On September 20th, the BoJ recently convened for what was one of its most anticipated meetings to discuss its “monetary policy review”. Most notably, rather than approach the situation from the liquidity perspective with an asset purchase or rate cut announcement – the so-called “shock-and-awe” tactic, the modus operandi of the BoJ – the bank essentially opted to tweak its policy framework in a more nuanced approach reminiscent of the Fed’s Operation Twist. Here are the three most important takeaways from the BoJ’s meeting:
The BoJ will target the yield curve, i.e. purchase/sell Treasury securities by maturity to control the shape/behavior of the yield curve, presumably to support the recent steepening of the yield curve, to allay concerns about financial stability, and to support lending activity. The BoJ will supplant Nikkei 225 ETF purchases for more TOPIX ETFs. Investors have complained for years about the BoJ’s arbitrary handling of equity/exchange-traded fund pu rchases which heavily favored Nikkei 225 companies, leaving out many of Japan’s mid-to-small-size businesses. By reducing Nikkei 225 purchases and expanding to the TOPIX and JPX-Nikkei 400, the BoJ seems to have finally responded to the market’s concerns. Interestingly, the BoJ also abandoned its monetary base target; the BoJ will simply expand the monetary base by as much as is necessary until inflation reaches above and beyond the 2% target in a stable manner. This is becoming a theme at the Fed and ECB now as well: whether this is a cause for confidence or a sign of desperation is up to interpretation.
What I am more concerned with is recent trading activity of Japanese financial equities (NYSEARCA:DXJF), that is, how the market perceives the impact of the BoJ’s latest policy decisions on Japanese banks and other financial institutions. The recent steepening of the yield curve had already prompted market participants to buy back into Japanese financials, and now this latest BoJ meeting has caused these equities to recover significantly… albeit still in a repressed manner.
Top Financial Stocks To Invest In 2017: Wolverine World Wide, Inc.(WWW)
- [By Monica Gerson]
Benzinga's newsdesk monitors options activity to notice unusual patterns. These large volume (and often out of the money) trades were initially published intraday in Benzinga Professional . These trades were placed during Monday’s regular session.
Pier 1 Imports Inc (NYSE: PIR) Dec16 5.0 Puts Sweep: 1191 @ ASK $0.80: 1354 traded vs 102 OI: $5.32 Ref Alcoa Inc (NYSE: AA) Jul16 9.5 Puts Sweep: 1494 @ ASK $0.13: 14k traded vs 6682 OI: $10.09 Ref Sarepta Therapeutics Inc (NASDAQ: SRPT) Jul16 10.0 Puts: 3536 @ ASK $0.50: 5506 traded vs 54k OI: Earnings 8/4 $22.50 Ref Tableau Software Inc (NYSE: DATA) Jul16 47.5 Puts Sweep: 837 @ ASK $0.30: 995 traded vs 37 OI: Earnings 8/3 $50.60 Ref Yandex NV (NASDAQ: YNDX) Aug16 18.0 Puts Sweep: 532 @ ASK $0.30: 2143 traded vs 78 OI: Earnings 7/28 Before Open $22.02 Ref Wolverine World Wide, Inc. (NYSE: WWW) Aug16 22.5 Puts: 719 @ ASK $1.35: 1032 traded vs 0 OI: Earnings 7/19 $22.22 Ref Conn's Inc (NASDAQ: CONN) Jan17 5.0 Puts Sweep: 605 @ ASK $0.85: 1355 traded vs 3132 OI: $7.16 Ref
Posted-In: Huge Put PurchasesNews Options Markets
Top Financial Stocks To Invest In 2017: CF Industries Holdings, Inc.(CF)
- [By Cameron Saucier]
Worst-Performing S&P 500 Stocks No. 3: CF Industries Holdings Inc. (NYSE: CF)
CF Industries makes nitrogen fertilizer and other nitrogen products.
- [By Michael Flannelly]
CF Industries Holdings, Inc. (CF) announced early on Monday that its Chairman and Chief Executive Office Stephen R. Wilson will step down and retire as CEO effective January 1, 2014.
W. Anthony Will, CF Industries’ Senior Vice President, Manufacturing and Distribution, has been selected to succeed Wilson as CEO on January 1, 2014. Mr. Wilson will remain with the company as a director and serve as non-executive chairman.
Mr. Will joined CF Industries in 2007 as the company’s first vice president of corporate development. He was promoted to his present position in 2009 and has been responsible for annual production of 15 million tons of fertilizer and its distribution through some 70 locations.
CF Industries Holdings shares were up $5.47, or 2.82%, during pre-market trading on Monday. The stock is down 4.59% year-to-date.
- [By Robert Rapier] While the MLP space is dominated by the oil and gas sector, in last week’s article we began to explore some of the more exotic master limited partnership offerings. This week we continue our exploration of nontraditional MLPs by looking at the partnerships supplying fertilizer.
