October 31, 2019
The S&P 500 closed at a record level yesterday after the Federal Reserve meticulously followed the widely anticipated script. They cut short term rates be a quarter of a percent but apparently brought this easing cycle to an end, or at least paused until early 2020 at the earliest.
At 9:30 this morning we’ll get the latest the PCE. That’s the personal consumption expenditure index and it’s reportedly the Fed’s favorite inflation indicator. Any big uptick in future inflation may convince the Fed that the next necessary step might be a rate increase. Expect that today’s reading will reflect only a one-tenth of one percent increase.
Shares of Fiat Chrysler are looking to open more than 3 percent higher on word of their 50/50 merger with the parent of Peugeot. In European trade Peugeot shares are more than 13 percent lower.
Shares of Apple, Facebook and Kraft-Heinz are higher this morning after good earnings reports. Starbucks and Lyft are also getting a lift.
Our stock futures took a nosedive in the early morning hours on a Bloomberg report that Chinese officials are doubting that they’ll ever be able to reach a long-term trade deal with the Trump Administration.
Asian markets rose before that report was published, but Europe is lower.
Adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down 65, however, the NASDAQ futures are about 8 points above fair value.
October 30, 2019
A disappointing Consumer Confidence Report from the Conference Board helped kill an early rally yesterday, even though earnings reports continue to impress. Thus far, about 84 percent of the S&P 500 companies that have reported have met or bettered expectations.
This morning, ADP, Moody’s, Sony, Garmin and General Electric all beat estimates, while Molson-Coors, Tupperware and Yum Brands fell short.
At 2 o’clock, most expect the Fed to cut short-term interest rates by a quarter point, and then indicate that further rate cuts may be further away than some expect. Of course, lower interest rates hurt savers but help borrowers, notably car and home buyers. Even with this year’s low interest rates, homeowners are not going crazy with debt. According to the Federal Reserve, as of June 30th, the loan to equity ratio among U.S. homeowners was only 36 percent. Eleven years earlier, in 2008, that ratio stood at 55 percent.
Facebook, Starbucks and Apple all report in after 4 o’clock this afternoon.
Asian markets lost about a half-percent overnight, but Europe, on average, is little changed. Things could change a lot with the Fed decision at 2 o’clock, but for now, adjusted for fair value, the S&P 500 futures are higher by about a point, the Dow futures are up 18, and the NASDAQ futures are about 10 points above fair value.
October 29, 2019
The Federal Reserve Open Market Committee opens a two-day meeting this morning. Almost everyone expects that short term interest rates will be cut another quarter point at 2 o’clock tomorrow afternoon. Of course, the fact that everyone expects it means that stock prices already reflect that result. If the Fed moves rates more than that or doesn’t move at all, we could see some market indigestion.
During the third quarter of this year, 24 of the world’s 41 central banks cut interest rates, as opposed to only 3 that raised rates.
Meanwhile, most corporate earnings continue to beat the lowered estimates. General Motors just reported $1.72 in profit verses the expected $1.31. However, a billion-dollar cost of the recent UAW strike is causing GM to cut its full year earnings forecast from 7 dollars per share to $4.65. Nonetheless, GM shares are looking to open about one percent higher. Merck, Pfizer, ConocoPhillips, Kellogg, Xerox and Autonation all reported better than expected results.
Beyond Meat reported a surprise profit last night, but the shares, which recently traded near 230 dollars per share are indicated to open around 83 bucks, down about 20 percent since yesterday’s close as competition moves in.
Shopify, another recent high-flyer is almost 8 percent lower after reporting a quarterly loss, blamed on increasing investment.
Asian markets were mixed overnight, but Europe is lower. Adjusted for fair value, the S&P 500 futures are lower by about 4 points, the Dow futures are down 33, and the NASDAQ futures are about 22 points below fair value.
October 28, 2019
If the futures are to be believed (and they usually are) we’ll open stock trading today at new intra-day record highs this morning.
