The Banking and Strategy Initiative

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It’s Monday Again: It’s easy to forget its the Post Taper world!, China Mobile, Merry Christmas, Investors return to Global Fixed Income in 2014 (US Economy & Markets: The Week ahead: December 23 – 27, 2013) US:AAPL, US:DRI, US:CMG

Logo used from 1980–2007, still in use at some...

Logo used from 1980–2007, still in use at some Applebee’s locations. (Photo credit: Wikipedia)

Of course being Christmas week, not much is scheduled by way of Economic Reports with Jobs Data coming out on January 10th and the Chicago PMI being released next Tuesday.

Target has been suffering from the data breach affecting all its 40 million customers, sales down 4% from last year in the company’s early damage assessment updates

Tiffanys seems to be leading in the Holiday Sales surge even as the latest spending pegs the November consumer sending at a 0.5% increase. Macys could not be far behind and Walmart and Amazon would continue to cater to a larger segment (that lives in a body suit ? :D)

CMG is happy enough with its Asian experiment in Washington and the East Coast to invest ‘furthr’ in a new Locale in Broncos country

Minimum Wage, Casual Dining and other Christmassy and Twittery trades

The increase in minimum wage is expected to hit owned Casual Dining Businesses with Franchised chains like McDonalds getting off wit h a 6 cents earnings impact (Pier Jaffray/Bloomberg). However casual dining chains like BJs expected to be impacted 33 cents may also be outweighed by others like Applebees (US:DIN) and Chili’s (US:EAT) who have postulated in the recent quarterly report that they would not be impacted by the wage increase having heavily invested in in -store innovation.

Dominos is invested in a new Digital strategy, MCD having recruited a new Chief Digital Officer as well but we dot expect Feshdirect, Dominos, McDonalds or other excluding Amazon to make fresh inroads into the internet ecommerce markets now waiting for the next big surge of custom thru breaking innovation not unlike netflix or amazon and instead of new snack companies (nibblr) tom tomming copycat navigation software or others like grubhub trying to recycle old gravy which may not get spare dollars given heating bills in this half of the year since October.

The most well dressed to the ball however may be Dominos who have managed to take 50% of the business outside US with India making a #2 market recently and UK close behind at #3

Still, its better businesses have something more to tackle than just increased healthcare spends across California, New York and New Jersey among others , almost equating to metropolitan areas accounting for most of the Economic recovery

It’s easy to forget the Taper

Housing Recovery

Last week saw Existing Home Sales come down to an annual rate of 4.90 mln homes  but still a nice number ( broke a 29 month increasing trend but barely, with November 12 number at 4.96 mln) Housing starts and Building Permits crossed the 1 million mark and stayed up with growth in Single Family unit starts coming up 20% after the 890k freeze up in October.

Housing completions also saw a big 20% jump in the November series at a nice round 823k number across 604 k single family units and a 354k multi family units including almost 220k completions in the Third quarter itself keeping up with the 2012 data as is much needed given the early preoccupation in the recovery with a low Housing completion rate

That Taper and the Global recovery mish mash

Even if the Taper announced last Wednesday at the FOMC continues at $10 Bln new reductions every 45 days ( 8 FOMC meets across the year) there is more than $600 Bln in new Bond buying  by the $5 Tln Fed in 2014. Also mot investors including Banks, Japan and China sovereign fund investors and others like Blackrock (Still not upbeat on the bonds but its a matter of time) and PIMCO  with yields almost certain to cross the 4% threshold. US will thus be leading the Global recovery except for the bump up in Emerging markets as Europe returns to negative growth and Germany the only one growing at the top.

Even the UK recovery seems suspect though I would not equate it with Mark Carney’s likely early exit. However concerns around a strong Dollar cutting into the Economy’s gains remain as the currency markets push up the Dollar and the Euro in turns. China’s Yuan meanwhile has become the global nubmer 2 in currency backed by the 8% share largely from Global trade. PBOC continues to push banks to shut off their brisk lending and predictably that increases the noise levels from some economists for a hard landing in China

A Deal Mish Mash for your Christmas Dinner and good 2013 takeaways

Darden is trying to sell off the Red Lobster which will likely not bring the rosiness back in their cheeks but China Mobile’s 760 million subscriber s are now confirmed to be making a bee line for iPhones. Analysts at Piper Jaffray have upgraded iPhone sales growth levels to upto 20% after the deal but we’d say the number is likely to be expected at closer to 25-30% by investors with Apple trading at $565 in opening trades

Dow futures were at 16234 at open, the S&P 500 shooting to 1830 minutes into trading and the NASDAQ is also above 4030

Wierd stories include Jos A Bank rejecting another Pac Man come back from Mens Wearhouse and Wearhouse seemingly trying to nominate Directors at the Big brother of Suits. Hilton has already floated the $2.5 Bln IPO matching lesser buyback sultans this year like P&G whil Starbucks continues with near 8% comp increases in the US apart from 35% operating margins in China and Asia Pacific

Munis receding?

With the Puerto Rico scuffle that started mid season in Q$, Muni refunding prospects have decreased in 2014 with RBC estimating $100 Bln only in refunding. However there will still be nearly $200 Bln in new issuance and ourown estimates think the Muni and Structured Finance markets will continue to enoy a residual demand of more than $2 Tln and $50 Bln as more bond investors come back to markets heartened by the good yields.

No news is good news still for Bond traders as lowest bonuses mar the 2013 story that started on a good note.

The Coffee trade could be coming back in 2014 too but Cheese prices kept Dominos Pizza smiling through the year going by

 

 

 

 

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This entry was posted on December 23, 2013 by in Amitonomics, Banking, Financial Markets, housing, Retail Lifestyle.

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