November 20, 2019
It’s been fairly easy to spot the relationship between stock prices and news about the trade war with China, and we’ll spot it again today. Yesterday, President Trump threatened an increase in Chinese tariffs if there is no “phase one” agreement with the Chinese. Also yesterday, the Senate passed a “Hong Kong Human Rights and Democracy” bill, further irritating the Chinese. The bill would impose sanctions on Chinese officials who behave badly. It now moves to the House, where a similar bill has already passed. The Chinese are threatening “strong countermeasures” if the bill becomes law.
In response, stock markets overseas are lower, with many off by three-quarters of a percent this morning.
With somewhat cheerier news, retailer Target reported an adjusted profit of $1.36 per share, 17 cents better than expected. Target shares are looking to open about 9 percent higher. And Lowe’s is out with a much rosier forecast than competitor Home Depot gave us yesterday. Lowe’s posted a $1.41 profit, 6 cents better than expected and raised full-year profit guidance a bit. Lowe’s shares are indicated about 3½ percent higher.
At 2 o’clock the Fed will release the minutes from its latest rate cutting meeting. Should be an interesting read, if you’re into that kind of thing.
In the meantime, our stock futures are lower and have been all morning. Adjustedfor fair value, the S&P 500 futures are lower by about 9 points, the Dow futuresare down 93 and the NASDAQ futures are almost 30 points below fair value.
November 19, 2019
A pessimistic story about the Chinese trade negotiations got us off to a lower start yesterday. But, as has been common over then past month, a late rally again pulled stock prices higher by the end of the day.
Shares of many brick and mortar retailers are heading for the discount rack pre-market. Leading the charge lower are shares of Kohl’s. Adjusted earnings of 74 cents per share fell well short of the expected 86 cents. Same store sales were only four-tenths of a percent, less than half of the expected increase. Kohl’s cut full year earnings guidance by about 40 cents per share and shares are more indicated than 11 percent lower.
Also disappointing this morning was Home Depot. Although adjusted earnings came in a penny ahead of the $2.52 estimate, same store sales of 3½ percent fell short and Home Depot shares are more than 4 percent lower.
The famous other hand belongs to medical device maker Medtronic. Better than expected profit and increased guidance has shares about 2 percent higher.
Shares of a company called Myovant Sciences are almost 75 percent higher on word of a 97 percent response rate in stage 3 trials of their prostate cancer drug.
Japanese stocks fell about a half percent overnight, but most other overseas markets are higher. Adjustedfor fair value, the S&P 500 futures are higher by about 8½ points, the Dow futures, even after a 70-point hit owing to Home Depot are stillup 52 and the NASDAQ futures are almost 36 points above fair value.
November 18, 2019
We're likely to open trade today with the Dow Jones Industrial Average at another all-time high, after closing over the 28,000 level for the first time on Friday.
Remember when we used to have “Merger Mondays?” One merger that won’t be announced today is the HP – Xerox deal. HP hasn’t slammed the door completely, but has rebuffed the first Xerox buy-out proposal
There’s a report out that former high-flier Wework won’t be cutting 4,000 jobs – they might cut as many as 6,000.
The stock market is clearly in melt-up mode and has been shrugging of any bit of bad news for weeks now. But just as a clear sky can turn cloudy, or even stormy, these clear skies won’t last forever. Keep an eye on your exposure to stocks and rebalance your investment allocation if it’s getting out of whack. It hurts to sell anything that keeps going up in price, but a balanced allocation is your financial umbrella when the rains come.
No major earnings reports are due until tomorrow and the economic calendar doesn’t get crowded until later in the week.
Asian markets are up as China cut a key interest rate overnight. European markets are mixed,
Our futures have been on the slow rise most of the morning. Adjustedfor fair value, the S&P 500 futures are higher by about 4 points, the Dow futures are up 54 and the NASDAQ futures are about 19 points above fair value.
November 15, 2019
As of late, even if stock prices face challenges early in the trading day, they been able to fight their way back to about even or better by 4 in the afternoon. This morning, it looks like they’ll start higher. Comments from a U.S. Administration official indicate that trade talks are getting closer to at least a “phase one” resolution.
Long suffering shareholders of JC Penney are seeing their shares about 17 percent higher this morning after Penney reported an adjusted quarterly loss of 30 cents per share. Analysts expected a loss of 56 cents. That’s what has the stock higher, but it’s still only about a buck and a quarter per share.
Applied Materials shares are also on the rise after reporting a four cent per share beat and raising guidance for first quarter earnings. Shares of RH, otherwise known as Restoration Hardware are about 8 percent higher. Berkshire Hathaway’s latest 13(h) filing reported that Berkshire has taken a stake in RH.
October Retail Sales come at 8:30. Expect an increase of two tenths of a percent. A report on manufacturing activity in the New York region is expected to show improvement from last month.
