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WJR September 2016 Reports


September 30, 2016

Rule number one – if you drive costs lower, you’re likely to drive profits higher. That’s the case with Costco this morning. $1.77 per share of profit beat estimates by four cents. Although personnel costs were higher due to pay raises to their workers, the switch from American Express credit cards to VISA cards lowered costs enough to give rise to the earnings surprise. Costco shares, which have not had a banner year, are about 2 percent higher pre-market.

The Deutsche Bank turmoil continues to upset traders around the world. Many remember the failure of Lehman Brothers as the tipping point of the 2008 bear market. However, while history may be rhyming here – it’s not likely to be repeating. There are huge differences in the two situations.

Personal Income and Spending numbers are on the way this morning as well as the University of Michigan’s final verdict on the September mood of the consumer.

Overseas markets are mainly in the red after yesterday’s drop in the U.S. Europe is lower by about one percent.

We’ll put the wraps on the third quarter today, and it’s one of those funny mornings when the futures look lower, but really aren’t – at least right now. After adjustment for fair value, the S&P 500 futures are higher by about 4 points, the Dow futures are up 33, and the NASDAQ futures are almost 10 points above fair value.

September 29, 2016

We have two days left in the year’s third quarter, and in spite of all the gloom and doom that’s been thrown about regarding stock prices, it’s turned out not so badly. The S&P 500 is up around 4 percent this quarter including dividends and the NASDAQ is up around 10 percent since the 30thof June.

This morning we’re awaiting reports on the weekly jobless claims, August pending home sales and perhaps the most important of the bunch, the Government’s third and final guess at second quarter Gross Domestic Product. Expect that number to be revised higher from an anemic rate of 1.1 percent growth to a still-anemic 1.3 percent.

There’s a trio of better that expected earnings reports this morning. Pepsico’s $1.40 of adjusted profit was 8 cents better than expected. Pepsi also raised their forecasts. Accenture beat estimates by a penny and raised its dividend by 10 percent and Conagra’s 61 cents per share was 13 cents better than expected.

Oil is backing off just a bit from yesterday’s big rally on a story suggesting that OPEC might be getting its output setting act together.

Overseas markets are pretty much all higher this morning, unlike our futures, which have taken a bit of a dip since the top of the hour. Adjusted for fair value, the S&P 500 futures are down about 6 points, the Dow futures are down 45, and the NASDAQ futures are about 13 points below fair value.

September 28, 2016

A company you’ve definitely heard of and probably left for dead some years ago is seeing its shares rise about 6 percent this morning. Blackberry reported a second quarter loss of 71 cents per share, but on an “adjusted” basis (that’s when you don’t count the expenses you don’t want to count because they’ll supposedly never happen again) Blackberry had a break-even quarter. That was a nickel better than expected, and by the way, their Chief Financial Officer has resigned for personal reasons.

The August Durable Goods Orders Report comes in about 20 minutes and it’s expected to be a downer compared with July’s 4.4% surge. Expect a decline of 1.9 percent.

If you love listening to Central Bankers speak, well, first of all, you really need a new hobby and perhaps, a personality. But second of all, today is your day. Six Fed-heads are out on the speaking circuit trying to confuse traders even more than current Fed policy and this wacky election already has.

European markets are about one percent higher. Yesterday’s rally apparently indicated that traders favored Hillary Clinton’s performance on Monday night. But this morning, futures have been up and down and all around. At this point they’re pointing higher, but not by much. 

Adjusted for fair value, the S&P 500 futures are up a point, the Dow futures are up 17, and the NASDAQ futures are almost 5½ points above fair value.

September 27, 2016

After a couple of days of fear and loathing in the stock market in anticipation of last night’s debate, we’ll have a bit of a relief rally this morning. Post-debate, the Dow Jones Industrials futures popped more than 100 points higher overnight, and although they’ve backed off those levels stock prices should be on the rise at 9:30.

