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 didnâ€™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 â€śBrexit Schmexitâ€ť 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.
Thereâ€™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 yearâ€™s fourth quarter are beginning to flow, and so far, itâ€™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. Thatâ€™s a 20% premium to Fridayâ€™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 Poorâ€™s 500 stock index will start the day on a five-day winning streak. Thatâ€™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. Yesterdayâ€™s Holiday Sales reports from major retailers did some damage to those stocks, especially shares of Macyâ€™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, weâ€™ll start to find out how the big boy corporate profits survived in last yearâ€™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.
Donâ€™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 yesterdayâ€™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.