This be the busiest week of the quarter for earnings news, with 6 members of the Dow and 150 components of the S&P 500 reporting results. So far this morning, we’ve heard a mixed report from AT&T. Adjusted profit of 94 cents was a penny per share better than expected. Sales were a little light, but more share buybacks are on the way and AT&T shares are indicated about one and a half percent higher.
Spotify shares are looking to open more than 5 percent higher after reporting a surprise profit. Walgreens-Boots Alliance reported $1.43, two cents better than expected. The star of the show this morning are shares of Tiffany, up about 28 percent, on word that luxury goods company LVMH may be looking to acquire all those little blue boxes.
Alphabet and T-Mobile report later today and oh, by the way, we have a two-day Federal reserve Meeting starting tomorrow.
Overnight, Asian markets followed our end-of-week rally higher, as has much of Europe.
Adjusted for fair value, the S&P 500 futures are higher byabout 7 points, the Dow futures are up 84, and the NASDAQ futures are about 27 points above fair value.
October 25, 2019
Corporate earnings reports are once again demonstrating how good companies are at setting lousy expectations and then beating them. Although some are swinging and missing, the hits just keep on coming.
Stars of the show yesterday were shares of Tesla, rising almost 18 percent on the day after the company announced a surprise third quarter profit on Wednesday night. Tesla shares are indicated less than one percent lower this morning.
Anheuser-Busch Inbev shares are about 8 percent lower this morning on flat profit growth. But, if you like chips along with your beer, the chips are rising at Intel, as $1.42 of adjusted profit came in 19 cents better than expected. Intel shares are looking to open 3 percent higher.
A big cash drain in order to build out next day delivery at Amazon took the blame for a disappointing report last night. Amazon shares are looking to open about 6 percent lower.
At 10 o’clock this morning, we’ll get the University of Michigan’s final October Consumer Sentiment reading. Expect the prior figure of 96 to be confirmed. Looking forward to next week, should the Fed’s widely expected short term interest rate cut come, it will come next Wednesday.
Overseas markets are mixed, and our futures have been in reverse over the past hour. Adjusted for fair value, the S&P 500 futures are lower by more than 4 points, the Dow futures are now flat, and thanks in large part to the decline in Amazon, the NASDAQ futures are about 39 points below fair value.
October 23, 2019
Last week, over 80 percent of the S&P 500 companies that reported, reported earnings that were better than expected. Many of those reporting last week we the big banks. This week, the earnings flight is running into some rough air, especially with the big industrials.
Last night Caterpillar missed the $2.88 profit estimate by 22 cents. They also missed on sales and lowered earnings guidance. This morning, Boeing reported $1.45 of adjusted profit, 64 cents short of the $2.09 estimate, even though sales did not disappoint. However, China is buying fewer 787 wide bodies, which will hurt next quarter’s results. Boeing still expects the 737 Max to return to service before January 1st, and the sooner the better for their financials, as free cash flow was nearly a negative 3 billion dollars last quarter.
Eli Lilly shares are off about 2½ percent pre-market as earnings were okay, but sales fell short. Whirlpool missed on earnings. Paypal, Ford Motor Company, Microsoft and Tesla are all on the reporting docket for later today.
Last night Texas Instruments disappointed and that has chip stocks under pressure.
Our futures have recovered quite a bit over the past half hour, when the Dow futures were lower by more than 100 points, but they still have a way to go. Adjusted for fair value, the S&P 500 futures are lower by about 5 points, the Dow futures are now down only 17 and the NASDAQ futures are about 26 points below fair value.
October 22, 2019
Corporate earnings reports continue to impress overall this morning, with most companies handily beating admittedly modest estimates.
Standing head and shoulders above the rest is biotech firm Biogen. Quarterly earnings of $9.17 easily beat the $8.22 estimate. That’s the good news. The better news is that Biogen will be moving forward in seeking regulatory approval for their experimental anti-Alzheimer’s drug. That news has Biogen shares about 40 percent higher pre-market.
Other companies beating estimates this morning include Procter & Gamble, Novartis, Lockheed Martin, Harley Davison, United Technologies and Under Armour. UPS reported $2.07, which beat by a penny, but revenue missed and UPS shares are off about 4 percent. The opposite story at Travelers – revenue was a positive, but $1.43 of profit missed by 92 cents, due to big additions to loss reserves.
