Thursday 8/22/19=DJIA +50 NASDAQ -28
Yield Curve Inverts Again.
Daily Wrap: The market started off pretty good today and then it sold off when the yield curve inverted once again. It is hard to see recession brewing with blowout earnings from Home Depot, Lowe’s, and Target this past week, however. As I have mentioned previously, we are going to hear the “R” word thrown around a lot between now and the next presidential election.
Trading: I dumped two positions today. I do not like the way they are trading. The sector that they are in look horrible.
Seeking Alpha, Stocktwits, Twitter: I was fairly activi on social media today. I sent out tweets on the following stocks: SWCH, PODD, KLAC, CNMD, CGC, CBLK, CNBC (tv), and BA.
Here was the mood of the market as we got ready to start a new trading day.
Futures on edge as traders seek Fed clarity
• Futures wavered between slight gains and losses overnight with investors largely attuned to the Fed's symposium in Jackson Hole, Wyoming, over the next two days.
• Philly Fed President Patrick Harker and Dallas Fed President Robert Kaplan will kick off the festivities today, commenting on the world's largest economy, before Fed Chair Jerome Powell takes the stage tomorrow.
• The ECB is also scheduled to release minutes of its July policy meeting, at which it raised the possibility of further rate cuts, money printing and a reprieve from its penalty charge on bank deposits.
European stocks fall as prospects of aggressive Fed rate cuts recede
• Japan +0.05%.
• Hong Kong -0.84%.
• China +0.11%.
• India -0.72%.
• London -0.53%.
• Paris -0.59%.
• Frankfurt -0.37%.
Two good reports on the U.S. economy today.
Jobless claims stay range bound
• Initial Jobless Claims -12K at 209K vs. +216K consensus, 221K prior (revised).
• Continuous Claims: -54K to 1.674M vs. 1.700M consensus, 1.728M prior (revised).
Existing home sales rebound as mortgage rates fall
• July Existing Home Sales: +2.5% to 5.420M vs. 5.385M consensus and 5.290M prior (revised).
Trump does a flip-flop.
Trump says he's not looking at tax cuts due to strong economy
• President Donald Trump now says he's not looking at a payroll tax cut or indexing capital gains to inflation, a day after he said he was thinking about such moves.
• “I’m not looking at a tax cut now. We don’t need it. We have a strong economy," he told reporters on the White House lawn today.
• Previously: White House is looking at payroll, capital gains tax cuts, Trump says (Aug. 20)
Does anybody in Washington D.C. care anymore? The problem is: who is going to run for President on an “austerity” platform? Giving stuff away is much better for getting votes.
Federal deficit on track to top $1T per year, CBO says
• The Congressional Budget Office projects the federal deficit to average $1.2T a year from 2020 to 2029, under current law.
• That will boost debt held by the public to 95% of gross domestic product, its highest since just after World War II.
• Estimates federal deficit for 2019 will be $960M.
• CBO projects economic output growth of 2.3% in 2019 and averaging 1.8% per year after 2019, less than the historical average.
Dialing up pressure over biofuel policy
• Farmers have been infuriated at the Trump administration's decision to grant waivers exempting 31 oil refineries from rules requiring them to blend corn-based ethanol into gasoline.
• As a result, national and state trade groups have delivered letters to the White House over the past 48 hours detailing the damage the waivers have caused the biofuel industry.
• Farmers, which are seeing crop prices hit hard by a trade war with China, have also complained that the recent government crop report did not reflect damage from historic flooding this spring.
Boeing stock looks very interesting once again.
Boeing scores $1B contract for A-10 wing replacements
• Boeing (NYSE:BA) has been awarded a $999M defense contract to replace the wings on A-10 close air support aircraft, which provides for up to 112 new A-10 wing assemblies and up to 15 wing kits..
The Carolinas are booming.
Pfizer to build gene therapy manufacturing facility in NC
• Pfizer (PFE +1.2%) plans to invest $500M to construct a state-of-the-art gene therapy manufacturing operation in Sanford, North Carolina. The facility will support its ongoing R&D investments in gene therapy, including its R&D sites in Chapel Hill and Kit Creek.
• The company held a ceremony this morning at the Sanford location celebrating the completion of the first phase of the project.
Even Nordstrom’s reports blowout earnings!
Nordstrom EPS beats by $0.11, misses on revenue
• Nordstrom (NYSE:JWN): Q2 GAAP EPS of $0.90 beats by $0.11.
• Revenue of $3.78B (-5.0% Y/Y) misses by $140M.
• Shares +8.4%.
Sporting Goods too!
Dick's Sporting Goods EPS beats by $0.06, beats on revenue
• Dick's Sporting Goods (NYSE:DKS): Q2 GAAP EPS of $1.26 beats by $0.06.
• Revenue of $2.26B (+3.7% Y/Y) beats by $50M.
• Shares +9.4% PM.
Not so good at mall-based retailer L Brands, however.
L Brands EPS beats by $0.04, misses on revenue
• L Brands (NYSE:LB): Q2 Non-GAAP EPS of $0.24 beats by $0.04; GAAP EPS of $0.14 misses by $0.04.
• Revenue of $2.9B (-2.7% Y/Y) misses by $50M.
Light profit guidance from L Brands
• L Brands (NYSE:LB) falls slightly after setting profit guidance below expectations.
• Comparable sales fell 1% during the quarter to miss the consensus mark of +1%. Comparable sales plunged 8% for the Victoria's Secret business during the quarter.
• Operating margin was 6.0% of sales vs. 5.8% consensus and 7.6% a year ago.
• L Brands sees Q3 EPS of -$0.05 to +$0.05 vs. $0.08 consensus and full-year EPS of $2.30 to $2.60 vs. $2.46 consensus.
I featured Workday (WDAY) on my Best Stocks Now Radio Show today. It is a big position at my firm.
Workday gains bull on 'game-changer' products
• Mizuho starts Workday (NASDAQ:WDAY) at Buy and a $225 price target.
• The firm says Workday "is well-positioned to become the leader in the cloud back-office suite and ultimately achieve a dominant position" in the sector.
• Mizuho calls the recent cloud platform and prism analytics products "game-changers" that can both become $1B businesses.
• Workday will report earnings on August 29. Consensus estimates expect $872.44M in revenue and $0.35 EPS.
• WDAY shares are up 0.6% pre-market to $192. Workday has an Outperform average Sell Side rating.