Deutsche Bank Bullish on U.S. Equities, Sees V Shaped Recovery in Earnings

Binky from Deutsch Bank makes the case for higher U.S. stocks, based on the premise of a revitalized corporate earnings scene. He points out that earnings are beating by an average of 3.5% — heading into estimates that were flat. In other words, earnings are at record highs and they’re expected to trend higher — taking stocks with it.

The recent rally in stocks is ‘typical of a close election’, as well as the current lull.

Markets aren’t pricing in stimulus. As such, get long now else miss out.

I’ll take zinc. I got a new zinc trade that I’ll unveil tomorrow.

$AAPL is no longer an interesting company. Under the direction of Tim Cook, the company is geared to avoid risk and has fallen behind Samsung in nearly every facet of innovation. This is more of a finance company now, compiling cash at a record pace and keenly focused on creating free cash flow.

For the quarter, Apple beat on both the top and bottom lines. They issued downside guidance; but no one really gives a shit about that.

Reports Q1 (Dec) earnings of $3.36 per share, $0.14 better than the Capital IQ Consensus of $3.22; revenues rose 3.3% year/year to $78.35 bln vs the $77.26 bln Capital IQ Consensus. Gross margin 38.5%, in-line with estimates vs. 40.5% last year.

iPhones 78.3 mln vs 77.3 mln ests and 74.8 mln last year.

iPads 13.1 mln vs 14.7 mln ests and 16.1 mln last year Macs 5.4 mln vs 5.2 mln ests versus 5.3 mln last year.

Co issues downside guidance for Q2, sees Q2 revs of $51.5-53.5 bln vs. $54.05 bln Capital IQ Consensus; gross margin between 38-39% vs 38.7% ests and 39.4% last year.; operating expenses between $6.5 billion and $6.6 billion; other income/(expense) of $400 million; tax rate of 26 percent

All people care about are iPhone sales and they crushed it.

Co reported Q1 iPhones of 78.3 mln vs 77.3 mln ests versus 74.8 mln last year.
Co reported Q1 iPads of 13.1 mln vs 14.7 mln ests versus 16.1 mln last year.
Co reported Q1 Macs of 5.4 mln vs 5.2 mln ests versus 5.3 mln last year.

And then there’s this guy, livestream shorting $AAPL with his entire net worth wearing a fucking wolf mask. LOL

Tfw you short $AAPL with the last of your inheritance and broadcast it live wearing a wolf mask. #AllinApple https://t.co/4DY1W2aX54 pic.twitter.com/5bXkwY1rgZ

— G. S. Iyer (@iyer_gs) January 31, 2017

Here’s some background on the aforementioned man wearing the wolf mask.

And, he did an interview with Chicago Sean discussing this stupid trade in detail.

My portfolio was up nearly 2% today — buoyed by a very strong zinc market. For 2017, I am all about zinc and uranium. Zinc closed higher by 2.8% and after the market closed, $X guided way up, in ridiculous fashion.

U.S. Steel sees FY17 $3.08 vs $1.67 Capital IQ Consensus Estimate

The more demand for steel, the greater demand for zinc. Unlike steel, there isn’t a great oversupply of zinc. Hence, I expect both $TECK and $HBM to do quite well this year, especially with Trump’s fiscal stimulus plans looming.

Both the NASDAQ and the S&P closed higher, with the Dow being the only standout. Breadth was upwards of 61% and most people had a good day. I view today’s tape as a proper consolidation day and expect a resumption of the market rally tomorrow morning.

This being the last trading day of January, I am pleased to announce returns of 6%. Inside Exodus, my GARP portfolio was higher by nearly 5% — led by a 43% return in $UEC.

Happy 80th birthday to the legendary Phillip Glass, my favorite contemporary composer.

I haven’t seen a good looking -150 day like this in awhile, truly indicative of a market begging to go higher. Although the Dow is off by 150, breadth is at 50% — meaning half of the stocks traded are green for the day.

My positions give zero fucks and are all higher.

Observe.

At the end of the day, people want to speculate. Look at that god forsaken $DRYS — lifting higher on bullshit news.

In other words, this sell off is straight up bullshit. It looks like Exodus will be right again and stocks will begin heading higher — starting with tomorrow’s session.

