Weekend edition—Women march on, triangles of instability, smarter hearing

Good morning, Quartz readers!

The day after Donald Trump’s swearing-in as 45th president of the United States, thousands of people will join the Women’s March on Washington, or one of its many sister marches around the world, to remind the incoming administration that “human rights are women’s rights, and women’s rights are human rights,” a motto coined by Hillary Clinton more than 20 years ago.

This should not be a partisan issue. Trump has said that he loves women—”cherishes” them even. But his presidency is the culmination of a campaign stained by sexism, and his proposed policies threaten substantial setbacks for American women—including a war on reproductive rights, a likely increase in health-care costs, and no plan to address the gender pay gap. Activists across the world hoping the US might advance on these issues will continue to look elsewhere for leadership.

The conversion of women’s rights into a partisan issue also masks another undeniable element of this activism: the economic benefits at stake. Fair pay, equal participation in the workforce, reproductive rights—when women, regardless of race, religion, or sexual orientation, have their rights fulfilled, their countries grow faster, and more inclusively. According to a McKinsey report, fully equal workplace participation worldwide would add as much as $28 trillion to global annual GDP.

This progress is too important—ethically, socially, and economically—for anyone to be complacent. No government should stand in the way of a society where the minds and bodies of women are safe and supported, and where the roles of women are properly valued.

Women aren’t the only ones who carry the burden of reminding the world of this. It’s a task for all of us. —Annalisa Merelli


On the Formula E race track, a need for speed is becoming a need for data. For the DS Virgin team, data technology delivers actionable insights that give drivers a competitive edge—and other organizations can similarly benefit from a data driven approach. Tell us how your business uses data analytics to accelerate growth bytaking our brief survey here.


A paradigm shift in geopolitics. Anti-elitism will be a powerful driving force in geopolitical and financial events this year and probably beyond, ushering us into a new, unknown era, predicts Steve LeVine. Expect a backlash against Silicon Valley, and look for the US, North Korea, and Russia to form a “triangle of instability.” (For those concerned about democracy prevailing, here’s some advice onhow reading might help.)

And a paradigm shift for scientists. While a new administrationsets its sights on overturning now-former US president Barack Obama’s efforts on climate change, some scientists are working on ways to bring climate research to the attention of a wider audience. Antarctic scientist Ari Friedlaender talks to Georgia Frances King about the potential of storytelling to effect change—and lets us know how the whales are doing.

In or out of Africa? Donald Trump’s transition team has spent the last few weeks coming to grips with how the United States is run, including how it spends foreign aid. As part of that process, the team sent a four-page list of Africa-related queries to the US State Department, probing how much funding is being stolen, and asking why Africa should receive aid when people in the US are suffering. Quartz Africa reporters Lily Kuo, Abdi Latif Dahir, and Yomi Kazeem set about trying to bring some perspective to those queries.

Indian mixologists go retro. Long before a burgeoning bar scene spawned celebrity mixologists with hip cocktail recipes, the most refreshing, distinctive drinks in India were made by village grandmothers, write Suneera Tandon and Maria Thomas. Now these traditional drinks, with their dazzling complexity and interplay of sweet and salty, sour, bitter, and floral flavors, are making a comeback in India’s hippest bars, transforming a basic Gimlet or Manhattan into something you won’t find anywhere else.

The earbuds of the future have brains. The Amazon Echo has proven audio’s power to be the medium through which we interact with our devices, but people still underestimate the power of putting computers in your ears. In a detailed look at the potential of “smarter hearing,” Dave Gershgorn test-drives the Here One, wireless earbuds from Doppler Labs that can make a conversation more understandable, a commute quieter, or, eventually, a real-time dialogue across languages possible.


Scandinavia’s supercyberspies. Hugh Eakin in the New York Review of Books describes a paradox: Despite Sweden’s image as a beacon of human rights and internet freedom, its small but proficient cyber-intelligence agency is one of the US’s closest collaborators in digital surveillance. Other countries, too, are expanding their snooping capabilities in response to growing threats to NATO from Russia and China, with only mild resistance from citizens and lawmakers.

The team trying to get you to “like” Mark Zuckerberg. From hoodie-wearing introvert to proud dad, eloquent speaker, and thoughtful CEO: Mark Zuckerberg’s image has evolved significantly over the last few years, thanks in no small part to the employees managing his Facebook page, Bloomberg’s Sarah Frier writes. From deleting spam to interspersing soft-focus pictures with user stats updates, Zuckerberg’s page is a revealing mix of how conflated his personal image is with that of his company.

Why statistics have failed us. From William Davies in the Guardian comes a convincing explanation for the loss of trust in experts and the rise of populism and post-truth politics. Statistical categories and methods didn’t evolve to keep pace with rapid changes in society and the economy. As a result, their generalizations became increasingly divorced from individual experience and they—and people who relied on them—lost credibility.

