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WJR October 2017 Reports



October 31, 2017 - Ron's away today.  He'll be back Wednesday.  Happy Halloween!

October 30, 2017

The last hyper-busy week of third quarter earnings reports is here, and will include reports from Facebook, Apple and Tesla. We’ll also get a full load of economic surveys, October Car Sales, the monthly Jobs Report and a Federal Reserve Open Market committee meeting.

Before all that unfolds, it looks like we have a full-on Merger Monday on our hands. Home builder Lennar is buying competitor CalAtlantic for what amounts to $51.34 per share in a 9 billion-dollar deal. CalAtlantic shares are higher by about 19 percent. Strayer Education and Capella Education are merging, and there’s a deal cooking in the energy space as well. Dynegy shareholders will get an 18 percent premium in the form of cash and stock of Vista Energy. That has Dynegy shares higher by about 12 percent this morning.

European Bank HSBC reported a five-fold pre-tax profit increase from the same quarter a year ago. However, shares are a little more than one percent lower pre-market.

September Personal Income and Spending Reports come at 8:30. Expect four-tenths of percent and nine-tenths of a percent increases respectively.

Major markets overseas are mixed, and not moving much in either direction.

At this point S&P 500 futures are down about 5 points, the Dow futures are lower by 52, but the NASDAQ futures, following up Friday’s massive gains in technology stocks are just about 3 points above fair value.

October 27, 2017

We’re putting the wraps on the busiest week of the third quarter earnings season today and between last night’s reports and this morning’s reports, we have a package of positive profit that has the major indexes all pointing higher.

The most remarkable report of the bunch came from Amazon. Yes, the Whole Foods purchase helped. However, for a company the >

Shares of Google parent Alphabet are higher by about three percent pre-market after reporting earnings of $9.57, way ahead of the $8.33 estimate. Microsoft is higher by almost 5 percent after reporting 84 cents, which was a 12-cent beat. Intel and Exxon-Mobil are also on the rise.

The sad sack of the morning is toy-maker Mattel. Due to the Toys-R-Us bankruptcy, it wasn’t expected to be a great quarter for Mattel. However, profit of 9 cents per share fell way short of the 57-cent estimate and Mattel shares are about 17 percent lower.

Aetna is higher on reports of a $200 per share buyout bid from CVS Health.

The Government’s first guess at third quarter GDP comes at 8:30. Expect only 2.7% versus the second quarter’s 3.1 percent. Hurricanes will get the blame there.

Overseas markets are higher once again, and at this point, adjusted for fair value, futures on the S&P 500 are higher by almost 10 points, the Dow futures are up 30 and the NASDAQ futures, boosted by earnings news from the big technology companies, are a whopping 85 points above fair value.

October 24, 2017

Stock prices actually declined yesterday. Yes, it can happen. And, it will happen again – just not today, or any day when earnings reports are as positive as they’ve been all morning.

About a third of the S&P 500 companies report earnings this week and it’s been a banner morning so far. 

General Motors reported $1.32 of quarterly profit. That was a full 20 cents better than expected. Domestic margins ran at 8.3 percent and that makes it 10 quarters in a row that GM has beaten estimates. GM shares are almost 4 percent higher on the news.

Three members of the S&P and the Dow Industrials really got the party started. Caterpillar shares are more than 6 percent higher, after reporting $1.95 of adjusted earnings, which was 68 cents better than expected. 3M, United Technologies, Eli Lilly and Fifth Third Bank also beat their respective bogeys.

McDonald’s missed by a penny. Lockheed Martin missed by two cents, but raised full year guidance.

The disaster du jour appears to be Whirlpool. They missed, they lowered and adding insult to injury, Sears won’t be re-stocking their Whirlpool inventory for sale. Once the current batch it’s gone – it’s gone. More than 9 percent of Whirlpool’s stock price is also gone this morning.

Japanese stocks were up for the 16thsession in a row. That’s a record win streak for the Nikkei. At this point, adjusted for fair value, futures on the S&P 500 are higher by about 5 points, the Dow futures are up 148 and the NASDAQ futures are about 7 points above fair value.

October 23, 2017

It doesn’t happen often, but last week the major stock indexes rose each and every day. That’s the first time in 20 years for the S&P 500. Although this is a brand-new week, it looks like we’ll start the day at new highs one again.

One surprising stock on Friday was sneaker maker Sketchers. Surprisingly good earnings and improved guidance shot the Sketcher shares higher by more than 41 percent.

