Bed Bath & Beyond shares jump on real estate deal that gives the retailer $250 million

Bed Bath & Beyond shares jumped nearly 3% Monday morning after the retailer said it had completed a sale-leaseback transaction with an affiliate of Oak Street Real Estate Capital, netting it $250 million in proceeds. Bed Bath & Beyond said in a press release that the properties it has sold represent about 2.1 million square feet of commercial real estate, which includes stores, office space and a distribution center. Bed Bath & Beyond, which also owns Buy Buy Baby and Harmon drugstores, has roug


Bed Bath & Beyond shares jumped nearly 3% Monday morning after the retailer said it had completed a sale-leaseback transaction with an affiliate of Oak Street Real Estate Capital, netting it $250 million in proceeds.
Bed Bath & Beyond said in a press release that the properties it has sold represent about 2.1 million square feet of commercial real estate, which includes stores, office space and a distribution center.
Bed Bath & Beyond, which also owns Buy Buy Baby and Harmon drugstores, has roug
Bed Bath & Beyond shares jump on real estate deal that gives the retailer $250 million Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-06  Authors: lauren thomas
Keywords: news, cnbc, companies, gives, retailer, estate, stronger, target, bed, deal, work, real, valuebed, shares, officer, million, jump, bath


Bed Bath & Beyond shares jump on real estate deal that gives the retailer $250 million

Bed Bath & Beyond shares jumped nearly 3% Monday morning after the retailer said it had completed a sale-leaseback transaction with an affiliate of Oak Street Real Estate Capital, netting it $250 million in proceeds.

The embattled company’s new CEO Mark Tritton, who just took the reins in November, said the deal, which entailed selling real estate and leasing it back, “marks the first step toward unlocking valuable capital … that can be put to work to amplify our plans to build a stronger, more efficient foundation to support revenue growth, financial stability and enhance shareholder value.”

Bed Bath & Beyond said in a press release that the properties it has sold represent about 2.1 million square feet of commercial real estate, which includes stores, office space and a distribution center. Bed Bath & Beyond, which also owns Buy Buy Baby and Harmon drugstores, has roughly 1,500 locations in total.

The company said it is continuing to work with outside financial advisors to review its real estate and determine the best uses “to optimize its asset base and enhance shareholder value.”

Bed Bath & Beyond said it plans to use the proceeds from the deal announced Monday to reinvest in its core business and transformation efforts, to fund share repurchases and to reduce outstanding debt, or a combination of these tactics.

Tritton has only been in the CEO role, after leaving Target, for a few weeks. But he has shown he is wasting no time to embark on his own turnaround strategy.

Last month, he ousted six senior executives — in the midst of the holiday shopping season, including the retailer’s chief merchandising officer, marketing officer, digital officer, its general counsel and chief administrative officer.

Bed Bath & Beyond has come under heightened pressure and sales have slumped as businesses such as Amazon, Walmart and Target have appealed more to consumers with speedier shipping and stronger websites, as they sell many of the same items that Bed Bath & Beyond has traditionally offered in its stores.

Meantime, selling real estate and leasing it back is a strategy that numerous retailers have deployed in the past, especially when they’re in a pinch for liquidity. Sears did this prior to going bankrupt. So has Macy’s. But this also means these companies then are stuck with paying rent.

Bed Bath & Beyond shares are up roughly 40% over the past 12 months, as of Friday’s market close.

The retailer is set to report quarterly earnings after the bell on Wednesday.


Company: cnbc, Activity: cnbc, Date: 2020-01-06  Authors: lauren thomas
Keywords: news, cnbc, companies, gives, retailer, estate, stronger, target, bed, deal, work, real, valuebed, shares, officer, million, jump, bath


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Dollar records best week in 1-1/2 months on strong data

The dollar recorded its best week since early November after a series of strong U.S. economic data releases that make a near-term cut in interest rates unlikely. Earlier this week, the U.S. reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing. That has driven the dollar index up 0.56% this week. The pound was last 0.03% stronger against the dollar, at $1.301, and up 0.48% against the euro at 0.851 pence. In thin pre-holiday trade, the eu


