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WJR January 2019 Reports

January 31, 2019

Yesterday, we were hoping to not hear any bitter words out of the mouth of Fed Chairman Jerome Powell.  We didn’t expect that the words would be coated in sugar, honey and whipped cream with a cherry on top.

The Fed, which put interest rate increases “on auto-pilot” not long ago, officially disengaged the auto-pilot yesterday for fear that the economy might nose-dive at too fast of a rate.  And since rising stock prices are a function of solid earnings and low interest rates, stock prices wasted no time in soaring off the runway.

Today we’ll get earnings reports from 37 members of the S&P 500.  Earnings guidance for 2019 has cooled off to an expected increase of only about 6 percent on average after a double digit rise last year.  Blame a coordinated slowdown in international economies.  Should we get some good news regarding trade, that might reverse as quickly as interest rate policy has.

Among the many earnings reports of the morning, General Electric reported only 17 cents of profit, which was a nickel short.  However, sales showed improvement.  That’s allayed the fears of those who thought that GE might go away altogether.  Shares are more than 8 percent higher pre-market.

China and Japan followed us higher overnight.  European markets are mixed, as are our futures. Adjusted for fair value, the S&P futures are higher by about 4 points, the Dow futures, hurt by a nearly 8 percent drop in DowDupont,are lower by57 points, but the NASDAQ futures, boosted by an a nearly 12 percent jump in Facebook shares,are about 58 points above fair value.

January 30, 2019

We have Chinese trade talks starting, a Federal Reserve Open Market Committee decision and statement AND another slew of fourth quarter earnings news today.  It’s almost enough to keep you warm.

The major stock indexes are soaring pre-market, but before you think all boats are rising – be careful.  Big jumps in the bids for Apple and Boeing are fueling much of the rally.

Last night, Apple reported earnings that were just a penny better than lowered expectations.  However, after December’s pessimistic guidance, traders expected much worse and Apple shares are looking to open about 5 percent higher.

For its part, Boeing shares are soaring more than 6 percent after reporting $5.48 in adjusted profit, which was 91 cents better than expected.

Chip maker AMD shares are about 10 percent higher, even after issuing lowered 2019 guidance.  Oshkosh shares are up 8 percent on good earnings and raised guidance.  The famous other hand is Tupperware, down 8 percent.  They met earnings, but sales were disappointing. McDonald’s beat the earnings estimate and shares are a little higher.

AT&T shares are 2 percent lower as new wireless business and Direct television service fell short. Whether or not you use the AT&T service, the Federal Reserve statement at 2:30 will be must-see TV today.  No change in interest rates is expected and hopefully Chairman Powell will choose his words carefully.

 

At this point, adjusted for fair value, the S&P futures are higher by about 13points, the Dow futures are up 241,almost all due to Boeing and Apple,and the NASDAQ futures are almost 62 points above fair value.

January 29, 2019

The earnings parade rolls on today. It’s a bit of a mixed bag of results so far.  Beating the earnings estimates this morning are 3M, Verizon and Pfizer.  However, among those companies, only shares of 3M are looking to open higher, as traders weigh 2019 guidance.  3M shares are almost 3 percent higher, while Pfizer and Verizon look to open 2 to 3 percent lower.  Allegan shares are off a bit more than that.

The miss of the morning appears to be Harley-Davidson.  Profit of 17 cents per share fell 11 cents short and Harley-Davidson shares are downshifting by 8 percent or so.

Later today, we’ll hear from Biogen, Danaher, Ebay and Apple, among others.

At 10 o’clock the Conference Board’s January Consumer Confidence survey results are expected to dip to around 125 from December’s 128.1

Asian markets were lower on the whole on increasing trade tensions after yesterday’s criminal charges against Huawei, but European markets are breaking higher.

 

At this point, adjusted for fair value, the S&P futures are higher by about a point and a half, the Dow futures are up 33, and the NASDAQ futures are 12 points above fair value.

January 28, 2019

It’s kind of interesting. During almost the entire Government shutdown, the stock market climbed higher.  Don’t look now, but the Government is now back in business and our stock futures are in the dumps.  Coincidence or causation?  You be the judge.

Meanwhile, the biggest Michigan-headquartered bank is getting bigger.  Chemical Bank will acquire Minnesota-based TCF Financial.  That’s a 3.6 billion-dollar deal.

It’s Super Bowl Week for football, and it’s Super Bowl Week for corporate earnings reports.  We’ll also get a Federal Reserve Meeting and a China trade meeting thrown in as if there wasn’t enough going on.  More than 20 percent of the S&P 500 will report earnings, with 37 of them checking in on Thursday alone.