One big drag on the Dow this morning is McDonalds, which missed the $2.21 estimate by a dime. Sales also came up short. That’s cutting the Dow Industrials by more than 40 points.
Overseas stock markets are mixed, but mostly higher. Adjusted for fair value, the S&P 500 futures are higher by about 3 points, the Dow futures are now down 10 points and the NASDAQ futures are about 23 points above fair value.
October 16, 2019
Surprisingly promising comments out of the European union about the prospects for a Brexit deal added fuel to a stock price surge yesterday that was sparked by better-than-expected earnings news. This morning, the futures are indicating only a mild pullback from last night’s levels.
Shares of Abbott Labs are almost 3 percent higher pre-market after meeting earnings expectations. There don’t appear to be any landmines out in the banking sector. Bank of New York Mellon, U.S. Bancorp, Bank of America and PNC all reported better than expected adjusted profit this morning.
United Airlines, not only beat estimates, but raised full-year earnings guidance. United shares are looking to open more than 2 percent higher. Netflix and IBM will report in later today.
Mortgage applications rose a bit last week and later this morning, we’ll find out how well consumer spending drove the economy in September. Expect a three-tenths of a percent increase, but just two-tenths of a percent gain excluding auto sales.
Asia generally followed us higher overnight, but European market are mixed.
Our futures have nearly come all the way back from earlier lows. Adjusted for fair value, the S&P 500 futures are lower by about 2 points, the Dow futures are down 12 and the NASDAQ futures are about 12 points below fair value.
October 15, 2019
It’s been said that the secret to a successful relationship, whether with people, your favorite sports team or corporate earnings is sufficiently low expectations.
Three months ago, most Wall Street analysts thought that third quarter corporate earnings would be slightly positive. Since then, expectations have ben lowered to the point that if earnings are level on a year-over-year basis it will be a pleasant surprise.
This morning, floodgates opened on third quarter reports and, not surprisingly, we’re seeing almost everybody beating those lowered expectations. Blackrock’s profit slipped by 8 percent from a year ago, to $7.15 per share. However, the expected profit was only $6.92 and Blackrock shares are almost one percent higher pre-market.
Shares of United Health, JP Morgan and Johnson and Johnson are all about a couple percent higher on earnings beats. Citigroup shares are a little lower, even though earnings weren’t bad. So far among the big firms reporting, Goldman Sachs and Wells Fargo missed their respective earnings estimates. Goldman shares are off almost 2 percent, although Wells is only lower by a fraction of a percent.
Asia was mixed overnight, but outside of London Europe is higher. Our futures are off earlier highs. Adjusted for fair value, the S&P 500 futures are higher by about 8½ points, the Dow futures are up 76 and the NASDAQ futures are about 25 points above fair value.
October 14, 2019
Unlike the stock market, the bond market, the banks and the post office will be taking the day off in recognition of Columbus Day. That will give us the day off from a lot of financial news but brace yourself for the rest of the week. Third quarter earnings reports start to roll out in volume tomorrow, with the major banks all reporting in this week. This week’s reports include results from 7 components of the Dow Jones 30 Industrial Average.
The year-over-year comparisons will be tough this quarter as corporate results for the third quarter 2018 were enjoying the impact of the 2017 tax cut law. We may actually see corporate earnings decline a bit on a year-over-year basis, yet it’s possible that expectations have been ratcheted back so far that there may be some upside surprises.
Asian stock markets rose overnight as the apparent trade truce, as tenuous as it is, was received as being better than nothing at all. European markets, however, are lower across the board.
Our futures have improved quite a bit over the past couple of hours but are still indicating a lower open for stock prices. Adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are up about 49 (after being down over a hundred points earlier this morning) and the NASDAQ futures are about 17 points belowfair value.
October 11, 2019
There could be lights flickering at the end of a few of important tunnels this morning and that prospect has the stock futures on fire.
