Hotline Sample Report
This report is a sample for information purposes only. These recommendations are closed.
8/1/2019 1:18:01 PM Eastern Time
Day After Jerome
The day after Jerome “Jay” Powell was ambiguous about the next move from the Fed, economic data released this morning for the ISM manufacturing as well as Construction Spending came in well below Wall Street consensus.
July ISM manufacturing came in at 51.2 from 51.7 in June; the street was looking for 52.0. Its clear manufacturing is getting worse, and in fact, the decline has steeped in recent months bringing the headline number to its lowest level since August 2016.
I think the more worrisome part of the report is the prices paid, which underscores the notion deflation could be lurking. Prices paid are freefalling with July landing at its lowest level since May 2016.
Construction Spending also plunged, down 1.3% from June and -2.1% year to year. Particularly worrisome is sharp private declines, -12.0% for commercial and -15.3% in education.
US Construction Spending
Is the Oil Miracle Running Dry?
Concho Resources (CXO) posted earnings of $0.69 missing consensus by $0.05, but the more problematic part of the financials was realized prices per barrel $36.02, which missed the street $37.44. This is one of my favorite Permian ideas, and now I’m really worried.
There has been scuttlebutt about peak Permian, but industry folks tell me that’s not correct. These oil stocks were already spinning their wheels, but the reaction to this news is a huge red flag. We’ll do more work.
Long Idea: CyrusOne Inc. (CONE) @ $61.34
BACKGROUND: CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 212 Fortune 1000 companies. With a track record of meeting and surpassing the aggressive speed-to-market demands of hyperscale cloud providers, as well as the expanding IT infrastructure requirements of the enterprise, CyrusOne provides the flexibility, reliability, security, and connectivity that foster business growth. CyrusOne offers a tailored, customer service-focused platform and is committed to full transparency in communication, management, and service delivery throughout its 48 data centers worldwide.
SKINNY: CONE had a strong intraday reversal, after posting quarterly results that beat on top and bottom. The firm raised guidance for year 2019 and sees normalized FFO in the range of $3.50 -$3.60 from $3.30 - $3.40. Guidance was better than consensus of $3.36. CONE is breaking out, and we see the stock going to $73.70.
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