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WJR September 2019 Reports

September 30, 2019

It’s the last day of the third quarter.  For all the recent volatility, the S&P 500, including dividends, is about one percent higher than its level of June 30th.  Not doing quite as well recently is the price of bitcoin, down 34 percent over the last three months including a drop of 20 percent just last week.

Another company has joined the long list of retailers operating while bankrupt.  Forever 21 has filed for Chapter 11 protection and will close almost 200 of their 800 stores as mall-based retailers continue to lose sales to online rivals.

Another hard-luck story (maybe a hard-boiled story) this morning is the earnings report from Cal-Maine Foods.  A 30 percent drop in egg prices resulted in a 94 cent per share loss, nine cents worse than expected.  Cal-Maine stock is more than 5 percent lower pre-market.

The Institute of Supply Management releases their September Chicago Purchasing Managers survey result this morning.  Expect it read about 50, which would indicate not much growth, but not much decline in economic activity.

We’ve seen a recent trend of stock prices starting the day higher and then getting beaten down as soon as our beloved politicians get out of bed.  True to form, we should start a little higher this morning.

Adjusted for fair value, the S&P 500 futures are higher by almost 10 points, the Dow futures are now up 71 and the NASDAQ futures are 34 points above fair value.

September 27, 2019

The day of the high-octane initial public offering, at least for companies with questionable plans for making a profit may be coming to an end.  Yesterday, Peleton’s public shares started the day at at 27 dollars per share and spun into reverse without breaking a sweat, finishing the day more than 11 percent lower.

This came after the We company shelved their IPO for the time being. This morning Endeavor, which is the company that owns the IMG sports management company and the UFC body-slammed their anticipated IPO for the time being.

Shares of memory-chip maker Micron are short-circuiting by 6 percent pre-market, even though earnings and sales beat estimates last quarter.  Micron’s outlook for the remainder of the year left a lot to be desired.

The August Durable Goods Report, personal income and spending figures and the University of Michigan’s final verdict on Consumer Sentiment are on the way this morning.  Expect the U of M survey to confirm the mid-month estimate of 92.

Comments from a Bank of England official has the pound falling but British stocks rising this morning, as the former rate hawk said that more monetary easing may be needed. Our futures are off earlier highs but are still indicating higher prices at 9:30.

Adjusted for fair value, the S&P 500 futures are higher by about 12 points, the Dow futures are now up almost 100 points and the NASDAQ futures are 17 points above fair value.

September 26, 2019

There’s a little flurry of earnings and economic news to ponder today, which may give us a temporary reprieve from worrying about which politicians are hell-bent on throwing each other out of office.

Two companies are seeing share price gains this morning, even though last quarter sales fell short of estimates.  Rite Aid shares are about 6 percent higher after adjusted earnings of 12 cents were 10 cents better than expected. Likewise, Conagra Brands share are about 5 percent higher, after beating the 38 cent estimate by a nickel per share.

The apparently irrepressible shares of Beyond Meat are 13 percent higher pre-market as McDonald’s announced that they’ll be trying out the Impossible Burger in Canadian stores.

The Government’s final guess at second quarter GDP is on the way.  In case you’re keeping track of the cryptocurrency roller coaster, Bitcoin is more than one percent lower this morning at around $8,400.  That’s more than 20 percent lower than its level of about three weeks ago.

Outside of Shanghai, overseas markets followed us higher overnight.  Adjusted for fair value, the S&P 500 futures are higher by about 7 points, the Dow futures are now up 78 points and the NASDAQ futures are 8 points above fair value.

September 25, 2019

In simpler times, stock market movements could often be explained by simply looking at earnings and interest rates. Nowadays, throw in a global trade war and perpetual political upheaval. Looking through the market microscope seems more like a look through a kaleidoscope.

Yesterday’s downdraft in stock prices was a direct result of Nancy Pelosi’s announcement of an impeachment inquiry. Although the likelihood of impeachment and Senate conviction appears remote, markets hate uncertainty and instilling uncertainty appears to be the modus operandi of many of today’s politicians.

