Even though the December-quarter earnings season is only really winding down now, we have just over three weeks until the current quarter comes to an end. Soon after, the March-quarter earnings season begins.
Generally speaking, such lulls see investors triangulating what was learned over the last several weeks with the latest information and other cues to prepare for what's likely ahead. As we've talked about in recent Roundups, a growing concern is U.S.-China trade talks may not live up to the expectations being set by the White House.
Despite Tuesday's favorable ISM Non-Manufacturing Index data for February, as we've discussed, the aggregate data points of late show a slowing U.S. and global economy. We were reminded of this today when the OECD cut its 2019 global economic growth forecast to 3.3% from 3.5%, with some of the larger cuts in Europe, and updated its 2020 outlook as well. While the U.S. outlook was lowered slightly, the U.K.'s 2019 forecast was reduced to 0.8% from 1.4%, and Germany's to 0.7% from 1.6%.
To be fair, the OECD tends to be a few steps behind the market data, and while it is a tad late in making these cuts, there are those that are taking note. The same can be said for the Federal Reserve's latest Beige Book, the central bank's anecdotal data from its regional banks, that will be shared this afternoon. Odds are employment and order commentary will be of keen interest to economists and investors like ourselves.
In terms of those other data points to watch in the coming few weeks, we will see the usual spike in investor conferences that tends to happen in between the earnings blitzkrieg and the end of the quarter lull. During these presentations, management comments and their tone will be sized up vs. what was shared earlier in the quarter to determine if anything has meaningfully changed.
Another key data point to watch for, now that corporate blackout dates have come and gone, is insider selling activity, especially given the year-to-date market rise vs. the slide in 2019 consensus EPS expectations for the market. Inside the data, we're looking for indications that at the margin the tone of the business may be somewhat less than was expected previously. The data is publicly available via Form 4 filings with the SEC. However, it takes some detective work to put the pieces together.
Over the last month, we've seen meaningful insider selling activity at Estee Lauder (EL) , Mettler Toledo (MTD) , Procter & Gamble (PG) , Tableau Software (DATA) , The Trade Desk (TTD) , and a number of others. There can be a number of reasons why individuals as well as insiders sell stock. When examining the data, what we're looking for is selling by more than one or two insiders and something of size in aggregate rather than a few hundred shares. For example, in the last month, four c- suite executives at Trade Desk sold just under 486,000 TTD shares, with 89% of those sales coming between $194-$199, and now TTD shares are trading several dollars below that range.
In the coming weeks, we'll continue to keep tabs on insider selling as well as insider buying activities across the active portfolio to fine tune our positions sizes as well as help identify potential new positions.
This commentary was originally sent March 6 to subscribers of TheStreet's Stocks Under $10 portfolio. Click here to learn more about this portfolio, trading ideas and market commentary product.
Chris Versace and Stephen "Sarge" Guilfoyle are co-portfolio managers of Stocks Under $10.
