FINANCIALS
Financials are Zenolytics scream from the rooftops, pound the table and force you to take a good look in the mirror trade for remainder of 2019.
It's one thing to say that financials, such as JPM, C and a host of others are undervalued. They are undervalued.
It's one thing to say that they are doing everything right in terms of returning cash to shareholders through raising dividends and buying back stock. They are doing exactly that.
It's quite another to make the astute observation that despite interest rates falling through the floor, compressing net interest margins and completely changing every single financial equation drawn up over the past 12 months for major banks, they have managed to thrive.
The picture only gets brighter from here, as long dated government treasuries have become the "get off my lawn" trade of 2019. The grumpy, geriatric investment types who have piled into fixed income assets will be forced to make amends well before the end of the year.
As interest rates move up, expect financials to accelerate. Earnings this week should further set the stage.
PUBLICLY LISTED PRIVATE EQUITY
Speaking of financials, publicly listed private equity names are finally getting their due as proper investments within a portfolio. Carlyle Group is the latest private equity name to go the corporate conversion route. Blackstone announced a conversion recently, with the stock price firing off like a rocket ever since. KKR is simply going along for the ride, rising 3% plus this past week.
The tide for private equity names isn't due to come in anytime soon. Simply consider the fact that negative yielding government assets are creating greater demand among large money types for alternative asset managers. It's also socially acceptable behavior to brag about investing in KKR's latest, accredited investor only, global infrastructure fund to the oohs and aahs of a captive summer cocktail crowd. Everybody wins.
GOLD AND SILVER
Long before gold became an investment to adore, Zenolytics published "Making The Case For Gold" late in 2018. Perhaps it is now time to publish a piece called "Making The Case For Silver."
Silver is lagging far behind gold this year, presumably due to its industrial metal/levered to global economy/scared of a global recession component. However, what needs to be understood is that silver can only lag for so long before a continued rally in gold creates an orgy of animal spirits that will also lift silver.
After this week's price action, silver does look like it may be ready to join gold, fear of global recession causing less demand on the industrial side of things be damned.
REDFIN/OPENDOOR PARTNERSHIP
Zillow has managed to ruffle enough feathers in the Ibuying space to create partnerships of this nature in order to compete effectively, if not survive in the long run. Discussed news of the Redfin/Opendoor partnership at length this past week.
Continued momentum on the upside in Zillow will cause investors to take note of Redfin's increasing focus on this space. What will always be tough to overcome for Redfin is that Zillow gets all the eyeballs due to their position in the markets. The partnership with Opendoor gives Redfin some valuable expertise in the Ibuying business. Whether this is enough to even partially negate Zillow's eyeball aggregation is questionable.
Given the spread between Redfin and Zillow's market caps, Redfin presents a compelling risk/reward regardless of how one feels about their overall market position.
SNAP POTENTIAL
Another upgrade of SNAP this past week, this time by none other than Goldman Sachs.
Zenolytics position on SNAP is well known.
When you consider that the stock is still trading close to 40% below the value of its opening trading price in March of 2017 as the company was rushed to market without a cogent means of monetizing their user base, you begin to understand that despite being the best performing name in the S&P 500 this year, we may be closer to a beginning in SNAP shares than any conceivable end of the upside momentum.
REVERSAL IN RATES
The most expected unexpected event of 2019, at least in our book, will be a complete roundtrip of interest rates this year, closing the year around 2.70% on the ten year yield, perhaps much higher.
The markets are going to force the hand of every single risk averse investor who feels they are somehow being smart by front-running the most anticipated global recession in modern history through giving their money to governments in developed countries in exchange for nothing in return except for the guarantee that they will get their capital back at maturity.
This past week perhaps saw the beginning of this rebellion against all that is wrong in the thought patterns of the supposedly sophisticated among us.
Rates are going higher.
Zenolytics now offers Turning Points and ETF Pro premium service Click here for details.
Disclaimer
This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice.
This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website.
T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing.
Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding capital markets or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in, the transmission thereof to the user. With respect to information regarding financial performance, nothing on this website should be interpreted as a statement or implication that past results are an indication of future performance.
