. Users are required to download a patch and update their operating system to fix the flaw.

    Researchers with Alphabet Inc.’s Google Project Zero working with international academic and industry researchers discovered two flaws. The first is called Meltdown. Hackers can bypass the hardware’s wall between applications run by users and the computer’s memory. That can let them read a computer’s memory then steal passwords.

    Spectre is the second and it affects chips from Intel, AMD and ARM. Hackers can possibly trick otherwise error-free applications into revealing secret information. Apple Inc. and Microsoft Corp. have available patches for users of desktop computers affected by Meltdown.

    AT&T Sets Launch Date for 5G Mobile Network

    About a dozen cities in the Unites States can expect higher speed and response time than the current 4G networks by late 2018. After the international wireless standards for the network have been finalized last month, AT&T Inc. is now ready to launch the fifth-generation (5G) mobile network.

    The No. 2 U.S. wireless carrier will use the 5G technology that is far superior to 4G in terms of speed and response time.

    Netflix Continues Global Dominance

    Shares of Netflix (NFLX) have already shot up 7% in the first two trading days of 2018 to an all-time high. It brought up its worth to nearly $90 billion. NFLX soared by 55% in 2017 and continues to be comfortably ahead of Amazon.com Inc. (AMZN) and Hulu.

    The future of the streaming titan is bright despite the additional looming threat of more streaming options from Apple Inc. (AAPL) and the tandem of Walt Disney (DIS) and Twenty-First Century Fox (FOXA).

    According to analyst Time Nollen from Macquarie Research, Netflix is a winner on all counts - programming hours, original content, quality and time spent. And things are not expected to change anytime soon.

    Tesla Moves Target Date for Model 3 Anew

    Customers will have to wait again for Tesla Inc.’s (TSLA) new Model 3 sedan. The electric vehicle maker headed by Elon Musk has again moved the production target for the second time on Wednesday.

    The announcement disenchanted investors even as the company claimed it made major progress in hurdling manufacturing challenges that have hindered the vehicle’s rollout. TSLA went down 2% in after-market trading.

    Tesla said it would build about 2,500 of Model 3 weekly by the end of the first quarter. The number is half the original volume it had earlier projected. The plan now is to produce 5,000 vehicles per week by the end of the second quarter.

    Spotify Files for U.S. IPO

    News outlet Axios reported on Wednesday that Spotify, the biggest global music streaming company, has filed ‘confidentially’ with U.S. regulators for an initial public offering. It is also targeting a direct listing in the first half of 2018 that would allow some longtime investors to cash out. Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) are its main rivals.

    The music streaming service was valued as much as $19 billion last year. If plans push through, it would be the first major company to carry out a direct listing. The route is the unconventional way of pursuing an IPO without raising new capital. There is no need for a bank or broker to underwrite an IPO. Further, related fees and charges are eliminated. The move could change the way companies go to the public to sell shares.

  • 3 Jan 2018 6:01 AM | Jocelyn dela Dingco (Administrator)

    Nasdaq Closes at 7,000 for the First Time

    Wall Street had a buoyant start on Tuesday and it appears the bullish sentiment in 2017 that drove the market to several records is still present. U.S. stocks rose in the first trading session of 2018 with the Nasdaq closing at 7,006.90, its first-ever close above 7,000. The S&P 500 also scored a fresh record to end at 2,695.79 while the Dow Jones was just 13 points below its all-time record at 24,824.01.

    Apart from the technology sector, S&P consumer discretionary, healthcare, energy and materials indexes were all up more than 1% on January 2. Many investors say the momentum from last year could continue. The recently approved U.S. tax overhaul is anticipated to boost not only but the economy as well.

    Chipmakers Advance On First Trading Day

    Tech stocks, particularly those of the chipmakers, rallied on the first trading day of 2018. The Semiconductor Industry Association reported on Tuesday that November chip sales increased by 21.5% to $37.7 billion. Sales in the Americas rose by 40.2% to $8.77 billion but the largest market was China, with $11.9 billion in sales or an 18.5% increase from November 2016.

    The PHLX Semiconductor Index rallied 2.8%, its biggest one-day percentage jump since Nov. 11, 2016, when it surged 3.9%. Top gainers were Advanced Micro Devices Inc. (AMD) with a 6.8% jump followed by a 6.2% surge in Micron Technology Inc. (MU).

    Shares of Chinese tech companies Alibaba Group Holding Inc. (BABA) and Baidu Inc. (BIDU) rose by 6.5% and 3.5% respectively. Even the Chinese online retailer JD.com Inc. (JD) had a great start as it finished 4.5% higher.

    California Legalize Weed, Marijuana Stocks Soar

    According to Marijuana International Corporation, the largest marijuana-associated firms by market capitalization added about $1.7 billion in value on Tuesday, bringing the total to over $19 billion. Effective January 1, 2018, selling pot for recreational purposes for people 21 or older is now legal in California. They are also allowed to possess up to one ounce of marijuana.

    Canadian firm MedReleaf (MEDFF) climbed 27%, Vancouver-based Aurora Cannabis Inc. (ACBFF) jumped 24%, Canada-based Canopy Growth Corp. (TWMJF) rose 9%, Ontario-based Aphria Inc. (APHQF) grew 8%, and another Canadian company Canntrust Holdings Corp. (CNTTF) increased 5%. While California has legalized sales of marijuana, it remains illegal under federal law.

    More Retailers Face Bankruptcy & Closure

    More brick-and-mortar retailers face bankruptcies and store closures in the U.S. this year. The wave of store closures and bankruptcies that struck last year could further intensify. A prominent commercial real estate firm, Cushman & Wakefield, reported that retailers closed an estimated 9,000 store locations in 2017. That number could increase by 33% in 2018.

    The said firm also estimates that about 25 major retailers could declare bankruptcy. Gap Inc., Gymboree, Payless, Rue21, and Walgreens are some of the few major companies closing stores in 2018. Based on the projections by the S&P Global Market Intelligence, the more prominent retailers that might file for bankruptcy are Sears, Bebe, Bon-Ton Stores, and Stein Mart.