Shipping, the world’s biggest invisible industry. In an excerpt on Longreads from a new book by Rose George, the author of Ninety Percent of Everything marvels at how container ships bring almost all our goods to us yet remain one of the least transparent industries. Boarding a vessel belonging to Maersk—“the Coca-Cola of freight with none of the fame”—she reflects that shipping involves environmental and labor issues as serious as those in industries like mining, yet has almost entirely avoided similar levels of public concern and scrutiny.

Barack Obama prepares for a third term. Obama might have thought being the first African-American US president was going to be the biggest political battle of his lifetime, but he’s now gearing up for a potentially bigger fight to protect progressive ideals, and his legacy, under a Trump presidency. “You can lock in progress for generations if you win three in a row,” Dan Pfeiffer, a former White House senior adviser, tells GQ’s Jason Zengerle. “Some of the battles that would have been settled with a Clinton win will now continue for the next 4 to 20 years.”

Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, PR-perfected Facebook pages, and Indian cocktail recipes to hi@qz.com. You can follow us on Twitter here for updates throughout the day.

CWS Market Review – January 20, 2017

CWS Market Review

January 20, 2017
Obama’s Radicalism Is Killing the Dow” – WSJ, 13,000 Dow Points Ago

Dear Lord, this has been a dull, dull, dull market. The S&P 500 has now gone six weeks without having a single daily move, up or down, of more than 1%. Compare that to last summer, when we had six straights days of moves greater than 1%.

The Trump Rally has apparently given way to the Ambien market. Folks, Wall Street is fast asleep. Here’s a stat for you: Since December 12, the Dow has closed every single day within a range of 230 points. That’s a little over 1%. You can expect that kind of range for one day, but over a month?

Things may change soon. Fourth-quarter earnings season is under way, and we’ve already had our first Buy List earnings report. Signature Bank beat consensus estimates by two cents per share. This bank has had a phenomenal rally since the election, but, like everybody else, it’s chilled out. I’ll go over the earnings report in a bit.

I’ll also preview the five earnings reports coming our way next week. But first, let’s look at why the Ambien market may not last, and why I’m cautious about stocks over the next few weeks.

Expect a Rougher Market This Winter

The new president is going to be sworn in in a few hours. Whenever there’s a new president, you’ll hear lots of breathless commentary about how he’ll ruin or save Wall Street. I tend to shy away from these predictions (see this week’s epigram). As Warren Buffett said, forecasts tell you more about the forecaster than they do about the future.

Having said that, I think the market is looking tired right now. The Dow ran into 20,000 and could go no further. Let me be clear: I’m hardly forecasting doom. Rather, I think some minor pullbacks are in order over the next few weeks. Nothing to be too concerned about. In fact, I would expect our stocks to weather any storm better than the overall market.

This is a key moment for the economy. Next week, we’re going to get our first look at the fourth-quarter GDP report, and I think it will be a good one. The report for Q3 was 3.5%, but here’s the thing—the U.S. economy has had a difficult time stringing together two or three good quarters in a row. I think this is our best chance to break that.

This week, for example, we learned that industrial production grew by 0.8% last month. That’s quite good. That beat expectations, and it was the biggest increase in more than two years.

We also got another CPI report telling us that inflation is well contained. The news reports noted that inflation rose by 2.1% last year, which was the largest increase in five years. Well, yes, that’s correct, but it glides over the fact that we came close to deflation over those five years. So this year, inflation has climbed all the way to “low.” This is another reason I doubt the Fed will raise interest rates three times this year.

This week’s Fed’s Beige Book said that labor markets are getting “tight.” That’s econo-talk for “workers want more money.” They may get it. The initial claims report came within a whisker of touching its lowest point since the Nixon administration. Plus, last Friday, the Census Bureau released a decent retail-sales report for December. On Wednesday, Janet Yellen said the economy is close to full employment.

I prefer to listen to the market’s opinion over that of economists, and I’m pleased to see the bond market pull back some. It shouldn’t be too easy for bond investors to outpace stock investors. The bond folks need to be kept on their toes. The 10-year yield got up to 2.5% this week. That’s about double the yield from six months ago. This is part of an ongoing rotation as money leaves safe assets and is gradually finding a home in riskier ones. That could be a major theme this year.

Now let’s look at our first Buy List earnings report for Q4.

Signature Bank Earned $2.11 Per Share for Q4

On Thursday, before the opening bell, Signature Bank (SBNY) reported Q4 earnings of $2.11 per share. That was two cents more than Wall Street’s consensus. Overall, this was another good quarter for Signature.

For the year, the bank earned $7.37 per share. That was only 10 cents more than 2015’s total, but remember they took a 70-cent charge in Q3 related to their medallion loans. Still, they were to top 2015’s result, which made 2016 their ninth record year in a row. The numbers for last year were pretty impressive. Total deposits grew 19% on the year. The key stat I like to watch is net interest margin, and that came in at 3.30%. That’s quite good.

I was also pleased to see Signature improve its fiscal condition this year by raising money from the capital markets. They had a common stock offering that brought in $320 million, plus a debt offering that took in $260 million.

Signature Bank Chairman of the Board Scott A. Shay, noted: “Signature Bank has produced yet another record year of earnings and solid financial performance. We are proud that — even from the depths of the financial crisis — we maintained a rapid growth pace while remaining a pillar of strength for our clients during those uncertain times.

