Category Archives: Companies

Brexit & Trade Worried Hamper Stocks

WEDNESDAY – U.S. stocks were lower Wednesday as worries over U.S.-China trade relations dampened sentiment around a record-setting rally.

The Wall Street Journal reported, citing former Trump administration officials, that the ongoing trade talks could hit an impasse that would derail a so-called “phase one” trade deal. Uncertainty around trade also grew after the Senate passed a bill supporting Hong Kong protesters. This led China to accuse the U.S. of interfering in domestic affairs.

The Dow pulled back from record highs on Tuesday amid losses from Boeing and Home Depot while investors monitored earnings and developments in the U.S.-China trade talks. There is lingering uncertainty among investors about the possibility of a deal between both countries, despite comments last month suggesting they were close to signing a partial agreement.

Elsewhere, investors are awaiting minutes from the Federal Reserve’s October policy meeting at 2 p.m. The U.S. central bank decided to lower the federal funds rate by 25 basis points to a range of 1.5% to 1.75% late last month.

In corporate news, Target shares jumped more than 8% in the premarket after the retailer posted quarterly results that easily beat expectations. Target also raised its full-year profit outlook.

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Stocks Try To End Big Week On A High Note

FRIDAY – U.S. stock futures pointed to a little changed open on Friday following a record-setting session for the major stock indexes.

Around 7 a.m. ET, Dow Jones Industrial Average futures were unchanged but pointed to a gain of 33 points at the open. S&P 500 and Nasdaq 100 futures pointed to a flat open.

The small implied gain for the Dow comes after Disney shares jumped more than 5% on great earnings. Disney’s revenues for its media and networks segment topped estimates, while sales for the company’s parks, studio entertainment and direct-to-consumer businesses also beat expectations.

Stocks rose to record highs on Thursday after the world’s two largest economies reportedly agreed to remove existing trade tariffs, sparking a huge rotation into equities and out of bonds. The U.S. 10-year Treasury yield jumped more than 15 basis points at one point on Thursday, its biggest upward move since the 2016 election.

The increasingly positive tone around global trade put the major indexes on track for solid weekly gains. Entering Friday’s session, the Dow is up 1.2% week to date. The S&P 500 and Nasdaq Composite are both up 0.6% for the week through Thursday’s close. It would be the third straight week of gains for the Dow while the S&P 500 headed for its fifth straight weekly gain. The Nasdaq was on pace for a six-week winning streak.

On the data front, consumer sentiment figures are due out at 10 a.m. ET, as well as wholesale trade numbers.

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Roku Stock Takes A Dive

Shares of Roku plunged Thursday as the streaming devices company posted third-quarter results that missed Wall Street’s expectation after multiple quarters of blowout growth.

Roku reported a third-quarter loss of 22 cents a share, worse than the 18 cents a share loss analysts surveyed by FactSet expected. Roku had beaten analysts’ expectations for quarterly earnings in seven of its last eight reports.

“ROKU broke a string of 2019 beats reporting a mixed 3Q and a frankly surprisingly mixed 4Q despite its (temporary) leadership position in the distribution of Disney+,” Pivotal Research analyst Jeffrey Wlodarczak said. “We are not surprised by the … decline indication in the stock in the after-market as an undeniably rich 12+X ’20 revenue multiple simply does not leave a lot of room for anything but material beats.”

Pivotal has a sell rating on Roku with a $60 price target. RBC Capital similarly pointed out Roku’s advantage as a distributor, as it get revenue from the streaming services of Apple, Disney, Amazon and Netflix. But unlike Wlodarczak, RBC’s Mark Mahaney has an outperform rating on Roku, as he sees it “as one of the best plays on ad-supported” over-the-top services, saying “the Streaming Wars catalyst isn’t showing up in the numbers yet, but we continue to believe ROKU will benefit materially.”

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Stock Market Higher on Positive Banking Earnings

U.S. equities rose on Friday as investors parsed through quarterly results from several big banks and economic data.