    Cryptocurrencies Set New All-Time High


    On Tuesday, the cryptocurrency market started the New Year with a bang as the total value of the more than 1,300 publicly traded cryptocurrencies set a new all-time high of $667 billion. The list of data came from CoinMarketCap and it might be an indication the entire cryptocurrency market has recovered from the December 22 debacle when a correction occurred. The market plunged more than 30% from around $648 billion to $422 billion that day. 

    The most notable information is that the world's largest cryptocurrency may not be a large contributor. Bitcoin's share of the total market cap has now dropped to an all-time-low. The data suggests that the value of all bitcoins is currently only 35.6%of the entire marketplace.

  • 2 Jan 2018 8:35 AM | Jocelyn dela Dingco (Administrator)

    Wall Street to Welcome 2018 with Optimism

    Wall Street is set to welcome 2018 today on the first trading day of the year. Investors are pondering if the market momentum from 2017 can continue into the New Year. The U.S. stocks futures are mixed in early trading following the market’s slight dip on the final trading session of 2017.

    The European markets are mostly negative in early trading although the losses are meek. The Asian markets ended the day with gains. The main Chinese indexes had a good start with gains of 1% to 2%.

    New U.S. Tax Rules to Affect Profits of Corporate Giants

    Goldman Sachs (GS) forecasted last week that the changes in tax rules would take $5 billion off its profit in the final quarter of 2017. The slash is due to the "repatriation tax" or a one-time tax on the cash it hold overseas.

    Other corporate giants will be taking hits between $1 billion and $3 billion each in one-off charges. These are Barclays (BCS) Credit Suisse (CS), UBS (UBS), andoil giant Shell (RDSA). BP (BP) also announced that it will be writing off about $1.5 billion in credits for the fourth quarter of 2017 because of the changes in U.S. tax rules.

    Still, all the companies said that the lowering of U.S. corporate tax rate from 35% to 21% from 35% would ultimately be beneficial for business.

    Oil Opens the Year Above $60 per Barrel

    The international benchmark Brent crude futures LCOc1 and the U.S. West Texas Intermediate (WTI) crude futures CLc1 opened the year above $60 per barrel. This is the strongest opening for the first time since 2014.

    U.S. West Texas Intermediate hit $60.74 earlier on Tuesday then retreated to $60.63 a barrel. Brent crude hit a May 2015 high of $67.29 before sliding to $67.18 a barrel. The U.S.-based Schork Report said that the growing unrest in Iran has set the stage for oil’s bullish start in 2018.

    U.S. Airport Computers Restored After System Outage

    Photos of long lines at various airports in the U.S. circulated on social media after immigration desk computers went down for about two hours on Monday. Travelers entering the United States after the holidays were inconvenienced by the service disruption.

    The outage started at about 7:30 p.m. EST and was fixed about 9:30 EST according to the customs agency. All airports were back online after waiting times for travelers were extended longer than the usual. The Customs and Border Protection saw no malicious intent although it gave no explanation as to what caused the processing system outage.

    Apple Rush Replacement Batteries for iPhone 6

    Apple (AAPL) is working double time to appease irate iPhone owners by making available discounted replacement batteries. Users of iPhone6 or later need not wait any longer as they can already purchase the battery at $29.

    Apple originally planned to start offering the battery replacements a month from now. The company confirmed the early availability last Saturday. However, the supplies of some replacement batteries may be limited. It was discovered last week that Apple was slowing down older iPhones on purpose. Apple admitted the problem but said it was to prevent sudden battery shut downs.

  • 2 Jan 2018 12:10 AM | Jocelyn dela Dingco (Administrator)

    AN EPIC YEAR FOR THE STOCK MARKETS

    According to the S&P Dow Jones Indices, the value of publicly-listed companies on the global stock markets grew by $12.4 trillion in 2017, including dividends. The U.S. stock market, as usual, was in the center stage as investors wagered on strong economic growth, solid corporate earnings and optimism that President Trump would ease on regulations. Towards year-end, a big corporate tax cut boosted the market with the signing of the tax bill into law.

    The Dow Jones Industrial Average surged by 25.08%, the S&P 500 shot up by 19.42% but the tech-heavy Nasdaq Composite index outshined both with a stunning 28.24% gain. All three main benchmarks finished lower to end the year without the Santa rally.

    Global Winners

    Even with a remarkable showing in 2017, a number of stock market indices around the world outperformed the U.S. by a wide margin. Following are the top 4 winners:

    Argentina’s Mervel index is up 77% this year and hit a record high in the final week of 2017.

    The main Turkish index rallied by 48% with the implementation of temporary tax cuts and a loan guarantee program for small businesses

    The Nigerian All-Share Index has closed the gap with the records high of 2008 with a 42% surge in 2017.

    Hong Kong’s Hang Seng charged ahead by 36%, overshadowing China's major mainland indexes in Shanghai and Shenzhen.

    Biggest Loser

    While major stock markets posted sizable gains, the stock market of Qatar tumbled by 18%. The neighboring Gulf nations - Saudi Arabia, Bahrain and the United Arab Emirates – decided to cut diplomatic ties and transport links Qatar in June. The nations alleged that Qatar is funding terrorism which the latter is denying.

    Efforts and conditions were set but none were successful to restore the broken ties. The Middle East dispute is doing vast damage to Qatar’s economy and the besieged Gulf state is struggling to get by with workaround strategies and different trade routes.

    A WINNING HOLIDAY SEASON

    The official sales figures won’t be available until January 2018 but the U.S. holiday shopping season this year is set to break new grounds. No holiday season is more critical for retailers than 2017. Many are determined to stay remain afloat in a market increasingly dominated by Amazon.com Inc. (AMZN).

    Based on the data released by MasterCard Spending Pulse for the period November 1 to December 24, U.S. holiday sales increased by 4.9%, setting a new record for dollars spent. The numbers are the largest since 2011 on a year-over-year basis.


    The holiday shopping season accounts for up to 40% of annual sales. For this year, online and in-store spending posted record-breaking sales of more than $800 billion. Online shopping was boosted by a late season rally that saw a large gain of 18.1% compared to 2016.

