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8/1/2019 1:18:01 PM Eastern Time

Day After Jerome
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

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.

ISM Manufacturing

United States ISM Purchasing Managers Index (PMI)

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.

Private 962,943,000,000

  • Residential 507,231,000,000
  • Non-residential 455,712,000,000

Public 324,055,000,000

  • State & Local 300,715,000,000
  • Federal 23,339 ,000,000

Total 1,286,997

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
Industry: Real Estate; Reits
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$61.34
Entry Limitsee comments
Stop LossN/A

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.

Key Fundamentals
PEG  4.38
Book Value  21.76
Institutional Holdings  0.00
Price/Sales  9.27
Average Daily Volume  1.07M
Shares Outstanding  99.11M
Market Value  6.96B
Insider Activity  26 Buys 2 Sales
52-week High  69.01
52-week Low  48.94
Annual Earnings Estimate  -0.27

Analyst Coverage
 UBS Downgraded to  Neutral
 Deutsche Bank Upgraded to  Buy
 Berenberg Upgraded to  Buy

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