“As the Bank continues to grow, we retain our strong discipline and follow the hedgehog theory of business – doing a few things, but doing each of them very well. In our case, that means maintaining our unrelenting commitment to depositor safety and service and conservative lending posture. We look forward to the New Year and to embracing many opportunities as we have built a platform poised to serve an expanding roster of clients,” Shay concluded.

Shares of SBNY weren’t doing much until the election. Then, out of the blue, the stock jumped 21% in four days. It’s always interesting how stocks can suddenly rally right about when you’ve given them up for dead. Once SBNY got to $150 per share, the rally started to peter out, and that’s about where the stock is today. I continue to rate Signature a buy up to $165 per share.

Next Week’s Buy List Earnings Reports

Stryker (SYK) is due to report its Q4 earnings on Tuesday, January 24. The orthopedics company had a good earnings report in October. In fact, they felt confident enough to raise the low-end of their full-year guidance by five cents per share. Stryker now expects 2016 earnings to range between $5.75 and $5.80 per share. That translates to Q4 results of $1.73 to $1.78 per share.

I’ll be curious to hear their forecast for 2017. Wall Street expects $6.39 per share. I suspect Stryker will offer conservative guidance.

Just a reminder that one year ago, Stryker said to expect 2016 earnings of $5.50 and $5.70 per share, and they’ll clear that with room to spare. This is why we like high-quality stocks. Here’s the annual EPS trend for Stryker: $2.95, $3.33, $3.72, $4.07, $4.23, $4.73, $5.12, and $5.75 to $5.80 for last year. That’s very impressive.

On Tuesday of this week, Alliance Data Systems (ADS) said it stands by its 2016 FY forecast of $16.90 per share in core earnings on revenue of $7.2 billion. That translates to Q4 guidance of $1.9 billion in revenue and core EPS of $4.64. My numbers say that sounds about right. ADS will report its earnings on Thursday, January 26.

CR Bard (BCR) has enjoyed a few upgrades recently from Wall Street. I started to get very bullish on this stock during the fall. On CNBC, they asked me for a candidate to beat earnings for Q3, and I said, CR Bard. The company gave guidance of $2.51 to $2.55 per share, and I said that was too low. I was right. Bard made $2.64 per share, but the stock didn’t start to rally until last month.

Bard also increased their 2016 EPS range to $10.23 and $10.28 per share. That implies Q4 earnings of $2.70 to $2.75 per share. Keep an eye on my $230 Buy Below price. Don’t chase BCR. I’ll raise my Buy Below if the numbers are strong.

Microsoft (MSFT) also reports on Thursday. Not much to add about the software giant. The company has been churning out very good earnings. They beat the Street three months ago by eight cents per share. The consensus on Wall Street is for 78 cents per share. The stock has had a very good run over the last six months.

Sherwin-Williams (SHW) is one of our new stocks this year. The company gave a Q4 range of $2.13 to $2.23 per share; Wall Street expects $2.21.

Here’s an earnings calendar for our Buy List stocks for this earnings season.

Company Ticker Date Estimate  
Signature Bank SBNY 19-Jan $2.09  
Stryker SYK 24-Jan $1.76  
Alliance Data Systems ADS 26-Jan $4.66  
CR Bard BCR 26-Jan $2.74  
Microsoft MSFT 26-Jan $0.78  
Sherwin-Williams SHW 26-Jan $2.21  
Aflac AFL 31-Jan $1.64  
Danaher DHR 31-Jan $1.03  
Ingredion INGR 31-Jan $1.64  
Snap-On SNA 2-Feb $2.41  
Cognizant Technology CTSH 6-Feb $0.86  
Intercontinental Exchange ICE 7-Feb $0.69  
Axalta Coating Systems AXTA 8-Feb $0.29  
Fiserv FISV 8-Feb $1.16  
Cerner CERN 9-Feb $0.61  
Express Scripts ESRX 14-Feb $1.87  
Wabtec WAB 16-Feb $0.93  
Moody’s MCO 17-Feb $1.13  
Continental Building Products CBPX 20-Feb $0.27  
Cinemark CNK 22-Feb $0.42

Buy List Updates

Good news for Moody’s (MCO). The credit-ratings agency has agreed to pay $864 million to settle with the government over its ratings leading up to the financial crisis. The agreement calls for Moody’s to pay $437.5 million to DOJ and $426.3 million to the states. The news helped the stock bounce above $100 per share, despite being downgraded by UBS and Barclays last week.

Barclays struck again. This time, they downgraded Cerner (CERN). Interestingly, Cerner was one of our worst-performing stocks last year, and it’s our best so far this year. Weird how that happens! Earnings are due out on February 9.

SunTrust initiated coverage on HEICO (HEI) with a buy rating and a price target of $85. Also, Institutional Investors named HEICO’s CEO, Laurans Mendelson, the best CEO in defense/aerospace.

Deutsche Bank initiated coverage on Danaher (DHR) with a Buy rating. They gave the stock a price target of $88 per share.

