A lot of people started the year talking about a recession, but 2019 was a big sucess. A great bull market and a big surprise for many. President Trump have played a huge part in it by cutting tax and regulations and that`s what Wall Street like.
Only a few trading sessions are left of this Wall Street record year. It has been an unbelievable year for stocks! Recession will come one day but the bull market will continue until it stops.
So far, it has been a good earnings
season with a higher than average seventy-five percent of S&P 500
companies that have reported beating expectations. That was strong
enough to push the stock market to record highs.
On Tuesday 19, Home Depot will report earnings before market open. The report will be for the fiscal Quarter ending October 2019, and the consensus EPS for the quarter is $2,52, which is up from the same quarter last year at $2,51.
The Home Depot is the largest home
improvement retailer in the United States, and considered to be the
best run retailer in the world. I have been watching this stock for
years and it`s interesting and funny to see that they beat estimates
time after time.
Home Depot opened up two stores 40
years ago. In 1979, the first two stores, built in spaces leased from
J.C Penny that werw originally Treasure Island «hypermarket». As of
October 20, 2019, they have 2,285 locations and 413,000 employees.
The founders created a company to keep alive the values that were important to them; Values like respect among all people, excellent customer service and giving back to communities and society.
In December 2006. the Home Depot
announced its acquistion of the Chinese home improvement retailer The
Home Way. The acquisition gave the Home Depot an immediate presence
in China, with 12 stores in six cities.
But the Home Depot didn`t succeed in
China. They lack of success in China has been attributed t o the
disconnect between The Home Depot`s do-it-yourself ethos and Chinese
culture. The market in China is more of a do-it-for-me culture.
So, as of April 2011, Home Depot shut
its last Beijing store, the fifth Home Depot to close in China in the
previous two years. As of September 16, 2012, all seven of the box
stores in China had been shut down, and they has no immediate plans
to further expand its specialty stores in China.
The US-China trade war is risky but the
impeachment is even more risky. They want to impeach a president that
have done so much for its own people, and tax cuts and many reforms
have boosted to U.S economy.
Strong consumer activity and low
interest rate is helping companies like Home Depot, and this is why
they beat earnings all the time. At least for the last two years. But
according to DM Martin`s Research, the RMI (remodeling market index)
and future bid activity have come off their 2017 peaks in the past
The management doesn`t seems to be concerned about the demand. Last quarter they said; «Current health of the U.S consumer and a stable housing environment» was postive for them. Its difficult not to be bullish, and share repurchase can push the EPS higher.
Norway`s trade surplus plunged NOK 23,8 billion in August this year. All the way down from NOK 30,5 billion to NOK 6,7 billion in the same month the prior year. This is happening in a country that is famous for being «the last Soviet state.» A country were the Communist party is growing in popularity like never before.
But is doesn`t matter, because most of the income is coming from oil and gas. In addition; they have $1 trillion in assets called The Government Pension Fund Global, also known as the Oil Fund. The fund was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector.
The fund have stocks in 9158 different
companies in 73 different countries. Most of the capital is invested
in stocks and some of it in fixed income securities. A small part of
the investments is invested in the real estate market.
The goal is to contribute to the
Therefore, the fund and the country is
dependend on sustainable growth, markets that works well and
Oil prices jumped more than 20 percent on Monday and that`s good news for Norway. The higher the price of oil, the more they earn. 62 percent of Norway`s export comes from Mineral fuels, oils and distillation products.
We all know that these category is on the way out. So, the “new oil” is fish that stands for 9,5 percent of the exports. In other words; this model is fragile.
The biggest trading partner is the
United Kingdom with 22 percent export. Second is Germany with 16
percent. Third; Netherlands at 11 percent, France and Sweden with 6,7
percent. Down on the export list we will fine the U.S at 4,7 percent
and China with 2,1 percent.
Two of the biggest trading partners are
in trouble. United Kingdom with Brexit and Germany near recession. In
addition; we have the trade tension between the U.S and China. As you
can see; a higher oil price came at the right point for the fund as
62 percent of the exports comes from oil.
Brent climbed as much as 20 percent on
Monday and that is the biggest percentage move since 1990 Kuwait
invasion. It jumped up to $71 per barrel in the seconds after the
open, before pulling back about half of the initial surge. That was
equivalent to $12 increase, and that is the largest gain in dollar
terms since 1988. All this is good news for Norway that is dependend
But the Nobel Peace Prize Country need
to wake up, because this won`t last forever. Higher oil prices is
good but that is not enough. The Petro dollar can also be a game
changer in addition to all the electric vehicles that is flooding the
market. Every single EV sold will decrease the demand for oil every
Nor is fish enough. Oil is good
especially if you are in a cartel business. You don`t have much
competition either because oil is very limited in other countries. 70
percent on this planet is water and there are lots of fish in it.
Other countries can start to compete in the fish industry whenever
they want. Fish is not as unique as oil. Competitors can pop up and
take market shares and push the prices down. Like Russia.
Russian aquaculture is planning a new RUB 1,5 billion smolt plant and that will reduce the dependence of Norwegian fry imports. Russian Aquaculture produces around 18,000 tonnes of salmon and trout on the Kola peninsula, the for northwest of Russia. Among the owners of the company are Maksim Vorobyov, the brother of the governor of Moscow.
Russia will triple the production in 11 years. The deputy head of Russia`s Fedral Agency for Fisheries Vasily Solokov has told Tass that the Russian government is drawing up plans to make salmon production account for 37 percent of all aquaculture by 2030.
Some Russian producers are hoping to increase production to cover one third of the country`s entire salmon and trout consumption. A peninsula in northern Russia which is close to key military bases and nuclear submarines is being used to grow the country`s salmon farming regime.
Trump escalates the trade fight between
the U.S and China and rips Federal Reserve President Jay Powell.
Trump tweeted earlier today that «Starting on October 1st,
the 250 Billion dollars of goods and products from China, currently
being taxed at 25%, will be taxed at 30%.
…..Additionally, the remaining 300 Billion dollars og goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. And all that led to a Market chaos on Friday.
Walgreens announced yesterday that they
will close 200 US stores. A company that was founded 118 years ago.
But Walgreens is not alone. About 12,000 stores are expected to close
in the U.S this year.
According to CoStar Group, retailers closed a record 102 million square feet of store space in 2017, but that number was smached in 2018 by closing another 155 million square feet. To sum up; that`s thousands of stores.
So far this year, 29% more stores
closings announced than last year, according to Coresight Research.
They tracked the 5,864 closings in 2018, which included all Toys R Us
stores and hundreds of Kmart and Sears locations.
This year, Sears are planning to close another 21 stores while Kmart will close «only» 5 stores in October. Kmart closed 48 stores earlier this year. That`s nothing compared to Walgreens’ 200 stores. Or Fred`s 442 with another 129 stores.
We have to keep in mind that some of
the retailers also are opening new stores while closing locations at
the same time. But……
The pain will continue for years to come. According to UBS, if the e-commerce penetration continue to rise up from its 16% level to 25%, about 75,000 stores need to be shuttered within a few years.