January 31, 2018 - Ron is away today. He'll be back soon.
January 30, 2018
Yesterday, stocks took their worst downdraft since September. That is until today of course. Rising interest rates appear to be giving traders an excuse to recognize some of the massive gains theyâ€™ve realized in the recent rally.
Shares of Met Life are making for a sad Snoopy this morning. Late yesterday, Met Life said that their earnings report will be delayed. The words â€śweak internal controlâ€ť were used, and you know that thatâ€™s not good. Traders are shooting first and aiming later, as Met Life shares are down about 6Â˝ percent.
Health care stocks are having a rough morning. JP Morgan, Berkshire Hathaway and Amazon are considering a not-for-profit company to lower health care costs for the average American. This could become a real game changer is a space that could use some game-changing.
Pfizer reported profit of 62 cents, which was six cents better than expected. Pfizer raised full year guidance, but the stock is stuck in the health care swoon and is down almost 2 percent.
McDonaldâ€™s earned $1.71per share, 12 cents better than expected. Global same store sales were up 5Â˝ percent. Shares are relatively unchanged pre-market.
Overseas markets are all lower after our drop yesterday. At this point, adjusted for fair value, the S&P 500 futures are lower by 12 points, Dow futures are now down about 192, and the NASDAQ futures are now just about 36 points below fair value.
Thereâ€™s a big merger in the works this morning that had the potential to result in the longest corporate name in recorded history. Keurig Green Mountain is buying Dr. Pepper Snapple for $103.75 per share plus 13 percent of the combined company. The new company will fortunately be called merely Keurig Dr. Pepper. Dr. Pepper Snapple shares are almost 35 percent higher this morning.
And it just wouldnâ€™t be a Merger Monday without a deal in the biotech space. Sanofi has outbid Novo Nordisk and will buy biotech firm Ablynx, shares of which are about 20 percent higher pre-market.
In less than 20 minutes, weâ€™ll find out if Americans once again outspent their income in December. Expect a three-tenths of a percent increase in income and a one half of a percent increase in spending, and if youâ€™re having trouble figuring out which one is bigger, you may be part of the problem.
It looks like demand for the new iphones disappointed over the Holidays. Apple is reportedly halving production of the iphone X. Apple reports earnings later this week.
Chinese stocks were lower overnight. Europe is mixed, but mostly a little lower. Our futures have recovered a bit off their lows of the morning, but weâ€™re still looking at little red arrows as we head toward 9:30.
At this point, adjusted for fair value, the S&P 500 futures are lower by a bit more than 6 points, Dow futures are now down 44, and the NASDAQ futures are now just about 23 points below fair value.
Based the fourth quarter earnings reports revealed so far, it looks like corporate America is doing pretty darn well, and thatâ€™s a good thing. And while there are plenty of reports still to come for 2017â€™s fourth quarter, in less than 20 minutes weâ€™ll get our first look at the overall economyâ€™s performance in the fourth quarter. The â€śadvanceâ€ť number, which is the Governmentâ€™s first guess at the prior quarterâ€™s Gross Domestic Product is expected to come in at 2.9 percent, after rising 3.2 percent in the third quarter.
Thereâ€™s some bad news if you have a foreign vacation coming up. Treasury Secretary Mnuchin said that a weaker dollar is good for American exporters, which is hard to argue against. However, currency traders sold off the dollar in response, which is off 3 percent against the British pound this week.
On the earnings front, Starbucks shares are almost 5 percent lower pre-market. Last nightâ€™s 2018 sales forecast was at the low end of what analysts expected. Colgate Palmolive shares are also lower this morning after reporting earnings.
On the famous other hand, Intel shares are providing a big portion of the gain in the Dow futures right now. Intel shares are indicated almost 6 percent higher after reporting earnings last night.
Hong Kong was more than a percent and a half higher overnight, Mainland China was higher, but most of the rest of Asia lost ground. Europe is higher and while our futures are off earlier highs, weâ€™re still in the green as we head toward 9:30. Right now, adjusted for fair value, the S&P 500 futures are higher by 10 points, Dow futures are now up 56, and the NASDAQ futures are now just about 39 points above fair value.
It may not be time to keep one eye on interest rates, but it might be helpful to glance in that direction once in a while. While nothing seems able to stop this runaway bull market, you can bet that if interest rates start giving equities some meaningful competition, the escalator up for stock prices might start to stall.
The interest rate on the 10-year Treasury bond is now about 2.639 percent. A year and a half ago, that rate was under 1Â˝ percent. Thatâ€™s a nice, slow rise over a year and a half. However, an accelerating rate off a higher base will be a reason for concern.