That’s all for now. The news next week will probably be dominated by earnings news, but there will be some key economic reports. The most important will be the first look at Q4 GDP. Growth for Q3 was 3.5%, but we’ve had a lot of difficulty getting two good quarters back to back. Let’s see if we can do it this time. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
2223 Ontario Road NW, Washington, DC 20009, USA

#Trump’s inauguration, troops enter #Gambia, $1 trillion coin

Good morning, Quartz readers!


Donald Trump becomes the 45th president of the United States. Nearly a million people are descending on the US capital to either celebrate or protest the mogul’s inauguration. The swearing-in itself promises to be a low-key affair, notable for the absence of star performers, Democratic lawmakers, and ailing former presidentGeorge H.W. Bush.

The US Senate votes on at least two Trump cabinet picks. It’sexpected to confirm retired generals James Mattis and John Kelly to lead, respectively, the Pentagon and the Department of Homeland Security. Republicans had hoped to clear more nominees today, but Democrats argued the process was being rushed and lacked sufficient financial and ethics paperwork.

The World Economic Forum wraps up with Philip Hammond and Henry Kissinger. Britain’s finance secretary discusses the UK’s future relationship with the EU alongside Barclays CEO Jes Staley and former Italian prime minister Mario Monti. Kissinger thenchats about global prospects for 2017 with forum founder Klaus Schwab.


China delivered its dubious GDP figures. Beijing said the nation’s GDP grew by 6.8% in the fourth quarter. As for reality, who knows? This week the government finally admitted to making up some statistics. Today’s figure would suggest growth is stabilizing in the world’s second-biggest economy. For the year, GDP growth was reportedly 6.7%—just as authorities predicted 12 months ago.

US senators grilled Trump’s pick for treasury secretary. In abruising confirmation hearing (paywall) they questioned Steven Mnuchin, a former Goldman Sachs banker, on his failure to declare almost $100 million in assets. He broke with Trump by voicing a preference for a strong US dollar, and said he wanted to quickly raise the debt ceiling before it maxes out in March.

Senegalese troops entered Gambia after its president refused to give up power. Adama Barrow, who defeated the country’s longtime leader Yahya Jammeh at the polls in December, was sworn in as president in a makeshift ceremony in Dakar, neighboring Senegal’s capital. A Barrow spokesman said Jammeh either “accepts the situation or we are looking at a state of war” (paywall).

US investigators said Tesla’s Autopilot wasn’t to blame for a fatal crash last year. In a big win for Elon Musk, authorities determined that drivers with Tesla’s semi-autonomous driving software were 40% less likely to get in an accident, making Teslas much safer than the average car.

Italian rescuers tried to reach dozens of people missing in an avalanche. They were inside a hotel that was destroyed by tons of snow and ice, shaken loose by a series of recent earthquakes.


Dave Gershgorn on the headphone startup that wants to put two extra brains in your ears: “Doppler’s software must be able to do a few things within milliseconds: Identify a specific noise, understand the characteristics of that noise, and then alter the noise without distorting it. These ambitions all rely on machine learning, a still-nascent field in which algorithms are taught to find patterns in data.” Read more here.


As the hours count down
Reality has set in
The Street wants results


Teen drug use can be slashed with “natural highs.” Iceland’s incredibly successful program offers classes in music, dance, hip hop, art, and martial arts.

A populist strongman can alter the nature of a democracy.History shows that authoritarian leaders bend the rules until they are unrecognizable.

The White House should be run like a corporate board. Half a dozen people around a table should make decisions collectively.


Obama briefly considered minting a $1 trillion coin. Facing a government shutdown, it was one way to pay off the national debt.

Dutch trains run on windmill power. There are 2,200 turbinesgenerating enough electricity to meet the country’s mass transport needs.

Twilight actress Kristen Stewart released a research paper on artificial intelligence. The Hollywood A-lister wants to use AI to make art, not just inspire it.

Running could actually be good for your knees. The activity stimulates changes in the biochemical environment inside the joint, which could help it work more smoothly (paywall).

One in five people may “hear” flashes of light. Many may not even realize they are experiencing sensory cross-wiring similar to synesthesia.

Our best wishes for a productive day. Please send any news, comments, jogging routes, and robot art to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

#Samsung heir walks, #Trump’s final cabinet pick, #Japan toilet clarity

Good morning, Quartz readers!


The European Central Bank holds its first policy meeting of 2017. Investors hope it will be boring after the bank extended its quantitative easing program longer than expected last month. Afterwards chief Mario Draghi will face questions on when the program might start to wind down, and on what other moves the bank is planning.

Theresa May talks business at Davos. Having finally outlined her Brexit plans in a speech this week, the British prime minister will meet with Wall Street bosses who might ditch London as their European headquarters. Goldman Sachs could cut its London staff in half, with many workers moving to Frankfurt, Handelsblatt reported.

Gambia’s inauguration day standoff. Election winner Adama Barrow is supposed to take office, but current president Yahya Jammeh declared a state of emergency after initially conceding the race, and parliament voted on Tuesday to extend his term. The African Union said it will stop recognizing Jammeh as Gambia’s president starting today.


