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WJR February 2019 Reports

February 28, 2019

Predicting the next recession has become a popular parlor game for market prognosticators.  Of course, a recession is normally described as two consecutive quarters of negative Gross Domestic Product.  At 8:30, we’ll get the delayed first read on 1st quarter 2019 GDP.  However, nobody expects a negative number.  Expect something in the rage of a 1.8 to 2.5 percent increase.

J.C. Penney announced earnings of 18 cents per share this morning, which was 8 cents better than expected on better than expected sales.  That has Penney shares up more than 20 percent pre-market.  That’s the good news.  The bad news is that the shares are still only trading around a buck and a half each – the literal definition of a “penny stock.” Horizon Pharmaceuticals shares are more than 20 percent higher on a positive drug test.

We’ll find out about how things are going in the Midwest this morning as the Chicago Purchasing Managers Index is expected to hit 58 for February, up from January’s 56.7. According to a report out this morning, factory activity in China has fallen to a three-year low. 

In Vietnam, the battle of bad haircuts broke up without an agreement on North Korean denuclearization, but stock traders don’t seem to much care.

Overseas markets are mixed. Adjusted for fair value, the S&P futures are lower by almost 3 points, the Dow futures are down 7 points but the NASDAQ futures are about 22 points below fair value.

February 27, 2019

We have a handful of encouraging earnings reports this morning, and one that’s – not so much.

Best Buy’s adjusted profit of $2.72 per share was 15 cents better than expected.  Best Buy shares are looking to open about 9 percent higher.  After Home Depot’s downer yesterday, Lowe’s delivered a pleasant surprise today, beating the 79-cent estimate by a penny, even though comparable store sales were only up 1.7 percent, versus the expected 2.1 percent.  Lowe’s shares are rising about 4 percent pre-market.

Ionis Pharmaceutical shares also up about 3 percent on a good revenue and earnings report and Campbell Soup shares are up 5 percent on a good earnings report.

Shares of Weight Watchers are losing weight quickly this morning, down about 35 percent, as earnings and sales disappointed and this year’s outlook is weak.

Square, Chesapeake Energy, Box and Booking Holdings will all report today.  The National Association of Realtors is expected to tell us that pending Home Sales in January were flat, after declining more than 2 percent in December.

Overseas markets are a bit lower, and at this point our futures ae down a little more than they were 24 hours ago. Adjusted for fair value, the S&P futures are lower by about 8 points, the Dow futures are down 72 and the NASDAQ futures are about 29 points below fair value.

February 26, 2019

A couple of stocks that are part of the Dow Jones Industrial Average are pulling the index lower this morning.  Home Depot, after taking a one-time 16 cent write-down, reported $2.09 in quarterly earnings, seven cent short of estimates.  Home Depot did increase its dividend to $1.36 and announced a 15 billion dollar share buyback.  Still, Home Depot shares are indicated about three percent lower.

Likewise, Caterpillar is looking to open 3 percent lower on a double downgrade from a major stock broker, and Shake Shack is looking 3 percent lower on weak full year guidance.

Out with better than expected news this morning are Macy’s, J.M. Smucker, AutoZone, Hertz, Cracker Barrel, Discovery Communications and Tenet Healthcare.

Fed Chairman Powell is chatting with the Senate Banking Committee today as part of the semi-annual testimony that used to be called “the Humphrey-Hawkins” testimony.  Of course, if you’re old enough to remember Humphrey or Hawkins, you probably have fond memories of the world before the internet.

Housing Starts, Housing Price Data and Consumer Confidence numbers are all on the way.  Overseas markets are a bit lower, and at this point, adjusted for fair value, the S&P futures are lower by about 4 points, the Dow futures are down 73 and the NASDAQ futures are about 16 points belowfair value.

February 25, 2019

It’s a big morning in the bio-pharmaceutical world.  The bio-pharma unit of General Electric is being sold to Danaher for 21.4 billion dollars, almost all of that in cash, as the un-conglomeration of General Electric continues.  GE will use the proceeds to decrease leverage and firm up their balance sheet. GE stock is 17 percent higher pre-market, Danaher is higher by more than 6 percent.

Separately, Roche is paying a 122 percent premium to Friday’s closing price to snap up Spark Therapeutics.  That’s a 4.3 billion-dollar deal for a company that is developing drugs to treat hemophilia and other diseases.

There may be more consolidation coming in the gold space as well.  Barrick Gold is proposing an all-stock merger with Newmont Mining.

Earnings reports are on the way from Hertz, Etsy, McDermott and Mosaic.

Stocks in China rallied more than 5½ percent overnight after yesterday’s announcement that President Trump is extending the deadline for the imposition of 25 percent tariffs.  Stocks in the U.K. are flat, but mainland Europe is higher.