Nevertheless, the European Central Bank couldnâ€™t care less. They kept their short-term interest rate a zero this morning, and promised to keep it there for a long time to come. That ECB failure to raise rates may limit our Central Bankâ€™s desire to raise rates this year, although some in the know are expecting four quarter point hikes to come before Christmas.
Itâ€™s far from Christmas for Ford shareholders this morning. An earnings miss and a bleak outlook has Ford shares bellow the 12 dollar mark this pre-market. Out with good earnings this morning are Caterpillar, Celgene, 3M Northrup-Grumman and Raytheon, among others.
Overnight, Asia was mixed, but Europe is mostly a little higher. Our futures are off to the races again. Right now, adjusted for fair value, the S&P 500 futures are higher by 9Â˝ points, Dow futures are now up 115, and the NASDAQ futures are now just about 39 points above fair value.
The earnings reports continue to roll in this morning, the latest of the biggies is Comcast. Profit of 49 cents was 2 cents better than expected. Comcast is raising its dividend by 21 percent and shares are fractionally higher.
General Electric has been quite the punching bag lately, but it may be getting off the mat. Shares have risen almost 6 percent since late yesterday. Although profit last quarter missed the 29-cent target by two cents and overall revenue was 5% lower, revenue from the oil and gas business was strong and the stock is back up over 17 bucks this morning.
They both took big accounting charges on their deferred tax assets due to tax reform, but both General Dynamics and Rockwell Automation reported better profit than expected.
The average 30-year mortgage rate rose again last week, according to the Mortgage Bankers Association. The average rate on a conventional 30 year note with 20 percent down was 4.36 percent. Mortgage applications rose by more than 4 percent last week.
Overseas markets were mixed overnight. Our futures have been on the rise since midnight and it looks like the party will roll on at 9:30. Right now, adjusted for fair value, the S&P 500 futures are higher by 6 points, Dow futures are now up 99, but the NASDAQ futures are now just about 7 points above fair value.
Four Dow Jones Industrial Average component companies have already reported earnings this morning and weâ€™re three for four so far with two singles and a home run. The only swing and a miss came from Verizon. Even though sales were higher than expected, adjusted earnings of 86 cents per share fell two cents below estimates.
Procter & Gambleâ€™s $1.19 of profit was a nickel ahead, Johnson & Johnson shares are about one percent higher after $1,74 was a 2 cent beat and 2018 guidance was boosted to $8.10 from $7.86. The big surprise came from insurer Travelers. Profit of $2.28 was 77 cents better than expected, and the shares are 2 percent higher.
TD Ameritrade shares are higher after beating estimates by 2 cents and announcing a 24-hour ETF trading platform â€“ just in case you are currently getting too much sleep.
Adobe Systems raised full year guidance and Bacardi is buying Patron for 5.1 billion dollars. Netflix may be the winner of the morning. They raised guidance last night and shares are about 10 percent higher pre-market.
Our stock futures have been up and down and all around during the past few hours, so thereâ€™s nothing definitive as far as the open is concerned. At this point, adjusted for fair value, the S&P 500 futures are lower by 2 points, Dow futures are now down 14, but the NASDAQ futures are now almost 15 points above fair value.
The federal Government may be shutting down, but the stock market remains open and may just ignore all the whole kerfuffle on Capitol Hill.
In fact, there have been 19 other Government shutdowns since 1976. All have lasted three weeks or less, with most lasting less than a week. The average stock market reaction during the previous shutdowns has been a decline of about a half of one percent â€“ which is about as much as the market has gained on any given day recently.
Shares of Haliburton will likely gain more than that today. 53 cents in operating profit was 7 cents better than expected. Big broker and bank UBS is a little lower after announcing a 3 billion dollar charge relating to the new tax law.
And, itâ€™s another big merger Monday, especially in the biopharmaceutical space. Juno Therapeutics shares are 27 percent higher as Celgene announced its aquisition of Juno for 87 dollars per share in cash. Sanofi is buying Bioverativ and insurer AIG will pay $40 bucks per share for Validus Holdings. Validus is 40% higher on the news.
Most overseas markets are a little higher, especially in Europe. At this point, adjusted for fair value, the S&P 500 futures are lower by a point, Dow futures are now down 58 points, and the NASDAQ futures are now about 2 points below fair value.
Earnings and mergers will get the attention due them today. However, if it looks like the Senate cannot get enough Democratic votes to keep the Government running, we could see a bumpy ride today. Sixty votes are needed and it looks like a dozen more Democratic votes are needed.