The dollar recorded its best week since early November after a series of strong U.S. economic data releases that make a near-term cut in interest rates unlikely.
Earlier this week, the U.S. reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing.
That has driven the dollar index up 0.56% this week.
The pound was last 0.03% stronger against the dollar, at $1.301, and up 0.48% against the euro at 0.851 pence.
In thin pre-holiday trade, the eu
Dollar records best week in 1-1/2 months on strong data Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-19
Keywords: news, cnbc, companies, strong, stronger, yen, dollar, week, best, reported, months, records, union, 112, trade, britain, set, data


Dollar records best week in 1-1/2 months on strong data

The dollar recorded its best week since early November after a series of strong U.S. economic data releases that make a near-term cut in interest rates unlikely.

U.S. growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy maintained the moderate pace of expansion as the year ended, supported by a strong labor market.

Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said on Friday in its third estimate of third-quarter GDP. That was unrevised from November’s estimate in line with economists’ expectations. Consumer spending was stronger than previously reported, and there were upgrades to business spending.

Earlier this week, the U.S. reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing. That has driven the dollar index up 0.56% this week. It was last up 0.35% on the day to 97.724.

The GDP and personal consumption figures are “indicators of the strength of the economy going into 2020,” wrote analysts at Western Union Business Solutions. These figures “further strengthen the belief that the Federal Reserve will pause on interest rate cuts for the near future,” they wrote.

Sterling was slightly stronger on the day after a bad week that has seen it take a beating from renewed concern over a hard Brexit. After hitting a 19-month high against the dollar last week on the back of Conservative Party leader Boris Johnson’s electoral victory in Britain, the currency dropped when the new prime minister revived the possibility that Britain could leave the European Union without a trade agreement.

The pound was last 0.03% stronger against the dollar, at $1.301, and up 0.48% against the euro at 0.851 pence. Nevertheless, the currency was set for its worst week against the greenback in over two years, and its largest weekly loss since July 2017 versus the euro.

More than three years since Britain voted to exit the European Union in a 2016 referendum, Johnson’s government will leave the EU at the end of January and has set December 2020 as a hard deadline to reach a trade agreement.

In thin pre-holiday trade, the euro weakened by 0.43% to $1.107, while the Japanese yen was 0.11% weaker against the dollar at 109.48 yen.


Company: cnbc, Activity: cnbc, Date: 2019-12-19
Keywords: news, cnbc, companies, strong, stronger, yen, dollar, week, best, reported, months, records, union, 112, trade, britain, set, data


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Trump: NATO is becoming stronger because people are now fulfilling commitments

Trump: NATO is becoming stronger because people are now fulfilling commitmentsPresident Trump and France’s President Macron hold a press conference at the NATO summit in London.


Trump: NATO is becoming stronger because people are now fulfilling commitmentsPresident Trump and France’s President Macron hold a press conference at the NATO summit in London.
Trump: NATO is becoming stronger because people are now fulfilling commitments Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-03
Keywords: news, cnbc, companies, press, summit, fulfilling, stronger, trump, nato, commitments, president, macron, hold, london


Trump: NATO is becoming stronger because people are now fulfilling commitments

Trump: NATO is becoming stronger because people are now fulfilling commitments

President Trump and France’s President Macron hold a press conference at the NATO summit in London.


Company: cnbc, Activity: cnbc, Date: 2019-12-03
Keywords: news, cnbc, companies, press, summit, fulfilling, stronger, trump, nato, commitments, president, macron, hold, london


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Cowen upgrades Chipotle and names it a ‘best idea’ for 2020 because of digital sales

A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018. Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020. The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share fr


A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018.
Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020.
The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share fr
Cowen upgrades Chipotle and names it a ‘best idea’ for 2020 because of digital sales Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-26  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, best, restaurant, share, idea, cowen, names, sales, chipotle, mexican, upgraded, digital, tortilla, stock, stronger, 2020, upgrades, target, shares


Cowen upgrades Chipotle and names it a 'best idea' for 2020 because of digital sales

A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018.

Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020.

The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share from $800 per share. Chipotle shares closed at $786.51 a share on Monday.


