The Weekly Summary
Once again, market historians are all about superlatives and historical comparisons as the second-worst May in six decades gave way to the best week of the year. It’s clearly the best of times and the worst of times, depending on your point of view. Given our longer-term perspective, we favor the most constructive comparisons. This is still one of the best years we’ve seen in some time, with the S&P 500 up 16% YTD and BMR stocks surging 27% in the same period.
Cut through all the dithering and these numbers are huge. Of course, for the S&P 500, all the upside this year barely only recovered the ground lost last year. Our stocks, on the other hand, are up an average of 55% since our initial Research Report on each one. This isn’t extraordinary for us. It’s really only in line with our long-term performance.
That’s what gives us the confidence to take “the worst month since X” along with “the best week since Y” and still know that our investment universe has what it takes to come out ahead. The Mexican tariff threat came and went, giving investors nothing but whiplash. As that threat recedes, new clouds on the market will come and go in turn. People who want to feel nervous will find plenty of fear factors to obsess over. The rest of us will stay in the market for the long run and reap the rewards.
We’re even seeing what would normally be considered “bad” news greeted with cheering on Wall Street. Friday’s job creation numbers were not great, but stocks soared as investors embraced the implication: A weakening economy will drive the Federal Reserve to cut rates and get cheap money flowing again. While the logic looks a little backward to us (can the cure really be better than the disease?), even such convoluted optimism ultimately keeps stocks pointed in the right direction as we wait for more straightforward good news in the form of stronger data and real earnings growth ahead.
In reality, Wall Street’s future is never as awful as the worst-case scenarios suggest. When Chinese tariffs became a concern several months ago, corporate executives incorporated the costs into their long-term planning. Some companies shifted supply relationships to other Asian countries or Mexico. Others figured out how to cut expenses elsewhere to balance the impact. They’re still in expansion gear. That’s a good thing for investors.
There’s always a bull market here at The Bull Market Report! This week the High Yield Investor looks at three of the biggest growth opportunities in our income-oriented portfolios: Vornado, Office Properties and Blackstone Group. Our other stock updates favor some of our strongest Technology recommendations like Akamai, Shopify, Square and especially Roku, but we also need to check in on Apple and Tesla as well.
The Big Picture is all about the Fed and the odds of a rate cut in the immediate future, while Gary Jefferson keeps watching China. He isn’t worried. Neither are we.
Key Market Measures (Friday’s Close)
BMR Companies and Commentary
The Big Picture: Rate Relief Is Coming
(But Maybe Not Right Now)
Investors who once only passively hoped that the interest rate tightening cycle would pause are now almost unanimously betting that the Fed will cut soon to take pressure off the global economy. At this point, our only question isn’t whether short rates are going down but when the process will start. (Long rates have been going down since October (and 1981 for that matter), to almost historically low levels.)
While the economy still looks strong on the whole, hiring activity has clearly slowed as companies shift to a more cautious posture. They aren’t eager to expand payroll dramatically until they have a clearer sense of where import costs and export markets are going. Likewise, while manufacturers haven’t seen any substantial downturn in demand, they’ve reined in future orders in order to stay nimble.
They aren’t worried. They just aren’t eager to take chances right now. And that’s exactly where the Fed is. Their eyes are open and they’re ready to make policy adjustments necessary to keep the global economy expanding. Reading between the lines, that means that either interest rate relief is coming or business activity will pick up again on its own. Either way, the employment and industrial numbers we’ve seen in the last few weeks will almost certainly go down in history as just another soft spot on the road.
Interest rate futures markets are banking on the Fed. Practically everyone now thinks we’ll get one to three 0.25% cuts by the end of the year, which takes overnight lending rates down to 1.5% and gives the near-term end of the yield curve all the breathing room it needs.
Most investors are looking at July 31 for the first of those cuts, so don’t get disappointed if the Fed holds rates steady in its next meeting two weeks from now. This isn’t about instant gratification. It’s about making sure the need to cushion the economy is urgent enough to justify any relief at all. After all, rates are still low by historical standards and if anything, long-term rates are arguably too low for comfort.
However, the end of July is a long way off. The G20 summit later this month provides a context for a trade breakthrough or at least a truce, in which case the Fed can legitimately hold its fire for the time being. As far as the markets are concerned, even a gesture toward a loosening posture in the next policy statement is all it takes to support stocks until a rate cut becomes necessary or tariffs are off the table at last.
