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WJR April 2018 Reports



 
 
April 30, 2018

Three corporate mergers officially qualifies today as a “merger Monday.” In the timeshare industry, Marriott Vacations is buying ILG for 4.7 billion dollars.

The big merger drama in telecom land may be over. T-Mobil has agreed to buy Sprint in a 26-billion-dollar deal. Sprint shares are down 12 percent on the news. Now the deal goes to the regulators and getting approval there is no slam dunk.

In an even bigger deal at 35 billion dollars, Marathon Petroleum is buying refiner and pipeline operator Andeavor. The price there is a 24 percent premium to Andeavor’s closing price on Friday.

The economic calendar is crowded today. At 8:30, March personal spending and income are expected to each be four-tenths of a percent higher. A slowdown in  Also at 8:30, the Fed’s favorite indication of inflation, the PCE deflator, is expected to be higher by only one-tenth of a percent. Anything much higher will bolster the Fed’s desire for higher interest rates.

McDonald’s shares are up 4 percent and shares of England’s big advertising firm WPP are 7 percent higher on earnings news.

April 27, 2018

Wasn’t it just a couple of months ago that everyone was wringing their hands and stocks were selling off on fears that our foreign policy could give rise to nuclear war with North Korea? Oh, how times change. Of course, some would say that it’s not over until the fat man signs, but it looks like peace is a lot closer than war on the Korean peninsula.

Traders are definitely at peace with internet and technology earnings this morning. Shares of Expedia are higher by 11 percent on better than expected bookings, even though they’re still reporting losses. Microsoft reported 95 cents in profit for last quarter, which was a dime better than expected. Microsoft shares are about 4 percent higher pre-market. Not to be outdone, Amazon’s $3.27 profit almost tripled the $1.26 estimate. Shares are 7 percent higher. Amazon also announced a $20 annual hike in the price of Amazon Prime. With 100 million subscribers – well -- the bottom line arithmetic there is not particularly difficult.

At 8:30, expect that the Government’s first read on first quarter Gross Domestic Product will print at 2.0 percent. That would be well off the 2.9 percent increase in the fourth quarter, but keep in mind that the first quarter is usually fairly weak.

Asian markets were higher across the board overnight. Europe is mostly higher and that’s the way we should start as well. Adjusted for fair value, S&P 500 futures are higher by about 6 points, the Dow futures are down 35, but the NASDAQ futures, with Amazon and Microsoft leading the way, are 108 points above fair value.

April 26, 2018

The yield on the 10-year Treasury Note started the day yesterday above the 3 percent level, giving stock traders a reason to sell early in the day. By mid-afternoon, however, when the sky had not fallen as a result, buyers stepped in, responding to better than expected earnings.

This morning, the 10-year yield has dipped below that 3 percent level, and the earnings reports continue to impress. I’ve jotted down the names of at least two dozen big companies that have reported earnings since last night and I can’t find one that failed to meet analyst expectations. 

Among those companies, standouts include Chipotle Mexican Grill, Facebook and General Motors. Chipotle announced a billion-dollar stock buyback and a 2.2 percent increase in same store sales. Chipotle shares are more than 13 percent higher pre-market. Facebook shares are 7 percent higher as operating income increased by 64 percent, and General Motors’ $1.43 of operating profit came in 19 cents ahead of the consensus estimate. GM shares spiked higher this morning, then dipped into the red on concerns about rising input costs but have now recovered most of that loss. Ford shares are up a percent and a half after last night’s report.

The European Central Bank kept interest rates policy unchanged this morning. Asian markets were mixed, but Europe is mostly higher.

Adjusted for fair value, S&P 500 futures are higher by about 14 points, Dow futures are up 82, and the NASDAQ futures, powered by Facebook, are about 79 points above fair value.

April 25, 2018

The boxing match between rising corporate profits and rising interest rates continues, and in yesterday’s round, fears of interest rates scored a knockdown.

This morning, corporate profits continue to impress. However, traders trade not on what happened last quarter, but on what may happen six months from now. More than one company commented yesterday that commodity and other input prices are rising. That means margin pressure and likely rising inflation and interest rates to come. In other words, this may be as good as it gets for the earnings picture.

This morning Boeing reported $3.64 in quarterly profit. That was a whopping $1.06 better than expected. Viacom, Twitter, Comcast and Nasdaq also beat estimates. However, the Dow Jones Industrials may add to its five-day losing streak before equity prices gain some traction. The yield on the 10-year Treasury is above the psychologically important 3 percent level as we start the day.