At 9 o’clock, the S&P Case-Shiller Index will tell us how home prices are doing across the country. Overall, about a 5 percent increase from a year ago is expected. Then at 10, the Conference Board will tell us how consumer confidence is holding up. Expect that the September reading slumped by about two points from August’s reading of 101.

The Fed’s Vice-Chairman Stanley Fischer will speak at 11:15 this morning. Nike and Cintas will report earnings after 4 o’clock.

Another big hedge fund is biting the dust. Perry Capital will be shutting down after losing about 60 percent of its investors’ money since 2014. The fund blames “market headwinds” for the losses, which only sounds believable if you believe everything you heard last night.

Asian markets were mostly a bit higher overnight, but Europe has turned lower.

Adjusted for fair value, the S&P 500 futures are higher by 6 points, the Dow futures are up 45, and the NASDAQ futures are almost 15 points above fair value.

September 26, 2016

There’s one week left in the year’s third quarter, and although there will be a smattering of earnings reports on the way from companies that aren’t on a calendar year end (like the report from Nike, which comes tomorrow afternoon) analysts are looking ahead to results for third quarters that end this coming Friday. Once again, hope springs eternal, but reality may disappoint. Analysts expect third quarter earnings for the S&P 500 companies to decline for the sixth consecutive quarter, and average about a 2.3 percent decline year over year.

Three Federal Reserve Regional Presidents are out on the speaking circuit today, but the speeches that have traders the most on edge today are the ones that come tonight, during the first Presidential debate. Conventional wisdom is that a strong showing by Donald Trump could give stock prices some trouble tomorrow, due to the market’s preference for continuity of the status quo, and other reasons.

A couple of exchanges are formally getting together as the CBOE is acquiring BATS for 32.50 per share.

Overseas markets are a sea of red numbers at this hour, with most lower by one to two percent. We’ll follow up Friday’s declines with more of the same this morning. Adjusted for fair value, the S&P 500 futures are lower by 8 points, the Dow futures are down 71, and the NASDAQ futures are about 23 points below fair value.

September 23, 2016

With three days of gains under its belt, our stock market may well take a bit of a breather today. 

With the ink barely dry on the Federal Reserve’s latest proclamation on interest rates, we’ll have no fewer than four Federal Reserve Presidents either giving speeches or participating in panel discussions today. Traders may someday quit over-analyzing every word that comes out of their intra-meeting mouths. But in the meantime, expect some volatility in stock prices depending on what they say.

Retailer Finish Line said that earnings last quarter came in as expected, but same-store sales were more than 5 percent higher, and Finish Line shares are more than 5 percent higher pre-market in response.

Oil prices are backing off a bit this morning after a two-day rally based on word that Saudi Arabia has offered to cut production, if Iran freezes theirs at current levels. Of course, talk is cheap and oil will continue to be until those countries can get on the same page.

Asian markets were mixed overnight, but on the whole, European markets are almost one percent lower at this hour. Our futures are suggesting slightly lower prices at 9:30. Adjusted for fair value, the S&P 500 futures are lower by almost 5 points, the Dow futures are down 21, and the NASDAQ futures are about 8 points below fair value.

September 22, 2016

Our beloved Central Bankers continued to huff and puff and sit on interest rate raising hands yesterday. While keeping the status quo on rates was widely expected, it sparked a relief rally in stock prices, with the Dow Jones Industrials rising over 160 points.

This morning traders can turn their collective attention to more conventional things, like employment and earnings – at least until the Federal Reserve Presidents start running around giving speeches again.

At 8:30 the Weekly Jobless Claims Report is expected to hold steady at about 260,000. Then at 9, we’ll get a reading on sales of existing housing. Expect a four-tenths of a percent increase in the July report after a couple of two-tenths of a percent increases in May and June.

Red Hat and Auto Zone are out with better-than-expected earnings this morning. Jabil Circuit shares are down almost 5 percent pre-market.

And, it may be time to finally get serious about changing your online passwords as Yahoo is expected to announce a massive data breach including user passwords and birthdates.

