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Asian markets off sharply. US Futures off significantly. Oil down to $55.
DP WEEKLY WRAP: Was Technical Analysis At All Helpful This Week?
By: Carl Swenlin | August 2, 2019
While I work, I watch a business news channel with the sound turned down. It's not really a necessary activity, it's just what I do. One of the things I notice is that the commentators try to attribute news items to every market twitch, and most of the time it is laughable; however, once in a while there are news events that clearly move the market, this week giving us some good examples. On Wednesday the much anticipated Fed announcement delivered the expected quarter percentage point rate cut, but the hope was for a half point cut, and the market tanked. On Thursday the market rebounded strongly until the president threatened another 10% tariff on Chinese goods, and the market tanked again. On Friday the market seemed to stabilize at the open, but the Chinese threatened retaliatory tariffs, resulting in further selling. Through it all, I thought how it provided a fine opportunity to show how technical analysis helped to traverse the hazards, if indeed it was helpful at all.
In some cases technical analysis can help us anticipate reactions to scheduled events. For example, the Fed announcement was long-anticipated, and you'll note on the chart above that a rising wedge formation appeared in advance of that event -- the final top forming on Monday. A rising wedge is a bearish formation, so we could anticipate that the reaction to the announcement would probably be negative, but there was no clue as to the magnitude of the reaction.
There was no advance warning of the president's proposal of new tariffs on Chinese, so there was no way to anticipate Thursday's decline, even though in hindsight the decline was not a surprise, given the news.
The last item of news I cited is more ambiguous regarding its effect on the market. The Chinese threat for retaliatory tariffs was also accompanied by the threat by the Chinese to impose martial law in Hong Kong. Was it one or the other, or both? Let's stay out of that rabbit hole and look in the rest of this report for other technical items that may have influenced our market stance.
GLOBAL MARKETS
BROAD MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: Note that there is a larger rising wedge on this chart.
SPY Weekly Chart:
Climactic Market Indicators: There were three days with climactic downside volume, and Friday's candlestick looks like it could be a short-term bottom. I expect the current decline to resolve somewhat like the one in May, which means to look for a bounce next week, then another leg down.
Short-Term Market Indicators: The STO-B and STO-V are oversold, and I'll be looking for something that looks like the double bottoms in May. Obviously, I can't predict what will happen, but this is an example of how the technicals can point us toward likely outcomes.
Intermediate-Term Market Indicators: The ITBM and ITVM have topped and are approximately neutral. The three signal indexes on the bottom have just topped and have a way to go before they are oversold.
CONCLUSION: There is no question that news played a big part in market action this week, but our technical indicators have been favoring a downside outcome for a while. They didn't predict it, but they were pointing in that direction. (Technical analysis is a windsock, not a crystal ball.) As I said, I am expecting a bounce next week, then another leg down.
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Dow Jones Industrials Index (DJIA) - Moving Lower »» Monthly Summary Analysis
By: Marty Armstrong | August 3, 2019
Weekly Investment Strategy - Weekly Headings
By: Raymond James Financial | August 2, 2019
Key Takeaways
• Activity levels continue to point to economic strength.
• Negative seasonality and heightened valuations are risks to the market.
• We caution investors from becoming overly complacent.
“Traffic” is the dreaded price we all pay every year as we make our way to the beach for summer vacations. This past week, as my family was making a trip to the Jersey shore, we got stuck in what seemed like never-ending traffic which got me thinking. With all the time I had looking at overhead traffic lights and the brake lights of the cars ahead of me, never have three colors so clearly matched my mood (from “happy” green to “frustrating” red) to our views of the economy and financial markets.
• Green Means Go | The US economy is likely to keep “moving” with limited risk of recession over the next 12 months. Although it can be incredibly frustrating at times, believe it or not, traffic can provide a solid read on the health of the economy and is one of our favorite real-time indicators of economic activity. The thought process is that the more confident consumers are, the more they drive and take vacations. With total miles driven in the US at a record high, it is consistent with this week’s elevated consumer confidence (as the expectations component rose to the second highest level since 2000) and strong personal consumption (2Q19 posted the second strongest quarter over the past five years.) Our other real time indicators similarly suggest the US economy remains on solid footing. Withholding taxes, which is a daily statement released by the Treasury Department that reflects the amount of taxes withheld from employees’ paychecks, has moved to record highs and is growing ~9% on a six month annualized basis, which is in the 90th percentile relative to all other time periods. Continued strength in the labor market should support consumer spending and economic growth going forward. Activity levels remain healthy with truckloads at record highs and air freight cargo nearing record highs. With the Fed cutting interest rates 25 bps this week for the first time in 11 years (and likely to cut one more time in October), the economy should be able to maintain its momentum and keep growing (our 2019 GDP growth estimate is +2.1%).
• Yellow Means Caution | The S&P 500 is currently up 19.2% year-to-date (YTD), which is the second best start to a year in over 20 years. Recent catalysts for the S&P 500 have been a better than expected 2Q19 earnings season and the dovish shift in global central bank policy. However, given the recent rally, valuations have moved higher and the S&P 500 is trading at its highest P/E since March 2018. While fundamentals support a move higher longer term, some near-term volatility may be warranted to digest the recent gains. It is important to note that despite 2Q19 earnings season likely to land in positive territory (at ~1-2%), 3Q19 EPS estimates have shifted into negative territory (-1.3% year-over-year (YoY)) and full-year 2019 and 2020 EPS estimates have each been revised down 5% year to date. The continued move lower in forward earnings expectations, in conjunction with negative seasonality (August and September are historically two of the weakest months for equities) could lead to near-term weakness for the equity market. With the equity market flashing yellow, precaution is warranted in deploying new capital.
• Red Means ‘Stop’ and Be Aware | In addition to stopping at red lights, investors also need to watch the brake lights of the car (and risks) in front of them and not get too close so they can safely stop, if needed. The rally in equity markets have led to the market being priced to perfection and investors becoming complacent around many upcoming risks. As an example, increased optimism around aggressive central bank actions has been met by disappointment (and sell-offs) the last two weeks. The ECB not cutting rates immediately last week and the Fed not committing to more rate cuts in the near term has led to modest equity declines. This week’s tweet by President Trump announcing that a 10% tariff would be applied to the remaining $300 billion of Chinese imports starting on September 1 reminded the markets that trade frictions have not vanished. Other risks on the horizon include Brexit concerns with new Prime Minister Boris Johnson threatening a no deal Brexit and political rhetoric as we head into the 2020 election. Elevated valuations, low volatility, and rising equity investor sentiment serve as warning ‘brake’ signs of the potential of an uptick in volatility and the reason for our recent cautiousness on the equity markets.
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High Consumer Confidence Is A Notable Stock Market Warning
By: Urban Carmel | August 1, 2019
Summary: In July, the Consumer Confidence Index (CCI) jumped to its highest level since last September, right before stocks started a 20% correction. Sometimes a high in the CCI coincides closely with a 5% or greater fall in stocks, but at other times the lag has been many months. In general, however, the risk/reward for investors over the next 6 months has not be favorable.
* * *
In July, the Conference Board's Consumer Confidence Index (CCI) jumped to the highest level since last September. According to the Conference Board: “Consumers are once again optimistic about current and prospective business and labor market conditions. In addition, their expectations regarding their financial outlook also improved."
The CCI was created in 1967, based on a monthly survey of 5,000 households. The report gives details about consumer attitudes (how would you rate the current business and employment situation; do you think your income will be higher or lower in 6 months) and buying intentions.
Increasing confidence is generally good for the economy as it drives consumption, which is 70% of the US economy.
But excessive confidence is not good, especially for the stock market. The timing is far from perfect but risk/reward and forward returns are often poor.
The current CCI is now 136. It has been higher in only 3 other periods: the late 1960s, the late 1990s and last year (the next 4 charts are from Sentimentrader; to become a subscriber and support the Fat Pitch, click here). Enlarge any chart by clicking on it.
The CCI was 135 last September (lower than now) before SPX started a 20% fall that ended on Christmas Eve. There was virtually no lag between the high in CCI and the start of the fall in SPX.
That's not always the case. See the annotations in the chart above. The CCI reached current levels in January 1998 and SPX rose another 20% over the next 6 months before giving all of those gains back. SPX rose another month after a high CCI in May 1999 and another 8 months after a high CCI in November 1999 before the big bear market of 2000-02.
That was also the pattern in 1968-69: SPX rose another 5% a month after the high CCI before the 1969-70 bear market started. On the other hand, two highs in CCI in 1967 and 1968 coincided closely with 5% and 7% falls in SPX, respectively.
In general, risk/reward has been unfavorable over the next 6 months following a high in the CCI. In half of the instances listed below, SPX fell more than 4% during the next month. The median fall in the next 3 months was more than 5%, jumping to 9% in the next 6 months. Only 2 of the 17 instances (12%) avoided any serious trouble (in green). The odds strongly favor trouble.
Mark Hulbert reaches a similar conclusion: SPX tends to underperform following a high CCI (his article is here).
While the outlook for US equities suffers after a high CCI, it's hard to make the case that the economy is necessarily in immediate trouble. It took more than 3 years for the next recession after the CCI hit a similar level in 1997, and recessions have started from lower levels four other times in the past 40 years. There are not enough instances or consistency to draw a firm conclusion (from Doug Short).
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CNBC
U.S. stock futures were pointing to further losses on Wall Street. The Dow on Thursday had been up more than 300 points before President Donald Trump said the U.S. next month would impose a 10% tariff on the remaining $300 billion of Chinese imports. The Dow closed down 280 points. China said this morning it would retaliate if those levies were to go into effect. (CNBC)
* Treasury yields tick lower after hitting November 2016 lows (CNBC)
* Oil prices regain ground after plunging nearly 8% on Trump tariff threat (CNBC)
* Trump's broadside raises fear that trade war is 'new status quo' (CNBC)
* Trump tariff threat pushes up chance for Fed rate cuts as recession risks rise (CNBC)
The Dow, on a three-session losing streak, and the S&P 500, on a four-session losing streak, were on track for their worst weeks since the end of May. Where stocks end up today could be determined by what the government's July employment report shows when it comes out at 8:30 a.m. ET. (CNBC)
Meanwhile, Dow components Exxon Mobil (XOM) and Chevron (CVX) issue quarterly earnings this morning. There are no major companies reporting results after the bell this afternoon. Warren Buffett's Berkshire Hathaway (BRK.B) issues quarterly numbers Saturday morning. (CNBC)
* Exxon Mobil earnings: 73 cents a share, vs 66 cents EPS expected (CNBC)
IN THE NEWS TODAY
Goldman Sachs (GS) is taking aim at the world's biggest so-called quant hedge funds.The investment bank recently approved a three-year plan to spend more than $100 million to overhaul its stock trading platform. The project is meant to accelerate the shift Goldman has been making since realizing in 2014. (CNBC)
Home improvement retailer Lowe's (LOW) has told thousands of workers that their jobs are being eliminated. The company plans to outsource jobs of maintenance and assembly workers to third-party companies. (CNBC)
STOCKS TO WATCH
Cloudera (CLDR) shares were soaring in the premarket after investor Carl Icahn disclosed a 12.6% stake in the cloud software company. Icahn plans to push for changes and possibly seek board representation.