At the end of the trading day we’ll get the profit report from Ford Motor.

Applications for new purchase mortgages were flat last week, with refinancing apps slightly lower in the >

Overseas markets are lower after yesterday’s selloff here. Our futures recovered a bit on the Boeing earnings, but still have a way to go to break into the green.

Adjusted for fair value, S&P 500 futures are lower by about 8 points, Dow futures are down 17, and the NASDAQ futures are about 15 points below fair value.

April 24, 2018
 
The tug of war between rising interest rates, a stronger dollar and better than expected earnings ended in a relative no-decision yesterday. Interest rates teased the 3 percent level but backed off a bit as the day wore on.

Today it looks like earnings will get the early spotlight. With over a dozen big firms reporting this morning, there’s only one reporting earnings that did not match estimates. Travelers reported $2.46 of operating earnings. That was 22 cents light. However, California mudslides, southern hail storms and a couple of Nor’easters get the blame for the shortfall. Matching estimates but lowering guidance this morning is 3M.

Among the companies reporting better than expected numbers are Caterpillar, Biogen, JetBlue, Coca-Cola, United Technologies, Verizon, Eli Lilly, Lockheed Martin, PulteGroup and Harley Davidson. Last night, Google’s parent Alphabet also printed a positive report. Suffice it to say that the expected good news in corporate earnings is coming true this quarter.

We’ll get three reports on the strength of the housing market today and a couple of consumer confidence survey results. At 10 o’clock, the Conference Board is expected to report that April confidence dipped a bit to a reading of 126.1.

Chinese stocks were strongly higher overnight. Other overseas markets are mixed, and not by much in either direction. We’ll start the day in the green. Adjusted for fair value, S&P 500 futures are higher by about 17 points, Dow futures are up 148, and the NASDAQ futures are about 47 points above fair value.

 
April 23, 2018

We’re in the middle of the first quarter earnings reporting season, but rather than sitting around feeling neglected, the bond market is calling out for attention. Late last week, the 10-year Treasury yield broke through the 2.9 percent level, and this morning, at 2.977, we’re closing in on 3 percent. Most analysts think that we can go to 3½ or more before bond yields start to give stocks any formidable competition. Nevertheless, crossing 3 percent may have traders toying with the “sell” button.

There’s more trouble in Toyland this morning after reading Hasbro’s quarterly report. Profit of 10 cents per share fell well short of the 33-cent estimate. The Toy’s-R-Us bankruptcy get’s the blame there, but no matter the cause, the effect is that Hasbro shares are about 7 percent lower pre-market. Mattel shares are about 5 percent lower in sympathy.

Oil services firm McDermott International was in a deal to be acquired by Chicago Bridge and Iron. This morning, a rival bid from a Norwegian firm has McDermott shares about 19 percent higher.

The March Existing Home Sales Report comes at 10 o’clock, and just before that the PMI Composite Flash Index is expected to tick a little higher to 54.6. That’s a measure of private sector output.

Our futures have crawled out of an earlier hole, and at this point are positive.  Adjusted for fair value, S&P 500 futures are higher by about 6 points, Dow futures are up 29, and the NASDAQ futures are about 17 points above fair value.

April 20, 2018

A couple of unwelcomed comments from Federal Reserve officials (at least unloved by traders) put a halt to this week’s price rally. The market has apparently digested the possibility of three interest rate hikes this year. A fourth hike appears to be the point of no returns. Two more Fed-heads are out on the speaking circuit today, shortly after the market opens.

The futures were indicating a much lower start for this morning until downtrodden General Electric reported quarterly results. Earnings of 16 cents per share were well ahead of the 11-cent estimate. That has GE shares up more than 5 percent pre-market. Keep in mind that the first quarter is often the strongest for GE and the company still has a long way to go to reclaim its former status.

Pinnacle Foods shares are 8 percent higher on an investment by an activist investor. Ionis Pharmaceuticals shares are almost 12 percent higher on word of a one billion dollar 10-year collaboration with Biogen.

Skechers share are running downhill in a hurry this morning, lower by about 23 percent. Better than expected sales and earnings for last quarter were more than offset by a on a weak full year forecast.

Asia was mostly lower overnight, but Europe is mostly higher. Our futures are trying to make up their minds. Adjusted for fair value, S&P 500 futures are flat, Dow futures are down 31, and the NASDAQ futures are about 12 points below fair value.
 
