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WJR March 2018 Reports



 


March 29, 2018

The stock market vertigo continued yesterday, with the Dow trading in a roughly 400 point range before finishing pretty much unchanged. There’s some thought that today’s action will be a little more calm as a fair number of traders will play hooky this afternoon to stretch the upcoming three day weekend to three and a half days or more.

There won’t be any trading in U.S. stocks and bonds tomorrow, and that means that the remainder of the week’s economic reports will get scrunched into today.

In addition to the traditional Thursday jobless Claims Report, we’ll get the March Chicago Purchasing Managers Index, and a report on February Personal Income and Spending. Expect that income rose four-tenths of a percent and spending rose two-tenths. Perhaps more importantly, in this age of the Federal Reserve’s interest rate campaign, the PCE Deflator, which is the inflation index most closely watched by the Fed, is expected to rise only two-tenths of a percent, to a year-over-year rise on only one and a half percent.

The University of Michigan will celebrate the weekend appearances in the Final Four and the Frozen Four by announcing its March consumer Sentiment repot. Expect a reading of 102.

Asia was mixed overnight, but Europe is higher and we’ll likely head north at the opening bell. Right now, adjusted for fair value, S&P 500 futures are higher by 9½  points, Dow futures now up 85, and the NASDAQ futures are 35 points above fair value.

March 28, 2018

As we barrel toward the end of 2018’s first quarter, yesterday’s treasure is becoming today’s trash. Technology stocks took it on the chin again yesterday, and it wasn’t just the Facebook data dump this time. Former darlings Nvidia, Adobe, Netflix and Tesla also stepped lower on valuation concerns and a debt-rating downgrade of Tesla by Moody’s.

This morning, there is some good news from Walgreens/Boots alliance. Earnings of $1.73 were 18 cents better than expected and Walgreens stock is more than 4 percent higher. Shares of Lululemon are almost 7 percent higher on an earnings beat.  In the U.K., Shire PLC shares are almost 20 percent higher on word of a potential takeover.

The Government’s final verdict on 2017 4thquarter Gross Domestic Product comes at 10 o’clock this morning. Expect that the economy accelerated last quarter at a 2.7 percent clip.

Overseas markets are once again making their today look like our yesterday as it’s a sea of red elsewhere, excepting a small gain in London.

Our futures have turned positive after some overnight lows, although recently where we start the day (or any given hour, for that matter) has little to do with where we end up.

Nevertheless, adjusted for fair value, S&P 500 futures are higher by 10 points, Dow futures now up 98, and the NASDAQ futures are 24 points above fair value.

March 27, 2018

Yesterday’s monster rally in stock prices did not quitter recover all of Friday’s monster losses, but it looks like we might get back the rest soon after the open of trade this morning. Over the weekend, Administration officials threw a bunch of cold water on the smoldering fears of a global trade war. It was those fears that threw stock prices for a loop last week.

This week is a short week of course, with Good Friday just three days away. Good Friday will also mark the end of what may have been a very good quarter for corporate profits.  So far this week, we haven’t heard for any major companies warning that this quarter’s results won’t be up to snuff.

At 10 o’clock we’ll hear from the Conference Board and their survey of March Consumer Confidence. Expect a reading of 131, which would be slightly higher than the April result.

Japanese stocks rose 2.7 percent overnight. Other overseas markets are higher, generally between one and two percent. Our futures have also been on the rise this morning.

At this point, adjusted for fair value, S&P 500 futures are now higher by 12   points, Dow futures now up 111, and the NASDAQ futures are 60 points above fair value.

March 23, 2018

As we discussed yesterday, trade wars are the wars that nobody seems to win, and just the thought of a worldwide trade war sent major shivers through stock price yesterday. Our President has established a >

Nike issued some encouraging words last night after the close of trading. Adjusted earnings of 68 cents per share outpaced the 53-cent estimate on strength in, of all places, China. Nike shares are almost 5 percent higher pre-market. KB Homes shares are about 3 ½ percent higher on good earnings.