General Motors is reportedly calling on the UAW to engage in around-the-clock bargaining. That, and the direct engagement of CEO Mary Barra in negotiations seems to indicate that some sort of agreement is getting closer.
In the U.K. there are new hopes for possible agreement on a Brexit deal.
Topping those expectations, the Chinese trade delegation did NOT go home yesterday. They’re still in Washington and statements by President Trump yesterday are giving hope to a breakthrough in those negotiations. It’s likely not the BIG deal the U.S. is seeking, but even a truce in the tariff war would be good news for international business and corporate confidence.
Oil futures are about 1½ percent higher on a report that an Iranian oil tanker carrying over a million barrels of crude oil was the recipient of a couple of missiles during its cruise through the Red Sea overnight.
Later this morning, we’ll hear the preliminary result for the October Consumer Sentiment Survey.
Overseas markets are solidly higher on the prospect of some sort of trade deal. Adjusted for fair value, the S&P 500 futures are higher by about 32, the Dow futures are up about 288 points and the NASDAQ futures are about 91 points above fair value.
October 10, 2019
The third quarter earnings season starts to roll out in volume next week, and it will be the last quarter of 2019 that most companies will face really tough comparisons to the prior year, owing to the 2018 tax cuts.
This morning, Delta Airlines was first off the runway, announcing an adjusted quarterly profit of $2.32 per share, which was 6 cents better than expected. Sales were up 6 percent and the operating margin was higher, but Delta says that the rest of the year won’t be quite as rosy, and shares are more than 3 percent lower pre-market.
Shares of Bed Bath & Beyond, which were pretty much on a half-off sale over the past six months, are more than 22 percent higher this morning after naming a former Target executive as its new CEO.
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Negative headlines about the Chinese trade talks have the futures in a moderate funk this morning, as we await the next head-fake from any of the players involved.
Adjusted for fair value, the S&P 500 futures are lower by about 5 points, the Dow futures are down 46 and the NASDAQ futures are about 13 points below fair value.
October 9, 2019
In case you had better things to do yesterday than watch the headline-driven stock market, let me summarize for you. We went way down on bad China trade headlines, we recovered most of the loss on good interest rate news and went way down again on more bad trade war news.
This morning, word that China is still open to a partial trade deal in spite of the blacklisting of 28 Chinese companies by the U.S. has stock prices bouncing higher again. Bottom line? Unless you like to pretend that you can make money by day trading, which nowadays is really HOURLY trading, ignore all the noise and go live your life.
Later this morning, the Labor Department will release its August JOLTS survey. That’s a report on Job Openings and Labor Turnover in the country. Expect about 7¼ million job openings existed at the end of August. It’s an important report for those on the lookout signs that companies may stop hiring. That’s the kind of thing that may portend an economic recession. No recession indicated at Dollar Tree and Family Dollar – they’ll hire 25,000 workers for the upcoming holiday season.
At 2 o’clock, we’ll get to read the minutes from the latest Fed meeting, which reportedly featured an unusual amount of opinion differences between Fed-heads.
European markets are solidly higher and, absent any more China trade noise, we’ll head north at 9:30 as well. Adjusted for fair value, the S&P 500 futures are higher by about 26, the Dow futures are now up 210 points and the NASDAQ futures are about 81 points above fair value.
October 8, 2019
We’ll get off to a rough start this morning, as China and the Trump Administration are not giving us any reason to believe that substantial progress will be made later this week on trade negotiations in Washington.
In apparent response to Chinese moves in response to comments by a basketball executive and a video-gamer in support of Hong Kong protesters, the Trump administration has now blacklisted a group of Chinese companies that specialize in artificial intelligence technology reportedly being used against the protesters. Not exactly the backdrop that portends any kind of compromise on trade.
And, as Germany inches closer to an official recession, Chancellor Merkel has reportedly told the U.K.’s Prime Minister that a Brexit deal isn’t going to happen. That, among other factors has Europe lower by about one percent this morning.
Boeing is facing another headwind as Southwest Airline pilots have filed a lawsuit against the airline for lost wages due to the 737 Max grounding. Pilots have reportedly had to forgo more than 100 million dollars in wages.