In Japan, the markets were closed for a holiday. Other Asian markets are higher on the order of about one-half of one percent. Many European stock markets are almost 2 percent higher. We’ll get some early follow-on to yesterday’s rally as well.  At this point, adjusted for fair value, the S&P 500 futures are higher by 7 points, the Dow futures are up 75, and the NASDAQ futures are about 20 points above fair value.

September 21, 2016

There’s a lot going on today and it all started overnight in Japan. As we all know, the Bank of Japan and most other Central Banks around the world have been aggressively trying to spur economic growth and inflation by lowering short term interest rates, in many cases (including Japan’s) below zero. Arguably, it hasn’t worked as well as expected. So, the Bank of Japan doubled down this morning and will now manipulate the price of their 10 year Government Bond, with a target yield of zero. We’ll see how that works out.

Things didn’t work out so well for Wells Fargo’s CEO before Congress yesterday as he tried to explain away years of playing fast and loose with customer account openings. Today, Mylan’s CEO gets her turn at the whipping post over playing fast and faster with prices for the life-saving Epipen.

General Mills reported earnings that beat estimates by 3 cents per share this morning. Shares of FedEx and Adobe are sharply higher this morning after positive repots last night. Microsoft is raising its dividend by 8 percent.

Of course, the 800 pound gorilla in the room is the 2 o’clock announcement of Federal Reserve interest rate policy. Current betting among economists (and you know how they love to gamble) is only an 18 percent chance of an increase today, but a much higher likelihood of a December rate hike.

Overseas markets are higher, with Europe up about one percent. At this point, adjusted for fair value, the S&P 500 futures are higher by 5 points, the Dow futures are up 60, and the NASDAQ futures are 18½ points above fair value.

September 20, 2016

If you ask your everyday economist about the odds of the Federal Reserve hiking interest rates tomorrow, about 9 out of 10 will tell you that a rate hike is off the table. However, a clear majority expect that rates will go up before we see 2017. So, whether see get the hike tomorrow or, more likely, in December, rates look to be on the rise soon.

Another thing that’s on the rise is the profit at home builder Lennar. $1.01 per share last quarter beat expectations by 12 cents. After rising more than a percent and a half yesterday, Lennar shares are higher by more than a half-percent pre-market.

Wells Fargo’s CEO John Stumpf will sit in the hot seat today before a Senate panel today and will reportedly accept responsibility for the recent cross-selling scandal and unethical conduct at Wells. Of course, it was Congress that gave birth to the big bank cross-selling model back in 1999. But don’t expect Senators to take any of the blame when they can easily place the blame somewhere else.

Allergan is at it again, buying Toriba Therapeutics for 1.7 billion dollars. 

August Housing starts come at 8:30. Expect a decline of 1.7 percent.

Oil prices are slipping about one percent this morning and our futures are losing some of their earlier gains. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 8 points, the Dow futures are up 66, and the NASDAQ futures are almost 9 points above fair value.

September 19, 2016

It’s no secret that traders will focus on interest rates this week, as if that’s something new. Last week’s economic data provided little reason to believe that the Federal Reserve will hike short term interest rates on Wednesday, in spite of what Fed Regional Presidents have been hinting over the past couple of weeks.

But, before that Fed announcement comes on Wednesday afternoon, we’ll get a policy update from the Bank of Japan on Wednesday and couple doses of corporate drama. Tomorrow, the top dog at Wells Fargo will spend a little time chatting with a Congressional Committee regarding the recently disclosed misdeeds in opening unauthorized customer accounts at Wells. Wells stock is a little higher pre-market on a brokerage firm upgrade; the thinking is that the recent sell-off is overdone.

On Wednesday, top executives of Mylan will attempt to justify the six-fold increase in the price of the Epipen over the past few years to a House Oversight Committee. 

Oil is almost a percent and a half higher this morning.