There’s no uncertainly in the operating results from Nike. Earnings of 86 cents per share came in 15 cents better than expected on a 27 percent jump in Chinese sales and a 33 percent boost in Chinese profit.  Nike shares are up about 6 percent pre-market and are adding about 35 points to the Dow Jones Industrials, which are nevertheless indicated a bit lower.

The merger talks between Altria and Philip Morris have ended, as Altria’s recent purchase of a 35 percent stake in vape-maker Juul is looking to be a bit of a problem. Philip Morris shares are almost 6 percent higher on the news. Juul’s CEO, by the way, is stepping down. Altria stock now a bit higher on that news

In spite of that and the Nike results, stock prices should head a little lower at 9:30. Adjusted for fair value, the S&P 500 futures are lower by about a point, the Dow futures are now up 3 points and the NASDAQ futures are about 13 points belowfair value.

September 24, 2019

As last week’s angst over the pace of Chinese trade talks fades, stock prices are looking to levitate a bit in the early going today.

On the earnings front, we have a case of the good, the mixed and the ugly this morning.

Carmax beat earnings and revenue estimates this morning, reporting $1.40 of profit, seven cents better than expected.  Carmax shares are about 4 percent higher pre-market.  Mixed news came from AutoZone.  Earnings of $20.95 fell a little short of expectations, but sales were better than expected and shares are fairly flat so far.

The ugly came from Canada’s Blackberry.  Shares are about 10 percent lower on a revenue miss.  We’ll hear results from Nike after 4 o’clock this afternoon.

The Conference Board’s September Consumer Sentiment survey results this morning are expected to come in at about 133, which would indicate a little less confidence than reported in August.

Outside of London, overseas markets are in the green, as are our futures, although they are off earlier highs.

Right now, adjusted for fair value, the S&P 500 futures are higher by about 13 points, the Dow futures are up 103 and the NASDAQ futures are about 37 points abovefair value.

September 23, 2019

Stock prices were rolling along nicely last Friday until stories rose about a possible breakdown in Chinese trade negotiations, sending equities into the red.  While any damage in the talks appear to be limited, markets around the world are lower this morning.

Compounding the problems in Europe, the September Eurozone manufacturing Purchasing Manager Index hit a seven-year low at 45.6, down from 47 in August.  German manufacturing, highly reliant on their auto industry) was even weaker, hitting a 10-year low at 41.4.  Although the Eurozone services index is still indicating slight expansion, it’s at a much slower rate.

There are a lot of British travelers getting an unwanted extension of their vacations today as travel tour company Thomas Cook filed for liquidation, stranding about hundreds of thousands of travelers.  Thomas Cook has only been around for 178 years and just over a year ago was worth over 2 billion dollars.

The Japanese market was closed overnight for yet another holiday, but most other markets overseas are lower.

Our futures have recovered a bit from early morning lows, but we’re still looking at lower prices at 9:30. Right now, adjusted for fair value, the S&P 500 futures are lower by about 5 points, the Dow futures are down 65 and the NASDAQ futures are about 10 points below fair value.

September 20, 2019

We’re within the last 7 trading days of the end of the third quarter.  As is usually the case, estimated earnings for this quarter have been reduced.  However, we haven’t heard a lot of warnings from specific companies regarding severe disappointments from those lowered estimates.

One such warning late Wednesday sent shares of U.S. Steel lower by more than 11 percent yesterday.  A loss of 35 cents per share would fall well short of the expected loss of ten cents per share.

Now that the third quarter is almost over, the Federal Reserve is set to tell us how much we were worth in the second quarter of the year.  Household net worth in the U.S. rose 4 ½ percent in the first quarter as the S&P 500 rose almost 14 percent.  Second quarter growth is expected to be much more muted, as the large caps tacked on just over 4 percent in that quarter.

Please note that according to New York City, if you’re a student in the New York City public schools, it’s okay to skip school today in the name of concern for the environment.  Apparently, it’s just another step forward in our educational system.

