Ron is away today. He'll be back soon. Have a great day!
September 26, 2017
Four more speeches from Federal Reserve officials are on the agenda today, including a 12:45 speech from Janet Yellen in Cleveland. Interestingly, Minneapolis Fed head Neel Kashkari opined yesterday that the economy is in no danger of overheating and there is no need for an immediate hike in short term interest rates.
In the hit-a-home-run-or-strike-out world of biotech, a firm called Axovant Sciences had a pretty good batting average going into today. Through yesterday, its shares had risen 95 percent this year. Unfortunately, we hear this morning that the companyâs late stage treatment to combat Alzheimerâs disease struck out swinging and Axovant shares are lower by about 70 percent pre-market.
Lot of housing news on the way today, including the August New Home Sales report and the July Home Prices Report. Expect that prices have risen almost 6 percent year-over-year and the New Home Sales in August perked up to an annualized rate of 583,000.
Darden Restaurants met the earnings estimate last quarter, but Olive Garden sales slumped, and Darden shares are almost 5 percent lower this morning.
Overseas markets are mostly lower after our declines from yesterday, but we may see a little bounce back in the early going.
Adjusted for fair value, futures on the S&P 500 are up a point and a half, the Dow futures are up 28, and the NASDAQ futures are about 15 points above fair value.September 25, 2017
Itâs the beginning of the end of the third quarter for companies with a calendar year-end. Traditionally, itâs a time when companies that will fall short on quarterly earnings start pre-announcing that inconvenient truth. However, earnings have been so good for the past handful of quarters, precious few companies have had anything to warn about.
That may change this week, if for no other reason than the twin impact of Hurricanes Irma and Maria. This morning, home builder DR Horton warned that earnings for the rest of 2017 will be hurt due to the hurricanes. However, they do not think that 2018âs performance will be hurt.
Now that the Federal Reserveâs decision has been made, weâll have no fewer than three Fed heads out on the rubber chicken circuit today. Weâll also get the Dallas Fedâs latest manufacturing survey for the Dallas region, which is expected to cool from a reading of 17 all the way down to 12.
The big merger of this Monday has Genuine Parts buying Europeâs Alliance Automotive for about 2 billion dollars.
Overseas markets are narrowly mixed. Our futures have been sitting at very slightly lower levels all morning. Adjusted for fair value, futures on the S&P 500 are down 2 points, the Dow futures are down 9 points, and the NASDAQ futures are about 11 points below fair value.
Seems that each day we talk about some little biotech firm whose stock shoots higher based on a promising new drug. Well, volatility works in both diretions and sometimes a companyâs shares shoot in the other direction. This morning, shares of Versartis are indicated more than 84 percent lower. The companyâs drug to combat human growth hormone deficiency showed no better performance than an existing drug marketed by Pfizer.
Shares of athletic shoe and apparel retailer Finish Line is falling short of the mark. Same store sales are off 4 Â˝ percent. Second quarter operating earnings of 12 cents were 2 cents short, and Finish Line is now predicting full year profit of 55 cents per share. Thatâs less than half of earlier expectations.
Transoceanâs shares are lower after announcing a 1.4 billion-dollar charge to retire 6 of their ocean drilling rigs.
Word is that Sprint and T-Mobile are closing in on a merger agreement and shares of both are higher pre-market.
Most of Asia was a little lower overnight, but most of Europe is a little higher. Still, the marketâs overall reaction to this weekâs monetary policy announcement remains fairly muted. Adjusted for fair value, futures on the S&P 500 are down 2Â˝ points, the Dow futures are down 8 points, and the NASDAQ futures are almost 15 points below fair value.
Years ago, the Federal Reserve was roundly criticized for being insular, opaque and almost downright secretive about monetary policy. Well, that was then and this is now. Yesterdayâs announcement of the Fedâs planned policy moves were so well telegraphed, it almost fell like we were watching a network rerun.
No hike in interest rate â but one is coming by year end. A slow roll off in the Fedâs bond inventory â but a roll off that could turn into a roll-up if the economy weakens. In summary, the plan is a baby step in a multiple-step interest rate ânormalizationâ that stock traders fully expected.
A move that was confirmed this morning was also widely expected. Google is buying HTCâs interest in the Pixel phone for 1.1 billion dollars. HTC and Google have worked jointly on Pixel, and while HTCâs overall market share in cell phones has declined, Google is re-committing to the phone hardware space.
Albertsonâs is buying meal-delivery service âPlated.â That has the price of Blue Apron higher in sympathy. Shares of water purification company Calgon Carbon are more than 60 percent higher this morning on a buyout offer.
Stock prices started yesterday flat, ended the day flat, and a showing little movement this morning. Adjusted for fair value, futures on the S&P 500 and down 2 points, Dow futures are flat and NASDAQ futures are 3 points below fair value.
