Market Moment
Glen Eagle®: America’s Women-Owned Trading Desk®
05/24/2021
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Dividend vs. Debt: Some investors were caught off-guard last week when AT&T announced it would merge its WarnerMedia assets (which it acquired recently in 2018) with Discovery. The strategic move will result in AT&T both paying a lower dividend yield (dropping from 7% to around 4%) and reducing their substantial long-term debt, which stood at $160 billion as of 1Q21. This massive debt burden is one reason why the stock has underperformed other dividend aristocrats over the past 5 years (-23% versus 75% growth for aristocrats [ticker: NOBL]).
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Do We Remember How to Dine Out? A recent UBS study showed that two-thirds of respondents are now willing to eat in a restaurant. Additionally, OpenTable has reported that the number of seated diners (in the restaurants on their platform) has reached 92% of the baseline level from pre-pandemic times (looking back two years ago). This bodes well for the restaurants/chains that have been able to stay open since there will be increasing demand with limited competition (since roughly 90,000 restaurants shut down during the pandemic). Some believe this will take momentum away from the stocks of fast food restaurants like McDonalds and Chipotle which did incredibly well last year.
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Time For a History Lesson: The rapid rise in commodity prices is often viewed as a predictor of impending inflation. This is not always true, however. For example, from December 1998 to June 2008 commodity prices tripled yet consumer prices grew at a modest annualized rate of 3%. This was due in part to technological advancements over that period of time and increased energy efficiency, which allowed more productivity or output per barrel of oil. Both factors are still at play today and should continue to act as deflationary forces despite rising commodity prices.
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It Can’t Go Up Forever: Although interest rates remain low, the real estate market is showing signs that it may start to cool down. 2020 saw the fastest pace of home sales in 14 years, but existing home sales have fallen in February, March, and April of this year. “Price-shock” rather than a lack of interest from buyers seems to be the culprit. The annual price increase of homes as of April was 19% (the largest increase since 1999), resulting in a median existing home price of $341.6K. Would-be buyers are clearly rethinking their potential purchase due to the price inflation.
Economic Calendar
Monday: n/a
Tuesday: Corelogic Case-Shiller Nat'l home price index (Mar), Consumer confidence index (May), New home sales (Apr)
Wednesday: N/A
Thursday: GDP revision (Q1), Durable goods (Apr), Pending home sales index (Apr)
Friday: Personal income (Apr), Consumer spending (Apr), Core inflation (Apr), Trade in goods deficit- advanced report (Apr), Chicago PMI (May), Consumer sentiment index - final (May)
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US Futures
S&P 4169.75+0.43%
DOW 34,279 +0.37%
NASDAQ 13,479.75 +0.56%
World Markets
FTSE 7030.92 +0.18%
NIKKEI 28,364.61 +0.17%
Hang Seng 28,412.26
-0.16%
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Treasuries
3 Mo 0.01%
10YR 1.632%
30 YR 2.33%
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Currencies
Euro $1.2209
Pound $1.413
Yen $108.87
Commodities
Gold 1878.60 +0.10%
WTI Crude 64.64 +1.67%
Silver 27.65
+0.64%
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Upcoming Earnings Calls
Monday - RIDE
Tuesday - AZO, INTU, JWN, ZS, A
Wednesday - DKS, ANF, AEO, NVDZ, OKTA, SNOW, WDAY, WSM
Thursday - BBY, DG, COST, GPS, VMW, BOX, ADSK, HPQ, CRM, DELL, ULTA
Friday - N/A
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Consider working with Glen Eagle as one of your preferred partner trading desks
Client Focused Trading for large institutions, pensions, hedge funds, wealthy families, and private equity for over 30 years
Ansie Monaghan
Carol Ann Fernandez
Glen Eagle
4422C Route 27
PO Box 399
Kingston, NJ 08528
(609) 631-8231
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