China cut interest rates overnight for the second consecutive month.  That has Asian markets outside of Hong King on the rise.  Europe is also mostly higher.

At this point, adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 45 and the NASDAQ futures are about 14 points above fair value.

September 19, 2019

The Federal Reserve gave traders (and their algorithms) just what most expected yesterday, but did NOT give any solid indication that yesterday’s quarter-point interest rate cut would be followed by more cuts this year.  The initial reaction was a sell-off in stocks, until a final-hour rally lifted the Dow into the green, as the computers apparently decided that the news wasn’t so bad.

Whether interest rates go lower in the future or not, corporations are no doubt using these super-low rates to borrow funds and buy-back their own stock.  Target has announced that as soon as their 5-billion-dollar buyback program is complete, they’ll start another 5-billion-dollar buy-back.

Last night, Microsoft announced an 11 percent dividend increase and an additional 40 billion dollar buy-back.

This morning, Olive Garden parent Darden Restaurants announced earnings that beat expectations, but sales were a little soft in spite of a nice same store sales increase at Olive Garden.  Shares of Darden are about 1½ percent lower pre-market.  U.S. Steel shares are more than 10 percent lower on a profit warning.

As was the case yesterday, Asian markets are mixed but Europe is solidly higher.

Our futures have improved from their lows of the morning but are still indicating a lower open. Adjusted for fair value, the S&P 500 futures are lower by about 3½ points, the Dow futures are down 27 and the NASDAQ futures are about 11 points below fair value.

September 18, 2019

A very late day rally pushed stock prices a bit higher yesterday, although we may give those gains back in the early going today.  Still, very often on Federal Reserve Announcement Days, the major indexes hover around the flat line by the time of the announcement.  That time would be at 2 o’clock, with the explanatory statement and press conference at 2:30. Almost everyone expects that the Fed’s target rate will be cut by one-quarter of one percent. It’s the content of the Fed statement and press conference that will be of more interest.

Yesterday after the regular trading session, FedEx reported results that fell well short of expectations.  They also lowered forward guidance and FedEx shares are more than 10 percent lower in the pre-market today.  In sympathy, UPS shares are off more than 3 percent, even though this might be a FedEx specific problem and not an industry-wide problem among shippers. FedEx laid most of the blame on a slowing world-wide economy.

General Mills also reported this morning, with a 79 cent per share profit than was 2 cents better than expected.  However, sales fell short and General Mills shares are about 2 percent lower this morning.

Asian markets were mixed overnight, but Europe is higher.

Nevertheless, we should open with weaker prices at 9:30.  Adjusted for fair value, the S&P 500 futures are lower by a little more than 5 points, the Dow futures are down 35 and the NASDAQ futures are about 17 points below fair value.

September 17, 2019

The long-suffering oil-related stocks received quite a boost yesterday after the aerial attack on Saudi Arabia knocked out 5 percent of the world’s oil production.  That’s the largest one-event reduction in history.  West Texas Intermediate crude oil bubbled up by more than 14 percent, and some of the most heavily shorted oil stocks had a blowout day as the short sellers rushed to cover those bets.

Things appear to be settling down this morning, especially given that there has been a discernable silence from the Saudis regarding military retaliation, which could lead to a much broader conflict.

Our own domestic interest-rate conflict between the President and the Federal Reserve enters another chapter today as the Open Market Committee starts a two-day meeting.  We should hear about a quarter-point interest rate cut at 2 o’clock tomorrow.

Earnings are on the way just after today’s 4 o’clock close of trading from Adobe and FedEx. FedEx just announced price hikes that will go into effect next year. And it now appears that the tumultuous IPO of Wework’s parent will be delayed by at least a month.

Overseas markets are mostly lower. Our futures just took a leg lower during the past fifteen minutes and are pointing to a lower open on Wall Street. Adjusted for fair value, the S&P 500 futures aredown 4 points, the Dow futures are down 61 and the NASDAQ futures are about 8 points below fair value.

September 16, 2019

It’s hard to find any “good news” stories this morning and we can start right here in Detroit with the UAW strike against General Motors.  GM shares should open about 2½ percent lower as the picket lines start to form and rumors swirl about future legal issues for high-ranking UAW officials.

