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WJR December 2018 Reports

Ron is taking a Holiday break.  He will return in January.  Here's to a great 2019!

 

December 21, 2018

The stock market hates uncertainty.  Currently, we’re uncertain as to how high interest rates are headed, we’re uncertain how severe an apparent global economic slowdown will be and now we’re uncertain whether much of the Federal Government will be functioning past midnight.  In the U.K., they’re not even certain if they can get a flight out of Gatwick Airport.

Seems like the only thing we’re certain about is that people continue to spend a lot of money on sneakers.  Last night Nike reported 50 cents of adjusted quarterly profit, which was 4 cents better than expected, and Nike shares are looking to open about 8 percent higher.

The famous other hand belongs to Carmax, with shares about 8 percent lower pre-market.  Earnings were better than expected but used car sales were not so hot.

At 8:30, the November Durable Goods Report is expected to reflect a 1.6 percent rise.  At the same time, the Government’s final verdict on Third Quarter GDP is expected at 3.5%.  At 10 o’clock, The University of Michigan’s final Consumer Sentiment report of the year is expected to be unchanged at 97.5.

Our futures took a dip from higher levels this morning President Trump when tweeted a threat about a long Government shutdown if Congress doesn’t put up funds for the Mexican wall.

Nevertheless, we’re still pointing a little higher at this point. Adjusted for fair value, the S&P futures are higher by about 8points, the Dow futures are up 74 and the NASDAQ futures are about 29 points abovefair value.

December 20, 2018

Yesterday’s quarter point hike in short term rates and generally dovish comments from Federal Reserve Chairman Powell did not come as a surprise. Unfortunately, the algorithms that run the minute-to-minute stock trading gave Powell’s remarks two thumbs down, with the Dow falling over 700 points from its high point of the day. Perhaps it had more to do with the Fed’s continuing liquidation of its bond portfolio.  But whatever it was, it wasn’t pretty.

The Food and Drug Administration has given the thumbs down to fast-track status on a promising lung cancer drug.  Spectrum Pharmaceutical’s potential blockbuster poziotinib drug will not be on a fast track, and that has Spectrum’s stock lower by 33 percent this morning.

Beating earnings estimates since the close yesterday were Walgreen’s Boots Alliance, Conagra, Blackberry and Herman Miller. Herman Miller shares are looking to open almost 9 percent higher and Blackberry is up 6 percent, while the other two are slipping a bit.

The Bank of England held interest rates steady this morning, which is no surprise given the economic and Brexit uncertainty in the U.K.

Overseas markets followed us lower.  This morning our stocks futures have been up, down and all around.  At this point change is the only constant.  Adjusted for fair value, the S&P futures are down 5 points, the Dow futures are down 30 and the NASDAQ futures are about 5 points below fair value.

December 19, 2018

Today’s the day. About eight times per year, the Federal Reserve Open Market Committee gets together to determine short term interest rates for the next 6 or 7 weeks.  Long term rates are set by the bond market, which lately has established lower rates for longer term debt while the Fed has been on a rate hiking campaign. When the short-term rate exceeds the long-term rate you have what’s known as an “inverted yield curve” which encourages people and businesses to hoard cash rather than make long term investments.  Although it’s far from infallible, inverted yield curves often indicate a recession in the making.

That’s one of the reasons that today’s 2 o’clock announcement from the Fed is so important.  Whether the Fed should raise rates or not, jawboning from President Trump raised the odds of a rate increase, if the Fed wants to reaffirm their independence.  So, expect a quarter-point increase, but lots of dovish comments from Jay Powell at 2:30 regarding the course of policy in 2019.

Shares of Winnebago and General Mills are higher pre-market after earnings beats.  Glaxosmithkline and Pfizer will combine their consumer health businesses, perhaps trying to package them for a spin-off.  And Facebook shares are under pressure again after a story about more customer data sharing.

Asia was mixed, Europe is higher.

Adjusted for fair value, our futures aren’t nearly as good as they first appear, but they’re still indicating higher prices at 9:30. the S&P futures are higher by about 4 points, the Dow futures are up 71 and the NASDAQ futures are about 4 points above fair value.

December 18, 2018

Another day, another drubbing for stock prices yesterday.  However, some relief may be on the way as traders look toward tomorrow’s Federal Reserve decision.  The Fed starts their two-day meeting today, with the expectation that tomorrow they will raise short term interest rates by a quarter of a percent and then signal a cease fire on future rate hikes unless absolutely necessary.

Of course, President Trump once again tweeted his feelings of the subject this morning, urging a halt to rate increases right now. That almost guarantees a rate hike tomorrow, so that the independent Fed can avoid the perception that they are bowing to the Presidential tweetstorm.