Overseas markets are generally higher in the three-quarters of one percent to one percent range. Our futures have pointed higher all morning long as well. At this point, adjusted for fair value, the S&P 500 futures are higher by more than10 points, the Dow futures are up 102, and the NASDAQ futures are almost 17 points above fair value.

September 16, 2016

Stock price volatility has made a long awaited comeback this week, and our up and down and up and down market moves look to continue this morning. Yesterday’s big rally was helped in large part by a nearly 3½ percent surge in the price of Apple shares. In-store sales of the iphone 7 and the Watch2 begin today. So far, online orders for the iphone have been very hot.

Samsung Galaxy Note 7 phones have been even hotter, but not in a good way. Samsung will recall a million of the Note 7’s, on almost 100 reports of spontaneous combustion, some of them causing burns and property damage.

The volatility I spoke of earlier could get a shot in the arm from the options and futures markets today. It’s a quadruple witching Friday. That’s means that a bunch of options and futures contracts will be expiring all at the very same time.

At 8:30, expect word that consumer prices rose only one-tenth of a percent last month. A little later, the University of Michigan’s Consumer Sentiment Index is expected to perk up to a reading of 90.8.

A bunch of Asian markets were closed overnight for a holiday including China and South Korea.   European markets are mostly lower. At this point, adjusted for fair value, the S&P 500 futures are lower by 9½ points, the Dow futures are down 66, and the NASDAQ futures are 13 points below fair value.

September 15, 2016

As expected, the Bank of England held its interest rate policy steady this morning, but indicated that rate cuts may be on the way. That has the pound down against the dollar.

As we await word on the timing and pace of domestic interest rate increases that are certainly on the way, we can call next week “Fed Week.” And if that’s the case, we can call today “Data Day.” 

Over the next 2½ hours, we’ll get the most recent readings on Weekly Jobless Claims, Producer Prices, Retail Sales, Industrial Production and Business Inventories. We’ll also get regional economic reports from the Philadelphia and New York Federal Reserve Banks, the Bloomberg Consumer Comfort Index and the Energy Information Agency Natural Gas Report. In short, it’ll be a day only an economist could love.

In front of all that, overseas markets aren’t showing much movement in any direction, although our futures perked up a bit over the past half hour.

At this point, adjusted for fair value, the S&P 500 futures are higher by just about 2½ points, the Dow futures are up 33, and the NASDAQ futures are almost 6 points above fair value.

September 14, 2016

Hard to tell whether stock traders are more afraid of the health of the oil market, the health of the economy or the health of the Presidential candidates, but fear returned in spades yesterday with the Dow shedding another 258 points.

This morning, the seas appear to be calmer with stock futures rising moderately.

The takeover drama involving Germany’s Bayer and St. Louis’ Monsanto appears to be over. Bayer will be the buyer at $128 per share. Compare that to Monsanto’s closing price of $107 last night.

Ford Motor announced ambitious plans for electric and self-driving cars and other growth tactics this morning. Pre-market trade has Ford stock more than one percent lower in response.

Once again, overseas markets are mixed, although overall, most European may still holding on to modest gains. 

At this point, adjusted for fair value, the S&P 500 futures are higher by about 5½ points, the Dow futures are up 46, and the NASDAQ futures are about 18 points above fair value.

September 13, 2016

Some dovish words from Chicago Federal Reserve President Brainerd rallied stock prices yesterday, capping off a couple of weeks of non-stop chatter from the Fed heads. Fortunately, they now get put into time-out for the next eight days to allow traders to find something else to get exercised about.

This morning, that other thing seems to be the price of oil. West Texas Intermediate is more than 2 percent lower on a forecast by the International Energy Agency that worldwide oil supply will continue to exceed demand in 2017. While that’s good news for consumers – not so much for oil companies that may be over-leveraged or the banks that allowed that to happen.

The National Federation of Independent Business August survey came up a little short as far as the expected confidence level of small business people. The reading of 94.4 was .4 below expectations and .2 below the July reading.