It looks like we’ll keep the party going at 9:30 as well.  At this point, adjusted for fair value, the S&P futures are up almost 12 points, the Dow futures are up 132 and the NASDAQ futures are about 41 points above fair value.

February 22, 2019

Yesterday stock prices fell for the first session in four, but what was lost yesterday may be found shortly after the market open today.

There are a couple of stocks that will be on the down escalator this morning.  In fact it looks more like the down elevator for Stamps.com.  They announced last night that they are ending their partnership with the U.S. Postal Service.  IT leads one to ask, “so, what are you going to sell.”  Traders are not asking.  They’re just selling with Stamps.com shares lower by almost 50 percent.

Kraft Heinz issued a quarterly report that missed the earnings estimate, missed the revenue estimate, reported quickly rising input costs, they cut their dividend and revealed that the SEC is investigating their accounting practices.  Outside of that, it was a great report.  Kraft Heinz shares are about 23 percent lower pre-market.  And, for all the Warren Buffett fans out there, keep in mind that Berkshire Hathaway owns almost 27 percent of Kraft Heinz.

President Trump will meet with Chinese Vice-Premier Liu He today, who has been granted “special envoy” status by his Government.  Optimism of a deal in the offing has our stock futures heading north.

Asia was mixed overnight, but Europe is higher. At this point, adjusted for fair value, the S&P futures areup almost 11 points, the Dow futures are up 112 and the NASDAQ futures are about 31 points above fair value.

February 21, 2019

With the release of latest Federal Reserve Open Market Committee meeting minutes yesterday, traders have pretty much satisfied themselves that interest rate increases are off the table for a good long time.  That means, that outside of earnings news, the focus turns almost exclusively to the China trade talks.  With the Chinese in Washington today and tomorrow, any substantive announcement regarding progress or lack thereof will no doubt move stock prices.

The price of Domino’s stock is moving this morning, and not in a good way.  Earnings fell 7 cents short of estimates and Domino’s stock is looking to come up a half-a-slice short, down about 7 percent.

Newmont Mining reported 40 cents of quarterly profit, a full 15 cents better than expected.

Later this morning, we’ll get the Weekly Jobless Claims, the delayed December Durable Goods Report and the January Leading Economic Indicators.  They are expected to rise 15 basis points, in contrast to a 10-basis point decline in December.

Our futures were higher until about an hour ago and have been bumping around the flat line ever since. At this point, adjusted for fair value, the S&P futures are flat, the Dow futures are down 6 and the NASDAQ futures are about apoints below fair value.

February 15, 2019

We should start the day with a substantial recovery from yesterday’s late sell-off.  The Dow Jones Industrial futures were in a triple digit hole a few hours ago.  Then word came that some progress had been made in the China Trade talks and we saw pictures of Secretary Mnuchin shaking hands with President Xi and still apparently keeping his own wallet.  Reportedly, a Chinese delegation will come to Washington next week to continue talks.  If nothing else, the frequent flyer miles that are piling up here are just incredible.

Shares of Nvidia are piling up gains this morning after their earnings report last night.  Nvidia shares have cooled off from last night’s levels but are still indicated more than 6 percent higher pre-market.

Pepsico reported $1.49 of adjusted profit the morning, which was right in line with expectations.  The miss of the morning is heavy-equipment firm Deere.  They missed the $1.76 profit estimate by 22 cents, and Deere shares are looking to open almost 4 percent lower.

At 10 o’clock the University of Michigan’s preliminary February Consumer Sentiment Report is expected to improve to 94 from January’s disappointing 91.2.

Asia was mostly lower overnight, but Europe is solidly higher.  At this point, adjusted for fair value, the S&P futures are higher by about 5 points, the Dow futures are up 52 and the NASDAQ futures are about 13 points above fair value.

February 14, 2019

Roses are red, violets are blue. Stock prices are higher and the futures are too.

The rally of 2019 rolls on this morning, boosted on a report that President Trump might extend the deadline for increased Chinese tariffs by as much as 60 days as negotiations drag on.

In less than 15 minutes, we’ll read the delayed report on December Retail sales.  In the meantime, earnings continue to roll in.  Coca-Cola reported earnings that matched expectations this morning, but lowered 2019 guidance from $2.23 cents to $2.08 per share.  Coke shares are about 3 percent lower premarket.

Last night, Cisco Systems reported better than expected earnings and raised full year guidance.  Those shares are looking to open more than 4 percent higher.

After today, about three-quarters of the S&P 500 will have reported results.  So far, more than 70 percent have out-performed profit estimates, that’s higher than the long-term average on a 17% average increase in earnings.  However, the average analyst estimate for earnings growth in the current quarter is flat.

Today may well be the beginning of the end for many cryptocurrencies today, as JP Morgan Chase will roll out its OWN digital currency, with a stable value.  They likely won’t be the last big institution to do that.