Company: cnbc, Activity: cnbc, Date: 2019-11-26  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, best, restaurant, share, idea, cowen, names, sales, chipotle, mexican, upgraded, digital, tortilla, stock, stronger, 2020, upgrades, target, shares


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Cowen upgrades Chipotle and names it a ‘best idea’ for 2020 because of digital sales

A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018. Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020. The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share fr


A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018.
Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020.
The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share fr
Cowen upgrades Chipotle and names it a ‘best idea’ for 2020 because of digital sales Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-26  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, best, restaurant, share, idea, cowen, names, sales, chipotle, mexican, upgraded, digital, tortilla, stock, stronger, 2020, upgrades, target, shares


Cowen upgrades Chipotle and names it a 'best idea' for 2020 because of digital sales

A chicken burrito, guacamole, bag of tortilla chips, and a drink are arranged for a photograph at a Chipotle Mexican Grill Inc. restaurant in El Segundo, California, U.S., on Wednesday, July 25, 2018.

Fast food Mexican restaurant chain Chipotle is “better, faster” and “stronger” heading into the new year, according to Cowen, who just named the stock one of its best idea of 2020.

The firm upgraded shares of Chipotle to outperform from market perform and hiked its price target to $970 per share from $800 per share. Chipotle shares closed at $786.51 a share on Monday.


Company: cnbc, Activity: cnbc, Date: 2019-11-26  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, best, restaurant, share, idea, cowen, names, sales, chipotle, mexican, upgraded, digital, tortilla, stock, stronger, 2020, upgrades, target, shares


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Small caps break out to new high for the year in positive sign for the whole stock market

The small cap Russell 2000 index jumped to a fresh 52-week high Monday, signaling small stocks may be set up for a breakout that could help lift the entire market. The Russell 2000 closed at 1,621.90, a 2% gain, and the highest close since Oct. 9, 2018. It’s U.S. broadly, and now small caps, a big breakout in the Russell 2000 today. The small cap Russell 2000, trailing other indices in the march to new highs, broke its previous high from May 6 of 1,618.4 early Monday, and then climbed higher int


The small cap Russell 2000 index jumped to a fresh 52-week high Monday, signaling small stocks may be set up for a breakout that could help lift the entire market.
The Russell 2000 closed at 1,621.90, a 2% gain, and the highest close since Oct. 9, 2018.
It’s U.S. broadly, and now small caps, a big breakout in the Russell 2000 today.
The small cap Russell 2000, trailing other indices in the march to new highs, broke its previous high from May 6 of 1,618.4 early Monday, and then climbed higher int
Small caps break out to new high for the year in positive sign for the whole stock market Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-25  Authors: patti domm
Keywords: news, cnbc, companies, sign, stronger, highs, russell, cappelleri, small, breakout, caps, market, positive, high, cap, 2000, break, stock


Small caps break out to new high for the year in positive sign for the whole stock market

The small cap Russell 2000 index jumped to a fresh 52-week high Monday, signaling small stocks may be set up for a breakout that could help lift the entire market.

The Russell 2000 closed at 1,621.90, a 2% gain, and the highest close since Oct. 9, 2018. The S&P 500, Dow and Nasdaq, which had previously regained their highs, all closed at new record levels Monday.

“The dynamics of this market are changing. The definition of this new uptrend that’s developing is that pullbacks should be shallower and shorter lived and and the upswings should be stronger,” said Ari Wald, technical strategist at Oppenheimer. “I think this is a market where global equities are breaking out across the board. It’s not just the U.S. large cap growth anymore. It’s U.S. broadly, and now small caps, a big breakout in the Russell 2000 today. You really have a market that is firing on all cylinders.”

The small cap Russell 2000, trailing other indices in the march to new highs, broke its previous high from May 6 of 1,618.4 early Monday, and then climbed higher into the close. The Russell has risen near that level previously but failed to break above it.

Frank Cappelleri, head market technician at Instinet, said the move in small caps was a positive, but the gains will need to hold.

“One of the biggest divergences was that small caps have lagged, and this still has a while to go to recapture its all time highs from last fall,” said Cappelleri. “This is really a step in the right direction, especially since it got through a level that was rejected a number of times.”

Cappelleri said just a third of the S&P 500 are at or within 3% of all-time highs, and a broader range of stocks need to join the rally so small caps are a welcome addition.

“The more components you have moving together, the argument is the stronger the chances are for the breakout to hold and not fail,” Cappelleri said.