Domino’s Pizza reported better than expected earnings for last quarter but lowered their long-range guidance and the stock is about 3½ percent lower pre-market.
Asian markets were generally higher overnight, but we’ll start the day in the red. At this point, adjusted for fair value, the S&P 500 futures are lower by about 18½ points, the Dow futures are now down 167 and the NASDAQ futures are 45 points below fair value.
October 7, 2019
There’s a little good news this morning if you’re a long-suffering shareholder of General Electric. Not such good news if you’re a GE employee. General Electric is freezing pension benefits for about 200,000 salaried employees. Like a lot of large emplyers, GE is switching to 401k-style savings plans. Pension benefits for former GE employees already receiving benefits won’t change. GE shares, which have lost almost a third of their value over the past year, are more than one percent higher pre-market on the news.
About 10,000 employees of HSBC Holdings, which you may remember used to be called Hongkong Shanghai Banking Corporation, have other things than pensions to worry about. Those 10,000 employees will soon be let go, on top of the 4,000 position cuts that HSBC announced a couple of months ago.
In front of third quarter earnings, which start to flow in volume next week, traders will be closely watching trade war news. The Chinese are scheduled to visit Washington on Thursday and Friday and are reportedly proposing a limited trade truce. That, of course, is not what started this whole kerfuffle in the first place and is not likely to gain a lot of traction, at least for now.
Asian markets were mostly lower overnight, but Europe is higher.
Our futures are off their lows but are still point toward a lower open for stock prices. Right now, adjusted for fair value, the S&P 500 futures are lower by almost 9 points, the Dow futures are now down 73 and the NASDAQ futures are 24 points below fair value.
October 4, 2019
This morning’s 8:30 Labor Department Report will likely set the tone for the day after yesterday’s news sent stock prices on another wild ride.
The ISM survey on the services sector of the economy showed slight expansion yesterday, but the reading of 52 was 3 points lower than expected, and the lowest in three years. That weakness amplified fears of an economic slowdown and sent stock prices down sharply. By the end of the day, traders hit the “buy” button, reflecting the apparently oversold condition.
Expect that in sixteen minutes or so we’ll hear that about 140,000 new jobs came into being in September and that the Unemployment Rate held steady at 3.7 percent. Speaking of jobs, it looks like HOP will be shedding up to 9,000 of them and cash strapped Wework may say goodbye to as many as one out of every four in its workforce.
Last night, Costco released another generally strong earnings report. Although overall sales missed expectations, profit of $2.69 came in 14 cents better than expected. Domestic same store sales were up more than 6 percent and online sales were almost 20 percent higher than a year ago.
Lots of Federal Reserve officials will be out on the speaking circuit today, so look for a lot of word-parsing that may have stock prices looking like a yo-yo once again.
Right now, adjusted for fair value, the S&P 500 futures are lower by almost 9 points, the Dow futures are now down 47 and the NASDAQ futures are 12 points belowfair value.
October 1, 2019
A lack of earth-shaking tweets or headlines about impeachment or China allowed an early rally to persist throughout the day yesterday, and it appears that some of that momentum will carry over into the early going today.
Quarterly corporate earnings reports are starting to trickle in, and that trickle will tun into a flood over the next few weeks. This morning, spice-maker McCormick & Company reported $1.46 of adjusted quarterly profit, which was 18 cents better than expected, even though sales disappointed slightly. McCormick raised full-year guidance and the shares are slightly higher pre-market.
Overnight, the Australian Central Bank cut their short-term interest rate target for the third time this year to an all-time low. They also signaled that another cut may be on the way to help its economy.
The alternative argument is that rock-bottom rates really can’t help overwhelming demographic economic trends. The ugly side of rock-bottom rates showed up in Japan overnight, where a very soft bond auction was sovereign interest rates on the rise worldwide. The yield on our 30-year bond is about 12 percent higher than the yield of just over a month ago.
Overseas markets are mixed, but our futures are in the green. Adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are now up 59 and the NASDAQ futures are almost 23 points above fair value.