Even beleaguered General Electric rose one percent Friday, although the shares are backtracking by about the same amount pre-market on a broker downgrade. Shares of Broadsoft were halted this morning for pending news, and that news is now out. Cisco Systems will buy Broadsoft for 55 dollars per share.

Over the weekend it was reported that the new tax bill would put a $2,400 limit on deductible 401(k) contributions. That trial balloon is sinking faster than a Verlander slider this morning, after a President Trump tweet promised that the 401(k) rules wouldn’t be touched.
 
The major economic reports of the week will come later in the week.

Most markets overseas are higher. Our futures are well off their highs of the morning, and at this point, adjusted for fair value, futures on the S&P 500 are higher by 2 points, the Dow futures are up 18 and the NASDAQ futures are about 8 points above fair value.

October 20, 2017

After a rather bumpy start, stock prices survived the 30-year anniversary of the 1987 market crash pretty well yesterday. And last night’s Senate vote that cleared a budget hurdle and gets us on an accelerated path to possible tax reform has little green lights flashing this morning.

Not living in that green-light district this morning are shares of General Electric, which may be demoted to colonel if it continues to disappoint in its earnings mission. Quarterly profit of just 29 cents was 20 cents below expectations. Granted, a new CEO is in charge and you might expect the baby to be thrown with the bath water in this report. However, GE also cut this quarter’s estimate from $1.53 to $1.07. That has the stock about 6 percent lower pre-market.

E-Trade also missed the mark this morning. Honeywell reported a year over year profit increase of 8.7 percent, and Procter & Gamble beat the $1.08 estimate by a penny. Nevertheless, P&G shares are about one percent lower this morning.

September Existing Home Sales are expected to have declined almost one percent. We’ll find out at 10 o’clock, but we’ll have to wait until 7:30 tonight to hear Janet Yellen’s latest speech, so you may want to make early dinner reservations.

At this point, adjusted for fair value, futures on the S&P 500 are higher by 5 points, the Dow futures are up 83 and the NASDAQ futures are about 17 points above fair value.

October 19, 2017

It was thirty years ago today, and if you were invested in stocks at the time, you remember that day right along with the Kennedy assassination and the Challenger explosion. On that day stocks lost almost a quarter of their value. What you may not remember about 1987 is that before the swoon, stock prices had been up about 40 percent, and for the year as a whole, stock prices rose more than 5 percent in 1987.

Of course, that was then and this is now. While today’s drop in the futures may have something to do with traders who over-empha>

Companies beating estimates include American Express, Blackstone and Winnebago. Travelers reported 91 cents, which more than doubled expectations. Verizon matched the estimated 98 cents. Falling short was Philip Morris International.

Blue Apron is cutting 6 percent of its workforce, and health insurer Anthem won’t renew its contract with Express Scripts. They’ll start up a division to do their own pharmacy benefits management.

European markets are in the red by about one percent or so. We’ll start in the red as well. At this point, adjusted for fair value, futures on the S&P 500 are lower by 10 points, the Dow futures are down 77 and the NASDAQ futures are about 32 points below fair value.

October 18, 2017

The Dow Jones Industrial Average breeched the 23,000 level for the first time ever yesterday, and although it closed the day just below that level, there was a lot of ballyhoo over reaching another 1,000 point “milestone.” This morning, we are once again getting a lesson on how misleading the Dow Index can be if you’re using it as a proxy for the overall stock market.

IBM, which carries a lot of weight in the dollar-weighted Dow Index, is boosting the index by more than 50 points this morning, in spite of reporting the company’s 22ndconsecutive quarter of declining revenue. Adjusted earnings of $3.30 beat estimates by 2 cents, and IBM hinted that the business may be turning the corner as they raised full-year guidance. Shares are almost 6 percent higher pre-market, resulting in that Dow Industrials boost. 

Abbott Labs shares are more than one percent higher after reporting earnings.

M&T Bank reported $2.21. That missed the estimate by 19 cents. 

Merck was granted a broker upgrade this morning, Biogen received two upgrades.

Asian markets were mixed overnight, but Europe is mostly higher. At this point, adjusted for fair value, futures on the S&P 500 are higher by only 3 points, the Dow futures are up 91 (thank you, IBM) and the NASDAQ futures are about 3 points above fair value.