Aphria (APHA) reported a surprise fiscal fourth quarter profit, and the Canada-based cannabis producer also reported revenue that surpassed analyst estimates. Shares were soaring 30% in the premarket.
Square (SQ) beat estimates with earnings and revenue. However, current quarter guidance was shy of Wall Street forecasts. Separately, Square announced the sale of its food ordering platform Caviar to DoorDash in a $410 million cash and stock deal.
Pinterest (PINS) reported smaller-than-expected losses yesterday, along with strong revenue. Pinterest reported an increase in monthly active users as well.
GoPro (GPRO) fell a penny short of estimates with adjusted quarterly profit of 3 cents per share. Revenue also missed. However, GoPro reported a 15% jump in subscription services revenue and it raised its outlook for the second half.
Etsy (ETSY) beat forecasts by 1 cent with quarterly profit of 14 cents per share. But the online crafts marketplace operator saw revenue miss. Etsy increased revenue guidance for the year.
NetApp (NTAP) shares are under pressure after the data storage firm warned that current quarter sales and profit will come in below forecasts. NetApp said it remained confident in its long term strategy and its business model.
Toyota (TM) cut its full year profit forecast by about 6%. The automaker posted an 8.7% increase in operating profit for the April through June quarter to the highest level in nearly 4 years.
Campbell Soup (CPB) sold its Arnott's biscuit business and other international assets to private equity firm KKR (KKR) for $2.2 billion.
CNBC
U.S. stock futures were pointing to a higher Wall Street open after a Fed-inspired sell-off that saw the Dow and S&P 500 post their biggest one-day losses in two months. Investors were disappointed after Fed Chairman Jerome Powell said Wednesday's 0.25% interest rate cut should not necessarily be taken as the first in a series. (CNBC)
* Trump: Powell 'let us down' by not clearly signaling more cuts (CNBC)
* Lower rates already came to housing, and they're not helping much. (NY Times)
Despite Wednesday's sharp declines, the Dow and S&P logged a positive July. Turning the calendar page, stocks have gained ground in August the past two years, but they've also seen some steep August losses this decade, most notably in 2011 and 2015. (CNBC)
A busy morning for earnings brings reports from Dow component Verizon (VZ), General Motors (GM), Dunkin' Brands (DNKN), Wayfair (W), and Yum Brands (YUM). After-the-bell reports today include GoPro (GPRO), Pinterest (PINS), and Square (SQ).
Shares of Qualcomm (QCOM) were falling about 7% in the premarket after the chipmaker reported mixed fiscal third-quarter results, beating on earnings but missing on revenue. Qualcomm also gave a current quarter earnings forecast that falls largely below estimates as it strips out business from China's Huawei. (CNBC)
Shares of Fitbit (FIT) were tanking about 18% in premarket trading after the fitness device maker fell short of estimates on quarterly earnings. Fitbit revenue beat. However, Fitbit cut its full-year sales forecast on disappointing sales of its new Versa Lite smartwatch.
On today's economic calendar, the Labor Department is out at 8:30 a.m. ET with initial jobless claims, ahead of tomorrow's release of the government's July employment report. Meanwhile, the ISM's July manufacturing index and June construction spending are both out at 10 a.m. ET this morning. (CNBC)
IN THE NEWS TODAY
Intel (INTC) has applied for licenses to sell some of its products to Huawei following the blacklisting of the Chinese technology giant and a subsequent easing of restrictions on the firm. Intel CEO Bob Swan told CNBC the company has applied for a license to sell "general purpose compute" products to Huawei.
* Gary Cohn: Trump's trade war with China is hurting the US economy more (CNBC)
A group of Nordstrom family members that own nearly a third of the retailer have been working on a proposal to increase their stake to more than half. The family last year aborted talks to take the retailer private after an initial offer of $50 a share was rejected as too low. (WSJ)
Sen. Josh Hawley introduced a bill that would ban Snapchat's (SNAP) Snapstreak feature that encourages users to send photos on the app at least once every 24 hours. The Missouri Republican said it's a way to curb overuse of social media. (Reuters)
SmileDirectClub , which provides invisible teeth-straightening devices, is looking to sell up to $1 billion in stock in an initial public offering (IPO). The size and timing of the offering could still change depending on market conditions. (CNBC)
STOCKS TO WATCH
Beyond Meat (BYND) priced a secondary offering of 3.25 million new shares at $160 per share, 18.6% below Wednesday's closing price for the plant-based burger maker's stock. Shares were dropping about 9% in the premarket. Beyond Meat has rocketed nearly 700% since its IPO in May.
Amazon (AMZN) is in early stage talks to buy a 26% stake in India's Reliance Industries, according to the Economic Times. Reliance is India's largest brick and mortar retailer.
Thomson Reuters (TRI) raised its sales and profit outlook for 2019 and 2020 after reporting a 4% increase in organic revenue for the second quarter. Separately, Thomson Reuters and co-owner Blackstone (BX) finalized a deal to sell their Refinitiv data business to London Stock Exchange for $27 billion in stock.
BlackRock (BLK) is no longer in talks to buy private equity firm Pamplona's stake in cybersecurity firm Cofense, according to the Wall Street Journal. BlackRock already holds a stake in Cofense, and the potential deal was designed to address national security concerns.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
CNBC
U.S. stock futures were pointing to a positive Wall Street open, but what happens at Wednesday's close no doubt depends on the Fed's interest rate decision and policy statement at 2 p.m. ET. Central bankers are expected to reduce borrowing costs for the first time since 2008. After logging its best June since 1938, the Dow with one trading day left this month was up 2.25% for July and up 16.6% for all of 2019. (CNBC)
* Fed credibility is at stake as it looks to cut rates under pressure from a vocal president (CNBC)
Another busy morning for earnings includes quarterly results from General Electric (GE) and Spotify (SPOT). Qualcomm (QCOM) and Occidental Petroleum (OXY) are among the after-the-bell profit reports. (CNBC)
* GE shares jump 5% after beating low earnings expectations as cash flow stabilizes (CNBC)
* GE CFO Jamie Miller stepping down, will stay in role during transition (CNBC)
* Spotify shares slip despite reports subscriber growth as the podcast industry booms (WSJ)
Shares of Apple (AAPL) were about 4% higher in the premarket, and if those gains were to hold, the stock would push back towards a $1 trillion market value. Investors were encouraged by better-than-expected quarterly profits and revenue despite a 12% decline in iPhone sales. Services and wearables helped pick up the slack. (CNBC)
* Apple's strength in China boosts sales despite trade tensions (NBC News)
* CEO Tim Cook: We want to continue making Mac Pro in US (CNBC)
* Cook: Apple's credit card, in partnership with Goldman Sachs, launches next month (CNBC)
ADP releases its July look at private sector employment at 8:15 a.m. ET, two days before the government's monthly jobs data. The Chicago purchasing managers index hits at 9:45 a.m. ET. (CNBC)
* Mortgage applications fall for third straight week despite lower interest rates (CNBC)
IN THE NEWS TODAY
U.S. and Chinese envoys concluded meetings today aimed at ending a tariff war after President Donald Trump rattled financial markets by accusing Beijing of trying to stall. Economists had said quick breakthroughs were unlikely because the two governments face the same disagreements that caused talks to break down in May. (AP)
* Cramer: Wall Street should get ready for Trump to impose more tariffs on China (CNBC)
Trump is working on a proposal to allow the U.S. to import drugs from Canada, Health and Human Services Secretary Alex Azar told CNBC. It's unclear what the proposal would look like. But Trump has previously supported a plan by lawmakers who said they can lower high prescription drug costs by approving imports from Canada.
An internal Federal Aviation Administration analysis conducted after the first of two deadly Boeing 737 Max crashes showed the likelihood of a similar crash was high, The Wall Street Journal reports.
WeWork, owner of co-working spaces across the globe, is in talks to acquire real estate-focused software startup SpaceIQ. The transaction could help WeWork convince Wall Street that it's at least somewhat of a technology company as it gears up for an IPO. (CNBC)
Carlyle Group (CG) said today that it would abandon its partnership structure and become a corporation with a single class of shares, going a step further than private-equity peers that have already converted. (WSJ)
STOCKS TO WATCH
FireEye (FEYE) lost 1 cent per share in the second quarter, surprising analysts who had expected a 1-cent profit. While revenue beat estimates, operating expenses were more than 7% higher. The cybersecurity firm company cut its full year guidance. The stock was about 15% lower in the premarket.
Advanced Micro Devices (AMD) reported in-line profits and revenue. However, AMD gave a third-quarter revenue forecast below analyst projections, as gaming console chip demand falls.
Gilead Sciences (GILD) beat adjusted quarterly profit and revenue estimates. The drugmaker's bottom line got a boost from improved sales of HIV treatments. Gilead also raised its full-year sales forecast.
Amgen (AMGN) reported better-than-expected earnings per share. The biotech giant's revenue also came in above estimates, as sales of newer drugs helped offset a drop for its older treatments that have gone off patent.
Mondelez International (MDLZ) matched Wall Street's estimates of its quarterly earnings, with the snack maker's revenue slightly above Street forecasts. Mondelez did raise its 2019 forecast for organic sales.
Yum China (YUMC) beat estimates by 7 cents with quarterly profit of 46 cents per share, though the restaurant operators revenue was slightly below forecasts. Yum China also said it expected sales growth to "moderate" going forward.
Sotheby's (BID) sold $3.1 billion in art during the first half of 2019, down 10% from a year earlier. The auction house agreed in June to be bought by French telecom magnate Patrick Drahi for $2.7 billion.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Talking to a shop keep in Goldsboro, NC yesterday, Said the air base is fairly empty- "they want everyone over in Iraq and Qatar".
So folks, President Trump is building up our strength in hot spot middle east.
I believe he may give Iran a black eye, eventually
Suggest having some shorts on. A jolt to the market could witness a rapid decent, albeit short term.