The weekend attack on Saudi Arabian oil facilities will likely take any slack out of oil inventories worldwide, at least for a few weeks if not longer.  Almost 6 million barrels per day are temporarily off the market, and the price of crude oil has spiked about 8 percent this morning.  The large oil company stocks are about four or five percent higher, but energy exploration company stocks are about 10 percent higher.

Economic reports from China are not horrible, but both industrial output and retail sales increases missed expectations and were worse than the prior month.  Industrial output hit a 17-year low.

A bunch of earnings reports are on tap for later in the week and of course, we’ll get the Fed’s interest rate decision on Wednesday.

The Japanese market was closed overnight for “Respect for the Aged Day.”  However, other markets overseas are lower.

Our futures have improved a bit but are still pointing lower. Adjusted for fair value, the S&P 500 futures are lower by about 10 points, the Dow futures are down 85 and the NASDAQ futures are about 48 points below fair value.

September 10, 2019

We learned yesterday that most all of the state attorneys general are getting together to investigate Google for anti-competitive behavior, if not worse.  That threw a chill into a lot of stocks in the tech sector, and that chill continues this morning.

Speaking of chills, shares of Ford Motor are looking to open more than 3 percent lower this morning.  Yesterday, Moody’s lowered its rating on Ford’s 14 billion dollars in debt to “junk” status.  The other two rating agencies, Fitch and S&P still have Ford rated two levels above “junk” status.  If those ratings don’t hold, it would not be good news for the company.

The National Federation of Independent Business survey was released this morning and shows a 1.6-point drop to 103.1.  That’s the lowest reading since March and tells us that small business owners in the U.S. expect some rough waters ahead.

More weak economic data out of China overnight is sparking hope of another round of monetary stimulus there to counteract the impact of increased tariffs.

Ahead of our open, overseas markets are mixed. Adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down 34, and the NASDAQ is looking to follow up yesterday’s losses with more of their own as the NASDAQ futures are about 29 points below fair value.

September 9, 2019

It should be a very quiet day for economic and earnings news, as the majority of holiday-related vacations are now in the rear-view mirror.

Another oxycontin maker may to be on the road to Bankruptcy Court.  This morning, settlement negotiations with Purdue Pharmaceuticals appear to have stagnated and a couple of state attorneys general suggest that a filing may be on the way.

With better news on the pharmaceutical front, Acadia Pharmaceutical shares are more than 73 percent higher pre-market on word that their dementia-related psychosis drug passed stage three trials.

AT&T shares are almost 10 percent higher as activist investor Elliot Management has taken a stake in AT&T and is suggesting some changes.

In case you thought that ALL retailers were suffering, know that Amazon with hold a career day next week in six cities, offering 30,000 permanent new jobs.

An indication that an interest rate might be on the way in China had Asian markets higher overnight, although Hong Kong was flat.  European markets are mixed, but our futures have been higher all morning.

In fact, our stock indexes will start this morning within a couple percent of all-time highs. At this point, adjusted for fair value, the S&P 500 futures are higher by about 11 points, the Dow futures are up 58, and the NASDAQ futures are about 16 points above fair value.

September 6, 2019

Hope that tensions might ease in Hong Kong and that Chinese trade talks will resume fueled a significant rally yesterday.  We should get a little carry over into today’s market as well.

However, there’s a big economic elephant in the room that could trample any early rally. At 8:30, the Bureau of Labor Statistics will release the August Employment Report.  Expect that 157,000 new jobs were created in August, which would be slightly higher than the July increase.  The unemployment rate is expected to hold steady at 3.7 percent.  Perhaps the most interesting figure, if you’re looking for a correlation between job growth an inflation, is the average hourly wage, which is expected to have increased by 3.1 percent year-over-year.

Shares of Lululemon are increasing by almost 5 percent this morning.  Last night, Lulu announced 96 cents in adjusted quarterly profit, seven cents better than expected on a 15 percent increase in same store sales.  They also raised full year earnings guidance.

