May 03, 2017: TTM Technologies reports Q1 EPS of $0.37 versus the $0.29 estimate. Revenue also beat coming in at $625.2 million versus the $615 million estimate.
The CEO Thomas T. Edman said, “TTM delivered strong organic year on year growth in the first quarter of 7 percent, near the high end of our guidance, and profitability which exceeded our forecast. On a year over year basis, most end markets grew, with the fastest growth coming from the cellular, computing and aerospace and defense end markets. This growth, along with strong operational execution, resulted in non-GAAP EPS above the high end of our guidance. These results represent the highest revenue and EBITDA for a first quarter in the history of the company.”
February 8, 2017: TTM Technologies reports Q4 EPS of $0.58 versus the $0.45 estimate. Revenue also beat coming in at $706.5 million versus the $672 million estimate.
The CEO said, “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular and automotive end markets. This drove substantial operating income leverage in the business resulting in the highest non-GAAP EPS in the history of the company.”
December 12, 2016: Detecting heavy call activity in TTM Technologies, 5000 June $17.5 calls trade at $0.65.
November 30, 2016: Stifel raises price target of TTM Technologies to $15, from $13, and reiterates a Buy rating.
October 30, 2016: JPMorgan raised the price target of TTM Technologies to $16 from $14, and reiterates an Overweight rating.
TTM Technologies, Inc. is a major global PCB manufacturer, focusing on quick-turn and technologically advanced PCBs and the backplane and sub-system assembly business.
Bring Insight makes the argument that anyone currently invested in the Stock Market is Dancing with the Devil.
Bright Insight said, “The Stock Market closed at its HIGHEST LEVELS EVER! This is actually not a good thing, as the bubble is going to pop sooner rather than later – and crash incredibly hard. It is a mathematical certainty that the stock market will crash. In fact, the stock market is literally rigged, and fraudulent.”
Folks this is one of the reasons why all new stock picks I’m releasing over GuerillaStockTrading.com have to be quality (rising EPS and revenue) that have excellent valuation (P/E and forward P/E under 15), that have already retraced. The idea is that if a big stock market correction takes place, you will lose less money and have more time to get out than if you buy risky growth small cap stocks without P/Es.
Below is the show from Bright Insight that makes some very important points about the dangers that lurk behind every trade you make in the stock market right now.
Barron’s just released a cover story that suggests that President-elect Donald Trump should take steps to make U.S. trade policy freer than it is now after a backslide during the past 15 years. Barron’s goes on to assert that any aggressive push by Trump to hike tariffs will face resistance from a Republican-dominated Congress that has traditionally supported trade liberalization.
Republicans in Congress need to be re-educated on “trade liberalization” else face the end of their political careers at the hands of the American people. Whether you like Donald Trump or not, one thing Trump made clear is that the American people have to take a more active role in holding their elected leaders accountable for the outsourcing of American jobs.
Specifically, make sure that your Republican representative gets educated on why “free trade” (or trade liberalization) hasn’t lived up to the promise by sending them this article I published here. We have new economic data that explains why “trade liberalization” in its current form does not work for the American people. Anyone who is still for “free trade” in its current form is either corrupted by a foreign entity, or simply ignorant about the latest findings in the science of Economics.
A trade war between the US and China is likely going to start next year with a key promise of Trump to declare China a “currency manipulator” on day one of his Presidency and to enact a 45% tariff on certain Chinese produced products sold in US markets.
China has threatened to retaliate by dumping Boeing and instead ordering from Airbus. China has said it will block sales of US automobiles and iPhones in China and that US soybeans and maize imports will be halted.
To better understand why I think 3D printing stocks are a good play on a trade war with China, we have to go back in history and use macroeconomic analysis to see how we got to where we are today.
China Joins the WTO
In 2001 China joined the World Trade Organization and began flooding America with illegally subsidized exports. Over the next ten years, the US would shut down over 60,000 factories, lose more than 5 million manufacturing jobs and see it’s historical annual rate of GDP growth cut by two-thirds.
Trade Deficits and Offshoring Subtract From GDP Growth
As a result of China joining the WTO, structural problems hit the US, Europe, and other major economies like Japan and South Korea.
If a country like the US runs a trade deficit, this directly subtract’s from its GDP growth. From that observation, you can see what the two most important structure drags on growth for many developed nations like the US have been.
The first has been the drag of the large trade deficits. The second has been the drag on lower domestic investment growth, as multinational corporations like Caterpillar, General Electric, and General Motors, have built more plants in other countries and fewer plants in the US.
Where have most of the offshoring of productions gone? The answer is China.