MG
CNBC
U.S. stock futures were lower this morning ahead of today's start of the Fed's two-day July policy meeting. Central bankers are expected to announce tomorrow their first interest rate cut in more than a decade. On Monday, the Dow logged its second straight day of gains, while the S&P 500 and Nasdaq both slipped from Friday's record closing highs. (CNBC)
* Goldman raises year-end S&P 500 forecast, sees another double-digit gain in 2020 (CNBC)
Dow components Procter & Gamble (PG) and Merck (MRK) lead a long list of corporate earnings this morning, with Eli Lilly (LLY) and Under Armour (UAA) also out. Apple (AAPL), another Dow stock, grabs the afternoon's spotlight. Advanced Micro Devices (AMD), Groupon (GRPN), and Mondelez (MDLZ) also issue quarterly results after the bell. (CNBC)
* Procter & Gamble shares up on earnings beat (CNBC)
* Merck shares jump after earnings and revenue smash Wall Street estimates (CNBC)
* Under Armour shares sink 10% on sales miss (CNBC)
Shares of Beyond Meat (BYND) were falling about 13% in the premarket after the plant-based burger maker late Monday announced a secondary offering only three months after its IPO. Beyond Meat, up nearly 800% since its May debut, also reported a larger-than-expected loss, though revenue did beat analyst estimates. (CNBC)
* Wall Street analysts say there's a lot more pain to go for Beyond Meat (CNBC)
On today's economic calendar, June personal income and spending are released at 8:30 a.m. ET. The S&P/Case-Shiller report on May home prices is out at 9 a.m. ET. The National Association of Realtors' June pending home sales and the Conference Board's July consumer confidence index are both out at 10 a.m. ET. (CNBC)
Two months after U.S.-Chinese talks aimed at ending a tariff war broke down, both sides are trying to temper hopes for a breakthrough when negotiations resume today on an array of disputes that has grown to include tension over China's tech giant Huawei. (AP)
* Trump rips China as trade negotiations set to begin, says 'no signs' of agricultural purchases (CNBC)
IN THE NEWS TODAY
Shares of Capital One (COF) were off about 5% in premarket trading, after the bank said a data breach, identified earlier this month, exposed personal information of 106 million credit card customers and applicants. The FBI arrested a suspect, Paige A. Thompson, who was charged with computer fraud and abuse. (CNBC)
Thompson, who formerly worked for Amazon Web Services, which hosted the breached Capital One database, was not shy about her beliefs. She's listed as the organizer of a Meetup group, described as a gathering for "anybody with an appreciation for distributed systems, programming, hacking, cracking." (NY Times)
China's Huawei reported today a 23.2% year-over-year increase in revenue for the first six months of 2019 year despite facing political headwinds. Huawei is considered to be one of the leading names in the 5G race. The company is facing mounting fears that its technology could enable Chinese espionage. (CNBC)
Qualcomm (QCOM) and China's Tencent Holdings struck an agreement to collaborate on 5G and gaming devices. Qualcomm is the largest supplier of mobile phone chips for Android devices, while Tencent is China's largest mobile software maker. (Reuters)
Facebook (FB) reminded investors that while it expects to launch its Libra digital currency in 2020, a number of factors could keep that from happening. Facebook has seen a flurry of pushback on Libra from U.S. and international regulators and lawmakers. (CNBC)
Johnson & Johnson (JNJ) said the FTC is conducting an investigation into whether the company's contracting practices for its rheumatoid arthritis drug Remicade violate antitrust laws. Rival Pfizer (PFE) has sued J&J over its practices involving Remicade, with J&J denying any wrongdoing. (Reuters)
STOCKS TO WATCH
BP (BP) reported better-than-expected second-quarter profit, with the British energy giant helped by a significant increase in oil and gas production. That helped offset lower oil prices and refining profits.
Sony (SNE) reported an 18.4% increase in fiscal first-quarter operating profit, coming in above analyst forecasts. Sony's bottom line was helped by an especially strong performance for its image sensor unit.
Newell Brands (NWL) hired Ritchie Bros. Auctioneers CEO Ravi Saligram as its new chief executive officer, taking over Oct. 2. The maker of Sharpie pens and other consumer products signed Saligram to a three-year contract, but said he could potentially remain for a longer period of time. Saligram was CEO of OfficeMax until it merged with Office Depot (ODP).
Occidental Petroleum (OXY) does not expect to generate enough cash to cover shareholder payments until 2022, according to an SEC filing by Anadarko Petroleum (APC). Anadarko has a deal to be acquired by Occidental for $438 billion, a transaction that is opposed by activist investor and Occidental shareholder Carl Icahn.
Dish Network (DISH) reported quarterly profit of 60 cents per share, falling short of consensus by 5 cents. However, the satellite TV provider saw revenue above forecasts, and it also lost fewer than expected pay-TV subscribers.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
KHC Added to short- following it down.
Seeking to significantly mitigate a up to now losing position
Earnings coming right up..
Not a recommended play as ER's are dicey and alternatively one can channel trade successfully 'til the cows come home.
Daily Market Watch »» Stock Indices Daily Trend
By: Marty Armstrong | July 30, 2019
KHC Just shorted at 31.70
Earnings sometime in the next couple days
I'm thinking new CEO will use first report to clear out deadwood, start fresh.
Dangerous play as stock is already down 47% over 52 weeks and good news out of ER will send flying
My only languishing stock, formerly long for a bounce.
A bold play to lesson position loss to date
Not a recommended play- best to play the mo after ER
CNBC
U.S. stock futures were pointing to a modestly lower Wall Street open ahead of the Fed's two-day July meeting, which begins tomorrow. Central bankers are expected to cut interest rates. Meanwhile, former Fed Chair Janet Yellen said she supports a 0.25% rate cut. (CNBC)
The S&P 500 and Nasdaq are coming off record closes Friday, and all the major averages posted weekly gains last week for the third time in four weeks. With three trading days left in the month, the Dow, S&P 500, and Nasdaq are all on track to post positive July numbers for the fifth year in a row. (CNBC)
It's a busy week for economic numbers, but today is the exception with no major reports on the calendar. The latest ADP private sector employment report Wednesday and the government's July jobs report Friday are among the reports set to be released.
It's a similar story with corporate earnings, with a busy week ahead, including Apple (AAPL) tomorrow. But today gets off to a relatively slow start, with Dish Network (DISH) before-the bell and Beyond Meat (BYND) and Texas Roadhouse (TXRH) after-the-bell.
Shares of generic drug maker Mylan (MYL) were surging about 25% in the premarket as Pfizer (PFE) reached a deal to combine its off-patent drug business with Mylan. The combined company would sell Mylan's EpiPen and Pfizer's Viagra, and it would be domiciled in the U.S. (CNBC)
IN THE NEWS TODAY
Negotiators for the U.S. and China face off in Shanghai this week in another attempt to piece together a trade accord amid much lowered expectations for the kind of sweeping deal that appeared within reach this spring. The Wall Street Journal reported that people close to the talks said a major breakthrough soon is unlikely.
* Beijing says China stepping up US soy imports, yet to show up in US data (Reuters)
The European Commission reportedly will be blocking five countries from accessing parts of the European Union's financial markets, in a move that could hit the United Kingdom after it leaves the bloc. The decision will see the Commission removing certain market access rights from Argentina, Australia, Brazil, Canada and Singapore. (CNBC)
London Stock Exchange is in advanced talks to buy financial data provider Refinitiv, majority owned by Blackstone Group (BX), for $27 billion including assumed debt. The deal, which will likely be announced this week, is expected to face a long antitrust review before it can close. (Reuters)
Southeast Asian ride-hailing company Grab said today it will invest $2 billion into Indonesia over the next five years using funds from SoftBank Group. The investment will be aimed at speeding up the development of Indonesia's digital infrastructure, including building a next-generation transportation network around electric vehicles in local cities. (CNBC)
United Airlines (UAL) and security identity firm Clear have struck a deal to expand the number of biometric screening kiosks in airports around the U.S. The partnership includes United buying a stake in Clear. Delta Air Lines (DAL) also has an ownership stake in Clear. (CNBC)
STOCKS TO WATCH
Genomic Health (GHDX) has agreed to be bought by cancer diagnostics firm Exact Sciences (EXAS). The companies are valuing the cash and stock transaction at $2.8 billion. Genomic Health shares were soaring in the premarket after jumping nearly 5.6% on Friday.
Novartis (NVS) heart failure drug Entresto did not meet its goal in a trial testing its possible application for a new use. The drug is already approved to treat "reduced fraction" heart failure.
Sanofi (SNY) raised its 2019 outlook after the French drug maker posted strong second-quarter numbers. Sanofi's bottom line got a boost from strong growth at its vaccines and rare diseases products.
BlackRock (BLK) is in talks to buy cybersecurity firm Cofense, according to a Reuters report. BlackRock already owns a stake. The talks come after a U.S. national security panel reportedly asked another stakeholder, Pamplona Capital Management, to sell its stake because of unnamed security concerns.
Citi increased its per-share price target on Chipotle Mexican Grill (CMG) to $955 from $797. That's a nearly 20% bump. Citi's top-end bull case is $1,317 and it's low-end bear case is $329. Chipotle shares closed at nearly $780 on Friday.
Domino's Pizza (DPZ) was rated "sell" in new coverage at Deutsche Bank, which points to the "competitive intrusion" of third-part delivery aggregators. Deutsche Bank said the competitive pressure will increase in magnitude over the next 2 to 3 years.
WATERCOOLER
Disney's (DIS) "The Lion King" may still rule the box office, but Quentin Tarantino's "Once Upon a Time in Hollywood" certainly held its own this weekend. Tarantino's R-rated ode to Hollywood's golden age opened with $40 million from 3,659 North American theaters, a career best for the filmmaker. (Variety)
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
VGR Small short @ 12.15
VGR I covered immed this morning for a tiny profit as I saw "the boys" were going to run it.
If in, possibly take a long and dump at first sign of flagging. Then average the earlier short.
Anything can be traded out of, in any number of ways.
MG
Thanks to DiscoverGold for keeping things going here last week. Thursday, I was out on deliveries all day (3) and Friday was responding to a business issue and recovering.
Let's make some money this week!
MG
Dow Jones Industrials Index (DJIA) - Breaking-Out »» Monthly Summary Analysis
By: Marty Armstrong | July 27, 2019
• • • The Overview
By: Marty Armstrong | July 26, 2019
Is the Worst Finally Behind for 3M Shareholders?
By: 24/7 Wall St. | July 25, 2019
When 3M Co. (NYSE: MMM) released its second-quarter financial results before the markets opened on Thursday, the firm said that it had $2.20 in earnings per share (EPS) and $8.20 billion in revenue. That compared with consensus estimates of $2.05 in EPS and $8.03 billion in revenue, as well as the $3.07 per share and $8.39 billion in the same period of last year.
Overall, organic local-currency sales decreased 0.9%, while acquisitions, net of divestitures, increased sales by 0.1%. Foreign currency translation decreased sales by 1.8% year on year.
Total sales grew 5.8% in Health Care, with declines of 0.5% in Consumer, 2.9% in Transportation and Electronics, and 9.0% in Safety and Industrial.