IBM reported earnings and revenue last night. For the first time in about 5 years, quarter-over-quarter revenue increased for Big Blue, as their Cloud business accelerated. Unfortunately, margins were lower, and the traditional IBM business continues to be a dragging anchor. Guidance was tepid and IBM shares are about 3 percent lower pre-market. American Express shares are 2 percent lower after suspending their share buy-back program.
Thereâ€™s talk that Biogen is interested in buying Acorda Therapuetics, and that has Acorda shares almost 16 percent higher this morning. Lincoln National is buying Liberty Life Assurance in a 3.3 billion dollar deal.
The University of Michiganâ€™s preliminary Consumer Sentiment Reading comes at 10 oâ€™clock. Expect an increase to a reading of 97.
Major overseas markets are almost all higher. Our futures are off earlier highs, but no matter where the market starts, it will likely wobble around all day depending on whether it appears that the Senate can get its act together.
At this point, adjusted for fair value, the S&P 500 futures are higher by about a point and a half, Dow futures are now down 12 points, but the NASDAQ futures are now nearly 10 points above fair value.
Itâ€™s shock and awe time once again for stock prices as the Dow Jones 30 closed above the 26,000 level fir the first time yesterday. Todayâ€™s stock futures have been all over the map since midnight, and no significant reversal is indicated.
GNC Holdings has had a big reversal during the past 3 months or so, with the stock price off almost 60 percent. This morning, however, they raised fourth quarter guidance on a pick up in same store sales and GNC shares are about 14 percent higher pre-market.
LaQuinta shares are indicted about 9 percent higher on word that Wyndham Hotels will buy LaQuinta for nearly 2 billion dollars.
Morgan Stanley is the latest big bank reporting big profits. 84 cents per share of adjusted earnings came in 7 cents better than expected, and shares are 2 percent higher. The famous other hand belongs to Alcoa. Shares are about 6 percent lower after the $1.04 profit missed the consensus estimate by 23 cents.
Overseas markets were surprisingly little changed after our surge higher yesterday.
Our futures have sagged over the past hour and are paining a mixed picture for stock prices, with the tech-heavy NASDAQ Index taking it on the chin. At this point, adjusted for fair value, the S&P 500 futures are down 2 points, Dow futures are up 14, but the NASDAQ futures are now about 21 points below fair value.
It might have been the start of a pullback, but at this point it, yesterdayâ€™s rally interruptus looks more like the pause that refreshes. The major indexes finished a little lower yesterday, in spite of an early rise of some 285 points in the Dow Jones Industrial Average.
You might expect that the new tax law might have an impact on a firm like Goldman Sachs. Goldman confirmed that expectation this morning. A generally accepted accounting principles loss of $5.51 cents per share translated to a $5.68 per share profit when adjusted for extraordinary items, like the new tax law. That adjusted profit was 77 cents better than expected. However, Goldman Shares, after an early spike higher, are now indicated about three-quarters of one percent lower. That GAAP loss was Goldmanâ€™s first quarterly loss in six years.
Bank of America shares are trading flat after beating estimates by a few cents per share. Juno Therapeutics shares are about 60 percent higher on reports of a potential tie-up with Celgene.
At 2 oâ€™clock, weâ€™ll get the Federal Reserveâ€™s survey results of regional economic conditions.
Overseas markets are mixed as they tried to make sense of yesterdayâ€™s price action here.
Yesterdayâ€™s reversal of fortune in stock prices looks to reverse again at 9:30. At this point, adjusted for fair value, the S&P 500 futures are higher by a bit more than 15 points, Dow futures up 171, and the NASDAQ futures are about 37 points above fair value.
Stop me if youâ€™ve heard this one â€“ the S&P 500, Dow Jones 30 and the NASDAQ 100 start the day at all-time record highs once again. Never gets old â€“ does it? And now come the earnings reports. While most everyone expected a good earnings season, pay special attention t the guidance companies posit for the full year to come.
First in line this morning came health giant United Health Systems. They reported $2.59 per share of quarterly profit, which was 8 cents better than expected. Revenue was also higher than expected, but United Health also said that profits should rise about 17 percent in 2018. Shares are about 2 percent higher pre-market. General Motors also indicated this morning the 2017 earnings will come in at the high end of expectations.
The beleaguered stock of General Electric is a little more beleaguered this morning. A review of GE Capital turned up some major funding deficiencies. GE will take a 6.2-billion-dollar current charge and will reportedly pump another 15 billion into GE Capital in years to come. GE shares are suffering more than a 4 percent hit on the news.
Drug maker Merck shares are about 5 percent higher on positive results of a lung cancer trial, and Citigroup just reported $1.28 in operating profit for the quarter, 9 cents better than expected, although they are taking a 22-billion-dollar non-cash charge due to the new tax law.
