Time to Buy the Sirius XM Dip

Sirius XM Holdings, Inc. (SIRI) got sold in late April after reporting in-line first-quarter earnings while reaffirming fiscal year 2017 guidance. The decline is now approaching technical support levels that should support a strong bounce and resumption of the uptrend that began following a multi-year breakout in July 2016. The rally still shows considerable upside potential, allowing sidelined market players to get on board a relatively slow moving train.

The company occupies a unique technology niche, transmitting old school audio entertainment through high-tech delivery systems. Product demand isn’t infinite, given today’s diverse platforms for voice and music transmission, but they’ve done an admirable job holding onto existing customers and contracts. Saying it another way, 31.6 million subscribers should keep a solid floor under price through 2017 and beyond.

SIRI Monthly Chart (1994–2017)

The company came public at $4.50 in September 1994, 14-years before its life-saving merger with XM Satellite Radio, and sold off to $1.63 a few months later. It then entered a choppy uptrend that tested nerves and trading accounts with repeated downdrafts, finally lifting to an all-time high at $69.44 at the height of the Dot.com bubble in 2000. A topping pattern broke to the downside in 2001, generating a steep decline that dumped the stock to 39-cents in 2003.

It bounced strongly into 2004 and stalled at 50-month EMA resistance near 10, with that peak marking the highest high in the last 13 years. It then entered a persistent downtrend that continued into 2008 when the bottom dropped out in a dramatic plunge that hit an all-time low at 5-cents in March 2009. Somehow, the company avoided bankruptcy, ticking higher in a slow motion advance that reached $2.44 in 2011.

The stock has stair-stepped to higher ground for the last six years, but gains have been limited. Also, price action has failed to post a single higher high since the 2000 peak, highlighting its dubious position as the lowest-priced and sole single-digit Nasdaq-100 component. Not surprisingly, that connection is underpinning currently bullish action, with the tech-heavy index leading the bull market in a series of all-time highs.

The uptrend crossed the 50% retracement of the 2005 into 2009 downtrend when it broke out above multi-year resistance at $4.18 in 2016. This price action bodes well for additional upside that reaches the .618 retracement level at $5.83 in coming months. The 200-month EMA is declining toward that level, advising long-term shareholders to consider timely exits into the $5.75 to $6.25 price zone.

SIRI Weekly Chart (2012–2017)

The stock topped out at $4.18 in 2013, giving way to a rounded correction that yielded a July 2016 breakout to a 10-year high, followed by a buying surge into year’s end. The momentum-fueled advance spiked above $5.00 in March 2017, hitting a buzzsaw of aggressive selling interest that triggered a reversal into April. The stock broke support at the 50-day EMA after April 27 earnings and is now trading near a 3-month low.

The decline reached with 10-cents of a 15-month rising lows trendline last week, with that support level aligned tightly with the .386 Fibonacci rally retracement at $4.67. The 50-day EMA lifting into the trendline adds a third technical element that raises odds for a reversal and strong bounce in coming days. It also identifies a conservative risk management plan, with a tight stop loss on the other side of the trendline and moving average.

The Bottom Line

Sirius XM broke out above 2-year resistance at $4.25 in July 2016 and entered a strong uptrend that stalled above $5.00 in March 2017. A 2-month pullback has dropped relative strength indicators into oversold levels while the price has reached support, with both factors favoring strong upside into the summer months.

<Disclosure: the author held no positions in aforementioned stocks at the time of publication.>

Time to Buy the Sirius XM Dip

How to Thrive as Market Cycles Return

Come June, it will be eight years since the end of the longest and deepest economic downturn since the Great Depression. Yet we are still feeling its effects. There remains, for example, a shortage of what John Maynard Keynes called animal spirits—the risk-taking that greases an economy’s gears. Business start-ups are still down by one-fourth from their 2006 peak. Growth has not recovered to anything close to traditional levels. In the seven full years since the recession ended, gross domestic product has increased by an average of just 2.1% annually, about one-third less than the post–World War II norm.

See Also: Kiplinger’s Economic Outlooks

In 2009, Mohamed El-Erian, then the CEO of bond powerhouse Pimco, popularized the term new normal to describe what he predicted would be a “world of muted growth” and subdued inflation, one in which the banking system would be “a shadow of its former self.” He got that right. What he got wrong was his prediction that this condition would last only three to five years.

