August 30, 2018
I think that the tag line used to be “fall into the GAP.” This morning, we’ll change that to “GAP is going to fall.” Even though sales and earnings were better than expected last quarter, and profit was higher than a year ago, word of a 5 percent drop in same-store sales at the flagship GAP stores as the shares more than 7 percent lower pre-market.
Foot Locker’s earnings of 75 cents per share came in a nickel better than expected, but same store sales there were also light, and shares are looking to open down 2 percent.
Autodesk shares are almost 9 percent higher on an earnings beat, and even though they had a good earnings report, Intuit shares are lower on news that the CEO will be stepping down.
The July Durable Goods report is on the way, but traders will likely focus on Fed Chairman Powell’s speech at the Kansas City Fed’s conference in Jackson Hole Wyoming.
Japan was almost one percent higher overnight, other foreign markets are mixed, but generally a little higher, and we should get off to a good start on Wall Street. Adjusted for fair value, the S&P futures are now higher by 5 points, the Dow futures are up 63, and the NASDAQ futures are about20points abovefair value.=
August 23, 2018
Every year, the Federal Reserve Bank of Kansas City holds a big confab in Jackson Hole Wyoming to discuss pertinent economic issues of the day. With that many economists gathered at the same place at the same time, each with their own financial opinions and prognostications, there are seemingly plenty of headline worthy opportunities for the financial press. Of course, it’s been said that if all economists were laid end to end, you still wouldn’t reach a conclusion. We’ll see what comes out of the two-day meeting that starts today.
What came out of earnings news this morning is a story of two up and two down.
Chinese internet giant Alibaba shares are 3 percent higher. Earnings missed, but revenue was 61 percent higher than a year ago due to additional subscribers. William Sonoma checked in with good earnings and an upbeat outlook. Shares are about 7 percent higher pre-market.
Lower by 9 percent are shares of L brands on a lowered full year outlook, and Hormel shares are about 5 percent lower for the same reason.
Weekly Jobless claims numbers are on the way at 8:30, and at 10, July New Home Sales are expected to have risen 2.2 percent.
Our futures have been just slightly lower much of the morning. Adjusted for fair value, the S&P futures are now down 1½ points, the Dow futures are down 7, and the NASDAQ futures are now about 7points belowfair value.August 21, 2018
It’s still earnings season for some retailers, with Target reporting tomorrow, and Kohl’s checking in this morning. Kohl’s profit of $1.76 compares with the $1.64 consensus estimate on better than expected sales. That’s the good news. Not so good is that while Kohl’s raised full year earnings guidance, they only raised their estimate by a nickel. Given that last quarter was 12 cents better than expected, the 5-cent raise is either some sandbagging or an indication of rougher waters ahead. Kohl’s shares are about 2 percent lower pre-market.
Shares of Coty, JM Smucker and J Jill are also lower after reporting earnings.
The price of home builder Toll Brothers’ shares is through the roof this morning, with shares indicated about 7½ percent higher. Profit of $1.26 was 23 cents per share better than expected.
Chinese stocks rose a percent and a half overnight. In fact, most markets overseas are higher on the hope of some progress in trade negotiations.
At this point, our futures look almost exactly like they did 24 hours ago. In fact, they’re a bit better. Adjusted for fair value, the S&P futures are now higher by about 5 points, the Dow futures are up 54, and the NASDAQ futures are now about22points above fair value.
We finished last week with the S&P 500 Index less than one percent form its all-time high, and so far this morning, things are looking good once again.
Things are looking really good if your own shares of SodaStream. It may be to eliminate a competitor, or it may be to get another leg up in the sparking water market, but Pepsico is buying SodaStream for 3.2 billion dollars. That has Soda Stream shares, which were already 20 percent higher over the past month, bubbling up another 10 percent this morning.
Estee Lauder announced better than expected sales and profit for last quarter, but weak guidance for the current quarter and entire year has shares lower pre-market. Sounds like additional promotional expense are getting the blame.
Tesla shares are once again in reverse this morning, dropping about 4 percent so as its becoming apparent that the road to possibly going private is a long and winding one from here.
More news from the economic basket case that is Venezuela. The government there is devaluing the currency by 95 percent. Imagine all of your dollars being worth about a nickel. Not a pretty picture.
Chinese stocks rose overnight, on hopes of progress in the trade talks with Washington. European markets are about a half percent higher. Our futures are off earlier highs, but at this point, adjusted for fair value, the S&P futures are now higher by about 5½ points, the Dow futures areup 59points, and the NASDAQ futures are now almost19 points abovefair value.