    • The story is different per category but it was a winning season for retail generally:
    > Electronics and appliances 7.5%, the highest growth in 10 years


    > Home furniture and furnishings 5.7%, as did home improvement

    > Specialty apparel and department stores saw moderate gains, impressive enough given recent store closings

    > Jewelry grew 5.9%, driven by last minute sales

    The main contributing factor for the increased sales is the strong U.S. economy and the retailers’ heavy early-season promotions which paid off. Significant gains were already apparent during the first three weeks of November. Also, evolving consumer preferences continue to play out in the aisles and online sites of retailers across the U.S.

    Business is Booming for Logistics Companies

    Logistics companies like FedEx and United Parcel are once again in their busiest months of the year and they’re doing a pretty good job. The holiday season is usually a make or break affair even for shipping giants. Failure to make timely deliveries could tarnish their reputations and hurt investor sentiment too.

    However, both companies are able to manage and efficiently handle the holiday surge with minimal delays resulting in another record season. According to the National Retail Federation, the heavy rise in shipments, in and around the holiday season, are primarily attributable to the rise in e-commerce globally.

    Specifically, e-commerce was expected to grow by around 8-12% in 2017, which is more than double the overall increase for all retail. This staggering growth rate is also expected to grow at a similar rate over the next few years.

    S&P 500 TOP PERFORMERS


    S&P 500 2,673.61 as of 12/29/2017 (+19.42% YTD) Last week's close: 2,683.34

    Among the stocks that figured prominently in the top ten list of the best-performing stocks of 2017 on the S&P 500 index are a mix of sectors - tech, healthcare, consumer discretionary, industrials and utilities.

    The Top 5 Best Performers

    1.    NRG Energy Inc. (NRG)                       +132%         Utilities

    At the year-end closing of the books, NRG Energy Inc. came out as the as the best performing on the index. It was a close run-off with second-ranked Align Technology Inc., the maker of Invisalign dental braces. Shares of NRG finished 1.9% higher on Friday while ALGN fell by 1.8%. 

    The one-week gain of more than 43% in July of NRG shares solidified its top rank position by year’s end. The company made headway after shifting its focus away from renewables and instead selling power plants in an effort to become leaner. As for Align Technology, the company’s shares have consistently beaten Wall Street earnings and revenue estimates. It is tops in the medical specialties industry.  

    1.    Align Technology Inc. (ALGN)            +131%       Healthcare

    2.    Vertex Pharmaceuticals Inc. (VRTX)  +103%       Healthcare 

    3.    Wynn Resorts Ltd. (WYNN)                 +95%    Consumer Discretionary

    4.    Boeing Co. (BA)                                    +89%         Industrials

    Three stocks from the Tech Sector made it to the top ten – #6 Micron Technology Inc. (MU), #8 PayPal Holdings Inc. (PYPL), #9 Nvidia Corp. (NVDA). Two from the consumer discretionary sector completes the cast - #7 D. R. Horton Inc. (DHI) and #10 Pulte Group Inc. (PHM).

    Boeing is ranked no. 5 on the S&P 500 index but is the Dow Jones’ top performing stock in 2017.

    The Top 5 Worst Performers

    • 1.   Baker Hughes (BHGE)                         -51%      Energy
    • 2.   Range Resources Corp. (RRC)           -50%      Energy
    •  
    • 3.    Under Armour Inc. (UAA), (UA)     -50%/-47%  Consumer Discretionary
    •  
    • 4.    Scana Corp. (SCG)                              -46%      Utilities
    •  
    • 5.    Envision Healthcare Corp. (EVHC)    -45%      Healthcare

    In addition to BHGE and RRC, the stock of Chesapeake Energy Corp. (CHK) is the third energy stock (#8) that belongs to the top ten worst performers. CHK is down -44%. What caused Baker Hughes fall this year was when it was acquired by General Electric Co. The shareholders of the old Baker Hughes Inc. received a special cash dividend of $17.50 a share on July 6.

    NASDAQ RECAP

    The tech-heavy Nasdaq Composite Index outpaced the Dow Jones and S&P 500 in 2017. Tech stocks contributed significantly to the banner year of the U.S. stock market. Investors also rushed into growth-oriented companies belonging to the index.


    Nasdaq Composite Index 6,903.39 as of 12/29/2017

    (+28.24% YTD) Last week’s close: 6,959.96

    The Nasdaq Composite established numerous records, hitting two 1,000-point milestones during the year, passing the 6,000 mark in April and briefly crossing 7,000 in early December. It was the third quickest 1,000-point climb in the index’s history.

    But in ranking the top performing stock for the year, one unfamiliar name stood out. Nasdaq’s biggest winner in 2017 is Gravity Co. Ltd. (GRVY). GRVY is a South Korean videogame maker. Their series of game launches in key markets catapulted the stock to No.1 and rose to nearly 796% on the year.

    An interesting sidebar is a stock that rode on the cryptocurrency craze. Riot Blockchain Inc. (RIOT) was formerly Bioptix which is an “animal health care” company. When it changed its name and shifted to a blockchain business, Riot jumped and gained 640% for the year.

    There are plenty of conventional names that delivered handsome returns, mostly from the smaller Nasdaq-100 Index. Align Technology Inc. (ALGN), no. 2 in the S&P 500, is the biggest gainer and one of the top four stocks that rose by more than 100% on the year.

    1.    Align Technology Inc.                                       131%

    2.    Take-Two Interactive Software Inc.                  123%

    3.    Vertex Pharmaceuticals Inc.                             103%

    4.    MercadoLibre Inc.                                             102%

    Dish Network Corp. (DISH) ended up as the worst tech performer in Nasdaq-100. The company lost 400,000 net subscribers in its latest quarter compared to the previous year although about 145,000 customers had their services “proactively paused” due to Hurricane Maria. DISH can be a future acquisition target for some because of the valuable spectrum it owns. However, no potential buyers have emerged so far.


    DOW JONES' WINNERS

    The Dow Jones Industrial Average closed out 2017 on a very high note. It’s actually the blue-chip index’s best year since 2013. The top five were big winners in the broader S&P 500 index too.