On the Formula E track, a need for speed is becoming a need for data. For the DS Virgin Racing team, data informs every step of race strategy: from pre-race simulations, to in-race sensor data, to post-race analysis. And the team that has the best tech partner enjoys a tremendous competitive advantage. Advertisement


Samsung heir Lee Jae-yong avoided arrest in South Korea’s bribery scandal. A court denied prosecutors’ request to arrest him, ruling that there “appears to be no flight risk and no need to physically detain” the Samsung vice chairman. He still faces charges of bribery, embezzlement, and perjury—though he might not be punished severely due to Samsung’s influence on the nation’s economy.

Investors underestimated Netflix yet again. The streaming video giant easily surpassed quarterly expectations, adding 1.93 million subscribers in the United States and 5.12 million internationally, thanks to original hits like Stranger Things and Narcos. Netflix plans to spend a whopping $6 billion on content in 2017, up $1 billion from last year.

Donald Trump made his final cabinet pick. He wants Sonny Perdue, the former Republican governor of Georgia, to head the agriculture department. The agency directs the nation’s farm policy and several programs that Republicans lawmakers have suggested trimming, including food aid to the poor and new standards for school lunches.

US authorities sued Oracle for gender and race discrimination.The labor department alleged that the software company paid its white, male workers more and unlawfully favored Indian applicants for product development and technical roles. Oracle denied the charges.

2016 was the hottest year on record. That makes three years in a row of record-setting temperatures, with last year averaging 1.2 °C (2.2 °F) hotter than in the late 1800s. Temperatures in 2017 are likely to dip due to the absence of the El Niño weather pattern, but will still be in the top five.


Ana Campoy on the US refugee problem: “The US has committed to protecting people facing persecution in their home country. President Barack Obama wasn’t very adept at handling the dramatic switch in the nature of illegal immigration into the US, which has largely happened under his watch. His policies have mostly focused on dissuading people from coming to the US, not figuring out whether they deserve protection.” Read more here.


More Wall Street weirdness:
Goldman blows past estimates
and its shares still fall


Mobile phones prove that US police lie. In the vast majority of cases they get away with it, even when there’s video evidence to prove them wrong.

The first step to save a good business: Cut the crap. That’s the advice Steve Jobs used to save not just Apple, but Nike too.

An Africa with open borders could be a nightmare. Although they were arbitrarily imposed, the continent’s divisions help containdiseases, terrorism, and xenophobia.


The Mirai botnet began with a Minecraft rivalry. The malicious software that hijacks millions of connected devices was initially used to shut down the popular game’s servers.

A Finnish bear is holding his first art exhibition. Juuso paints with his fur and paws—and his abstract paintings are selling for up to €4,000 ($4,259).

Japan is standardizing the baffling array of control buttons on high-tech toilets. Tourists have long been shocked when theirnether regions are sprayed with air and water.

The world’s second three-parent baby was born in Ukraine.The controversial technique is banned in the US and only available to mothers with genetic conditions in the UK.

China’s government posts hundreds of millions of fake social media comments every year. The aim is to distract the public from discussing real problems.

Our best wishes for a productive day. Please send any news, comments, bear art, and toilet strategies to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

Hydrogen’s big backers, #Samsung scandal, human-loving vampire bats

Good morning, Quartz readers!


Samsung’s heir faces arrest. Jay Y. Lee, the Samsung Group’s de facto leader, is being investigated in a bribery case related to South Korea’s widening corruption scandal. A court will decide whether to approve Lee’s arrest warrant, which accuses him of directing company funds to a confidant of president Park Geun-hye.

Germany plans for Brexit. A cabinet committee led by chancellor Angela Merkel will address preparations “within the federal government as well as by European institutions” ahead of Britain’s departure from the EU. The meeting comes a day after British prime minister Theresa May, in a long-awaited speech, laid out a 12-point list of objectives for Brexit.

More confirmation hearings for Trump’s cabinet. The US Senate is set to grill Tom Price, the health secretary nominee, about potential conflicts of interest. Scott Pruitt, tapped to lead the Environmental Protection Agency, will face questions on his climate change denial. UN ambassador nominee Nikki Haley and commerce secretary pick Wilbur Ross will also be in the hot seat.

The US economy gets a report card. The labor department will release new data (paywall) on the consumer price index, which rose 1.7% in November from a year ago. Meanwhile the Federal Reserve will publish its industrial production index, with economists expecting an 0.6% increase in December to offset an 0.4% decline in November.


Auto and oil giants announced they’ll invest $10.7 billion in hydrogen-related products. Including Toyota, BMW, and Royal Dutch Shell, the 13 companies will also form a council to persuade policymakers that hydrogen is the way to go as the world transitions away from dirtier sources of energy. The investments will be made within five years, they said.

Barack Obama sent $500 million to a UN climate fund… It was the second such payment made toward $3 billion pledged to the Green Climate Fund, designed to help developing countries switch to cleaner energy. Incoming president Donald Trump has called man-made climate change a hoax and could withhold the remaining amount. Republican senators have called the payments a waste of money.