Itâs Fed decision day, and if actions follow expectations, weâll hear about no change in interest rates, but will hear about the timing of an eventual sale of the Fedâs giant pile of Treasuries and mortgage backed securities.
Last nightâs earnings reports painted a mixed, but mostly disappointing picture. Federal Express missed the earnings target and lowered its full year guidance. Shares are about one percent lower this morning. Adobe did better than expected last quarter, but the details have the shares off almost 3 percent.
Bed, Bath and Beyond shares are about 15 percent lower, as 67 cents of quarterly profit fell 26 cents short of the average estimate. In the comparable quarter last year, Bed Bath & Beyond earned $1.11.
The pharmaceutical darling of the morning is Alnylam Pharmaceuticals. Shares are up more than 20% on a successful drug test.
Microsoft shares are fractionally higher after announcing a 7.6 percent dividend increase.
Like most markets overseas, weâll likely play close to the flat line until the Fed speaks during the 2 oâclock hour. Futures on the S&P, Dow and NASDAQ are all within a point or two of fair value.
Shares of Bob Evans Farms are nearly 40 percent higher this year, on speculation of a merger plan. If youâre a Bob Evans shareholder, you have to love it when a plan comes together. Post Holdings will pay 77 dollars per share for Bob Evans, which is about 6 percent higher than yesterdayâs close.
The last gasp of big earnings news for the quarter comes after the close tonight when we hear from Bed Bath & Beyond and Adobe Systems. Federal Express, which just announced a 3 to 5 percent price increase for 2018 shipments will also report after 4 oâclock.
As we mentioned yesterday, Toys-R-Us did file for Chapter 11 protection yesterday, joining a growing list of bricks and mortar retailers in doing so. Toys-R-Us had been facing cash-up-front terms for future inventory purchases.
The Fedâs Open Market Committee starts a two-day gabfest today, and markets overseas are playing it close to the vest. They are mixed, but very little changed in front of our Fedâs pending announcement tomorrow.
Our stock index futures havenât budged much over the past few hours. Adjusted for fair value, the S&P 500 futures are higher by almost 8 points, the Dow futures are up nearly 31 points, but the NASDAQ futures are a fraction of a point below fair value.
Markets across the globe appear to be jumping on board with our rally of last week. That week was the best week of the year for the Dow Jones Industrials. Of course, this is a new week, and traders will be laser focused on Wednesday afternoon.
Thatâs when the Federal Reserve Open Market Committee wraps up a two-day meeting and is likely to announce the beginning of the end of its bond buying program. Announcing a beginning is easy. Getting to the end may prove a bit more difficult.
It seems that at least once a week we see a small pharmaceutical company surging on hopes for a new medical breakthrough. This morning itâs Israeli firm Pluristen Therapeutics. Shares are more than 16 percent higher on FDA fast-track approval for a treatment to combat Critical Limb Ischemia.
And if you think that Dave Brandon had his troubles as the University of Michigan Athletic Director, at least he didnât have to compete with the internet. Brandon is now CEO of Toys âR Us, and word is that a bankruptcy filing may be the next thing in the shopping cart. The âinternet of things claimsâ another victim.
Womenâs shoe provider Aerosoles is filing for Chapter 11 and closing more retail stores. Making it a merger Monday â Northrup-Grumman is buying Orbital for 7.8 billion dollars. Orbital shares are about 20 percent higher pre-market, and shares of most stocks should trade higher at 9:30.
Adjusted for fair value, the S&P 500 futures are higher by almost 4 points, the Dow futures are up nearly 55, and the NASDAQ futures are about 11 points above fair value.
As any business owner knows, what youâve done is important. What youâre going to do is critical. Last night, Oracle announced a 62 cent per share profit for last quarter. However, forward guidance wasnât inspiring and Oracle shares are off almost 4 percent pre-market.
Later this morning, weâll get information on August Retail Sales, which are expected to rise only one-tenth of a percent due to disappointing car sales. Consumer Confidence figures from the University of Michigan come at 10 oâclock and are expected to only dip a little to a reading of 96, in spite of the landfall of Harvey and the approach of Irma at the time the survey data was collected.
Several other economic reports will round out the weekâs data as we look forward to next weekâs meeting of the Federal Reserve Open Market committee and a widely anticipated announcement regarding a reduction in the Fedâs balance sheet. Theoretically, that would result in rising long-term interest rates.
The Nikkei Index in Japan rose overnight in spite of North Koreanâs target practice overhead. Most European markets are a little lower, and weâre looking for a rather mixed start for the third session in a row.
At this point, adjusted for fair value, the S&P 500 futures are lower by less than a point, the Dow futures are up nearly 17 points, but the NASDAQ futures are about 6 points below fair value.