    Dow Jones Industrial Average 24,719.22 as of 12/29/2017 (+25.08% YTD) Last week’s close: 24,754.06


    Shares of Boeing Co. (BA) soared 89.43% and emerged as the overall Dow leader in 2017. The aerospace and defense sector heated up because of the year-long strong demand in the defense and commercial sectors. The production rates of its 787 Dreamliner and narrow-body 737Boeing were ramped up due to the increasing demand.

    In addition, the company found alternative ways to cut production costs, thereby increasing its free cash flow. Investors welcomed with glee Boeing’s announcement of an $18 billion repurchase program and  a 20% dividend hike to $1.71.

    BA climbed consistently through the year, piling up a series of records and buoyed by better-than-expected earnings. The commercial airliner and defense contractor’s second quarter earnings report was impressive that it sent the stock up almost 10% in a single session.

    Boeing is not part of Silicon Valley yet it overshadowed the FAANG stocks: Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc., which have all made a lot of buzz this year.

    Caterpillar Inc. (CAT) came in distant second and climbed 71% in 2017. The construction and mining equipment maker was the best performer in the past six months to edge past Boeing for a period, 58.8% to 48.6%. There was a rebound in commodities that boosted demand for heavy mining equipment. Housing markets in the U.S. and China also remained strong.


    Credit card provider Visa (V) ended the year at 3rd place, climbing 46.45%. The company rode on strong consumer sentiment. More jobs were created and wages increased. The payment stocks of all stripes have been big winners over the last 12 months.

    Tech-giant Apple Inc. (AAPL) slid to the number four spot, gaining 46.2% in 2017.The highly anticipated iPhone X was released in November. It was the biggest redesign of the iPhone in three years. The cheaper iPhone 8 was also launched.


    Wal-Mart (WMT) managed to land at the top five despite the Amazon.com Inc. (AMZN) juggernaut. WMT rose 43.1% during the year. The discounter icon improved its e-commerce offerings to compete head on with AMZN. Wal-Mart purchased Jet.com and Shoebuy.com in 2016, vintage millennial brand ModCloth and high-end outdoor gear site Moosejaw in 2017. The company acquired Parcel, a same-day grocery and meal kit delivery service, in October.

    THE WEEK AHEAD

    The year 2017 is the first time since 2012 that international stock exchanges outperformed the U.S. market. However, U.S. stocks still posted gains exceeding 20%, including dividends. The Dow Jones Industrial Average rose more than 5,000 points, posting its largest ever point gain in a calendar year.

    Stock markets soared around the world due to improved global economic growth and strong investor confidence. Interest rates generally remained low, helping keep markets unruffled despite ongoing worries that political uncertainty or unexpected events would cause disruptions.

    For 2018, investors should set realistic expectations. The strong economic growth and rising corporate earnings fed the bull market but the pace might slow down after five years of above-average U.S. stock market returns. Investors should be more prudent and prepare in case there is a return of higher volatility plus the slow rising U.S. interest rates.

    Have a Prosperous 2018!

  • 29 Dec 2017 6:39 AM | Jocelyn dela Dingco (Administrator)

    Wall Street Hopes to End the Year on a High Note

    The Dow Jones Industrial Average recorded its highest ever close on Thursday at 24,837.51. The blue-chip index had an impressive run in 2017 and is up 25.7%. That’s the Dow’s best annual performance since 2013.

    Today, the U.S. stock futures are pointing up again as Wall Street is seeking to year to end on a high. Both the S&P 500 and the Nasdaq Composite are close to all-time highs too.

    As compared to stock market indices around the world, many have outperformed the United States by a wide margin. Among the global winners is Argentina’s Mervel index which is up 77%, followed by the main Turkish index which has surged 46% in 2017.

    U.S. Oil Price Hit the Highest on Last Trading Day

    With an unexpected fall in American output and a fall in commercial crude inventories that stoked buying, U.S. oil prices hit their highest since mid-2015 on the final trading day of the year. U.S. West Texas Intermediate (WTI) crude futures traded at $60.21 a barrel (up 37 cents or plus 0.6% from their last close) after hitting a June 2015 high of $60.32 earlier in the day.

    The international benchmark, Brent crude futures, was also up, rising 45 cents or 0.7% to $66.61 a barrel. Brent broke the $67 mark earlier in the week for the first time since May 2015. In international markets, Brent crude oil futures also rose, supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China.

    Since the start of 2017, Brent and WTI have risen by 17% and 12%, respectively, although the price increases from mid-2017 are much stronger, at nearly 50%.

    Global M & A Reach $3.54 Trillion

    Global Mergers & Acquisitions in 2017 reached $3.54 trillion with unsolicited takeover approaches helping drive the deal-making activities. Although M & A in the U.S. dropped by 16% to $1.4 trillion year-on-year, it was offset on a global basis by a same 16% rise in M&A in Europe to $856 billion and an 11% rise in Asia-Pacific M&A to $912 billion.

    The last three years was actually a favorable deal making environment due to the availability of cheap debt financing and high CEO confidence. The highest peak since 2008 was recorded in 2015 when M&A totaled $4.22 trillion. The data was provided by Thomson Reuters.

    For deals that were completed, it was noted that 80% of them were initiated by the buyer approaching the seller as opposed to companies who decided to sell. The Goldman Sachs Group Inc. validated this interesting fact.

    Consumer Confidence at Still High Despite December Dip

    The spirits of Americans remained high overall during the holiday shopping season despite being less confident about the economy in December than they were last month. In a report released by the Conference Board last Wednesday,  U.S. consumer confidence index dipped to 122.1 this month from a revised 128.6 in November.

    Conference Board economist Lynn Franco said that notwithstanding the dip, consumers' expectations remain at historically strong levels, suggesting economic growth will continue well into 2018. The view of the business research group regarding today's conditions rose to the highest level since June 2001. But their expectations were the lowest since November 2016.

     

    Uber Sell Large Shares to SoftBank

    Uber’s new Chief Dara Khosrowshahi scored a major victory after a consortium led by SoftBank Group Corp. has agreed to buy a large number of shares of the ride-services firm in a deal worth $48 billion. The price tender is a 30% discount to Uber Technologies Inc.’s most recent valuation of $68 billion.