October 17, 2017

It’s no secret that stock prices are all about interest rates and earnings reports. We’re sifting through another batch of those earnings reports this morning, and it’s hard to find a bad one in the bunch.

Goldman Sachs stock has been a relative laggard this year, but it’s about one percent higher in the pre-market after reporting $5.02 of quarterly profit. That was 85 cents higher than expected. Also about one percent higher are shares of Morgan Stanley. They reported 93 cents, which was a 12-cent beat.

Netflix shares are adding 2 percent to yesterday’s gains after gaining more than 5 million subscribers last quarter. Harley Davidson beat the earnings estimate by a penny, but their shares are downshifting by about one percent.

A pair of companies you may have never heard of – Impax Laboratories and Amneal Pharmaceuticals are merging to form the fifth largest maker of generic drugs in the country.

Industrial production numbers are on the way along with the results of a survey of homebuilder sentiment. 

Overseas markets are mixed. Our futures have been creeping slowing higher after flatlining much of the morning. At this point, adjusted for fair value, futures on the S&P 500 are higher by a half point, the Dow futures are up 22, and the NASDAQ futures are about 4 points above fair value.

October 16, 2017

You probably didn’t know that there was a big banking conference in Washington yesterday. If you had only known, you wouldn’t have wasted time watching a boring old football game, and you could have instead experienced the white-knuckle thrill ride of an afternoon of bankers discussing monetary policy.

Well here’s what you missed – Janet Yellen did reinforce the prevailing view that we’re in for one more interest rate hike, probably in December, but she did hint that if inflation doesn’t pick up, the Fed’s pace of rate hike might slow in future years. Nevertheless, interest rates are heading higher.

Roughly ten percent of the S&P 500 report earnings this week. Today’s headliner comes after 4 pm when Netflix reports. 

The biotech darling of the morning is a company named Exelixis. The drug they’ve been developing to fight kidney cancer has been given priority review status by the FDA and Exelixis stock is on a 19 percent tear pre-market.

Japanese stocks have now rallied to ten consecutive sessions. Outside of China, major Asian markets were higher. Europe is mixed. Oil is more than one percent higher on word of hostility between the Iraqis and the Kurds.

Our futures have started most recent mornings just about as positive as they are at this hour. Adjusted for fair value, futures on the S&P 500 are higher by 3 points, the Dow futures are up 34, and the NASDAQ futures are about 15 points above fair value.

October 13, 2017

It’s Friday the 13th, but don’t be scared – the stock futures are again pointing higher after yesterday’s minor pullback.

Big bank quarterly earnings continue to roll in this morning with Bank of America checked in with 48 cents per share, 3 cents ahead of the consensus estimate. Revenue was also slightly better than expected and Bank of America shares are almost one percent higher pre-market. Wells Fargo reported profit that appears to have missed expectations by almost 20 percent, but there’s a special charge in there that may be mucking things up. Nevertheless, Wells Fargo shares are lower by about 4 percent.

It will be interesting to watch the medical insurance stocks today, as President Trump appears to be getting into the baseball playoff spirit by taking a Louisville Slugger to Obamacare insurance subsidies.

At 8:30, the September Consumer Price Index is expected to spike six-tenths of a percent higher. Retail Sales should be higher by 1.8 percent on a month-to-month basis.

Four Fed Heads give speeches today and on Sunday, Janet Yellen will be part of a Worldwide Banking panel that will include a question-and-answer session. While she’s pretty consistent when she’s forced off-script – you never know what might slip out with respect to future monetary policy.

The vast majority of overseas markets are higher, and our futures took another leg up just in the past half-hour. Adjusted for fair value, futures on the S&P 500 are higher by almost 4 points, the Dow futures are up 48, and the NASDAQ futures are about 15 points above fair value.

October 12, 2017

AT&T is one of the first, but won’t be the last in this department – AT&T warned this morning that recent Hurricanes and earthquakes will put a hurt on 3rdquarter results.

Apparently, there was no such problem at JP Morgan Chase. $1.76 of quarterly profit beat the $1.65 estimate. Guidance wasn’t particularly inspiring, however, and JPMorgan Chase stock is fractionally lower pre-market. Citigroup shares are also a bit lower after reporting profit that was a dime better than the $1.32 estimate.

A similar story came out of the oven this morning at Domino’s Pizza. Adjusted earnings of $1.27 was 4 cents better than expected, but Domino’s shares are fractionally lower this morning.