The Dow Jones industrial average rose more than 150 points before holding about 110 points higher, with Goldman Sachs contributing the most gains. The S&P 500 rose approximately 0.4 percent, with information technology and financials leading advancers.

The Nasdaq composite gained 0.4 percent.

JPMorgan Chase, Wells Fargo and Citigroup all posted better-than-expected quarterly results, beating estimates on both the top and bottom lines.

In economic news, U.S. retail sales rose 0.6 percent in September, matching expectations. Meanwhile, the Labor Department said its producer price index for final demand increased 0.3 percent after being unchanged in August.

Other data released Friday included business inventories, which rose 0.2 percent in August. Meanwhile, October consumer sentiment came in at 87.9, well below an estimate of 92, as concerns over the U.S. presidential election weighed.

Investors have been heavily scrutinizing U.S. economic data recently, trying to gauge the likelihood that the Federal Reserve raises interest rates later this year. According to the CME Group’s FedWatch tool, market expectations for a December rate hike are more than 60 percent.

The dollar rose 0.43 percent against a basket of currencies, with the euro near $1.099 and the yen around 104.18.

In oil markets, U.S. crude traded about 1 percent lower at $49.96 per barrel.

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Nasdaq briefly positive; Street awaits Fed

WEDNESDAY – U.S. stocks traded in narrow range Wednesday after morning data and ahead of the scheduled afternoon conclusion of the Fed meeting.

Treasury yields climbed, with the 2-year topping 1 percent for its highest since Jan. 8, after inflation and housing data.

Stocks opened lower and held mostly in the red in morning trade. The Nasdaq composite briefly attempted gains.

The FOMC is due to conclude its two-day meeting on Wednesday with the 2 p.m. ET release of its statement and economic projections. Those include the highly scrutinized “dot plot,” which shows the targets for appropriate federal funds rates by FOMC participants. Fed Chair Janet Yellen is also scheduled to give a news conference at 2:30 p.m.

Oil traded higher, with WTI above $37 a barrel following news producers will meet next month in Qatar to discuss a proposal to freeze output.

Coming Up:

Wednesday

Earnings: FedEx, Ctrip.com Intl., Guess, Herman Miller, Jabil Circuit
10:30 a.m.: Oil inventories
1 p.m.: European Central Bank President Mario Draghi gives welcoming remarks at ECB Contemporary Art From Poland Exhibition
2 p.m.: FOMC meeting announcement
2:30 p.m.: Fed Chair Janet Yellen press conference

Thursday

Bank of England monetary policy announcement and minutes
Earnings: Tencent, Michaels Cos., Intl. Game Technology, Lands’ End, Adobe Systems
8:30 a.m.: Jobless claims
8:30 a.m.: Philly Fed business outlook survey
8:30 a.m.: Current account
10 a.m.: JOLTS
10 a.m.: Leading indicators
10:30 a.m.: Natural gas inventories
4:30 p.m.: Fed balance sheet/Money supply

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Samsung wins appeal dispute with Apple

A U.S. appeals court just overturned a $120 million verdict against Samsung,  in its patent feud with Apple.

The court said Samsung  did not infringe Apple‘s “quick links” patent, and that two other patents covering the iPhone’s slide-to-unlock and auto-correct features were not valid. The court also said Apple was liable for infringing one of Samsung‘s patents.

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The Most Shorted NYSE Stocks

Chesapeake Energy Corp. (NYSE: CHK) saw its short interest drop less than 3% to around 224.80 million shares by the end of January. That was the third consecutive period of decline, and it was 34.4% of the company’s float. The days to cover remained about eight as the daily average volume pulled back.

The short interest in Freeport-McMoRan Inc. (NYSE: FCX) surged another 25% between the most recent settlement dates to more than 222.71 million shares. That followed a 15% gain in the previous period, and it was 19.6% of the miner’s float. It would take about three days to cover all short positions, as the average daily volume rose to a 52-week high.

Sprint Corp.’s (NYSE: S) short interest declined about 5% in the final weeks of the month, ending five consecutive periods with an expanding number of shares short. The most recent reading of around 212.78 million was 34.2% of the float. The days to cover dropped from more than 13 to about six as the daily average volume increased.

