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Week Ahead – Time for compromise

Deal Time The next week is all about compromise. Can the UK and EU reach a Brexit compromise that avoids a damaging no deal at the end of the month? Can Congress find a compromise on a stimulus package and spending bill to prevent hardship for businesses.

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Deal Time

The next week is all about compromise. Can the UK and EU reach a Brexit compromise that avoids a damaging no deal at the end of the month? Can Congress find a compromise on a stimulus package and spending bill to prevent hardship for businesses and households and avert a government shutdown? Can EU leaders overcome their differences and sign off on the 2021-27 budget and Covid-19 relief package? It’s time for some deal making.

Republicans and Democrats lock horns as deadline looms

EU leaders fight to save 2021-27 budget

The time for a Brexit deal is now


Country

US

The focus in the US remains on the coronavirus and the growing restrictive measures aimed at thwarting its spread.  Many states are at risk at reaching healthcare capacity and concerns are high that it will get worse by Christmas.  Some states are seeing record high cases and the likelihood of more shelter-at-home orders will start to weigh on businesses.  Pressure is growing for Congress to due to more and this should be a critical week for breaking the stimulus stalemate. 

On Thursday, the November inflation readings should signal price pressures are still not a concern.  The monthly reading should tick higher to 0.1%, while the year-over-year reading softens to 1.1%.  Weekly jobless claims will be released, and the recent restrictive measures could start being reflected with this reading.  Friday will provide the University of Michigan’s preliminary December consumer sentiment reading, which should show a further deceleration in confidence.

US Politics

Campaigning for the two Georgia senate seats is about to enter a maddening pace.  President Trump will give his support to Republican incumbent Senators David Perdue and Kelly Loeffler at a rally on Saturday.  Democrats need to win both seats to have a split Senate, with VP Harris having the tie-breaking vote.  Most political experts expect the Republicans to win at least one of the races and keep control of the Senate.  Democrats will need to deliver a strong turnout but that will be difficult to motivate the younger voter.  

EU

The EU is sticking to its guns over the 2021-27 budget, which includes the €750 billion recovery fund. Opposition from Poland and Hungary to the rule of law clause has caused significant friction but the other 25 member states have signaled they’re prepared to persevere and have a plan B for the recovery fund that doesn’t require the backing of the two countries. An emergency budget would then be enforced from next year which would cut spending considerably. With Hungary and Poland being significant beneficiaries of the funding, it seems their hand is not as strong as they wish. 

Brexit

We’re at a critical stage now on Brexit with the next few days potentially seeing a deal signed or talks break down. EU leaders want to review the deal and next week’s summit, with there being less than four weeks until the end of the transition. Markets appear dangerously confident of a deal which poses not just downside risk, but significant weekend risk as well given the point we’re at. 

UK

The country has exited lockdown although life isn’t much different for most of the country, with the restrictions that remain in place. The MHRA moved quickly to approve the Pfizer vaccine which means it will be ready for distribution from next week to the most vulnerable. This is a massive step forward but it will still be months until it is available to the masses which means restrictions aren’t going anywhere just yet. Still, after the year we’ve all had, a few months is nothing. 

Brexit remains the number one risk for the economy, with officials working hard towards a deal but the same old issues remain. A breakthrough could come in the next few days, one way or another. 

Turkey

The lira has broadly stabilized over the last few weeks following the sacking of the country’s central bank governor and resignation of its finance minister. Last months rate hike satisfied the demands of the markets for now but the currency remains very weak, historically speaking and vulnerable to further shocks. 

US lawmakers are pushing for sanctions on Turkey as part of a defence spending bill which put the lira under a little pressure on Friday. I don’t think the impact will be overly significant though, which the currency likely having priced in a less friendly relationship with Biden from January.

China

A wrath of Chinese data is expected to show the economic recovery is not losing any momentum.  Trade data is expected to show modest increases in both exports and imports (dollar terms).  New yuan loans and aggregate financing are expected to increase significantly.  