So far this morning, Caterpillar dug a pretty deep hole for its share price.  Earnings of $2.55 per share fell 44 cents short of expectations and Caterpillar shares are looking to open about 5 or 6 percent lower, which is costing the Dow futures about 50 or 60 points.

Overseas markets are mostly lower on worries regarding those upcoming trade talks.

At this point, adjusted for fair value, the S&P futures are lower by about 14 points, the Dow futures are down 176, and the NASDAQ futures are 44 points belowfair value.

January 25, 2019

The fourth quarter earnings picture is becoming a bit clearer.  Profits are slowing down – some actually missing lowered estimates.  However, there are still many companies doing very, very well.

Last night, Starbucks, which now seems to have a store everywhere except your living room, reported same store sales growth of 4 percent.  That was far better than the consensus estimate of 2.8 percent. Starbucks shares are about 3½ percent higher pre-market.

Western Digital raised guidance for 2019 and those shares are looking to open about 9 percent higher.  But all is not well in tech-land.  Last night, chip-giant Intel reported earnings for last quarter that were better than the $1.22 estimate at $1.28 but warned that profit in the first quarter would weaken, and Intel shares are almost 7 percent lower.

Drug company Abbvie is almost 3 percent lower after a disappointing report this morning and medical equipment company ResMed is off almost 14 percent after reporting earnings.

Most markets overseas are higher, and our futures have been higher all morning long. At this point, adjusted for fair value, the S&P futures are higher by about 13 points, the Dow futures are up 123, and the NASDAQ futures are 36 points above fair value.

January 24, 2019

Ford Motor Company warned us that fourth quarter earnings weren’t going to be pretty, and last night they delivered the news.  On a GAAP accounting basis Ford lost 3 cents per shares.  However, when you get rid of the “special” stuff like pension plan write-downs and such, the adjusted profit was 30 cents per share, compared to the lowered expectations of 27 cents.  Ford is being pretty guarded with full year 2019 guidance, other than to say they have a plan for improvement. So far in the pre-market, Ford shares have recovered about a third of a percent after dropping almost 2 percent yesterday.

Their products may add spice to your meals, but investors in McCormick are reaching for the antacid this morning.  Shares are more than 10 percent lower premarket after reported adjusted earnings of $1.67 per share fell three cents short.  Freeport-McMoRan also fell short on earnings.

Shares of a bunch of airlines are approaching liftoff this morning after good earnings reports, among them are Southwest, American Airlines and JetBlue.

Overseas markets are generally a little higher after out late rally yesterday.

Our futures have been holding at slightly higher levels much of the morning. At this point, adjusted for fair value, the S&P futures are higher by about 5 points, the Dow futures are up 37, and the NASDAQ futures are 34 points above fair value.

January 23, 2019

Like it or not, the current daily flash point for stock prices continues to be news about trade with China.  Early yesterday, a report that Administration officials had cancelled an upcoming meeting with the Chinese sent the Dow more than 400 points lower.  Late in the trading day, a White House official debunked the story and markets recovered a quarter of the loss and are continuing to recover pre-market this morning. 

Also on the rise are shares of IBM, which are about 7 percent higher.  Last night, IBM reported better than expected results and actually guided higher for the 2019 year.  It’s been a long slide for Big Blue and many hope this may be a turning point for the company in its transition from hardware to services.

Also out with better than expected numbers are Comcast, which raised its dividend, Procter & Gamble, TD Ameritrade and Northern Trust.  United Technologies blew away the $1.53 estimate by earning $1.95 per share.

Shares of Capital One are off about 6 percent after missing the $2.37 estimate by 37 cents.  Kimberly-Clark also reported lower earnings than expected.

Overseas markets are mixed as they wait for us to make up our directional mind. At this point, adjusted for fair value, the S&P futures are higher by about 13  points, the Dow futures are up 204, and the NASDAQ futures are 36 points above fair value.

January 22, 2019

The World Economic Conference is going on this week in Switzerland, so it’s appropriate, I suppose that traders are responding to global concerns this morning.  Over the weekend the International Monetary Fund lowered its growth projection for the world’s economies from 3.6 percent to 3.5 percent.  Along with that, China reported that 2018 Gross Domestic Product increased 6.6 percent.  That’s the lowest rate of growth since 1990, assuming that you believe any of the numbers China reports in that regard.

Corporate reports of last quarter’s performance in this country continue to come out.  Johnson & Johnson reported $1.97 per share in operating profit, which was a couple cents better than expected.  Also, better than expected were results from Travelers and Logitech.

The miss of the morning comes from financial firm UBS.  Shares of UBS are about 5 percent lower, as the U.S. wealth management business of UBS reportedly saw profit decline 22 percent.

