March 26, 2019
With all the stock trader hysteria last week regarding a slightly inverted yield curve, most investors are focusing on the upcoming earnings season. We have a couple weeks to wait for that news.
This is typically the time that companies that expect disappointing numbers will warn us. Thankfully, those earnings warnings have been few and far between so far. This morning, however, Samsung warned that a slowdown in demand for chips and video screens will make the current quarter a bit of a downer.
Bed Bath and Beyond shares appear to be reaching to “infinity and beyond” this morning. They are more than 20 percent higher on a Wall Street Journal report that three activist investors are looking to wage a proxy fight to replace the entire board of directors at Bed Bath and Beyond.
A little later this morning we’ll get February Housing Starts, the Case-Shiller Home Price Index and the Conference Board, reading on March Consumer Confidence, which is expected to hold steady at the February reading of 131.8.
Japanese stocks rose more than 2 percent overnight. Europe is around a half percent higher, and it looks like we’ll get off to a strong start. Adjusted for fair value, the S&P futures are higher by about 20 points, the Dow futures are up 195, andthe NASDAQ futures are about 57 points abovefair value.
March 25, 2019
Viacom shares are almost 6 percent higher pre-market on word that they have reached a deal with AT&T to keep SpongeBob Squarepants and other lesser programs on the AT&T Direct TV platform.
Later today, Apple will host an unveiling at corporate headquarters. Rumor has it that Apple will unveil a streaming app aimed directly at the market that has made Netflix a lot of money. Biogen, after Thursday’s big drop, announced a 5 billion dollar share buyback program today.
Pinterest and Lyft will list shares for public trade later this week. We’ll also get the Government’s final verdict on Fourth quarter 2018 Gross Domestic Product.
Japanese stocks were 3 percent lower overnight, after our downdraft on Friday. China was 2 percent lower, but Europe is more of a mixed picture, with London higher and the mainland in the red.
The Muller Report has been issued, and while it may serve as the latest reason that Congress can’t seem to get anything that’s worthwhile accomplished, traders don’t seem to care one way or another.
The Dow futures in overseas markets gained 100 points right after the Report’s delivery, but were down 100 points earlier this morning. Right now, were closer to a toss-up than anything else.
At this point, adjusted for fair value, the S&P futures are flat, the Dow futures areup 18, but the NASDAQ futures are about 15 points below fair value.
March 22, 2019
Last night, Nike reported earnings of 68 cents per share. The good news is that was 3 cents better than expected. That bad news is that North American Sales were not up to snuff. Perhaps the best news is that no basketball players shoes exploded yesterday. Nevertheless, Nike shares are almost 5 percent lower pre-market.
Tiffany reported $1.67 per share of profit, seven cents better than expected. Unfortunately, comparable store sales were lower by one percent and Tiffany shares are likely to come out of the little blue box about 4 percent lower this morning.
The big scheduled data point of the day (and it’s not that big) is the National Association of Realtors report on February Existing Home sales. Expect an annual run rate of about 5.13 million units, which would be a nice pick up from the January number of 4.94 million. And don’t look now, but the 10-year Treasury rate, often a harbinger of future mortgage rates, is under 2½ percent this morning.
Asian markets were mainly higher overnight. Some lousy manufacturing data out of Germany and the ongoing dumpster fire that is Brexit has European markets off by about one percent this morning, and that’s helping to push our futures lower as well.
At this point, adjusted for fair value, the S&P futures are downabout 13 points, the Dow futures are down 156, and the NASDAQ futures are about 23 points below fair value.
March 21, 2019
There some bad news this morning if you’re hoping that a successful treatment for Alzheimer’s Disease is right around the corner. It’s even worse news is you hold shares in drug maker Biogen. Biogen will discontinue late stage trials for the experimental drug aducanumab, not because of safety concerns – it just wasn’t effective. Biogen shares are about 27 percent lower pre-market, and for an 80-billion-dollar company, that’s a lot of pain.
Just six months ago, the Federal Reserve announced that short term interest rates were on an “auto-pilot” climb higher. The Fed disengaged that “auto-pilot” back in January, and yesterday they officially grounded that pilot, announcing that the balance sheet run-off would end in September and short-term interest rates would not rise again for the remainder of the year. Until, of course, they change their mind again.
