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Daily Reports @ WJR

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WJR March 2017 Reports

March 31, 2017

It’s the last day of the first quarter of the year and it’s been another good one for stock prices. The S&P 500 Index is almost 6 percent higher since the end of 2016, not even counting the dividends those companies pay. The Dow Jones Industrials are likely to finish about 5 percent higher. Unless we lose all those gains today, which is highly unlikely, we’ll have seen six quarters in a row of increasing prices. That hasn’t happened in more than ten years.

The price of a share of Blackberry stock is increasing this morning, although the company is worth only a fraction of its value before Apple’s iphone came along. Nevertheless, Blackberry reported 4 cents of operating profit for last quarter. They had been expected to breakeven. Blackberry shares are gaining about 6½ percent pre-market.

Data on personal income and expenditures, the Chicago Purchasing Managers Index and the University of Michigan’s final verdict on March Consumer Confidence all come by 10 o’clock this morning. U of M’s preliminary estimate of 96.7 is expected to remain unchanged, just one point below its post-election high point.

Overseas markets did not follow our rally from yesterday, as most are lower. Our futures have improved over the past hour, but are still indicating a little pullback in prices while we await the morning’s economic data. At this point, adjusted for fair value, the S&P 500 futures are lower by about 2 points, the Dow futures are down 16, and the NASDAQ futures are less than 6 points below fair value.

March 30, 2017

It’s been a tough week for leggings. Firstly, they can apparently get you kicked off airplanes, and this morning shares of Lululemon are running downhill at a rapid pace. Although same store sales were higher by 8 percent, $1 of adjusted earnings for last quarter missed estimates by a penny and Lulu predicted a drop in sales this quarter. According to the CEO, sales are slumping because Lululemon apparel isn’t “colorful” enough, a condition which they promise to change right away. So, be on the lookout for some neon at your next yoga class.  In the meantime, Lululemon shares are about 19 percent lower pre-market.

At 8:30, we’ll get the Government’s final assessment of how much the economy grew in the fourth quarter of 2016. Expect a bit of a rise to an even 2 percent.

We’ll also hear about weekly Jobless Claims at 8:30. Speaking of which, the latest layoffs in the active money management industry were announced today at Legg Mason, where 3 percent of staffers will be increasing future Jobless Claims figures.

Four Federal Reserve speeches are on the agenda today. Asian markets pulled back overnight. European markets are mixed.

Our stock futures are just about in the same condition as they were 24 hours ago. Adjusted for fair value, the S&P 500 futures are lower by 2 points and the Dow futures are down 17, but the NASDAQ futures are almost 2 points above fair value.

March 29, 2017

A new era of uncertainty opens in Europe today, as the U.K. gave formal notice less than an hour ago that they’d prefer to >

Major investment firm Blackrock is re-writing the way they manage assets. They will let one out of every seven of their stock-picking staff go, in favor of computer-management of assets. The move lowers investment costs significantly and is another step in the direction of passive asset management. Perhaps a lot of stock pickers don’t have the ability of foresee the future after all, at least not enough to justify their salaries.  There’s a big surprise.

Shares of Vertex are surging about 18 percent higher this morning on positive results in a test of their cystic fibrosis drug.  

Better than expected economic reports and some comforting comments from a Fed-head give us a rally yesterday that pulled stocks back to within two-tenths of a percent where they started the month. However, we might give a little more back at the open this morning.

Overseas markets are mixed. Right now, adjusted for fair value, the S&P 500 futures are lower by 2½ points, the Dow futures are down 20, but the NASDAQ futures are almost a point above fair value.

March 28, 2017

The headlines today will say that the Dow Jones Industrial Average has now fallen for eight consecutive sessions, and that’s the first time that’s happened in six years. However, the magnitude of the decline has been relatively small and the Dow is still 12 percent higher than its level prior to the November election.

That could all change if the first quarter corporate earnings season disappoints, and we’ll start to find out about that in about two weeks. Even though we’re in the last few days of the quarter, absent Ford Motor, earnings warnings have been few and far between.

Red Hat shares are rallying this morning on a good earnings report, positive guidance and some broker upgrades. Tesaro shares are 7 percent higher after FDA approval of their ovarian cancer drug. And Tesla shares are another 2 percent higher, after rallying two percent yesterday on a 5 percent investment by Hong Kong based investment company Tencent.

Reports on Consumer Confidence and Housing Prices come this morning, along with speeches by no fewer than 5 Federal Reserve officials. 

Most overseas markets are a little bit higher this morning. Our futures have lost earlier gains and are painting and mixed and somewhat bland picture as we head toward 9:30. Right now, adjusted for fair value, the S&P 500 futures are lower by almost 2 points, the Dow futures are down 18, but the NASDAQ futures are less than a point above fair value.