Some weaker than expected economic news out of China has put a bit of a pause to the global stock rally. Not that overseas markets are hurting badly this morning, but they are turning in a mixed performance.
Earlier this morning the Bank of England announced no change in interest rates, but warned that if pricing pressures start to rise, they may well shift gears. Of course, central banks around the world have been huffing and puffing that line for several years now.
At 8:30 this morning the weekly jobless claims are expected to swell past the 300,000 mark due to the impact of Hurricane Irma. Weâll also find out if August Consumer Prices rose at all, following up yesterdayâs weaker-than-expected Producer Price Report. Expect a three tenths of a percent increase, and a year-over-year inflation hike of 1.9 percent.
You might say that itâs been a bad week if youâve had your personal information compromised. Itâs also been a bad week for shareholders of credit monitoring firm Equifax. Those shares are of another one and a half percent this morning, after losing about 30 percent since their massive data breech was announced last week.
Our futures are just about in the same places they held 24 hours ago relative to the prior dayâs close. At this point, adjusted for fair value, the S&P 500 futures are lower by about 2Â˝, the Dow futures are up nearly 4 points, but the NASDAQ futures are about 8Â˝ points below fair value.
Well, weâve survived the Apple gadget presentation yesterday, with promises of a wristwatch that doesnât have to be near an iphone (although youâll still have to own an iphone to use the watch.) Also, the new iphone Ten (the $1,000 model) wonât be available until November. Yesterdayâs demonstration of the watch worked well. The demonstration of facial recognition on the new iphone (which Samsung already has) didnât go so well.
The housing market (or at least the mortgage sales market) continues to benefit from sinking interest rates. The average rate on a conventional 30-year mortgage fell to 4.03 percent last week. Refinancings were up 9 percent, and seasonally adjusted applications for new purchase mortgages were 11 percent higher.
Producer prices have been persistently weak as of late. At 8:30 weâre expecting a little pick up to a three-tenths of a percent increase in August, but only two-tenths of a percent if you ignore food and energy prices.
American Airlines is lowering revenue estimates, which is no surprise in the wake of recent weather events.
Stock prices are a little lower in the United Kingdom, but are generally a half-percent higher in other markets overseas. As we head toward 9:30, the futures are paining are painting a mixed picture, but mostly a little lower. Adjusted for fair value, the S&P 500 futures are lower by about 3Â˝ points, the Dow futures are up 4, but the NASDAQ futures are about 10 points below fair value.
Stock prices never lost momentum yesterday in hopes of continued low interest rates and lots of rebuilding business in southern states. Stock prices rose more than one percent, and if the futures are any indication, and they usually are, weâll continue on to record levels for the major indexes in the early going today.
Yet, even the events of the weekend will get pushed to the back burner of tradersâ stovetop today as Apple unveils its new bunch of gadgets. Word is that the new iphone will go for upwards of $1,000 dollars. In another example of financial prudence, half the country will rush out to buy one, and they could be the half of the country that havenât managed to accumulate at least $1,000 in savings. That may be why some say we need income redistribution.
Earlier this morning, the National Federation of Independent Business survey of small business optimism reported a level of 105.3, which was at the upper end of expectations, and matched the highest level in 12 years. At 10 oâclock, the Labor Departmentâs July Job Opportunities and Labor Turnover Report is expected to tell us about 6 million job openings nationwide.
Overseas markets are almost all higher, and weâre heading in that direction as well. Adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 66, and the NASDAQ futures are about 21 points above fair value.
Every 11thof September, we all remember the man-made disaster of 2001. This morning, we wake up to the natural disaster of Hurricane Irma. Irrespective of the human toll, reaction from stock traders and the machines that they run couldnât be more different.
In 2001, the prospect of additional attacks and uncertainty regarding the government response sent stock prices reeling. This morning, certainty regarding the business of rebuilding Florida and other storm-struck states is contributing to a surge in stock prices. Even insurance stocks are trending higher, as the damage was not as severe as expected. Not lost in all this is the possibility that Irma will convince the Fed to hit the âpause buttonâ on rate increases.
All that is well and good, but we should remember that a lot of businesses have lost, and will continue, to lose a lot of business due to the storm. We now have three weeks to go before the end of the third quarter of 2017. Florida may not have gotten the storm surge that was predicted, but a surge in corporate earnings warnings should be expected before October 1st.
All major overseas markets are higher this morning, with most of Europe higher by about one percent.
Our futures are off their highs of the morning, but are still pointing us higher at 9:30. Adjusted for fair value, the S&P 500 futures are higher by about 13 points, the Dow futures are up 136, and the NASDAQ futures are about 43 points above fair value.
