The Enhanced Investor Weekly Macro
April 30, 2017
ENHANCED INVESTOR WEEKLY WRAP & UPDATE Market Preparation Hello Everyone! It’s a huge week for earnings, so I’ve included some of the top companies to watch and new long-term fundamentals for potential “pops” and swings. Otherwise, the global financial markets will be looking to this week's Federal Reserve policy meeting on Wednesday for fresh hints on the timing of the next U.S. rate hike. Traders will also focus on the monthly U.S. employment report due Friday to gauge the health of the world's largest economy, especially in the wake of a recent string of disappointing economic data. Elsewhere, the euro zone is to publish preliminary data on first-quarter economic growth on Wednesday for further hints on the strength of the region's economy. Meanwhile, in the U.K., traders will focus on a trio of reports on activity in the manufacturing, construction and services sectors for further indications on the continued effect that the Brexit decision is having on the economy. Investors will also pay close attention to monthly data on China's manufacturing sector, which should provide a health check of the world's second-largest economy at the start of the second quarter. Most markets will be closed in Europe, the U.K. and Asia for the May Day holiday on Monday. 1. Federal Reserve Monetary Policy Decision The Federal Reserve is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET on Wednesday. The central bank will release its post-meeting statement as investors look for any change in language which could point more clearly to a June rate hike. There are also a number of Fed speakers slated to make appearances following Wednesday's meeting, with Chair Janet Yellen due to deliver a speech titled "Monetary Policy Rules and Committees" at the Hoover Institution, in Stanford on Friday. Markets are currently pricing in around a 65% chance of a rate hike in June and for September, odds stand at about 80%. The Enhanced Investor Weekly Macro
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The Enhanced Investor Weekly Macro
April 30, 2017
The median Fed policymaker forecast is for two more rate increases by year-end, after already raising its benchmark interest rate once this year, by a quarter percentage point at its last policy meeting in March. 2. U.S. Employment Data - April The U.S. Labor Department will release its confirm payrolls report for April at 8:30AM ET (12:30GMT) on Friday. The consensus forecast is that the data will show jobs growth of 185,000 following an increase of just 98,000 in March, the unemployment rate is forecast to inch up to 4.6% from 4.5%, while average hourly earnings are expected to rise .3% after gaining 0.2% a month earlier. An upbeat employment report will point to an improving economy and support the case for higher interest rates in the coming months, while a weak report would add to uncertainty over the economic outlook and push prospects of tighter monetary policy further off the table. Besides the jobs report, this week's calendar also features U.S. data on manufacturing and service sector growth, auto sales, personal spending, inflation, factory orders and monthly trade figures. Headlines from Washington regarding President Donald Trump's health care reform and tax cuts will also be in focus. Earnings from the giants of Apple (NASDAQ;AAPL), Facebook (NASDAQ:FB), Tesla (NASDAQ:TSLA), Time Warner (NYSE:TWX), Pfizer (NYSE:PFE_ and Mastercard (NYSE:MA) are also on the radar this week. 3. Euro Zone flash Q1 GDP The euro zone will publish a preliminary report on Q1 economic growth at 5:00AM ET on Wednesday. The region's economy is forecast to expand .5% in the first three months of the year, accelerating slightly from growth of 0.4% in the preceding quarter. Data late last week appeared to broadly back that up with weaker-than-expected gross domestic product expansion of .3% in France offset by booming .8% growth in Spain. Besides the GDP report, the euro zone will also release unemployment data for March and April’s true PMI.