Micron beat estimated earnings last night, but warned that the current quarter may slow somewhat due to some disruption in their supply chain. Micron shares are about 3 percent lower.

Japanese stocks ended the week weakly, down 4 percent on trade war fears. Europe is about 1 to 1 ½ percent lower.

Our futures have rallied quite a bit just in the last 15 minutes. Earlier this morning, the Dow Jones futures were lower by more than 200 points. Adjusted for fair value, S&P 500 futures are now higher by nearly 3 points, Dow futures now up 37 points, but the NASDAQ futures are still 14 points below fair value.

March 22, 2018

We all know that “love” never mean having to say you’re sorry. But “never” is such a long, long time. It took the CEO of Facebook four days and at least two televised attempts before he actually apologized for the Cambridge Analytica data scandal. Facebook shares are more than 1½ percent lower once again this morning as traders are evidently looking for a little less “love” and a bit more contrition and remedial action from Facebook management.

Shares of Darden Restaurants are off about 3½ percent pre-market.  Earnings for $1.71 were comfortably ahead of estimates, but same store sales fell short as did overall revenue.

There’s more trouble in the publishing world. Meredith with cut 1,200 jobs and sell some Time Inc. publications, including Time and Sports Illustrated. G III Apparel shares are more than 4 percent lower on a lousy forecast. 

And speaking of upcoming trouble, now that we’ve digested another Fed rate hike, expect the President to announce a set of tariffs today aimed at correcting trade policy with China. Rising interest rates of low levels aren’t dangerous to stock prices, but possible trade wars are a whole ‘nother story.

Weekly Jobless Claims come at 8:30 and Leading Indicators come at 10. Outside of Japan and Korea, overseas markets are lower as are our futures. Adjusted for fair value, S&P 500 futures are down 15 points, Dow futures down 145, and the NASDAQ futures, again weighed down by social media, are now a whopping 61 points below fair value.

March 21, 2018

There’s no doubt that the financial headline story of the day is the Federal Reserve Open Market Committee statement at 2 o’clock and newly installed Chairman Jay Powell’s first presser as Fed-head at 2:30. A quarter-point hike in short term rates is pretty much baked in the cake. If Powell’s remarks at 2:30 sound a lot like ex-Chairman Yellen, stocks should perk up. In the unlikely event that he sounds more like ex-Chairman Volker, there could be trouble ahead.

Trouble is already here for shares of General Mills. Last quarter, profit of 79 cents per shares were a penny ahead of estimates, revenue wasn’t horrible, but the full year outlook was lowered due to rising input prices. General Mills stock is almost 8 percent lower premarket.

Facebook shares have lost almost 10 percent over the past two trading days, and they are one and a half percent lower again this morning as all social media stocks are under pressure as we await any news from Facebook executives about their data privacy practices, and how they might be tightened.

FedEx issued a great earnings report last night due to a strong economy and higher prices.

Japan was closed for a holiday. Other overseas markets are mixed. Our futures have given up earlier gains,

Adjusted for fair value, S&P 500 futures are down a point, Dow futures down 5, but the NASDAQ futures, pressured by weakness in social media stocks, are now about 16 points below fair value.

March 20, 2018

When a company reaches the price level and the market capitalization of a Facebook, a company sneeze can turn into market pneumonia, as we witnessed yesterday amid the Facebook user data scandal. Facebook shares dropped by almost 7 percent yesterday and are a little lower once again in the pre-market this morning.

Speaking of 7 percent lower, shares of Children’s Place fit that bill this morning after same store sales came in short of expectations, and even a 25% increase in the dividend isn’t helping a lot.

Shares of Oracle had been up almost 10 percent this year. That was until last night. Disappointing earnings and a slowing of Oracle’s cloud strategy have the shares off almost 9 percent.

The Federal Reserve Open Market Committee kicks of the Jay Powell era today. We’ll get their verdict on short term interest rates tomorrow at 2 o’clock.

Asian markets were mixed overnight, but Europe is bouncing into the green.