July is also important because we’ll see the first wave of 2Q19 earnings in the weeks leading up to that particular Fed meeting. If the trade war has put Corporate America on the defensive, we’ll know at that point. The Fed will know too.
In terms of our strategy, this doesn’t change much. We remain focused on the quarter-to-quarter flow of cash across our portfolio companies as we factor out the day-to-day noise. Headlines only hurt when they change the fundamentals. If other investors want to flee the news cycle, that’s their herd response, not ours. As such, while the next few weeks will probably remain choppy and reactions to the Fed may be a little confused, we retain our long-term edge.
Tesla (TSLA: $205, up 10% -- all returns are for the week)
We’ve been telling you for months that Elon Musk isn’t going to make life easy for the short sellers who have already promised to buy an astounding $7.5 billion in Tesla stock to cover their positions. Last week proved that the Tesla story is far from over and that Musk himself still has enough leverage to make his detractors miserable when they step too far out of line.
It’s all about demand for the cars that is driving orders. Overseas sales of the mass-market Model 3 hit a bottleneck in the first quarter, pushing over 10,000 cars into the current reporting period and pushing the company back out of profitable territory in the last quarter. But that bodes well for the current quarter that ends on June 20. Stay tuned.
A few prominent critics seized on the seasonal decline in North American delivery numbers to support their arguments that people just don’t want electric vehicles. Musk says they’re wrong. According to early progress reports he’s shared with his sales team (and leaked to the rest of us), North American sales can top 72,000 this quarter if the incentives line up right.
Add the cars going to Europe and China back in, and there’s a good chance that Musk will not only hit his global target of 90,000 deliveries in April, May and June but exceed the company’s 4Q18 record. That’s impressive in light of the expiration of U.S. environmental subsidies at the end of last year.
Admittedly, upgrades and improvements to lure buyers will move Tesla a little farther from profitability on each sale, but this is more about shaking up the delivery-focused short thesis than protecting the margins. We already knew the Model 3 would take a little time to become a profit center for the company. Proving that people can still be motivated to buy electric cars sends Wall Street a signal that the sales curve hasn’t hit a wall.
The story here has always been that margins will improve when global deliveries scale up. And that’s actually the most exciting thing about the early 2Q19 sales trends Musk’s leaked comments confirm. Europe is coming along nicely, with initial sales tracking above 10,000 cars per month. If that holds, the global landscape looks mighty good.
China, on the other hand, isn’t really a factor. The people with the gloomiest view on Tesla think the company will struggle to sell more than 4,000 cars per month into that vast market under ideal conditions. That’s roughly what we’re seeing. Any uptick in Asian sales is a bonus. Any obstacles are practically factored into the stock now.
This stock is all about North America and Europe right now. The trade war will sting but nobody seriously thinks it will make much difference in the immediate future.
BMR Take: Given the profoundly aggressive nature of investing in Tesla today, we’ve been willing to forgive the stock dropping below our $310 Sell Price as long as Musk gives us a reason to keep paying attention. This is that reason. Getting sales moving in the right direction has already made short sellers nervous. Confirming that Model 3 demand is more than a one-quarter boom will force them to cover their bets. They helped push Tesla down nearly 40% YTD but now they need to buy 37 million shares, a breathtaking 28% of the stock available on the open market. We suspect that’s enough to turn the tide.
Roku (ROKU: $102, up 12%)
It’s not easy to triple your money in five months, but that’s exactly what an investment in this stock has been able to accomplish since January 1. The stock is on fire, with analysts pouring gasoline onto the flames by doling out ‘buy’ ratings like candy. Both Needham and Guggenheim jumped on the Roku bandwagon this week, with Needham labelling the company its ‘top pick.’
The shift from traditional television to streaming content couldn’t be clearer, and Roku is one of several companies that is benefitting immensely from this rapidly-accelerating trend (some others are Netflix and Amazon – both BMR picks). Roku has 30 million accounts, and saw users stream 10 billion hours of content during 1Q19 alone. Average user engagement on the platform has reached 3.5 hours per day.