August 17, 2018
In case anyone wondered how much possible trade wars are influencing stock prices, yesterday provided the answer. Early news of a Chinese trade delegation coming to the United States was compounded by comments from trade negotiator Robert Lighthizer that a breakthrough in NAFTA negotiations may be just days away. The Dow Jones nearly 400-point gain was the best price rise in four months. It looks like we’ll take some time to digest yesterday’s big market gains early on today.
Shares of heavy equipment maker Deere are digesting about a 4 percent decline this morning. Earnings of $2.59 per share fell 16 cents short of expectations. Sales were better than expected, but full year guidance was uninspiring.
Nordstrom shares are on an almost 9 percent rise pre-market after last night’s announcement of better than expected earnings, a 4 percent rise in same-store sales and raised guidance.
The July Leading Economic Indicators come at 10 this morning and are expected to ease off to a four-tenths of a percent increase, down a tenth of a percent from the June figure.
August 16, 2018
This one-step forward-one-step back stock market should follow yesterday’s step backward with a big step forward in the early going today. A mid-level official from China will travel to the United States soon to resume negotiations on trade policy. While it’s not high-level, ANY level of renewed negotiation is giving traders hope that trade tensions will ease.
And it could just be that the Chinese are more willing to talk because their economic growth is starting to slow. Another Chinese internet play, JD.com reported earnings that were less than half of the consensus estimate. Together with yesterday’s disappointing numbers from Tencent, we could be seeing the reason the Chinese are willing to start talking again.
Two domestic retailers are heading in decidedly different directions this morning. Walmart reported $1.29 in profit, 7 cents better than expected, they raised guidance and shares are indicated more than 10 percent higher pre-market. The famous other hand belongs to JC Penney. Penney lost 38 cents per share last quarter, 32 cents worse than expected. They lowered sales guidance for the full year and Penney shares are looking to open about 21 percent lower.
Weekly Jobless Claims and the July Housing starts come in fifteen minutes.
Asia was lower overnight, but European markets are in the green, and we’re heading for a strong open for the major indexes. Adjusted for fair value, the S&P futures are now higher by about 16points, the Dow futures are up239, and the NASDAQ futures are now about 55points abovefair value.
August 15, 2018
Retailer Macy’s just reported quarterly earnings of 59 cents per share. That was 8 cents better than expected and Macy’s raised full-year guidance. Another retailer that’s not doing quite so well is Sears Holdings. This morning, word is that hedge fund honcho Eddie Lampert may buy Sears’ Kenmore division for 400 million dollars or so, as the last remaining pieces of flesh get picked off the Sears and Kmart bones.
The financial crisis and great recession are about a decade in the rear-view mirror at this point, but firms are still paying for their shenanigans. Royal Bank of Scotland will pay a nearly 5 billion-dollar fine as penance for their mortgage sales practices at that time.
Chinese internet giant Tencent reported disappointing earnings after the Chinese market closed this morning. Online gaming revenue suffered as a result of the Chinese Government’s crackdown on some of Tencent’s most popular online games.
Speaking of which, Chinese stocks were off another 2 percent overnight. Many European markets are off almost one percent.
Our futures have been losing ground all morning long, although the losses moderated during the past half hour. Nevertheless, we’re looking at weaker open for stock prices. Adjusted for fair value, the S&P futures are now lower by about 15points, the Dow futures aredown 142, and the NASDAQ futures are now about 56points belowfair value.
August 14, 2018
Yesterday afternoon, technology infrastructure company Switch reminded us that things don’t ALWAYS go higher with technology companies. Reported earnings of 2 cents per share fell short of the 4-cent estimate and compares to 7 cents a year ago. Guidance was lowered for the rest of the year, and traders are switching to other stocks this morning, sending Switch shares more than 25 percent lower.
Heading in the other direction are shares of Advance Auto Parts. $1.97 in earnings was an 11-cent beat and shares are higher by more than 6 percent pre-market.
You know the names Coach and Kate Spade. The company is now known as Tapestry, and shares are about 4 percent higher this morning as Tapestry announced 60 cents of adjusted profit, three cents better than expected. Home Depot shares ae indicated about 2 percent higher after a good earnings report and improved guidance.
A report on July Import and Export prices comes in just about 15 minutes, but that’s about it for economic reports today.
Most markets overseas were surprisingly calm overnight, given the escalating rhetoric out of Turkey. Markets are mixed but little changed. It looks like we’ll get back a chunk of yesterday’s losses in the early going on Wall Street. The S&P futures are now higher by about 11points, the Dow futures are up 114, and the NASDAQ futures are now about 36points above fair value.