April 19, 2018

As we approached the first quarter earnings reports, the average estimated earnings increase for the S&P 500 companies was around 17 percent, which would have been very strong compared with recent years. So far, the big boys and girls that have reported have told us that profits are actually higher by closer to 30 percent.

Pair that with little movement higher in long-term interest rates, and you have the ingredients for a pretty good rally in stock prices, which is what we’ve seen so far this week.

This morning, Blackstone, and of New York Mellon, BB&T, Procter & Gamble, American Express and Alcoa are all out with better than expected numbers. Amex and Alcoa shares are each about 4 percent higher pre-market.

The disaster du jour appears to be Pier One. They missed on sales and earnings AND halted their dividend AND projected an overall loss for fiscal 2019 AND announced a three-year plan to address their issues. Traders are not waiting out the three-year plan, as Pier One shares are about 18 percent lower this morning.

Weekly Jobless Claims and the Philadelphia Fed Outlook Survey will come at 8:30. In the meantime, domestic stock futures are taking a bit of a breather and have dipped just a bit since the top of the hour.

Adjusted for fair value, S&P 500 futures are lower by 3 points, Dow futures are down 8, and the NASDAQ futures are about 14 points below fair value.

April 13, 2018

With the rhetoric with China cooling a bit, President Trump said to be exploring re-entering the Trans-Pacific Partnership, and no missiles flying toward Syria (at least yet) stock prices continue to rebound this morning.

And now, stage left, here come the earnings. JP Morgan Chase reported $2.37 cents in quarterly profit this morning, which was 9 cents better than expected on better revenue than expected.

Similarly, Citigroup reported profit of $1.68, versus the expected $1.61. Not to be outdone, Wells Fargo checked in minutes ago with $1.12 in earnings, six cents better than expected. Both Wells and Citi reported slightly higher than expected revenue.

The University of Michigan’s first crack at April Consumer Sentiment comes at 10 o’clock. Expect a slight dip to a reading of 101.

Chinese stocks were lower overnight, but Japan was higher and European markets are higher on the order of a half percent or so.

We’ll likely start the day in the green as well, although our futures have slumped a good bit over the past hour. Adjusted for fair value, S&P 500 futures are higher by 10 points, Dow futures are up 99 and the NASDAQ futures are about 24 points above fair value.

April 12, 2018

The price/earnings ratio is a time-honored way of determining whether a stock is a good value or is overpriced. Although the overall market P/E ratio has very little predictive value, it still widely quoted as a gauge of overall market value.

The forward price/earnings ratio is currently hovering around 16, which supports the view that the overall market isn’t overly expensive. Of course, the forward P/E is based on ANTICPATED earnings for the upcoming quarter and year.

As earnings season starts today, it’s expected that overall profits will have risen over 17 percent year over year. If actual profits fall short, traders may question current prices.

Two major companies reported this morning, and both had good news. Delta Airlines beat the 73 cent profit estimate by a penny, and financial powerhouse Blackrock reported that their profit rose 27 percent from the year ago quarter. $6.70 cents was 31 cents better than expected. Shares of both companies are around 2 percent higher pre-market.

Bed Bath and Beyond shares are 17 percent lower this morning on a weak forecast. 

Weekly Jobless Claims come at 8:30. Expect that about 230,000 folks hit the beach last week.

Asian markets were mixed overnight, but Europe is higher, as are our futures.

Adjusted for fair value, S&P 500 futures are higher by 12 points, Dow futures are up 136 points and the NASDAQ futures are about 37 points above fair value.

April 11, 2018

Yesterday the Senate got its chance to pound on Facebook’s CEO Mark Zuckerberg, who turned in an admirable performance. Zuckerberg stayed cool, calm, professional and importantly did not bust out laughing at some of the questions that were posed. Facebook shares rose over 4 percent yesterday, although they’ve retreated over one percent pre-market this morning. Zuckerberg heads for another go-round with the House later today.

The first quarter earnings season kicks off tomorrow. Today, we’ll have the March Consumer Price Index at 8:30 (expect and two-tenths of a percent increase) and the release of the latest Federal Reserve Open Market Committee minutes at 2 o’clock.

Mortgage applications fell about two percent last week.

Asian markets were mixed overnight. This morning, Europe is turning lower based on another tweet-storm coming out of Washington. With Russia warning that it will shoot down any American missiles headed for Syria, our President has told Russia to sharpen their sights, because the missiles are on their way in a response to the Syrian chemical weapons attack of a few days ago.

The futures fell like a missile out of the sky with this morning’s tweet-storm.   They’ve recovered a bit of ground, but not a lot.

