Nav.ing the Market: Week of Dec. 9th

Launched by popular demand, we’re bringing you a quick recap of key moves in the market this week. We’ll break it down by sector because your portfolio likely looks the same. Here’s a guide to the market if you’re shy about your sector knowledge (that’s the whole world, by the way).

Each week, we’ll report key updates to 11 sectors, citing big changes, new IPOs, and important company or industry updates. Here’s this week’s breakdown: 

Energy 

Oil prices are rising. Investors are taking a mild sigh of relief as oil prices rose on Thursday after falling the previous day. Why the fall? OPEC (the Organization of the Petroleum Exporting Countries) forecasted a supply deficit next year. However, the US Federal Reserve (the Fed) held interest rates steady, striking this optimistic tone on the outlook of the economy. 

Materials 

Nothing too new to report, but while we’re here, here’s a little catch up on where Materials falls this year. Materials sector has lagged behind the broader S&P 500 this year, and some investors fear that will continue as trade tensions with China drag on. The segment, which includes chemicals, construction materials, packaging and metals companies, is particularly exposed to the global economy. While some companies have grappled with weather and other individual problems, the continuing uncertainty over the trade war is dampening expectations for the world-wide growth that drives much of the sector. The sector has gained 18% this year, versus the 25% climb by the S&P 500. Only the energy and health-care sectors have performed worse.

Industrials

  • Like Materials, Industrials are also highly impacted by trade (and said trade wars…). So, as we head into the last days of 2019, these companies are forecasting some grim profit cuts as we face 2020. Which specifically? Global airlines cut 2019 profit forecast, citing trade ‘tensions.’ 
  • Meanwhile, Moody’s has been saying not to fear. The outlook for global airlines and shipping looks ‘stable.’ That’s it. That’s all that was said. 
  • Oh, and let’s not forget the shipping industry is about to face new pollution rules. A win for the whales, question mark for investors. 

Consumer Discretionary (Cons Disc)

Tax-loss selling season. So, essentially investors try to sell off stocks at this time of year to mitigate end-of-year capital gains. 

Consumer Staples (Cons Stpl) 

Trucking company Celadon (one of the largest truckload carriers in N. America) filed for bankruptcy on Monday. It has an estimated $611M in revenue so far this year and boasted customers like Lowe’s Cos (LOW), Philip Morris International Inc. (PM), Walmart Inc., Honda Motor Co., and Procter & Gamble Co. (PG). The company owes $33M to the Justice Department after a federal probe into the company’s accounting practices. While this the largest truckload bankruptcy filing to date, Celadon’s business only accounts for a small bit of the overall industry (weighing in around $200 billion). 

Health Care 

Never thought we’d say this, but cancer is trending this week. US Pharma (pharmaceutical) giant, Merk and France’s leader Sanofi both made billion dollar (with a B) acquisitions of cancer biotech firms. As our population lives longer, and resistance to cancer drugs rises, Big Pharma is looking for new ways to monopolize and the markets are getting behind those that do….

Financials 

  • The consumer is holding strong in one of our longest periods of sustained positive credit activity in recent years. TransUnion’s 2020 consumer credit forecast projects serious delinquency rates will either decline or remain about the same for auto loans, credit cards, mortgages and unsecured personal loans.
  • Also, Morgan Stanley’s cutting a sh$t ton of jobs as they cite automation as the culprit. And yet, it looks like their margins are so calm and steady, too.

Information Technology 

  • Xactly (a sales performance management company) announced on Tuesday that they’ll be giving their software away for free to small businesses. CSR anyone? 
  • Electric vehicle companies, Arrival and Charge, have chosen connectivity management software provider Cubic Telecom to integrate its intelligent connected car solution to their electric commercial vehicle fleet. The solution will be deployed in selected models from 2020 in the UK, with follow-up plans to roll out to Europe and North America.

Telecommunication Services 

Nothing too mind-blowing this week, check back in next! 

Utilities 

Nothing too mind-blowing this week, check back in next! 

Real Estate 

Fannie Mae and Freddie Mac are pulling back on risky mortgages. Meaning, you may be less likely to see lower than average down payments. Ultimately, this could begin to shut out homebuyers who can’t afford to put down as much as 20% on their home. 

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