August 13, 2018
Overseas markets are seeing more red arrows as the world wrings its hands due to another dive in the Turkish lira. Not that Turkey is a huge piece of global GDP. However, Turkish companies have borrowed a lot of foreign money, and the country is a fiscal mess. Any large-scale default could wreak some havoc, especially with some European banks and other emerging markets.
If you’ve bought Wranger jeans, or Timberland shoes, or a North Face coat, you’ve bought them from VF Corp. If you own shares of VF Corp, 2018 has been a good year thus far, with shares about 30 percent higher. Today, VF announced that they will split the company in two pieces. One surviving piece will specialize in jeans, the other in footwear and other products. Shares are up another 6 percent on that news.
The loser of the morning it German company Bayer. Bayer owns Monsanto, which suffered a 289 million dollar verdict connected to a claim that Monsanto’s Roundup product caused a customer’s terminal cancer. Beyer is about 12 percent lower in European trade.
The Nikkei Index in Japan fell 2 percent overnight. European markets are also lower.
Our futures recovered from a fairly deep hole just in the past hour. The S&P futures are now down a point or so, theDow futures are up a point,andthe NASDAQ futures are now about 11points above fair value.
It’s been a while since stock prices took a tumble based on a foreign currency crisis, but here we go again. Yesterday, the Russian ruble took a pounding after the U.S. instituted new sanctions of Russia. This morning, the European Central Bank is reportedly concerned, to no one’s surprise, that European banks may be too exposed to Turkish debt. The Turkish lira is down more than 10 percent against the U.S. dollar this morning. It’s lost more than a third of its value this year.
The calendar quarter earnings reports are pretty much in the rear-view mirror, and a good earnings season it has been. The January year-end retailers report in great number starting next week.
Yesterday, Dropbox reported adjusted earnings (when you can ignore stuff like stock-based compensation) of 16 cents per share, 5 cents better than expected. Shares rose 9 percent yesterday, but are about 7 percent lower pre-market today on word that Dropbox’s Chief Operating Officer is leaving the company.
Asian markets were mixed overnight, but most of Europe is lower on worries about European bank exposure to Turkey. We should have a rough go of it at 9:30 as well. Adjusted for fair value, the S&P futures are lower byabout 14points, the Dow futures are down 112, andthe NASDAQ futures are now about 44points below fair value.
August 9, 2018
A couple of previously announced high-profile mergers unraveled this morning. The Rite Aid/Albertson’s deal was worth about 24 billion dollars, but the companies will go their separate ways after a lot of criticism of the deal by Institutional Shareholder Services, among others. Rite Aid shares are indicated about 10 percent lower this morning.
Tribune not only called off their merger with Sinclair Broadcasting, but is suing Sinclair for not doing enough to convince regulators to approve the deal.
Booking Holdings, the old Priceline, checked in with better than expected sales and earnings this morning, but the stock is about 7 percent lower. Viacom’s $1.18 was 11 cents better than expected. Also out with positive earnings news are Adidas, 21stCentury Fox and Yelp. Canada Goose is higher after posting a smaller loss than expected.
Dun and Bradstreet is being taken private at an 18 percent premium to yesterday’s closing price.
At 8:30, the weekly jobless claims will be announced as well as July inflation in producer prices, which of course, eventually becomes inflation to the consumer. Expect a three-tenths of a percent increase, just like in June. The would bring the year-or-year producer inflation rate to 3.4 percent, or 2.8 percent, excluding food and energy.
Asia was mostly higher overnight, but Europe is a little lower right now. Adjusted for fair value, the S&Pfutures are up a half point, the Dow futures are up 12, butthe NASDAQ futures are now about 4 points belowfair value.
August 8, 2018
Some people question the value of having a Twitter account. How about making a tweet and having it increase your net worth by 1.2 billion dollars? That’s what effectively happened yesterday when Elon Musk tweeted that he was THINKING of taking Tesla private at $420 per share. Not doing it, mind you – just THINKING about it. By day’s end, Musk’s Tesla holding had risen by about 1.2 billion on the rise in Tesla’s stock price. How much did you make on your Twitter feed yesterday?
Not creating a lot of new wealth was yesterday’s earnings report from Papa John’s. Same store sales were more than 10 percent lower year over year and Papa John’s shares are about 10 percent lower pre-market.
Disney is off about one percent on a revenue miss. CVS shares are about two percent higher after earnings beat the $1.61 estimate by 8 cents. And Michael Kors reported earnings that were 37 cents per share higher than the 95-cent estimate. Shares are up about 2½ percent pre-market.
China was lower again overnight. Other markets overseas are mixed, but very little changed in either direction.