India

The Reserve Bank of India left interest rates unchanged this week as the country continues to battle stagflation. India entered technical recession last week and inflation is above the upper end of its target range. There are calls for the government to do more rather than lean on a central bank that is limited in what it can do without exacerbating the inflation problem.

New Zealand 

The New Zealand Dollar continues to move further away from the  0.7000 level.  The RBNZ is expected to keep the pace of bond purchases at NZ$800 million at QE auctions.  Economic data releases this week will include REINZ House Sales, Business Manufacturing PMI and Food Prices for November.  

Australia 

The Australian dollar has been on a tear benefitting from the rally in commodities.  A relatively quiet week on the data front from Australia will see an update from the NAB on business conditions, third quarter house price index and Westpac’s December consumer confidence index.  The focus from Australia will remain on the diplomatic spat with China.  

Japan

A busy week in Tokyo will start with household lending data that is expected to bounce back.  The final third quarter GDP reading will likely be revised slightly higher on quarterly basis from 21.4% to 21.5%.  Japan’s current account surplus should also rise higher as the export-driven economy was strong in October.  Core machine orders should show a significant improvement from the drop seen in September.  Lastly, Japan’s November producer prices index could turn positive on a monthly basis. 


Key Economic Events

Saturday, December 5th

– Brexit negotiations are expected to inch towards a deal, but last-minute hurdles could derail a breakthrough

– President Donald Trump tries to assist the two Republican senators that are in the runoff elections on January 5th.

Sunday, December 6th

– No events

Monday, December 7th

– The deadline for setting the 2021 budget is here and all eyes will be on both Poland and Hungary and whether they will remove their veto.

– The UK parliament debates the Internal Market Bill amendments

– Holiday for Spain and Italy’s Milan

Economic Data

Germany Oct Industrial Production M/M: 0.7% estimate v 1.6% prior

Australia services index, ANZ job advertisements

Switzerland foreign-currency reserves

Japan leading index

China trade, foreign reserves

Tuesday, December 8th

– White House hosts coronavirus vaccine summit 

– Holiday in Italy, Spain, Portugal and Austria.

Economic Data

Euro-area Q3 Final GDP 

Japan Q3 Final GDP, household spending

Australia business conditions

Hungary CPI

Germany ZEW survey

South Africa Q3 GDP Q/Q: 64.5% estimate v -51.0% prior

Wednesday, December 9th

– German Chancellor Merkel speaks to the Bundestag during the 2021 budget debate.

– UK House of Commons debates the Taxation (post transition period) Bill

– Italian PM Conte tries to win the vote on the European Stability Mechanism reform

– Weekly EIA crude oil inventory report

Economic Data

US wholesale inventories

Mexico CPI

Germany trade data

Bank of Canada rate decision: Expected to keep Interest Rate unchanged at 0.25%

Australia consumer confidence

Japan core machine orders, machine tool orders

South Africa CPI, retail sales

France industry sentiment

Thursday, December 10th

– The ECB rate decision is expected to keep rates steady and deliver an increase and extension to its pandemic bond-buying program and provide banks access to more long-term loans.

– A crucial EU leaders summit will discuss the budget, stimulus and Brexit.

– Czech parliament’s upper house will vote on PM Babis’s request to curb a portion of the tax overhaul.

– Bank of Canada’s Deputy Governor Beaudry delivers the Economic Progress Report.

– The FDA reviews the vaccine made by Pfizer/BioNTech, potentially granting access for distribution within 24 hours.

Economic Data

US initial jobless claims, CPI, Treasury monthly budget statement

UK Oct GDP M/M: 0.4% estimate v 1.1% prior, industrial production M/M: 0.3% estimate v 0.5% prior, RICS house prices

South Africa current account, gold production, manufacturing production

Japan PPI

France industrial production

Czech Nov CPI M/M: 0.1% estimate v 0.2% prior

Friday, December 11th

– Michigan consumer sentiment index for December is expected to decline from 76.9 to 76.3.  The US is dip slightly after falling to a three-month low in November. The coronavirus cases are surging all over the country and likely triggering restrictive measures that will damage sentiment. 

