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WJR February 2018 Reports

 
 
 
February 23, 2018

It should be a relatively quiet day for economic news and earnings reports. But then, a lack of any significant news hasn’t prevented stocks from making significant moves this week. We will get speeches from four Federal Reserve Bank Presidents, but until Chairman Powell goes to Washington next week, those speeches may not make much matter. The text of Powell’s prepared remarks will be release later this morning.

HP Enterprises earnings release last night does matter. The shares are about 13 percent higher this morning, as the company beat expectations for earnings, announced a dividend increase a share buyback program and raised full year guidance.

Not to be outdone, shares of natural pet food maker Blue Buffalo are almost 17 percent higher. General Mills likes what it sees and will pay 40 dollars per share to acquire Blue Buffalo. That’s an 8 billion dollar deal.

The yield on the 10-year Treasury has retreated this morning below the 2.9 percent mark, and that appears to have traders is a pretty good mood. Asia was higher overnight. Europe is fairly flat.

Mid-day volatility may still kill an early rally, but in the early going, our stock prices should push higher. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 20 points, Dow futures are up 184, and the NASDAQ futures are now about 59 points above fair value.

February 22, 2018

The Federal Reserve released the minutes of their latest meeting yesterday. They reflected a more dovish Fed than generally expected, and stoked fears that long term rates might rise more sharply than expected. That caused the yield on the 10-year Treasury to shoot up to 2.95 percent, and sent stock prices sharply lower at the close after giving up a 300 point Dow gain earlier in the day.

Giving up over 8 percent of its value pre-market is online retailer Wayfair. A loss of 83 cents per share was 30 cents more than expected. The famous other hands go to Chesapeake Energy, up 7 percent on earnings and the Avis/Budget Group, up more than 8 percent.

Blooming Brands, the parent of Outback and Carabba’s and Bonefish Grill beat the 39-cent estimate by 2 cents, and Norwegian Cruise Lines also reported better than expected results.

Leading Economic Indicators Report comes at 10 and we’ll hear no fewer than 4 Fed Heads chat it up before 4 o’clock.

Overseas markets mostly followed us lower overnight.

Nowadays, where the market starts the day has little bearing on where it will be ten minutes later, let alone the rest of the day. This morning, we’re looking at a flattish open after recovering from a 100-point downer in the Dow futures earlier.

At this point, adjusted for fair value, the S&P 500 futures are higher by 4 points, Dow futures are down a point, and the NASDAQ futures are now about 12 points above fair value.
 
February 21, 2018

With earnings season now pretty much in the rear-view mirror, we glance over there and notice that almost 80 percent of reporting companies have beaten earnings estimates. 

That throws traders’ focus clearly toward interest rates, which are a little lower so far today. At 9 this morning, the Philadelphia Fed President giving a speech and them tonight, the Minneapolis Fed head will be part of a panel discussion. Those talks, and at least eight more Fed speeches before week’s end may give us some indication of current Fed think. Next week, Chairman Powell climbs Capitol Hill for a little chit chat with Congress. At 2 o’clock today the Fed will release the minutes of their latest meeting.

Advance Auto Parts reported earnings this morning 14 cents higher than the 63-cent estimate. Southern Company also beat. Foot Locker is raising its dividend by 11 cents to 34 ½ cents per share. Boyd Gaming shares are 6 percent lower pre-market on an earnings miss on an apparent slowdown in Las Vegas gambling receipts.

Most of Asia was higher overnight, but most of Europe is lower at this hour.

We should start with the major indexes in opposite directions. At this point, adjusted for fair value, the S&P 500 futures are lower by 3 points, Dow futures are down 40, but the NASDAQ futures are now about 16 points above fair value.

February 20, 2018

We’re starting the short trading week with a little flurry of earnings news from some pretty big companies. Walmart shares are about 6½ percent lower pre-market. Adjusted earnings of $1.33 fell four cents short of estimates, even though same store sales were up 2.6 percent, versus 1.8 percent a year ago. Full year guidance of $4.87 per share is about 13 cents shy of the average analyst estimate.

Medical supplier Henry Schein matched the 97-cent estimate. Among the companies reporting better than expected profits include Home Depot, Gannett and Domino’s.

Qualcomm has raised its bid for NXP Semiconductors again, as they attempt to ward of an acquisition bid from Broadcom. NXP shares are 6 percent higher on that news.

Historically, slowly rising interest rates from low bases are generally good for stock prices. Quickly rising rates – not so much. Don’t look now, but the yield on the 10-year Treasury bond is slightly over 2.9 percent this morning. Any sudden spike above 3 percent is likely to give traders a reason to hit the “sell” button.  

All of this week’s big economic reports come later in the week.

Most major stock markets overseas are a bit lower this morning. Our futures are nothing to write home about, either.

At this point, adjusted for fair value, the S&P 500 futures are lower by 14 points, Dow futures are down 152, and the NASDAQ futures are now about 38 points below fair value.