Company: cnbc, Activity: cnbc, Date: 2019-11-25  Authors: patti domm
Keywords: news, cnbc, companies, sign, stronger, highs, russell, cappelleri, small, breakout, caps, market, positive, high, cap, 2000, break, stock


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China plans stronger protections for intellectual property rights

China said on Sunday it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights infringements. An opinion document released by the State Council and Communist Party’s Central Office on Sunday evening called for a strengthening of protections through both the civil and criminal justice systems and an effective enforcement of penalties. The upper limits on legal compensation should be raised substantially, it said. The docu


China said on Sunday it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights infringements.
An opinion document released by the State Council and Communist Party’s Central Office on Sunday evening called for a strengthening of protections through both the civil and criminal justice systems and an effective enforcement of penalties.
The upper limits on legal compensation should be raised substantially, it said.
The docu
China plans stronger protections for intellectual property rights Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-24
Keywords: news, cnbc, companies, enforcement, stronger, rights, compensation, intellectual, protections, property, upper, limits, china, document, plans


China plans stronger protections for intellectual property rights

China said on Sunday it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights infringements.

An opinion document released by the State Council and Communist Party’s Central Office on Sunday evening called for a strengthening of protections through both the civil and criminal justice systems and an effective enforcement of penalties.

The upper limits on legal compensation should be raised substantially, it said.

The document said that by 2022, China should be making progress in issues that have affected intellectual property rights enforcement, such as low compensation, high costs, and the difficulty of proof. By 2025, there should be a better system of protection in place.


Company: cnbc, Activity: cnbc, Date: 2019-11-24
Keywords: news, cnbc, companies, enforcement, stronger, rights, compensation, intellectual, protections, property, upper, limits, china, document, plans


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‘Short-term chaos’ in Hong Kong won’t impact the Greater Bay Area

‘Short-term chaos’ in Hong Kong won’t impact the Greater Bay Area1 Hour AgoXiao Wunan of the Asia Pacific Exchange and Cooperation Foundation says the future of Hong Kong will be supported by stronger government policies once the violence cools down. He also discusses the transition in the Chinese economy and the need for more priority to be given to health care in the country.


‘Short-term chaos’ in Hong Kong won’t impact the Greater Bay Area1 Hour AgoXiao Wunan of the Asia Pacific Exchange and Cooperation Foundation says the future of Hong Kong will be supported by stronger government policies once the violence cools down.
He also discusses the transition in the Chinese economy and the need for more priority to be given to health care in the country.
‘Short-term chaos’ in Hong Kong won’t impact the Greater Bay Area Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-19
Keywords: news, cnbc, companies, supported, impact, wont, kong, stronger, chaos, bay, transition, violence, priority, area, hong, wunan, greater, shortterm


'Short-term chaos' in Hong Kong won't impact the Greater Bay Area

‘Short-term chaos’ in Hong Kong won’t impact the Greater Bay Area

1 Hour Ago

Xiao Wunan of the Asia Pacific Exchange and Cooperation Foundation says the future of Hong Kong will be supported by stronger government policies once the violence cools down. He also discusses the transition in the Chinese economy and the need for more priority to be given to health care in the country.


Company: cnbc, Activity: cnbc, Date: 2019-11-19
Keywords: news, cnbc, companies, supported, impact, wont, kong, stronger, chaos, bay, transition, violence, priority, area, hong, wunan, greater, shortterm


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China’s central bank sets yuan midpoint fix at highest since August 8

The People’s Bank of China’s (PBOC) set its daily midpoint fix for the yuan on Wednesday at 7.0080 per dollar — its strongest since August 8. “(The yuan fix) was much stronger than what we were expecting. It was much stronger versus market expectations,” Divya Devesh, Asia foreign exchange strategist at Standard Chartered Bank, told CNBC’s “Street Signs” on Wednesday. Every morning, the Chinese central bank’s sets a midpoint for the yuan on the mainland. Also known as the onshore yuan, the curre