During the past 15 minutes or so, our futures have given up earlier gains. Adjusted for fair value, the S&P and Dow futures are pretty much flat, and the NASDAQ futures are now about 4 points below fair value.
It’s a mixed bag of earnings news this morning, with shares prices reacting more to what lies ahead rather than what just happened.
Dean Foods shares are about 8½ percent lower pre-market. Adjusted earnings and sales for the past quarter were both better than expected, but Dean Foods says that inflation and private label competition will make the rest of the year a lot less appetizing.
Likewise, Marriott guided lower, even though last quarter’s $1.73 of profit easily beat the $1.38 estimate. Marriott shares are indicated about 2 percent lower.
Discovery share are about 3 percent lower after missing the 83 cent earnings estimate by 17 cents. Office Depot’s profit of a nickel per share was a two-cent beat, and traders are bidding the stock 7 percent higher.
At 10 o’clock, the Labor Department’s Job Openings and Labor Opportunities June report is expected to again show that there are more job openings than there are unemployed people in the U.S. Until recently, that situation had never been recorded before.
When we sat here 364 days ago, everyone was all a-twitter about the Dow Jones industrial Average crossing the 22,000 mark. Of course, there were dire warnings from the so-called “market gurus” that a crash was coming. This morning, we’ll start off at about 25,400 on the Dow, which, even not counting dividends, is more than a 15 increase. The S&P 500, by the way, is higher by almost as much – about 14½ percent. That’s not to say that the market performance will repeat. However, remember that they call “gurus” “gurus” because “charlatans” is too hard to spell.
Newell Brands reported 82 cents of adjusted earnings this morning, 4 cents better than expected. Shares of Tyson Foods and Henry Schein are both in rally mode this morning after good earnings reports. Cardinal Health and Sempra Energy also report today. They may have reported already, I don’t know, I’ve been out working on my short game.
Chinese stocks fell again on trade war tensions. Toronto is closed for a Holiday.
Our futures dug out of a deep hole in the 5 o’clock hour this morning, but they’re not giving us reason to believe a lot of change is on the way at 9:30. The last time I looked, adjusted for fair value, the S&P futures are flat, the Dow futures are down 22, but the NASDAQ futures are about 4 points above fair value.
As we all know, earnings and interest rates are important levers for stock prices in the long term. Just one look at this morning’s futures reminds us in the short term, trade policy is a big lever indeed.
Yesterday’s story that the Trump Administration may be raising tariffs on 200 billion dollars in Chinese goods to 25 percent by early September has traders on edge this morning, with Chinese stocks losing about 2 percent and European markets are about one to two percent lower.
If you’re a longer-term thinker, the earnings news continues to be strong. Better than expected results came from Zoetis, DowDupont, Kellogg, Yum Brands, Fitbit, CIGNA and Teva Pharmaceuticals, although Teva shares are lower on a drop in North American sales. Square beat on earnings but warned on the current quarter. Shares are a couple percent lower.
Tesla shares are more than 8 percent higher this morning on Elon Musk’s pledge that every quarter going forward will show a profit.
The Bank of England raised short term interest rates a quarter point this morning, to three-quarters of a percent, as expected.
Our futures have been stock in a deep rut all morning. Adjusted for fair value, the S&P futures are lower by about 18 points, the Dow futures are down 171, and the NASDAQ futuresare about 56points belowfair value.
August 1, 2018
It’s been a rough stretch for the infamous FAANG stocks since Facebook’s surprisingly bad earnings report last week. Late yesterday afternoon, Apple stepped in to stop the bleeding, at least for today.
Apple’s profit of $2.34 per share was an 18-cent beat. Although total iphone sales fell short, sales of the top of the line and more profitable iphone X continued to roll. Apple is now projecting about 61 billion in sales for the current quarter. Shares are indicated almost 4 ½ percent higher pre-market.
Among other companies reporting better-than-expected earnings this morning are Molson Coors, Garmin and Autonation.
Speaking of autos, we’ll hear from the major automakers today, well, everyone except General Motors, on total car sales in the month gone by. General Motors reports sales totals on a quarterly basis, not monthly.
Of course, at 2 o’clock we’ll get the latest interest rate announcement from the Federal Reserve. If they decide on any change, it will be a huge surprise.
Word that the U.S. may be planning higher tariffs on 200 billion dollars’ worth of Chinese goods sent Chinese shares lower overnight. European markets are mostly a little lower.
The S&P futures are just almost a point above fair value, and while the adjusted Dow futures are down 22,the NASDAQ futures, reflecting Apple’s strong earnings report last night,are about 22points above fair value.