Displaying items by tag: stocks

(New York)

Some of the best forward looking recession indicators are in the commodities markets. Because they are generally a gauge for demand in the economy, they indicate where things are headed. Well, one of the best—copper—which is utterly ubiquitous across the global economy, is flashing some very worrying signs. Copper has had a very rough summer, but it has been worsening lately despite better share prices. The commodity just hit its lowest price in over a year. China accounts for around 40% of global copper demand. One analyst summarized the situation, saying “Copper is widely considered to be a bellwether for the global economy and so a weak price is cause for concern”.

FINSUM: Copper is partly at the mercy of the big fears in emerging markets, but that does not seem to account for the extremity of the selloff. This does worry us.

(New York)

Any investor will already know that Tesla is locked in an interesting and precarious situation. Elon Musk is apparently fixed on taking the company private, which has pushed its share price up, but the effort looks highly vulnerable, which could send things crashing back down. Add into the mix that the SEC is investigating the fact that Musk announced his intentions via Twitter, and you have a dangerous mix. Many are wondering when the SEC might decide if Musk broke the rules with his tweet, but the reality is that it may take some time for a judgment.

FINSUM: In our view the lack of a ruling on Musk’s tweet could mean this whole deal sits in limbo for some time.

(New York)

Market breadth has not been very good this year. In fact, it has generally been terrible. Tech stocks have delivered virtually all the gains. However, one bright spot in this uneven landscape has been healthcare shares, and that seems likely to continue. According to Barron’s, “Positives in the sector include attractive valuations, upward earnings revisions, share buybacks, and policy tailwinds”. Drug price pressure is still a concern for pharma companies, but right now things look strong, with over 90% of companies in the sector beating earnings forecasts.

FINSUM: We will be honest in saying that we do not have much expertise in the sector, but demographics also seem to be a supportive factor for the long-term investor.

(New York)

Elon musk’s tweet last week about planning to take Tesla private was met with much excitement, but also much incredulity. Many seemed to think the idea was just a pie in the sky plan with little chance of actually coming to fruition. However, the plan seems to be moving forward as Musk announced yesterday that he has hired Goldman Sachs and Silver Lake to advise the deal. Musk is apparently also working with the Saudi Arabian sovereign wealth fund to get the capital necessary to buyout the company, but is also seeking outside investors as well.

FINSUM: As the plan looks more and more concrete, the stock keeps rising towards the announced $420 buyout price.

(New York)

Since their low in 2017, retail stocks have been on a great run, rising about 35%. The question for investors is where the market goes from here. After easily outpacing the market, retail could face some headwinds, though analysts are still generally positive. Some say cost pressures are rising quickly and will hurt earnings, while others say such assumptions are overstated and that earnings should be fine.

FINSUM: Rising consumer confidence has really helped lift the sector out of its doldrums, but any economic peak could also prove the high point for retail. If you think this cycle has already peaked, then retail would seem vulnerable.