Bottom line: with the dollar down by 1% v the euro and base metals ripping through the roof, this market is like a tinder box waiting to detonate and explode. I would not hold onto any shorts here. Book the trade.

I really don’t know what the answer is for our healthcare crisis. None of the plans, thus far, work. Permitting ‘capitalism’ to work when all of the big pharmas dominate has only led to extraordinary price hikes, across the board.

At the very core of the healthcare expense issue are the drug prices. For those of you who don’t have FREE healthcare through your employer, you’re fully aware of the insanity that is health insurance. Regulations need to control prices there, as the big pharma cabal have proven to give zero shits about the American patient.

Is it fair for prices in other countries to be 1/5th as expensive as ours? Why should we pay premium prices, when all those fuckers do is buy back their own stocks and ingratiate themselves with lavish bonuses? Where’s the value add and what good is health insurance if no one can’t afford it?

Trump had a meeting with some big pharma execs this morning. Here were the headlines.

Biotech is bouncing on these headline, now marginally higher, via $IBB.

UPDATE: Merkel responds by saying US can’t influence euro.

“Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did that before the euro existed,” Merkel told a news conference with Swedish Prime Minister Stefan Lofven.

“Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is,” she added.

Trump’s trade advisor, Peter Navarro, is making waves this morning after suggesting that the euro was grossly undervalued — giving the cucks in Germany an unfair advantage over its rival, especially within the EU.

His comments were directly pointed at Germany’s Merkel, a person critiqued often by President Trump for her stance on immigration.

“A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued,” Mr Navarro said. “The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU — ergo, this is a multilateral deal in bilateral dress.”

The OECD (illuminati) agrees.

Euro is the most undervalued currency among its Group-of-10 peers https://t.co/pBgSx3XBD2 pic.twitter.com/rI4oDezEGL

— Bloomberg Markets (@markets) January 31, 2017

The net result of these comments have people thinking trade war, sending the dollar lower, gold and other base metals way higher, and the dollar lower.

The obvious winners with a weaker dollar are gold and silver. I prefer zinc, especially since it has utility, mostly used to galvanize iron into steel. With Trump’s infrastructure spending bill not too far around the bend, and the specter of the wall looming, I love $TECK and $HBM for their zinc exposure.

Bitcoins are also sharply higher on this news.

While Trump may not talk about it, or his advisors, the culprit of the articailly weak euro is an obvious one: ECB QE.

As long as the ECB is printing magic money out of thin air to purchase bonds, the euro will remain weak. QE has distorted the essence and rules of finance by rigging borrowing costs and suppressing currencies in order to gain an advantage over non host country counterparts.

Will Trump call the banksters out next?

This is a company in crisis, makers of horribly looking sneakers and apparel. I never quite understood how anyone could buy their sneakers. Then again, I’m a guy who never wears sneakers and believes wearing shorts is for women and small children.

Nevertheless, $UAA is plunging in dramatic fashion this morning after missing and issuing downside earnings guidance. Plus, the CFO is Mcquitting — never a good sign.

What stands out the most is the drop in gross margins and 17% spike in inventories. This company must be Kmarting their merchandise in an effort to attempt to reach goals. I know the CEO, Kevin Plank, is one of those high school QB assholes who pretend to know everything and walk around life like it was a giant fucking locker room, slapping people on the ass and snapping wet towels at their faces.

Well guess what asshole? Your fucking company is a piece of shit now and no one cares about your motivational speeches.

Now your shares are in the gutter and your company is taking on water, a la SS Titanic.

Reports Q4 (Dec) earnings of $0.23 per share, $0.02 worse than the Capital IQ Consensus of $0.25; revenues rose 11.7% year/year to $1.31 bln vs the $1.41 bln Capital IQ Consensus.
North American revenues grew 6 percent.

International revenues, which represented 16 percent of total revenues in the quarter, were up 55 percent driven by significant growth in the U.K., Germany, China and Australia.
Apparel revenues increased 7 percent to $929 million including strength in golf and basketball.

Footwear revenues increased 36 percent to $228 million driven by accelerated growth in running and basketball.
Accessories revenues increased 7 percent to $104 million with strength in bags and headwear.

Gross margin was 44.8 percent compared with 48 percent in the prior year’s period, as benefits from more favorable product costs were offset by aggressive efforts to manage inventory, changes in foreign currency and the outperformance of footwear and international businesses in the overall mix.