Looking ahead to the 2019 full year, the company expects to see EPS in the range of $9.25 to $9.75 and an organic local-currency sales loss of 1% to 2%. Consensus estimates call for $9.39 in EPS and $32.44 billion in revenue for the year.
3M paid $830 million in cash dividends to shareholders and repurchased $400 million of its own shares during the quarter.
Mike Roman, 3M board chair and chief executive, commented:
I am encouraged by our company’s progress and performance in the second quarter. Our execution was strong in the face of continued slow growth conditions in key end markets, as we effectively managed costs and improved cash flow. Moving ahead we remain focused on continuing to drive operational improvements, investing for the future and delivering for our customers and shareholders.
Shares of 3M traded up over 3% Thursday at $185.36, in a 52-week range of $159.32 to $219.75. The consensus price target is $177.88.
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Money Managers Increased their Exposure to the US Equity Markets to their Highest Level Since August 29, 2018 • DiscoverGold
NAAIM Exposure Index
* July 24, 2019
The NAAIM Number
95.75
Last Quarter Average
77.30
»»» Read More…
Click on "In reply to", to see The NAAIM Number from prior weeks
CNBC
U.S. stock futures were pointing to a lower open, after a Tuesday rally that saw the Dow Jones Industrial Average close within less than 10 points of its record. Overall momentum remains positive, with the Dow, S&P 500, and Nasdaq up for two straight days and three of the past four. Additionally, all three remain on track for a fifth straight positive July, with one week to go in the month. (CNBC)
On today's economic calendar, weekly mortgage applications are expected at 7 a.m. ET, while June new home sales numbers are expected at 10 a.m. The Energy Department has its usual Wednesday look at oil and gasoline inventories at 10:30 a.m. (CNBC)
It's an extremely busy morning for corporate earnings, led by Boeing (BA), AT&T (T), Caterpillar (CAT), and UPS (UPS). Also out this morning: Anthem (ANTM), Boston Scientific (BSX), General Dynamics (GD), Hilton Worldwide (HLT), Nasdaq (NDAQ), Norfolk Southern (NSC), Northrop Grumman (NOC), and VF Corp. (VFC).
Facebook (FB), Ford (F), and Tesla (TSLA) are out with quarterly numbers after today's closing bell, along with Align Technology (ALGN), Citrix Systems (CTXS), Equifax (EFX), Las Vegas Sands (LVS), O'Reilly Automotive (ORLY), PayPal Holdings (PYPL), and Xilinx (XLNX).
IN THE NEWS TODAY
American trade negotiators will soon head to China for face-to-face talks as the world's two largest economies try to strike a deal. The U.S. officials will travel to China for discussions sometime between Friday the start of a six-week congressional recess in Washington and Thursday, August 1. (CNBC
The U.S. Department of Justice said it is opening a broad antitrust review of big tech companies, which sent shares of Amazon, Alphabet, and Facebook lower in after-hours trading. The move is the strongest by Attorney General William Barr toward Big Tech, which faces increased scrutiny on both sides of the political aisle. (CNBC)
Japanese automaker Nissan plans to cut more than 10,000 jobs globally as it looks to turn around its business, Kyodo News reported. Nissan has about 139,000 employees around the world. (CNBC)
The proposed merger of T-Mobile (TMUS) and Sprint (S) will be the subject of a leadership meeting today by Germany's Deutsche Telekom, which owns 63% of T-Mobile. Separately, Bloomberg reported that Dish has agreed to pay $5 billion for wireless assets that T-Mobile and Sprint will sell to gain approval for the deal. (Reuters)
UPS is expanding its delivery to seven days a week on January 1 and has set up a subsidiary to deliver packages via drones. UPS also announced a new partnership with Michael's Craft stores to expand its "Access Point" service that allows customers to pick up or drop off pre-labeled packages at more than 40,000 brick and mortar locations. (CNBC)
Starbucks (SBUX) is expanding its partnership with Uber's (UBER) Uber Eats service to deliver coffee and food throughout the U.S. beginning in early 2020.
STOCKS TO WATCH
Snap (SNAP), which is the maker of Snapchat, posted a slimmer-than-expected loss for the second-quarter, while exceeding expectations for user growth and revenue.
Texas Instruments (TXN) beat adjusted quarterly profit and revenue forecasts. The stock is getting a boost from the results, especially in light of the company's previous warning about a slowdown in demand that may last for a few more quarters.
Visa (V) reported better-than-expected quarterly numbers yesterday. Visa's results were helped by an overall boost in spending using Visa cards, highlighted by a nearly 9% jump in U.S. payment volume.
iRobot (IRBT) shares are under pressure after the Roomba robot vacuum cleaner maker said tariffs resulting from the trade dispute between the U.S. and China will weigh on company results throughout this year. iRobot also cut its full-year earnings guidance.
Campbell Soup (CPB) is selling its Australian snacks unit Arnott's to private-equity firm KKR (KKR) for a reported $2.2 billion.
General Electric (GE) has hired advisers to explore a sale of its aircraft financing unit, according to Bloomberg, which also reports that Starwood and Apollo Management have put in bids. GE CEO Larry Culp had said in January that he didn't plan to sell the unit, which could fetch around $4 billion.
WATERCOOLER
Chipotle Mexican Grill (CMG) teased potential new menu items on its earnings call as the chain continues to impress investors under CEO Brian Niccol. Chipotle said it's timing the launch of carne asada soon and is testing quesadillas. (CNBC)
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Margin Debt and the Market: Up 4.8% in June
By: Jill Mislinski | July 22, 2019
Note: The NYSE has suspended its NYSE Member Firm margin data as of December 2017. We have replaced our Margin Debt data with FINRA data, which includes data for all firms, not just NYSE member firms.
Let's examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.
The first chart shows the two series in real terms — adjusted for inflation to today's dollar using the Consumer Price Index as the deflator. At the 1997 start date, we were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.
Debt hit a trough in February 2009, a month before the March market bottom. It then began another major cycle of increases.
The Latest Margin Data
FINRA has released new data for margin debt, now available through June. The latest debt level is up 4.8% month-over-month.
At the suggestion of Mark Schofield, Managing Director at Strategic Value Capital Management, LLC, we've created the same chart with margin debt inverted so that we see the relationship between the two as a divergence.
The next chart shows the percentage growth of the two data series from the same 1997 starting date, again based on real (inflation-adjusted) data. We've added markers to show the precise monthly values and added callouts to show the month. Margin debt grew at a rate comparable to the market from 1997 to late summer of 2000 before soaring into the stratosphere. The two synchronized in their rate of contraction in early 2001. But with recovery after the Tech Crash, margin debt gradually returned to a growth rate closer to its former self in the second half of the 1990s rather than the more restrained real growth of the S&P 500. But by September of 2006, margin again went ballistic. It finally peaked in the summer of 2007, about three months before the market.
NYSE Investor Credit
Lance Roberts of Real Investment Advice analyzes margin debt in the larger context that includes free cash accounts and credit balances in margin accounts. Essentially, he calculates the Credit Balance as the sum of Free Credit Cash Accounts and Credit Balances in Margin Accounts minus Margin Debt. The chart below illustrates the mathematics of Credit Balance with an overlay of the S&P 500. Note that the chart below is based on nominal data, not adjusted for inflation. Here, we have retained the NYSE data through November 2017 and switched to the FINRA data moving forward.
Here's a slightly closer look at the data, starting with 1997. Also, we've inverted the investor credit monthly data and used markers to pinpoint key turning points.
As we pointed out above, margin debt data is several weeks old when it is published. Thus, even though it may, in theory, be a leading indicator, a major shift in margin debt isn't immediately evident. Nevertheless, we see that the troughs in the monthly net credit balance preceded peaks in the monthly S&P 500 closes by six months in 2000 and four months in 2007. Before the December 24, 2018 correction of 19.78%, the previous S&P 500 correction greater than 15% was the 19.39% selloff in 2011 from April 29th to October 3rd. Investor Credit saw a negative extreme in March 2011.
Conclusions
There are too few peak/trough episodes in this overlay series to take the latest credit balance data as a leading indicator of a major selloff in U.S. equities. This has been an interesting indicator to watch and will certainly continue to bear close watching in the months ahead.
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CNBC
U.S. stock futures were poised for a second day of gains, following the announcement of a debt and spending deal by the White House and congressional leaders. The major averages had rebounded from a Friday loss earlier in the day on reports that the deal was about to be announced. The S&P 500 sits about 1% below its July 15 all-time high, with the Dow about 0.7% below its own record high. (CNBC)
On today's U.S. economic calendar, the National Association of Realtors is out at 10 a.m. ET with its June report on existing home sales. (CNBC)
It's a busy day for earnings. Dow components Coca-Cola (KO), United Technologies (UTX), and Travelers (TRV) lead this morning's earnings reports, with Kimberly-Clark (KMB), Harley-Davidson (HOG), Hasbro (HAS), Biogen (BIIB), Centene (CNC), Fifth Third (FITB), KeyCorp (KEY), Lockheed Martin (LMT), PulteGroup (PHM), Quest Diagnostics (DGX), Sherwin-Williams (SHW), and Stanley Black & Decker (SWK) also issuing quarterly numbers.
Dow component Visa (V) is out with its quarterly numbers after today's closing bell, along with Chipotle Mexican Grill (CMG), Discover Financial (DFS), Edwards Lifesciences (EW), iRobot (IRBT), Snap (SNAP), and Texas Instruments (TXN).
IN THE NEWS TODAY
Apple (AAPL) is in advanced talks to buy assets from Intel's (INTC) modem chip business, potentially acquiring patents and staff valued at $1 billion or more, The Wall Street Journal reported. If the purchase happens, it would again underscore Apple's increased willingness to consider large multibillion-dollar acquisitions with its war chest of $225 billion in cash and marketable securities. (CNBC)
Trump met with CEOs from Google (GOOGL), Broadcom (AVGO), and other technology companies to discuss trade practices and national security issues. The discussion came as tech companies face the potential of increased regulation following a week of hearings on Capitol Hill. (CNBC)
Facebook (FB) is expected to announce a settlement with the Federal Trade Commission over its privacy practices as soon as this week. It has already been widely reported that the settlement would include a fine of about $5 billion, as well as a number of privacy-related requirements. (WSJ)
Equifax (EFX) will pay $671 million to settle numerous state class-action lawsuits and investigations by the Federal Trade Commission, New York Department of Financial Services, and the Consumer Financial Protection Bureau. The deal, which is still subject to a six-month court approval process, will establish a consumer restitution fund of up to $425 million. (CNBC)
STOCKS TO WATCH
Whirlpool (WHR) beat Wall Street's adjusted quarterly profit and revenue estimates. Whirlpool also raised its full-year forecast, after successfully increasing prices to offset higher production costs.