That said, the new normal hasn’t been all that miserable. To mitigate the dangers of a rickety banking system, reluctant businesses and unenthusiastic consumers, the Federal Reserve adopted an unprecedentedly easy monetary policy. Fed actions, combined with the usual cost-cutting activities of businesses after recessions, led to rising profits that ignited one of the longest bull markets in history. Despite muted economic growth, the Dow Jones industrial average soared from 6547 at the stock market’s bottom to 20,663 today (all prices and returns are as of March 31).

Mixed impact. Now, we’re headed back to the old normal. For the economy, it will be better. For investors, it could be worse. But don’t despair. You can still thrive.

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The reason for the return to the old normal is simple: The Fed is starting to raise rates because, as chairman Janet Yellen put it, the economy is approaching “our objectives,” meaning full employment (essentially, something close to the current 4.7% unemployment rate) and annual inflation of about 2%.

During the financial crisis, the Fed dropped its primary short-term interest rate from 5.25% to 0.25% and kept it there for seven years. At the end of 2015, the Fed raised the rate by one-fourth of a percentage point, and it has since hiked it twice more. The rate is now about 1%, and the Fed has indicated that more increases are coming. The Fed has also ended its “quantitative easing” program, during which it bought trillions of dollars’ worth of bonds to bring down long-term rates.

Thanks to these extraordinary actions, says Yellen, the economy appears ready to grow at a more normal pace without the Fed having to keep “pressing on the gas pedal.” The old normal means that economic expansions alternate with contractions. At the start of an expansion, interest rates are low (though not at rock bottom). Businesses and consumers borrow, invest and buy. As activity increases, the Fed grows worried about the economy overheating and inflation accelerating, so it hikes rates—often sharply. These higher rates deter borrowing, investing and buying, and growth declines. A bear market materializes, often signaling a recession. The Fed cuts rates, and we begin the cycle again.

If we are indeed back to the old normal, we are just beginning the upward part of the cycle. We can expect to see economic growth and inflation increase, and, at some point, the Fed will raise rates dramatically. Just before the 2001 recession, the Fed boosted its key short-term rate to 6.5%; before the 1990 recession, it hiked it to nearly 10%.

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Investors need to readapt themselves to the old normal. Start by examining your portfolio. If you have invested in stocks in recent years, you have probably done well. Imagine you started 2011 with $100,000 in Vanguard 500 Index Admiral (symbol VFIAX) which tracks Standard & Poor’s 500-stock index, and $50,000 in Vanguard Intermediate-Term Treasury Admiral (VFIUX), which holds medium-maturity U.S. government bonds. Assuming that you invested in a tax-deferred account, today you would have $214,200 in the stock fund and $59,340 in the bond fund. Your original allocation of 67% in stocks and 33% in bonds would now be 78% in stocks and 22% in bonds. To return to the original mix, you’d need to sell some of the stock fund and move the proceeds to the bond fund, or make new investments only in the bond fund. Your objective is to get back to a reasonable old-normal allocation.

See Also: 29 Ways to Earn 1% – 10% on Your Money in 2017

Also, in a time of rising rates, be sure to ladder your bonds so that they mature in sequence, year after year. That way, if rates rise, you can invest the proceeds from lower-yielding bonds as they mature into new, higher-yielding bonds. Or, for better diversification, you can purchase a series of funds whose portfolios are composed of bonds that mature in a single year, such as Guggenheim BulletShares 2022 Corporate Bond ETF (BSCM, $21). The exchange-traded fund yields 2.9% and charges annual fees of 0.24%. Versions that mature in 2023, 2024 and so on are available.

Assume also that the old rules apply for stock investing: Diversify and hold for the long haul. I have a penchant for shares that have lagged the market. A good example is the Dow itself, which over the past five years has trailed the S&P by an average of one percentage point per year. You can buy the 30-stock Dow portfolio through SPDR Dow Jones Industrial Average ETF (DIA, $206), which charges just 0.17% per year.

I expect that as real recovery finally comes to the U.S., it will come as well to Europe, which has also lagged. Consider France. It is home to some excellent companies, including drugmaker Sanofi (SNY, $45); LVMH MoËt Hennessy–Louis Vuitton (LVMUY, $44), the world’s premier luxury-goods firm; and energy giant Total (TOT, $50). You’ll find all of these stocks in iShares MSCI France (EWQ, $27), which has returned an anemic 6.7% annualized over the past five years.

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Speaking of energy, I expect that sector to come back. A barrel of oil at $50 is just not normal. A good way to buy oil and gas is through Vanguard Energy (VGENX), a mutual fund managed by real people (not algorithms) that has outpaced the average fund in its category in six of the past seven calendar years (including so far in 2017). Among its top holdings are Schlumberger (SLB, $78), the services company, whose shares are down by one-third from their five-year high, and such integrated energy companies as Chevron (CVX, $107), which sports an attractive dividend yield of 4.0%.