    Major changes are expected in the way the board will oversee the company. Uber is dealing with federal criminal probes, a high-stakes lawsuit and an overhaul of its workplace culture.

    The rest of the SoftBank-led consortium includes Dragoneer Investment Group and will own approximately 17.5% of Uber. That stake contains a share purchase, through a tender offer, from earlier investors and employees at the $48 billion valuation, as well as a $1.25 billion investment of fresh funding at the $68 billion level.

  • 28 Dec 2017 6:58 AM | Jocelyn dela Dingco (Administrator)

    U.S. Oil Trading Hit Records

    As volumes in U.S. contracts are outpacing growth elsewhere, financial oil trading is booming and hitting records this year. Based on Thomson Reuters Eikon’s trading data, 2017 volumes for U.S. benchmark West Texas Intermediate (WTI) will hit a record of nearly 150 million. This front-month future is the most exchanged contract.

    The said volume is more than double the 71 million trades for spot Brent futures which is the international benchmark. The U.S. crude output has surged nearly 70% over the past five years. There is a visible trend showing in market open interest, the number of daily open contracts across all months, where WTI started edging ahead of Brent in September.

    Apple and Amazon Venturing into Saudi Arabia

    Reliable sources informed Reuters that Apple (AAPL) and Amazon.com Inc. (AMZN) are in licensing discussions with the Kingdom of Saudi Arabia. The two big U.S. corporations are keen on investing in Riyadh to support Crown Prince Mohammed bin Salman’s push to give the conservative kingdom a high-tech look.

    A source confirmed that Apple was talking with SAGIA, Saudi Arabia’s foreign investment authority. Although both companies are already selling products in the kingdom via third parties, global tech giants have yet to establish a direct presence. Amazon Web Services (AWS), the cloud computing division, is leading the discussions for Amazon. They will be competing in a market currently dominated by smaller local providers like STC and Mobily.

    About 70% of the Saudi population is under 30 and frequently glued to social media. Luring Apple and Amazon would further Prince Mohammed’s reform plans and raise the companies’ profile in a young and relatively affluent market.

    Apple Gets Wish from Reduced Repatriation Tax Rate

    Apple’s CEO Tim Cook is finally getting his wish after years of asking Washington to reduce the company’s repatriation tax so they can bring back billions of dollars held overseas. Apple is the biggest cash hoarder by far.

    By the end of the most recent quarter, Apple had $268.9 billion in cash and marketable securities. More than $250 billion of the total was held outside the United States. With the enactment of the tax bill into law, observers are curious whether Apple will make good its promise to return the money to its home country. The world's most valuable company has been widely criticized for continuing to rely on tax havens.

    Bitcoin Slumps as South Korea Eyes New Regulations

    Bitcoin continues to be volatile as the South Korean government clamps down on the cryptocurrency. According to Coindesk, the value of bitcoin plunged more than 10% to below $14,000 on Thursday morning in Asia.

    The head of the country's financial regulation agency, Yonhap, told reporters that the bitcoin bubble will burst later. The government will be putting in place measures to cool speculation in bitcoin. Included in the measures are a ban on opening anonymous virtual currency accounts and new laws giving authorities the power to shut down digital currency exchanges.

    Power Outage Shuts Down Rides in Disneyland

    Rides in Toontown and Fantasyland at the 85-acre Anaheim theme park was shut down. A power outage that lasted for several hours hit Disneyland (DIS) at 11:00 a.m. on Wednesday, disrupting several popular rides during one of the peak weeks of the year. Crews were able to restore electricity to Toontown by noon, and all affected areas by 4 p.m. The electrical failure was caused by a transformer.

  • 27 Dec 2017 4:54 AM | Jocelyn dela Dingco (Administrator)

    Apple Faces Class-Action Lawsuits

    Apple Inc. (AAPL) faces 8 lawsuits in various federal courts that claim iPhone users were defrauded by way of slowing devices without warning to compensate for poor battery performance. The complaints added that because of the tweak, many iPhone owners were misguided in attempting to resolve the issues over the last year.

    The lawsuits, all seeking class-action, were filed in U.S. District Courts in California, New York and Illinois. They are representing potentially millions of iPhone owners nationwide.

    For the first time, Apple acknowledged last week that the operating system updates released since last year for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge. Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said.

    The admission came following Primate Labs’ analysis last Dec. 18 that a software change had to be the reason why there are blips in the iPhone’s processing speed. Primate Labs is the firm that develops the iPhone performance measuring app.

    Amazon Celebrates Biggest Holiday Season Ever

    Amazon.com Inc. (AMZN) is again expected to grab the lion's share,  or more than 50%, of new holiday online sales in 2017. The e-commerce giant said that customers were shopping on its website at "record levels" throughout the months of November and December. Over the course of one week, more than 4 million customers were added to Amazon’s Prime or started a free trial. This sent the membership count to new highs.

    Although no specific membership total was provided, Amazon is already boasting about a successful holiday season, calling this year as the "biggest" ever. Amazon devices, led by Echo Dot and Fire TV Stick, also logged their best holiday.

    Retailers’ Stocks Climb

    MasterCard Inc. (MA) reported that shoppers spent over $800 billion during this season. As a result, the share prices of U.S. department stores jumped on Tuesday. Sarah Quinlan, head of market insights for Mastercard Advisors, reported the sales figures. The surprising numbers were boosted by growing consumer confidence, rising employment and early discounts.

    Most U.S. retail stocks have tumbled this year as they continued to lose sales to online stores, mainly to Amazon.com Inc. (AMZN). On Tuesday, shares in J.C. Penney Co Inc. (JCP) rose by 7.6%, Kohl’s Corp. (KSS) shares were up 5.8%, Macy’s Inc. (M) rose 5.1% and Nordstrom Inc. (JWN) increased by 2.8%. There was a late rally in online sales during the holiday season as sales rose by 18.1%.

    FedEx and UPS Welcome Returned Gifts

    According to Optoro, a firm  specializing in return shipments, gift recipients will return an estimated $90 billion worth of goods this holiday season. For FedEx (FDX) and United Parcel Service (UPS), those returns are pleasant gifts. Both companies stand to gain as consumers send items back to retailers and other vendors in droves.