Earnings from Capital One and IBM are still on the docket for later today.

Markets overseas are lower on the Chinese growth data, and our futures have been stuck in the mud all morning.  At this point, adjusted for fair value, the S&P futures are lower by about 16 points, the Dow futures are down 134, and the NASDAQ futures are 51 points belowfair value.

January 18, 2019

Stock and bond markets will take a three-day weekend as we look forward to Monday’s Martin Luther King Jr. Holiday.  However, markets elsewhere will trade and we could get an interesting report from China, which is slated to report their Gross Domestic Product on Monday.

Nevertheless, that is then and this is now, and now we have to get today’s news.  Front and center is Tesla.  They have announced that 7 percent of their workforce will be on the unemployment line soon as they cut costs to improve the financial, and possibly lower the price tag on the Model 3.  Coincidentally, Tesla shares are off about 7 percent pre-market.

Last night, American Express missed the $180 estimate by 6 cents, blaming a December decline in consumer spending.  Shares are about 2 percent lower.  Also last night, Netflix reported better than expected profit, but revenue was short and revenue guidance was lowered.  Shares are off almost 4 percent.

Better than expected earnings from trucker J.B. Hunt shares up about 5 percent.  Oil giant Schlumberger matched the 36-cent estimate, but their GAAP earnings of 39 cents look a lot better than the comparable quarterly loss of $1.63 from last year. Shares are looking about 3 percent higher.

 

Asian markets rose on hopes of progress in the trade talks.  Our futures have been in the green all morning.  At this point, adjusted for fair value, the S&P futures are higher by about 11points, the Dow futures are up 139, and the NASDAQ futures are 24 points abovefair value.

January 17, 2019

Earnings reports for the major U.S. banks wrapped up this morning with a disappointing report from Morgan Stanley.  Profit of 80 cents per share missed estimates by 9 cents and were also lower than the year-ago figure of 84 cents.  Certainly, the fourth quarter swoon in stock prices didn’t help, but the Morgan Stanley report contrasted with the other big bank reports we heard yesterday. Morgan Stanley shares are indicated almost 5 percent lower pre-market.

We have heard some tales of woe from retailers about holiday sales, and we have one from Signet Jewelers this morning.  Signet shares are about 10 percent lower after warning that fourth quarter profit and full year 2019 look weaker than expected.

Reporting better than expected profits this morning were Becton Dickinson, CSX and Alcoa. American Express and Netflix report later today.

The Weekly Jobless Claims report will survive the Government shutdown and will come to us in about 15 minutes.

Asian markets were mixed overnight, but Europe is lower after a disappointing report from the major bank Societe Generale.  Our futures are of earlier lows but have a long way to go. Adjusted for fair value, the S&P futures are lower by 11 points, the Dow futures are down 105, and the NASDAQ futures are 29 points belowfair value.

January 16, 2019

For all the political turmoil in Great Britain, stock markets are saying “Brexit Schmexit” and appear instead to be focused elsewhere.

The elsewhere this morning points to quarterly earnings as well as a merger in the payment processing and financial services space.  First Data is merging with Fiserv in a stock deal valued at 22 billion dollars.  First Data shares are indicated about 24 percent higher, and Firserve looks a percent or two lower.

A much better than expected earnings report came from Goldman Sachs. $6.04 of profit was way ahead of the $4.45 estimate. Goldman is raising its dividend as well. Bank of America also beat estimates by about 10 percent on better than expected sales.  Airline United Continental shares are about 5 percent higher after $2.41 of earnings were 37 cents better than expected.

In the red this morning are shares of Nordstrom, down almost 9 percent after Holiday same store sales disappointed, and Snapchat parent Snap, shares are more than 10 percent lower after announcing the resignation of their Chief Financial Officer.

There’s no retail sales report this morning due to the Government shutdown.

The Dow futures took a big step (about 30 to 40 points) higher after the Goldman Sachs results came out within the past hour. Adjusted for fair value, the S&P futures are higher by a point and a half, the Dow futures are up 48, but the NASDAQ futures are 5 points above fair value.

January 15, 2019

S&P 500 earnings in 2019 are expected to grow only by 8 percent or so, after growing by more than 20 percent last year.

The big earnings reports for last year’s fourth quarter are beginning to flow, and so far, it’s a bit of a mixed bag.  First out of the box this morning was UnitedHealth, reporting $3.38 per share, which was 7 cents better than expected on better than expected revenue.  Shares spiked about 2 percent higher before falling back to a pre-market loss of about one half of one percent.

Delta Airlines reported $1.30 of profit, which was 3 cents better than expected, in spite of higher fuel prices.  And in spite of that, Delta shares are about one and a half percent lower.  Wells Fargo beat the earnings bogey by 4 cents but fell short on sales.