Finally, we have financial-services companies. Banks benefit from rising rates because, typically, the spreads widen between the short-term rates at which banks borrow and the long-term rates at which they lend. Insurance companies win, too, because they can invest the premiums they collect in bonds with higher yields. Some financials have performed well lately, notably the large banks, such as JPMorgan Chase (JPM, $88), that I recommended in my October 2016 column.

The best strategy is to own a broad portfolio such as Fidelity Select Financial Services (FIDSX), a mutual fund that owns regional banks such as Huntington Bancshares (HBAN, $13), based in Columbus, Ohio; insurers such as Travelers (TRV, $121); and big banks such as Bank of America (BAC, $24). (For an ETF that taps into this sector, see This Financial Fund Is Heating Up.

I’ll end with a key lesson from old-normal history: Unlike what occurred during the new normal, stocks will eventually fall. That’s when you’ll face your toughest task. You will have to stick with your stocks until the cycle starts moving up again. It always does.

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James K. Glassman, a visiting fellow at the American Enterprise Institute, is the author, most recently, of Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. He owns none of the stocks mentioned.

See Also: The 4 Best Stock Funds for the Next Bear Market

How to Thrive as Market Cycles Return

Equifax Signals Growth with Opening of New Offices at One Atlantic Center

ATLANTA, May 10, 2017 /PRNewswire/ — Equifax Inc., (NYSE: EFX), a global information solutions provider, announced today the unveiling of its new office space at One Atlantic Center (OAC) with a ribbon-cutting ceremony attended by Equifax Chairman and Chief Executive Officer
Richard F. Smith and Chief Global Operations Officer
Andy Bodea as well as Mayor
Kasim Reed, President and CEO of Invest Atlanta Dr.
Eloisa Klementich, Georgia State Senator
Brandon Beach, and Commissioner of the Georgia Department of Economic Development Pat Wilson.

“It’s a very exciting day for us as we continue to expand our presence in the Atlanta Metro Area and reaffirm our commitment to the growth of our great city,” said
Andy Bodea, Chief Global Operations Officer at Equifax. “These new offices are both a testament to the strength of our operations as well as to the vitality of the FinTech community in Atlanta, a growth engine in the U.S. We remain committed to drive innovation in all areas of our business and investing in the best talent to ensure we continue to deliver value to customers and consumers.”

With its close proximity to the Georgia Institute of Technology campus, the new office space spans five floors in the 50-story iconic skyscraper. It serves as an extension of the company’s operations and joins the other Equifax metro Atlanta locations in midtown and Alpharetta. Currently, Equifax employs more than 2,200 Atlanta citizens with the number expected to reach close to 3,000 over the next five years. The expansion is expected to generate over $62 million of economic impact for the city as a result of a $17 million investment by Equifax in the project, which was also supported by the Georgia Department of Economic Development.

“I want to congratulate Equifax for its ongoing success and expansion,” said Mayor
Kasim Reed. “Equifax is a company with deep, established roots in our great city, and has redefined itself as a front-runner in the FinTech space. The organization’s commitment to the city’s growth trajectory has also helped further establish Atlanta as one of the leading technology and innovation hub in the world.”

Built in 1987 between the intersection of 14th and West Peachtree Streets, the OAC building will house Equifax employees from different functions such as IT, data/analytics, marketing, and finance across 100,000-square-feet of office space.

About Equifax
Equifax is a global information solutions company that uses trusted unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. The company organizes, assimilates and analyzes data on more than 820 million consumers and more than 91 million businesses worldwide, and its database includes employee data contributed from more than 7,100 employers.

Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor’s (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,700 employees worldwide.

Some noteworthy achievements for the company include: Named to the Top 100 American Banker FinTech Forward list (2015-2016); named a Top Technology Provider on the FinTech 100 list (2004-2016); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2016); named one of Fortune’s World’s Most Admired Companies (2011-2015); named one of Forbes’ World’s 100 Most Innovative Companies (2015-2016). For more information, visit www.equifax.com.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/equifax-signals-growth-with-opening-of-new-offices-at-one-atlantic-center-300455421.html

SOURCE Equifax Inc.

Equifax Signals Growth with Opening of New Offices at One Atlantic Center

Maine bans mortgage loan servicer from taking on new business - Press Herald

Maine is one of 25 states that have banned Florida-based Ocwen Loan Servicing LLC, one of the country’s largest home mortgage loan servicers, from taking on any new business until allegations of illegal practices are resolved.

