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Comments of the Day
29 October 2020
Video commentary for October 28th 2020
A link to today’s video commentary is posted in the Subscriber’s Area.
Some of the topics discussed include: risk off knocks stocks markets back. gold and oil pull back to the lower side of short-term ranges, safe havens did not rally significantly on expectations for additional stimulus.
Risk Off
The vast majority of markets pulled back today and the Dollar strengthened. The tightening on restrictions on movement and economic activity in Europe and the prospect of taxes rising in the advent of a Democrat clean sweep in next week’s election have sapped demand. The failure of the USA’s political parties to agree on additional stimulative measures represents a loss of the liquidity which has helped to support earnings and speculation.
Email of the day on Covid and the Trump rallies
It seems to me that the above are going to be seen as super spreading events as we see day after day thousands of his followers in close proximity not wearing masks, blindly following his mantra that the disease is turning the corner. Supporting my argument is we know an important property of the virus is that it survives in the atmosphere much better at lower temperatures thus aiding the infectivity.
Thank you for this email which may be of interest to other subscribers. I found the point you made months ago about the tendency of stressed individuals to be more susceptible to infection to be particularly insightful.
GE “Tough to Argue With” Results Win Over Wall Street Critics
This article by Esha Dey for Bloomberg may be of interest to subscribers. Here is a section:
General Electric shares jumped as much as 10% on Wednesday after the company’s third-quarter results
topped projections, earning the company plaudits from even the most bearish Wall Street analysts.
* Gordon Haskett analyst John Inch (hold) said GE’s EPS beat follows the pattern of mostly all other industrial companies that have beat bottom-line forecasts this earnings season
** Said overall, stronger healthcare and better free cash flow, despite still tough aviation business, “are likely to reinforce the messaging that GE has fundamentally bottomed – although the company will likely continue to face years ahead of difficult climb-back,” while Covid resurgence could arrest aviation fundamentals and future improvement in healthcare business
* JPMorgan analyst Stephen Tusa (neutral) said the across-the-board nature of the beat “is what it is, positive”
** The 4Q guide for free cash flow of over $2.5 billion suggests cash will be well ahead of JPM’s below-consensus expectations, and a “headline like that is tough to argue with”
* RBC analyst Deane Dray (outperform) said GE is still battling through a multiyear turnaround, worsened by the Covid-pandemic, but “there were encouraging signs” in the company’s EPS beat
** As is typical with a GE earnings, there are a number of moving parts involving charges/reserves, the analyst noted
** Said the most notable of those is the $100 million reserve taken for a potential settlement with the SEC for legacy accounting issues; however, since these issues date back to two CEOs ago, Dray expects investors would view it as a positive to see this issue resolved via a settlement
* GE 14 buys, 8 holds, 1 sell; avg PT $8.07: Bloomberg data
* NOTE: Earlier, GE Jumps on Surprise Profit as Culp Sees Faster Turnaround
The global economy is in a state of flux because no one can have an accurate reading what the future patterns of activity will be following the pandemic. The travel/hospitality sector obviously has a place in the economy but at what scale? The stay-at-home champions have seen a step change in demand growth for their products but how sustainable is that growth trajectory? For industrials is the economy going to bounce back on infrastructure development or be mired in political infighting?
Eoin’s personal portfolio – new trading position opened October 21st
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.
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