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WJR October 2016 Reports

October 31, 2016

As we mentioned last Friday, we’re in a five or six day stretch of trading days that is historically the best stretch of the year for stock prices. Although the futures are pointing us higher this morning, things could get very bumpy due to the new FBI email investigation. It’s apparent that we have a stock market that has become convinced, if not comfortable of an upcoming Clinton victory, and we all know how the stock markets hates uncertainty and surprises.

This isn’t a big surprise, but Level 3 Communications shares are more than 8 percent higher pre-market after confirming that Century Link will buy the company for what equates to about 66 dollars per share. That’s a 23 percent premium to what Level 3 shares went for less than a week ago. In another deal widely rumored last week, General Electric will merge its oil and gas operations with Baker Hughes. GE will own about 62 percent of the combined operations.

Cardinal Health reported $1.24 of income, 3 cents better than expected, but cut its full-year outlook by about a nickel per share.

At 8:30 we’ll get the September Reports on personal income and spending. Expect a rather large four-tenths of a percent increase in personal income, and rest assured that Americans did their best to outspend that income, with spending rising one half of one percent.

Asian markets were mixed, but generally a little higher overnight. European markets are mixed, but generally lower by a half percent or less. Adjusted for fair value, the S&P 500 futures higher by about 6 points, the Dow futures are up 33, and the NASDAQ futures are about 22 points above fair value.
October 28, 2016

October has a nasty reputation for being a lousy month for stock prices and market volatility. This October, things haven’t been very volatile, although the S&P 500 is lower by about 1½ percent. But don’t despair, because historically, the last few trading days in October and the first few days of November comprise one of the best stretches of the year for stock prices.

This morning, we’re wrapping up the busiest week of the third quarter earnings season. Newell Rubbermaid turned in a positive report and raised full-year earnings guidance. Hershey shares are about 2 percent higher pre-market as $1.29 in adjusted profit beat the $1.18 estimate. ExxonMobil was a nickel ahead of estimates at 63 cents in profit.

The nearly nine-month rally in Amazon shares may be over. Amazon was profitable last quarter, but only because of Amazon Web Services. That doesn’t mean a lack of business – it means Amazon is spending at an increasing rate to expand, and is willing to give up short term profit in its quest for world domination. Last quarter, profit of 52 cents fell well short of the 78 cent estimate.

The Government’s first guess at 3rdquarter GDP comes at 8:30. Expect a pick up to 2½ percent, which would be the highest rate of economic growth in five quarters. The University of Michigan’s final verdict on October Consumer Sentiment comes at 10 o’clock. Expect a reading of 88 ½.

Foreign markets are generally lower. We should get off to a slightly higher start for most stocks. Adjusted for fair value, the S&P 500 futures are flat, the Dow futures are up 16, but the NASDAQ futures, weighed down by the weakness in Amazon, are about 12 points below fair value.

October 20, 2016

The European Central Bank’s press conference comes in less than 20 minutes. We should hear from Mr. Draghi about the rationale of this morning’s decision to hold European interest rates steady.

Meantime, the price of American Express shares are not very steady this morning, and that’s a good thing if you own them. Amex shares are more than 6 percent high after a good earnings report.

Verizon earned $1.01 on an adjusted basis last quarter, which was a little better than expected, but revenues were a little light, as they were at Walgreens. Shares of both companies are lower this morning on that news.

Weekly Jobless claims come at 8:30, along with the Philadelphia Fed economic outlook. A little later this morning we’ll get the Leading Economic Indicators. Expect an improvement of two-tenths of a percent.

It appears that traders are content in the belief that the Presidential debate contained no major surprises or pratfalls. That has our stock futures higher, although not nearly as much as a couple of hours ago. Adjusted for fair value, the S&P 500 futures are higher by about point and a half, the Dow futures are up 25, and the NASDAQ futures are about 5½ points above fair value.

October 19, 2016

You have to be of a certain age, and you probably have to be old enough to have been invested in the stock market 29 years ago today. But if you are of that age and you were so invested in 1987, you likely remember October 19thof that year almost as clearly as the Challenger disaster, the Kennedy assassinations, or September 11th. Granted, nobody died – but the 22 percent dive in the stock market that day is pretty unforgettable.

The stock index futures are suggesting no such volatility is likely today, but then again, it IS early and it IS October.