    That sum total of returns is close to a quarter of the total value of goods returned annually and this amount has been growing steadily as consumers shift their shopping online. Both FedEx and UPS have been trying to capture a bigger share of the returns business. However, returns are a major challenge to retailers who are facing costly return rates as e-commerce grows.

    Tesla to Build Pick-Up Trucks

    Tesla’s Chief Executive Elon Musk disclosed on Tuesday plans to build pick-up trucks after the Model Y, a crossover SUV. Musk took to Twitter to inquire from his 17.1 million followers how the electric car and power company can further improve.

    Many talked about the various software upgrades but one Twitter user in particular asked for an electric pickup truck. Musk answered by saying that type of vehicle is on the way. Musk said that he'd been thinking about the design elements for almost five years now.

  • 26 Dec 2017 5:45 PM | Jocelyn dela Dingco (Administrator)

    THE GENERAL MARKET

    GOP Tax Bill Signed Into Law

    The week culminated with U.S. President Donald Trump signing the Republican tax bill on Friday. It marked his first major legislative triumph since he assumed the presidency in January this year.


     

    The enacted bill overhauls the tax code for individuals and businesses, eliminates the Affordable Care Act's so-called individual mandate, and opens parts of Alaska up to oil drilling. Trump fulfilled his pledge to sign the bill before Christmas.

     

    The Republican-led legislative branch of the U.S. government finally succeeded in sealing Trump’s first major legislative victory after the final approval (224-201) on Wednesday at the House of Representatives. The Republicans in the Senate also won 51-48 in favor of a sweeping $1.5 trillion tax bill.

    Many prime companies welcomed the tax reform bill’s approval. Immediately following Congress’ approval, AT&T (T) announced its intention to increase capital spending in the United States by $1billion in 2018. The company also promised to grant a $1,000 special bonus to more than 200,000 of their domestic employees. If U.S. President Donald Trump signs the bill before Christmas, the bonuses will be paid out to the employees during the holiday season.

     
    Trump gave special mention and praised Boeing Co. (BA), Comcast Corp. (CMCSA) and Wells Fargo & Co. (WFC) because they all pledged to offer employees bonuses and increased wages, if permitted, after the passing of the tax bill.
     

    The U.S. tax overhaul is coming in as a windfall to Silicon Valley technology companies like Alphabet Inc. (GOOGL) and Apple Inc. (AAPL). Both companies will enjoy big tax cuts and the window to bring back billions of dollars from overseas at a reduced rate.


    YTD PERFORMANCE OF THE THREE MAIN INDEX


    S&P 500 2,683.34 as of 12/22/2017 (+19.85% YTD)

    Last week’s close: 2,675.81

    The S&P 500, the U.S. stock market benchmark, also finished on its own record high of 2,690.16 on Monday which is its ninth straight monthly rise and the longest since April 1983. The index is likewise on track to post positive monthly returns, including dividends, for all 12 months of 2017.

    Dow Jones Industrial Average 24,754.06 as of 12/22/2017 (+25.26% YTD)

    Last week’s close: 24,651.74

    The Dow Jones Industrial Average was knocking on the door of the 25,000 mark earlier this week and posted its highest closing record of 24,792.20 on December 18.

    The blue-chip index has set 86 new record closing highs since the Trump won the 2016 presidential elections. Investors were confident then that the president-elect would pass business-friendly legislation and other job-boosting measures.  its 70th record close of 2017 to break a calendar-year record that’s stood since 1995, is on track to log its longest streak of monthly gains in nearly 59 years.

    Nasdaq Composite Index 6,959.96 as of 12/22/2017 (+29.29% YTD)

    Last week’s close: 6,936.58

    The Nasdaq Composite briefly surpassed the 7,000-point mark for the first time in mid-day trading on Monday before closing slightly under that milestone.

    Monday’s closing of 6,994.76 was also a record-high. The tech-heavy index had the largest percentage gain on Monday (0.8%, or 58 points) among the three major indices.

     

    Reversal of Fortune – Bitcoin Loses One-Third of Its Value

    After starting the week strong and closing at a record high, the biggest and best-known cryptocurrency lost one-third of its value on Friday. Bitcoin suffered its worst setback in just five days after a blistering ascent to a peak close to $20,000 last Sunday.

    The digital currency plunged as much as 30% before cutting losses, as this week’s selloff extended to a fourth day. The weekly decline is the biggest in almost 3 years. Other cryptocurrencies tumbled as well: ethereum dropped as much as 36% while litecoin slumped as much as 43% according to composite prices on Bloomberg.


    CONSUMER STAPLES SECTOR HIGHLIGHTS



    American Food Giants are going for a Snacking Overload

    Campbell Soup Co. (CPB) / Snyder’s-Lance Inc. (LNCE)

    A big moment for the food industry on Monday is the news that Campbell Soup Co. would acquire Snyder’s- Lance for about $5 billion. The latter is home to who’s who of snack brands, including Snyder’s of Hanover, Cape Cod, Kettle, Lance, Pop Secret, and Late July.

    Adding Cape Cod potato chips, Snyder’s pretzels and Pop Secret popcorn to its portfolio would in effect reignite Campbell’s sales with salty snacks. With Snyder’s- Lance beefing up their snack department, the snacks would comprise nearly 50% of Campbell Co.’s net sales. Their softer soup business would fall to about a quarter of the business.

    The acquisition is an attempt to bring back growth since Campbell is experiencing a three-year slump due to declining soup sales. With its $2.2 billion in sales over the last 12 months, the addition of Snyder’s-Lance would result to more than $10 billion in revenue.

    In stark contrast to Campbell Soup Co., the stock of Snyder’s-Lance is performing better on a year-to-date basis. LNCE spiked by 6.94% on Monday when news of the deal broke out. Trading volume jumped by 245.82% from the previous Friday.

