September 26, 2018
The Federal Reserve will wrap up another two-day tea party this afternoon with another quarter-point hike on short-term interest rates. While another quarter point hike is widely expected come December, traders will focus on Chairman Powell’s 2:30 press conference for any hints regarding 2019 interest rate policy.
Profit expectations were surpassed last quarter at Nike. 67 cents per share came in a nickel better than expected and a dime better than last year. However, marketing expenses rose more than expected and Nike shares are looking to open about 2 percent lower. Cintas shares are lower this morning, also due to rising costs.
KB Homes shares are higher by about 7 percent. 87 cents in quarterly profit compares to the 77-cent estimate and 51 cents a year ago.
In another bit of good news for housing, mortgage applications were up almost 3 percent last week as the average rate for a 30-year conventional mortgage with 20 percent down is up to 4.97 percent.
Asia was mostly higher overnight, Europe is mixed, but our futures have been higher all morning, although they have slipped a bit over the past half-hour.
Right now, adjusted for fair value, the S&P futures are higher by 4 points, Dow futures are up 23, and the NASDAQ futures are about 15 points above fair value.
September 25, 2018
The Federal Reserve Open Market Committee starts another two-day meeting today which will likely result in a widely telegraphed one-quarter of a percent hike in short term interest rates. Longer term rates, which are determined by market forces rather than central bank fiat, have remained stubbornly low in the face of recent Fed tightening. However, the 10-year Treasury rate, which just last week breeched the 3 percent level, rose to over 3.1 percent this morning. That’s a seven-year high.
Speaking of rising rates, prices at the gas pump may be on the rise soon. West Texas Intermediate futures are at $72.41 this morning. Brent crude hit a 4 year high at 81.10 on worries about Iranian supply.
Nike will report quarterly results after 4 o’clock this afternoon. Earlier today, FactSet Research Systems reportedly slightly disappointing earnings and sales numbers. Shares are off 5 percent pre-market. Michael Kors shares are about one percent lower after announcing the acquisition of Gianni Versace.
A report on July home prices is due this morning. It’s expected that the average home price rose a quarter of one percent.
Asian markets were mixed overnight, Europe is mostly higher. Right now, adjusted for fair value, the S&P futures are higher by almost 9 points, Dow futures are up 98, and the NASDAQ futures are about 22 points above fair value.
September 24, 2018
We’re heading into the last week of what is historically a weak month for stock prices. However, the S&P 500 Index is about one percent higher for the month, and if you include dividends, the S&P is about 11 percent higher year-to-date. That’s despite trade tariffs, despite political controversy, despite rising interest rates.
Surging profits are fueling the market, and although the third quarter numbers are a few weeks away, most expect that third quarter profits will rise about 19 percent from a year ago.
It appears to be another Merger Monday. Barrick Gold and Randgold are merging in an 18-billion-dollar deal. Shares of both are higher. Comcast shares are about 4½ percent lower pre-market on word that Comcast won the bidding for British firm Sky at 17 pounds, 28 pence per share. Sirius is buying Pandora in an all-stock deal, although another bidder can still outbid them.
Markets in China, Taiwan, Japan and South Korea were closed to celebrate last night’s Detroit Lion’s victory. Okay, just kidding – they were closed for some other holiday. Stocks in Hong Kong were down 1.6 percent as the latest Chinese trade tariffs kicked in.
Our futures have been trending lower since around midnight. Right now, adjusted for fair value, the S&P futures are lower by about 6½ points, Dow futures are down 51, and the NASDAQ futures are about 45 points below fair value.
September 21, 2018
The Dow Jones Industrial Average hit a new all-time high yesterday for the first time since January. The Dow has now been higher for seven of the last eight trading days, and if we finish the way we’re likely to start today, it will be eight out of nine. The S&P 500 also closed at a record level yesterday.
Under Armour shares, which were being given up for dead not long ago are about 8 percent higher this morning after rising more than 30 percent year-to-date. They raised the lower end of their full-year earnings guidance and also announced that they’ll be cutting another 400 jobs over the next six months. Could be some connection there.
Micron shares are lower by about 4 percent pre-market. Earnings for the quarter gone by were better than expected but fears about the impact of future tariffs are getting the blame.
McDonald’s is raising their dividend by 15 percent to $1.16 per share.
The September Manufacturing Purchasing Managers Index comes later this morning from IHS Markit. Expect a slight improvement to a reading of 55.
Japanese stocks were eight-tenths of a percent higher overnight.
Our futures are well off earlier levels but are still indicating a higher open for stock prices. At this point, adjusted for fair value, the S&P futures are higher by about 3 points, Dow futures are up 67, and the NASDAQ futures are about 11 points above fair value.