TD Ameritrade (AMTD) beat forecast and adjusted quarterly profit estimates. Separately, the company announced that CEO Tim Hockey will step down once a successor is found.
Starbucks (SBUX) is buying a stake in restaurant technology company Eatsa, and will also take a seat on the board. Eatsa had operated a number of automated cafes, but has closed those locations down and is now selling its systems to other restaurant chains.
AutoNation (AN) named Chief Financial Officer Cheryl Miller as its new CEO, replacing Carl Liebert. The nation's biggest auto dealership chain had named Liebert to the post in March, replacing long time CEO Mike Jackson, but now said that both sides agreed that Liebert was not the right fit.
UBS (UBS) posted better-than-expected quarterly profit, with the Switzerland-based bank logging its best second quarterly in nearly a decade. The bank saw weakness in wealth management, but strength in retail and corporate banking.
Boeing's (BA) outlook was downgraded to "negative" from "stable" by Moody's, echoing a similar move earlier in the day by Moody's rival Fitch. Both credit rating agencies cited the ongoing uncertainty surrounding Boeing's grounded 737 Max jet.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
CNBC
U.S. stock futures were indicating a higher Wall Street open and a possible reversal of recent negative trends. The Dow, S&P 500, and Nasdaq all fell Friday and have been lower in three of the past four trading days. They are also coming off their first weekly drop in three weeks, but remain higher for the month of July. The energy sector has been July's worst performer among the S&P sectors, but it could very well move up in the rankings today on a jump in crude oil prices following ramped-up Middle East tensions.
Oil prices rose more than 2% today on concerns that Iran's seizure of a British tanker last week may lead to supply disruptions in the energy-rich Gulf. British Prime Minister Theresa May called for emergency security session today to discuss a response to the seizure. (Reuters)
No economic reports are on today's calendar.
Cal-Maine Foods (CALM), GNC (GNC), Halliburton (HAL). and PetMed Express (PETS) are out with quarterly earnings this morning, while Whirlpool (WHR), TD Ameritrade (AMTD), and Zions Bancorp (ZION) are among the handful of companies releasing quarterly numbers after today's closing bell.
* Three-quarters of FANG are about to report. Here's what to watch (CNBC)
IN THE NEWS TODAY
China on Monday launched a new Nasdaq-style tech board the Science and Technology Innovation Board, or "STAR Market" on which 25 companies were listed, as the country attempts to address investor concerns like market volatility and lack of governance. It's the third time in 10 years that China has established a new major equity market. (CNBC)
* Super-fast internet from satellites is the next big thing in the space race (CNBC)
Equifax (EFX) is nearing a deal to settle the government investigations into its 2017 data breach that exposed nearly 150 million accounts and Social Security numbers. The settlement, in which Equifax would pay around $700 million, could be announced as soon as today, The Wall Street Journal reported.
Alphabet's (GOOGL) Google unit has finalized a settlement with the FTC over alleged violations of children's data privacy laws, the Washington Post reported. The fine is said to be "multimillion-dollar" but the exact amount wasn't reported.
CBS (CBS) and AT&T (T) were unable to come to an new distribution agreement, causing CBS stations to go dark on AT&T services like DirecTV and U-verse for millions of viewers. (The Hill)
STOCKS TO WATCH
Phillips (PHG) reported better-than-expected quarterly comparable sales, as the Dutch health technology company sold more of its hospital equipment in the China and U.S. markets.
M&T Bank (MTB) was downgraded to "neutral" from "overweight" at Piper Jaffray, following second-quarter earnings for the bank that missed Wall Street's forecasts. Piper Jaffray also cut its price target on the stock to $168 per share from $196 a share.
Stitch Fix (SFIX) was upgraded to "buy" from "hold" at Stifel Nicolaus, which cited an attractive entry price for the styling service's shares.
Ralph Lauren (RL) confirmed the departure of Brand Group President Valerie Hermann, effective at the end of September. The news had earlier been reported by Women's Wear Daily.
WATERCOOLER
Over the weekend Disney (DIS) proved, once again, that it is the king of the box office. "The Lion King," the company's latest remake of one of its animated classics, hauled in an estimated $185 million in the U.S., the highest opening in July ever. The previous record was held by "Harry Potter and the Deathly Hallows: Part 2 which earned $169.1 million during its debut in 2011. (CNBC)
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
The Case for Walt Disney as a Stock to Own for the Next Decade
By: 24/7 Wall St. | July 22, 2019
Picking a stock that is safe to own for a full decade is no simple task. After all, there are recessions, rapidly changing consumer habits, wages and operating costs, other business disruptors, and even laws and taxes that have to be considered. There also are even wars, military actions and other geopolitical risks that have to be factored into a decade-long evaluation. 24/7 Wall St. has tracked companies that are safe enough for most investors to want to own for the next decade.
To qualify as a stock to own for a decade or more, they must have solid earnings histories, they have to be paying dividends or are about to embark on a dividend strategy, and they must have business models that can adapt to and withstand the tests of time. That includes being able to remain profitable even during economic slowdowns and traditional recessions.
Walt Disney Co. (NYSE: DIS) was first selected by 23/7 Wall St. as one of 10 stocks to own for the next decade back in late 2010. The economy was still just starting to recover from the Great Recession. National unemployment was over 9% and nominal gross domestic product was about $15 trillion. Zoom forward to 2019, the stock market has turned into the strongest bull market anyone that is still alive has seen. And in 2019, unemployment is under 4% and GDP is over $21 trillion.
The question to ask now is if Disney is a stock that should be owned for the next decade. Before just assuming “yes” because of strength or just assuming “no” because the stock has risen so much, it’s important to understand that the Disney heading into 2020 is a vastly different company with a vastly different economic opportunity for the next 10 years.
In 2010, Disney was a leader in media and entertainment with a vast movie library and movie studios. It had major merchandising, theme parks and vacation destinations, cruises, ESPN, Marvel, Pixar and ABC. That’s still true, but now Disney owns Star Wars, which will have altered Disney’s opportunities when coupled with the power of Marvel and Pixar. ESPN went from a hero to being a dud, and now it also is likely to be viewed favorably now that Disney is launching its own streaming service for cord-cutters and cable subscribers alike. Disney can also count the massive $70-plus billion Fox acquisition that assured its position as a media powerhouse for the years and decades ahead.
What else has changed is that Disney has had to take on massive long-term debt to fund that solid buyout. Its share price has risen handily since that deal closed, but debt can be a bad thing in a recession or slower economic time. It also can be crippling if a company has to refinance that debt in the years ahead when interest rates could be higher and investors may demand a higher spread. Disney’s long-term debt was $17.2 billion and its “other liabilities” in long-term obligations was $9.6 billion at the end of 2018. At the end of the first quarter, Disney’s long-term debt was $37.8 billion and its “other liabilities” was $26.7 billion. This took a company with $44 billion in total liabilities up to $109 billion in one rapid swoop.
Back in 2010, Disney paid a dividend yield of only 0.9%. We argued that it was far too low, but the share appreciation still puts that yield at only about 1.25%. Despite the dividend rising 300% in total annualized payouts, Disney’s share price of about $37 in late 2010 (unadjusted for dividend payments) has risen to $140 in summer 2019.
Another difference between 2010 and heading into 2020 is that Chair and CEO Bob Iger is now much closer to retirement. His pay has been a topic of discussion, but Iger has made some great acquisitions and investments and he has positioned the company for future decades. Whoever assumes that role in the coming years likely will know at least a little bit how Tim Cook feels as the replacement for Steve Jobs.
Disney also ranks high in the EGS investing field that has become much more of a focus heading into 2020 than back in 2010. The stock is highly ranked in all the indexes and exchange-traded funds tracking environmental, social and governance (ESG) themes. Disney also may get to use some of its capital from the forced sale of regional sports networks as part of a regulatory agreement under the Fox deal to pay down debt. On top of Star Wars already having offshoots and its own theme park, Marvel’s Avengers has become the most valuable movie franchise going. Disney is now the super-majority owner of Hulu too. All this is going to make the Disney+ streaming service a hit and must-own service for families.
Generating a return of 15% in 2018 was far better than the 6% return that analysts had projected at the start of that year. Disney entered 2019 trading at about $110, and Wall Street analysts had a consensus price target of just $124.50 at the start of this year. Disney has now risen above $140 per share, with a 30% year-to-date gain that is 10 percentage points higher than the S&P 500’s gain, and analysts now have a Refinitiv price target closer to $151.
In July, JPMorgan has told its clients to buy Disney shares ahead of the early August earnings report. The firm’s rating is Overweight and its target price is $150. Many other analysts have jumped firmly on the Disney train. Earlier this year, Merrill Lynch’s price objective jumped up to a $168, and the firm even laid out a scenario where Disney could rise closer to $200 per share.
Disney now is worth more than $250 billion in market cap. It’s taken decades to build to that level. One very strong case is the coming war with Netflix Inc. (NASDAQ: NFLX). Disney is taking all of its Disney, Star Wars and Marvel content off of Netflix very soon. Even after a poor earnings and subscriber report, Netflix has a market capitalization of $140 billion. The market is never likely to assign the same multiple on earnings or revenues that it has for Netflix, but Disney+ is being priced far lower than Netflix and its new content powerhouse is close to a sure thing that households will subscribe to. Even valuing the future streaming at one-third of the Netflix value would be a major win for Disney (and probably bad for Netflix).
If Disney can work down some of its debt, even if it comes at the expense of growing its dividend by that much, Disney appears to be on stable ground for the next decade. This stock has risen roughly eightfold since the selling zenith of the Great Recession in early 2009, and it has risen to $140 from $37, while not even adjusting for a dividend that has more than tripled since our first decade call on Disney.
Are there risks to Disney’s decade-long upside case? Absolutely. As far as what can go wrong between now and then, that might take another hour to cover.
As far as evaluating Disney as a stock to own for the next decade, this is not a view that should be endorsing or panning a single quarter’s earnings report. The same is even true for a full year’s earnings. Disney’s stock has risen massively, and a different team will run Disney in the not-so-distant future as Iger is approaching 70 years old.
It seems almost impossible to expect that the decade after 2020 will see the same great gains as the past decade without a major pullback in Disney shares or the stock market in general. It’s a different time, and the business cycle is much more mature. History also would seem to dictate that the economy has to be closer to the next recession than farther away. That said, a new management team and the solid business foundation set up over the past decade by Iger and his team might make Merrill’s most optimistic upside target sound rather low for those who will try to zoom forward a decade from now.
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DP WEEKLY WRAP: Technology Sector Bullish Percent Seems Maxed
By: Carl Swenlin | July 19, 2019
The Bullish Percent Index (BPI) shows the percentage of stocks in a given index with Point and figure BUY signals. Besides having a BPI for the major market indexes, StockCharts.com also has a BPI for each of the 11 Sector SPDRs, and I have started to display them with their respective sectors. The Technology BPI ($BPINFO) is at 90%, which shows excellent participation; however, it is likely that it has peaked and will start declining again. This will erode support of the sector index, and will probably result in a price decline. Also note that the PMO and OBV have negative divergences against price, offering more evidence of technical weakness.
