Next Week Preview (2/26~3/2)

Last week we had three weak trading sessions followed by a surprise rally on Friday. I still remain cautious --- not sure if it is a real breakout, as equity market is swung by treasury yields.

Next week, earnings will focus on retailers. First the weekend news.

News

Mexico president shelves his plan to visit to Washington DC in March after a 50 minutes phone call with Trump on Tuesday.

China's Communist Party has proposed eliminating a two-term constitutional cap on presidential terms, solidifying signs that Xi Jinping intends to stay in power indefinitely.

More companies cut ties with NRA, including CB, MET, SYMC, DAL, UAL, CAR, HTZ and Enterprise Holdings.

Samsung reveals galaxy S9, which is similar to S8 expect faster processor and better camera. Huawei shows MateBook X Pro with hidden camera for better privacy (maybe best in class so far), along with two pads.

Berkshire Hathaway Inc. (BRK.A): Q4 Net earnings of $19,790 per class A equivalent share. Book value of  $211,750 (+23.0% Y/Y) per class A equivalent share (Dec. 31). However, only $36B of that $65B gain in book value came from operations. The other $29B  was courtesy of The Donald's tax cuts.

Top 15 holdings:
WFC, AAPL, BAC, KO, AXP, PSX, USB, MCO, LUV, DAL, GS, BK, CHTR, BYD Company (China), GM

Biggest bets in recent years: Airlines and Apple.

A few takeaways from Warren Buffett's letter to investors:
    1. BRK has $116B cash to spend, but couldn't find good deals.
        Comments: it hints the high valuation of stocks these days.

    2. In 2017, national disasters have caused $3B on BRK's insurance business. The company is well prepared for similar situations in the coming years.
        Comments: Global Warming is accelerating, insurance companies may suffer, buy Homedepot and Lowe's.

     3. Buffett suggests not to buy stocks with borrowing money. He shows the 4 times stock price dropped around 50% in history. You will be better prepared for recessions if debt-free.

     4. Warren Buffett is turning 88 this year. He hasn't pointed any successor. Stock price is 43.6% higher than book value (Share A $304k vs 212k). If Warren Buffett retires or has health problem, what will happen to BRK.A, BRK.B.

Upcoming Events


  • Jerome Powell will present to a House committee on Tuesday and a Senate committee on Thursday.
  • Wednesday: second estimate of 2017Q4 GDP.

Earnings Next Week

Monday

  • post-market:  FIT

Tuesday

  • pre-market:   AMT, M, SEAS
  • post-market:  CPTA, ESRX, PCLN, TIVO

Wednesday

  • pre-market:   EOG, LOW, TJX
  • Post-market:  AHT, CRM, LB, MNST, MYL, PANW

Thursday

  • pre-market:   AMCX, BBY, BKS, KSS
  • post-market: GPS, JWN

Friday

  • pre-market: FL, JCP

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