Rentech (Nasdaq: RTK) has been around for more than a decade, and it has shifted strategies several times. Full disclosure: Rentech’s Chief Technology Officer Harold Wright is a former manager of mine when we were both at ConocoPhillips, and I have visited Rentech’s facility in Commerce City, Colorado.
For most of Rentech’s existence, the company has sought to commercialize alternative fuels. At one time it had ambitions to build a large coal-to-liquids (CTL) plant, but federal legislation ultimately nudged it instead into the biomass-to-liquids (BTL) space. The company did build a BTL demonstration plant, but ultimately shut it down and has now refocused its effor ts on becoming “one of the largest wood processing companies in the world.”
During its interesting journey as a company, Rentech acquired two ammonia nitrogen fertilizer facilities, which turned out to be a profit center that funded the alternative energy research. In November 2011, Rentech spun off this fertilizer business into an MLP called Rentech Nitrogen Partners LP (NYSE: RNF).
In the months leading to the spin-off, RTK’s market capitalization was about $200 million. Rentech maintained 60 percent ownership of RNF, and three months after the spin-off RTK’s market cap had risen to $400 million, while investors had bid RNF up to $1 billion. Interestingly, RTK’s share of RNF was worth more than RTK’s entire market cap, a situation that persists. The market currently values Rentech at $482 million, while the valuation of Rentech Nitrogen Partners makes RTK’s 60 percent stake in RNF worth slightly more than $600 million — another illu
Top Financial Stocks To Invest In 2017: Honeywell International Inc.(HON)
- [By Laurie Kulikowski]
HON is our top pick and a core EE/MI holding. While fundamentals are not best-in-class, we see HON as the best Energy play within the group with overall profit growth continuing to stand out next year, driven by high business quality and ongoing execution around cost and margins. And with ’17 the "inflection" year for revenues and Elster accretion, coupled with plenty of balance sheet optionality, we believe the stock deserves to trade at a premium versus an average discount across a range of metrics, including an adjustment for pension.
- [By Ben Levisohn]
Oppenheimer’s Ari Wald compare the current market to 1983, and recommend owning top-performing economically sensitive stocks like 3M (MMM), Microsoft (MSFT), and Honeywell International (HON) before the S&P 500 breaks out:
- [By Jon C. Ogg]
Honeywell International Inc. (NYSE: HON) is one of the largest conglomerates out there, but it is often overlooked as a broad economic indicator like some of the companies. Maybe its $88 billion market cap just isn’t big enough these days in the world where companies need to have $100 billion market capitalization ratesto be megacaps.
- [By Ben Levisohn]
RBC’s Deane Dray and team worry that valuations of industrial stocks like General Electric (GE), Danaher (DHR), Honeywell International (HON), Ingersoll-Rand (IR) and Pentair (PNR) have gotten ahead of themselves and recommend a “barbell strategy” when playing the sector. They explain:
- [By Mitchell Clark]
Honeywell International Inc. (NYSE:HON) is its own diversified powerhouse in aerospace. This particular industry is doing far better than the general economy.
Honeywell’s recent quarterly results were very good. The company backed its 2016 sales and earnings outlook, which really pleased the market.
This stock is not overpriced and prospects for rising dividend payments going forward remain excellent.
- [By Ben Levisohn]
Deutsche Bank’s John Inch and Karen Lau argue that Honeywell International (HON) is “achieving Asian critical mass.” They explain:
After over a decade of aggressive and earnest Asian investment including seed planting and cultivation of local Asian talent, we believe Honeywell has emerged from behind other western countries in China and the rest of Asia to leading position across its served markets. Honeywell claims (and we believe it is true) that it has become the Chinese/Asian competitor that local rivals look to emulate. Honeywells profit margins in China are above the corporate averages across the companys businesses. Meanwhile, we learned that Honeywell is sometimes even the local price leader, such as for scanning and mobility products.
Within China, we estimate Honeywells sales to be closing in on $2.8bn (6-7% of company total), roughly flat last year (dragged last year by PMTs down results due to the collapse in oil prices and associated project deferral), up low to mid single-digits this year (ACS is running up double-digits YTD) and up double-digits next year (and beyond). As part of the $2.8bn, the company reportedly has realized ~$750mm in sales that it classifies as East for East (E4E) developed and produced almost entirely in local markets for local customers (i.e., ACS and turbo with some PMT product applications). We believe the $750mm to be a laudable achievement particularly given the rapid pace of change of Chinas economy over the past decade coupled with aggressive local competition. Honeywell retains #1/#2 positions across a swath of the markets it serves.
Honeywells achievement of Chinese critical mass opens lots of new doors for the company, in our opinion, including talent attraction/retention and new partnership opportunities. Many of these doors would appear to lead to accelerating future sales. The other prospective benefit of critical mass specifica