Utilities traditionally are a recession safe haven, although in March they fell along with the broader market. There is reason, however, to think they will outperform going forward. According to an analyst poll conducted by FactSet, analysts expect utilities to be the sector least affected by the pandemic, with 2020 earnings down only 1.6% from pre-pandemic...
Analyst forecasts for Merck earnings came down sharply early this year, but lately they've stabilized and even ticked upward a little. Merck is still priced for an optimistic market, with forward P/E around 15 and PEG around 2-3. This is reasonable for a large cap company with 3% dividend and a great reputation, but it's not bargain pricing, exactly. A second...
Bristol Myers-Squibb got another FDA approval yesterday to expand the label for its immunotherapy drug Opdivo. The approval isn't a huge deal, but it would have been an upward catalyst on a normal stock market day. BMY remains a highly rated stock by analysts, at just 10 forward P/E, 1.17 PEG, and 3% dividend yield. One drawback of BMY is that it has a -1.5% ESP...
As my followers know, I've been mostly sitting in cash and silver waiting for sanity to return to this market. Y'all bought stocks, and all I bought was popcorn, and it turns out the joke's on me. Here's how big the gap between price and fundamentals has gotten. On June 1, GDPNow reduced its Q2 GDP forecast to -52.8%. This is down over 10% in the last week. As...
Maybe too late for this trade, but I learned today that Carlyle Group subsidiary Combined Tactical Systems makes about a quarter of the less-lethal munitions used by police in the recent suppression of rioters and protesters in the United States. As long as unrest continues, this will likely continue upward. Not exactly the ethical/ESG trade of the year, though.
Quite a few people are short the June crude oil futures contract going into contract expiry on May 19, but it looks to me like they're getting squeezed. Several reasons this is happening: 1) Supply destruction has been unprecedented, with shale producers bankrupted and output cuts by Russia and Saudi Arabia at maximum. 2) Gasoline demand has been surprisingly...
The Nasdaq Food and Beverage ETF is entering a major downturn as the US is beginning to experience major disruptions in the meat market. Yesterday the McDonald's CEO announced that they've had no supply-chain disruptions yet, but they're watching the situation "hour by hour" and are very concerned about it. Later that day, I heard my first story of a McDonald's...
The prices of high-yield bond ETFs went through the roof after the Fed announced that it would be buying them, but they came back down as investors realized that the central bank hasn't actually purchased any yet. Word on the Street is that they're about to start, though, so I went ahead and picked up a couple May 15 calls, and we'll see what happens. Here's the...
If you've been following my previous thread, you know that I've been watching the 50-day EMA and the 200-day EMA as possible reversal levels for this rally in the S&P 500. We eventually pushed past the 50-day (green curve), but yesterday we got rejected from a test of the 200-day (dark blue curve), and now we've violated the upward trend line (light blue line)...
As I understand it, today's oil price meltdown was triggered by an oil ETF called USO. Unlike gold ETFs that hold physical gold, oil ETFs like USO hold no physical oil. The way USO works is that it holds contracts for delivery of physical oil next month (in this case, contracts for delivery on May 20). Then, on the 20th of the month, it sells those contracts and...
Retail sales data, industrial production data, and capacity utilization data for March all came in quite a bit worse than analyst forecasts today. The Empire State manufacturing index for April also hit a record low, falling nearly 40 points more than expected. Bankruptcies are also piling up this week at a much faster pace than last week. Publicly traded...
Novavax's Nanoflu isn't your typical new drug-- it's a whole new pharmaceutical technology. So it's hard to overstate how important today's positive Phase 3 clinical trial result is. Positive Phase 3 trial data this morning suggest that Novavax's Virus-Like Particle (VLP)-based flu vaccines will be much more effective than existing egg-based vaccines. When you...
Bristol-Myers Squibb says it has seen no major business disruptions and expects no decrease in global demand for its drugs this year. That means the 3.5% dividend yield should stay stable, and BMY is a great value at 1.3 PEG. BMY also just got FDA approval for a multiple sclerosis drug, which could turn out to be a pretty big deal. Most of the market has been...
I read an interesting WSJ article this morning on JP Morgan. It seems that CEO Jamie Dimon believes JP Morgan can maintain its dividend even if GDP dips 35% this year. The bank has a large cash pile and a diversified portfolio because Dimon has long been designing JPM to be a "port in a storm." www.wsj.com JPM currently has a 4% dividend. It's possible that if...
There's a lot of action in energy stocks today as Donald Trump announced on Twitter that Saudi Arabia and Russia are closing in on a deal to cut production by 10-15 million barrels per day. This is going to be challenging, since the two countries only produce 23 million barrels per day between them, so they'd have to cut their production in half. Shortly after...
Oil futures are forecasting about 50% upside from here by the end of the year. (Go Google the "Contango Curve.") However, oil could fall as much as 50% before it rises again, depending how long quarantines go and how the industry reacts to the storage shortage. So when playing oil, I'm thinking I'll take a small starter position at $20 per barrel and triple the...
I suspect that the Phase 4 stimulus bill, which Trump wants to be $2 trillion dollars, will include some funds for the 5g rollout. That might benefit companies like Nokia and Ericsson, though I'd expect the US government to favor US companies in any contracts for infrastructure build. Thus, I'm looking today at American Tower. On the hourly chart, AMT looks like...
It sure looks like the S&P 500 is getting rejected from the 20-day exponential moving average (EMA) today. With support at the 10-year trend line and resistance at the 20-day EMA, the price will get squeezed between the two in the coming days, and we should see a breakout one way or another. I tend to think the breakout will be downward. Futures markets are...