It’s no accident that the start of America’s era of slow growth in 2001 coincided with China joining the World Trade Organization or WTO, which gave China full access to American markets.
Contrary to the rules of the WTO, China began to flood the US with cheap, often illegally subsidized exports, and over the next decade and a half; the US would see the loss of over 60,000 factories and more than 5,000,000 manufacturing jobs.
The Emergence of Structural Trade Imbalances
During this time the economies of Europe, India, Brazil, among others, would likewise begin to have significant growth-sapping trade deficits with China and this would reduce global growth below what it would otherwise be.
The result would be the structural emergence of a growth-sapping global trade imbalance, as illustrated in the following set of figures.
Here, we see chronic annual trade deficits on the order of 200 to 400 billion dollars annually, with the heavily exported China.
By the year 2012, these deficits would help slow growth dramatically in both Europe and the US, and as a result, China’s two biggest customers would thereby be too weak to sustain China’s export-dependent growth.
In a ripple effect, slow growth in China, in turn, would lead to slower growth in so-called commodity countries like Australia, Brazil, and Canada, whose economies depend heavily on the sale of natural resources like coal, iron ore, and soybeans to China. More broadly, these structural trade relationships would lead to a new type of butterfly effect the world had not yet seen.
Here, we see that weak demand for Chinese exports from Europe and the US leads to weak import demand from China for commodities and other natural resources. In this way, chronic trade imbalances between China and other countries around the world would make it very difficult for a robust, global economic recovery.
Why Keynesian Stimulus Failed
From this butterfly effect, you can see why expansionary, Keynesian fiscal and monetary stimulus in the US and Europe, did not have the full effects anticipated. Indeed, this short-run Keynesian approach did nothing to address the underlying, chronic, long-term structural trade imbalances, acting as a drag on both the U.S. and European economies and by extension, much of the rest of the world.
3D Printing and China Manufacturing
China is rapidly losing ground to 3D printing technology. The business model of it being cheaper to manufacture goods in China could come to an end over the next ten years.
US companies will soon be able to make most things in small 3D printer factories right in your neighborhood or town. Factories, as we know them today, will get broken up and made smaller and local. Newsweek writes…
In the distributed manufacturing scenario, the carbon footprint, so to speak, of each shoe drops precipitously. Asian manufacturing is toast, probably upsetting the global balance of power. And factory jobs—well, they’re likely never coming “back.” 3-D printing automates a lot of what factory workers would’ve done. The hope is that distributed manufacturing creates a whole new set of opportunities for middle-class workers and keeps money local instead of funneling it overseas.
Coming Trade War With China
A Trump Administration will be placing tariffs on Chinese-produced goods effectively penalizing US corporations that manufacture products in China. China will retaliate by blocking the sale of US goods inside of China.
This trade war with China will only speed up the adoption of cheaper and faster 3D printing facilities inside the US IMO.
Many US businesses could increase their purchases of 3D printing machines as a result of the worsening trade relationship with China as well as the public outcry over the loss of millions of US jobs to China.
The earnings recession which began in Q1 2015 prevented businesses from buying 3D printers as consumer demand was uncertain. This last quarter we saw an end to the earnings recession, and if corporate earnings continue to rise, we could see more companies buying 3D printers.
Big Players and Big Money Flowing Into 3D Printing Technology
In May of 2016, the 2D printing giant HP revealed that it has been spending billions of dollars developing 3D printing technology and announced the release of its Jet Fusion 3D 3200 and 4200 printers. The more powerful 4200 was slated to begin shipping in the fall of 2016, while the 3200 will be available in 2017. HP claims these polymer 3D printers are up to 10 times as fast and twice as cost-efficient as current 3D printers powered by the leading technologies. HP sees the incredible future for 3D printing and aims to become the leading 3D printing company.
3D Printing Stock Chart
Chart Comments: Not a great looking chart. Twiggs Money Flow is rising but still below the 0% line. The 50-day moving average (blue line) at $15.21 is currently being tested, and a breakout above this level would be bullish.
Stratasys Stock Chart
Chart Comments: Stratasys’ chart looks even worse than DDD. The Twiggs Money Flow is rising nicely, but it is still below the 0% line.
HP Inc Stock Chart
Chart Comments: Twiggs Money Flow falls below 0% line after missing on revenue; however, overall, the strongest looking chart of the 3D printing stocks. Fantastic valuation at P/E 9.9 and forward P/E 9.2. Wait for candle over candle bounce before taking a long entry.
Disclosure: I do not hold any stocks mentioned in this article.
Franklin Financial Network provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals.
