Southwest Airlines (LUV)

October 29, 2018

October 29, 2018

Stocks opened higher this morning. The Dow is currently up 105 pts and the SPX is up .7%. Utilities, consumer staples, materials, real estate, healthcare and financials are all up over 1% at the moment. Energy and consumer discretionary sectors are down slightly. The VIX Index, a measure of traders’ fear, fell back to 24 after spiking above 25 on Friday. European stock markets will close up over 1% and Asia was mixed overnight. China’s markets, however, are still under pressure. The Shanghai Composite Index is down over 28% this year in local currency terms. The dollar is a bit stronger today against a basket of foreign currencies, and up nearly 5% in 2018. Wall Streeters are increasingly concerned that a stronger dollar will hurt US businesses selling overseas. A few blue-chip companies have said so in recent days. Commodities are trading lower. WTI crude oil is down .6% to trade at $67.17/barrel. Bonds are selling off today after a pretty strong run over the last week or so. The 5-year and 10-year Treasury yields ticked up to 2.94% and 3.10%, 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.

September 28, 2017

Stocks gapped down at the open but quickly recovered. The Dow is currently up 22 pts and the SPX is flat. Transports, semiconductors, pharma and gold miners are trading higher, but banks and retailers are giving back some of their recent gains. By the way, the SPX is poised to achieve its eight consecutive quarterly gain. European markets are up slightly in today’s session after a survey of economic confidence gave investors a positive surprise. Most of Asia was higher overnight. The dollar is weaker today and WTI crude oil is up again to trade around $52.30/barrel. Bonds continue to sell off as yields march higher. The 5-year Treasury yield is up around 1.92% and in the near term it could move up to test resistance at 1.96%. The 10-year Treasury yield is up around 2.33% and will likely test 2.40% in the near future. 


*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.

May 1, 2017

Stocks opened higher this morning (Dow +8 points; SPX +.26%). Consumer discretion, financials and tech are leading the way. Utilities, telecom and consumer staples are trading lower. The VIX Index is down modestly to trade around 10.6 and VIX May futures are just under 12. The dollar is pretty much unchanged and commodities are mostly higher, except for oil. WTI crude oil continues to slide, trading near $48.70/barrel. Many traders say it could go to $47 in the near-term. Remember, oil was above $53 less than a month ago. Bonds are down slightly today in price. The 5-year and 10-year Treasury yields edged up to 1.84% and 2.31%, 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.

October 26, 2016

Stocks opened lower but turned around. The Dow and SPX are currently up 45 pts & .1%, respectively. REITs, transports and gold miners are down the most in early trading. Energy and financials sectors are modestly higher. WTI crude oil opened lower but quickly recovered and is trading around $50/barrel. Bonds are selling off as yields resume their march higher. The 5- and 10-year Treasury yields are trading at 1.31% and 1.79%, respectively. Near-term resistance for the 10-year is 1.8%. 


*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 21, 2016

Stocks opened lower this morning (Dow -17 pts; SPX flat). Energy, healthcare and consumer discretion are higher but just about every other sector is modestly lower. The VIX has fallen flat around 1 12, indicating low expected volatility over the next 30 days. The dollar is flat and commodities are higher on the day.  WTI crude oil is down a bit to $45.40/barrel. Bonds are lower again this morning with yields moving higher. The 5- and 10-year Treasury yields are up to 1.14% and 1.60%, 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.

Supplement: April 26, 2016

I'd like to provide a summary of some key earnings announcements over the last several days:

Southwest Air (LUV) beat revenue (up 9% y/y) and earnings (up 33%) expectations for Q1. Fuel expenses fell during the quarter (average down to $1.78/gallon vs. $2 a year ago). Management did their best to talk-down future growth prospects. Fuel costs are expected to rise to $1.85-1.90 this year. Competitors are adding capacity “aggressively” (should be up 4-5% in Q2/3), and that will likely drive revenue-per-seat-mile down. But it’s also true that end demand remains strong. The stock was up 1.8% yesterday after the announcement.

Polaris (PII) reported a 5% year-over-year decline in revenue and a 45% decline in earnings. Sounds terrible, but it was all factored into the stock price and Wall Street forecasts. Actually, revenue was modestly better than expected. Management appears to have issued strong earnings guidance for the year, but gave a very wide range ($6.20/share to $6.80) "due to the persistent unpredictability around overall economic trends and more specifically powersports industry trends for the remainder of 2016." The stock immediately dropped 3% in the wake of the announcement, but clawed its way back through yesterday’s session; it’s up over 3% today.

BB&T Corp. (BBT) beat first quarter earnings estimates and revenue climbed 10% y/y. Traditional banking got a little better: first quarter net-interest-margin rose 8 basis points to 3.43%. Loans to energy companies are in focus. During the quarter, the bank charged-off $154mil in loans, about $30mil of which were energy-related. Non-performing loans (i.e. not current on payments) were up 27% q/q, driven entirely by energy loans. Losses look very manageable. The stock is up 1.7% this morning.  

Schlumberger (SLB) posted first quarter earnings that narrowly exceeded expectations. Revenue also came in slightly better that Wall Street forecasts. Of course, the company noted persistent pricing pressure throughout the industry and said conditions aren’t great. But everybody knows that. The company continues to cut headcount (down by 1/3 since the oil crisis began). The CEO didn’t pull any punches: “This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.” The stock gapped down at the open this morning but quickly recovered and is now trading flat.   

Starbucks (SBUX) reported first quarter results that matched analyst forecasts. That’s not generally a good thing when your stock trades at 30 times earnings. Overall same-store-sales rose 6% vs. 6.7% expected. Asia-Pacific same-store-sales increased 3% whereas analysts were looking for about 4.5%.  So the stock is down 5.5% this morning, and investors are debating whether this is a good buying opportunity.

Alphabet (GOOGL) missed Wall Street forecasts in the first quarter. Revenue rose 18% y/y and earnings grew 14% y/y. Mobile search and YouTube were very strong. Paid clicks rose 29% vs. 31% in the prior quarter, so a little deceleration there. Investors aren’t pleased with the fact that expenses rose on new hiring activity and investments in non-core areas of the business. The stock is down almost 6% this morning.

Visa (V) narrowly beat Wall Street earnings estimates but came in line with revenue forecasts. In terms of growth, revenue rose 6% y/y and earnings grew about 8%. The company noted weakness in emerging markets economies as well as in regions dependent on oil production. That said, total payments volume grew 12% y/y and transactions processed rose 9%. Management says annual net revenue will grow 7-8% in fiscal 2016 (ending September). They previously guided to double-digit growth. So the stock is down 3.9% this morning. 

Whirlpool (WHR) missed Wall Street forecasts and the stock is down 4% today. Sales fell 4.7% y/y. Excluding the effect of currency (i.e. stronger dollar) sales increased 1%. Earnings shot up 23% y/y but still came up short of expectations. Sales in some regions (Latin America, Europe) were weak. North America, however,  posted growth. Despite disappointing results, management did not reduce earnings guidance for the full year. 


*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.