… and commuted the sentence of Chelsea Manning. She isserving a 35-year sentence as a transgender woman in a male military prison, and twice tried to commit suicide last year. As a US Army private she gave hundreds of thousands of secret military and diplomatic documents to Wikileaks.

Deutsche Bank signed a $7.2 billion settlement with US authorities. The bank “did not merely mislead investors” but “contributed directly” to the 2008 financial crisis, said attorney general Loretta Lynch. Having agreed last month to the amount—down from the $14 billion sought—the bank said its conduct at the time was unacceptable and that it had upped its standards.

Nigeria mistakenly bombed a refugee camp. An airstrike meant for Boko Haram extremists instead killed more than 100 refugeesand aid workers.


Steve LeVine on Quartz’s geopolitical forecasts for 2017: “The anti-elite uprisings all around us appear to signal the close of one era, and the advent of a new, unknown one… But we are in a void at the moment—the dangerous period before a new age fully takes hold, and systems, nations and movements are up for grabs.” Read more here.


New day, new chaos
Easier to lasso wind
Than parse policy.


The rules that have kept the world together since 1945 are under attack. Outgoing US ambassador to the UN Samantha Powerhad some stern words for Vladimir Putin.

Donald Trump is reviving the “Great Man” theory of history.The president-elect “resists analysis as a predictable, impersonal force.”

African mobile operators and startups should work together.Large telcos can financially support smaller firms and draw talent from them in return.


A self-piloted flying car from Airbus is on the way. CEO Tom Enders said a prototype will take to the skies by the end of this year.

Fiji is getting useless donations from Australia. Instead of chainsaws, woolly sweaters, and high heels, aid agencies would rather citizens send cash instead.

Vampire bats have developed a taste for human blood.Scientists in Brazil found human DNA in feces samples from the hairy-legged winged mammals.

Putin thinks Russian prostitutes are “the best in the world.”Even so, he doesn’t believe allegations that Donald Trump made their acquaintance.

Fake news may lead to genocide in South Sudan. Falsehoods spread on social media are causing massacres in the world’s youngest country.

Our best wishes for a productive day. Please send any news, comments, flying cars, and bat repellant to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

#May’s #Brexit address, #Xi’s #Davos debut, transparent wine prices

Good morning, Quartz readers!


Theresa May lays out her Brexit plan. The British prime ministerwill deliver a speech detailing how the UK plans to leave the EU. She’s expected to focus on national unity, border control, trade, and customs. Yesterday the pound slid amid fears she’ll emphasize leaving the EU’s single market to regain control of immigration policy.

Germany’s top court decides on whether to ban a neo-Nazi political party. The Constitutional Court’s ruling could end the National Democratic Party. The upper house of parliament brought the suit last March, arguing that the far-right NPD (Nationaldemokratische Partei Deutschlands) is racist, anti-Semitic, and a threat to the nation’s democratic order.

Russia talks 2016 diplomacy. Foreign minister Sergey Lavrov will hold his annual press conference (link in Russian). Possible topics include his nation’s military role in Syria, allegations that Russian hacking influenced US elections, and the Kuril Islands, still a point of contention between Russia and Japan.

Xi Jinping delivers his big speech at Davos. As the first Chinese president to attend the World Economic Forum, he’s expected to deliver a philosophical keynote speech defending globalization andmusing upon “where humans came from, where they are now, and where they are going.”


On the Formula E track, a need for speed is becoming a need for data. For the DS Virgin Racing team, data informs every step of race strategy: from pre-race simulations, to in-race sensor data, to post-race analysis. And the team that has the best tech partner enjoys a tremendous competitive advantage. Advertisement


Rolls-Royce agreed to pay over $800 million to resolve bribery inquiries. The UK aerospace firm reached agreements (paywall) with authorities in Britain, the US, and Brazil related to probes into potential corruption in overseas markets. The largest payment, of about $600 million, will go to Britain’s Serious Fraud Office.

Germany’s auto industry hit back at Trump. German economic minister Sigmar Gabriel and BMW pushed back against the US president-elect’s threat to tax Mexican-made imports to the US by German automakers, and his complaint that few American cars can be found on German roads. “Build better cars,” Gabriel said.

The US irked Russia. US Marines arrived in Russia’s neighbor, Norway, marking the first time since World War II that Norway has allowed foreign troops to be stationed there. It follows on the US strengthening its military presence in Poland.

The last man to walk on the moon died. US astronaut Eugene Cernan passed away at the age of 82. He wrote his daughter’s initials into the lunar surface, and upon taking his first steps there exclaimed, “Oh my golly! Unbelievable!” Recently John Glenn, the first American to orbit the Earth, died at the age of 95.


Jenni Avins tries wine from a startup that pledges pricing transparency. “Each line item on Alit’s cost sheet offers an opportunity for customers to learn something about the wine and the values behind it. I was initially put off by $2.88 for custom packaging, until Tarlov told me the majority of the investment wasn’t for a fancy bottle, but rather a recyclable shipping box that wouldn’t require any environmentally harmful styrofoam packaging.” Read more here.