September 20, 2018
We talked a little about the Canadian cannabis stock Tilray yesterday. Tilray shares finished the day right around where they started – up almost 40 percent. However, during the day yesterday, trading in Tilray shares was halted five times due to the wild volatility. At one point, the shares were higher by almost 100 percent. So far this morning, the shares are indicated about 12 percent higher, as the reefer madness continues with too many dollars chasing a limited number of cannabis stocks. A company called New Age Beverages is about 33 percent higher this morning, after rising 175 percent over the past three days. Be careful out there, folks.
Darden Restaurants, parent of the Olive Garden reported $1.34 in quarterly profit this morning, ten cents better than expected. Darden also raised full year guidance and shares are about 7 percent higher. Software firm Red Hat shares are down about 8 percent pre-market after past earnings and earnings guidance both disappointed. Also about 8 percent lower are shares of Thor Industries after a lousy earnings report.
Weekly Jobless Claims numbers and the August Existing Home Sales Report are on the way this morning.
As we head toward 9:30, it looks like we’ll see green arrows once again. Adjusted for fair value, the S&P futures are higher by almost 11 points, Dow futures are up 133, and the NASDAQ futures are about 42 points above fair value.
September 19, 2018
Don’t look now, but long-term interest rates may be starting to climb. The 10-year Treasury Bill rate hit 3.059 percent this morning after breeching the 3 percent level last week. While 3.059 doesn’t sound very high, keep in mind that it’s been seven years since rates have been higher than 3.1 percent. While the 10-year rate isn’t directly tied to mortgage rates, it tends to be a pretty good indicator.
Speaking of which, according to the Mortgage Bankers Association, the average rate on a conforming 30-year mortgage with 20 percent down has risen to 4.88 percent. That’s already at a seven-year high. The number of mortgage applications rose 1.6 percent last week, fueled by a 4 percent increase in the number of refinancing loans.
Everyone except short sellers like to see a stock at a new high. This week new highs are blossoming in cannabis related stocks (several puns intended there.) After rising almost 30 percent yesterday, Canadian cannabis company Tilray is almost another 40 percent higher pre-market as cannabis legalization in Canada is less than a month away.
Asian markets were generally higher overnight. European markets aren’t much moved in any particular direction, and speaking of going nowhere fast, adjusted for fair value, the S&P futures are down by 3½ points, Dow futures are down 3, and the NASDAQ futures are about 14 points below fair value.
September 18, 2018
The two big earnings report of last night each missed the mark in different ways, but both FedEx and Oracle are seeing their shares lower pre-market. Oracle’s earnings were a little better than expected, but revenue missed the mark on disappointing cloud services and license support sales. FedEx reported only $3.46 per share in profit, which was 35 cents lower than expected. FedEx blamed the shortfall on timing. Their decision to accelerate pay raises in light of tax reform hit the current quarter earnings. Timing or not, shares are indicated about 2 percent lower.This morning, General Mills beat the 64 cent per share estimate by 7 cents on an adjusted basis, but shares are down 4 percent as General Mills did not raise full year guidance.Japan was higher by about a percent and a half overnight, China was about 2 percent higher. Europe is a bit higher. Our futures had been on a slow climb ever since the close of the cash market yesterday.At this point, adjusted for fair value, the S&P futures are higher by 6 points, Dow futures are up 59 and the NASDAQ futures are about 13 points above fair value.
September 17, 2018
We will see a little flurry of late-in-the-calendar-quarter earnings this week. Today, FedEx and Oracle will report after 4 o’clock this afternoon. Expect the Oracle earnings to come in at around 68 cents per share.However, trade negotiations and tariff threats continue to hold sway over stock prices this week. We should get an update on President Trump’s latest threat to slap tariffs on another $200 billion of Chinese imports later today. This time around, the charge will reportedly be only 10 percent, rather than the 25 percent rumored earlier.Steve Madden stock will split 3 for 2. Shares of Teva Pharmaceuticals are more than 8 percent higher pre-market on word that the FDA has approved Teva’s anti-migraine drug.The Japanese market was closed overnight for a holiday called “Respect for the Aged Day.” Other overseas markets are mixed, but generally a little lower.
September 14, 2018
Bad weather from Hurricane Florence has shut down the economic day in North Carolina. A nice late-summer afternoon in New York may lead to slower afternoon trade on Wall Street as traders may try to stretch their weekend a bit. Not that they’ll miss a whole lot. We will get a report on August Retail Sales from The Census Bureau. Expect a four-tenths of a percent rise from July, and a full half percent if you exclude automotive sales.The University of Michigan’s first look at September Consumer Sentiment comes at 10 this morning. It’s expected that last month’s reading of 96.2 will not much change.Shares of utility company Nisource were more than 7 percent lower pre-market after a series of natural gas explosions in the Boston area.Yesterday, the White House invited China to engage in another round of trade negotiations. That had Asian markets in a good mood overnight. Japanese stocks sit at a seven month high, and outside of London, European markets are higher.Our futures have held at slightly higher levels all morning. Right now, adjusted for fair value, the S&P futures are higher by 3½ points, Dow futures are up 37 and the NASDAQ futures are about 21 points above fair value.