If youâre one of those who tries to be responsible about their personal finances, you know that itâs a good idea to check in with one of the three major credit reporting firms periodically â just in case some mischief maker may have gotten hold of your personal information and/or credit card numbers.
Well, in another case of no good deed going unpunished, weâre finding out that about 143 million U.S. consumers may have had their personal information accessed because of hacked systems at Equifax, one of those big three reporting firms. The data breach was discovered about 6 weeks ago, but weâre just hearing about it today.
Just in case youâre curious, you can go to the Equifax website, enter your name and the last six digits of your Social Security number and find out if your information was compromised â that is, if youâre comfortable typing in your name and the last six digits of your Social Security number.
Oh, by the way, a few Equifax executives sold chunks of their Equifax stocks prior to the disclosure of this news. Just a coincidence, they say. Equifax shares are about 12 percent lower this morning.
Not to be outdone by that drop, shares of gun maker American Outdoor are almost 19 percent lower this morning after last nightâs earnings report.
So, outside of that and Texas floods, and Florida hurricanes, and North Korean shenanigans and data breaches, itâs surprising that the futures arenât weaker than they are.
Adjusted for fair value, the S&P 500 futures are lower by about 4 points, the Dow futures are down 35, and the NASDAQ futures are about 5 points below fair value.
It looks like weâll get another little bounce back from yesterdayâs thumping as stock investors pick up positions at newly-lowered prices.
We do, however, have a trio of earnings warnings this morning that will not help shares of those individual companies.
Shares of travel website Trivago, higher by about 27 percent higher this year, are looking to drop more than 21 percent this morning after the company warned of slowing sales and earnings. Likewise, shares of Dave and Busterâs and Rubbermaid parent Newell Brands are lower by more than 7 percent each on lowered forecasts.
The Fedâs fashionable colored Beige Book, their survey of regional economic conditions will be published at 2 oâclock this afternoon. At 10 oâclock, weâll get the Institute of Supply Managementâs reading on how the services sector did in August. Expect improvement from Julyâs 53.7 to about 55.3.
Home ownership is a little more affordable than a week ago as the average rate on a 30-year conventional mortgage with 20 percent down fell to 4.06 percent.
Asian markets were mixed overnight, but European markets have generally turned a bit higher. Adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 48, and the NASDAQ futures are 19 points above fair value.
Because of the Labor Day holiday, weâre not having a Merger Monday today. Letâs call it a âcome together Tuesday.â This morning, United Technologies announced the acquisition of Rockwell Collins. Itâs a deal thatâs been in the works for about a month now, so itâs not a big surprise. Rockwell Collins shareholders will get $94 in cash and United Technologies stock worth $46. Thatâs about an 18 percent premium to Rockwellâs price when rumors of the potential deal started to spread.
Later today, the July Factory Orders report is expected to follow up Juneâs 3 percent increase with a decline of about 3 percent.
Delphi shares are a little higher on the back of a Wall Street Journal story.
Lego will cut about 8 percent of its workforce, to adjust to a slowdown in sales.
And if you need money in a hurry, effective today, selling shares of a stock or an ETF will get the cash in your account in two days rather than three, as clearing systems implement whatâs called T+2 settlement.
Overseas markets are mixed, but most are a little higher.
The last time we had a big North Korean scare (which wasnât long ago) stocks started the day in the red, but ended in the green. Our futures have been recovering from their early morning declines, but still have a long way to go. Adjusted for fair value, the S&P 500 futures are lower by almost 7 points, the Dow futures are down 61, and the NASDAQ futures are almost 14 points below fair value.September 1, 2017
Itâs the first day of the month that has a history of being not very kind to stock investors (at least not as kind as the three or four months to come.) Itâs also the first Friday of the month, and that means that the Labor Department will celebrate Labor Day be releasing the Employment Situation Report for August.
Most expect the report to tell us about the creation of 180,000 new non-farm jobs. However, the ADP Report this week ran hot, so we could see a number north of 200,000. The unemployment rate is likely to hold at 4.3 percent and the increase in the average hourly wage to be two-tenths of a percent, bringing the year-over-year rise to 2.6 percent.
Shares of Lululemon are on a 5 percent rise this morning on a broker upgrade. Network security firm Palo Alto Networks shares are almost 8 percent higher after yesterdayâs earnings report. On a GAAP basis, Palo Alto lost 42 cents per share on the quarter, but if you adjust for the 35% of sales that they paid out in stock-based compensation, Palo Alto earned 92 cents, which was 13 cents better than expected.
The ISM and PMI survey results on the manufacturing sector also come this morning, but ahead of that itâs likely that weâll follow up yesterdayâs rally with more green arrows.
Most overseas markets are higher and adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 71, and the NASDAQ futures are 17 points above fair value.