GLOBAL MARKETS
BROAD MARKET INDEXES
Note that the BPIs have started to break their uptrend lines drawn from the June low. I believe it was last week that I said it was going to be a problem when those BPI uptrends were broken.
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
Because some interest rates are currently inverted, I will be including a chart so we can watch the situation. In normal circumstances the longer money is borrowed the higher the interest rate that must be paid. When rates are inverted, the reverse is true. It is generally believed that rate inversions result from "a flight to safety." On the chart below, notice that the one-month and three month T-Bills (dotted lines) pay a higher interest rate than the one year through the 10-year T-Bonds. This is a serious problem for the stock market.
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: Price broke down from the rising wedge on Wednesday, and a rally attempt on Friday failed. There is a negative divergence on OBV, and S&P 500 total volume continued to be thin.
SPY Weekly Chart: This chart still looks bullish, but the PMO has decelerated somewhat.
Climactic Market Indicators: Nothing major to see here.
Short-Term Market Indicators: Both the STO-B and STO-V have negative divergences, and the STO-V has dipped lower than its June low.
Intermediate-Term Market Indicators: These indicators have rolled over and most have crossed down through their signal lines. The Golden Cross Percent is still rising, but it moves more slowly.
CONCLUSION: In spite of a probable July 31 interest rate cut, the market has started to roll over. On the chart above we can see a giant rising wedge, which we expect to resolve downward. Also on the chart above, the indicators are descending from relatively overbought levels, so a hefty decline can take place while they correct down to recent oversold levels, and it could really get ugly if they move down to their December lows.
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Click on "In reply to", for Authors past commentaries
Dow Jones Industrials Index (DJIA) Monthly Summary Analysis »» Breaking-Out
By: Marty Armstrong | July 20, 2019
AMC Call Options Red-Hot After Analyst Bull Note
By: Schaeffer's Investment Research | July 19, 2019
• Credit Suisse initiated coverage on AMC with an "outperform" rating and an $18 price target
• Options bulls are storming the stock in response
The shares of AMC Entertainment Holdings Inc (NYSE:AMC) just toppled the $10 mark for the first time in nearly a month, up 6.7% at $10.26 after Credit Suisse initiated coverage on the movie theater concern with an "outperform" rating and an $18 price target -- roughly a 90% premium to last night's close. The analyst predicted that a stronger film slate for the second half of the year, paired with recent price increases will boost AMC stock, and sees industry box office growth during the next three quarters boosting sentiment among investors.
This bull note comes at the same time as Disney's (DIS) much-buzzed about Lion King release, which will undoubtedly generate revenue for AMC over the weekend. Considering all the buzz surrounding the stock, a surge in call contracts should come as no surprise. So far, 7,366 calls have exchanged hands, five times the intraday average, and 10 times the number of put contracts. Plus, this call volume is pacing in the 100th annual percentile of its annual range.
The July 10 call, which expires later today, is most active, and it's possible traders are purchasing the options to open for a volume weighted average price of $0.26. This means traders will profit if the underlying stock holds above $10.26 (strike plus premium paid) through the close tonight. The September 10 call is seeing some action, too, with contracts potentially being sold to close here.
Taking a quick look at the charts, AMC has rallied hard off its all-time low of $8.73 earlier this month, up roughly 17% since bottoming out. The equity has found recent support atop its 10-day moving average, and, for the first time since late April, is back above its 30-day trendline, too.
Should the stock continue to rally, additional analyst bull notes might be in the cards for AMC. Right now, four of the nine brokerages in coverage call it a "hold." The consensus 12-month target price of $16.58, on the other hand, is a 60% premium to current levels.
Echoing that, an unwinding of shorts could put some wind at the security's back, too. Even as bearish bets began to trickle out during the last reporting period, the 11.82 million shares sold short still represent a hefty 23.3% of the stock's available float. At AMC's average pace of trading, it would take over a week to cover these pessimistic positions, leaving plenty of room for more short covering.
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Why Are The Airlines Flying?
By: Greg Schnell | July 19, 2019
Airline price charts are starting to improve. The big question is - why? After years of going sideways for the industry group, is it possible that now is the moment to be optimistic that something is changing? Well, the industry daily chart does not look all that optimistic.
The weekly chart has one particular indicator that is getting interesting. The momentum indicator I am using is the Price Percentage Oscillator (PPO), which has just moved above zero and has also moved above its signal line (it's hard to tell just from the chart, but I have put the zoom panel on the end so you can see it). Notice that the airline PPO rolled over, with each top on the $SPX in the bottom panel. As the chart finally tries to make a break, it is also pushing the PPO indicator up against the down-sloping trend line. A break in this long-term downtrend might mark the change in trend from sideways to up for the airlines.
One of the reasons this may be happening is that the reduction of available planes may be tightening up the number of available seats, pushing revenues higher for the airlines. While the airlines are not off the ground yet, some of the individual charts look better than the industry average.
It is the breakout from this big sideways area that suggests a change is in the air. It might be time to change the air in your portfolio and look for higher highs. I worked through all the transportation stocks on Wednesday's Market Buzz, so check that out for more information.
Good trading,
Greg Schnell, CMT, MFTA
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Options Bulls Pounce as Boeing Takes Off
By: Schaeffer's Investment Research | July 19, 2019
• Some Boeing traders are looking ahead to next week's earnings report
• BA stock is at the top of the Dow this afternoon
Boeing Co (NYSE:BA) is the best Dow stock this afternoon, after the aerospace giant said its grounded 737 MAX planes are expected to begin flying again in the fourth quarter. BA also indicated it will ramp up production of the aircraft by next year, and compensation to airlines as a result of delayed 737 MAX deliveries will translate into a $4.9 billion after-tax charge.
At last check, BA stock is up 4.6% at $377.67, headed toward back-to-back weekly wins. Since bouncing from the $350 region early last week -- home to a 61.8% Fibonacci retracement of Boeing's December low to March high -- the shares have added 8.3%, and have regained a foothold atop their 200-day moving average. However, the security is struggling near its 120-day trendline, which contained a late-June rally attempt.
ba stock daily price chart on july 19
Options traders are positioned for more upside through tonight's close. Amid accelerated volume -- around 107,500 calls and 64,000 puts have traded so far, three times what's typically seen -- buy-to-open activity has been detected at the July 370, 375, 377.50, and 380 calls, BA's four most active options this afternoon. Looking further out, bulls may be purchasing new positions at the weekly 7/26 375- and 380-strike calls, which expire next Friday, July 26.
The lifetime of these weekly call options encompasses Boeing's second-quarter earnings report, which is scheduled for release before the market opens next Wednesday, July 24. The stock has closed higher the day after earnings in six of the past eight quarters, including the last three in a row. On average, the shares have moved 3.8% in the subsequent session, regardless of direction, roughly in line with what Trade-Alert currently pegs as the implied earnings deviation.
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Money managers Reduced their exposure to the US Equity markets since last week...
• DiscoverGold
NAAIM Exposure Index
* July 17, 2019
The NAAIM Number
81.85
Last Quarter Average
77.30
»»» Read More…
CNBC
U.S. stock futures were climbing this morning after an influential Fed official hinted at more aggressive policy easing. Stocks had been falling this week until New York Fed President John Williams said the central bank needed to "act quickly." However, a spokesperson later said Williams was drawing from research, not hinting at what may happen at this month's meeting. The markets see a rate cut as a lock. (CNBC)
* Blackrock CEO Larry Fink sees US stocks moving higher even from near-record levels (CNBC)
* BlackRock's second-quarter profit misses estimates (Reuters)
At the end of this packed week of earnings, Dow stock American Express (AXP) reported a better-than-expected quarterly profit before the bell. On today's economic calendar, consumer sentiment data is out at 10 a.m. ET. (CNBC)
* Microsoft beats on earnings, stock moves higher (CNBC)
Boeing said it will take a $4.9 billion charge in the second quarter due to the worldwide grounding of its 737 Max planes after two fatal crashes that killed 346 people. The charge, which comes to $8.74 a share, is set to wipe out profits. (CNBC)
IN THE NEWS TODAY
The We Company, parent of shared office space manager WeWork, plans to host an analyst day for Wall Street banks on July 31, as the company steps up its preparations for an initial public offering, Reuters reported.
USA Today publisher Gannett (GCI) is close to a deal to combine with GateHouse Media, a move the Wall Street Journal reports would join the nation's two largest newspapers. Local papers have suffered a decline in circulation compared to national outlets and have lost their online-advertising business to tech giants.
Ascena Retail Group (ASNA) said the winding down of its Dressbarn business is on target, as it released the locations of 53 stores slated to shut by the end of August. The announcement came amid chatter the business would be forced to file for bankruptcy to break leases. (CNBC)
The Environmental Protection Agency will not ban a widely used pesticide that has been linked to serious health problems in children, including damaging brain development. It's a victory for the chemical industry and farmers who lobbied for chlorpyrifos. (NY Times)
* Bayer welcomes judge's call for reduced damages in $2 billion glyphosate case (Reuters)
STOCKS TO WATCH
Crowdstrike rose about 18% following the release of its first earnings since its IPO. The cybersecurity company reported a loss per share of 47 cents in line with the 47 cents estimated, and revenues of $96.1 million versus $95.6 million estimated, according to Refinitiv.
Skechers climbed about 13% after the shoemaker's second-quarter earnings surpassed Wall Street's expectations. Skechers reported earnings per share of 49 cents on revenues of $1.26 billion. Analysts polled by Refinitiv had expected earnings per share of 34 cents on revenues of $1.22 billion.
Shares of Chewy were higher after the pet food and supplies company released its first earnings report since its IPO. Chewy said it made $1.1 billion in sales in its first quarter, recording a net loss of $29.6 million, which is in line with the guidance it set forth in its prospectus for its IPO earlier this year.