About 70 percent of corporate earnings reports this quarter have been better than expected. This morning, Morgan Stanley’s 81 cents was an 18 cent beat. Halliburton also surprised to the upside. Reynolds American missed the 64 cent estimate by 3 cents. Tupperware and Intel had positive earnings news, but warned that the current quarter will be a challenge. Intel shares are almost 5 percent lower this morning.

At 2 o’clock, the Fed’s Beige Book will be released. That will give us the Fed’s outlook for the economy in various regions nationwide.

Japanese stocks rose for the fourth session in a row. Our futures are fairly calm at this hour. Adjusted for fair value, the S&P 500 futures are lower by just a tenth of a point, the Dow futures are up 8, but the NASDAQ futures, hurt by the Intel outlook, are almost 9 points below fair value.

October 18, 2016

After a couple of pretty drab weeks in the stock market, we may have a bona-fide rally underway this morning on the back of a bunch of strong earnings reports. Well, if not particularly strong, at least they’re better than expected.

Wolverine’s 49 cents in profit came in a penny ahead of estimates. Philip Morris was two cents better than the $1.23 estimate. Johnson and Johnson also beat by two cents and raised full year guidance. Domino’s reported a 13% rise in same store sales, which was almost 5 percent better than expected. Goldman Sachs blew away the $3.82 expected profit with $4.88 in earnings. Blackrock, United Continental, United Health and IBM also reported higher profit than analysts expected, but IBM saw revenue fall for the 18thconsecutive quarter. IBM shares 2½ percent lower premarket.

The star of the morning is Netflix. Shares are higher by almost 19 percent on a surge in new subscribers.

At 8:30, the Consumer Price Index, which people used to care about, is expected to come in at a three-tenths of a percent increase. Careful about what you ignore. Any big pickup in the CPI may encourage the Fed to get on their giddy-up with interest rates.

Overseas markets are higher, with Europe generally higher by more than one percent. Adjusted for fair value, the S&P 500 futures are higher by about 15 points, the Dow futures are up 106, and the NASDAQ futures, helped by the Netflix surge, are about 47 points above fair value.

October 17, 2016

Stock prices are on a two-week losing streak. If it’s going to stop there, it will likely take some positive corporate earnings news. Fortunately, there will be no shortage of opportunity as third quarter reports start to roll out in volume this week.

Earlier this morning, Bank of America reported 41 cents in operating profit, which was a full 7 cents better than expected on better than expected revenue. BOA shares are indicated about 1½ percent higher pre-market. Hasbro shares are looking to open almost 5 percent higher on a revenue and earnings beat. Disney-related products did particularly well. The miss of the morning is from trucking firm J.B. Hunt. 97 cents fell a nickel short of expectations. Later on today, we’ll hear from United Continental, Netflix and IBM.

We were supposed to get a big mystery announcement from Tesla today, rumored to be plans to re-work the Model X SUV. However, the unveiling of whatever it is to be unveiled will be kept behind the curtain until Wednesday.

Overseas markets are predominantly lower. Our futures have been recovering from earlier lows but are still not quite in the green.

Adjusted for fair value, the S&P 500 futures are lower by just about a point, the Dow futures are down just about a point, and the NASDAQ futures are about 5 points below fair value.

October 14, 2016

It’s a big day for big bank earnings reports. Earlier this morning, JP Morgan Chase reported $1.58 of quarterly profit, which was 19 cents better than expected. Those shares are about a percent and a half higher pre-market. PNC, $1.84 of profit was a six-cent beat. Citigroup just reported at the top of the hour. $1.24 versus $1.16 was an eight cent beat. And beleaguered bank Well Fargo says that even with all the phantom-account scandal related issues, they were able to make $1.03 in profit, which beat the consensus estimate by just 2 cents.

There’s a big Fed Economic Conference in Boston today, and that means we’ll hear public comments from at least four Fed Heads, including Chairperson Yellen.

Producer Prices for last month will be reported at 8:30, and before 10 we’ll also get September Retail Sales, which are expected to have surged by six-tenths of a percent and the University of Michigan’s preliminary verdict on October Consumer Sentiment.

United Continental is the latest airline to have suffered a major computer outage, however they say that everything’s back up and running at this hour.

Asian markets rose overnight and Europe has a significant rally underway, on the order of one to two percent.

Right now, adjusted for fair value, the S&P 500 futures are higher by 8½ points, the Dow futures are up 91, and the NASDAQ futures are about 17 points above fair value.

October 13, 2016

It will be rough waters for stock prices when we set sail at 9:30, and the problems started overnight in China. Import and export data in China fell well short of expectations, with exports down 10 percent and imports down 2 percent. In a world that’s begging for some sign of economic growth, that’s not a good sign.