After the Fed’s announcement, stocks rallied on the promise of stable rates, but them fell, mostly fueled by a decline in the financial sector, as traders wondered how banks would increase profits in a low-rate environment.
Levi Strauss shares start trading today. They IPO’ed at 17 back a piece last night, a couple dollars higher than expected. Micron, Darden Restaurants and Williams-Somona are out with better-than-expected earnings news. Nike reports later today.
The futures took quite a tumble on the Biogen news. At this point, adjusted for fair value, the S&P futures are down about 13 points, the Dow futures are down 139, and the NASDAQ futures are about 31 points belowfair value.
March 20, 2019
You might say that we’ll all be well fed today. Or maybe just “fed-up.” In any event, the Federal Reserve Open Market committee will take their latest non-action on interest rates at 2 o’clock, wrapping up a two-day meeting. At 2:30 Fed Chair Powell will explain way they are sitting on their interest-rate hike hands, and why they probably will for the foreseeable future.
Other “fed” news of the morning is from FedEx. Earnings for its fiscal third quarter were $2.80 per share on a full accounting basis, which is down from $7.59 from the same period a year ago. Adjusted earnings missed the $3.17 estimate, and FedEx lowered full year guidance to about $12.50. Wall Street was expecting a little north of 13 dollars per share, and FedEx shares are almost 7 percent lower pre-market.
The European Union hit Google parent Alphabet with a 1.7 billion dollar fine for something they stopped doing three years ago. Pretty easy way to raise money, if you can do it.
In Germany, BMW shares are about 5 percent lower after they warned about a tough earnings year ahead.
Our futures perked up a bit during the past half hour and are now slightly positive. At this point, adjusted for fair value, the S&P futures are up a fraction of a point, the Dow futures are up 20, and the NASDAQ futures are about 5 points above fair value.
March 19, 2019
When it comes to stock prices, corporate earnings matter – except when they don’t.
This morning, two stocks are heading in opposite directions, even though both revealed some weaker than expected earnings.
Shares of discount shoe retailer DSW are lower by about 6 percent after reporting adjusted earnings of $1.66 for the quarter gone by. That was 12 cents short of expectations. According to GAAP accounting, when you have to count all the stuff you’d really rather not, DSW lost 58 cents per share, even though same store sales were 5.4 percent higher.
The famous other hand belongs to Canadian marijuana company Tilray. Now that Canada has legalized recreational pot, Tilray sales more than tripled from a year ago. They reported 33 cents per share in losses, as they invested for future growth. That was much larger than the estimated 4 cent per share loss. However, the prospect of changing laws and opening markets in the United States and Europe has shares of Tilray higher by about 3½ percent higher pre-market.
FedEx reports earnings later today and at 10 o’clock we’ll get the January Factory Order, which are expected to have increased by about a third of one percent.
In the meantime, it looks like the rally rolls on. Stock futures got a little boost about 10 minutes ago, at this point, adjusted for fair value, the S&P futures are up about12points, the Dow futures are up 119, and the NASDAQ futures are about 35 points above fair value.
March 14, 2019
Happy pi Day, everyone!
Figuring out the stock market’s direction is seldom easy as “pie.” But we’ll gain a pretty strong clue in less than a month when first quarter earnings reports start to roll out. Everyone agrees that overall profits won’t match last year’s level, but just how much lower is what inquiring minds want to know.
General Electric said this morning that they expect to be free-cash-flow-positive by 2020, but current year adjusted earnings per share should be around 55 cents. Wall Street estimated 2019 profit at 70 cents, and GE shares are lower by about a percent and a half.
Shares of a couple of database management firms are headed in opposite directions this morning. Positive guidance has shares of MongoDB up over 20 percent, while shares of Cloudera are about 13 percent lower on a less than fantastic outlook.
Chinese production during the first to months of this year hit a 17-year low. That caused Asian markets to give up early gains overnight and finish relatively flat. European markets are a little higher.
Our futures have off their highs of the morning, and at this point, adjusted for fair value, the S&P futures are up about 2½ points, the Dow futuresare up 25, andthe NASDAQ futures are on a roll once again. They are about 14 points above fair value.
March 13, 2019
We’ll get a couple of economic data points in just over 15 minutes from now. The Census Bureau’s January Durable Goods Report is expected to have dropped by seven-tenths of a percent after a one point two percent rise in December. Also at 8:30, we’ll learn about price inflation at the wholesale level, as the February Producer Price Index is expected to have risen by two-tenths of a percent.