The Enhanced Investor Weekly Macro
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The Enhanced Investor Weekly Macro
April 30, 2017
ECB policymakers did not discuss removing the bank's easing bias on monetary policy at its latest meeting last week, maintaining their dovish stance despite recent indications of surging inflation and robust growth. Again, these are only indications, not actual data. 4. U.K. Producer Manufacture’s Index The U.K. will release readings on April manufacturing activity 4:30AM ET on Tuesday. Reports on the construction sector on Wednesday and the service sector on Thursday. The manufacturing PMI is forecast to dip to 54.0 from 54.2 a month earlier, construction activity is expected to weaken slightly to 52.0 from 52.2, while a survey on Britain's giant services sector is forecast to inch down to 54.5 from 55.0 last month. Data released last week showed the British economy grew by just .3% in the January-March quarter, underlining worries that the economy is slowing just as Prime Minister Theresa May prepares to start negotiations to leave the European Union. This movement was to be expected. 5. Chinese Manufacturing Data - April The Caixin manufacturing index, which focuses more on small and mid-sized firms, is due at 9:45PM ET Monday. The survey is expected to inch down to 51.0 from 51.2 in the preceding month, so not much of a change all things being equal. The official manufacturing purchasing managers' index released on Sunday dipped to a six-month low of 51.2 in April from 51.8 in March, below the forecast for 51.6. Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction. China's economy grew 6.9% in the first quarter, boosted by higher government infrastructure spending, which is a great sign for the Chinese economy. But growth is expected to slow as policymakers take steps to reduce financial risks in the economy.
The Enhanced Investor Weekly Macro
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The Enhanced Investor Weekly Macro
April 30, 2017
Long-Term Fundamentals WD - Financier for commercial and multi-family loans. Breakout of base & earnings due on 5/3 TDOC - 4 weeks tight closing price base pattern in 6 week base. Tele/Video on demand physician services. GLW - Glassware maker expanding into new product lines. Breakout of 13 week base, 39% growth recently. MGM - Casinos are hot again, 6 month base breakout this past week. EPS up 138% in most recent reporting period. AMAT - 7 week ascending base pattern with light pullback for this chip equipment King. PE Ratio 15** RNG - Expanding into more internet of things home applications* COMM - 6 week base pattern for the connectivity products provider, Earnings due 5/4* CRUS - 4 week base pattern for integrated circuits and chip maker, rides back of Apple. 4 week base, earnings 5/3* BIVV - Bioverativ is spin off of Biogen, specializing in Hemophilia. Breakout of 3 week base near highs. Earnings 5/3* GMS - Breakout of 8 week base for this constructions products provider. ESNT - Mortgage insurance provider in all 50 states, should continue to ride housing boom. 13 week base. Earnings 5/5* PCRX - 10 week base turning upwards, Exparel is post-surgical pain drug non Opioid. Earnings 5/1 and expanding into dental markets*
The Enhanced Investor Weekly Macro
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The Enhanced Investor Weekly Macro
April 30, 2017
Additional Info For any newcomers who don’t know me, I’ve been contributing via the Enhanced Investor Weekly Macro Reports under #WatchList for over a year now. I began the education portion of this newsletter back in November due to the market action at the time. My in-depth knowledge of bubbles relative to political shifts and global economics, emerging markets, and monetary/fiscal policy needed to be shared, so I decided that it was simply not enough for beginners, or even intermediate traders because in order to have the ability to synthesize what’s truly happening - you need to be operating at the MBA/PhD level. As I’ve noted before, unfortunately, some PhD’s forget the basics. Whether that’s due to moral hazard, or plain and simple hubris, I can’t comment on that. Anyway, as I said a few weeks ago, it’s not fair for me to assume that all of you have what those at investment banks call “financial sophistication”, but that’s why we’re working together here at Enhanced Investor. Monitoring Wall Street and Washington helps us gain the upper edge. It’s why we do this. Anyway, I am more than happy to help, so if for some reason I don’t receive a tag in the #mainstockchat, or you don’t direct message me on Discord, please feel free to email here adamwood@fas.harvard.edu or you can tag me on StockTwits @ EILeadMacroAnalyst. Don’t fear a bubble - ever. We do not fear bubbles here at Enhanced Investor. Why? Because we’re armed with the strategic, tactical, and historical knowledge of every major bubble that has ever occurred. From the Tulip Mania of 1637 to the Housing Crisis of 2008 and the current market conditions - we’re prepared.
The Enhanced Investor Weekly Macro
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