    The Hershey Co. (HSY) / Amplify Snack Brands, Inc. (BETR)

    The iconic American confectionary company is looking beyond chocolate and adding “better-for-you” snacks as consumers are seeking healthier foods. Hershey Chief Michele Buck said on Monday, when the deal was announced, that there is “seriousness and intent” to transform the100-year-old company to an innovative snacking powerhouse.

    In addition to SkinnyPop popcorn, other savory snacks that are included in the deal are Oatmega, Paqui, and Tyrells.  Krave jerky and BarkTHINS are the recent acquisitions by Hershey. With more Amplify food products, Hershey will have a strong foothold in the snacking sector.

    The candy bar giant will benefit from the SkinnyPop which prides itself on using no artificial ingredients, flavors, or preservatives. The on-the-go healthy snack brand had double-digit percentage sales growth in recent years.

    The deal would be worth $1.6 billion where Amplify’s equity value was placed at $12 per share. The acquisition will boost the overall growth profile of Hershey by 0.5%. That is already significant given the current state of the packaged food business. Also, the deal would add 5% to Hershey’s total sales.


    TRANSPORTATION SECTOR HIGHLIGHTS


    Bright Prospects for 3 Shipping Stocks in 2018



    XPO Logistics Inc. (XPO)


    Three shipping stocks have bright prospects in 2018 but XPO Logistics has the greatest potential of all three names. In terms of market cap, XPO’sis less than $10 billion. That is about one-sixth the size of FedEx and one-tenth the size of UPS. However, the company has about 10,000 contracts with owner-operators who deliver packages to its customers.
    XPO shot up 14.38% to close higher at $90.01 on Friday. The stock of this logistics company has been an outstanding performer in 2017.

     

    XPO generated interest on Friday because of the news that Home Depot Inc. (HD) has not lost its desire to buy the $9 billion transportation and logistics company.

     

    According to a Recode report, Home Depot believes Amazon.com Inc. (AMZN) was also considering making an offer to purchase XPO, which specializes in shipping and delivering big, bulky packages. Home Depot wants to prevent AMZN from snatching up XPO first. Home Depot refused to comment on the acquisition rumors.


    The decided advantage of XPO is taking over the market FedEx and UPS won’t touch. The company has begun shipping big ticket items like 70-inch TVs for the last mile.


    FedEx Corporation (FDX)

    FedEx Corp. presented its fiscal second quarter that ended Nov. 30 after the close on Tuesday. The numbers were solid, beating earnings estimates handily. The company also raised full-year earnings-per-share guidance from a range of $12 to $12.80 to a range of $12.70 to $13.30.

     

    FedEx cited major factors that contributed to an impressive quarter – strong demand trends, improving global economy and its own execution for its increased guidance.

    •  
    On Wednesday, FDX climbed 3.51% to an all-time high of $251.07. Actually, the stock traded at all-time high numbers in after-hours trading Tuesday night. FDX finished the week at $250.02.

    The shipping giant sees a potential increase in annual profits by nearly $1.5 billion when the tax bill is signed into law. The blue-chip company is poised to achieve that now that the tax legislation has been enacted into law.

     

    FedEx told investors that the increase will be triggered by the change in valuating deferred tax liabilities as well as the cut in the corporate tax rate to 21%. The company added that the lower tax rate on a stand-alone basis will push earnings higher by $1 a share.

    United Parcel Service Inc. (UPS)

    The stock price of United Parcel was steady during week, maintaining the $118.00 - $119.00 level. UPS closed the week at $118.64. UPS might not be as successful as FedEx in terms of earnings and hasn't had an impressive run recently, but the future is still looking good. The company is due to present its earnings report on January 25, 2018.

     

    On Tuesday, UPS announced an order for 125 electric semi-tractor trailers from Tesla Inc. (TSLA) to add to its delivery fleet. Thus, Tesla secured its largest order for its recently unveiled electric trucks. UPS is now one of Tesla’s high-profile semi-tractor trailers customers. The others are Wal-Mart Stores (WMT) and PepsiCo. (PEP).

     

    UPS senior director for automotive maintenance Scott Phillippi says they have high expectations and are very optimistic that this will be a good product and Tesla will provide them firm support. UPS will be evaluating the performance of the Tesla vehicles as part of thier push to transition more to alternative-fuel vehicles.


    RETAIL TRADE SECTOR HIGHLIGHTS



    Amazon is going for Home Security

    Amazon.com Inc. (AMZN)

    Amazon is really targeting to get inside the homes of their customers. After the recent launching of its new Amazon Key delivery service involving automatic locks and security cameras, Amazon has acquired the startup Blink, which specializes in much the same products.

     

    The acquisition will improve Amazon's existing plugged in options because Blink's products work wirelessly. That will make the difference. The shift could be big since Amazon's existing system is limited by the need to have outlets posted near the doors and the set-up is not ideal. Although Blink's system needs batteries, you can buy them at a local store.

     

    Blink was acquired only a few days after they introduced their new video doorbell. The innovative ringer operates on two AA batteries and could last for a couple of years under normal conditions. Price-wise, Blink devices cost less than compared to the battery-powered doorbell of rivals like Ring. This new device only costs $100 while offering many of the same options.

     

    Amazon is aware that customers love home security cameras and monitoring systems. Blink will continue to operate under the Amazon umbrella selling and supporting the same great home security products. It’s Day 1 for Blink at Amazon but they’re looking forward to deliver more useful products to customers.

     

    Shares of Amazon.com Inc. dropped this week after starting strong at $1,190.58 on Monday. It went downhill in the next four trading sessions and finished the week at $1,168.36.


    THE WEEK AHEAD

    Wall Street takes a break on Christmas Day and resumes the next day for the last trading days of the year. Reports on consumer confidence and pending home sales will be released on Wednesday.

     

    The sweeping reform to the U.S. tax system that was signed by U.S. President Donald Trump into law on Friday will take effect on January 1, 2018. Most of the provisions for individuals are set to expire after 2025. Among the highlights of the bill include reduced individual income-tax rates, an increased standard deduction/child tax credit, and a substantial reduction in the corporate tax rate.

