Monday Digest #84

Weekly summary of finance, economic and tech news. Vision from DreamTeam. With 💜

Full version of our weekly digest also covers actual information about mid-cap companies and useful tips for the public to improve strategy on the financial market and make additional proceeds with our help. We suggest you to open and investigate the very interesting niche among investing opportunities.

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#FEDrate

Last two months USD Libor rate rose by 1/3 from Y2009 figures. The explanation for why Libor — the rate at which banks lend money to each other — is becoming unhinged from other borrowing costs is simultaneously simple and complex. The simple explanation is that a change in the U.S. rules governing money-market funds is driving investors who manage about $600 billion into government securities and away from non-government assets. The complexity emerges because the ripples from that change are showing up in different parts of the market in different ways.

#MACROECONOMICS #FINANCE

Bank of America warned of the risk of a collapse in the bond market. Investors often wonder, “if by the end of the era of ultra-low yields”, says Bank of America Merrill Lynch (BAML), in his review for the 12th of August (there RBC). Bank of America — not the first, who warns that bond prices climbed too high. This week managing Director J. P. Morgan Asset Management Oksana Aronov wrote that bonds with negative yields, where in the world it has traded more than $10 trillion, actually turned into the equivalent exchange-traded products (commodities) such as oil or gold.

Shenzhen-Hong Kong Stock Trading Link Gets Green Light. The long-planned stock-trading link between Hong Kong and the mainland city of Shenzhen has been approved, a step toward opening China’s $6.5 trillion equity market to international investors. Chinese Premier Li Keqiang announced the State Council’s endorsement, according to a statement on the body’s website. Foreign investors are waiting for details on which stocks will be traded through the link and what restrictions will apply to their purchases.

#POSTBREXIT

Freedom Party (the third political force in the country) of the Netherlands is preparing a draft of the referendum (Nexit), the same as Brexit. In the case of the country’s exit from the European Union The Hague intends to improve relations with Moscow and to remove the anti-Russian sanctions especially.

Great Britain’s decision to withdraw from the European Union has a negative effect on the oil fund of Norway. Nearly a quarter of the property portfolio of the fund is British real estate, 16% came from properties in London. The Fund has reviewed its portfolio estimation (including Properties UK) and it decreased by 5%. Profit Fund decreased by 1.4%, and exchange rate fluctuations have led to an additional reduction of 1.6%.

British withdrawal from the EU faces recession of the British economy in the coming year. After growing by 1.3% this year, the GDP of the country is waiting for the recession to 0.6% next year (recovery is expected in 2018 by 1.4%). The main negative factor is uncertainty. It will lead primarily to a drop in investments by 1.7% this year and 5.4% next year and household consumption by 1.5% in 2017 while the savings rate could rise from 6% to 10%.

#JAPAN #CHINA #TRADEBALANCE

For the 19th month in a row, Japanese Imports plunged — dropping 24.7% YoY (worse than expected), the biggest drop since Oct 2009. Exports were just as dismal, also missing expectations, plunging 14.1% YoY — worst since Oct 2009. The biggest driver of the collapse of Japanese trade was a 44% crash in the Chinese trade balance.

Fortunes have been lost predicting a blowup in the Chinese economy, but Friday’s reports on industrial output, investment and retail sales provide new evidence for the bears. China’s economy is clearly slowing down, though how much is less clear. The slowdown would be positive if it resulted from Beijing’s efforts to cut back industrial overcapacity and rein in wasteful investment at state-owned companies.The growth of private investment (about 60% of total investments in fixed assets) shows record low of 2.1% since the beginning of the year. Economists fear that China falls into a liquidity trap: instead of investing, companies accumulate cash. Notice, that China is the world’s largest oil importer.

#COMMODITIES

Saudi Arabia is sending signals that it could boost its crude oil supplies in August to a new record level, overtaking Russia, the world’s top oil producer, as it gets ready for tough talks next month for a global output freeze pact. One source from outside OPEC said the Saudis were quietly telling the market that output could rise further in August to as high as 10.8–10.9 million bpd.

