Saturday, September 3, 2016

TLH Weekly Review - September 3, 2016

I'll keep this weeks review quick. We did receive quite a bit of economic news, and I'll give a quick synopsis.

At the beginning of the week we received Personal Spending and Income data.  Incomes rose a bit more than expected, and spending was lower than expected. So if we put that together we should have seen in bump in the savings rate. That we did as savings were bumped up from 5.5% in June to 5.7% in July.  The trend of higher savings started since the recession is still intact, and nicely recovering from the downturn in 2013.

Pending home sales and Case-Shiller 20 City Composite also showed gains of 1.3% and 5.1% respectively. But on the downside construction spending came in weak with a 0% change while the market expected 0.9%.  Then all eyes turned towards the Non-Farm Payroll data on Friday.  Considering the Fed has sent out it's speakers to
make the case for a rate hike all week, and they've mentioned job growth plenty of times it only made sense people were keeping their eyes on this report more than normal. Then the number came in weaker than expected at 151k vs 200k. The unemployment rate remained unchanged at 4.9% vs expectations for 4.8%. Not widely reported was the revised upward growth in July's number to 275k from 255k. Average hourly earnings were up 0.1% resulting in a YOY growth rate of 2.4%.

It seems overall markets were pleased with the news and sent stocks higher for the day.  US Treasury yields ticked up a bit as the 2 year was unchanged, 5 year + 1bp, the 10 year +3bp, and the 30 year + 5bp. The prospects for a September rate hike edged down to 21%. Interestingly the Dollar Index added some ground as it was up 0.2%.

IndexStarted WeekEnded WeekChange% ChangeYTD %
S&P 5002169.162179.9810.820.56.7
Russell 20001238.881251.2812.401.010.2

The portfolio was quiet for the most part. No big news out of any holdings for the most part with the exception of Costco reported Monthly, Quarterly, and Fiscal Year sales which came in flat across the board. In the US Monthly and Quarterly sales were flat, but fiscal year sales were up 1%.  When adjusted for currency and gasoline company wide sales were up 2%, 3%, and 4% for each period. The market knocked the stock down on the news to the high 150's, which isn't really much.

I think the company is still operating on a solid foundation here, but it seems competition from online sellers is putting the heat on the company just a bit more than I'd like. I'd like to see them leverage their online platform more than they are now, and maybe I'll keep an eye out for any updates over the next year. Either way it's still good to see the trend isn't falling here.

Hain Celestial(HAIN) announced they were delaying filing of their 10-K(annual report).  Not good to see that happening.  I feel better knowing I cut exposure to the company, but this drama doesn't look like it will end anytime soon now for sure.  Whenever the 10-K get's delayed there is usually more fire than what the smoke tells us. Maybe I should have sold it all. I don't know. Time will tell here but the company still owns a lot of valuable brands that I don't want to give up on yet.

Enjoy the long Holiday weekend!

The Long Haul Investor

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