Our weekly recap of what's happening in the markets.

Nav.ing the Market: Week of Feb. 14

Launched by popular demand, we’re bringing you a quick and (sometimes) dirty recap of the week in stocks. 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, trending news, important company or industry updates, and all that jazz.

Here’s this week’s breakdown: 

Energy 

We’re keeping a close eye on oil production and prices as the coronavirus continues to impact OPEC+ (OPEC and allies like Russia) forecast of production. After their sooner-than-expected meeting last week to determine how many barrels of oil should be produced to meet global demand, they’ve announced growth of production to yield .99 million barrels per day (bpd). While that might seem like a lot, that’s a projection down .23 million from their previous month’s estimate thanks to the growing pandemic.

What to look for in the markets? Keep an eye on Brent crude (trading at $55.93 as of Thursday morning MST), and West Texas Intermediate.

Materials 

The metals and mining industry just got graded by the S&P 500. As investors put pressure on companies to be more environmentally conscious, analysts are more focused on assessing the ESG (environmental, social, governance) credentials of some of the largest brand names. As you might have guessed, coal mining and metals production are “well-above-average” in their environmental exposure and impacts. Here’s the full report card for each of the top companies. 

Industrials

We smell a partnership brewing…Alaska Airlines and American are teaming up to allow customers to book flights across their platforms. What’s the give? Well, with Alaska’s stronghold in the tech-trending Pacific Northwest (we see you Seattle) and American wanting to capture that techie love, it’s a pretty certain match made in heaven. 

Automakers are preparing to resume work in China. After extending the Chinese holiday at many production plants, GM, Tesla, and Ford are saying it’s time to get back to work.

Consumer Discretionary (Cons Disc)

Disney’s crushing their new-to-the-scene streaming game. How do they stay on top? Their marketing advantages and market opportunity of two billion people who can access streaming channels. Disney looks like a pretty safe bet for long-term growth.

Another brand capitalizing on quick demand? Tesla Inc. The company just announced a plan to sell $2 billion of common stock, which could bring in a projected $2.3 billion in proceeds to help fund an estimated $3.5 billion in capital expenditures this year.

Gucci’s parent company, Kerig, is feeling the market love after better-than-expected fourth-quarter earnings. 

And Shopify became profitable. It’s the first time for this eCommerce giant. 

Consumer Staples (Cons Stpl) 

PepsiCo just came out with quarterly earnings. What surprised analysts? Their organic revenue grew by 4.3 percent in their fourth quarter, which was better than anticipated. 

Who’s fighting a little harder for free trade? Whiskey distillers. The U.S. whiskey exports to EU nations plunged 27 percent in 2019 as a result of retaliatory tariffs. Not great, as American whiskey is the primary export of all spirits. 

Health Care

Here’s a bit of irony. Health insurers stocks surged this week amidst Bernie Sander’s strongholds in Iowa and New Hampshire. Why? Well, he’s not exactly promised to gain moderate favor on either side of the aisle. Meaning if Sanders wins the Primary, he’s well-positioned to lose the General, and private health care will keep on keeping on.

Coronavirus got an official name this week – COVID-19 – and while there’s still no cure, scientists are working with new “rapid response platform” to diagnose and treat the illness. What’s so cool about the platform? It allows scientists from all over the world to test and share results with each other. #teamworkmakesthedreamwork

Financials 

Wells Fargo has invested in Elliptic, a start-up that helps manage crypto risks by blocking transactions. While the capital will be used to invest in new markets (with a heavy focus on Asia), we’ll be keen to see how this play influences the big bank’s play into alternative money streams. 

The Fed’s chairman, Jerome Powell, was on the Hill this week as he faced questions about how the central bank plans to respond to new economic uncertainties amidst the growing coronavirus pandemic. Powell testified that the economy will remain resilient, but the Fed will be wary of the potential impact of the virus if it remains at its current growth rate. 

Oh, and insurers plan to increase prices for U.S. business after large catastrophe rates (like fires) and low-interest rates have impacted profits. 

Technology 

Amazon’s AWS CEO, Andy Jassy, goes on the defensive after fears the giant brand will continue to overtake small and big businesses. Sure, Amazon has crushed retail and tech industries, but Jassy claims it won’t harm the hardware (smartphones) or payment game. 

The US Federal Trade Commission asked the five most valuable US tech firms (Apple, Microsoft, Google, Amazon, and Facebook …obvi) for info about all of those companies they’ve been buying recently. They want to explore how these copious purchases are impacting economic growth and innovation.

Telecom Services 

Chinese phone maker, Xiaomi, launched their new 5G smartphones on Thursday in hopes of reversing plunging sales in their own market. They’re the world’s fourth-largest smartphone maker, but with a tight line of competition, that doesn’t get you much. Both phones are planned to launch domestically, before hitting the international scene. 

Meanwhile, US Cisco is under pressure after their shares dropped 6 percent during Thursday morning trading amidst concerns of the coronavirus’ impact on their data centers. 

Real Estate 

Non-bank lending is hitting the mortgage market. Though, regulators may say “hold up.” Apparently, non-bank lending accounts for two-thirds of all mortgages, which is about $335 billion in loans.  Non-bank lenders can approve loans more quickly and online, and adhere to lesser regulations. But they are considered riskier as they rely on short-term lending sources and have limited ability to withstand market shocks. 

And UBS is having a moment as investors scramble to withdraw around $7 billion in the bank’s Trumbull Property Fund. 

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