Economic Data

US PPI, University of Michigan sentiment, Baker Hughes rig count

New Zealand food prices, manufacturing PMI

Industrial production: India, Italy, Mexico

Sovereign Rating Upgrades

– Spain (Fitch) 

– Switzerland (Fitch)

– Norway (Moody’s)

– U.K.(DBRS)

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Economics

Braxia and KetaMD, CEOs McIntyre and Gumpel Speak on Acquisition

Last week, the Canadian company Braxia Scientific acquired 100% of the issued and outstanding stock of KetaMD, Inc. This is an exciting acquisition, and…

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Last week, the Canadian company Braxia Scientific acquired 100% of the issued and outstanding stock of KetaMD, Inc. This is an exciting acquisition, and in today’s interview, The Dales Report’s Nicole Hodges talks with CEOs Dr. Roger McIntyre and Warren Gumpel of Braxia Scientific and KetaMD respectively.

For some background information, KetaMD is a U.S. based, privately-held, innovative telemedicine company, with a mission to address mental health challenges via access to technology-facilitated ketamine-based treatments. Braxia Scientific is Canada’s first clinic specializing in ketamine treatments for mood disorders. They recorded revenue of $1.49m for 2022 fiscal year, ended March 31. On a year-over-year basis, revenue increased 47.5%.

Here’s some highlights from the interview.

KetaMD gives Braxia a presence in the US

Dr. McIntyre says that KetaMD gives Braxia what they’ve had as their vision from the beginning: a US presence. KetaMD is a living program. It’s already running, has infrastructure, and patients. McIntyre believes that a program like KetaMD is something Braxia’s needed to scale and obtain commercial success.

With telemedicine, Braxia has a potential to serve a gap in access. The zeitgeist of “patient going to medicine” has flipped, McIntyre says. “Now it’s medicine goes to the patient, and that is long overdue.”

COVID speeding a trend that was already happening

In 2020, 80% of physicians indicated they had virtual visits. That’s a number up from 22% the year before. But this is something that many doctors, McIntyre included, believe always should have happened. The pandemic only was the catalyst for innovation and making the option viable.

While some treatments will always need a clinic or a hospital, McIntyre believes some treatments can be done safely at home. And they are, for many chronic diseases. He feels implementing ketamine and psychedelics would be among these treatments where service could be expanded into the home. It would require careful SOPs in place, best practices, and surveillance. But he believes Braxia Scientific could deliver this with KetaMD.

Gumpel to stay as CEO of KetaMD

Gumpel says that KetaMD benefits in this acquisition from being part of the world’s most prominent researchers in depression, psychedelics, and ketamine. In the acquisition, he’ll stay on as CEO. He admits that Dr. McIntyre has been a huge part of collecting the data on the safety of ketamine treatment, and has a strong motivation to “see this thing through until most of society can access that – or at least the people that need it and want it.”

Gumpel admits he has a personal connection to ketamine treatment. As a person who has experienced bouts of depression for years, it saved his life, he says. He is grateful he was living within walking distance of ketamine treatment in Manhattan. It made him extremely aware of the accessibility gap, which in part inspired KetaMD.

Be sure to tune in for the full interview regarding Braxia and KetaMD, right here on The Dales Report!

The post Braxia and KetaMD, CEOs McIntyre and Gumpel Speak on Acquisition appeared first on The Dales Report.

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Spread & Containment

How to Use Dividends to Find the Best Tech Stock

Investors Alley
How to Use Dividends to Find the Best Tech Stock
When we talk about tech stock investing, we hear discussions of all sorts about different…

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Investors Alley
How to Use Dividends to Find the Best Tech Stock

When we talk about tech stock investing, we hear discussions of all sorts about different measures used for picking stocks.

For example, some tech investors use year-over-year revenue growth. Others subscribe to a theory that has been floating around for many years, that the secret to picking tech stocks was looking at the percentage of cash flows spent on research and development.