In spite of their recent system outage and relatively weak airfares, Delta Airlines was still able to post better than expected results, earning $1.70 per share. That was a nickel better than expected, even though revenue fell a bit short.

John Stumpf won’t have to undergo another Capitol Hill grilling as the head of Wells Fargo. In fact, he won’t be undergoing anything as the head of Wells Fargo anymore. Stumpf resigned his post, effective just after the market closed last night.

And if you’ve been shopping at a Vera Bradley store lately, keep an eye out. They announced this morning that their payment systems have been hacked.

Weekly Jobless Claims come at 8:30, two Fed speeches come later today, and earnings reports start to roll in some volume tomorrow. In the meantime, adjusted for fair value, the S&P 500 futures are down 12½ points, the Dow futures are down 96, and the NASDAQ futures are about 28 points below fair value.

October 12, 2016

The last Federal Reserve Open Market committee meeting was not exactly a love fest, with three of the voting Fed heads dissenting to the decision to hold interest rates steady. We’ll find out how the internal debate went at 2 o’clock this afternoon when the meeting minutes are released. Hopefully, things were civil enough that even the disagreeable members did not threaten prosecution or imprisonment.

Shares of cybersecurity company Forninet are in a prison of their own this morning, with shares off more than 14 percent on a lousy earnings report. The famous other hand belongs to data backup and recovery firm Barracuda Networks. Barracuda shares are almost 9 percent higher after reporting earnings.

CSX reports after the close of trading today. But, in front of that, will be treated to two Federal Reserve President speeches.

India, Venezuela and Brazil are all closed for various holidays today. The futures look pretty ugly, but they’re really not as ugly as they look. But adjusted for fair value there’s just not much going on. At this point, adjusted for fair value, the S&P 500 futures are flat, the Dow futures are down 7, and the NASDAQ futures are even with fair value.

October 11, 2016

Things went from bad to worse for cell phone maker Samsung overnight. They announced that the temporary halt in Galaxy Note 7 production is now a permanent shut down of the Note 7. Samsung shares lost 8 percent of their value in Korean trade on the news. The estimated cost of the recall and discontinuance is as much as 17 billion dollars. In response, shares of Apple are looking about 2 percent higher this morning, as the company looks to convert a lot of Samsung customers to the Apple ecosystem.

Third quarter earnings reports got off to a flying stop this morning. Alcoa reported 32 cents per share in operating profit in their last pre-spin-off report. That was 3 cents short of the consensus estimate and Alcoa shares have spun off about 7 percent of their value in premarket trade.

The National Federation of Independent Businesses reported the second consecutive monthly decline in the confidence of small business people in their survey this morning, with most of the problem was with weakening inventories. In spite of that, the survey results showed an increase in optimism for improved business conditions over the next six months.

Most European markets are higher at this hour, but our futures took it on the chin after the Alcoa results were announced. At this point, adjusted for fair value, the S&P 500 futures are down by 4½ points, the Dow futures are down 22, and the NASDAQ futures are about a fraction of a point below fair value.

October 10, 2016

Presidential debate number two is in the books this morning, and no matter which candidate you think had the upper hand, traders seem to approve, as our stock futures have been rising much of the morning.

Whether or not stocks can rise much more is likely dependent on the magnitude of future earnings. The S&P 500 is currently valued at about 25 times trailing earnings. Yes, interest rates are at rock bottom, which helps justify that level. However, the anticipated second-half earnings rebound had best happen in support of that valuation. We’ll start to discover the third quarter earnings tomorrow as Alcoa kicks off the reporting season.

Merck shares are rising about 12 percent pre-market on word of positive tests for a new lung cancer drug. The famous other hand belongs to Twitter this morning. Twitter shares are lower by more than 10 percent on a Bloomberg story asserting that after kicking the tires, Google, Disney and are all unlikely to make a bid for Twitter.

And the case of the melting phone case is exploding for Samsung this morning. Verizon and AT&T have stopped swapping Galaxy Note7s and Samsung has stopped production of the Note 7 altogether until the figure out what’s making the phones such a literally hot item.

If not hot, our futures are definitely pretty warm.  Adjusted for fair value, the S&P 500 futures are higher by 11 points, the Dow futures are up 86, and the NASDAQ futures are about 22 points above fair value.