February 16, 2018

Stock prices will be shooting for a six-session winning streak today as we continue to make the early February correction nothing more than a memory.

There’s a little flurry of earnings news this morning, and it’s a mixed picture.

Coca-Cola beat the 38-cent profit estimate by a penny per share. Deere’s $1.33 in adjusted profit was an 11-cent beat. JM Smucker also beat and raised guidance. Campbell Soup reported a dollar, which was 18 cents ahead and raised full-year guidance, although organic growth disappointed and the shares are about 2 percent lower.

Earnings disappointed at apparel company VF Corp and Kraft-Heinz.

At 8:30, expect an announcement that January Housing starts rose to an annualized rate of more than 1.2 million units.

We may well see trading volume tail off this afternoon as some try to turn a three-day weekend into three-and-a-half.

Asian markets were mixed overnight, but Europe continues to strengthen, now higher by one-half of a percent to one percent or more. Our futures are off their highs of the morning but are still pointing north with some vigor. Adjusted for fair value, the S&P 500 futures are higher by 8 points, Dow futures are up 81, and the NASDAQ futures are now about 30 points above fair value.

February 15, 2018

I hope everyone had a wonderful Valentine’s Day. A couple of pharmaceutical companies announced that they’ll be making love in the lab soon. Bristol-Myers Squibb and Nektar Therapeutics announced a plan to work together on a new cancer drug. Shares of both were higher yesterday (Nektar was up more then 11 percent) and both are higher again this morning on the news.

Cisco Systems shares are more than 7 percent higher this morning on an earnings beat and an enhanced share buyback program. Waste Management shares are about 3 percent higher pre-market. 85 cents of quarterly profit came in 2 cents better than expected. Avon Products shares are 3 percent higher. Adjusted earnings there were 12 cents versus the expected 7 cents.

Yesterday’s hot Consumer Price number knocked the stock market lower for a while until a buying wave took over mid-day.

Today at 8:30 we’ll hear about January Producer prices. Don’t look now, but the yield on the 10-year bond is over 2.9 percent this morning, getting close to the psychologically interesting level of 3 percent.

Outside of Indonesia and Iceland, all markets overseas are higher (even Japan, which has been on an extended losing streak.)

Our futures are off their highs of the morning but are still pointing north with some vigor. Adjusted for fair value, the S&P 500 futures are higher by 10 points, Dow futures are up 174, and the NASDAQ futures are now about 40 points above fair value.

February 14, 2018

It’s Valentine’s Day - the day of love. And if your stock and bond holdings are your true love, there’s no better gift you can receive today that a tame Consumer Price Inflation number at 8:30. It was a spike in inflation fears, exacerbated by a bunch of leveraged bets gone bad that kicked off all the market downdraft earlier this month.

At 8:30 expect that the January CPI rose four-tenths of a percent, with the core rate up two-tenths of a percent. The lower the better for stock prices. A two-tenths of a percent core rate would translate to a 1.7 percent annualized rate. Feeding traders something higher than that might lead to more stock indigestion.

The January Retail Sales Report will also come at 8:30. Expect that auto sales held the January rate of increase down to three-tenths of a percent, with the headline rate up as much as a half-percent.

Sodastream shares are more than 6 percent higher on good earnings and an improved outlook. Also reporting better than expected numbers this morning were MolsonCoors and Hilton Worldwide. Chipotle shares are more than 11 percent higher after announcing the hire of Taco Bell’s CEO.

Overnight, Japan was lower once again, this time by four-tenths of a percent. Most other major markets are higher, as are our futures as we head toward the CPI announcement at 8:30

Adjusted for fair value, the S&P 500 futures are higher by 10 points, Dow futures are up 135, and the NASDAQ futures are now about 31 points above fair value.

February 13, 2018

A very nice rally yesterday gave us the first back-to-back positive sessions since January. Still, the major indexes are still about 7 percent off their all-time highs and we could be in for some choppy waters at 9:30 this morning.

A few companies will sail well above those waters. GNC, whose shares have lost more than 90 percent over the past 4 years, saw same store sales rise 5.7 percent last quarter and its shares are rising more than 37 percent pre-market. Walgreens-Boots Alliance is reportedly interested in buying the 74 percent of Amerisourcebergen that it doesn’t already own. Amerisourcebergen shares are about 14 percent higher. UnderArmour shares, have been under pressure for the past two and a half years, losing about three-quarters of their value, are 14 percent higher pre-market. They broke even on the quarter, as expected. However, sales beat estimates and the worm may be turning at UnderArmour.

The National Federation of Independent Business survey of small-business sentiment hit its third highest reading since it started in 1973.

Outside of Japan, Asia was higher overnight. Outside of the U.K., countries east of the Atlantic are lower.

Our futures are clawing their way back from deeper waters, but if the market opened now, it would open lower. Adjusted for fair value, the S&P 500 futures are lower by 7 points, Dow futures are down 75, and the NASDAQ futures are now about 15 points below fair value.