Following up on the big customer account fabrication that came to light last Friday, Wells Fargo says that they will eliminate employee incentive compensation for customer account creation in order to deal more honestly with customers in the future. There’s now word of a Congressional investigation so find out if some 30,000 complaints filed with the Consumer Financial Protection Bureau regarding similar abuses might indicate that Wells hasn’t been the only bank playing fast and loose with opening unauthorized customer accounts.

Overseas markets are mixed, although overall, most European may still holding on to modest gains.  
 
At this point, adjusted for fair value, the S&P 500 futures are lower by about 13 points, the Dow futures are down 96, and the NASDAQ futures are about 20 points below fair value.

September 12, 2016

Stock prices turned ugly on Friday, and they’re not looking a lot better this morning on (what else?) comments by a Federal Reserve official. On Friday, Boston Fed head Rosengren put the prospect of an interest rate hike at next week’s Fed meeting squarely on the table and traders didn’t like that idea one bit.

Today, we’ll be honored with three more speeches from the gang who just can’t shut up. Atlanta’s Dennis Lockhart is speaking right now. Minneapolis’ Kashkari and Chicago’s Brainerd speak at one o’clock. Fortunately, after today, they’ll be under a gag order until next week’s Open Market Committee meeting.

It’s a rather quiet Merger Monday with only one deal of note. Horizon Pharmaceuticals is buying Raptor Pharmaceuticals at a 21 percent premium to Friday’s closing price. Michigan’s Perrigo is about 4 percent higher pre-market on word that activist investor Starboard Capital has taken a significant stake in the company.

Overseas markets are generally lower by between 1½ and 2 ½ percent. Our futures aren’t as ugly as earlier this morning, but they’re a long way from winning any beauty contests. At this point, adjusted for fair value, the S&P 500 futures are lower by about 11 points, the Dow futures are down 105, and the NASDAQ futures are about 33 points below fair value.

September 9, 2016

It’s an unusually quiet day for economic and earnings news as we wrap up the short holiday week.

One earnings report comes from Mattress Firm.  57 cents of operating profit was 8 cents worse than expected, (corrected) although sales were a little light. There’s very little trading in those shares so far in the pre-market.

On the “thanks for telling us now” list, Goldman Sachs has added Facebook to its focus list this morning.

Wells Fargo has settled a little problem with the Government, agreeing to pay 185 million dollar fine and 5 million dollars in restitution to their own clients. An internal incentive compensation plan may have influenced 5,300 now ex-employees to open unauthorized client accounts. Of course, we don’t really know, since Wells did not admit or deny the Government’s allegations. We do know however, that those 5,300 employees were sent looking to open unauthorized accounts elsewhere, if that was their particular specialty.

Asian markets were lower by one to two percent overnight. European markets are about a half-percent lower. Our futures have been lower all morning long and are continuing to slide. At this point, adjusted for fair value, the S&P 500 futures are lower by about 11½ points, the Dow futures are down 79, and the NASDAQ futures are about 25 points below fair value.
 
September 7, 2016

Interest rate speculation will continue to drive stock prices today. Yesterday, a couple of lousy reports on the services sector of the economy led traders to believe that a September rate hike is pretty much up in smoke, leading to moderate gains in stock prices.

Today, we have a couple of federal Reserve Presidents testifying on Capitol Hill, and then at 2 o’clock, we’ll get the Federal Reserve’s Beige Book, which is their latest survey of regional economic conditions. Don’t expect great things there.

And speaking of not expecting great things, the latest product unveiling from Apple comes today. Outside of a faster processor and a possible lack of a headphone jack in the new iphone, there’s not much people are expected to get horribly excited about.

Advanced Micro Devices stock has been on a tear lately, more than tripling over the past year. Until last night, that is. AMD announced a new stock offering, and existing shares are about 3½ percent lower this morning as a result. ON the famous other hand, Western Digital shares are 5 percent higher on an improved earnings forecast.