Roku has been wisely expanding its high margin Platform business line over the past few years. Roku’s Platform business includes its operating software and ad sales. The Player business line includes all of the hardware components such as Roku TV. The Player segment is low margin, and Roku essentially uses its hardware to get into people’s homes and establish a presence for its high margin Platform business, which then drives revenue. Over the last four years, Platform revenue has increased at an annualized rate of over 100%. That’s astonishing, and illustrates how embedded Roku is becoming in the mainstream.
The company is also building out their advertising model, having recently expanded into advertising and releasing two services – Activation Insights and Reach Insights – which provide deeper audience engagement opportunities via their platform. Because Roku is a streaming service, all of its ads are 100% targeted, which means advertisers get more bang for their buck on Roku than they do on traditional TV.
Roku’s YoY revenue growth reached 50% last quarter, eclipsing the 45% from the previous quarter, and the 40% achieved during the prior quarter. With gross margins currently at 45%, the company can grow at a lightning pace. Management has been able to expand its total gross margin by 17% over the last four years, thanks to the expansion of the Platform service. Yes, the company isn’t profitable – but remember, this is only a $12 billion company that went public less than two years ago. The names of the game here are revenue growth, margin growth, and customer acquisition, all of which Roku is hitting homeruns on. Oh yes – they’re also sitting on $265 million in cash and only $75 million in debt. So management has flexibility going forward when it comes to implementing corporate strategy.
BMR Take: With Disney’s recent announcement that its Disney Plus streaming service will be available on Roku, it’s small wonder the stock is through the roof. That partnership alone could net the company $200 million a year. That’s the beauty of Roku – it provides a platform for users to stream content (either via the Roku channel, or other streaming services like Disney Plus, Amazon, Hulu and Netflix). So Roku isn’t in competition with any of those services. In fact, the more popular streaming becomes, the better it is for the company. An investment in Roku is a prediction that the streaming trend will continue, and that’s a prediction we couldn’t be more comfortable making.
Akamai (AKAM: $79, up 5%)
This has been a tremendous story for us this year. Up 30% YTD (and we’re not even halfway through the year yet), Akamai has even more room to run thanks to continued emphasis on cloud security from global enterprises, as well as management’s focus on consistent margin growth.
Cloud computing is one of the hottest issues in Tech at the moment, and Akamai’s cloud security solutions position the company in the right place at the right time. That segment makes up 27% of the overall portfolio, and has grown by around 30% YoY. Enterprise Defender is Akamai’s newest cloud service. It provides businesses with secure protection and access to encrypted files without the need for additional hardware components. This is known as ‘Zero Trust’ in the data security space, and it's a huge market. If Enterprise Defender is anywhere near as successful as the company’s Bot Manager service, Akamai is looking at a strong revenue boost.
With just over $700 million in 1Q19 revenue, Akamai achieved 6% YoY growth – not bad. But it's the company’s $107 million of net income that’s the real story here. That represents 25% YoY growth, thanks to 30% operating margins. Management has been hyper-focused on efficiently raising its overall margins, and that means Akamai has been able to produce much better earnings on slightly better revenue growth. With new cloud offerings in the works (the aforementioned Enterprise Defender being the most recent example), we expect revenue growth to accelerate, and with the higher margins already in place, expect net income to surge and bring the stock along for the ride.
BMR Take: Akamai has been growing margins for six straight quarters, with no signs of slowing. Although revenue growth has decelerated significantly, we believe this is more of a soft patch than a new normal. Once the new cloud offerings hit the market, revenue growth will pick up again. Add to that the emergence of 5G, and what’s already an important industry (data security) will become downright essential. We’re long Akamai on strong tailwinds and management’s efficient margin expansion.
Apple (AAPL: $190, up 9%)
Big news in the Apple universe this past week, as it was revealed that this fabulous company is eyeballing a potential acquisition of autonomous shuttle startup Drive.ai.
If you’ve been here any amount of time at all, you know that Apple has plans to diversify into a host of tech-enabled services, including the soon-to-launch Apple Card, streaming service Apple Plus, and Apple Arcade, the company’s foray into online gaming. Now we can throw autonomous driving into the mix, and in a niche corner of the market no less.