The big miss of the morning came from JP Morgan Chase.  Profit of $1.98 was 22 cents lower than the consensus estimate. Shares are indicated almost 3 percent lower.

At 8:30, one of the few Government Reports not impacted by the shutdown is expected to tell us that Produce Prices fell by one-tenth of a percent in December, possibly giving the Fed one more reason to put interest rate increases on hold.

Asian stocks rose overnight on word that China will cut taxes and maintain flexible economic policy in response to the slowdown in their economy.  Europe, as expected, is kind of a mess in front of the big Brexit vote in the U.K. today.

Adjusted for fair value, the S&P futures are higher by a point, the Dow futures aredown 17, but the NASDAQ futures are about 23 points above fair value.

 

January 14, 2019

Weak import and export numbers from China have stocks in a worldwide slump this morning.  Imports to China fell 7.6 percent last month, while exports fell 4 .4 percent.  Tariffs had an impact, of course.  However, the concern is about just how much the Chinese economy is cooling overall.

The merger market is heating up this morning.  Newmont Mining will buy Goldcorp in an all-stock deal.  Aurora Cannabis will merge with Whistler Medical Marijuana in a 132-million-dollar stock deal, and reports have MNG Enterprises offering 12 bucks per share to buy USA Today parent Gannett.  That’s a 20% premium to Friday’s closing price.

The fourth quarter earnings reporting season kicked off today with a report from Citigroup at the top of this hour.  $1.61 in profit was a 6-cent beat, but that gains came from lowered expenses as revenue was light.  Citi shares are off a little more than one percent pre-market.  Shares of Tailored Brands are off more than 13 percent this morning.  They warned that same store sales at their Joseph A. Bank store are unexpectedly falling.

On Friday, our domestic market almost crawled all the way back out to even after falling sharply early in the day.  Our futures are not down as much as we were earlier, but are still looking to open deeply in the red.

Adjusted for fair value, the S&P futures are lower by about 22 points, the Dow futures are down 216 and the NASDAQ futures are about 67 points below fair value.

 

January 11, 2019

The Standard and Poor’s 500 stock index will start the day on a five-day winning streak.  That’s the longest streak since September.  Granted, the S&P is still 6 percent lower that at the beginning of what proved to be the worst December of all time, but we are more than 10 percent above the December 24th close.  

A major brokerage house has lowered its estimate for first quarter domestic GDP from two and a quarter percent to around two percent, owning to what is now looking like an extended Government shutdown.

Call today the calm before the earnings reporting storm that hits next week.  Yesterday’s Holiday Sales reports from major retailers did some damage to those stocks, especially shares of Macy’s, whose shares fell almost 18 percent yesterday alone.

Beating lowered expectations is a time-honored corporate earnings game.  With earnings growth expected to slow in 2019, expect that upcoming earnings news for last quarter will be pretty good, but earnings guidance may well be extremely pessimistic, especially given the uncertainty over China trade and the Government shutdown.  Today marks the first day of payless paydays for many Government workers.  We may soon learn just how many live paycheck-to-paycheck.

Overseas markets are mixed, with Asia a bit higher and Europe a bit lower.  Adjusted for fair value, the S&P futures are lower by about 12points, the Dow futures are down 87 and the NASDAQ futures are about 38points belowfair value.

 

January 10, 2019 - Ron is away today and will return tomorrow.

 

January 9, 2019

 

Yesterday gave us another day and another rally as stock prices continue to recover from a brutal fourth quarter of last year.

Next week, we’ll start to find out how the big boy corporate profits survived in last year’s fourth quarter.  With the Federal Reserve presumably taking its collective foot off the interest rate hike pedal, if profits continue to be strong, we may see that stock price rally continue.

Home builder Lennar reported $1.96 of profit this morning, which was better than expected, although sales fell a bit short.  On the other hand, J.C. Penney reported a 3 percent drop in same store sales over the Holiday season, while reaffirming cash flow guidance for the current quarter.

Don’t look now, but West Texas Intermediate Oil futures are back up above 50 bucks per barrel this morning.  But if you worry about oil supply, relax.  BP announced the discovery of an extra billion barrels in an existing oil field in the Gulf of Mexico.

Asian markets were higher this morning, following up yesterday’s rally here and optimism about progress in trade talks. European markets are about one to one and a half percent higher.

Our futures have been fluctuating a bit this morning but have been rising steadily over the past half hour. Adjusted for fair value, the S&P futures are higher by about 8 points, the Dow futures are up 96 and the NASDAQ futures are about 25 points above fair value.

WJR February 2019 Reports
WJR December 2018 Reports

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