General Motors shares are about a percent and a half lower this morning on a Wall Street Journal report that a Detroit area plant will be mothballed for six weeks and 200 jobs will be cut due to soft vehicle demand. 

At 8:30, the September Producer Price Report is expected to spike higher to an increase of four-tenths of a percent, perhaps as a result of the weather. Absent food and energy, however, expect only a two-tenths of a percent increase.

For the first time in a while, we might see a little pullback from record levels in the early going. Adjusted for fair value, futures on the S&P 500 are down about 5 points, the Dow futures are lower by 24, and the NASDAQ futures are about 6½  points below fair value.

October 11, 2017

We closed last night about a point and a half from another all-time closing high for the S&P 500. Some people believe that when stocks hit an all-time high, it’s a sign that they should sell. Of course, the next all-time high that the market reaches will mark the 170thall-time high it’s hit during the market rally of the past 8½ years. Someday prices will head lower. But reaching a new high would seem to be a pretty unreliable sell signal.

Meanwhile something that DOES determine the value of corporate stock is their earnings, and the third quarter earnings reports are starting to dribble in.

Thus morning, Delta Airlines reported $1.57 of profit, which was 4 cents better than expected, and predicted that fourth quarter passenger revenue should be 2 to 4 percent higher. Investment firm Blackrock earned $5.92 per share, versus the expected $5.57. Blackrock is fractionally higher pre-market. Delta shares are higher by almost 2 percent.

At 2 o’clock, the Fed releases the minutes from their most recent Open Market Committee meeting.

Japanese stocks hit a 20 year high overnight. European markets are very little changed at this hour.

Looking a little bit lower, but really not very much changed, and adjusted for fair value, futures on the S&P 500 are down about 2½ points, the Dow futures are lower by less than 2 points, and the NASDAQ futures are about 8 points below fair value.

October 10, 2017

With the bond market closed for Columbus Day yesterday, a fair number of stock traders apparently made it a three-day weekend as well as stock prices fell slightly in light trade.

But everybody’s back at it this morning and it looks as if the “buy” button will get pushed once again. If you’re looking for an explanation for this seemingly-to-good-to-believe stock rally, look no further than the number of share buy-backs we’ve seen. As long as corporations can borrow money at incredibly low interest rates, look for them to buy back their own shares as a way to boost earnings and possibly improve cash flow.

Case in point this morning is Walmart. They announced a new 20 billion dollar 2-year stock buyback program. They also issued 2018 and 2019 earnings guidance pretty much in line with, but just a hair below what Wall Street has been expecting.

Honeywell and Pfizer shares are both high this morning one news of each company considering partial spin-offs.

And the real possibility that we might not get either health-care OR tax reform is apparently not lost on small business people, and they’re not happy about it. The National Federation of Independent Business survey dropped to a reading of 103 in September, down 2½ points.

Asia was higher overnight, but Europe is mixed. Spain one percent lower due to their Catalonia problem. At this point, adjusted for fair value, futures on the S&P 500 are higher by more than 5 points, but the Dow futures are higher by 49, and the NASDAQ futures are about 17 points above fair value.

October 6, 2017

It is once again the first Friday of the month. First Fridays are not just special because of the fish fry at your local K of C Hall, but because of the 8:30 am release of the Monthly Employment Report from the Labor Department. This time around, the local fish fry may be more meaningful if you’re trying to figure out the direction of the labor market.

The combined impact of Hurricanes Harvey, Irma and Maria probably limited new job creation to a meager 80,000 in September, and, with approaching Tropical Storm Nate about to intensify it may be a couple of months before we can get a “normalized” new jobs number. Nevertheless, the official Unemployment Rate is expected to hold steady at 4.4 percent.

Costco reported $2.08 percent per share of quarterly profit last night. That was 6 cents better than expected, sales were better than expected and same store sales were better than expected. The fly in the ointment is decrease in gross profit margin. Could be that Amazon’s acquisition of Whole Foods is already putting on the squeeze. Costco shares are lower by more than 3 percent pre-market.

Asian markets followed us higher once again overnight. European markets are mixed as are our futures. At this point, adjusted for fair value, futures on the S&P 500 are lower by almost 2 points, but the Dow futures are higher by 7, and the NASDAQ futures are about 4 points above fair value.