The U.S. Consumer Financial Protection Bureau filed a federal lawsuit in April accusing Ocwen’s parent company, Ocwen Financial Corp., of “years of widespread errors, shortcuts and runarounds,” costing some borrowers money and others their homes. Ocwen services more than 6,000 home mortgages in Maine.

A cease-and-desist order filed by the Maine Bureau of Consumer Credit Protection demands that Ocwen Loan Servicing immediately stop acquiring or originating new home mortgages or mortgage servicing rights in Maine until the company can prove that borrower funds are being collected, calculated and disbursed correctly. Twenty-four other states have filed similar orders, including Florida, Maryland, Massachusetts, Mississippi, Montana and Washington.

Mark Susi, staff attorney at the Maine BCCP, said Mainers have filed more than 50 complaints against Ocwen regarding its business practices. He said borrowers have complained that Ocwen failed to make escrow, tax and insurance payments on time, accurately recalculate escrow payments on an annual basis, and update loan balances to reflect payments made.

Susi said Maine’s cease-and-desist order essentially says, “We feel this activity is improper. Don’t do it anymore.”

Lauren Saunders, associate director of the Washington, D.C.-based National Consumer Law Center, said a multi-state examination to determine Ocwen’s compliance with federal and state laws and regulations identified several violations including, but not limited to, consumer accounts that could not be reconciled and “willful and ongoing unlicensed activity.”

“People have no choice of the mortgage servicer that handles their loan, and yet the servicer’s misconduct can cause families to lose their homes,” Saunders said in a news release. “That is why vigilance by the CFPB and state regulators is so important to send a message to financial service providers that misconduct will not go unpunished.”

Susi noted that Ocwen Financial Corp. has at least two subsidiaries that are licensed to sell home mortgages in Maine: Texas-based Homeward Residential Inc. and Georgia-based Liberty Home Equity Solutions, a reverse mortgage lender.

Those subsidiaries are allowed to continue doing business in Maine as long as Ocwen Loan Servicing does not service the loans, he said.

The CFPB lawsuit against Ocwen accuses the company of “failing borrowers at every stage of the mortgage servicing process.”

Perhaps most damning is the accusation that Ocwen illegally initiated foreclosure proceedings against at least 1,000 homeowners, including those who were fulfilling their obligations under a loan-modification agreement. Susi said it wasn’t immediately clear whether any of those foreclosures were initiated in Maine.

The lawsuit also alleges that Ocwen’s failure to make timely tax and insurance payments resulted in the lapse of homeowners’ insurance coverage for more than 10,000 borrowers.

Ocwen Financial Corp. has been struggling financially, posting a $32.6 million loss in the first quarter, and a $111.2 million loss in the fourth quarter of 2016.

Still, company CEO Ron Faris told investors last week during an earnings conference call that the state bans on new loan servicing business aren’t likely to hurt the company’s bottom line over the long term, and that Ocwen is working with state and federal regulators to address their concerns.

Faris told the group that the allegations of misconduct included in the Consumer Financial Protection Bureau lawsuit are false.

“It makes no sense that the CFPB deems our actions to be inappropriate,” he said.

J. Craig Anderson can be contacted at 791-6390 or at:

[email protected]

Twitter: @jcraiganderson

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Maine bans mortgage loan servicer from taking on new business - Press Herald

Blankfein: Having so many Goldman alums in government 'generates a lot of inconvenience'

Blankfein has been head of Goldman for more than a decade and said he “would normally be regularly engaged with the principle economic advisors and maybe the Treasury secretary in the administration.”

But now that Treasury Secretary Steven Mnuchin used to work at Goldman, “it creates issues for us that otherwise wouldn’t be there,” Blankfein said.

Still, Blankfein is proud that President Donald Trump chose so many former Goldman bankers for his administration despite criticizing the Wall Street firm during the campaign.

“My blink reaction is a sense of pride that again another person who wasn’t necessarily friendly to our institution in his campaign recognized the talent of these people,” Blankfein said.

Goldman bankers have a history of connections with the White House. Former executive Hank Paulson left the firm to become Treasury secretary just ahead of the financial crisis.

Blankfein: Having so many Goldman alums in government 'generates a lot of inconvenience'

Home Capital Stalls a Nascent Canadian Mortgage Bond Market ... - Bloomberg

Trouble at lender Home Capital Group Inc. is stalling efforts to create what would be the closest thing Canada has to a subprime mortgage bond market.