Martin Luther King Jr. was ahead of his time on universal basic income. King advocated for the idea in 1967. Experts now say it may be a necessary safety net as job losses mount due to automation.

Trust is a thing of the past. A survey by communications group Edelman found a “global implosion” in people’s trust for institutions such as business, government, the media, and NGOs.

Trump’s efforts to discredit John Lewis are misguided. The US lawmaker is a civil rights hero, having faced down death repeatedly in 1965 while peacefully protesting for equal treatment in Alabama.


An analysis of 10,000 scientific studies on marijuana concretely supports only three medical benefits. A new 400-page report also identifies strong evidence of four high-risk factors associated with cannabis use.

Spiciness may help you live longer. A longitudinal study of thousands of participants found that people who ate a lot of hot red chili peppers had a 13% lower risk of death.

Amazon tried selling Indian-flag doormats and Gandhi-themed flip-flops—in India. The e-commerce giant has been widely called out over its tone-deaf offerings, though some feel the reaction has been too much.

Theresa May will appear in Vogue. The British prime minister and fashion fan was shot by famed photographer Annie Leibovitz and will be featured in the magazine’s US edition in April.

A neo-Nazi podcaster was outed as having a Jewish wife. The host of a racist, anti-Semitic program resigned after the news about his wife spread online, reportedly leaving some of his listeners “crestfallen.”

Our best wishes for a productive day. Please send any news, comments, chili pepper recipes, and inoffensive flip-flops tohi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

CWS Market Review – January 13, 2017

CWS Market Review

January 13, 2017
“There is a danger of expecting the results of the future to be predicted from the past.”
– John Maynard Keynes

Earnings season is finally upon us. Over the next four weeks, 20 of our 25 Buy List stocks are scheduled to report Q4 earnings results. This is a crucial time for disciplined investors, because it’s when we get to see who among our stocks was naughty and who’s been nice.

It’s easy to think that stock movements are arbitrary—and it sometimes looks that way. But stocks do move for good reasons, and the most important is earnings. That’s why our Buy List is focused on high-quality companies. I’m happy to say that our Buy List already has a slight lead over the market this year.

Frankly, the “Trump Rally” is beginning to look a bit tired. Considering that the Dow has risen 22 times in 26 days, who wouldn’t be? The Dow has tried to break 20,000 several times, but it can’t seem to do it. Last Friday, the index came within 0.37 points of busting through…but no such luck. I wouldn’t be surprised to see the market pull back over the next few weeks. Nothing major. But just enough to clear out the trend-followers.

In this week’s CWS Market Review, we’ll look at what’s in store for earnings season. Next week, we’ll have our first Buy List earnings report. I also want to bring you up to speed on the latest news surrounding our Buy List stocks. Before we get to that, let’s look at some recent economic news. Small-business optimism just recorded its biggest increase in decades.

Small-Business Optimism Soars

Last Friday, the government reported that the U.S. economy created 156,000 net new jobs in December. That was below the expectations of 175,000 jobs, but it’s still largely within the previous trend. Unemployment ticked up to 4.7%. There’s still the issue of millions of Americans out of the labor force. Fortunately, though, the labor-force participation rate rose by a tad. There are, of course, major demographic trends at play in that figure. But on balance, we can say that the jobs market is improving.

The best news in the jobs report had to do with average hourly earnings. For December, AHE rose by a healthy 0.4%. That’s a good number, and it’s good news for us investors as well. That’s future revenue for our companies. Over the last year, wages have increase by 2.9%. That’s ahead of inflation, but not by much. Still, it’s good to see American workers finally get a real raise.

One of the more interesting reports we got this week was that small-business optimism soared in December. Actually, that understates it. Small-business optimism skyrocketed. It had its best monthly increase since 1980. The index jumped 7.4 points to 105.8, which is the highest since 2004.

Obviously, a good deal of that is political. Small-business people lean right, so there’s certainly comfort for them in a new administration. But I wouldn’t be quick to dismiss this as solely political. Optimism, especially newfound optimism, is an important ingredient for an expanding economy. These will be the people who will approve new construction plans or give the go-ahead to hire new employees.

There’s an erroneous belief that economic expansions must die of old age. I’m not so sure about that. Australia hasn’t had a recession in 25 years. Even eight years into our expansion, I think there are many reasons to believe that growth will accelerate this year.

Last Friday, the Dow reached an intra-day high of 19,999.63. The index came within a hair’s breadth of 20,000. Of course, it’s an arbitrary number, and an even more arbitrary index, but it’s an important milestone for people to see. It’s the kind of thing that people who don’t follow the markets will notice. To add some perspective, the Dow first closed above 200 on December 18, 1927, and Dow 2,000 fell on January 8, 1987. (Is there something about years ending in 7?)

Quietly, the market has slipped into a narrow trading range over the past month. In fact, for the Dow, this has been one of the narrowest ranges on record. Since December 9, the index has finished every trading day somewhere between 19,756 and 19,974. That’s 22 days locked in a range that’s a little over 1%.