Overseas markets are mixed, but Europe is generally higher. At this point, adjusted for fair value, the S&P futures are higher by about 7½ points, the Dow futures are up 85 and the NASDAQ futures are about 32 points above fair value.

February 13, 2019

It doesn’t look like yesterday’s furious rally is quite over.  Muted a bit, perhaps, but not over. A report within the hour that President Trump will sign the bill that prevents another Government shutdown gave the futures an additional boost.  That added to the upbeat mood engendered by a report that Chinese President Xi might meet with American trade negotiators later this week.

Not getting much of a boost this morning are shares of Groupon.  After posting tits 12th consecutive quarter of revenue declines, Groupon shares are indicated almost 13 percent lower this morning.

Tripadvisor shares are about 4 percent lower after adjusted quarterly earnings missed the 29-cent estimate by 2 cents.

Likewise, Generic drug maker Teva missed the 55-cent profit estimate by 2 cents, but a weak outlook for the rest of 2019 has Teva shares indicated more than 11 percent lower.

Cisco Systems, Barrick Gold and MGM all report later today.  But, in spite of that spate of missed earnings, optimism about a China trade deal has the stock futures in the green.

At this point, adjusted for fair value, the S&P futures are higher by about 7 points, the Dow futures are up 75 and the NASDAQ futures are about 29 points above fair value.

February 12, 2019

Stock futures are on the rise this morning on reports of a tentative deal in Washington to avoid another Government shutdown.  That being said, not all stocks are on the ‘up’ elevator.

Shares of Molson Coors are looking to open more than 6 percent lower.  Adjusted earnings of 84 cents came in a nickel better than expected.  However, earnings are not the only adjusted numbers there. Molson Coors’ 2016 and 2017 financials will be re-stated, reportedly due to ineffective internal controls.  When controls are in question and financials re-stated, traders tend to shoot first and ask questions later.

There’s no question that shareholders of cosmetics maker Coty are having a good day.  JAB Holdings has proposed acquisition of Coty at $11.65 per share.  Coty shares were at $7.06 late last week and are indicated at $11.43 this morning.

Under Armour beat the 4-cent profit estimate by a nickel.  Gross margins were up to 45% and Under Armour shares are about 3 percent higher.

The National Federation of Independent Business reported the fifth consecutive month of decline in small business confidence, yet the reading of 101.2 is still higher than the long-term average of 98.

Major overseas markets are higher, as are our futures.  At this point, adjusted for fair value, the S&P futures are higher by about 19 points, the Dow futures are up 177 and the NASDAQ futures are almost 58 points above fair value.

February 11, 2019

Some optimism about the Chinese trade negotiations has stock futures in the green this morning as we await the rest of the quarterly earnings reports to roll in.

On tap today are reports from Lowes, Brighthouse Financial and Vornado Realty Trust.

Checking in earlier this morning was Restaurant Brands International.  The parent of Popeye’s, Burger King and Tim Horton’s reported 68 cents in adjusted profit, which was a penny better than expected.

According to the South China Morning Post, Apple’s smartphone shipments in China fell 19.9 percent in last year’s fourth quarter.

Activision Blizzard is expected to announce hundreds of job cuts tomorrow.  Tesla has reportedly cut almost two-thirds of its staff at a Las Vegas facility that delivers vehicles to North American customers.

The Japanese stock market was closed overnight for National Foundation Day, but China was back in business after the Lunar New Year Holiday with rising share prices.  Major European markets are higher across the board.

Our futures have been climbing slowly over the past couple of hours.  At this point, adjusted for fair value, the S&P futures are higher by about 10 points, the Dow futures are up 114 and the NASDAQ futures are almost 37 points abovefair value.

February 8, 2019

For corporate earnings news, it’s a tale of two toy stories this morning.  Boosted by transformations for the iconic Barbie doll (which I suppose is technically plastic surgery) Mattel reported an adjusted quarterly profit of 4 cents per share.  In the comparable quarter a year ago, Mattel lost 82 cents per share. Analysts expected a loss of 16 cents this time around and Mattel shares are about 16 percent higher pre-market.

It’s a darker toy story at Hasbro this morning.  Blaming discounted inventory liquidations due to the Toys ‘R Us bankruptcy, Hasbro reported a profit of$1.33 per share, which was 34 cents short of expectations.  Traders that are liquidating some of their Hasbro shares this morning are swallowing an 8 percent discount.

Shares of Sketchers are 16 percent higher on good earnings, but about a half hour ago, Goodyear reported 51 cents, which was 9 cents short.

Japanese stocks were off 2 percent overnight, and as China gets back in business after the Lunar New Year celebrations, worries over trade negotiations with the U.S. have Asian markets in a bad mood.

European markets have also turned lower.

We haven’t seen three down days in a row for stock prices yet this year, but the pre-market futures are pointing us in that direction. Adjusted for fair value, the S&P futures are lower by 14 points, the Dow futures are down 125 and the NASDAQ futures are 54 points below fair value.

