Under Armour’s [NYSE: UAA] stocks performed poorly in 2017  and to be honest 2018 is not looking any better.

And guess what?

Investors know this. Market sentiment about the apparel company is so low that it is practically non-existent.

Under Armour’s shares have declined over 45% in 2017 while competitors such as Nike [NYSE: NKE] have increased. The company’s underperformance and rising debt levels remained a concern.

The overvalued company has consistently revised its estimates down for 2017 and yet still managed to miss these estimates time and time again.

In a press release, management announced plans to restructure the company with the hope of having a better year, but I wonder does that include giving their CEO Kevin Plank the boot?

Kevin Plank, a PR nightmare, does more harm than good to the company’s bottom line. Between his comments regarding U.S President Donald Trump and his involvement in Plank Industries, I am starting to wonder if Plank is serving UAA’s best interest.

Assuming the new U.S. corporate tax reform benefits the company, it will be futile without a drastic change in leadership.

Don’t get me wrong, Kevin Plank’s vision stands to benefit shareholders long-term. However, the lack of aggressive growth and crumbling balance sheet makes investors itch to dump the stock.

Under Armour’s current focus on endorsements, acquiring fitness apps and restructuring leaves the entity unable to challenge both the rising Adidas and the dominant Nike.

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It seems so long ago that the investor of hotel properties, Ciboney was a household name in Jamaica.  The out-of-business company has yet to recover from falling into debt despite selling off the majority of its assets to fulfil its debt obligations.

Ciboney’s primary asset, a 6.56 hectares of beachfront property in Westmoreland valued at approximately J$250 million, was recently sold to Green Forest Limited for J$249 million.

FINSAC, who owns 72%, has held on to the Culloden property in the hopes that the company or property will catch the eye of no doubt aggressive investors, despite the rising debt levels.

According to the Group’s August 2017 statements, the company’s net current liabilities have increased by 9.44%, while assets have declined by 7.4% when compared to the same period last year, respectively.

While it remains unclear what Green Forest Limited plans to do with the property, my bet is on villas, the question remains.

Should we be expecting a delisting from the Jamaica Stock Exchange in 2018?

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The oil market has never looked more stable in years as it does now.
Oil prices are set to end the year with a bang and everyone is looking at 2018 with wonder.

What to look out for in 2018?

U.S. shale growth

U.S. shale output will continue to rise but by how much is uncertain.  There have been numerous red flags that raise a lot of questions about the health of the shale industry.  As operation costs increased, drilling companies are reporting losses which illustrate that the industry’s break-even price has been grossly miscalculated. The IEA reports suggest that shale will rebalance next year.

OPEC playing nice

OPEC production declined in November for the fourth consecutive month. The group’s compliance rate with the production cuts is at 115%, the highest number yet, this is a positive sign heading into 2018. It is expected that OPEC will extend the production cut agreement into the second quarter of 2018.

Inventories

OPEC’s strategy will primarily come down to what happens to global inventories. The stock surplus is now at about 100 million barrels more than the five-year average, down two-thirds from the start of 2017. It’s likely that the excess will be erased at some point in 2018.

Unexpected outages

All of these forecasts and predictions will become void if supply disruptions occur. Forties, the largest oil field in the North Sea, shut down recently due to cracked pipelines and could be closed for weeks. This incident highlights the type of event that can catch the oil market by surprise, leading to sharp and sudden price increases even if all seems well elsewhere in the world.

Venezuela remains a concern as the oil producing company production declined by 42,000 bpd. Current output is at a 30-year low and is anticipated to get worse before it gets better. Other countries like Nigeria, Iran and Libya can have serious implication for the oil market if a conflict arises.  It only takes one significant disruption to upend the most carefully crafted oil forecast.

That said we remain optimistic and estimate that Brent will hit the $60-$65 per barrel mark next year.

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The Dow Jones industrial average just did something it has never done in its 121-year history.

The 30-stock average is now up more than 5,000 points in a year, marking its biggest annual-points gain ever.

The Dow also notched a record close for the 70th time this year, which is another milestone. To put that into perspective, it means that about one of every four trading sessions this year has been a record close for the index.