October 6, 2016

The big economic report, as far as its impact on future Federal Reserve policy, comes tomorrow. That of course is the monthly Employment Report. Yesterday’s ADP Jobs survey came in a good bit weaker than expected. A weak number from the Labor Department tomorrow will help the cause of those who are hoping for no interest rate increase until December, at the earliest.

By the way, layoff announcements in September jumped to over 44,000 according to the Challenger Report, due mainly to layoffs in the education sector with the bankruptcy of ITT Technical Institute.

It looks like the proposed marriage of Lam Research and KLA-Tencor is on the rocks. The companies called off the nuptials this morning at the suggestion of the Government’s anti-trust police.

Costco’s same store sales rose one percent in September, which was better than expected and Walmart reiterated their 2017 earnings guidance this morning, but warned that 2018 profit will be flat, in part because of increase digital investment needed to compete with among others.

Asia was a little higher on average overnight. Europe is a bit lower, as are our futures. Adjusted for fair value, the S&P 500 futures are lower by 4½ points, the Dow futures are down 29, and the NASDAQ futures are about 7 points below fair value.

October 5, 2016

Three Fed speeches, a half-dozen economic reports, a handful of earnings and some merger speculation will give traders a mouthful upon which to chew today.

There’s ongoing speculation that Salesforce .com is preparing to acquire Twitter. There is a story in Detroit-based financial information hub Benzinga this morning that suggests that Salesforce’s largest shareholder, Fidelity Management thinks that the acquisition isn’t such a great idea.

Earnings for Constellation Brands were a pleasant surprise this morning. $1.77 per share beat the consensus estimate by 12 cents on better than expected sales. Constellation shares are almost 4 percent higher pre-market. The famous other hand belongs to Micron Technology this morning, with the shares off a couple of percent. Their numbers looked good last night, with less of a loss than expected, but an accounting change has traders a bit unsettled.

The ADP Employment Report comes in a couple of minutes. Expect a total of 170,000 new jobs created in September. After Monday’s good report on the manufacturing sector, we’ll get a couple surveys on the health of the services sector of the economy this morning.

Overseas markets are generally a little lower this morning, but we’ve taken a turn for the better over the past hour or so. At this point, adjusted for fair value, the S&P 500 futures are up about 4 points, the Dow futures are up 35, and the NASDAQ futures are 11 points above fair value.

October 4, 2016

Third quarter earnings reports won’t start coming in great number until next week, as traders wait to see if the “second half pick-up” in profit was reality or fantasy.

Nevertheless, this morning numbers are in from Darden Restaurants, and they’re pretty good. Profit of 88 cents per share was 6 cents better than expected. Same store sales were higher by more than one percent. Darden raised guidance and authorized an additional 500 million dollar stock buyback.

The cupboard is bare of economic reports today. However, one Federal Reserve Regional Bank President is giving a speech in West Virginia right now, and another takes the podium in New Zealand at 8 o’clock Eastern time tonight.

It’s a great time to do a little shopping in Great Britain. The pound is at a 31 year low against the dollar this morning, as the timeline for Brexit has moved closer. The British pound is going for just $1.27.

Markets overseas rallied on our solid manufacturing data from yesterday. We might see modestly higher prices at 9:30, although the Dow futures have lost about 30 points over the past couple of hours. At this point, adjusted for fair value, the S&P 500 futures are flat, the Dow futures are up 8, and the NASDAQ futures are 9 points above fair value.

October 3, 2016

It’s the first trading day of the third quarter of 2016, and also the first trading day of October, which is a month with a history of not-so-pleasant events for stock prices.

Still, it looks as if the quarter will get off to a rather subdued start. This morning brings reports on how the manufacturing segment of the economy did in September as both the PMI and the ISM Reports will be in by 10 o’clock. Expect readings of just over 50 from both reports, which would indicate modest expansion.

Third quarter earnings reports will start dribbling in tomorrow, as traders look to see if things really are getting healthy enough to support current equity prices.

September Auto Sales Reports will be rolling in all morning as well, with the expected annual run rate up to 17.4 million units. 

If you can’t decide whether you like to shop at Cabela’s or Bass Pro Shops, you may not have a choice soon. A consortium that includes Bass is reportedly looking to acquire Cabela’s.

Overseas markets are mainly higher by just a bit. Our futures have lost earlier gains. At this point, adjusted for fair value, the S&P 500 futures are lower by about 4 points, but the Dow futures are down 17, and the NASDAQ futures are 3 points below fair value.

WJR November 2016 Reports
WJR September 2016 Reports

Daily Reports @ WJR





















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