February 12, 2018

If there was ever a good week to ignore the hourly swings in stock prices, it had to be last week. Between the downs and ups, the Dow Jones Industrials traversed over 20,000 points last week. We’re likely to traverse another big chunk of points at the open this morning after closing on Friday with the Dow and S&P about 9 percent lower than their all-time highs.

On Wednesday of this week, we’ll get the latest consumer inflation data. It was a strong Jobs Report that fed a sudden rise in long term interest rates that stoked fears of rising inflation. That set the equity correction in motion. Speaking of rising interest rates, the ten-year Treasury Bond yields 2.884 percent this morning. If that yield hits 3 percent, we could well see another round of selling.

General Dynamics is buying this morning. They’re buying CSRA for $40.75 per share. That’s more than a 32 percent premium to Friday’s closing price.

Restaurant Brands International, which owns Burger King and Tim Horton’s and recently bough Popeye’s reported better than expected sales this morning, but earnings fell short due to Popeye’s integration costs. Still the stock is about one percent higher.

Japan lost 2.3 percent overnight, but most other major Asian markets were higher as is all of Europe.

We will see green at the open as well. Adjusted for fair value, the S&P 500 futures are higher by 29 points, Dow futures are now up 292, and the NASDAQ futures are now about 70 points above fair value.

February 9, 2018

If there’s one thing on which behavioral professionals agree. The pain you feel from a loss of money far exceeds the pleasure experienced from a gain. So, if you feel a lot worse about your February stock losses than you did about your January gains – congratulations – odds are you must be human. The hard part is not changing a long-term plan because of short term losses.

With the Dow Jones Industrial losing another 1,000 plus points yesterday, the end of the decline may be closer than the beginning, but the volatility groundhog may have seen its shadow this morning – it looks like it will be around for a while.

Nvidia shares are 8 percent higher after a great earnings report last night. Twitter shares unchanged this morning but they tacked on 12 percent yesterday.

UPS is 5 percent lower this morning and FedEx is 4 percent lower on word that Amazon will start a package delivery service for businesses.

Overseas markets followed us lower. Europe is lower by 1 to 2 percent, Japan closed down 2 percent, China down 3 percent.

Our futures have been all over the place again this morning. At one point the adjusted Dow futures were higher by more than 250 points. We’re at a different point now, and at this point, adjusted for fair value, the S&P 500 futures are higher by only 9 points, Dow futures are now up 31, and the NASDAQ futures are now about 25 points above fair value.

February 7, 2018 

I hope that you kept that seat belt fastened yesterday, and it looks as though volatility is not quite ready to leave the arena.

Our stock futures have cut earlier loss by more than half, but we’ll need a lot more recovery over the next hour if we hope to start in the green today. With dramatic thousand-point swings becoming the favor of the month, let’s get back to focusing on the stuff that matters – interest rates and earnings.

One Fed governor, speaking in Europe this morning issued some calming words with respect to all the stock market volatility. Concerning earnings, last night Snap reported strong user growth, and its loss was lower than expected. Snap shares are 21 percent higher pre-market. Disney also beat on the top and bottom lines. Michael Kors reported $1.77 versus the expected $1.29 in profit.

Humana beat estimates and raised its dividend by 25 percent. Hasbro beat the $1.80 estimate by a half dollar, but sales missed and the stock in 5 percent lower.

China and South Korea lost ground overnight, but he Nikkei in Japan finished higher. Europe is higher, but us, not so much. At this point, adjusted for fair value, the S&P 500 futures are lower by 10 points, Dow futures are now down about 145, and the NASDAQ futures are now about 37 points below fair value.

 
February 6, 2018

If you were totally shocked when the Eagles beat the Patriots on Sunday, you probably haven’t been watching football very long. If you are now totally shocked that the major stock indices are down 8 percent or so over the last couple of trading sessions, well, you probably haven’t been investing very long.

Yesterday’s nearly 1,200 point swoon in the Dow Industrials is the biggest point drop ever and the largest percentage drop in 6½ years. However, keep in mind that we normally see a 5 or 10 percent “correction” every year. It’s been 405 days since the markets have been down even 5 percent. In the more than 200 “5 percent or more” corrections in the past, the median decline is 8 percent and the average is 12 percent. In the early going today, we’ll see another leg down in prices, but it will likely put us a lot closer to the end of the correction than the beginning, especially if corporate earnings continue to rise. 

This morning, Toyota announced a 54% increase in annual profit and raised guidance. Not to be outdone, General Motors checked in with $1.65 in quarterly profit, which was 27 cents per share better than expected, on better than expected sales. Allergan’s $4.86 in profit beat expectations by 12 cents per share.

Asia followed us about 5 percent lower overnight. European markets are off about half that much. Please return your chair to the upright position and fasten your seat belts. At this point, adjusted for fair value, the S&P 500 futures are lower by 55 points, Dow futures are now down about 601, and the NASDAQ futures are now about 101 points below fair value.

WJR March 2018 Reports
WJR January 2018 Reports

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