The Dow, along with the S&P 500 and the Nasdaq composite, has had a banner year, rising 25.5 percent. The S&P 500 and Nasdaq are up 20.2 percent and 29.9 percent, respectively.

To be sure, most of the big point moves are in recent years for an apparent reason: The Dow is much bigger than it was decades ago. So investors should keep this point move in perspective.

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FosRich Company Ltd executed a successful initial public offering, closing one minute after the offer opened on December 4, 2017.

FosRich, incorporated in 1993 by Cecil and Marion Foster, is Jamaica’s premier distributor of lighting, electrical and solar energy products.

The listing ceremony was held on Tuesday, December 19, 2017, at the Jamaica Stock Exchange.

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As predicted, the U.S. Federal Reserve Fed voted on December 13, 2017, to raise the interest rate from 1.25% to 1.50%. The committee believes the labour market has continued to strengthen and that the gradual increase in rates will stimulate economic activity.

This is the fifth time the Fed increased rates since the financial crisis of 2008.

The outgoing Fed chair, Janet Yellen, will say goodbye to the committee on February 3, 2018, and all eyes are now on the incoming Trump-nominated chair, Jerome Powell.

The year 2017 has been an unprecedented one. On the one hand, inflation is low and stagnant suggesting the Fed should delay raising rates. On the other hand, economic growth and declining unemployment indicate increase rates. The policymakers are charged with playing “Goldilocks“, keeping rates not too high, not too low, but just right!

I do expect at least two rate hikes in 2018, as the Fed strive to stimulate economic growth of 2.5%, a revision from  2.1% previously forecast.

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There has been some debate about the outlook of the economic cycle. Some will argue that we are at the peak of the bull market, we wholeheartedly disagree.

The U.S. economy is now in what we economist like to call the late-cycle. Growth peaks and accelerated inflation are two characteristics of the late-cyle,  demanding attentiveness from investors.

We believe the economy is supportive of further upside for asset markets.

During the year 2017, investors witness the most coordinated above-average global growth performance in a decade. Market indicators suggest this pattern will continue in the first half of 2018, but it is undoubtedly not without risk.

Outlook & things to watch for 2018:

• Oil supply
• Unemployment rate
• Federal Reserve
• Brexit
• Trump Administration

The focus for most central banks globally is maintaining stability while simultaneously avoiding asset bubbles.

What does this mean for asset allocations?

We believe the current cycle reinforces our recommendation to diversify across asset classes, sectors and geography.
Historically, stocks outperform other assets during this period and we see no reason for this to change.

We expect the Fed, regardless of leadership, to raise rates modestly. That being said, a balanced portfolio of stocks and bonds will provide the best outcome for investors in our opinion.

The most significant risk for investors in navigating this cycle is exiting too soon. The late-cycle equity returns are often substantial, and the opportunity cost of missing out can more than offset a drawdown that might be subsequently avoided.

Investors should pay keen attention to policies, market sentiments as well as be vigilant in this market.

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Move over AT&T-TimeWarner!
It’s official, Walt Disney has inked a US$52.4 billion deal to acquire 21st Century Fox.

News broke this morning that Disney has acquired Fox studios which now brings the top six studios to five. Therefore, Disney has maintained its lead obtaining 39.6% of the box office market share. The deal is subjected to antitrust regulation, similar to AT&T-TimeWarner, which will take two years to be approved.

Why a merger?

According to the official statement released, the consolidation will help Disney-Fox create movies that dominate the box office, as they share intellectual property.

What do I think?

Disney’s target audience has always been family-friendly while Fox has the leg up on reality TV which viewers gravitate to.

This merger also means job cuts and other cost-cutting measures as Disney feels the pressure of declining viewerships. Tech companies like Netflix and Amazon.com who offer online-streaming services have forever shifted the traditional TV viewership. Furthermore, sports enthusiasts will be impacted as well since Disney now has the monopoly and can now force higher fees for ESPN which will trickle down to its customer base.

Should you buy?
Despite this news, Disney is NOT a buy for me.

In Q4 of 2017, Disney reported lower-than-expected results and the company’s operating income is down by 11% year over year.

The stock is currently overvalued at 18.1x P/E compared to the industry P/E of 13.02x.

Need I say more …?

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