DIA

ICYMI: Interview with Valuentum’s Callum Turcan

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Callum Turcan helps head up Valuentum’s research product and is co-editor of the company’s newsletters. We sat down with Callum to get his thoughts on new developments in the market and economy. Let’s kick things off with his thoughts on Brexit. Callum Turcan: Looks like the Brexit debate is coming to a close with a large Tory majority coming into the UK Parliament (EWU) after the December 12 general election, a large enough majority to provide Prime Minister Boris Johnson with more than enough room to maneuver the likely political obstacles ahead (over the next couple of months). By early 2020, it seems the UK will no longer be a member of the EU given that the incoming Parliament, in … Read more

Economic Commentary: Apple $225+, Brokers Tumble, Auto Sales Look Tired

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“Though all signs point to increased volatility, we maintain our view that we’re well-positioned in the newsletter portfolios, and the ideas highlighted in the Exclusive publication consider the backdrop economic conditions we closely monitor.” — Brian Nelson, CFA There has been plenty of news in the markets this week, with the Dow Jones Industrial Average (DIA) experiencing significant declines only to bounce back a bit. From where we stand, the markets look vulnerable technically, but that doesn’t mean we’re looking to change anything in the newsletter portfolios. We have some dry powder in the form of a ~10% cash weighting in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. The disappointing September ADP jobs report added to lower-than-expected ISM (Institute … Read more

The Valuentum Team Talks Powell Speech and Threat of Global Recession

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Last week, China issued retaliatory tariffs on US goods, and Trump responded in kind, escalating trade tensions. Caught in the middle of this US-China trade war is the Fed, however. Let’s sit down with the Valuentum team and kick things off with our thoughts on Fed Chairman Powell’s speech, Challenges for Monetary Policy issued August 23 in Jackson Hole, WY. Our latest Economic Roundtable can be accessed here. Matthew Warren: Powell is certainly leaving the door open for cuts if needed. To me, it’s largely pushing on a string. I don’t think cost of capital is the problem. Capital is already cheap. Mortgages aren’t even following the 10-year (TLT, TBT) down fully. Banks (XLF) won’t take credit card rates down … Read more

Trump “Tweet Storm” Reveals Increased Frustration with Fed, China

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— Markets are starting to look toppy. — By Brian Nelson, CFA — The markets are under heavy pressure Friday, August 23, as China escalated the trade war with new retaliatory tariffs on $75 billion worth of U.S. goods (soybeans and autos), including a 5% tariff on U.S. crude oil prices. Removing the Energy Select Sector SPDR (XLE) from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio August 14 looks to have been a savvy move. Following the much-anticipated speech from Fed Chairman Powell today, President Trump responded with a series of tweets that showed tremendous frustration with the current situation. Here is the Twitter thread, reproduced below: — As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or … Read more

Join the Conversation on the Market Plunge

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The Valuentum team shares its thoughts on the recent surge in volatility and collapse in interest rates amid a trade and currency war between two of the largest economies in the world, the US and China. No changes to the newsletter portfolios at this time. During the past few days, the US (SPY, DIA) and China (FXI, MCHI) have escalated a trade war, turning it into a currency war, the latter allowing its yuan to drop to lower levels against the U.S. dollar. The US has now labeled China a “currency manipulator,” and China has responded by suspending U.S. agricultural purchases. China is one of the largest buyers of U.S. agricultural goods. The Valuentum team builds on its previous conversation … Read more

In the News: Second-Quarter Earnings Season Begins

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Second-quarter earnings season is upon us. The markets aren’t expecting much growth. Core industrial names may not fare well, but thus far, big pharma is solid. We’re not making any changes to the newsletter portfolios. By Brian Nelson, CFA We’re off to the races with second-quarter earnings season. The markets aren’t expecting much, with the consensus for S&P 500 (SPY) companies to experience a 3% earnings decline, according to FactSet. If this happens, this would mark the first time S&P 500 companies, in aggregate, would have posted year-over-year declines since the first half of 2016. The markets have rallied considerably since then, and despite the strong earnings expansion aided in part by corporate tax cuts, the 12-month forward P/E ratio … Read more

Now a Trade War on Multiple Fronts!

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This article appeared as the introduction to the June edition of the Dividend Growth Newsletter. By Callum Turcan and Brian Nelson, CFA On May 5, President Trump announced via Twitter (TWTR) that he planned to raise American tariffs on $200 billion of Chinese imports from 10% to 25%, stepping up pressure on Beijing in what we initially saw as a bid to get a trade deal over the finish line. By May 10, the new tariff rates had gone into effect and it became clear that neither side was any closer to reaching an agreement, unfortunately.  Just a few weeks ago, state-sanctioned rumors were coming out of Beijing (particularly, the editor-in-chief of the influential Global Times) that China was considering … Read more

Big Bank Roundup, Bank of America Catches Our Eye

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In this article, let’s catch up with how far the big 6 banks in the US have come since the height of the financial crisis exactly a decade hence. We will highlight the improvements in the banking system, some of the key risks, and a few high level thoughts about the individual franchises leading the US banking system. We like Bank of America the most, and we include diversified banking exposure in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. “Both a European bank crisis and/or a Chinese banking and economic crisis would be mutually reinforcing to the downside and a major cause of global deflation.” – Matthew Warren By Matthew Warren When you take a look at the … Read more

Consider Selling Discipline = Systematic, Forward-looking, Repeatable

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Image shown: An illustration of Valuentum’s call on Kinder Morgan during 2015. You can read about this in more detail in the Preface of Value Trap: Theory of Universal Valuation. For a consider-selling discipline to be successful, it must be systematic, forward-looking and repeatable. The Valuentum process worked equally well with General Electric during 2017 (image later in note). No changes to simulated newsletter portfolios. By Brian Nelson, CFA Good morning everyone! The markets took a shellacking yesterday with the Dow Jones Industrial Average (DIA) falling over 300 points during the trading session January 22. Had there not been a near-100 point leap in the Dow during the past few minutes of trading, the fallout may have been worse. Most are … Read more

Wild Ride in the Markets — Nelson

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Image Source: Spencerville Rodeo By Brian Nelson, CFA Market volatility has picked up quite a bit of late, and frankly you shouldn’t be the bit surprised. I’ve been quite active explaining the impact that the proliferation of index investing and quantitative investing has had and will have on the marketplace. The more people index or invest on backward-looking empirical criteria, as in most quant models, regardless of future expectations, the more people that buy everything at any price and hold no matter what, the more people that aren’t making decisions on the basis of underlying valuations, then the more people that can contribute to severe price-to-fair value dislocations. In many ways, when nobody is paying attention to what is going … Read more