As expected, the company’s revenue took a beating last quarter, thanks to the slump in iPhone sales. Revenue was down 30% from the prior quarter, and net income was down 43%. The good news for Apple is that smartphone technology isn’t going anywhere, despite the downturn in sales. In fact, with foldable phones and 5G on the horizon, there’s plenty to get excited about in Apple’s core competency. The even better news is that investors have shrugged off the disappointing sales numbers and are instead focusing on the future, which is brightened by all of that diversification. The stock is up 17% YTD, and is beginning its bounce back from the May downturn from the $210 level. We expect to be back up over $200 before you can say ‘5G.’
BMR Take: Apple was the first company to $1 trillion for a reason. Tim Cook and company know how to innovate, and with a slew of diversified business lines in the works, it will only take one of them breaking out to send Apple above the $1 trillion mark permanently. We’re "only" $150 billion away from that lofty goal, and expect to see this number again in the coming months.
Shopify (SHOP: $305, up 11%)
This stock is up over 115% year-to-date, setting new all-time highs last week. The financials tells most of the story, with 1Q19 revenue spiking 50% YoY to $320 million. Both Subscriptions Solutions and Merchant Solutions saw revenue jumps of 40% and 60%, respectively. 1Q19 was the 16th quarter in a row the company surpassed revenue expectations. Does anyone want to bet against #17 next quarter? (Not us.)
M&A activity has also been kind to Shopify. First there was the slew of acquisitions in the merchant processing space, including Total Systems and First Data, both of which sold for $22 billion, as well as Worldplay which netted a $35 billion price tag. All of that activity raised some eyebrows as to Shopify’s potential for being targeted. The company currently has a market cap of $33 billion. But instead it was Shopify who acquired a company, with its $100 million Handshake purchase. Handshake’s platform will boost the company’s B2B e-commerce solutions.
The only potential downside we can see with Shopify is that revenue growth is decelerating. But that’s to be expected as the company grows and signs up more users. Eventually, revenue growth has to decelerate. The fact that we’ve decelerated down to 50% speaks volumes about the company’s performance over the previous years.
BMR Take: Shopify is that rare company that always seems to do everything right. After pioneering the digital merchant solutions space, management has navigated a highly-dynamic industry and catapulted the stock to an all-time high. With Shopify Plus continuing to grow its user base in the 45-50% range per year, and with the Handshake addition boosting the underlying platform, don’t expect revenue growth to decelerate too much. The stock will continue to make investors happy for some time.
Square (SQ: $68, up 10%)
We're looking for even more than this week's huge advance as the merchant payment processor focuses on market expansion, and rolls out new upgrades to its services.
Square grew revenue 43% during 1Q19 to $960 million. The company’s subscription and services-based revenue led the charge, with a 125% gain. This is in line with the broader company strategy of targeting larger sellers with six-figure gross payment volume. Revenue from Square’s portfolio of large sellers grew 37% YoY during the quarter. The more sales they make, the more money Square makes, so it's a virtuous cycle.
The company recently improved its Square for Restaurants system by integrating delivery and takeout orders into a restaurant’s ordering platform. Now a single tablet can be used for all orders, and employees don’t need to manually enter the delivery instructions. The upgrade also means orders from sites like DoorDash and Postmates directly input into the system.
Square also recently purchased Eloquent Labs, an AI-based conversational assistant. The company plans to offer an AI-enabled chat feature for its customer base.
BMR Take: We still need a solid 50% boost to get back to that 52-week high of just over $100 which we touched in 3Q18. The fourth quarter wasn’t kind to Square – same with all Tech stocks. But the company has rebounded nicely here in 2019, even despite the May downturn. Now that cooler heads have prevailed, by the end of summer we expect to be back in the mid-$70 range where the stock was trading prior to last month.
A Word From Gary Jefferson
Jefferson Financial Group
First Vice-President, Investments
UBS Financial Services, Inc.
We have never believed there would be a full-fledged trade war between the U.S. and China because the U.S. has enormous leverage with China, given our trade deficit with the country and the ability of firms to shift supply chains toward alternatives like Vietnam, Mexico and India.
Stocks took a big hit last month as the trade war with China continued and a new one with Mexico seemed to come out of nowhere. However, we are concerned about whether the recent tariff talk about Mexico was a one-time threat or a new policy tool to stem the flow of migrants from Central America. Using tariffs to achieve goals outside of foreign trade makes it more difficult for international companies to plan ahead. Wall Street hates uncertainty.