    •  

    One implication of the tax bill to the market is the return of volatility. The optimism over the passing of the tax-reform bill somehow suppressed stock market volatility recently as investors looked past risk factors. Since September, market volatility has been 30% below the average of the last three years. The volatility index (VIX) even hit an all-time low in November. The largest dip in the stock market in 2017 has been 2.8%. This year is the market's first year without a 3% decline. Investors are cautioned to prepare.


  • 26 Dec 2017 6:22 AM | Jocelyn dela Dingco (Administrator)

    Production Cuts Tighten Oil Market

    Oil prices are near the 2015 highs ($65.83) because of healthy demand outlook and ongoing production cuts led by the Middle East-dominated OPEC and Russia which is the world’s single biggest oil producer. Brent crude is at $65.28 per barrel while U.S. West Texas Intermediate (WTI) crude futures were at $58.50 a barrel.

    Brent has already risen by 47% since mid-2017. The market is tightening as OPEC and Russia are withholding production output to prop up oil prices. The move was agreed upon last January and is set to cover all of 2018.

    Roche to Acquire U.S Biotech Ignyta

    The San Diego-based Ignyta Inc. (RXDX) agreed to be acquired by Roche Holding AG for $1.7 billion. Investors of the U.S. biotech will get $27 a share in cash based on the joint announcement of the two last Friday. The price is 74% percent higher than RXDX’s closing price of $15.55 on December 21, 2017.

    The Swiss company is the world’s biggest maker of cancer drugs. Roche has is focused on small deals like Ignyta to build out its portfolio. Roche sets the first half of 2018 as the completion date for the purchase.

    After Christmas Sale Is On

    Top U.S. retailers across the country are offering end-of-year deals. Shoppers can stock up on winter gear at Macy’s (M). The retail giant is reducing prices on designer coats and sweaters. Prices in the store’s beauty, electronics and toy departments have been slashed too.

    Amazon.com Inc. (AMZN) has its own after Christmas sale so customers can buy extra post-holiday gifts. There are discounts in all departments which shoppers can take advantage of for the rest of the month. The discounts on electronics deals range from 10% to 70% off games, computers, sound systems, major appliances, cell phones, tablets, cameras and more.

    Mega store Wal-Mart (WMT) isn’t expected to unveil its after-Christmas sales until Tuesday. But basing on its historical practice, they are likely to roll back prices on just about everything on its shelves. The retail giant already offered big savings and generous price cuts days before the holiday

    The retail behemoth Target (TGT) usually offers sales a day after Christmas but this year, it has yet to reveal any major deals following the holiday. However, shoppers can browse their holiday shop to see the already chopped prices on holiday decor and goodies.

    Even the clothing store Old Navy has joined the fray. Discounts of up to 74% are being offered on men and women's clothing, swimwear and pajamas.

  • 26 Dec 2017 6:17 AM | Jocelyn dela Dingco (Administrator)

    Investors are Wishing 2017 Won’t End

    A combination of very healthy fundamentals -- strong economic and profit growth -- together with the enthusiasm about the Republican tax overhaul caused the euphoria on Wall Street. Investors are anticipating the lowered corporate tax rate and incentives to return overseas profits could spur a wave of share buybacks. Stocks would look even more attractive.

    Unlike the chaotic situation with bitcoin, 2017 is a merry year for the stock market. The Dow Jones is poised to have the best year since 2013. The blue-chip index is up by an impressive 25%. The broader S&P 500 is also on fire. The index is also on track for its best performance in four years as it rocketed by 20% this year. similarly on track for its best performance in four years. The tech-heavy Nasdaq surged nearly 30%.

    Amgen Sees Tax Expense of $6.0 Billion with New Tax Law

    Drug maker Amgen Inc. (AMGN) estimates to incur tax expenses between $6 billion to $6.5 billion over time as it repatriates cash it has gathered around the world because of the newly enacted U.S. tax law.  The company said that some of the expense is also due to the revaluation of its tax liabilities as mentioned in their filing with the Securities and Exchange Commission.

    Amgen did not disclose how much of its $38.9 billion in cash and other holdings it intends to move back to the United States. The law signed by President Donald Trump last Friday sets a one-time tax repatriation rate of 15.5% for cash and cash-equivalents and 8% for illiquid assets. The said rate is an attempt to encourage U.S. companies to bring home the more than $2.6 trillion now held overseas.

    Lower Excise Tax for Cider and Craft Beer Makers

    The makers of craft beer, artisanal spirits, hard cider and mead in the U.S. will pay less excise taxes next year due to a certain provision in the sweeping tax overhaul passed by the U.S. Congress. Sections 13801 through 13808 in Part IX of the tax bill grants sharply lowered excise taxes on liquor or alcoholic beverages made by small producers.

    One provision also set up the first statutory definition of mead, an alcoholic beverage made of fermented honey. Small craft producers are a rapidly growing category of the alcoholic beverage industry in the United States. Sales of craft beer alone were $4.8 billion in the 12 months ended in January, according to data from Nielsen Holdings.

    Real Valuation of Bitcoin Seen When Hype Dies Down

    Many are still unsure how to value the world’s most popular digital currency. People are having difficulty determining Bitcoin’s real value because there are no fundamentals to begin with. However, analysts believe that some real value may be created once the hype around cryptocurrencies dies down.


    Bitcoin’s price peaked to $19,666 on December 17, but sharply dropped by as much as 31.8% on Friday to a low of $10,775 per coin. It pared some of its losses on Friday morning and Saturday to climb above $16,000 again. It slipped to just below the $14,000 mark on Sunday.

    Toy Makers Hurting Due to Lower Prices

    While toy makers are all selling more on Amazon.com Inc. (AMZN), profits are depressed because they’re often selling at lower prices. The Toys “R” Us bankruptcy is not helping the industry too. Hasbro, Jakks Pacific, and Mattel each generated nearly 10% of their overall sales from Toys "R" Us in their most recent fiscal years.

    Without new ‘hits’ or stalwart franchises, toy makers are finding it difficult to outsell the latest craze which is the Hatchimals. Canada's Spin Master is the only traditional toy maker that is doing well. The company owns the super popular line of Hatchimals toys. This toy line pushed its stock to surge more than 60% on the Toronto Stock Exchange this year.

Copyright © 2017 Swing Alpha, LLC