Franklin Financial Stock Chart
Chart Comments: Testing previous resistance at around $38. Inverted hammer with long upper shadow is bearish and may indicate a pullback is coming. Wait for close above $38 before long entry. Twiggs Money Flow is pulling back a little but still above 0% line. Watch where next low on Twiggs Money Flow forms, bullish if following low forms above 0% line. Big insider buying on November 21, 2016, this is the first insider buying since May of 2015. Excellent revenue and earnings growth. Attractive valuation of P/E 16.7 and forward P/E 13.4. Piper Jaffray just began coverage on November 22, 2016, with an Outperform rating.
Disclosure: I do not hold any position in this stock.
We know what Trump is bringing to the globalists brawl that has already begun with shots like China threatening a trade war against the US. Globalists are not going just to roll over quietly for a Trump Administration.
Lisa Haven thinks that globalists could crash the US economy in response to Trump’s win. Lisa thinks globalists could even try to assassinate Trump.
I think Lisa Haven is a bit too far on the side of paranoia, but I like hearing alternative views and some of the excellent points she makes. Regardless if you agree with Lisa Haven or not, one thing is clear that we can all agree on. Stock prices are not up because of fundamentals but on risky speculation on a Trump win which begs the question. Are we being set up for a big stock market crash?
The Federal Reserve held short-term interest rates steady as traders expected. In the Fed’s postmeeting policy statement, it said it only needed “some further evidence” of economic progress before moving forward with a rate hike.
What exactly is the further evidence that the Fed needs? To answer that, you have to know about what happened last year to the unemployment rate and wages.
After the Fed had raised rates in December of 2015, it said that it would raise rates four times in 2016. I went off the rails. Long time viewers of the weekly Saturday night show remember how angry I was at the absurd proposition that the economy was strong enough to hike rates four times in 2016.
The Fed was ultimately wrong in their four hikes in 2016 statement. What happened? Here’s where the Fed went wrong. The Fed thought that in December of 2015 that wages would begin to accelerate rapidly. For most of 2016, the monthly Employment Situation report showed an average of 220,000 jobs added per month. The unemployment rate had gone to 5% from 5.8%. The Fed thought that the demand for labor would shift to the right as illustrated in this graph.
The Fed thought that the demand curve would shift to the right from D to D1. As demand for employment increased, unemployment would continue to fall, and wages would rise rapidly. The problem is that the Fed assumed that the job market was very tight because of the low unemployment rate. In other words, the Fed assumed that the labor market supply was fairly static so that increased demand for labor would cause wages to rise rapidly.
Last year I was one of many voices yelling out to anyone who would listen that the labor force participation rate was dropping.
What this means is that the supply of labor was not static at all, in fact, it was just the opposite. The labor market continued to generate jobs at an average of 187,000 per month for most of 2016, but the unemployment rate stayed at 5%, and wages barely moved at all. Why? Because, as the labor participation rate was signaling, people came off the sidelines and back into the job market. We know this because the labor participation rate began rising in 2016.
As you remember from our lesson on illegal immigration, a rise in the supply of labor shifts the supply curve down. In other words, it largely offsets the outward shift of the demand curve! In case you don’t understand, let’s track this on a supply and demand graph.
In step 1, the labor demand curve shifts outward from D to D1 as the Fed predicted. A new equilibrium is established at point a. In step 2, suddenly people who gave up looking for work see wages rising, and so they come back into the labor market looking for work. That increase in labor supply shifts the supply curve down from S to S1 as wages fall. A new equilibrium is established at point b, the same original wage rate! We have a greater number of people employed, but the unemployment rate and more importantly wages stay the same.
At the end of 2015, the Fed thought the labor rate was much tighter than it really was because of the low unemployment rate. There was a lot more slack in the labor market (low labor participation rate) that was not being factored into the Fed’s equations. In other words, the Fed made a mistake by miscalculating how many people were on the sidelines and ready to jump back into the job market at the first sign of rising wages. That’s why the Fed said in December of 2015, after hiking rates a quarter point, that they would likely be hiking another four times in 2016. They thought wages were going to move higher really fast. There was much more slack in the labor market than the Fed thought, and there could still be more.
The Fed got fooled once. The Fed will not get fooled twice. This is what I think the Fed means by it only needs “some further evidence” of economic progress before moving forward with a rate hike. The Fed wants a little more evidence before hiking rates that most of the slack in the labor market is gone and that wages are rising from an outward shift in the labor demand curve.
Looking at the aggregate supply (AS), aggregate demand (AD) model, we can see where the US economy is currently at in the economic cycle. It is critical that traders and investors understand where we are at in the business cycle so as to be in on the right side of the trade. Timing Bull/Bear cycles and sector rotation is a critical skill for traders. Continue reading “The Aggregate Supply-Aggregate Demand Model”