Overseas markets are mixed, but we will levitate once again at 9:30. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 14 points, Dow futures up 233, and the NASDAQ futures are about 41 points above fair value.January 12, 2018
In case youâ€™re new to investing, there are a lot of gurus out there with the latest â€śsystem,â€ť most of which are designed to separate you from your money. But in the long run, once the short-term fads are washed out, it all boils down to earnings and interest rates. Higher earnings foretell higher stock prices, higher interest rates tend to have the opposite effect.
Fourth quarter earnings reports start to roll out in volume next week. But this morning, there is good news on the earnings front from JP Morgan Chase. They beat the adjusted earnings estimate of $1.69 by 7 cents, even though GAAP earnings were 37 percent lower due to the impact of the new tax law. Investment giant Blackrock also reported better than expected earnings. Wells Fargo just reported $1.16, which was 9 cents better than expected, although revenue fell short.
In contrast to the good news on earnings, stock futures were somewhat cooled off this morning when Dallas Federal Reserve President Kaplan opined that the economy is showing signs of overheating and the he supports three interest rate hikes in 2018, and possibly more.
Weâ€™ll find out if that alleged overheating is showing up in the Consumer Price data at 8:30 this morning. Expect only a one-tenth of a percent increase is expected, which would give us a 2.1 percent annual figure. December Retail Sales also come at 8:30.
Overseas markets are mixed, but generally a little higher. At this point, adjusted for fair value, the S&P 500 futures are higher by about 6 points, Dow futures up 107, and the NASDAQ futures are about 19 points above fair value.
Weâ€™ve seen a record six consecutive year-opening closing highs for the S&P500 and the NASDAQ 100 indexes. But, we may have to wait for next year to try for seven. But first, letâ€™s look at the corporate news of the morning.
Shares of home builder Lennar are 4 percent lower after a significant earnings miss. $1.29 per share fell well short of the $1.48 estimate. The silver lining, says Lennar, is that their 2018 tax rate will fall from 34 percent to 25 percent due to the recent tax law change.
Nordstrom says that same store holiday sales were up 1.2 percent, which is a little better than expected.
Sears has reportedly lined up additional financing and is cutting more costs. That good news has the stock up more than 5 percent pre-market. However, be careful out there. Sear stock dropped about 8Â˝ percent yesterday.
Get ready for the return of 3 dollar per gallon gasoline prices. Crude Oil is higher again by more than 1 percent at $63.61 per barrel. Most commodities, in fact are on the rise as traders consider possibility that inflation has not been eradicated.
Mainland China, Hong Kong and Great Britain are a little higher, but most overseas markets are leading us into the red this morning, and weâ€™re going there rather convincingly. At this point, adjusted for fair value, the S&P 500 futures are lower by about 11 points, Dow futures down 98, and the NASDAQ futures are about 39 points below fair value.
The Dow Industrials took a little breather yesterday while the S&P 500 and NASDAQ Indexes powered to yet more record levels, but it looks like the Dow may rejoin he party in the early going today.
Thereâ€™s more good news from retail this morning, as it appears that consumers are willing to spend more when they have jobs and the stock market does well. Imagine that. Target raised quarterly guidance and reported that Holiday Sales were up 3.4 percent year-over-year. Target shares are 3Â˝ percent higher pre-market.
American Eagle Outfitters says that fourth quarter sales to date are 8 percent higher., but holiday sales rose only 2 percent. Shares are flat so far. On the famous other hand, Under Armour shares are lower on a broker downgrade. Life-sciences firm Illumina is 7 percent higher on good results.
The Labor Departmentâ€™s Job Opportunities and Labor Turnover Report for November comes at 10 this morning. Earlier, the NFIBâ€™s survey result on small-business optimism dipped unexpectedly to 104.9 from 107.5.
Overseas markets are mixed, but most are higher. At this point, adjusted for fair value, the S&P 500 futures are higher by about a point and a half, Dow futures up 43 points, and the NASDAQ futures, after a strong day yesterday, are about 11 points above fair value.
2018 got off to a rip-roaring start last week. But there may be a little rip in that roar as we head toward 9:30 this morning. Our stock index futures, which were very strong in the very early morning have been on a slide lower ever since.
Weâ€™ll slide into fourth quarter earings season later this week. Priming the pump a bit this morning was Lululemon. Lulu stock is almost three percent higher pre-market after the company raised its fourth quarter guidance by a nickel to $1.26. Not to be outdone, Kohlâ€™s shares are about 6 percent higher on an improved outlook. Crocs also raised guidance.