The Nasdaq, by contrast, had its first down day of 2017 on Thursday. The S&P 500 Tech Index got to its highest point since September 2000. The index is still below its high from nearly 17 years ago. The coming earnings season will be important because we’ll be able to see if companies have witnessed any real improvements in their sales and earnings. I think we’ll have impressive results from companies like Microsoft (MSFT) and CR Bard (BCR). Now let’s take a look at our first Buy List earnings report, which comes next week.

Earnings Preview for Signature Bank

Now that we have 25 stocks on our Buy List, let me explain the earnings-reporting cycle. Companies are required to report their earnings each quarter. Most companies follow the March/June/September/December reporting period. On our Buy List, 20 of our stocks do just that. (Please note that that doesn’t necessarily mean their fiscal year ends in December. Microsoft, for example, has a fiscal year that ends in June.)

Four of our Buy List stocks; JM Smucker (SJM), Ross Stores (ROST), Hormel Foods (HRL) and HEICO (HEI), follow the January/April/July/October cycle. One of our stocks, RPM International (RPM), follows the cycle of February/May/August/November. RPM reported its November earnings recently.

Banks tend to report their earnings early in the reporting cycle. When it was on our Buy List, Wells Fargo traditionally kicked off earnings season for us. Now with Wells off the Buy List, that honor falls to Signature Bank (SBNY). I don’t know the exact date yet that SBNY will report, but going by previous years, it will likely be sometime next week.

Signature had a decent Q3 report in October. They made $2.11 per share, which beat the Street by seven cents. The key stat for any bank is net interest margin. For SBNY’s Q3, that came in at 3.14%, which is pretty good.

Obviously, the bum-medallion loans are still a problem for SBNY. The ride-sharing boom has decimated that business. Fortunately, Signature has taken steps to resolve the issue.

Signature is a good example of something you see a lot. It was a cheap stock, and the shares were doing absolutely nothing. Nada. The numbers were clear—the bank was a bargain. But all through the late summer and fall, the shares snoozed away. In October, SBNY was going for around $115 per share. Then came the election, and suddenly people realized, “hey, this bank thing stock is really cheap.” Within a few days, the stock shot to $150 per share.

The lesson is that many of our investments go against the tide. That means that it may take a while for the world to catch up to us. A great investment can have it all, but if it doesn’t have a catalyst, it won’t move. As prudent investors, we follow the sage words of Sir Mick: “time is on our side.”

Buy List Updates

When looking for superior companies, you want to search out firms that have strong pricing power. You probably regularly buy some product that you’re afraid to admit you’d keep on buying, even if they doubled the price. I certainly know I do.

This doesn’t mean the company should or will raise its price, but they know they have the ability to do so if they want to. As investors, that’s what we want to find. This tells us they have a locked-in market and few competitors.

On our Buy List, Moody’s (MCO) is a good example. In fact, Warren Buffett said that it’s actually difficult to judge Moody’s management, because its pricing power is so strong.

This week, JM Smucker (SJM) said they’re raising the cost of their packaged coffees, like Folgers and Dunkin’ Donuts, by an average of 6% in the U.S. The company said (what else?) they’re just passing on costs. But we’ll soon see how devoted those coffee drinkers are. I suspect SJM will do just fine.

A few of our stocks had ratings changes. Axalta Coating Systems (AXTA) was cut to neutral by Citigroup. Piper Jaffray started Hormel Foods (HRL) with an “overweight” rating. It takes a mature adult not to make a Spam joke here. I am not that man. Moody’s (MCO) was downgraded by UBS and Barclays.

Stryker (SYK) won’t report their earnings until later this month, but this week, they gave us a sneak preview. Stryker said that Q4 revenue rose by 16.3%. That’s 16.8% in constant currency. For the year, sales rose 13.9% to $11.3 billion. That’s a growth of 14.3% in constant currency.

“I am pleased with our performance in both the fourth quarter and the full year 2016,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “Fourth-quarter organic growth of 6.7% versus a strong prior year is impressive, and was balanced across Orthopaedics, MedSurg and Neurotechnology and Spine. In addition, we executed well on acquisitions and delivered leveraged adjusted earnings gains. We enter 2017 with good momentum across our businesses and look forward to building on this success.”

Stryker said that based on these numbers, they expect final 2016 EPS to be at the high end of their $5.75 to $5.80 range. That range translates to Q4 results of $1.73 and $1.78 per share. In October, Stryker raised the low end of their forecast by five cents per share. Forex costs are expected to knock 10 to 12 cents per share off their full-year bottom line. The company will report earnings on January 24.

That’s all for now. The stock market will be closed on Monday in honor Dr. Martin Luther King, Jr.’s birthday. On Wednesday, we’ll get the CPI report for December. It will be interesting to see if there have been any signs of incipient inflation. I doubt it, but will reserve judgment until we see the data. Also on Wednesday, the Fed will release its “beige book,” which offers a detailed overview of the economy. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

P.S. If you can’t get enough of me, I was on CNBC here and here on Thursday.

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
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