It’s one of those funny mornings when the futures can be misread easily. At >

March 19, 2018

It’s sleepy-time for economic news until Wednesday with nothing on the agenda today save a speech by the Atlanta Federal Reserve Bank President. The big focus of the week will be the two-day Fed’s Open Market Committee meeting which starts tomorrow. A quarter-point sort term interest rate increase is in the cards, but with a new person in the Chairman’s chair, the Fed may have something else up its collective sleeve. We’ll find out Wednesday at 2 o’clock.

Shares of Barclay’s Bank are higher this morning on word that an activist investor group has taken a stake in the company. And in Europe, a company called Micro Focus has seen its shares cut in half this morning on the resignation of its CEO and word of a profit shortfall.

HealthEquity, Oracle and Lennar will report earnings later today, but Facebook shares are leading the charge to the downside this morning and are lower by almost 4 percent on an unfolding story regarding third company use of Facebook data.

It may have picked the wrong week to Drop into the publicly-traded world, but Dropbox is expected to launch its IPO at a price of somewhere between 12 and 18 dollars per share.

Asian markets were mixed overnight, but Europe is lower by up to one percent or so. Our futures have gained a little ground over the past half-hour, but they have a long way to go. Adjusted for fair value, the S&P 500 futures are lower by 13 points, Dow futures are down 119, but NASDAQ futures are now about 81 points below fair value.

March 16, 2018 - No report today - Ron's at the Fisher Building for the St. Pat's party!

March 15, 2018

There are a number of economic reports due today, including the weekly Jobless Claims Report. Expect that 229,000 new claims were filed last week, which is a bit above the 4-week moving average. However, that moving average has been consistently moving lower for quite some time now, and that’s good news.

As earning season peters out, we have a couple retailers reporting their own good news this morning. Williams Sonoma’s $1.68 of profit beat estimates by 7 cents and that stock is about 5 percent higher this morning.

And you may remember the bidding war between Joseph A. Bank and Men’s Wearhouse a couple of years back. They eventually combined to form a company now known as Tailored Brands, and their stock is 6 percent higher this morning on better than expected earnings. Beleaguered Sears Holding stock is 12 percent higher on a lower than expected decline in same store sales.

With less than great news, Toy R Us will liquidate, and iheart Radio will reorganize under Chapter 11.

And in case watching stock prices isn’t exciting enough for you, you can always fixate on the price of bitcoin. Bitcoin is a little higher this morning after a 10 percent drop yesterday. Its price is down more than 40 percent since the beginning of the year. 

Overseas markets are not much moved in any direction, nor are our stock futures.

Adjusted for fair value, the S&P 500 futures are lower by a fraction of a point, Dow futures are up 33, but NASDAQ futures are now about 15 points below fair value.

March 14, 2018

Fourth quarter earnings season is pretty much in the rear-view mirror at this point. On average about 60 percent of the big companies reporting have affirmed or raised guidance for the entire year, and that has given prices support thus far.

One company not joining the ranks of the optimistic is Signet Jewelers. Signet beat the average earnings estimate for last quarter, but same store sales were off more than 5 percent and 2018 guidance was weak. Signet shares are paying the price – down more than 8 percent pre-market.

Yesterday’s news on consumer inflation was good. In about 15 minutes, we’ll find out if producer prices followed suit in February. Expect two-tenths of a percent overall, and three tenths of a percent if you ignore food and energy. We’ll also get the retail sales numbers for February.

Asia was lower overnight, but, in preparation for St. Patrick’s Day, Europe is in the green at this hour. 

If March’s market has been consistent at all, it’s been consistently true that where we start the day is seldom where we’ll finish. Nevertheless, we should start this day higher.

Adjusted for fair value, the S&P 500 futures are higher by about 9 points, Dow futures are up 101, and NASDAQ futures are now about 32 points above fair value.

March 13, 2018

Say what you want about the effectiveness of national policy and its impact on the economy. But if you ask the small business person, times have almost never been better. The National Federation of Independent Businesses survey which measures optimism among small businesses hit its second-highest level in history this morning. The reading of 107.6 came in at the top of the range of estimates and was up from last month’s 106.9.