The biotech darling of the morning is a company thatâ€™s working on a new cancer drug. Impact Biomedicines will be acquired by Celgene. The down payment is 1.1 billion dollars, but full price could be as high a 7 billion depending on the success of Impactâ€™s drug pipeline.
United Technologies and Caterpillar get brokerage house upgrades this morning, after having run way up in price, of course. Pandora shares, which have been cut in half since August, get a broker downgrade this morning. Thanks for that great vision, guys.
Japanese traders got the day off for â€śComing of Age Day,â€ť but other Asian markets rose overnight. European markets are still generally positive, but have lost earlier gains.
Adjusted for fair value, the S&P 500 futures are lower by about 4 points, Dow futures, which were up more than 70 around midnight are lower by 8 points, and the NASDAQ futures are about 3Â˝ points below fair value.
Fourth quarter earnings news starts to roll in next week. But on this First Friday of the month, weâ€™ll have to make due with the December Employment numbers from the Labor Department. At 250,000, yesterdayâ€™s New Jobs estimate from ADP came in way ahead of estimates. Today, the consensus estimate from Labor is 188,000. So, donâ€™t be surprised if the new jobs number comes in at 200,000 or above.
Earlier this morning, Constellation Brands reported 2 bucks in adjusted quarterly profit. That was the good news, in that the estimate was $1.87. However, sales came up short and Constellation shares are down about 3 percent, in spite on a newly announced stock buy-back plan.
Yesterday, the chairmen of the Securities and Exchange Commission and the Commodity Futures Trading Commission issued a pair of warnings to the public about the risks of putting real money at risk in cryptocurrencies. One of the latest of the crazy coins is called Ripple, and has reportedly made its creator the fifth richest person in America, if you could magically turn his theoretical net worth into net dollars. Be careful out there, folks.
We had 71 days of record-setting for the Dow last year, and so far, weâ€™re on a pace to top that in 2018. Thatâ€™s a comment, not a prediction.
Overseas markets followed us higher once again overnight and it will be new-record time at 9:30 once again. Adjusted for fair value, the S&P 500 futures are higher by 8 points, Dow futures are up 89, and the NASDAQ futures are about 32 points above fair value.January 4, 2018
The trading year is only two days old, and weâ€™ve seen two new records set already. Tuesday the NASDAQ hit a new high and yesterday, thee S&P 500 crossed the 2,700 level for the first time. Today is another day, but so far, all indications point toward even higher prices when we get underway.
Walgreenâ€™s Boots Alliance say that growth in prescriptions drove profits above estimates last quarter. They raised the bottom end of guidance for the current quarter. Macyâ€™s and JC Penney shares are both lower after reporting results.
And the biotech angel of the morning is a company called Cellect Biotechnology Limited. Shares are 35 percent higher on a successful test of their stem-cell transplant technology.
At 8:15, payroll processor ADP will give us their estimate of just how many new non-farm jobs came into being in December. Weâ€™ll get the official word on jobs from the Labor Department tomorrow morning. Earlier today, the Challenger Job Cut survey reported lower layoff announcements in December. Both lower than November and lower than expected.
Japanese stocks are trading again today and are playing catch-up with our rally, gaining more than 3 percent overnight. France and Germany are both more than one percent higher. Right now, adjusted for fair value, the S&P 500 futures are up 2Â˝ points, Dow futures are higher by 62 points, and the NASDAQ futures are about 14 points above fair value.January 3, 2018
As the day rolls on, the major auto makers will roll out December sales numbers. Overall, itâ€™s expected that sales were down almost 6 percent from the record numbers seen in December of 2016. Still overall 2017 sales should come in over 17 million units, which is a very healthy number.
Mortgage Applications fell about three percent last week, but put the blame on refinancings, which were down about 7 percent. Loan apps for home purchases were about one percent higher.
Shares of South Carolina utility Scana are more than 22 percent higher this morning. Scana will merge with, well, itâ€™s being acquired by utility giant Dominion Energy in a stock-for -stock deal. Meanwhile, the Government has blocked the purchase of Moneygram by Chinaâ€™s Ant Financial.
Weâ€™re seeing a few notable firms received broker upgrades this morning, including United Technologies, Eaton and Flour.
At 2 oâ€™clock, weâ€™ll get a look into the minutes of the latest Federal Reserve Open Market Committee meeting.
The Japanese stock market was closed overnight for a bank holiday. However, most major markets overseas are following our rally from yesterday higher. It looks like our stock traders have hit the â€śsnooze buttonâ€ť a few times this morning. Right now, the S&P 500, Dow 30 and NASDAQ indexes are all within a point or so of fair value.