All too often, tech stock analysis consists of storytelling and searching for ideas that will change the world, something I’ve heard thousands of times during my career. The number of companies that actually did change the world probably totals up to a few dozen over three decades.

Some of those beat the market. Others did not.

I have found a variable that can help tech investors spot promising opportunities to identify technology companies that have higher probabilities of providing market-beating returns: dividends.

Note a stock’s dividend yield: investors who want higher dividends with an overall total return would be smart to look into high-yield tech stocks as part of their income strategy. The key to using dividends to find market-beating tech stocks is to look at the rate of their dividend growth. It doesn’t matter how high the dividend is at any given time. We want to see companies that are consistently growing their dividends.

A tech company that pays a dividend is making a statement. It tells the world: “We are generating enough cash to pay the bills, hire great people, and fund our future growth plans as well as R&D. In fact, we are generating so much cash we have some left over to pay out to our investors.”

Ideally, we want to limit our universe of companies to those who are increasing their payout by at least 20% annually. Growing a dividend at that high a rate says that things are just continuing to get better.

Once we have a universe of tech companies that are growing their payouts at high levels, we want to make sure we only own those that really do have a wonderful business that just keeps getting better. We want to use a financial checklist to make sure our companies are in excellent financial shape and have what it takes to keep growing the business.

I prefer the nine-point checklist developed by Professor Joseph Piotroski when he was at the University of Chicago – known as the “Piotroski F-Score”. This is a list of nine criteria of profitability, leverage, and efficiency. On each criterion, a firm can either get one or zero points – pass or fail.

I limit my universe of tech stocks with paid dividend growth to just two to three with the highest scores on the Piotroski checklist.

Using this simple method for picking tech stock winners has crushed the S&P 500 over the past decade and even edged at the tech-heavy NASDAQ 100.

Texas Instruments (TXN) makes the current list of technology companies with high dividend growth and outstanding fundamentals and prospects. The company makes most of its revenues from semiconductors, but it does still have some revenues from its calculators and other business machines. (I have had one of these, a Texas BAII calculator, within arm’s reach for most of my career.)

Texas Instruments had a solid second quarter and increased its guidance for the third quarter. The company has not suffered the China slowdown problems that have plagued some of their competitors so far. The brightest spot in the recent report was semiconductors being sold to the automobile industry, which were up 20%.

Although we have seen some slowdown in semiconductors due to the supply chain issues created by the pandemic, Texas Instruments has powerful tailwinds from all the developments we see in technology over the next decade.

Every one of the hottest trends in the economy—from renewable energy to artificial intelligence and everything in between—is going to increase demand for semiconductor chips. There are thousands of semiconductors in every electric vehicle, which will be another massive source of demand for the industry.

Texas Instruments has a yield of 2.5% right now, and has been growing that payout by 20.5% annually.

Another semiconductor company, Broadcom (AVGO) has the fastest-growing payout on our list right now. The company makes chips for smartphones, networking, broadband, and wireless connectivity. Broadcom’s recent purchase of Symantec’s Enterprise Business also puts it in the cybersecurity business.

Broadcom’s shares currently yield 2.97% and the payment has risen by an average of 49% annually for the past five years.

Most investors will never think of using dividends as part of the stock selection process. Rigorous testing shows that dividend growth is actually an important part of identifying companies with the potential to be huge winners.

My favorite way to invest in those companies isn’t to buy their stock, though. Instead, I like to use a special, little-known investment that lets me invest in these companies for up to 18% less than what others pay…

While collecting twice or more the dividend yield!

All without any more risk. I’m tracking 5 opportunities like that right now, and I lay them all out right here.

Only 3% of investors even know these funds exist

But using them, I can beat the market 2-to-1 while collecting 2-10X MORE yield from regular dividend stocks.

I learned this trick while I was rubbing elbows with some of the biggest fund managers in US history.

They too are buying these little known funds, cashing in huge discounts and collecting income while they do it.

Click here to learn the secret yourself.

 

How to Use Dividends to Find the Best Tech Stock
Tim Melvin

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Government

Where Carnival, Norwegian, Royal Caribbean Sit on Covid Vaccines

Do You still need to be vaccinated to go on a Royal Caribbean, Carnival, or Norwegian Cruise?

