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Hotline Sample Report

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5/25/2017 7:12:33 AM Eastern Time

Fed's Mission Succeeding
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

Criticism, like rain, should be gentle enough to nourish a man's growth without destroying his roots.

-Frank A. Clark

The Federal Reserve had a special mission this year. They articulated how it would begin to remove accommodation without crushing the economy or the stock market. Yesterday, they may have pulled off the first part, and that was to underscore the gentle process without destroying the root of growth or dislodging the rally. To be sure, it was a heck of a challenge.

Fed Balance Sheet

  • $2.46 billion Treasuries
  • $1.77 billion Mortgage-Backed Securities (MBS)

The Federal Reserve balance sheet was plodding along at less than $900 billion when the world was shaken by the mortgage crisis.  From September 2008 to the end of the year, emergency measures swelled the balance sheet to $2.2 trillion. More creative measures (read ways to print money from thin air) eventually lifted the balance sheet to the current level of $4.43 trillion. 

Yesterday, the Fed announced intentions to put caps on how much accommodation (read free money) it would allow to run off its balance sheet. Essentially, the way it works is when assets are paid off; the Fed will not automatically reinvest the funds. The Fed has promised to be “gradual and predictable.”

The bottom line is Janet & Co are not going to upset the rally. 

P.S. I know you’re worried about light volume, and a sense that the market is spinning its wheels- there’s an old saying about never shorting a dull market. Be ready to add new positions.

CBO Scores AHCA

The House Republican health plan would leave 14 million fewer people insured next year, a new CBO forecast says.

New York Times

23 million more uninsured under GOP health bill, CBO says

The Republicans' revised plan to repeal and replace parts of the Affordable Care Act would also shrink the U.S. budget deficit by $119 billion, according to the nonpartisan Congressional Budget Office.

Washington Post

Forget the Headlines, Game On!

The score means the game is over most of the time. Last night, the Congressional Budget Office (CBO) gave the green light for the Senate to push through with Republican efforts to replace Obamacare.

There is a lot in the 41- page document, but here are the key figures over the next decade:

  • Reduce Federal Deficit by $119 billion
  • Increase Number of Uninsured by 23 million
  • Increase Premiums 20% in 2018
  • Increase Premiums 5% in 2019
  • Reduce Premiums Starting in 2020*

*This is where the details become murky, and serious assumptions must be made about the states that accept grants to block funding and waivers and the states that continue to cling to the current bargain created by President Obama to get even red states to expand Medicaid.

Will the Senate find a way to get this plan through and what about the House GOP members that were hoping for fewer people losing coverage?


After the Close

Earnings after the close on Wednesday were a mixed bag; for the most part, the initial reaction was great and shares popped for the following names:

Hewlett Packard (HP) +3%

Pure Storage (PSTG) +11%

Guess (GES) +16%

Williams-Sonoma (WSM) +9%

I say great when Williams-Sonoma is doing well because it means rich people are buying things the rest of us couldn’t afford. Espresso, anyone?

Long Idea: Live Nation Entertainment, Inc. (LYV) @ $34.05
Industry: Services; Entertainment - Diversified
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$34.05
Entry Limitsee comments
Stop LossN/A
Target$40.80

BACKGROUND: Live Nation Entertainment, Inc. is a live entertainment company. The Company's businesses consist of the promotion of live events, including ticketing, sponsorship and advertising. Its segments include Concerts, Sponsorship & Advertising, Ticketing and Artist Nation. The Concerts segment is engaged in promotion of live music events in its owned or operated venues and in rented third-party venues; operation and management of music venues; production of music festivals, and creation of associated content. The Ticketing segment is an agency business that sells tickets for events on behalf of its clients. The Artist Nation segment provides management services to music artists in exchange for a commission on the earnings of artists. The Sponsorship & Advertising segment employs sales force that creates and maintains relationships with sponsors to allow businesses to reach customers through its concert, venue, artist relationship and ticketing assets, including advertising on its Websites.

SKINNY: Live Nation Entertainment, Inc. (LYV) broke out @ 33.75; through there we see room to $40.80 in the longer term.


Key Fundamentals
PEG  3.22
Book Value  5.46
Institutional Holdings  69.40
Price/Sales  0.81
Average Daily Volume  1.18
Shares Outstanding  205.61
Market Value  6.96
Insider Activity  3 Sells
52-week High  35.13
52-week Low  22.2
Annual Earnings Estimate  0.13

Analyst Coverage
 Guggenheim  BUY
 Goldman  BUY
   



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