The Shanghai Index was lower overnight, the FTSE in London is lower this morning, but most other markets overseas are in the green on renewed optimism (justified or not) regarding the trade war. Adjustedfor fair value, the S&P 500futures are higher by 9 points, the Dow futures areup 88 and the NASDAQ futures are about 33 points above fair value.
November 14, 2019
It’s the giant that just keeps on growing. This morning Walmart reported quarterly profit of $1.16 per share, 7 cents better than expected. Comparable store sales were 3.2 percent higher, which was also better than expected, and although sales were a little light, Walmart raised full year guidance and the shares are about 3 percent higher this morning.
Viacom shares are likewise more than 3 percent higher premarket as earnings of 79 cents came in 3 cents better than expected.
The downer of the morning is Cisco Systems, down about 5 percent after foreseeing a 5 percent revenue drop.
Over in Germany, quarterly Gross Domestic Product of just one-tenth of one percent narrowly avoided indication of recession. Concurrently, Daimler has announced their intent to decrease personnel costs by 1.1 billion dollars by the end of 2022, in order to offset the cost of mandated fuel efficiency standards.
After yesterday’s rather hot increase in headline Consumer Prices of four-tenths of a percent, we’ll hear about Producer Prices at 8:30. Expect a two-tenths of a percent increase.
Overseas markets are mixed.
The earnings report from Walmart almost helped to almost pull the stock futures out of the red this morning, but not quite. They have since fallen back, and adjustedfor fair value, the S&P 500 futures are lower by 2 points, the Dow futures are down 19 and the NASDAQ futures are about 16 points below fair value.
November 13, 2019
Yesterday, President Trump confirmed that there won’t be any reduction in tariffs unless there’s a deal with the Chinese. China, of course, says there won’t be any deal unless tariffs are lifted. So, the Kabuki dance continues, my apologies to Japanese culture. That uncertainty, along with continuing protests in Hong Kong had Asian markets dropping overnight, which is spilling over to Europe and our futures.
They say a frown is just a smile turned upside down and this morning that smile is upside down at SmileDirectClub. Sales rose 50% from a year ago, but the company lost 89 cents per share, when a profit of 97 cents was expected. So, the business is growing, but the stock price is not – down about 7½ percent pre-market.
On the rise are shares of Canada Goose and Energizer Holdings after better than expected results.
At 8:30 the Consumer Price Index for October is expected to check in at three-tenths of a percent overall, but two-tenths of a percent core, as the lack of inflation in inflation continues, in spite of rock-bottom interest rates.
Our futures have improved a little over the past couple of hours, but at this point we’re still looking at recently unfamiliar red arrows. Adjustedfor fair value, the S&P 500 futures are lower by 9 points, the Dow futures are down 86 and the NASDAQ futures are about 26 points below fair value.
November 12, 2019
If you used part of a stick of Land-O-Lakes butter on your toast this morning, know that it appears that the maker of Land-O-Lakes and other refrigerator staples will be melting down. They’re blaming a reduction in milk product consumption as Dean Foods is filing for Chapter 11 bankruptcy protection and will pursue an orderly sale of company assets.
There are a couple of positive earnings reports out so far this morning as both homebuilder D.R. Horton and Rockwell Automation reported better adjusted profit than expected. Rockwell shares are indicated about 9 percent higher pre-market. Broadcaster CBS reported 95 cents of profit, a few cents better than expected, but revenue fell a bit short. Chip maker Skyworks Solutions reports later on.
President Trump will speak to the New York Economic Club at noon and it’s possible that he’ll announce another delay in threatened tariff on European goods, although that’s apparently not included in his prepared remarks. A little before that, Fed Chair Powell will begin two days of Congressional testimony.
Earlier today, The NFIB small business survey showed a small improvement in the mood of small business owners, with a reading of 102.4, versus the last reading of 101.8.
At this point, adjusted for fair value, the S&P 500 futures are higher by1½ points, the Dow futures are up 15 and the NASDAQ futures are about 6points above fair value.
November 8, 2019
Reports out of the White House yesterday threw some doubt into the previously reported “tariff truce.” That pumped the brakes on a pretty strong morning rally. Nevertheless, stocks closed at record or near-record levels and the futures are indicating that we won’t give much of those gains back in the early going today.
Not taking even a small step backward are shares of Disney. With the Disney Plus services ready to roll out next Tuesday, Disney reported quarterly earnings of $1.07, easily beating the 94-cent estimate. Disney shares are looking to open about 5 percent higher.
GAP shares are falling into about an 8 percent gap this morning on word that its CEO is stepping down and will be at least temporarily replaced by the son of the company’s founder. That sometimes doesn’t work out so well.
Trending higher are three companies getting broker upgrades this morning. Those are WWE, McDonald’s and FootLocker.
