RECENT NOTES
10/23/15 DMND | WHO WILL BE PICKING UP THE PIECES? LOOKS LIKE K
10/16/15 PEP | EXPANDING INTO SNACKS AND BREAKFAST?
10/16/15 REPLAY | THOUGHT LEADER CALL | LOOMING CRASH IN BEEF
10/01/15 CAG | IN THE BEGINNING
SECTOR PERFORMANCE
Food and organic stocks that we follow underperformed the XLP last week. The XLP was up +2.2% last week, the top performers on a relative basis from our list were Mead Johnson Nutrition (MJN) and Diamond Foods (DMND) posting increases of +5.8% and +5.2%, respectively. The worst performing company on a relative basis on our list was WhiteWave Foods (WWAV), which was down -8.6%.
XLP VERSUS THE MARKET
The XLP has fared better than most other sectors in the YTD time period. In the last five trading days, while the SPX was up +2.1%, the XLP was up +2.2%.
QUANTITATIVE SETUP
From a quantitative perspective, the XLP is BULLISH on a TRADE and TREND duration.
Food and Organic Companies
Keith’s Three Morning Bullets
If only Europe and China could ease every night before AMZN, GOOGL, and MSFT beat …
- EM – Emerging Markets didn’t like the Euro Devaluation last week, w/ EM MSCI Index closing -0.8% on the wk – reminder that there’s a $9T USD denominated debt #bubble that deflates on these tightening events (see our Q4 Macro Themes deck) – yes, Draghi ramping USD is deflationary – ask Oil -6.3% last week, or Energy Stocks (XLE -1.4%)
- EURO – oversold to the low-end of my $1.10-1.13 immediate-term risk range vs USD into week’s end. European Equities had their Viagra move (+6.8% week for the DAX, crushing all US indices with the Russell only +0.3%) and are showing no follow through this morning as Spain’s PPI deflates (again) to -3.6% y/y vs -2.2% last print
- 10YR – German 10yr = 0.51% and UST 10yr pulls right back to 2.07% this morning as the world wakes up to more deflation and #GrowthSlowing news – don’t forget that we get US GDP for Q3 this week and most of the sell side is still in la la land there
SPX immediate-term risk range = 1; UST 10yr Yield 1.98-2.09%
Please call or e-mail with any questions.
Howard Penney
Managing Director
Shayne Laidlaw
Analyst