Ford Motor has announced record August car sales in China at almost 100,000 vehicles. That’s 22 percent more than a year ago.

The S&P and Dow futures were looking pretty good in the early overnight, but turned lower a few hours ago. At this point, adjusted for fair value, the S&P 500 futures are lower by about 3 points, the Dow futures are down 16, but the NASDAQ futures still hanging in there at about 1½ points above fair value.

September 6, 2016

Given the Labor Day Holiday, we couldn’t have a “Merger Monday” this week. However, it looks like we’ll substitute a “Get-together Tuesday.”

Shares of Cepheid are more than 50 percent higher pre-market on word that Danaher will buy the diagnostics maker in a 4 billion dollar deal.

Enbridge and Spectra Energy are merging to form the biggest energy infrastructure company in the country.

General Electric is buying two European companies that make 3-D printing machines. That has pushed the prices of domestic 3-D companies Stratysys and 3-D systems higher this morning. Volkswagen is buying a stake in Navistar and Germany’s Bayer is raising its bid for Monsanto.

Two readings on the health of the services industry come by 10 this morning and we will thankfully not hear another Federal Reserve Governor speech until 8:30 tonight.

Asian markets were mostly higher overnight, European markets are narrowly mixed. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 1½ points, the Dow futures are up 19, and the NASDAQ futures are a bit more than a point above fair value.

September 2, 2016

It’s the first Friday of the month once again, and that means it’s the Labor Department’s job to tell us how many other jobs were created last month. They’ll also tell us what percentage of the workforce doesn’t have jobs (at least among those who still have enough initiative to want one.)

Expect 180,000 new non-farm jobs and a 4.8 percent unemployment rate. A number too good will increase the odds of a September interest rate hike. A number too weak will worry those who worry about recessions. Odds favor a good number. After all, there’s an election just two months away.

In any event, it looks like people are at least making enough money to buy their guns. Smith & Wesson reported 62 cents of profit last quarter. That was 8 cents better than expected. They also raised full-year guidance. Smith & Wesson shares are lower by a percent and a half this morning, but did gain over 5 percent yesterday.

Verifone shares are about 17 percent lower after cutting full year guidance. Shares of the GAP are gapping 2 percent lower on a 3 percent drop in same store sales.  Retailer Aeropostale has been bought out of bankruptcy for 243 million dollars.

Most markets overseas are a little higher. We’re stuck in neutral in front of the 8:30 Jobs Report. At this point, adjusted for fair value, the S&P 500 futures are lower by about 3 points, the Dow futures are down 8, and the NASDAQ futures are just about a point below fair value.

September 1, 2016

August went out with a whimper yesterday, and while it wasn’t a bad month for the markets, it was no barn-burner either. So now we look ahead to September, which has a nasty reputation of not being a very hospitable time for stock prices.

Nevertheless, it looks like we’ll open in the green this morning, although not all shares will be so lucky. Take, for example Salesforce.com. Adjusted earnings of 24 cents per share came in 2 cents ahead of estimates on a 30 percent increase in sales. That’s all well and good, but the forecast for the current quarter wasn’t quite up to snuff and Salesforce shares are about 6 percent lower pre-market.

Campbell Soup shares are about 4½ percent lower after reporting 46 cents per share in operating profit, which was 4 cents short of expectations.

August Auto Sales Reports will be rolling out all day long. Expect a small increase from Fiat Chrysler, but a small decline from GM. The Challenger Job Cut Report this morning showed the second lowest job-cut-announcement month this year. We’ll get revised productivity numbers, the weekly Jobless Claims and a couple of readings on the manufacturing sector before the morning is over as well.

Asian markets were mostly lower overnight, but Europe is mostly higher. Our futures have been pointing toward a higher open for stock prices all morning long. At this point, adjusted for fair value, the S&P 500 futures are higher by about 3 points, the Dow futures are up 33, and the NASDAQ futures are just about 15 points above fair value.

WJR October 2016 Reports
WJR August 2016 Reports

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