The mood is not so good at Dick Sporting Goods. Dick’s shares are off about 6 percent pre-market on 3rdquarter earnings news. A 25% dividend increase is helping cushion the decline of DSW shares this morning. Earnings fell a nickel short and the stock is only off about 2 percent.

General Electric was down graded again at a major brokerage firm this morning. Shares are down about 2½ percent. Qualcomm shares are about 5 percent lower after the Trump Administration blocked the proposed buyout by Broadcom.

At 8:30 we’ll get the latest word on consumer inflation. Expect a two-tenths of a percent increase in both the core and overall rate. The lower that number, the better for equities.

Japanese stocks rose for the fourth consecutive session. The rest of Asia was mixed. Europe is mostly higher at this hour.

Adjusted for fair value, the S&P 500 futures are higher by about 6 points, Dow futures are up 78, and futures on the NASDAQ, which is about 10 percent higher year-to-date, are now about 16 points above fair value.

March 12, 2018

There was a lot to love about last Friday’s Jobs Report, and stock prices felt that love all day long. Moreover, there may be a little love leftover as we start the new week.

A big surge in new jobs, importantly coupled with a very tame average hourly wage portends a strong economy with little inflation. Little inflation may influence the Fed to raise interest rates at a very slow pace, and slow increases off of low levels historically have provided a positive environment for stock prices.

It’s Monday, so there must be a merger out there. Clorox will spend 700 million dollars to buy Nutranext. And Biogen isn’t buying a whole company, but will trade almost 600 million dollars to buy a schizophrenia drug from Pfizer.

All the big economic data will come nearer the end of the week.

Oil prices are about three-quarters of a percent lower this morning and the 10-year Treasury yield is still well below that psychologically important 3 percent level, at just below 2.9 percent.

Overseas market are following our rally higher. Our stock futures were a lot higher earlier, but if the market opened right now, it would open with higher prices. Adjusted for fair value, the S&P 500 futures are higher by about 4 points, Dow futures are up 54, and the NASDAQ futures are now about 29 points above fair value.

March 9, 2018

The bull market in stocks heads into its 10thyear this weekend, and prospects for future gains continue to be a battle between prospective corporate profits and prospective interest rate levels. But in the meantime, tariffs, inflation rates and the North Korean threat continue to whip prices around.

All three of those are in the news this morning. At 8:30, the Labor Department’s Monthly Employment report could give us a read on future inflationary pressures. Expect that 205,000 new jobs were created last month, leading to a 4 percent unemployment rate and a two-tenths of a percent increase in the average hourly earnings. Hotter numbers could be bad news on the interest rate front.

Big Lots stock is almost 12 percent lower in the pre-market. Earnings of $2.57 beat the $2.44 cent estimate. They also raised their dividend. However, same store sales declined by a tenth of a percent. A 3 percent increase was expected.

Stock futures took a step higher after the White House narrowed the targets for possible tariffs. And surge higher still on last night’s news of a potential meeting between President Trump and Kim Jong Un. Although they’ve moderated a bit, we’re still looking to head higher at 9:30.

Adjusted for fair value, the S&P 500 futures are higher by about 3 points, Dow futures are up 29, and the NASDAQ futures are now about 14 points above fair value.

March 8, 2018

Yesterday’s early morning hysteria about the Gary Cohn resignation faded as the day moved along, and although the Dow 30 was still in the red at the end of the day, the broader S&P 500 almost broke even and the NASDAQ 100 turned in a nice gain.

Shares of pharmacy benefits manager Express Scripts will turn in an even nicer gain today. Insurer Cigna will acquire Express Scripts in a 67 billion dollar deal (including about 15 billion in debt.) Express Scripts shares are about 16 percent higher pre-market.

A White House tweet this morning bolstered the assumption that any trade tariffs the U.S. might impose will be far more targeted to certain countries than President Trump’s original statements suggested.

Kroger met the $1.63 profit estimate this morning, but shares are almost 6 percent lower.

