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Assessing the Fallout from the Collapse in China’s Stock Market…Thus Far

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No longer do we live in an isolated world. If you weren’t convinced of this before the Global Financial Crisis, the credit crunch of late last decade should have changed that. Just as the interconnectedness of global financial markets is undeniable, we think the significance of the health of the Chinese economy is as critically important to the trajectory of equity prices across the globe. That’s why we’re not taking the recent collapse in the Chinese stock market lightly. Here’s what we’re hearing. China’s major restaurant bellwether, Yum! Brands (YUM), owner of KFC, addressed whether a decline in the country’s equity market has impacted sales. Though the company noted that “a very small percentage of customers have been impacted,” we’re … Read more

Aerospace and Automotive Demand Powering Most Industrials

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Air travel growth and pent-up demand from delayed auto sales due to the Great Recession have provided a boom in spending within the commercial aerospace and automotive industries in recent years, respectively. The ever-increasing global population continues to be a driving force behind the expansion and adaptation of power end markets, and innovative solutions to meet growing global energy demand will continue to be a source of growth for industrials despite fluctuations in the energy-price markets. Such drivers in part have propelled the underlying performance of industrial giants GE (GE) and Honeywell (HON), among others. Winners and Losers Are Developing in Commercial Aerospace We expect commercial aircraft production and deliveries to continue to increase for at least the next three … Read more

June Sales Keep Auto Industry on Track for Best Year in A Decade

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Key Takeaways The auto industry continues its strong comeback in 2015. Volume and profits are growing, and the industry is poised for a banner year. SUV and light truck demand are the primary drivers behind the sales growth, as the drop in gasoline prices slows purchases of smaller, more fuel-efficient cars. America’s best-selling line, the Ford F-Series, remains in limited supply, even as demand for the truck line remains high, but other producers, including GM, are looking to take advantage of the mismatch. Toyota remains the top-selling retail brand in the US, despite weak industry-wide car sales. June US auto sales, according to Autodata Corp, increased 3.9% over the year-ago period to a total of 1.48 million units, the most … Read more

May US Auto Sales Cruise Past Expectations

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Key Takeaways The US auto market has recovered significantly since the depths of the Great Recession, posting its best monthly unit sales levels in May in a decade and possibly positioning itself to reach the highest level of annual unit sales since 2001. Consumer demand continues to shift from cars to light trucks and SUVs as pain at the pump eases. America’s best-selling truck, the Ford F-Series, is losing market share, but this may just be temporary as it ramps up production to meet “sky-high” demand. Chevy and Toyota are busy capitalizing on the weakness, however. Tesla may have the brightest future among any auto maker in theory, but how long will it take for its plans to be realized?  … Read more

The Invincible S&P 500?

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This is the performance of the S&P 500 (SPY) since the March 2009 panic bottom. It’s incredible, to say the least. US stocks, as measured by the S&P 500 have more than tripled since the doldrums of the Financial Crisis, and for those of us that lived and breathed the markets during every day of the Financial Crisis, the lack of volatility and the ongoing, steady advance seemingly month after month during the past 6-plus years have been incredibly peculiar–and perhaps contradictorily–less-than-comforting. Any market that sets prices on the buying and selling behavior of a wide-variety of participants with differing views shouldn’t be so coordinated and one directional. It seems unnatural, or at the very least, unusual. While others are … Read more

Dividend Increases for the Week Ending April 17

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Below we provide a list of firms that raised their dividends during the week ending April 17. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Blackstone Group (BX): now $0.89 per share quarterly dividend, was $0.78. CSX (CSX): now $0.18 per share quarterly dividend, was $0.16. Discover Financial Services (DFS): now $0.28 per share quarterly dividend, was $0.24. Donegal Group (DGICA): now $0.135 per share quarterly dividend, was $0.1315. Fidelity Southern (LION): now $0.10 per share quarterly dividend, was $0.09. General Motors (GM): now $0.36 per share quarterly dividend, was $0.30. … Read more

Goodbye Radio Shack, Hello Office Products Behemoth

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RadioShack will close its doors, while Staples and Office Depot are planning to tie the knot. 3D printing stocks may be in for a world of hurt in 2016, while GM and Ford benefit from strong employment and low gas prices. RadioShack (RSH) has finally defaulted on its debt. The company is reportedly in talks to sell half of its stores to Sprint (S) and close the remainder, should Amazon (AMZN) lose interest. Standard General, the largest shareholder in the archaic electronics retailer holds most all the cards, however, and we’ll soon see whether complete liquidation is in RadioShack’s future in the coming days. The sad reality is that the struggling electronics store chain may only have its real estate … Read more

Alcoa Kicks Off Fourth Quarter Earnings Season

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Would we ever considering owning Alcoa (AA) near a cyclical peak in economic demand, roughly 5-7 years into one of the strongest stock-market recoveries in history, or said differently, in the current environment? The short answer is: No. Market veterans know that the time to consider buying Alcoa is at a cyclical trough, not at peaks, and only then if there is no tangible risk of default. Alcoa may not be as much of an economic bellwether as it once was when the US was a much larger manufacturer of goods, but the aluminum giant is still relevant in assessing underlying demand trends in various end markets across the globe. The lightweight metal producer finds its way into just about … Read more

$45 Oil Prices!?!? There Is Never a Sense of Urgency When One Is Prepared

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Image Source: Macrotrends The bull market in energy (XLE) has lasted for the better part of a decade. Ever since the turn of the new century, energy perma-bulls have made the case that “black gold” (USO) should continue its ever-upward price advance thanks to ongoing demand from emerging and developing economies coupled with reduced inventories and areas of supply. We’re seeing this thesis challenged right at this moment. In deciding not to cut crude oil output in the face of oversupply and falling prices, the Organization of the Petroleum Exporting Countries (OPEC), for the lack of a better phrase, is now essentially engaged in a price war with producers in the US that are using breakthrough technology to produce oil … Read more