March 27, 2017

The post-election stock market rally was based on hope for some real change in the ground rules of business. Less regulation, lower taxes, fewer mandates should all lead to better business conditions. 

With the failure of the American Health Care bill last week, all of those assumed benefits are in doubt, especially promised tax reform, which relied in part on revenue re-directed from the additional Obamacare taxes.

As a result of the shaken confidence, gold and bond prices are spiking higher, global stocks are selling off, the dollar is falling on value and we could be looking at the eight day of downward movement in the Dow Jones Industrial Average.

There aren’t a lot of earnings on tap for this last week of the trading quarter, but this morning we have a couple of disappointments. Egg producer Cal-Maine Foods reported a nickel per share of profit, well below expectations. Cal-Maine shares are off more than 7 percent pre-market. And not to be out-done, apparel maker G-III shares are down about 15 percent. A 16 cent per share loss was six cents more than expected. The full year outlook for an 85-cent profit is much lower than the Wall Street estimate of $1.34.

Overseas markets are almost all in the red this morning. At this point, adjusted for fair value, the S&P 500 futures are down almost 15 points, the Dow futures are down 120, and the NASDAQ futures are about 29 points below fair value.

March 24, 2017

Watching stock prices weave all over the place yesterday left little doubt that every little sneeze on Capitol Hill regarding the American Health Care Act could lead to severe illness on Wall Street. But while that drama plays out, there is one earnings report out this morning that’s giving shareholders of one company pneumonia.

Shoe and apparel retailer Finish Line fell well short of a gold metal last quarter with an overall loss of 23 cents per share. Even if you ignore real accounting and ignore non-recurring items, the company only earned 50 cents per share, 20 cents short of expectations. Same store sales were 4½ percent lower and Finish Line shares are indicated almost 15 percent lower this morning.

The February Durable Goods Report comes at 8:30. Expect a 1.5% increase, but just eight tenths of a percent uptick excluding transportation.

Most Asian markets are a little higher, but Europe is lower. Our futures are giving us mixed indications, but nothing to get excited about so far.

At this point, adjusted for fair value, the S&P 500 futures are down less than a point, the Dow futures are higher by 24 points, but the NASDAQ futures are about 3 points below fair value.

March 22, 2017

We had gone almost four months without a one percent downdraft in stock prices. That ultra-long winning streak came to a rather decisive end yesterday, as the S&P 500 and Dow 30 dropped over one percent and the NASDAQ lost almost two percent. Most blamed uncertainty over the Trump agenda getting through Congress, but the real tipping point may have been last Friday’s quadruple options expiration. Whatever the cause, today is another day and it will be an interesting one to watch.

Shareholders of Nike are watching the price of their stock run downhill this morning. Last night, Nike announced that profit rose to 68 cents per share from 55 cents in last year’s comparable quarter. The problem is that sales were a bit short, shoe futures orders are down 4 percent, and online shopping continues to chip away at the brick and mortar of brick and mortar retailing. Nike shares are off about 5½ percent pre-market.

At 10 this morning, the February Existing Home Sales Report is expected to worsen a bit from the January number.

Overseas markets followed us lower overnight.

At this point the futures are pointing us slightly lower. Adjusted for fair value, the S&P 500 futures are flat, the Dow futures, weighed down by the action in Nike, are down 28, but the NASDAQ futures are about a half-point above fair value.

March 21, 2017

We have a little smattering of earnings news this morning, with three companies beating analyst estimates, but only one trading higher pre-market on the news.

Lennar is fractionally higher. The home builder reported 56 cents of profit for the quarter gone by, which was 7 cents lower than last year’s comparable quarter, but a penny better than estimates on better than expected sales.

General Mills’ 72 cents came in a penny better than expectations, and Land’s End reported 41 cents per share, which was a 6-cent beat, but in both cases, sales were lower than expected and both stocks are indicated a little lower.

It’s another day full of Federal Reserve President speeches. Two are done, with three left on the agenda.

Stocks in the UK are lower at this hour on an unexpected spike in British inflation. Nevertheless, it’s still only at an annualized rate of 2.3 percent. Most other markets overseas are higher.

Our futures have been on the “up” escalator most of the morning. At this point, adjusted for fair value, the S&P 500 futures are higher by 6 points, the Dow futures are up 39, and the NASDAQ futures are 16½ points above fair value.