October 5, 2017

Another day, and another record for stock prices yesterday and it looks like we’re in for modest gains at 9:30 this morning. Of course, the Labor Department might influence that outcome a bit with the release of the Weekly Jobless Claims Report at 8:30. Expect 270,000 new claims for unemployment, down just a bit from last week. Claims resulting for Hurricane Harvey and receding, but claims from Irma are still on the rise, and claims in Puerto Rico may only be estimated, since so many unemployment offices there were closed due to the devastation there.

The Challenger Report this morning reported a very slight decline in layoff announcements. Later today, three more Fed officials are out on the speaking circuit.

Constellation Brands just reported quarterly earnings of $2.47 per share, 31 cents better than expected. They also raised full year guidance and the shares are almost 5 percent higher pre-market. Shares of Victoria’s Secret parent L Brands are more than 3 percent lower after reporting a 2 percent decline in same-store sales.

Overseas markets are mixed, but our futures have been a bit higher all morning.

At this point, adjusted for fair value, futures on the S&P 500 are higher by about 3 points, the Dow futures are up 18, but the NASDAQ futures are more than 17 points above fair value.

October 4, 2017

Nowadays, more often than not, some little biotech company is surging or crashing due to the results of a clinical drug test or an FDA decision. This morning, an FDA decision to allow marketing of generic MS drug has a couple of the big drug companies in flux. Mylan gets the nod of approval and its shares are about 14 percent higher pre-market. Not suffering the news well is generic maker Teva Pharmaceuticals. Those shares are 14 percent lower.

As earnings season starts to ramp up, Pepsico reported $1.48 of quarterly profit this morning.  That was a nickel ahead of estimates. Sales fell a little short, but positive full year guidance has Pepsico shares fractionally higher,

Mortgage applications for home purchases rose a bit last week and are running 5 percent higher than a year ago. Applications for refinancings were lower last week and are running about 40 percent below last year’s frenetic pace as interest rates ticked a little higher. 

Janet Yellen is scheduled to speak in St. Louis at 3:15 this afternoon.

Asian markets followed us higher overnight. European markets are suffering a little indigestion this morning, led lower by Spain due to the Catalonia secession movement. Our futures are hitting the pause button on the week-long price rally. At this point, adjusted for fair value, futures on the S&P 500 are lower by about a point, the Dow futures are up 11, but the NASDAQ futures are 7 points below fair value.

October 3, 2017

The third quarter of the year was certainly better than expected for stock prices. Including dividends, the S&P 500 rose by over 4 percent, bringing the year to date gain to more than 14 percent.

Of course, October has a nasty reputation for big market corrections, but it also kicks off the fourth quarter of the year, and over the past 25 years, the fourth quarter has given us an average gain of almost 5 percent in the S&P 500, while gaining ground in 20 of those 25 years.

Shares of home builder Lennar are gaining ground this morning, up almost 2½ percent after reporting $1.06 in quarterly profit. That was a nickel better than expected. New orders were up 8 percent. Hurricane Harvey didn’t help results and may hurt the current quarter results even more. Paychex should report in at 8:30 this morning. Expect 60 cents per share of profit there.

September Car Sales Reports will roll in as the day rolls on. They’re expected to reflect increased sales as cars ruined by recent hurricanes are being replaced.

Japanese stocks rose one percent overnight. Hong Kong was up more than 2 percent, but European markets are mixed and nearly unchanged. The S&P 500 will try to make it six consecutive days of gains today as out futures are again indicating new record highs to start the day. Adjusted for fair value, futures on the S&P 500 are up about 2 points, the Dow futures are up 47, and the NASDAQ futures are 7½ points above fair value.

 
October 2, 2017

The terrible shooting in Las Vegas is the headline news this morning, and it’s having a bit of a stock-specific impact as well. Shares of MGM Resorts is off more than 4 percent pre-market, while shares of gun makers Sturm Ruger and American Outdoor are 4 and 7 percent higher, respectively.

According to a story in the New York Post, talks aimed at taking Nordstrom’s private aren’t going so well, and Nordstrom shares are lower by 6 percent pre-market.

By 10 o’clock this morning we’ll get the ISM and PMI Manufacturing Survey results for September, neither of which is expected to be meaningfully different than the August readings.

Overseas markets are generally a little higher, although a handful of Asian markets were closed overnight. Our futures are indicating new record highs to start the day. Adjusted for fair value, futures on the S&P 500 are up about 4 points, the Dow futures are up 55, and the NASDAQ futures are almost 18 points above fair value.

WJR November 2017 Reports
WJR September 2017 Reports

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