Carl Icahn has formally filed a proxy statement seeking to replace four board members at Occidental Petroleum (OXY). The activist investor alleges the company's board mismanaged its $38 billion, Warren Buffett-backed deal to buy Anadarko (APC). Icahn has a nearly 5% stake in Occidental.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Matthew J. Belvedere
@Matt_Belvedere
CNBC
U.S. stock futures were pointing to a lower Wall Street open this morning, potentially risking a third straight session of losses for the Dow, S&P 500 and Nasdaq. However, all three indexes remained sharply higher for the month. The S&P 500 and Nasdaq were about 1% off their record highs, ahead of Thursday trading. The Dow was about 0.5% away from all-time highs. (CNBC)
* Treasury Secretary Mnuchin to CNBC: Progress being made on debt limit deal, markets shouldn't be concerned (CNBC)
* Mnuchin: Call on trade with China counterparts set for today, 'complicated issues' remain (CNBC)
* Mnuchin: Treasury will ensure bitcoin doesn't become 'Swiss-numbered bank accounts' (CNBC)
Shares of Netflix (NFLX) were falling about 11% in premarket trading after the streaming service lost U.S. customers for the first time in eight years and missed targets on overseas subscriber additions by a wide margin. For the quarter, Netflix did announce after-the-bell Wednesday earnings and revenue that beat expectations. (CNBC)
Financial companies continue to report quarterly earnings this morning, with Morgan Stanley (MS) out before the bell, along with BB&T (BBT), Blackstone (BX), M&T Bank (MTB), and SunTrust Banks (STI). Meanwhile, Dow stock Microsoft (MSFT) leads the after-the-bell list, along with recent IPO Chewy (CHWY).
* Morgan Stanley beats profit estimates as rising stocks benefit wealth and fund business (CNBC)
Dow component UnitedHealth (UNH) this morning beat estimates with quarterly earnings and revenue, and raised its 2019 earnings forecast, buoyed by strength in the largest U.S. health insurer's pharmacy benefits management business and its insurance plans. (Reuters)
On today's economic calendar, at 8:30 a.m. ET, the Labor Department issues its weekly look at initial jobless claims and the Philadelphia Fed releases its monthly manufacturing index for July. The Conference Board is out with its June index of leading economic indicators at 10 a.m. ET. (CNBC)
IN THE NEWS TODAY
Federal prosecutors in New York have ended their campaign finance investigation into alleged hush money payments arranged by President Donald Trump's former lawyer Michael Cohen to two women who claim they had sex with Trump. The related materials will be made public today at 11 a.m. ET. (CNBC)
Homeland Security acting-Secretary Kevin McAleenan is set to testify today on Capitol Hill, where he's expected to be grilled over the treatment of migrants in detention centers. The hearing comes as lawmakers clash over how to deal with the crisis at the U.S.-Mexico border. (NPR)
* Wayfair says COO and CTO will retire this year, just weeks after protests over sales to migrant centers (Boston Business Journal)
The U.S. House of Representatives backed resolutions to block the sale of precision-guided munitions to Saudi Arabia and the United Arab Emirates, sending them to the White House, where Trump has promised a veto. Lawmakers want Washington to push the kingdom to improve its human rights record. (Reuters)
* Iran seizes foreign oil tanker in Persian Gulf, 12 on vessel, state media reports (USA Today)
STOCKS TO WATCH
IBM (IBM), a Dow component, beat estimates on quarterly earnings and met expectations on revenue. The bottom line was boosted by growth in its cloud business.
Apple (AAPL) was upgraded to "outperform" from "market perform" at Raymond James, which pointed to confidence in the upcoming 5G iPhone cycle.
Taiwan Semiconductor (TSM) said it expects a stronger second half of the year as 5G telecom-related demand increases. That follows a decline in second quarter profit for the contract chip maker.
SAP (SAP) reported a 21% decline in second-quarter operating profit, with the business software company saying investors should not expect a major improvement in profit margins before next year.
Novartis (NVS) raised its full year outlook for sales and profits, following a 20% rise in second quarter core operating income for the Swiss drug maker.
Advanced Micro Devices (AMD) was downgraded to "neutral" from "buy" at Mizuho Securities in a valuation call, with the firm noting an 80% year-to-date run up in the chip maker's shares.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
CNBC
U.S. stock futures were pointing to a slightly higher Wall Street open this morning, following the first loss in five sessions for the Dow and six sessions for the S&P 500. The Dow did, however, set another all-time intra-day high Tuesday before closing lower. Stocks remain solidly positive for the month, continuing a trend which has seen July gains in each of the past four years. (CNBC)
Continuing this week's bank earnings, Bank of America (BAC), Bank of New York Mellon (BK), Comerica (CMA), PNC Financial (PNC), and U.S. Bancorp (USB) issue quarterly results this morning. Dow component IBM (IBM), along with the first of the FAANG companies Netflix (NFLX), report after the bell. (CNBC)
* BofA beat estimates with profits on retail banking strength (CNBC)
Shares of Nu Skin Enterprises (NUS) were tanking about 20% in the premarket after the company said second-quarter earnings would come in below forecasts, due to reduced revenue in China. The maker of personal care products also points to negative impact from a falling dollar. (Seeking Alpha)
* Shares rail operator CSX sink after earnings were hit US-China trade war weakness (Reuters)
Goldman Sachs raised its Apple (AAPL) stock price forecast to $187 from $171, but that's still 9% below Tuesday's close. The Goldman research note is largely negative on Apple, discussing how the tech giant's services business growth may fall short. (CNBC)
On today's economic calendar, the government releases June housing starts at 8:30 a.m. ET. The Fed releases its Beige Book at 2 p.m. ET. The Energy Department releases its usual Wednesday look at oil and gasoline inventories at 10:30 a.m. ET. Kansas City Fed President Esther George speaks at 2:30 p.m. ET. (CNBC)
* Weekly mortgage applications drop as rates rise and homebuyers pull back (CNBC)
IN THE NEWS TODAY
Amazon (AMZN) is facing a formal EU antitrust investigation. The commission said today it's looking into whether the e-commerce giant abused its role as an independent marketplace and a retailer of its own products. Meanwhile, Group of Seven top finance officials are meeting in Paris today to find common ground on how to tax tech companies and navigate digital currencies. (AP)
Facebook's been saying a Swiss data protection agency will oversee its new cryptocurrency, Libra. But the social media giant hasn't reached out to the Swiss regulator about its digital coin yet. And the scrutiny of Libra moves to the House Financial Services Committee today, after a lively Senate Banking Committee hearing Tuesday. (CNBC)
Elon Musk's ambitious brain-computer start-up Neuralink is looking to start trials on humans next year. The start-up envisions drilling holes into the brain with a custom machine to embed thin threads that connect to a tiny processor, which can then be connected to a smartphone over Bluetooth. (CNBC) (MG note: "sheesh")
* Tesla cuts prices on top-selling Model 3 while discontinuing versions of other cars (CNBC)
IAC/InterActiveCorp (IAC) is paying $250 million for a stake in car-sharing app company Turo. The deal, once it closes, would make IAC largest shareholder in Turo, often referred to as the Airbnb for cars. The new funding brings Turo's total equity raised to $470 million. (CNBC)
STOCKS TO WATCH
United Airlines (UAL) beat consensus earnings and revenue estimates in its fiscal second-quarter. United still expects profits to rise despite capacity cuts caused by the grounding of Boeing's (BA) 737 Max jet.
Sprint (S) said that a security breach exposed subscriber information, according to a letter to customers obtained by ZDNet. Sprint said it was informed of the hack on June 22. The company said it re-secured all compromised accounts by resetting PIN codes three days later.
DouYu International (DOYU) priced its U.S. initial public offering at $11.50 per share, at the low end of the expected range. The China-based video streaming service, which is backed by Chinese internet giant Tencent Holdings, debuts today on the Nasdaq.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
• • • Dow Break 27,000
By: Marty Armstrong | July 16, 2019
CNBC
U.S. stock futures were pointing to a mixed Wall Street open, after a day of small gains kept the record closes going for the Dow, S&P 500 and Nasdaq. The early focus for investors today continues to be the key financial companies reporting earnings. (CNBC)
Dow stocks J.P. Morgan Chase (JPM) and Goldman Sachs (GS) report this morning, along with Wells Fargo (WFC). Johnson & Johnson (JNJ), another Dow component, is also out with earnings before the bell. Dow transport stocks United Airlines (UAL) and CSX (CSX) are among the companies set to report after the bell. (CNBC)
* JP Morgan beats profit expectations, aided by income tax boost (CNBC)
* Goldman Sachs earnings blow past Wall Street on strong investing banking, trading (CNBC)
* J&J's profit spikes as pharma fuels growth, consumer and medical devices improve (CNBC)
It's also a busy day for economic numbers, beginning at 8:30 a.m. ET, with retail sales and import prices for June. Industrial production figures for June are out at 9:15 a.m. ET. May business inventories and the National Association of Home Builders' monthly sentiment index for July are issued at 10 a.m. ET. (CNBC)
IN THE NEWS TODAY
CBS (CBS) and Viacom (VIAB) continue to bob along with merger talks and are now circling Aug. 8 as an internal deadline to agree to a deal, according to people familiar with the matter. The price of the transaction, which will come in the form of a merger exchange ratio, hasn't been discussed and won't be addressed until all strategic and management issues are sorted out. (CNBC)
Current and former Tesla (TSLA) employees working in the company's open-air "tent" factory say they were pressured to take shortcuts to hit aggressive Model 3 production goals, including making fast fixes to parts with electrical tape, working through harsh conditions and skipping previously required vehicle tests. (CNBC)
Budget airline Ryanair said the delays in Boeing deliveries will lower growth next summer, forcing it to close some bases and make cuts ahead of next year. Ryanair reported today it expects a 3% growth in passengers in the summer of 2020, compared to its previous estimate of 7%. (WSJ)
* Boeing seeks to reassure plane leasing firms as grounding of its 737 Max grinds on (CNBC)
Amazon's (AMZN) Prime Day continues into its second day, ending Wednesday at 2:59 a.m. ET. While competitors may match Amazon's price deals, the company's goal is more about signing up more members for Prime, which for a monthly or yearly fee includes faster delivery, streaming video and music, as well as discounts at Whole Foods. (CNBC)
* Amazon workers in Minnesota walk out as Prime Day orders roll in (CNBC)
STOCKS TO WATCH
Domino's Pizza (DPZ) earned $2.19 per share for its second quarter, beating forecasts of $2.02, although sales were below analyst estimates. U.S. comparable store sales were up 3 percent. But the stock was under pressure.
Shares of J.B. Hunt Transport (JBHT) were up around 8% in premarket trading despite the company missing estimates with quarterly earnings. The logistics firm's revenue was in line with estimates.
PayPal (PYPL) launched its international money transfer service Xoom in Britain and 31 other countries in Europe.
Vale (VALE) will pay about $107 million in compensation to workers who were affected by the January mining disaster that killed at least 240 people.
Repligen (RGEN) shares are under pressure after the drug maker announced a $100 million common stock offering and a $250 million offering of convertible senior notes.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Currently short 5 and long 3
-ARQL
-DVA
+KHC
+LEVI
-NPTN
+RCMT
-RST
-SGH
"Saturday Music" has been refreshed..
MiamiGent Thursday, 12/06/18 12:02:03 PM
Well, well, well...here I am, back again :)
How is everyone? Prospering, I hope.
Reactivating the board to post my picks.
