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- Consumer Confidence Hits Highest Level Since 2000
- Trump Administration Prepares Canadian Drug Import Deal
- Unusual Options Activity: Bed Bath & Beyond, Inc (BBBY)
- Insider Activity: Central Pacific Financial Corp (CPF)
| Consumer Confidence Hits Highest Level Since 2000 Posted: 31 Jul 2019 03:00 AM PDT
Strong rebound after June drop. Consumers saw increased confidence in the economy in July, making up for a drop in June. The confidence index hit 135.7, just below the highest level set in 2000. After dropping below 100 in June to 97.6, a sign of a modest decline, consumer confidence expectations bounced back to 112.2, indicating economic strength. And in a sign of job strength, those claiming that jobs are "hard to get" declined to 12.8 percent from 15.8 percent. Consumers claiming that business conditions were good increased to 40.1 percent from 37.5 percent. However, consumers saying business was bad also ticked higher, although at a much smaller increase, to 11.2 percent from 10.6 percent. The biggest improvement came in short-term outlooks, likely coming off heavily cited fears of a trade war slowdown in June. Consumers expecting the economy to improve over the next six months rose from 19 to 24 percent, while those who saw declining conditions dropped from 12.6 to 8.7 percent. With meetings about to go underway to resolve trade war issues, the consumer confidence data looks particularly strong, with few data points that hint at any mixed or contradictory data, as opposed to other economic measures that have lately shown a propensity to have both arguments for a stronger and weaker economy in the same data.  |
| Trump Administration Prepares Canadian Drug Import Deal Posted: 31 Jul 2019 03:00 AM PDT
Move could save billions in healthcare costs. The Trump administration is working on a proposal that would allow the United States to import drugs from Canada. The news was broken by Health and Human Services Secretary Alex Azar. The goal of the plan is to allow American citizens to pay a lower overall cost of drugs, and get the benefits of deals that pharmaceutical companies are making with foreign countries. Prices are generally lower in other countries. Current laws in the United States make it generally illegal to import medications from other countries for personal use. The pharmaceutical industry and regulators have long claimed that it could threaten consumer safety. Such plans have been touted as having the potential to increase competition and thus substantially lower prices, and have found support from politicians such as Bernie Sanders. The move is part of fulfilling repeated promises by Trump to make drug prices more transparent, and thus more likely lower, for consumers. Action to take: While the pharmaceutical companies may not like such proposals, the companies should continue to profit, albeit with smaller margins than before. The sector has been out of favor with investors, but having better and more fixed pricing would also eliminate some of the uncertainty that can weigh on prices. Given the struggles the Trump administration has had in reducing drug prices already, the pharma space still looks like an attractive buy now.  |
| Unusual Options Activity: Bed Bath & Beyond, Inc (BBBY) Posted: 31 Jul 2019 03:00 AM PDT
Big bet on share decline by September. On Tuesday, an unusual number of the September 2019 $8 puts on Bed Bath & Beyond Inc. (BBBY) traded. Over 10,100 contracts traded against a prior open interest of 443, a 23-fold surge in volume. With shares currently trading around $9.30, the $8 strike price is a bet that shares will drop at least 14 percent in the next 51 days before expiration. Shares of the company next report earnings in late September, but shares have been trending down in recent days as fears that the retailer will continue to struggle. The company's market cap is down to about $1 billion, and the company has net debt close to $3 billion, a level of debt that could even lead to bankruptcy in the near-future. Action to take: At about $0.33 per option, or $33 per contract, this is a nice cheap bet on an out-of-favor name likely to head lower. However, we'd prefer a January 2020 strike date or later, as shares could really drop following earnings in late September. Either way, investors looking to hedge their long positions could do well with a trade like this. Just don't get greedy—take profits following a big down day rather than wait the trade out for expiration.  |
| Insider Activity: Central Pacific Financial Corp (CPF) Posted: 31 Jul 2019 03:00 AM PDT
Chairman and President make buys. On Monday July 29th, Paul Yonamine, Chairman and CEO of Central Pacific Financial Corp (CPF) bought over 8.600 shares of the company, paying just over $255,000 to do so. He was joined by President Catherine Ngo, who bought 8,550 shares, paying just over $253,500. These buys follow off of some buys by directors back in mid-June. Central Pacific Financial Corp is based on Honolulu, Hawaii, and operates a traditional bank with 35 branches and 78 ATMs in the state. Besides personal loans, it offers business and commercial loans, construction and real estate, and other banking services such as traveler's checks, foreign exchange services, and safety deposit boxes for international travelers. Shares of the bank have risen by under 5 percent in the past year, just lagging the S&P 500 index. Over the past year, the bank has seen a rise in revenue growth, but has seen a small decline in earnings growth. Action to take: Although shares look a little expensive based on book value, Central Pacific looks like an interesting bet on growth and the rise of wealth in Hawaii. On an earnings basis shares look attractive, coming in at just 14 times earnings. And with a 3.2 percent dividend yield, investors will get an above-average income in the meantime. It's easy to see why insiders are buying here—and why investors may want to look at buying shares at or under $30.00.  |
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