At this point, adjusted for fair value, S&P 500 futures are lower by 24 points, Dow futures are down 231 points and the NASDAQ futures are 56 points below fair value.

April 10, 2018

Just when you we’re bracing for another left uppercut in the American-Chinese boxing match of tariff threats, the Chinese appear to have retreated to their corner.

Overnight, President Xi promised to open up Chinese markets and cut tariffs on imported automobiles. Now, it should be noted that the Chinese have promised this kind of thing before, so words are not as powerful as actions, and so far we only have words. Nevertheless it feels better than another sock in the chops.

Carl’s Icahn’s Icahn Enterprises has found a buyer for Federal Mogul. Tenneco is the buyer for 5.4 billion dollars and plans to split the company in two and bring both pieces public.

Going the other way is Verifone Systems. A private equity group will take Veriphone private at a 58 percent premium to last night’s closing price.

And no matter what the upcoming day has in store for you, you’re likely to have more fun today than Facebook’s CEO Mark Zuckerberg. The Zuck will be the latest in a string of corporate pinatas hung up before Congress to take a few whacks.

The NFIB March survey of Independent Business folks was a disappointing 104.7 this morning. Producer prices come in 15 minutes. Overseas markets are showing giving President Xi’s speech two thumbs up, as are our futures.

At this point, adjusted for fair value, S&P 500 futures are higher by 35 points, Dow futures are up 338 and the NASDAQ futures are 106 points above fair value.

April 9, 2018

Asian markets rose overnight after a familiar script played out over the weekend. The trade bluster of last week was walked back a bit by Washington over the weekend. Although our futures are positive at this point, they are a long way from recovering Friday’s 500-plus point drop in the Industrials.

As we await the start of first quarter earnings season later this week, which will feature reports from the big banks, there’s a lot of action in the drug and biotech space this morning. 

Merck shares are almost 4 percent higher on a positive test result for Keytruda, which is their drug for treating non-small cell lung cancer. Therapix shares are about 30 percent higher after positive test results for their hoped-for treatment for Tourettes syndrome. And drug giant Novartis is reportedly buying gene-therapy firm AveXis at an 87 percent premium for Friday’s closing price. AveXis shares are about 85 percent higher pre-market.

Although they’re not a drug-maker, General Motors shares are almost three percent higher pre-market on a broker upgrade.

England and a few other European markets are a bit lower, but the rest a slightly higher at this hour. At this point, adjusted for fair value, S&P 500 futures are higher by 12½ points, Dow futures are up 161 and the NASDAQ futures are 47 points above fair value.

April 6, 2018

Most traders had convinced themselves that all the China/U.S. tariff threats we’ve heard about were merely bluster and the opening of a conversation.  Yesterday, President Trump huffed and puffed and floated the idea of another 100 billion dollars of tariffs on Chinese imports. That sent stock futures crashing, and although they’ve recovered a lot since then, we’re still looking for lower prices at 9:30.

At 8:30, well get the Labor Department’s Employment Report for March. According to last month’s report, 313,000 new non-farm jobs were created in February, probably helped a great deal by mild February weather. March wasn’t quite as tame meteorologically, and the new jobs number is expected to come in at 178,000.   The Unemployment Rate should tick lower to an even 4 percent. Keep an eye on the average hourly earnings. They are expected to tick up to three-tenths of a percent for March and 2.7 percent for the trailing twelve months. If you’re searching, like the Federal Reserve is, for signs of higher inflation, that’s an important indicator.

Overseas stocks are in the red on the latest kerfuffle over tariffs.

Our futures haven’t moved much over the past two hours, and at this point, adjusted for fair value, S&P 500 futures are lower by 25 points, Dow futures now down 256 and the NASDAQ futures are 73 points below fair value.

April 5, 2018

Stock prices are coming off the first two-day winning streak in a month. Not that it looked that way for much of the day Wednesday. The Dow Jones Industrial Average traversed about 800 points yesterday from bottom to top. Watching it all day was a lot like your favorite video game; entertaining, but not very informative.

As we await the start of first quarter earnings season next week, traders are weighing the possibility of a world-wide trade war, versus the more likely possibility that what we’re watching is the beginning of a negotiating process. We’ve all read our history books. If the Fed tightens interest rates concurrent with Congress imposing tough tariffs – well – we saw that in 1930 and the after-effects were not pretty. It’s doubtful that ANYBODY really wants a trade war. 