So far, we don't see leading signs of weakness. The economy keeps humming along and last week’s reading on industrial orders was positive. As one of our most reliable resources says, "No deal with China and higher tariffs on Mexico (and perhaps others), doesn't mean recession, but instead a return to a roughly 2.0% growth. We estimate that the impact of the tariffs net of the benefits of tax cuts and deregulation roughly equal the negative effects of President Obama's tax hikes and regulation."
We continue to feel that markets will push policymakers in the right direction. However, while a return to the fast “race horse” economy is still possible, it is important to remember that stocks rallied a lot in the 8 years of the “plow horse.” Investors who stay calm while others panic will continue to be rewarded.
The bears will point out that the S&P 500 has broken support, that oil has dropped below $54 a barrel and there is a yield curve inversion. The bulls can still point out, however, that we still have solid GDP growth, high consumer confidence and a strong labor market coupled with low inflation and low interest rates to balance the negatives. Again, taking the good with the bad still points to growth and a net constructive environment.
So what is the bottom line? We see positive GDP growth for the foreseeable future and possibly a slowdown to 1.7% growth next year. That’s a long way away. We also see the S&P 500 moving up a few percentage points from here or at least not entering an extended decline. For now, markets may very well remain beholden to volatility and uncertainty, but we will remain focused on the longer term.
The High Yield Investor
By John Freund
VP of High Yield
The Bull Market Report
It looks like the Fed may actually cut rates sooner rather than later, or at the very least we can say with utter confidence that no more rate increases are on the horizon. That’s good news for a lot of stocks, but especially for the REIT sector overall. One shining example is Vornado (VNO: $68, up 3%, Yield = 4.0%). The stock is up 13% YTD after a tough 2018. We’ve still got another 12% to go before we reach the highs pre-4Q18 selloff, and we believe with a more positive outlook from the market going forward, it won’t be too much longer before we touch the mid-$70s once again.
Vornado had a decent 1Q19, hauling in $535 million in revenue, which was on par with 1Q18. FFO/share – a more illustrative metric when dealing with REITs – was down 13% YoY to $0.79. While that sounds bad, the vast majority of that decrease was due to a one-off $16 million expense for accelerated vesting of company stock. Without that one-time expense, FFO only decreased 3% YoY. Still not great, but to be expected given the rough second half of 2018 which all REITs had to slog through. Given that context, a 3% YoY decrease from 1Q18 actually isn’t that bad.
The good news for Vornado is that the company is NY-centric (roughly 90% of its portfolio is based in The Big Apple). New York has some extremely positive macroeconomic indicators, including 1Q19 occupancy rates of 97%, and a vibrant, diverse and healthy economy that is producing a deluge of job opportunities across industries. Vornado has four property developments which should come online in the next two years, as well as several other redevelopment opportunities (one which it has already received approval for) to meet the growing tenant demand.
Over the last decade, job growth in NYC has consistently outpaced the national average, thanks to a national boost in job creation. Job growth is expected to reach 3% for 2019, and private sector jobs jumped 2% for March, so we’re trending in the right direction here. Vornado boasts a portfolio of blue chip corporate tenants, including Bloomberg, Google, HSBC, PwC, Amazon, Aetna and Macy’s. This is a highly-diversified bunch, and a grouping that is unlikely to close up shop and stop paying rent anytime soon. Most of Vornado’s top-30 tenants are worth over $1 billion, and they produce 1/3 of total revenue, so Vornado’s top-line is relatively stable compared to other REITs.
With the broader economic outlook picking up, Vornado is poised to benefit as a provider of high-quality office properties. The better the macro-economic outlook, the better the outlook for the company (which is why 4Q18 was such a drag on the stock). But those days are long behind us now, and this year has been solid so far. We’re still looking for that mid-$70 range, and we believe the NY tailwinds coupled with an eventual Fed rate cut will get us there.
After a strong start to the year, Office Properties Income Trust (OPI: $24, up 1%, Yield = 9.2%) has been skidding downward since mid-January. The stock is down 8% YTD, but we have bottomed just below $24 and are now ticking upwards. We do expect a gradual acceleration back into the $30s, where we were in early January. And we’re banking that 9% yield along the way.
The company continues to address its core business after the recent merger. The diversification into both industrial office space and government properties creates long term stability, and allows the company to liquidate some underperforming assets without worrying about scaling down the portfolio too much. Office Properties recently sold a pair of office buildings for $22 million, the proceeds of which will be used for general corporate purposes.