February 6, 2019

General Motors will announce quarterly results in just a little over fifteen minutes from now.  Expect $1.22 of adjusted profit, compared to $1.65 a year ago. Daimler and Toyota are both out with less-than-great results this morning.

Last night, Disney reported first quarter adjusted earnings of $1.84 per share, which was 29 cents better than expected on better than expected sales. 

The big stock swing of the morning may be in shares of Snap.  The Snapchat parent lost two cents per share last quarter which was half the expected loss, but more importantly reported that the recent decline in user growth has stopped and the beaten down shares are snapping back by about 22 percent.

The trouble spot of the morning appears to be in video games.  Take-Two Interactive and Electronic Arts shares are each lower by more than 14 percent on bleak outlooks.  Spotify shares are off about 7 percent after announcing the acquisition of a couple of podcasting companies.

The German manufacturing orders dropped by 1.6 percent last month, which was the second monthly decline in a row. That has German stocks off about a half-percent.

We’re looking at lower numbers in the stock futures, although they are making a bit of a comeback. The adjusted S&P futures are lower by almost 5½ points, the Dow futures are down 23½ and the NASDAQ futuresare8 pointsbelowfair value.

February 5, 2019

Tonight is State of the Union night and irrespective of the content of the President’s speech, the theatrics in the room should make it an interesting watch. 

For investors, YouTube videos are sometimes worth watching.  Yesterday, a day after corporate stock buybacks came under Democratic Congressional fire, Bernie Sanders and Chuck Shumer were seen on a You Tube video saying that “something also must be done” to restrict corporations’ ability to pay dividends.  Pay attention, people.

And speaking of You Tube, parent Alphabet reported earnings last night that blew away estimates.  However, they also reported a 25 percent increase in capital expenditures, as they spent more on hardware and software to support their growth.  Traders so far appear afraid that expenses are growing too quickly and Alphabet shares are about 2 percent lower pre-market after gaining 2 percent yesterday.

Other companies with better than expected profit this morning are Energizer, Estee Lauder, BP, Viacom and Seagate.  However, Viacom’s sales were light and Seagate shares are 6 percent lower on lowered guidance.

The adjusted S&P futures are higher by 3½ points, the Dow futures are up 86points, butthe NASDAQ futures, weighed down by Alphabetare less than a point above fair value.

February 4, 2019

It’s a good morning if you’re a Patriots’ fan OR if you’re a shareholder in Ultimate Software.  Ultimate is selling to a private equity group for about 11 billion dollars. That works out to about an 19% premium to Friday’s closing price and a 32% premium to the average price on the last month.

Papa John’s shares are climbing about 4 percent pre-market.  Starboard Value announced that it is taking a stake in Papa John’s.  Starboard’s CEO will also assume Chairman of the Board duties at Papa John’s.

It’s another big week for corporate earnings reports.  Clorox reported $1.40 this morning, which was a dime per share better than expected on better gross margins. After the market close today, expect Alphabet, the parent of Google, to report $10.83 in quarterly profit.  We’ll also hear form Gilead and food company Sysco later today.

It’s a Holiday Week in China for the beginning of the Year of the Pig. European markets are mixed, and not much moved in any directions.

As we head toward the general market open at 9:30, Until a couple of minutes ago the stock futures combined had fewer total points than we saw in the Super Bowl last night. Accordingly, last night’s boredom could carry over to this morning’s stock market.  The adjusted S&P futures aredown a point and a half, the Dow futures are down 22 points, andthe NASDAQ futuresare just about 2 points belowfair value.

February 1, 2019

At 8:30, the Labor Department will tell us how many non-farm jobs came into being in January.  After December’s massive 312,000 pick-up, expect a much more modest number, perhaps around 170,000.

The big earnings report of the morning actually came last night from Amazon. Earnings were better than expected, some segments of the business are growing at a 95% rate, but shares are about 4½ percent lower, as guidance about sales and future expenses is giving traders some indigestion.

Other big companies with better than expected earnings include Cigna, Merck, Johnson Controls, Cypress Semiconductor, Exxon Mobil and YUM-China as Kentucky Fried Chicken is evidently catching on big-league in China.   Sony reported an all-time record profit for last quarter.

Shares of a bunch of pharmaceutical-related companies including CVS, Cigna and United Health are under pressure as the Trump Administration is seeking changes in the drug-rebate system that they say drives up prices to the consumer.

Overseas markets are mixed, but our futures have been losing altitude much of the morning. Adjusted for fair value, the S&P futures aredown byabout 5 points, the Dow futuresaredown 2 points,but the NASDAQ futures, weighed down by the current year guidance from Amazon,are about43points belowfair value.

WJR March 2019 Reports
WJR January 2019 Reports

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