Danaher (DHR)

FED DAY!

Stocks gapped down at the open (Dow -85 pts; SPX -.3%). Industrials, energy and financials are leading the way (all down .5% or more). Only utilities are powering ahead (+.5%). The Trump Administration asked the US Treasury to dramatically increase economic sanctions on Iran after concluding its culpability in a recent oilfield attack in Saudi Arabia. European markets are poised to close up by about .3% and most of Asia was modestly lower overnight. Commodities are trading lower today. Copper is down .3%; iron ore fell more than 3%. Oddly enough given geopolitical tension, WTI crude is down 1% to trade around $58.70/barrel. Bonds are mostly higher on the day, except for junk. The 10-year Treasury Note yield fell back to 1.75%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

STOCKS DOWN ON MIXED ECONOMIC/EARNINGS REPORTS

Stocks opened lower this morning as investors strain to digest quarterly earnings & economic reports. The Dow is currently down 123 pts and the SPX is down .3%. Financials and consumer staples are in the green, but most everything else is down.

Here’s a quick look at earnings announcements. Morgan Stanley (MS) is flat after reporting better than expected revenue and earnings; the wealth management business stood out. United Health (UNH) is down 2.8% after reporting better than expected second quarter results and boosting its 2019 profit outlook. Netflix (NFLX) fell 11% after reporting only 2.7 million new subscribers compared with Wall Street forecasts closer to 5 million. Danaher (DHR) is up 1.4% after reporting revenue & earnings slightly ahead of estimates. Honeywell (HON) surged 2% even though second quarter revenue fell slightly short of Wall Street forecasts. Investors felt management executed very well despite a weak global economic environment.

CNBC’s latest “Rapid Update” survey shows that economists believe the US economy is tracking to 1.8% growth in the second quarter, and 2% in the third quarter. That’s roughly equivalent to what the Federal Reserve calls long-term potential growth. Reporter Steve Liesman notes the gap between that figure and the Trump Administration’s goal of 3%, and says achieving that goal would require a boost in capital spending by Corporate America. Unfortunately, the trade war with China is clearly restraining capital spending. So while the US economy achieved about 3% growth last year, don’t expect that this year or next.

The Index of Leading US Indicators (LEI) fell in June, suggesting the 6-month outlook for the US economy is softening. This index is actually a set of 10 different economic indicators designed to predict economic conditions. The primary reasons for the drop were weakness in orders for manufacturing equipment and also building permits. It’s important to note that the index isn’t predicting recession, but the US economy has definitely lost some momentum over the last year. The LEI is 1.6% higher than it was a year ago, and that’s on the low end of the 8-year trend.

China’s economy grew by 6.2% in the second quarter of 2019. That sounds pretty strong, but it’s not. The truth is that growth has been decelerating in China for decades. Part of that trend is natural, due to the law of large numbers. But more recently, growth has slowed due to the trade dispute with the US and also slower economic growth in Europe, a major trading partner to China. Government stimulus, mostly debt-fueled , is being thrown at the problem. But Bloomberg notes that total corporate/household/government debt now equals 300% of China’s annual economic output. While the economy is growing at 6.2%, total debt is growing at an unsustainable 11%. This report, by the way, emboldened President Trump to announce that the US and China are no closer to a trade deal despite ongoing negotiations.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

October 20, 2017

Stocks gapped up at the open this morning (Dow +119 pts; SPX +.38%). The cyclicals (banks, transports, semiconductors) are leading the way. The defensives (consumer staples, real estate, utilities) are in the red. This is largely the result of some very encouraging earnings announcements. The VIX Index backed down to 9.8. Bonds are selling off again. The 5-year Treasury yield is up around 2.0% for the first time since mid-March. The 10-year Treasury note yield is up around 2.38%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

April 21, 2017

Stocks are mixed in early trading (Dow flat; SPX -.1%). Traders are exercising caution in front of the French election. Not surprisingly, utilities and gold miners are in the green. But for the most part, individual stocks are responding to their respective earnings announcements (see below). The VIX Index is up around 14.5 but VIX May futures are trading at 14.3. The fact that traders don’t expect a huge spike in volatility suggests a benign outcome for the French election. WTI crude oil is down around $50.50/barrel and most other commodities are down as well. Bonds are slightly higher in price, lower in yield. The 5-year and 10-year Treasury yields are currently at 1.75% and 2.22%, respectively. Those yields are hovering around 5-month lows. 


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

July 25, 2016

The major stock market averages fell at the open (Dow -95 pts; SPX -.5%). The energy sector is leading the market lower as oil slips, but all ten major sectors are down. WTI crude oil is down to about $43/barrel. Most other commodities are lower as well. Despite the selloff, bonds are roughly unchanged. The 5- and 10-year Treasury yields are hovering around 1.13% and 1.56%, respectively.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.