March 20, 2017

There are a bunch of small companies working to develop anti-cancer treatments based on immunotherapy, using the body’s own defense mechanisms. The possibilities are exciting, but investing in something that is right now only a hope can be risky. This morning, that risk is paying off if you own shares of a company named CytomX. Bristol Myers is giving them a 200 million dollar upfront payment and promising almost a half billion more to come, if their work meets certain benchmarks. CytomX shares are 33 percent higher on the news.

We all know that breaking up is hard to do, but it looks as though Great Britain is ready to start the process. Word this morning is that Article 50 will be invoked nine days from now, starting the process of separating England from the European Union.

Tiffany shares are almost 3 percent higher pre-market on a broker upgrade. Oil is down a percent and a half at 48 bucks per barrel and yield on the ten-year Treasury Bill is back down around 2½ percent.

Asia was narrowly mixed overnight. European markets are, on the whole, a little lower. We have two weeks to go in the year’s first quarter. Stock prices may move today, but they’re not likely to move very much in the early going. At this point, the S&P, Dow and NASDAQ futures are all within a point or two of fair value.

March 17, 2017 - No report today - Ron's at the St. Patrick's Day Party!

March 16, 2017

Conventional wisdom would tell you that rising interest rates are bad news for financial stocks. Yet, history has shown that slowly rising rates from low levels that rise because of an improving economy are instead very good news, at least until that economy falters. That, in essence, is the interpretation traders gave to yesterday’s quarter point interest rate hike. Chair Yellen promised more increases, but at a slow rate, based on improving economic conditions. 

It all looks good on paper, as do stock prices as we head to the open this morning. Yesterday, the S&P 500 and NASDAQ indexes rose more than three-quarters of a percent and the futures are higher again this morning.

Also higher are shares of Dollar General. $1.49 of quarterly operating profit came in 3 cents ahead of estimates. Same store sales were up one percent. Williams Sonoma is also out with a good report and a dividend hike.

Jobless Claims, the Labor Department’s JOLTs Report and the Philly Fed Index are all due this morning. At 8:30, February Housing Starts are expected to have risen to an annualized rate of 1.27 million. That would be almost 2 percent higher than the January number.

Overseas markets are higher. Our futures are off earlier highs, but are still in the green. Adjusted for fair value, S&P futures are higher by 3½ points, the Dow futures are up 55, and the NASDAQ futures are about 11 points above fair value.

March 15, 2017

Ah, beware the Ideas of March and beware those rising interest rates. Well, maybe not yet, but someday. Stock prices appear to have priced in a quarter-point hike in short term rates, as well as another couple of hikes during the remainder of the year. The official word comes at 2 o’clock this afternoon, followed by Chairperson Yellen’s presser at 2:30.

Outside of the Fed meeting, we’ll get a half dozen additional economic clues by the time trading closes for the day, including the February Retail Sales Report, which is expected to cool off from the January number, and the February Consumer Price Index. Expect that headline inflation is cooking along at an annualized rate of 2.7 percent, or 2.2 percent excluding food and energy.

Speaking of energy, President Trump will visit us in Detroit today to put the kibosh on the last-minute-before-he-went-away President Obama proclamation that hiked future automotive mileage requirements.

Asian markets were mostly slightly lower overnight. European markets are mostly slightly higher. Oil prices are up about 2 percent and that is likely helping our stock futures.

Adjusted for fair value, S&P futures are higher by 6½ points, the Dow futures are up 52, and the NASDAQ futures are just about 11 points above fair value.

March 14, 2017

The Fed’s Open Market Committee starts another two-day meeting today, and there’s about as little drama around the upcoming hike in interest rates as there could be. All recent speeches by Fed officials have telegraphed a quarter point hike in short term rates tomorrow, and anything else would really take the market by surprise.

There was a minor surprise out of shoe retailer DSW this morning. Twenty cents of operating profit last quarter was 4 cents better than expected, although sales fell short of forecasts. DSW stock, which lost over 4 percent yesterday have recovered more than 3 percent pre-market today. Aurinia Pharmaceuticals is the downer of the day so far, with shares off almost 25% per-market.

Earlier this morning, the National Federation of Independent Business Optimism Survey was even more optimistic than expected. However, he reading of 105.3 WAS a little lower than the last reading of 105.9, as the post-election small business exuberance may be starting to fade a bit.

Asian markets were marginally higher, but Europe is mostly lower.

It’ll probably be a low volume trading day given all the hysteria about the weather in New York City, but when the market opens at 9:30 the volume that’s there will likely be downward volume.

Adjusted for fair value, S&P futures are lower by 6½ points, the Dow futures are down 56, and the NASDAQ futures are just about 12 points below fair value.

