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Showing posts from September, 2019

Rotation: Value Stocks are overperforming in September

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In a week plenty of important economic news (Fed rate cut decision at Wednesday, Trade War concerns, Crude Oil price /CL spike after a drone attack, the recent ECB stimulus, the Friday Quadruple Witching, the huge spike in Repo Market rates yesterday), one is going unnoticed and I think it's crucial for exchanges in the mid-term: the "Great Rotation", as it has already been baptized by investors.

As you know, the Value stocks are those with low PE (Price/Earnings) and very stable fundamentals, and are opposite to the Momentum (or Growth) stocks, more focused on the aggressive growth of its value in the mid and long-term. This last, that have driven the bullish Wall Street rally for almost 10 years, is followed by the iShares Edge USA Momentum Factor ETF MTUMand includes giants companies such as Visa V, Mastercard MA, Microsoft MSFT, Disney DIS, among others. Meanwhile, the value stocks are followed by the iShares Edge USA Value Factor ETF VLUEwhich portfolio contains st…

World Economic News, at a glance

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- Retail Sales just doubled estimates at 0.4% along with a bonus revision in the month previous to solidify the overall staying power of the consumer.
- The good news may be enough to inch the SP500 SPX closer to its all-time high of 3,027.98 which is now less than 20 points away.

- The ECB announced plans to cut its bank rate by 10 basis points to an unfathomable 0.50% yesterday as stagnant growth persists in much of the region.
- Monthly QE purchases will begin in November at a rate of 20B Euros in an attempt to jumpstart the latency.
- European markets appear to be ending the week on a positive note other than the UK which is off modestly as the Brexit hash-out continues.

- Encouraging news on the trade front indicated that China just exempted some agricultural products like soybeans and pork from enforceable tariffs as sure appeasement to further negotiations. The largest soy purchase since June was also ordered which will hopefully open the floodgates to more sizeable purch…

Importance of the Yield Curve

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(Update from August 2018 post)
The Basics:
Mentioned here in several posts, the yield curve, take importance in these weeks because it's reaching a flat level that had not since 2007, with possibilities to invest for 2019, this with clear damage to the stock market. Why? Let´s briefly explain to you.

Understanding how this curve is drawn, its types (normal-reverse-flat-humpback), its inclination (steep or flat) and its relationship with the market, will allow us to make better trades. Also knowing its basic principle: the direct influence of the short-term yield bonds is the i-rate assigned by the FED, while the long-term ones depend, also directly, on inflation and how it is eroding the value of the bonus in time.

The yield curve is formed on an XY chart with the maturity times of the US Treasury Bond on one axis and the interest rates on the other. In an expansive cycle, there is a growing slope, as it is obvious that, at a longer time, higher yield is expected through a higher…

Important FED Speaks this week

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(Update from January 2019 post)

A Hawk and a Dove.
A preamble: a hawk, in monetary policy, is generally in favor of higher interest rates and less stimulus. He believes that inflation is already high and he needs to adjust the monetary policy to avoid it, even at the expense of unemployment, and thus maintain stable prices. A dove is quite the opposite: it prefers to maintain or reduce rates and favors more stimulus because he fears the high rate of unemployment and does not believe that the current inflation rate is high enough to worry about. 

FED Board of Governors
The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the FED. It is charged with overseeing the Federal Reserve Banks and with helping implement the monetary policy of the United States. The Republican Jerome Powell is the current Chairman. The other 15 current members of the Board of Governors, and mainly its position (hawkish, dovish or neut…

Technical levels for my Watchlist Stocks

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1. Cree CREE, $42.93 Its low 2019 guidance in its last earnings report (despite beats sales and EPS inline) plunged the stock from its comfortable $55-65 ($69.21 at highs) range since May to $43-45 levels, evaporating all its year gains. Its year pivot point is at $41.78 so it's worth keeping an eye there for its reaction at that level: if it rebounds or continues its falling to $40.84, its YTD low.

2. Dropbox DBX, $17.90 Same as Cree, lowered its guidance in its last earnings report, and the stock price sank more than 20%, verifying that Wall Street is yet reluctant this year to these cloud companies like Box or VMWare, both at year lows. Its recent all-time low at $17.20 is the level to check. Last week MACD bullish cross with low volatility gives some hope that this stock is rebounding now.

3. Disney DIS, $137.26 A winner-stock for this year, completes its pullback from $147.15, its all-time highs, and last week began its bouncing. At $137.60 is it month pivot point, the next …