At least two bond sales are on hold in Canada as investors wait to see how the Home Capital situation shakes out, according to people with knowledge of the matter. While discussions on both bond offerings were in early stages, one of the deals would be backed by loans from MCAP Corp., and the other, marketed by Royal Bank of Canada, with loans from Home Capital and Equitable Group Inc., said the people, who asked not to be identified because the talks are private.

MCAP, Equitable and Home Capital all focus on borrowers that the biggest banks shy away from, such as people who are self-employed and have irregular income. Their loans are often known as “alt-A” mortgages.

These alternative lenders are coming under increased scrutiny as Home Capital faces allegations from the securities regulator that it failed to properly disclose an internal probe into fraudulent mortgage applications. Home Capital this month took out an expensive C$2 billion ($1.5 billion) loan to fight off an exodus of customer deposits and an almost 80 percent plunge in its shares since the end of March. Home Capital rose 14 percent to C$6.64 at 2:33 p.m. in New York on Monday, reversing three days of declines.

‘Gun-Shy’

“At the moment, investors are a little bit gun-shy,” said Mark Carpani, a money manager at Ridgewood Capital Asset Management, which oversees C$1.1 billion in assets. He usually looks at residential mortgage bond sales, but is more hesitant about them now.

Representatives for Home Capital and Equitable declined to comment. A senior executive at MCAP did not return calls seeking comment.

It’s too soon to say whether the pause is anything more than a hiccup in the nascent market for mortgage bonds without government backing in Canada. The nation’s mortgage bond market, like the U.S.’s, is dominated by top-rated securities with a form of government-backed insurance. In Canada’s case, the insurance comes from the Canada Mortgage and Housing Corp., which was backing about C$440 billion of outstanding securities at the end of September.

Bankers and mortgage lenders have been testing investor demand for mortgage bonds with no federal support. So far, these bonds have been backed by prime home loans. MCAP sold such securities in 2014. In the last few weeks, Bank of Montreal sold a C$2 billion mortgage-backed securities deal bundling prime residential mortgages originated by the bank, spokesman Paul Gammal said by email. The big Canadian bank planned to purchase the top three tranches of the debt, equal to about 98 percent of the principal, according to a Moody’s Investors Service report.

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Lenders and bond underwriters have this year also been looking at selling bonds backed by loans that aren’t prime. For the deal backed by Home Capital and Equitable loans, Royal Bank of Canada held investor meetings to gauge interest on what was tentatively discussed as a C$250 million transaction, according to people with knowledge of the matter. Those bonds are to be issued by Steel Curtain Capital Group LLC and Ashley Park Financial Services.

For the deal backed by MCAP mortgages, National Bank of Canada has held meetings with investors, with an initial tranche of less than C$100 million. That offering would be issued by New Latitude Capital Corp. RBC, National Bank, Steel Curtain and New Latitude declined to comment. No one at Ashley Park was immediately available to comment. 

Government regulations that came into effect last year tighten access to government insurance, which could create an opening for more issuance of mortgage-backed securities backed by uninsured mortgages. The rule changes were part of ongoing efforts to cool the housing market, particularly Toronto’s, which saw average home prices increase 25 percent in April.

The Ontario Securities Commission accused Home Capital of failing to properly disclose an internal probe into fraudulent mortgage applications. The lender has hired bankers to pursue strategic options, including a possible sale of assets. The company suspended its dividend and added two former pension fund executives to its board, according to a statement Monday.

A resolution of Home Capital’s troubles might be needed to make investors more comfortable again with securitizing nonprime mortgages made by alternative mortgage lenders, said Richard Hunt, an analyst at Moody’s Investors Service in Toronto.

“It’s not sort of the mainstream part of the Canadian market,” Hunt said. “The perceptions might be a little harder on them.”

Home Capital Stalls a Nascent Canadian Mortgage Bond Market ... - Bloomberg

Mortgage Rates Slightly Lower After Jobs Report

Mortgage rates recovered today, moving sideways to slightly lower after losing ground over the past few days. Today’s focal point was the Employment Situation–the big “jobs report” for the month of April. Job creation ended up slightly stronger than expected (211k new jobs created versus a median forecast of 185k). Stronger jobs data typically puts upward pressure on mortgage rates, but in today’s case, there were some mitigating factors. The biggest mitigating factor is that rates have simply been moving in a very narrow range, and all the ups/downs we’ve been discussing in recent weeks aren’t tremendously consequential for the average borrower. Beyond that, 211k vs 185k isn’t a very big “beat” (+26k). Moreover, the last report was revised from 98k to 79k–a 19k drop, almost fully offsetting

Mortgage Rates Slightly Lower After Jobs Report