Earlier this morning, the Challenger Job Layoff announcement report told us that over 60,000 layoffs were announced last month. That’s the highest in a couple of years. However, more than half of those job cuts came in the retrial industry, which is not exactly a big surprise as the bricks-and-mortar stores struggle to attract shoppers.

Smucker’s is buying Ainsworth Pet Nutrition for 2 billion dollars. Somona Therapeutics is our biotech darling of the morning, with shares of 31 percent on FDA approval of an anti-microbial gel.

Outside of China, foreign markets are higher, with Japan up 1½ percent. Our futures are off earlier highs, but at this point, adjusted for fair value, S&P 500 futures are higher by 15 points, Dow futures now up 95 and the NASDAQ futures are 59 points above fair value.

April 4, 2018

Some days are more interesting than others. This one should be particularly interesting. Handicapping the odds of a world-wide trade war is the latest parlor game for traders, and this morning’s news was not encouraging.

Now everyone professes to not want a trade war. Apparently, the Chinese have noticed that Washington’s approach to negotiation is to punch first and talk later. China punched back this morning, tariffs of 50 billion dollars of U.S. goods, matching the tariffs on 50 billion of Chinese goods that the U.S. recently announced. That would bring the tariff on American made cars, for instance up to an eye-popping 50 percent.

Nothing goes into effect until sometime late next month, so there appears to be time for a little discussion, but this morning, traders are selling first and hoping for compromise later. General Motors shares are more than 3 percent lower and Tesla shares are more than 4 percent lower pre-market.

Speaking automotive, CarMax shares are almost 6 percent lower this morning on after reporting lower than expected sales.

We’ll get two reading on the domestic services sector later today, but in the meantime, volatility is back with a capital ‘V.’

Japanese stocks rose slightly overnight, but almost all other markets are lower on the trade war fears. Adjusted for fair value, S&P 500 futures are lower by 37 points, Dow futures now down 475, after being down more than 600 earlier this morning, and the NASDAQ futures are 107 points below fair value.
 
April 3, 2018

We’ll get the monthly sales numbers from most major automakers today, but it will be the last monthly report (at least for a while) out of General Motors. GM will join Tesla is giving out only quarterly reports in the future, claiming that more frequent reporting can distort analysis of sales trends. When the numbers are announced today, expect a slight softening of sales for the fourth consecutive month, with an annualized run rate of 17 million for domestic car sales.

Yesterday’s ISM Manufacturing Index checked in lower than expected, but traders were more concerned with tariffs and tweets and hopefully we’ll get a lot fewer of both in the weeks and months ahead.

And speaking of future negotiations, CBS will reportedly make an offer to acquire Viacom at a lower-the-market price. 

One of the big “unicorns” goes public today, as shares of Spotify will become available to trade.

We’ll start the day with the Dow Jones, the S&P 500 and the NASDAQ all more than 10 percent off recent highs. It’s known as a “correction,” and we’ll have to wait until late next week to see if first quarter earnings reports can ride to the rescue.

Asian markets were mixed overnight. Europe got back to business this morning after yesterday’s Easter Monday holiday, and averages there are improving after a rough start. Our futures are just slightly positive but have trended higher over the past half-hour. Adjusted for fair value, S&P 500 futures are higher by 7 points, Dow futures now up 48, and the NASDAQ futures are 33 points above fair value.

April 2, 2018

It’s the first trading day of the second quarter of the year. Oh, if we could only focus on upcoming first quarter earnings reports and the continued stability of the 10-year bond rate. Unfortunately, this morning brings the not-unexpected news that China is retaliating to the steel and aluminum tariffs we’ve levied upon them.

Tariffs on U.S. meat and fruit, among other products are supposedly designed to “offset” the steel and aluminum tariffs and not start a “trade war,” which nobody professes to want.

Walmart may want to get more deeply in the health and wellness business. Walmart is reportedly in talks with Humana. It could be a merger, a partnership or just a deeper business relationship. Whatever it is, it’s another signal that the American health care market continues to change rapidly.

Bad news for drug-maker Alkermes PLC this morning. The FDA has put the kibosh on an anti-depression drug and traders have depressed Alkermes shares by almost 20 percent this morning. 

On the earnings front, Cal-Maine Foods missed the consensus earnings estimate by 12 cents and the stock has egg on its >

Japan was a touch lower overnight. England, Canada and most European markets are closed for the Easter Monday Holiday. Right now, adjusted for fair value, S&P 500 futures are lower by 9 points, Dow futures now down 60, and the NASDAQ futures are 51 points below fair value.

 
 
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