The People’s Bank of China’s (PBOC) set its daily midpoint fix for the yuan on Wednesday at 7.0080 per dollar — its strongest since August 8.
“(The yuan fix) was much stronger than what we were expecting.
It was much stronger versus market expectations,” Divya Devesh, Asia foreign exchange strategist at Standard Chartered Bank, told CNBC’s “Street Signs” on Wednesday.
Every morning, the Chinese central bank’s sets a midpoint for the yuan on the mainland.
Also known as the onshore yuan, the curre
China’s central bank sets yuan midpoint fix at highest since August 8 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-06  Authors: eustance huang
Keywords: news, cnbc, companies, highest, yuan, devesh, sets, midpoint, stronger, positive, central, bank, trade, think, fix, currency, chinas, chinese


China's central bank sets yuan midpoint fix at highest since August 8

The People’s Bank of China’s (PBOC) set its daily midpoint fix for the yuan on Wednesday at 7.0080 per dollar — its strongest since August 8.

That comes a day after the currency traded below the historical support level of 7 against the greenback for the first time since that same month.

“(The yuan fix) was much stronger than what we were expecting. It was much stronger versus market expectations,” Divya Devesh, Asia foreign exchange strategist at Standard Chartered Bank, told CNBC’s “Street Signs” on Wednesday.

Recent reports suggest positive developments have been made on the trade front as the U.S. and China work toward a deal. Beijing has reportedly asked Washington to remove tariffs slapped on Chinese exports in September, as part of a so-called phase one trade deal.

“The probability of a September (tariff) rollback has obviously increased in the last 48 hours,” Devesh said. “I think today’s dollar-China fix at 9:15 (a.m. HK/SIN) was a very important signal.”

Every morning, the Chinese central bank’s sets a midpoint for the yuan on the mainland. Also known as the onshore yuan, the currency is allowed to trade within a narrow band of 2% above or below the day’s midpoint rate.

Still, Devesh added: “I think markets are probably reading a little bit too much into it, thinking that maybe there’s some positive news going to come from U.S.-China.”


Company: cnbc, Activity: cnbc, Date: 2019-11-06  Authors: eustance huang
Keywords: news, cnbc, companies, highest, yuan, devesh, sets, midpoint, stronger, positive, central, bank, trade, think, fix, currency, chinas, chinese


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Investors are waiting on small caps to join the Dow at a record to ‘signal a stronger bull run’

Scott Redler, partner with T3Live.com, said small caps could become part of the fuel that keeps stocks rallying into year end. “Optimism that the industrial economy has bottomed has triggered the recent stabilization in Small Cap relative performance. “When we compare Small Caps to Large Caps on our multi-factor model, we continue to find that Small Caps to look deeply undervalued, 1.25 standard deviations below the long-term average,” she wrote. He said that other measures for small caps did no


Scott Redler, partner with T3Live.com, said small caps could become part of the fuel that keeps stocks rallying into year end.
“Optimism that the industrial economy has bottomed has triggered the recent stabilization in Small Cap relative performance.
“When we compare Small Caps to Large Caps on our multi-factor model, we continue to find that Small Caps to look deeply undervalued, 1.25 standard deviations below the long-term average,” she wrote.
He said that other measures for small caps did no
Investors are waiting on small caps to join the Dow at a record to ‘signal a stronger bull run’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-04  Authors: patti domm
Keywords: news, cnbc, companies, cap, relative, investors, growth, dow, high, signal, caps, small, market, large, join, stronger, run, russell, record, waiting


Investors are waiting on small caps to join the Dow at a record to 'signal a stronger bull run'

The Dow Jones Industrial Average on Monday was the last of the three major stock market indices to regain its high, but if the lagging small cap Russell 2000 can join in, that could signal a stronger bull run.

The Dow on Monday opened at a new intraday high, and traded in record territory along with the S&P 500 and Nasdaq. The market is getting a lift from positive developments in trade talks between the U.S. and China, but is also entering what historically is the best six months of the year for stocks.

Small caps have been outperforming recently but are still a sharp 8% away from the all-time high of 1,742 in the Russell 2000, on Aug. 31, 2018. It is still 1.2% away from its 52-week high of 1,618.

Over the past three months, the Russell 2000 was up 4.3% while the S&P 500 was up 5.1%. But in the last month, the Russell has increased its pace of gains, and is up by 7.6% to the S&P 500’s 5.8%.