Overseas markets followed our rally higher overnight, and our futures have been on a slow rise much of the morning, but that could all change shortly after 8:30.

At this point, adjusted for fair value, the S&P 500 futures are higher by about 8 points, the Dow futures are up 87, and the NASDAQ futures are about 17 points above fair value.

September 5, 2019

The next Federal Reserve interest rate decision is still a couple of weeks away.  So, if anything was going to move the markets today it would be news about China.

Right on cue in the overnight hours, China confirmed that new talks are scheduled with U.S. negotiators in October.  That, and the withdrawal of the Hong Kong extradition proposal has stock prices levitating once again.  In case your keeping track, that has the 10-year Treasury yield back above 2 percent and the 2-year-10-year portion of the yield curve is no longer inverted,

But, for every silver lining there is a dark cloud, and this morning that cloud is raining losses on shares of specialty drug maker Mallinckrodt.  The company appears to be headed for a bankruptcy filing due to claims brought on by their opioid production and distribution.  Shares are 41 percent lower this morning at just over a buck and a half each.

Traders are also cutting no slack to office communication software firm Slack.  Last night the firm announced losses that were lower than expected, but weaker third quarter guidance has the shares off almost 13 percent, which is actually a bit higher than last night’s lows.

London is lower on their political turmoil, but most overseas markets are in the green. At this point, adjusted for fair value, the S&P 500 futures are higher by about 25 points, the Dow futures are up 238, and the NASDAQ futures are about 87 points above fair value.

September 4, 2019

The withdrawal of the China - Hong Kong extradition bill has global markets in rally mode this morning, even though the protests in Hong Kong may not be over.  Nevertheless, with so many potential trouble spots around the world, we’ll take whatever good news anywhere we can get it.

The was good news from truck maker Navistar International this morning, as $1.56 of quarterly profit was 38 cents per share better than expected.  Navistar shares are looking to open Almost 10 percent higher.  Not to be outdone, shares of Michael’s Companies are 22 percent higher as 19 cents of adjusted profit came in a nickel better than expected.  They also gave full-year guidance that was a little better than the consensus estimate.

Earnings are also on the way from Palo Alto Networks and American Eagle Outfitters.  Slack will also announce their earnings for the first time since going public with their shares.

Some additional insight into the country’s economic condition comes at 2 o’clock today with the release of the Beige Book, a survey of regional economic activity.

The Bank of Canada will make their latest interest rate announcement today.

As we look forward to 9:30, our stock futures are almost exactly up be as much as they were down 24 hours ago. Adjusted for fair value, the S&P 500 futures are higher by about 25, the Dow futures are up 219 points, and the NASDAQ futures are about 83 points above fair value.

September 3, 2019

Welcome to September, which historically has been the worst month of the year for stock prices.  Not that August showed us any love – August was only the second month this year giving us lower stock prices.

No matter how September turns out, it’s likely to start out on the downbeat.  As the new American tariffs on China and the new Chinese tariffs on America kick in, European markets and out futures are decidedly lower.

Not helping the Dow futures this morning are shares of Boeing.  The 737 Max will not fly again before early December as Boeing wrestles with international regulators.  Boeing shares are looking about 8½ dollars lower, which would shave about 60 points of the Dow Jones Industrials.

Furniture and home appliance maker Conn beat the 51 cent profit estimate by 11 cents and Conn shares are more than 14 percent higher pre-market.

Later this morning, we’ll get the August ISM Manufacturing Purchasing Managers Index.  Expect a reading of 51½. Still slightly expansionary and in line with the July reading.

Australia’s Central Bank held their short-term interest rates steady overnight, but intimated that there may be a rate cut coming.

Our futures have recovered a bit from earlier lows, but we’re still deep in the red as we head toward 9:30.  Adjusted for fair value, the S&P 500 futures arelower by about 23, the Dow futures are down 232 points, and the NASDAQ futures are about 67 points belowfair value.

WJR October 2019 Reports
WJR August 2019 Reports

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