Inventory increased 17 percent to $917 million.

Total debt increased 22 percent to $817 million.

Co issues downside guidance for FY17, sees FY17 revs of +11-12% approx $5.4 bln vs. $6.06 bln Capital IQ Consensus Estimate.
Gross margin is expected to be slightly down y/y.

Tempered top line results coupled with strategic investments in the company’s fastest growing businesses are expected to cause a decline in operating income to approximately $320 million.

Other full year assumptions include interest expense of approximately $40 million and an effective tax rate of 32 to 34 percent.

CFO Departure
The Company’s Chief Financial Officer, Chip Molloy, has decided to leave the company due to personal reasons. Effective February 3, David Bergman, Senior Vice President, Corporate Finance will serve as acting CFO. Mr. Molloy will remain with the company in an advisory capacity to assist with the transition.

Retail is dead. This company needs to be reinvented.

Democratic Congresswoman and long term advocate for American tech workers proposed a bill that will greatly fuck the Indian outsourcing problem which ingratiates the fuckhead executives in Silicon Valley.

If passed, and I think the President would be very supportive of this bill, it would destroy the H1-b visa program designated for high skilled workers. The minimum salary would jump from $60,000 to $132,000, instantly making American IT workers sought after and paid the amount the market dictates.

The High-Skilled Integrity and Fairness Act of 2017 introduced by California Congressman Zoe Lofgren prioritizes market-based allocation of visas to those companies willing to pay 200% of a wage calculated by survey, eliminates the category of lowest pay, and raises the salary level at which H1B dependent employer are exempt from non-displacement and recruitment attestation requirements to greater than $130,000.

This is more than double of the current H1B minimum wage of $60,000 which was established in 1989 and since then has remained unchanged.

The new salary limit makes it highly impossible for those already in the US on less than $1.30 lakh to stay back and those getting job offers with less than $11,000 per month salary are not eligible even to apply for a H1B visa. Thousands of IT employees working for Infosys, Microsoft, i-Gate, TCS, HCL, Wipro, Accenture, TechMahindra, etc. are the worst affected by the new law.

Earlier on, IT shares in India were crashing, led lower by Infosys, TCS, Tech Mahindra, HCL Tech and Wipro, but have since recovered and losses are now moderate — ranging between -2 to -5%. I suppose the market wants to see if this bill stands a chance at passing before passing judgement on Indian IT shares.

HIAS (Hebrew Immigrant Aid Society) head, Mark Hetfield, debated Tucker Carlson this evening on the merits of accepting refugees into the country — declaring it was the responsibility of the United States to accept anyone in need — citing the plight of jews in 1921 and how we, as a nation, horribly failed them — which contributed to the death toll during World War 2.

Tucker called him out for applying a straw man, revisionist, argument — asking Mark to explain what are ‘American values’ and how many refugees are we supposed to take in, considering there are upwards of 60 million, globally.

I am sure you could imagine where this went.

It’s important to note that organizations like HIAS make a living off admittance of refugees into the country. They aren’t honest brokers on the subject matter, since their livelihoods are dependent on government funds quantified off a number of refugees entering the country. In recent years, they’ve enjoyed solid growth, with revenues surging from $25m in 2012 to $40m in 2015, according to their 990 form filed with the IRS.

More to that end, the directors of HIAS have enjoyed a prosperous living off the recent influx of refugees, allocating upwards of $17m (~50%) of revenues towards salaries and compensation.

At the end of the day, they’re crony capitalists, sucking off the tit of government handouts — fueled by idealogues.

The last oversold signal for Exodus occurred in July of 2016. For bulls, it has been a long drawn out climb higher, with an energetic sprint higher after the elections. Our algorithms have been adjusting to recent stress points, as it intuitively learns current market behavior. For the first time in a long time, we triggered an oversold signal on our 3,6 and 12 mo algorithms.

It’s worth noting, however, the principle algo used on the site is the 36mo, due to accuracy and larger data sets.

Nevertheless, the data for the 12mo is impressive, 7 times up and 0 down over 10 trading days.

What does that stuff mean above? It indicates a market that stutter steps upon reaching this stress point for no more than a day, then it’s off to the races. In other words, according to recent history and providing the character of the market remains the same, tomorrow will be an optimal occasion to get long.