Thursday 8/15/19=DJIA +95 NASDAQ -3
No Recession Yet.
Daily Wrap: The market at least stabilized on today. I would expect another volatile day on Friday. It seems a lot of investors don’t lake to be long over the weekend. My current stance on the market has not changed at all since newsletter last Saturday. Read the Macro Outlook section of the newsletter.
I am already beginning work on this week’s newsletter. Stay tuned.
Here is once again a reminder of what happened on Wednesday:
- Investors went running for the hills on spiking fears of a recession after the U.S. Treasury yield curve temporarily inverted for the first time in 12 years.
- The Dow dropped 800 points or 3.05%, its worst percentage decline of the year; only three stocks on the S&P 500 - Newmont Goldcorp, Ventas and Evergy - finished with gains.
The jobs market remains strong. One of the major signs of a looming recession is a weakening jobs market.
- Initial Jobless Claims +9K at 220K vs. +208K consensus, 211K prior (revised).
- Continuous Claims: +39K to 1.726M vs. 1.690M consensus, 1.687M prior (unrevised).
A slowdown in retail sales would be yet another sign of coming recession. Not happening yet.
- July Retail Sales: +0.7% M/M vs. +0.3% consensus; +0.3% prior.
- Retail Sales (less auto): +1.0% M/M vs. +0.4% consensus; +0.3% prior.
- Core Retail Sales: +0.9% vs. +0.5% consensus; +0.6% prior (revised).
- Retail sales control group: +1.0% vs. +0.3% consensus; +0.7% prior (revised).
Three more good economic reports on Thursday
- August Philly Fed Business Outlook: +16.8 vs. +10 consensus, +21.8 prior.
- Q2 Productivity and Costs: +2.3% vs. +1.5% expected, +3.5% prior (revised from +3.4%).
- Unit labor costs: +2.4% vs. 2.0% expected, +5.5% prior (revised from -1.6%).
- August Empire State Manufacturing Survey: +4.8 vs. +2.5 consensus, +4.3 prior.
- New Orders: 6.7 vs. -1.5 prior.
- Shipments: 9.3 vs. 7.2 prior.
- Number of employees: -1.6 vs. -9.6 prior.
A nice report from a bellweather retailer.
- Walmart (NYSE:WMT): Q2 Non-GAAP EPS of $1.27 beats by $0.05; GAAP EPS of $1.26 beats by $0.04.
- Revenue of $130.4B (+1.9% Y/Y) beats by $1.08B.
- Shares -0.3% PM.
- Walmart (NYSE:WMT) reports comparable sales in the U.S. increased 2.8% in Q2 vs. +2.5% consensus. Transactions were up 0.6% and average ticket was 2.2% higher.
- Total sales rose 1.8% to $130.4B. International sales fell 1.1% to $29.1B.
- Sam's Club comparables sales were up 1.2% during the quarter vs. +0.6% consensus.
- E-commerce sales were up 37% against a strong comparable.
- Operating income fell 2.9% to $5.6B.
A nice report from Alibaba.
- Alibaba (NYSE:BABA): Q1 Non-GAAP EPS of $1.83 beats by $0.34; GAAP EPS of $1.17 beats by $0.23.
- Revenue of $16.74B (+36.9% Y/Y) beats by $880M.
- Shares +2.4% PM.
- 755M, up from 721M.
A terrible report from Canopy Growth. I have been warning about the cannabis stocks for a long time now.
- Canopy Growth (NYSE:CGC) Fiscal Q1 results:
- Net revenue: (C$90.5M) (+249% yoy and down 4% sequentially); recreational cannabis revenue: C$50.4M.
- Kilogram and kg equivalents sold: 10,549 (+13% sequentially).
- Net loss: (C$1,281.2M) (-999%); loss/share: (C$3.70) (-825%) due primarily to its scale-up in Canada and Europe.
- Non-GAAP EBITDA: (C$92.1M) (-136%).
A doomed company? I think so…
- J.C. Penney (NYSE:JCP): Q2 Non-GAAP EPS of -$0.18 beats by $0.13; GAAP EPS of -$0.15 beats by $0.17.
- Revenue of $2.62B (-7.4% Y/Y) in-line.
- Shares +3.51% PM.