September 11, 2018
September may be living up to its reputation as a lousy month for stock prices, as we may be looking at another morning of red arrows. Domestic stock futures have been sliding fairly steadily since midnight. Of course, between the horrific attacks of 17 years ago today that cost thousands of lives and shuttered the financial markets for six trading days and the Lehman Brothers collapse of 10 years ago this week, we have a lot of bad September memories in our not-to-distant past.Bucking the overall trend early on today may be shares of restaurant company Sonic. They raised guidance for fourth quarter same store sales as well as profit and Sonic shares are about one percent higher pre-market.Retailer Francesca look to be the downer of the morning, with shares losing almost 30 percent on lousy earnings news.A major broker downgraded shares of CBS. Apparently, they’ve determined that there’s a bit of a management shake-up going on over there. Japan’s Nikkei Index rose more than one percent overnight, but Chinese stocks were down again and Europe is off about one half of one percent.Right now, adjusted for fair value, the S&P futures are lower by 6½ points, Dow futures are down 98 and the NASDAQ futures are 20 points below fair value.
September 10, 2018
Last week reminded everyone that stock prices don’t ALWAYS go higher, as stocks had their worst week in over two months. Nevertheless, we could well come bouncing back a bit this morning.Getting bounced out of the C-suite at CBS, effective immediately, is longtime executive Les Moonves, after new accusations of sexual shenanigans surfaced. Historically, an involuntary change at the top is not good news for subsequent year returns, so it’s wait-and-see for CBS shares. Soo far this morning, shares are about 1½ percent higher. On the famous other hand, Snap shares are 2 percent lower on word that Snap’s Chief Strategy Officer is leaving the company.A year from now, Alibaba founder and Executive Chairman will be leaving his post, although he’ll still be on the board for a while. Ma isn’t being accused of anything other than a desire to return to teaching. The Federal Reserve will release the July Consumer Credit data this afternoon at 3. Consumer debt in this country is expected to hit an all-time high, approaching 4 trillion dollars.Chinese stocks were lower once again on tariff concerns, although Japan was higher overnight and Europe is solidly higher at this hour. Our futures have been on a slow rise, but have steadied over the past hour. Right now, adjusted for fair value, the S&P futures are higher by 13 points, Dow futures are up 117 and the NASDAQ futures are almost 45 points above fair value.
September 5, 2018
With little earnings news to move the markets, good old Washington D.C. is moving in to fill the volatility void.Oil prices are retreating a bit from yesterday’s bubble-up and Tropical Storm Gordon’s wrath has passed the offshore drilling complexes. Meanwhile, a typhoon in Japan has closed a major airport in Tokyo. Not to be outdone, multiple non-weather storm clouds are forming in Washington D.C.Members of Congress will be sending their own messages to Facebook and Twitter representatives today. Google parent Alphabet was also invited to this special shindig. However, when Alphabet big-wigs offered only to send a lower-level executive, Congress decided to move on without them.Canadian trade representatives will again engage in NAFTA negotiations today, while statements out of the White House and Ottawa don’t seem to be making an agreement very likely very soon.Shares of RH, Workday and German giant Bayer are all slumping a bit pre-market after reporting their quarterly results.Our futures have recovered a bit form a couple of hours ago when the Dow futures were lower by more than 100 points. However, we still should see red arrows at 9:30. Adjusted for fair value, the S&P futures are down about 5½ points, the Dow futures are down 71, and the NASDAQ futures are about 11points below fair value.
September 4, 2018
Welcome to September. It’s a month with a bad reputation when it comes to stock prices, although historically it’s at its worst when the general market is already in decline. In a rising market, there appears to be little to fear, at least if history repeats.History does show that Mondays are a big day for mergers and acquisitions.Even though today is Tuesday, it feels like a Monday, and oil services firm Transocean responded by announcing acquisition of offshore drilling contractor Ocean Rig at a 19 percent premium to Friday’s closing price.Transocean shares are looking to open a couple percent lower, but it may not be entirely due to the deal. Oil is about 2 percent higher as a tropical storm is disrupting drilling operations in the Gulf of Mexico.Although second quarter earnings season is pretty much in the past at this point, it was on the whole a good quarter, with earnings rising about 25 percent.Of course, in four weeks, we’ll start the whole circus over again. RH, formerly known as Restoration Hardware will report earnings today.Chinese stocks rose overnight about one percent, but European markets off about one-half to one percent.Our futures took a turn for the worse over the past couple of hours, and we’ll likely see red arrows at 9:30. Adjusted for fair value, the S&P futures are down almost 6 points, the Dow futures are down 79, andthe NASDAQ futures are about 22points belowfair value.
Our futures have improved a bit from earlier levels but are still indicating a slightly lower open. Right now, adjusted for fair value, the S&P futures are lower by 2 points, Dow futures are down 19 and the NASDAQ futures are about 20 points below fair value