#INTERESTING

Starting later this month, Uber will allow customers in downtown Pittsburgh to summon self-driving cars from their phones, crossing an important milestone that no automotive or technology company has yet achieved. Uber’s Pittsburgh fleet, which will be supervised by humans in the driver’s seat for the time being, consists of specially modified Volvo XC90 sport-utility vehicles outfitted with dozens of sensors that use cameras, lasers, radar, and GPS receivers. Volvo Cars has so far delivered a handful of vehicles out of a total of 100 due by the end of the year.


World of Midcap and Crindex M

#recommendations

Note interesting tickers below as this week trading opportunities.

Buy: $AES, $ACHC, $CNO, $CNP, $EVHC, $FEYE, $FUL, $JBHT, $KAR, $OII

Sell: $AJG, $BG, $BLKB, $ESRT, $IILG, $KYN, $XRX, $UDR, $IMS, $PAYC


Weekly review of midcap news and events

#services $BNED $BKS

Source: The company’s official web-site.

On August 17 Barnes&Noble (NYSE: BKS) (the online bookstore for books, NOOK ebooks & magazines. Shop music, movies, toys & games, etc.) fired CEO. The comment on this decision and its implemetnation was very short: “he was not a good fit for the company”. The firement from external view was obvious: Barnes&Noble and its subsidiaries has shortcomings in financial results. Also, Barnes&Noble education announced that the company will report fiscal 2017 first quarter earnings results on Thursday, September 8, 2016 before the market opens. The company will host an investor conference call at 10:00 a.m. Eastern Time on Thursday, September 8, to review the company’s financial results and operations.

Well, we do not know enough about this replacement in “the mother” of Barnes&Noble Education, but the market reaction on $BNED was subsequent that day (-5.01%). The day later the stocks recovered by a half and we expect that new CEO (which is unknown jet) will be a provider of value creation of the company and all its subsidiaries and market will reflect in appropriate way. Also we forecast the continue of $BNED growth from the tech analysis’ side.

#technology $YELP

Source: The company’s official web-site.

Yelp Inc. (NYSE: YELP) is an American multinational corporation headquartered in San Francisco, California. It develops, hosts and markets Yelp.com and the Yelp mobile app, which publish crowd-sourced reviews about local businesses, as well as the online reservation service SeatMe and online food-delivery service Eat24. The financials of last fiscal quater have first positive net earnings and another excelent proceeds within last 1.5 years. The company gets 5 Stars for its performance by investors.

After the public exposure of statements, on August 9, the next day market opened with 10.81% positive gap and during last week stocks showed expectable positive consolidation. We and market see ongoing develompent and spreading of Yelp services. That’s why on August 16 this stock was included in our portfolio. #strongbuy

Strategy results and performance of Crindex M

The structure of Portfolio was changed by including $YELP, the idea by Dmitry Levashkin. As we see, weight of tech sector raised. Nowadays top sectors in the portfolio are Services, Technology, Financial.

The diagram above shows weight performance of Crindex M. Like the last week, top-4 tickers by weight are $SIG, $JNPR, $RDN, and $OPK. But $YELP has an impact on the whole portfolio structure.

At the end of the week, on August, 19, we see that 2 stock have a little slump in trading position: $OPK, $YORW. At the same time $CECO, $FBC, and $SIG are top-3 surplus stocks during August 15–19.

This chart above shows 3 opportunities (on July 1, 2016) to invest in 3 “indices”: S&P 500, S&P Midcap 400 and our Crindex M strategy. Nowadays relative results of such investment decisions are 3.85% (-0.01%), 4.17% (+0.33%) and 5.34% (+0.19%) accordingly. E.g. our strategy outperforms S&P indices by 1.17–1.49% which is the very subsequent excess profitability. Additionally, Midcap and Crindex M have increased when the whole market has remained unchanged.


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