Earlier this morning, the European Central Bank kept interest rates unchanged, and removed any indication that they are willing to reduce rates in the future.

Outplacement firm Challenger, Gray and Christmas says that on there were only about 35,000 job cut announcements last month, another sign of a strong labor market.

And speaking of strong markets, overseas stock prices are on the rise, as are our futures. Adjusted for fair value, the S&P 500 futures are higher by about 5½ points, Dow futures are up 39, and the NASDAQ futures are now about 34 points above fair value.

March 7, 2018

If you watch stock prices closely throughout the day, you’ll be well trained to referee a tennis match by Spring. Trying to explain WHY the market moves the way it’s been moving at any given point in the day won’t train you for anything except perhaps a career as a fiction writer.

At one point it was hot wage growth, at another rising interest rates. The earnings. Then tariffs. Last night, the resignation of the President’s Chief Economic adviser dropped the Dow futures by well over 400 points. We recovered a bit from that level, but we’ll likely still see a significant drop in prices at 9:30. Of course, by noon, traders and the algorithms they program could find a totally different reason to rally or sell off. If you’re trading against them – good luck.

Oil prices are under pressure this morning. At 10:30, the monthly report on oil inventories is expected to show a significant rise. Abercrombie & Fitch shares are 7 percent higher on earnings. Brown Forman missed the 41 cent target by 3 cents per share.

At 2 o’clock, the Fed’s Beige Book, a survey of regional economic trends, could well be the next big thing to swing stock prices.

Overseas markets are lower on word of the White House shuffle. Asian markets are off one-half to 2½ percent. European markets are now, on balance, almost back to even.

At this point, adjusted for fair value, the S&P 500 futures are lower by about 24 points, Dow futures are down 284, and the NASDAQ futures are now about 51 points below fair value.

March 6, 2018

One formerly beleaguered stock that has been on quite a run is Target. Target shares, which have soared about 25 percent in the past three months or so may take a little downshift this morning. Earnings of $1.37 missed the average estimate by only a penny, sales were good, but margins – well – not so much. Even though full year guidance for 2018 was okay, Target shares are looking to open about 3 percent lower.

UPS shares are almost two percent higher on a broker upgrade.

The Nordstrom family may have hit a bump in the road to taking the retailer private. Their buyout offer has been rejected, although they’re probably not ready to check-out.

Outside of the Factory Orders Report at 10 and a couple of Fed head speeches, the economic report calendar is pretty sparse today.

Asian markets were mixed, but mostly higher overnight, but Europe is solidly higher.

Our futures shot higher earlier this morning on a report out of South Korea suggesting that North Korea may be willing to enter negotiations and possibly be willing to de-nuclearize. 

On top of that earlier rise, our futures took another step higher since the top of the hour. At this point, adjusted for fair value, the S&P 500 futures are higher by about 10 points, Dow futures are up 148, and the NASDAQ futures are now about 39 points above fair value.

March 5, 2018

Although “wars” are terrible for people, they’re often good for stock prices. That is, except for “trade wars.” Nobody benefits from a trade war.

The prospect of a worldwide trade war will drive all the financial chatter early this week. President Trump’s threat to impose steel and aluminum tariffs, and more recently automotive tariffs on European producers has traders on edge, although many admit that it’s time that the playing field be evened up a bit. 

Whether it’s a bluff or the real deal, it’s likely to dominate the conversation until we get the latest Employment Report on Friday.

There’s a big deal in the insurance space as AXA is buying XL Insurance for 15.3 billion dollars. XL shares are about 30 percent higher on that news.

By 10 o’clock the PMI and ISM survey results on the services sector of the economy will be released.

Asian markets were lower overnight. European markets (outside of Italy) are higher after yesterday’s Italian election resulted in no majority for the anti-Eurozone forces.

At this point, adjusted for fair value, the S&P 500 futures are lower by about 9 points, Dow futures are down 56, and the NASDAQ futures are now about 10 points below fair value.

 
WJR April 2018 Reports
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