Oracle’s quarterly performance has the shares up more than 5 percent this morning.  Earnings and cloud revenue were higher than expected.  This morning, Darden Restaurants reported 92 cents in profit, which was a penny better than expected on a 2.1 percent rise in same restaurant sales.  Darden shares are indicted about a percent and a half higher.  Boeing shares are boosting the Dow this morning after announcing a dividend increase.

Most overseas markets followed us lower overnight. However, we’re looking to start the day with green arrows. 

At this point, adjusted for fair value, the S&P futures are higher by about 22 points, the Dow futures are up 228 and the NASDAQ futures are about 65 points above fair value.

December 17, 2018

In case you’re wondering what happened to all of those post-Trump-election gains in your portfolio, consider that the S&P 500 is now back to the same level it held November 19 of 2017 and it’s likely to head a little lower this morning.

It should be an interesting week ahead, with another interest rate hike expected from the Federal Reserve on Wednesday, a little flurry of large=cap companies reporting earnings and a few high-profile economic reports later in the week.

We’ll warm up today with earnings from Oracle and Red Hat, and the New York Fed’s December survey of the state of manufacturing in the State of New York.  Expect that November’s reading of 23.3 will be a fond memory as the index is expected to decline more than 3 points.

Johnson and Johnson shares are off another one-half of one percent pre-market after taking a 10 percent dusting on Friday on reports that the company may have covered up knowledge of asbestos in their talc product years are years ago.

Jack in the Box shares may pop today on word that they may be putting up a for-sale sign.

Asian markets were mixed, but mainly higher overnight.  Europe is lower, generally by one-half to one percent.  Our futures took a big leg lower about 15 minutes ago.

At this point, adjusted for fair value, the S&P futures are lower by 5½ points, the Dow futures are down 99 and the NASDAQ futures are about 17½ points below fair value.

December 14, 2018

If you only looked at the change in stock prices at the end of the day yesterday, you might assume that it was a pretty quiet day of trading.  But like the proverbial duck gliding across the pond, there was a lot of furious footwork going on that you just didn’t see.  Stock prices again gyrated wildly throughout the day.

While 2017 lulled us to sleep with almost no price volatility, this year and maybe next will be a much more exciting place. That doesn’t necessarily mean more profitable, just more exciting.

The excitement for today will involve prospects for global growth (or lack thereof.)

Chinese retail sales and industrial output reports fell short of expectations overnight.  That helped drive Asian markets down one to two percent overnight, even thought China confirmed a three-month suspension of tariffs on 214 imported auto parts effective January 1st

After our markets closed yesterday, Costco reported $1.71 of quarterly profit, which was 12 cents better than expected.  However, sales fell short of estimates and Costco stock is about 3½ percent lower pre-market.

In just about fifteen minutes the domestic November Retail Sales Report is expected to reflect only a one-tenth of a percent increase after October’s eight tenths of a percent run-up.

At this point, adjusted for fair value, the S&P futures are lower by 28 points, the Dow futures are down 239 and the NASDAQ futures are about 92 points below fair value.

December 13, 2018

As individual stocks go, there’s an unlikely price gainer this morning.  The well-beaten-down shares of General Electric are sharply higher pre-market.  GE announce the creation of a 1.2-billion-dollar subsidiary that will focus on “the internet of things.”  It will be fully owned by GE but will have an independent board of directors.  That news and a broker upgrade have General Electric shares indicated about 12 percent higher this morning. Procter & Gamble shares are also benefitting from a broker upgrade today.

Shares of AFLAC are also on the rise on the rumor that there is a minority investment cooking with Japan Post.  No confirmation or details are out, but AFLAC is trending about 4 percent higher this morning.

Within hour, Network technology company Ciena reported adjusted earnings of 53 cents per share for the quarter gone by on a 21 percent surge in sales.  That profit was a nickel better than expected.

The European Central Bank held interest rates steady today and expects no change into next summer, which seems a long-long way away.

Asian markets followed our rally higher overnight.  European markets are narrowly mixed.

 

Our futures have been alternating positive and negative indications during the past few hours, but at this point, adjusted for fair value, the S&P futures are higher by 6 points, the Dow futures ar up 61 and the NASDAQ futures are about 36 points above fair value.

Ron is taking a few days off and will return December 13th.  See you then!

December 7, 2018

At one point yesterday, the Dow Industrial Average looked as if it would match Tuesday’s nearly 800-point decline.  However, a late day rally, on hopes that the Fed will hold off on interest rate increases, left the Dow with only a 79-point loss.

Asian markets picked up on that rally and finished today slightly higher. Europe is also mainly in the green. Nevertheless, the selling looks like it will continue here at least in the early going.