At 10 o’clock, the January Construction Spending Report is expected to rise three-tenths of a percent.
Some big company earnings news is on the agenda for tomorrow.
Although the futures are higher this morning, the Dow Jones Industrial Average continues to suffer the decline in price of Boeing. The price of Boeing shares has dropped over 50 bucks so far this week (including about a four dollar drop in the pre-market this morning.) That has shaved around 350 points off the Dow Index.
At this point, adjusted for fair value, the S&P futures are higher by about 8 points, the Dow futures, in spite of Boeing’s dipare up 49, andthe NASDAQ futures are about 31 points above fair value.
March 12, 2019
As of the close yesterday, shares of women’s clothing company Stitch Fix had been just about cut in half since last September. But, today is another day. Stitch Fix shares are almost 30 percent higher this morning after better than expected second quarter results and positive full year earnings guidance.
Just about a half hour ago, Dick’s Sporting Goods reported quarterly earnings of $1.07 per share. That was a penny better than expected. Problem is that same store sales didn’t pass muster and Dick’s estimated full year earnings of about $3.25, which is 9 cents shy of the average estimate. Shares are about 5 percent lower pre-market.
Likewise, security firm ADT lowered 2019 guidance and shares are lower by about 13 percent this morning.
And, for those of you who just can’t wait to buy the latest gizmo out there. Apple will stage an event on March 25th and is expected to unveil at least one new product that you might not need, but will want nonetheless.
Asian markets were generally up more than one percent overnight. London is higher on hopes of a Brexit deal, but mainland Europe has turned lower. Our futures turned a little lower a little more than an hour ago. At this point, adjusted for fair value, the S&P futures are flat, the Dow futures, thanks once again to a nearly 9 point drop inBoeingshares, are down 52,but the NASDAQ futures are about 6 points above fair value.
March 11, 2019
You might think that the Dow Jones Industrial Average as indicative of overall stock market health. This morning we have an example of how the construct of that index makes it a pretty lousy proxy for the overall stock market.
The 30 companies in the Dow are weighted by price per share. Boeing, at 422 dollars per share has about 10 times the weight in that index as Coca-Cola, which is around 45 bucks per share. Both companies, by the way, became components of the Dow on the same day in 1987.
This morning, in the wake of the weekend’s Ethiopian 737 Max 8 jet crash, Boeing shares are almost 10 percent lower. That alone is trimming the Dow Industrials future by about 275 points. So, on a morning when the overall market will open higher, the Dow Jones Industrials are in the dumps.
Nvidia will pay almost 7 billion dollars in cash to acquire fellow chip maker Mellanox. It’s a move apparently designed to lessen Nvidia’s reliance on video-gaming and cryptocurrency related chip sales.
At 8:30, the January Retail Sales Report is expected to be flat after December’s disappointing drop.
Overseas stocks are higher, and adjusted for fair value, the S&P futures are higher byabout 6½ points, the Dow futures, thanks to Boeing, are down 137, butthe NASDAQ futures are about 25 points above fair value.
March 1, 2019
In spite of an end-of-month three-day slide in stock prices, the Standard & Poor’s 500 returns for the first two months of 2019 were better than any returns from the months ending in the letters a-r-y in 28 years. So, those who sold out of stocks after a horrible December and never reinvested have once again learned a very expensive lesson in market timing. The fact is that most humans aren’t very good at it is, because, well, we’re human. Fear and greed can be really expensive emotions.
Traders are pretty emotional about shares of GAP this morning. Gap will be spinning off their Old Navy brand into a separate company and haven’t even cared enough about what’s being left behind to give it a name. Shares of GAP are about 20 percent higher on the news.
Foot Locker shares are having a pretty good pre-market as well. Quarterly adjusted earnings of $1.56 per share came in 16 cents better than expected on a 9.7 percent increase in comparable store sales. Shares of Foot Locker looking to open about 13 percent higher.
The Government play a little post-shutdown catch-up this morning, as we’ll hear about December AND January data on consumer income and spending.
Overseas stocks are higher, and adjusted for fair value, the S&P futures are higher by 17 points, the Dow futures are up 176 andthe NASDAQ futures are about 51 points abovefair value.