At 10 o’clock, the University of Michigan’s preliminary November Consumer Sentiment report will be announced. We’ll see if the recent stock market rally results in a better number than October’s 95.5.
At this point, adjustedfor fair value, the S&P 500 futures are lower by less than a point, the Dow futures are up 31 but the NASDAQ futures are about 11 points below fair value.
November 7, 2019
The algorithms that drive the computers that drive the big stock buys and sells that drive the markets haven’t had many exciting headlines to digest lately. Today, as they say, is a different day.
The overnight news from the Chinese Trade Ministry that China and the United States have agreed to roll back tariffs in phases is all the computers needed to put the futures in overdrive. Now granted, one contradictory tweet out of Washington could change things in a split second, and we don’t know the details of the supposed deal yet. However, stocks will be jumping higher at 9:30.
A couple stocks aren’t jumping this morning. TripAdvisor tripped over last night’s earnings news and shares are off about 5 percent. Other troubled names in the travel space are Expedia, looking to open about 13 percent lower and SeaWorld which missed the $1.40 profit estimate by 16 cents.
So far this earnings season, about 75% of the S&P 500 have reported better numbers than expected. That’s about 10 percent lower than the long-term average.
All major markets overseas are higher on the apparent tariff truce. At this point, adjustedfor fair value, the S&P 500 futures are higher by almost 11½ points, the Dow futures are up 119 and the NASDAQ futures are about 45 points above fair value.
November 6, 2019
Rising stock prices paused to catch their collective breath yesterday, although they’re still sitting around record levels. This morning’s futures are looking fairly quiet, but they’ve risen a bit over the past couple of hours.
This morning, earnings reports are mixed between the winners and the losers. Drug store chain CVS shares are about 3 percent higher after reporting $1.84 of quarterly profit, 7 cents better than expected as same store sales rose 3.6 percent.
Health insurer Humana reported adjusted earnings of $5.03 per share, 45 cents better than expected. Online dating company Match shares are lower by more than 12 percent on punk earnings and WW, the old Weight Watchers is losing more than weight today, down 15 percent after reporting a 3rd consecutive quarter of declining sales.
In case you’ve wanted to get into the restaurant business in a big way, Outback Steakhouse parent Blooming Brands announced that they are exploring “strategic alternatives” which may indicate that the “for sale” sign may be going up. So is the price, as Bloomin shares are indicated about 10 percent higher pre-market.
Most markets overseas are higher once again. At this point, adjustedfor fair value, the S&P 500 futures are higher by almost 2 points, the Dow futures are up 20 and the NASDAQ futures are about 4 points above fair value.
November 5, 2019
It’s said that the stock market climbs a “wall of worry.” Maybe not the “wall” that gets the most publicity, but it’s a wall that’s definitely going up as the S&P, the Dow and the NASDAQ all sit at all-time highs this morning.
While its human nature to think that we have the ability to predict the future, those trying to pick a top to the market have been consistently wrong for about 10 years running now, so proceed at your own risk if you’re set on setting your investment strategy on predicting the unpredictable.
At 10 o’clock this morning, we’ll see if the services sector of the economy is still expanding. The ISM non-manufacturing survey is expected to read 53.3 versus the prior report of 52.6. Anything over 50 indicates expansion.
Just released earnings reports were better than expected for Tapestry, the company formerly known as Coach, Mylan and Frontdoor. Peleton lost less money than expected. Uber shares are about 6 percent lower after losing more than a billion dollars last quarter. Prudential Financial shares are also lower pre-market and ShakeShack is getting an 18 percent shakedown on disappointing same store sales.
Overseas markets generally continue to follow us higher on hope of a trade truce. At this point, adjustedfor fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 67 and the NASDAQ futures are about 20 points above fair value.
November 1, 2019
A late rally yesterday turned a really ugly day of price action into a merely disappointing day if you’re invested in stocks. Yesterday morning, a really lousy reading from the Chicago Purchasing Managers Index inferred that the manufacturing sector is heading for a big slowdown.
It’s hard to tell just how much the General Motors strike impacted that survey, but it’s easy to assume that it DID drag the reading lower. At 10 o’clock this morning, the ISM Manufacturing Index will shed a bit more light on that subject. Expect a reading of 48.7. Not great, but not disastrous, given the GM situation.
Before that, the Monthly Jobs Report comes at 8:30. Expect that the U.S. economy added only 80,000 or so jobs in October, after adding 136,000 in September.
So far this morning, Exxon Mobil, Colgate-Palmolive, AbbVie and Newell Brands all reported better than expected profit. And although AIG swung from a loss to a profit, their 56 cents per share in earnings fell well short of the one-dollar expectation.
Asian markets were on average a bit high overnight. Europe is higher as well. We’ll see what the jobs report brings us at 8:30, but if the market was to open right now it would open modestly higher. Adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 32 and the NASDAQ futures are about 12 points above fair value.