1Q19 was a strong one. Revenue jumped 70% from the prior quarter (where it had remained stagnant throughout 2018) to $175 million. And after six straight months of net loss, the company churned out $34 million of net income. FFO was $72 million, a 33% YoY increase. Unfortunately, the broader May selloff took the stock down after the earnings call. That said, the May selloff is officially over and with the Fed expected to cut rates, the market is back in a positive mindset. We’re expecting Office Properties to rebound once investors refocus on the solid fundamentals and long term diversification benefits.
The company predicted “a return to accretive growth” during the second half of the year. Management has been entering into new and renewal lease agreements, with rents being 13% higher in 1Q19 than they were in 1Q18. The company also closed $270 million of property sales in 1Q19, so management is clearly emphasizing liquidity and shrinking the portfolio to its most profitable holdings.
We all know the days of that 12% Government Properties yield are over, but 9% is nothing to scoff at (quite the opposite, actually). The stock is on the cusp of our $22 sell price, and if it goes lower we’ll be forced to reevaluate our position. But for now, we’re seeing brighter times ahead as broader market anxiety eases. Once the nerves calm, cooler heads will prevail – and those cooler heads will be focused on that enormous revenue and FFO growth, which should send the stock higher.
Now let’s turn to Financial Services. Blackstone (BX: $42, up 11%, Yield = 3.9%) had a great week and an even better YTD (up 40%). The $48 billion private equity firm announced the purchase of $19 billion of warehouse facilities from Singapore-based GLP. The acquisition nearly doubles the size of Blackstone’s Industrial Real Estate portfolio, and illustrates management’s belief in the continued prosperity of the e-commerce and direct-to-consumer retail markets.
Industrial Real Estate is considered a part of the logistics chain for e-commerce delivery (Amazon has to keep all of those products stored somewhere). Blackstone is making a big bet that e-commerce will continue to thrive, and why shouldn’t it? The retail-apocalypse is in full swing, and with an estimated 25% of malls expected to close by 2022 according to analysts at HSBC, e-commerce is expected to rise to 35% of total retail sales by 2030 (e-commerce made up just 17% of total sales in 2017).
The company hasn’t been shy about expanding its Real Estate portfolio. Just a few weeks ago, Blackstone announced a $5 billion fundraise with the aim of investing in Real Estate debt. This will be the fourth RE debt-focused fund the company has churned out. This comes on top of the $20 billion commercial real estate fund the company is raising – the largest ever for a real estate fund of any kind. With 2:1 debt-to-equity purchasing power, Blackstone will control $60 billion of real estate investment. The company already boasts a 16% annualized return on its Real Estate portfolio, so why shouldn’t it look to beef up that business segment?
Perhaps even more significant was management’s recent decision to transition into a C-Corporation from a publicly-traded partnership. The move takes advantage of recent changes in the U.S. tax code, and allows many institutional investors such as index funds and ETFs who typically don’t invest in partnerships to hold shares. In fact, 60% of ETFs and index funds are currently restricted from owning partnerships. As a result, institutional ownership – which sits below 40% - will likely increase substantially once the change goes into effect on July 1. Rival KKR made the same transition recently, and it was expected that Blackstone would follow. Investors cheered the news by sending the stock higher, even as the rest of the market was cratering in early-mid May.
Blackstone’s financials are also rock solid, with 1Q19 producing $2 billion in revenue, a 15% YoY increase. Blackstone has also been growing Assets Under Management (AUM), with $43 billion additional assets last quarter, for a grand total of $510 billion. That represents a 14% increase from the prior year’s first quarter total. AUM is important, since private equity firms earn fees on the assets they manage. So the larger Blackstone’s AUM, the more top-line fees it generates.
Blackstone is a blue chip Private Equity company, and with institutional capital’s flight from hedge funds into the PE sector, expect firms like Blackstone and Carlyle (another BMR pick) to continue to increase their fee-producing AUM, and raise enormous funds like the aforementioned $20 billion real estate fund. The C-Corp transition has already provided the stock with a nice short term boost, and we expect even more to come as institutional investors pile in. But it’s the company fundamentals and positive industry outlook which will keep Blackstone in the black for the rest of the year.
Todd Shaver, Founder and CEO
The Bull Market Report