Scott Redler, partner with T3Live.com, said small caps could become part of the fuel that keeps stocks rallying into year end. He follows short-term technical moves and has been following the iShares Russell 2000 IWM ETF that tracks the Russell 2000.

The IWM is edging close to its 52-week high of $161, trading at just under $159.

“A pause here would make some sense since it just hit the high end of the range. If it could hold here and not pull back much, it would breed some confidence for a real breakout towards the August 2018 highs,” Redler said. “If IWM gets above and stays above $160, it could see a move back to its old highs.” The IWM hit a high of $173.39 in August, 2018.

Small caps could see a pullback in the next couple of sessions because the market has become overbought, and Redler said it will be important to see what happens after that move. “The heavy lifting since August in the S&P was led by tech, the home builders and some financials. If the market keeps rotating, this could be a viable group to sustain the move,” he said.

Credit Suisse chief equity strategist Jonathan Golub says he has more conviction in the stock market’s move higher, and he expects a continued turn toward cyclicals, and small caps should benefit.

“They’ve lagged the market through most of the cycle and if my call is right that interest rates rise and the economic data in the U.S. and globally has bottomed, then absolutely they are a winner in this environment,” said Golub.

He said small caps should be part of the leadership. “The call would be over the next three to six months — value over growth, small over large and more cyclical stocks over more stable, low vol names,” he said.

Analysts see the potential for a small cap move, but not all are embracing them wholeheartedly from a fundamental perspective.

“Optimism that the industrial economy has bottomed has triggered the recent stabilization in Small Cap relative performance. We’d like more evidence that a turning point, rather than a tipping point or a continuation of a positive but sluggish growth backdrop is at hand before moving to an overweight,” notes Lori Calvasina, chief U.S. equity strategist at RBC.

But Calvasina said small cap valuations look only modestly overvalued, and they are undervalued relative to large cap.

“When we compare Small Caps to Large Caps on our multi-factor model, we continue to find that Small Caps to look deeply undervalued, 1.25 standard deviations below the long-term average,” she wrote. “The valuation gap is striking and suggests that investors on the hunt for Value should look at smaller names. The relative multiple for Small Cap remains well below mid 2016 lows and the most compelling valuation reading that we’ve seen for Small Caps on a relative basis versus Large Caps since 2002.”

Jefferies points out that the price-to-earnings ratio for the Russell 2000 is now 20.6, the highest since December, 2018, but that is not so much of an issue since negative earnings revisions may have peaked. The forward p/e for the S&P 500 is about 17 times.

“We may have seen the last of the broad cuts in earnings and sales revisions for the small caps, as they ticked up last month. We have been looking for a real catalyst and not just valuations and this may bit it,” said equity strategist Steven DeSanctis, in a note. He expects small caps have the potential to outperform by 6%.

He expects small cap earnings for the third quarter will be down single digits, versus the expected double-digit decline, and large cap earnings should be down between 2% and 4%.

“The question is does this mean that 2020 is really easy and with decent economic growth, it provides a good set up for small caps? We are increasingly in that camp, although we certainly do not feel good about it, as we have been looking for an improvement in growth,” DeSanctis says.

DeSanctis, in a phone interview, said small caps do not have to hit a new high to keep the rally going, but it helps if they continue to move higher on an improving outlook. “If earnings growth gets better and broadens, that leads you to cyclicals outperforming, and small caps go a long with that,” he said.

He said that other measures for small caps did not move up as much as forward P/E. “Large caps are really stretched on an absolute basis with our model standing in the 91st percentile versus 89th last month,” he wrote.

Calvasina also said investors see small caps as the purest play on the U.S. economy and a place to put more money to work when the U.S. looks like it’s improving.

“There are a few data points that help to support this claim. Small Cap performance relative to Large Cap generally tends to move in sync with trends in the Chicago Fed National Activity Index, Cass freight shipments, and the yield curve,” she said.

The yield curve had been inverted during the summer, but in the last month, while small caps outperformed, the curve had steepened.


Company: cnbc, Activity: cnbc, Date: 2019-11-04  Authors: patti domm
Keywords: news, cnbc, companies, cap, relative, investors, growth, dow, high, signal, caps, small, market, large, join, stronger, run, russell, record, waiting


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