I welcome commentary about those picks and the general market.
Not a board for other plays, sorry- want folks able to see the trees, not the forest.
Good luck and please note this disclaimer in this board intro/header:
You alone are responsible for the stocks you buy or sell. Stock trading is very dangerous. You could lose all your money- many have!
Simulate (pretend) trading for a few years first- it's still fun and you'll be mighty glad you did.
Saturday music...
An appropriate ending:
Saturday music...
CNBC
Stocks eked out a record close Monday, but gains were muted as Wall Street stayed cautious ahead of corporate earnings season. Citigroup was the first in a wave of Wall Street banks out with their second-quarter scorecards this week.
Citi topped analysts’ expectations for profit and revenue, helped by gains from the initial public offering of electronic bond trading platform Tradeweb, CNBC’s Hugh Son reports. Son will be watching some key themes as J.P. Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Wells Fargo are also expected to issue quarterly results in the coming days. One metric on his radar is Wall Street’s trading revenue — a key part of investment banks’ business that has been under pressure in recent quarters
In the case of Citi, trading revenue excluding the IPO windfall fell 5%, led by a 9% drop in equities trading revenue. Citi’s total investment banking revenue dropped 10% to $1.28 billion, Son reports. Investors and analysts will be watching to see if the retail banking side of their businesses can pick up the slack, and in the case of J.P. Morgan, produce another record quarter.
On calls with analysts, Son is expecting bank executives to face questions about the widely anticipated July interest rate cut by the Federal Reserve. Banks had benefited from a December rate hike. But the Fed’s dovish shift to lower interest rates could impact things like net interest income — the nuts and bolts of the banking business.
Kate Rooney | CNBC Markets Reporter
@Kr00ney
CNBC
U.S. stock futures were modestly higher this morning after a record-setting week. The S&P 500 rose for four straight days, and its record Friday close was also its first finish over the 3,000 level. The Dow was riding a three-day win streak ahead of Monday's session. The Nasdaq was up in three of the past four sessions. The Dow and Nasdaq also closed at records Friday. (CNBC)
China released second-quarter figures today showing that its economy slowed to 6.2%, the weakest rate in at least 27 years, as the country's trade war with the U.S. took its toll. However, many outside experts have long expressed skepticism about the veracity of China's GDP report, saying the government there may be putting in a floor. (CNBC)
Just one U.S. economic report is out today, with the New York Fed issuing its July Empire State manufacturing index at 8:30 a.m. ET. Meanwhile, Citigroup (C) is out with quarterly earnings this morning, the first of the major financial institutions reporting this week. Dow Transportation component JB Hunt (JBHT) is out with quarterly results after today's closing bell. (CNBC)
Shares of Galapagos (GLPG) were soaring about 15% after Gilead Sciences (GILD) agreed to invest $5.1 billion to raise its stake in and partner with the Belgium-Dutch biotech company. The Gilead investment in Galapagos comes nearly four years after the firms partnered to develop a drug targeting inflammatory diseases. (Reuters)
Bitcoin fell sharply this morning, down 10% to 10,175, before recovering. The reason for the downward move was not immediately clear. But it happened after President Trump said last week, on Twitter, that he was "not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air." (CNBC)
IN THE NEWS TODAY
Billionaire investor Peter Thiel said the FBI and the CIA should investigate if Google (GOOGL) has been infiltrated by Chinese intelligence. Thiel blasted the Alphabet-owned Google for its work in China, saying the search engine giant was "engaged in the seemingly treasonous decision to work with the Chinese military and not with the U.S. military." (CNBC)
Facebook (FB) is reportedly close to settling with the Federal Trade Commission by paying a $5 billion fine. The FTC has been conducting a probe of Facebook's privacy practices. FTC commissioners broke along party lines, 3-2, with the GOP majority lining up to support the pact while Democratic commissioners objected. (Wall Street Journal)
A proposal to prevent big technology companies from functioning as financial institutions or issuing digital currencies has been circulated for discussion by the House Financial Services Committee. In a sign of widening scrutiny after Facebook's proposed Libra digital coin, the bill proposes a fine of $1 million per day for violation of such rules. (Reuters)
Chinese tech company Huawei plans to lay off hundreds of employees in America as it struggles with a blacklist imposed by the Trump administration over national security concerns. The layoffs are reportedly expected to hit Huawei's U.S. development subsidiary Futurewei, which employs 850 people in research labs throughout the U.S. (CNBC)
Boeing's (BA) 737 Max could remain grounded into 2020, according to government and industry officials who spoke to The Wall Street Journal. Following United and Southwest, American Airlines (AAL) extended its cancellations of flights involving the jet into early November. These are the only three U.S. airlines with 737 Max jets in their fleets.
Amazon (AMZN) kicked off its first 48-hour Prime Day run today. The retail giant said last year's day of deals and discounts was its biggest yet as it sold 100 million products. Having those extra hours this year will likely end in even better results. After all, people don't want to be left out. (CNBC)
STOCKS TO WATCH
Sealed Air (SEE) was downgraded to "underweight" from "sector weight" at KeyBanc, pointing to weak volume trends for the industrial gas maker as well as the degree of balance sheet leverage.
Crocs (CROX) was upgraded to "overweight" from "neutral" at Piper Jaffray, based on the belief that the shoe maker has been seeing solid traffic.
International Speedway (ISCA) and Speedway Motorsports (TRK) were both downgraded to "underperform" from "market perform" at Wells Fargo, which points to a lack of upside potential given takeover offers in play for both race car track operators.
UBS lowered its rating on shares of General Electric (GE) to "neutral" from "buy," saying UBS was "taking a breather after recent stock outperformance." Embattled GE has seen its stock surge more than 42% in 2019.
Tiffany (TIF) was downgraded to "neutral" from "buy" at Citi, based on concerns about near-term dynamics despite what Citi sees as good long-term moves by management at the luxury goods retailer.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
DP WEEKLY WRAP: New All-Time Highs, but Not for Small-Cap Stocks
By: Carl Swenlin | July 12, 2019
While the broad market indexes are currently making all-time highs, the S&P 600 Small-Cap Index (IJR) is struggling and remains about -14% below its all-time highs. This lack of small-cap participation is a concern, because the large-caps can't carry the market forever. The OBV is currently in a reverse divergence -- the OBV is making a higher high, but price is not. This tells us that price can't move higher in spite of increased volume.
Another set of S&P 600 indicators available on StockCharts.com shows the internal weakness of the small-cap index, with only about 45% of stocks above their 200EMA. This is almost 30 percentage points below the percentage of S&P 500 stocks above their 200EMA.
GLOBAL MARKETS
BROAD MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
The yield curve is inverted, meaning that longer-term interest rates are lower than shorter-term rates.
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: The volume for today's move to all-time highs was only 78% of the one-year average volume. We have another rising wedge, and yesterday the VIX touched the top Bollinger Band, so we should look for a short-term top early next week.
SPY Weekly Chart: This chart is totally bullish.
Climactic Market Indicators: Net advances are the only thing climactic I see on this chart.
Short-Term Market Indicators: The STO-B and STO-V turned up on Friday. That could be good for another short move up.
Intermediate-Term Market Indicators: These indicators are overbought, but could accommodate further price advance.
CONCLUSION: The market is at all-time highs, and the Fed is hinting strongly that we're probably going to get an interest rate cut at the end of the month. I don't get it. We have a rate inversion, and the market is overvalued. I am reminded of a Fed Chairman quote (I think it was Volker): We have the best economy that money can buy. At any rate, the volume this week was substandard, and, with small-caps lagging, the advance is not broad based. I think we're going to hit a rough patch soon.
Next week is an options expiration week, so we should expect low volatility toward the end of the week -- not guaranteed, but usual.
Read Full Story »»»
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Click on "In reply to", for Authors past commentaries
Dow Jones Industrials Index (DJIA) Monthly Summary Analysis »» Breaking-Out
By: Marty Armstrong | July 13, 2019
Why Cisco Still Qualifies as a Stock to Own for the Next Decade
By: 24/7 Wall St. | July 11, 2019
Cisco Systems Inc. (NASDAQ: CSCO) has acted like a champ in 2019. Its shares were up about 30% year to date, one of the top stocks in the Dow Jones industrial average. Its shares have recently hit multiyear and decade highs, while the Dow, S&P 500 and Nasdaq 100 have all achieved all-time highs. With a changing business model in recent years, Cisco is finally living up to its status as a stock to own for a decade. The question now is whether Cisco is a stock to own for the next decade.
24/7 Wall St. first named Cisco to a list of 10 stocks to own for the decade way back in November of 2010. With a new decade approaching, it is important to look backward for reflection and to look forward for guidance and planning. Without adjusting for dividends, Cisco was trading at close to $24.25 when we named it a holding for the decade. There is a history about why looking out for a decade doesn’t have to bring immediate action for investors when the market is at all-time highs. With some very (un)lucky timing in late 2010, Cisco shares immediately took it on the chin with a very bad earnings report right after it was featured as a decade-long holding in 2010.
What helped make Cisco a stock to own for the next decade in 2010 was that it was just about to become a dividend paying stock, and a lot of industry and companywide changes seemed to be brewing. It was also a time when much of the public was only just starting to recover from the Great Recession. U.S. unemployment was well over 9% at that time, and U.S. gross domestic product of almost $15 trillion is far shy of the current $21 trillion GDP of 2019.
With a recent share price of $57.25, there has been a simple gain of about 135% in nearly nine years. If you add in the total $7.00 or so that Cisco has paid in dividends per share since 2011, without even factoring in reinvestment, Cisco’s total return would be closer to 200% since 2010.
While a total return of that size should be nothing to be unhappy about, the current bull market is over 10 years old. The S&P 500 was at 1,219 and the Dow was only 11,350 back in late 2010. Those indexes now are closer to 3,000 for the S&P 500 and almost 27,000 for the Dow. Of those picks for the decade versus today, one has tanked and been a disaster, two would be classified as “nothing burgers” and seven have risen substantially (some seeing exponential gains).
Picking a stock to own for a decade will have vastly different criteria in 2019 or 2020 than way back in 2010. In 2010, the goal was not trying to pick the best performers of the market. It was a different time with much more market and investor unease from the effects of the Great Recession. The goal back then was to pick solid companies that either paid dividends or were about to, as well as companies that had the opportunity to keep raising their dividends or buying back stock or would be acquirers of other companies. It was a time that there was no assurance the bull market from that V-bottom in March 2009 would keep recovering. Many pundits were still sure that a bear market and recession were around the corner. For a serious market reminder, note that the S&P 500’s peak in 2007 was not even recaptured until early in 2013.
Read Full Story »»»
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06/02/11
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Type
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Free
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Moderator MiamiGent | |||
Assistants DiscoverGold mathew633 dDT |
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0
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20496
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