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new product, FOMC and CTL thoughts +1

11:22 21-Aug-18


This morning Integrated Device Technology issued a press release about another collaboration, this time on an ultra high resolution RADAR imaging solution.  Although I don't call out most of IDT's new products, this bears mentioning because it fits into so many high growth areas, including industrial automation, security, medical applications, and autonomous vehicles.  Even so, I still can't see chasing IDTI at current prices. 

Fitbit also announced its latest Charge wristband, just as anticipated last week.  I think the messaging features will be appreciated and help results over the next earnings report or two, but the $150 price point may be a sticking point.  Also as projected, Google is already moving in on Fitbit's turf.  This has become better understood in the 3 months since I first pointed it out, so I'm expecting FIT to maintain more of holding pattern, even if results are good.

One prediction that remains to be proven is my thoughts on the FOMC going with 3 rather than 4 rate hikes this year.  The market was treating the third, a month from now, as a virtual certainty and Trump jawboning does little to alter that, but it does focus attention on Powell's Jackson Hole speech this Friday morning.  If anything, I think the Trump commentary makes the coming rate hike more certain, as the Fed needs to maintain the charade of independence.  I'll be more inclined to reassess my prediction for the year once we see how this theater plays out in the midterms.

In conclusion, none of this changes my thoughts on staying pat with good investment choices made over the past year or more.  To that end, I'm happy to see CTL hit the $24 mark that I predicted for it this year.  Since I'm getting questions, I don't have much of a guess as to what will happen after the dividend.  I wouldn't be surprised to see strength similar to what we've seen with BGCP post-dividend, especially since the bond redemption is a step towards making good on the promise to reduce leverage.  If I do another CTL article, that would probably be the topic.  That said, the market could still have some surprises in store.  Probably the most useful thing that I can say is that I currently don't see any reason why CTL shouldn't progress into the thirties as we move through next year, but I do NOT necessarily see CTL as a buy and hold forever stock, which is why it has remained on the pick list, rather than moving to dedicated coverage.