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Do You still need to be vaccinated to go on a Royal Caribbean, Carnival, or Norwegian Cruise?

Cruise line covid-19 vaccination and testing rules, which were imposed by the Centers for Disease Control and Prevention at the beginning of the pandemic, have been stricter than most. After the pandemic started in early 2020, the CDC signed a No Sail Order on March 14, 2020, which was finally lifted after nearly eight months on Oct. 30, 2020.

After the No Sail Order was lifted, the CDC enacted extremely restrictive rules and regulations to help keep passengers safe with the covid pandemic still raging throughout the world. The rules and regulations were set forth to begin to return cruise lines to operational status.

The cruise lines first had to be staffed accordingly and set up with the ability to test, treat and quarantine for covid medical emergencies. Testing for crew and passengers before embarkment and before dis-embarkment was required. The testing at pre-embarkment was a measure to protect those boarding, while the post-trip testing was for determining if an infection started on the cruise line itself. Being able to track the virus was very important in the prevention of spreading the virus and protecting patrons.

Image source: Shutterstock

Vaccination Still Not a Free Pass to Board

Once the vaccination was developed and approved, it became part of the CDC guidelines for cruise line adult passengers to have their vaccination before boarding. Even with a vaccination, guests still needed to test before they boarded the cruise lines. As the vaccine was approved for younger age groups, those age groups were then also required to have the vaccine to travel. Passengers were required to be fully vaccinated unless they are exempt by some status.

Before boarding, cruise line passengers who tested positive, as well as their travel companions, were not allowed to board, depending on the cruise line and how long the cruise may be. Some passengers were allowed to board and then isolate, others would have to reschedule their trip. Trip insurance is a good buy these days.

Cruise Lines Letting Loose on Vaccine Policies

Carnival Cruise Line  (CCL) - Get Carnival Corporation Report has now removed pre-cruise testing for vaccinated guests and also welcomes unvaccinated guests to travel. Fully vaccinated guests traveling less than 16 nights with the cruise line will no longer be subjected to testing, but still must provide proof of their vaccination status. Unvaccinated travelers will only need to provide a negative covid test result to board the ships. All rules and regulations are still subject to the destination country’s guidelines.

According to the Healthy Sail Center for Royal Caribbean  (RCL) - Get Royal Caribbean Group Report, the cruise line has updated its covid vaccination protocol. The cruise line will now allow passengers regardless of vaccination status to board in some ports if the travelers meet the testing requirements. Testing requirements vary by cruise departure and destination. Check the cruise lines port departure for updated information on requirements.

There is, however, a major exception, at least for now, which is obvious when you look at the specific wording shared by the cruise line:

"Starting with September 5 departures, all travelers regardless of vaccination status can cruise on the following itineraries, as long as they meet any testing requirements to board.

  • Cruises from Los Angeles, California.
  • Cruises from Galveston, Texas.
  • Cruises from New Orleans, Louisiana.
  • Cruises from a European homeport.

Notice that Florida, a major port for the cruise line, is not currently on the list.

In the U.S. aside from Florida, any guest with a valid negative covid test within the last three days will be able to board. These guests will also not be required to take a second test at the boarding terminal. Fully vaccinated guests do not need to provide proof of a negative covid test for shorter cruises. See the cruise line website for all updated information as it is subject to change.

Beginning Sept. 3, Norwegian Cruise Line  (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report is dropping its covid vaccine requirements for all its cruises. The cruise line stated that it is continuing to follow requirements for all destination countries, so guests traveling will want to check on destination vaccine and testing requirements. All guests 12 and older regardless of vaccination need to show proof of a negative test within 72 hours. Check NCL online for further instructions prior to travel.

The CDC has taken the stance that travelers are now well informed enough to make their own decisions when it comes to traveling on cruise lines. The travelers are taking their own assumed risk for their health and well-being. Cruise lines are now welcoming this new freedom for their passengers. 

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