US Debt Crisis Averted………Until December

Posted on | by Todd | Leave a Comment on US Debt Crisis Averted………Until December

US Stock indexes may have dodged a bullet today when President Trump defied his White House advisors and sided with Democrats to defer the debt ceiling debate until December.

Using the legal structure of a “continued resolution” linked to emergency aid to victims of hurricane Harvey, the proposal would suspend the borrowing cap, currently at $19.9 trillion, until December 15th.

And while this manoeuvre calmed the nerves of T-Bill investors into the October maturity, the fear premium of a government shutdown has just been transferred to the December maturity.

Over the next few days we expect to hear more about how this political tactic will impact the administration’s legislative goals on tax reform, infrastructure programs and border security.

The prime risk to US equity markets is that credit agencies view this failure to address the debt ceiling as cause to downgrade US Sovereign debt ratings.

In short, “kicking the can” down the road has not made US assets less risky at current levels.

December T-Bill Yields

 

 

 

ALGO UPDATE: Buy Signal In SHL

Posted on | by Todd | Leave a Comment on ALGO UPDATE: Buy Signal In SHL

On August 16th, shares of Sonic Health care posted an intra-day high of $23.76.

The next day the company announced that NPAT fell 5% to $427 million, which was the worst component  of a reasonably good earnings report.

Our ALGO engine triggered a buy signal on SHL on Tuesday at $21.46.

We consider SHL a defensive stock, which has been oversold, and has now found good buying support in the $21.40 area.

Investors with a medium-term outlook can look to buy SHL with an initial target of $22.35 and a $21.20 stop.

Sonic Healthcare

 

ALGO Update: Sell Signal In STO

Posted on | by Todd | Leave a Comment on ALGO Update: Sell Signal In STO

Our ALGO engine triggered a sell signal for Santos into the close of trade yesterday at $3.81.

Recently, Santos reported solid earnings growth and have paid down a higher percentage of debt than the market expected earlier in the year.

In addition, the current rebound in Crude Oil prices has been a factor in the stock rising from $3.25 to $3.80 over the last two weeks.

With the US refineries based in Houston still preparing to come back online, and hurricane Irma now targeting Southern Florida, Santos shares  could could firm into the the $4.00 resistance level, near-term.

Over a longer time-frame, we expect both Crude Oil prices and shares of Santos to trade lower.

We will watch these two markets closely and give specific trade levels once a clear trade signal emerges.

Santos