The number of Vale S.A. (NYSE: VALE) shares short dropped by some 19.66 million in the two weeks to almost 198.12 million. At the most recent average daily volume, it would take about seven days to cover all short positions, down from nine mid-month.

Petróleo Brasileiro S.A. (NYSE: PBR), better known as Petrobras, saw the number of its shares short shrink by 2.7% in the two weeks to almost 191.18 million. That was still the second highest level of short interest in the past year. The days to cover fell to about six as the average daily volume increased again.

A nearly 14% rise brought Alcoa Inc.’s (NYSE: AA) number of shares short to more than 187.78 million at the end of the two-week period. That was the fifth straight period of rising short interest, up to some 14.7% of Alcoa’s total float. The days to cover increased from three to about five.
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Are Small Caps Less Risky Than You Think?

Here’s a thing I like about small companies. In many cases, the people who run them aren’t just executives — they’re proprietors who took massive risks to build what exists today and who run themselves ragged to make sure that what does exist will be even better in the future. While I’ve met hundreds of extremely competent, dedicated executives over the years, there’s just something different about the person who scratch-built a company. To him or her, there is no such thing as a better employment offer around the bend. There’s no such thing as down time, or weekends, or even hobbies. This company is it. There’s no pushing ideas through some big committee. That person is the committee.

Maybe those kinds of companies sound a little risky to you. After all, doesn’t classic finance hold that, all else being equal, the smaller a company is, the riskier it is? Well, yes, on a company-by-company basis, those with smaller market capitalizations are riskier in terms of volatility and potential for total loss.

I believe, all else being equal, that this is insane in the aggregate. There is no reason that a portfolio of well-researched, quality small-cap companies should be riskier than one consisting of large-cap companies.

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Stocks Lower on Weak Service Data

WEDNESDAY – U.S. stocks were lower on Wednesday, erasing initial gains, despite an oil bounce and decent jobs data.

The Dow briefly rose 100 points shortly after the open and fell 100 after the ISM non-manufacturing index reading for January came in weaker than expected.

Coming Up This Week:

Wednesday

Earnings: MetLife, Allstate, AvalonBay, Boston Properties, GoPro, Lincoln Natl., NXP Semiconductor, Yum Brands
9:45 a.m. Services PMI
10 a.m. ISM nonmanufacturing
10:30 a.m.: Oil inventories

Thursday

Earnings: AstraZeneca, ConocoPhillips, Philip Morris, Cigna, Clorox, Credit Suisse, Dunkin Brands, NY Times, Tempur Sealy, Hartford Fincl., LinkedIn, News Corp., Symantec, Decker’s Outdoor, DeVry Education, Lions Gate
7:30 a.m.: Challenger Job-Cut Report
8:30 a.m. Initial claims; productivity and costs
10 a.m. Factory orders
10:30 a.m.: Natural gas inventories
4:30 p.m.: Fed Balance Sheet/Money Supply
5 p.m. Cleveland Fed President Loretta Mester on economy, policy

Friday

Earnings: BNP Paribas, Nippon Telegraph, Estee Lauder, Toyota Motors, Tyson Foods, Moody’s, Weyerhaeuser, Aon, CME Group, Ametek
8:30 a.m. Employment report; international trade
1 p.m.: Oil rig count
3 p.m. Consumer credit, Treasury STRIPS

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Google Will Highlight Core Business

Monday’s earnings report will mark a new day for Google’s parent company, Alphabet. ($GOOG)

For the first time, revenue for its core products — search, mobile and video — will be separated and $GOOG will account for the cost of its experimental projects when the company reports after the bell Monday.

Overall, analysts predict Alphabet’s profit on Class C shares will have grown 18 percent year on year to $8.09 per share, on revenue of $20.763 billion, up 43 percent year over year, according to Thomson Reuters’. Class A earnings per share are expected to have grown 18 percent year over year to $8.10 on $20.764 billion in revenue, a 15 percent increase.

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