March 13, 2017

As we have come to know, Monday’s are for mergers and there’s a big one in the headlines this morning, with ramifications in the auto industry. Mobileye, the leading company in autonomous driving technology, will apparently be purchased by Intel for some 15.3 billion dollars. That bid values Mobileye at $63.54 per share, which is a 34 percent premium to Friday’s closing price. Intel shares are about 1 percent lower on the news.

It’s Federal Reserve Open Market Committee week, and normally we’d be on pins and needles about it. However, this time around a quarter point increase in short term interest rates has been so clearly telegraphed, it’s almost a non-event. That non-event will happen Wednesday afternoon. 

Speaking of the Federal Reserve, their Labor Market Conditions Index is the only economic report on the agenda today. That comes at 10 o’clock.

Much of Asia was higher overnight. Europe is more of a mixed picture without a lot of movement up or down. And, speaking of which, adjusted for fair value, S&P futures have just turned fractionally positive, the Dow futures are up 7 points, but the NASDAQ futures are just about 4 points below fair value.

March 3, 2017

We witnessed a rare stumble from warehouse club Costco last night. Earnings per share of $1.17 were 7 cents lower than a year ago and 19 cents short of expectations. Same store sales were higher by 3 percent, but Costco shoppers will be paying more for the privilege of generating those come June. Costco is raising their basic membership fee by 5 bucks and executive memberships fees by 10. That’s the first increase in six years. Of course, the beauty of membership fees is those dollars drop directly to the bottom line of the profit and loss statement.

The other side of the retailing story comes from Big Lots this morning. Adjusted earnings of $2.26 was four cents ahead of estimates. While sales and same store sales were a little short, Big Lots reiterated forward guidance and the shares are 5 percent higher pre-market.

American Outdoor, which is the company formerly known as Smith & Wesson suffered a couple of broker downgrades after a lousy report last night.

The February PMI and ISM survey results for the services industries come by 10 this morning, but are expected to be relatively unchanged from the January numbers.

Janet Yellen speaks at 1 o’clock, and the markets will listen, but for now it’s only the Dow futures that are pointing higher.

Adjusted for fair value, S&P futures are lower by about 3½ points, the Dow futures up 19 points, and the NASDAQ futures are just about 10½ points below fair value.

March 2, 2017

The post-election rally took a booster shot from the State of the Union speech yesterday, with records set yet again on all the major indexes, and the Dow Jones Industrials cracking the 21,000 level. But today, as they say, is another day.

And it’s a bad day if you hold shares of Juno Therapeutics. After rising 5 percent yesterday, Juno is trading about 7 percent lower this morning. They have stopped trials of an anti-leukemia drug after the deaths of some patients participating in those trials. 

Shake Shack is off 4 percent as their same-store sales were tough to swallow.

Higher by about 5 percent are shares of Broadcom. Last night they reported $3.63 in profit, which was 15 cents better than expected.

At 8:30 weekly Jobless Claims are expected to hold fairly steady at the 244,000 level. One more Federal Reserve Regional President speaks tonight, five more speeches come tomorrow, but at this point it’s pretty clear that we’ll see short term rates rise by at least a quarter percent when the Committee meets in less than two weeks. Not being judgmental here, but heir announcement will coincide with the Ides of March.

Chinese stocks were lower overnight, but the rest of Asia followed our market higher. Europe is fairly flat at this hour, as are our futures. Adjusted for fair value, S&P futures are lower by about 2½ points, Dow futures just turned the corner and are now up 10 points, and the NASDAQ futures are just about 4 points below fair value.

March 1, 2017

Stock prices broke their 12-day winning streak yesterday, which was one on only 4 trading days in February in which prices declined. However, based on the early reaction to the State of the Union speech, we’ll more than make up yesterday’s losses right off the get-go this morning.

Promises of a massive infrastructure plan, a massive tax cut and a rather surprising lack of bombast (accompanied by an expected lack of details) has stock futures traders in a very good mood this morning. 

Not in such a good mood are shareholders of Best Buy. Last quarter’s earnings were good, but forward profit guidance of 37 cents was well below the consensus guess of 49 cents, and Best Buy shares are about 9 percent lower pre-market. The famous other hand goes to Lowe’s on an earnings beat and higher guidance. Lowes’ shares are about 7 percent higher. Drug maker Mylan is about 7½ percent higher on a good earnings report.

A couple of Fed-head speeches the Beige Book, info on personal income and spending as well as a couple of reports on the health of domestic manufacturing could change the mood, but for now the mood is pretty good.

European markets are generally higher by 1 to 2 percent. Our futures have been on the rise all morning long. Adjusted for fair value, S&P futures are higher by about 14 points, Dow futures are up 128, and the NASDAQ futures are just about 32½  points above fair value.

WJR April 2017 Reports
WJR February 2017 Reports

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