There’s big selling in shares of Big Lots this morning, with the share off 14 percent.  Big Lots lost 16 cents per share last quarter, which was 15 cents worse than expected.

There’s better news from Lululemon and Broadcom.  Both had better than expected results, and Broadcom is raising its dividend.

And confirming the hot pot rumor of the week, Altria is buying a 45% stake in marijuana firm Cronos for 1.8 billion dollars. Cronos shares are about 22 percent higher pre-market.

At 8:30, the Labor Department is expected to report the creation of 198,000 new non-farm jobs in November, a 3.7 percent unemployment rate and a three-tenths of a percent increase in the average hourly wage. Any numbers hotter than that would bolster the argument for another interest rate increase this month.

Adjusted for fair value, the S&P futures are lower by about 18 points, the Dow futures are down 165 points and the NASDAQ futures are about 51 points below fair value.

December 6, 2018

As that great philosopher Roseanne Rosannadanna use to say, “It’s always something.”  There’s a lot of “somethin’” going on this morning.

Lots of big blue-chip stocks are looking two percent or more lower this morning.

One Monday, voices in the U.S. Administration trumpeted great hope of a China trade deal.  On Tuesday, traders noticed that there was radio silence from Chinese authorities on the issue.  Not a good sign.

Early yesterday, things looked better as the Chinese Finance chief DID have some encouraging words regarding trade.  But last night, word broke that Canadian authorities had arrested the CFO of Chinese company Huawei, supposedly at the behest of the U.S. in order to get her to testify regarding her company’s trade with Iran.

But it all together, and traders are hitting the sell button this morning, in fear of deteriorating American – Chinese relations.

Oil is also about 3½ percent lower, on the rumor that OPEC’s rumored output cut will be smaller than expected.

The ADP November Employment Report is due out in a minute or so.  Expect word of 190,000 new private sector jobs.

Markets oversea are generally off 2 percent or so. Adjusted for fair value, the S&P futures are lower by about 39 points, the Dow futures are down 402 and the NASDAQ futures are about 121 points below fair value.

December 5, 2018 - The market is closed in honor of President H.W. Bush.  Ron will return tomorrow!

December 4, 2018

Stock traders in the United States will get a mid-week vacation day tomorrow as the New York Stock Exchange and the NASDAQ will close in honor of President George H.W. Bush.  But stocks will trade today and at the open we’ll likely give back a fair chunk of yesterday’s gains.

Earlier this morning, home builder Toll Brothers reported quarterly profit of $2.08 per share, which easily beat the $1.83 estimate on better than expected sales. Profit in the year-ago quarter was only $1.17.  However, Toll Brothers says that rising mortgage interest rates are starting to slow business in the current quarter ad the shares are indicated about 5½ percent lower. Speaking of interest rates, the yield curve between 2-year Treasuries and 5-year Treasuries inverted this morning. Every time is different, but inverted yield curves have a nasty reputation of foretelling recessions a year or two in the future.

Apparently, some companies just can’t quit smoking.  Word is that Altria is in talks to make an investment in pot-producer Cronos, although no agreement of any type has been announced. Still, Cronos shares are looking to open about 10 percent higher.

Outside of China, Hong Kong and Indonesia overseas markets are seeing red numbers. Our futures are off earlier lows but are still pointing lower.

 

Adjusted for fair value, the S&P futures are lower by about 9 points, the Dow futures are down100 points and the NASDAQ futures are about 42 points below fair value.

December 3, 2018

If you thought that the threat of a trade war with China was weighing on stock prices, you were apparently right on the money.

The 90 day “truce” that Presidents Trump and Xi signaled over the weekend is leading to a sizable rally in stock prices this morning.  Of course, it’s just a truce, not a resolution, so curb your enthusiasm a bit.  However, automotive stocks are 2 to 4 percent higher this morning on a Presidential tweet indicating that China will lower its 40 percent tariff on imported vehicles.

There’s lot of enthusiasm for shareholders of biopharmaceutical company Tesaro this morning.  Glaxo SmithKine will buy Tesaro for 75 bucks per share.  That’s a 62 percent premium to Friday’s closing price.  Shares of Tribune Media are about 10 percent higher premarket on reports that Tribute will be acquired by Nexstar Media Group.

At 10 o’clock the report on October Construction Spending is expected to reflect a four-tenths of a percent rise after flat-lining in September.

Major markets overseas are about one to two-and-a-half percent higher on the Trade Truce.  Our futures have been solidly higher all morning. At this point, adjusted for fair value, the S&P futures are higher by about 39 points, the Dow futures are up 441 points and the NASDAQ futures are about 154 points above fair value.

WJR January 2019 Reports
WJR November 2018 Reports

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