Morning News: June 26, 2020
Posted by Eddy Elfenbein on June 26th, 2020 at 7:03 am

Wirecard Auditors Say ‘Elaborate’ Fraud Led to Missing Billions

Wirecard Collapse Puts German Watchdog in EU Crosshairs

Fed Limits Bank Payouts and Suspends Share Buybacks as Pandemic Grinds On

Amazon Agrees to Buy Self-Driving Startup Zoox For Over $1 Billion

A Penny for Your Thoughts Could Be a Lot Harder to Find

Paying Remote Workers to Relocate Gets a Pandemic-Era Boost

Ford Revamps All-Important F-150 With Optional First-Class Seats

Virgin Australia Finds New Owner in US Private Equity Firm Bain Capital

New Rule in California Will Require Zero-Emissions Trucks

Nike Stock Is Falling After a Surprise Loss Tied to the Covid-19 Pandemic

‘We Simply Don’t Have Any Money.’ Lufthansa Shareholders Approve $10 Billion Bailout

Costco Discontinues Half-Sheet Cake, an Apparent Casualty of Covid-19

Ben Carlson: Joe Granville: The Original Dave Portnoy

Michael Batnick: The New 60/40 Portfolio

Howard Lindzon: Larry David Sighting …A Zoom Update and ‘The Rally About Nothing’

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Jobless Claims = 1.48 Million
Posted by Eddy Elfenbein on June 25th, 2020 at 10:00 am

This morning’s jobless claims report was 1.480 million. While that continues the trend lower, it was above expectations of 1.35 million. This is the second week in a row that claims have come in higher than expectations. The number of people getting benefits fell below 20 million for the first time in two months.

There’s also a concern about a surge in coronavirus cases. States like Texas and Florida have seen major spikes. Apple closed some of its stores in Houston. Disney said it will delay the opening of its parks in California.

Also this morning, the government said that the U.S. economy fell at a 5% annualized rate during the first quarter. That’s the same number as before. Bear in mind that the first quarter began nearly six months ago and ended three months ago. We’ll get the first report on Q2 GDP in another month.

Solid Earnings from FactSet
Posted by Eddy Elfenbein on June 25th, 2020 at 9:44 am

Press release:

FactSet (FDS), a global provider of integrated financial information, analytical applications, and industry-leading service, today announced results for its third quarter ended May 31, 2020.

Third Quarter Fiscal 2020 Highlights

Revenue increased 2.6%, or $9.6 million, to $374.1 million compared with $364.5 million for the same period in fiscal 2019. The increase is primarily due to higher sales of analytics, content and technology solutions (CTS) and wealth management solutions. Organic revenues grew 2.6% to $375.3 million during the third quarter of fiscal 2020 from the prior year period.

Annual Subscription Value (ASV) plus professional services was $1.52 billion at May 31, 2020, compared with $1.45 billion at May 31, 2019. The organic growth rate, which excludes the effects of acquisitions, dispositions, and foreign currency movements, was 5.0%. The primary contributors to this growth rate were higher sales in FactSet’s wealth and research workflow solutions and a price increase in the Company’s international region. Please see the “ASV + Professional Services” section of this press release for details.

Operating margin increased to 32.5% compared with 32.2% for the same period last year. Adjusted operating margin improved to 35.5% compared with 34.0% in the prior year period primarily as a result of reduced employee-related operating expenses due to the coronavirus pandemic.

Diluted earnings per share (EPS) increased 11.0% to $2.63 compared with $2.37 for the same period in fiscal 2019. Adjusted diluted EPS rose 9.2% to $2.86 compared with $2.62 in the prior year period primarily driven by an improvement in operating results.

The Company’s effective tax rate for the third quarter decreased to 15.0% compared with 18.6% a year ago, primarily due to an income tax expense in the prior year related to finalizing the Company’s tax returns with no similar event for the three months ended May 31, 2020.

FactSet increased its quarterly dividend by $0.05 per share or 7% to $0.77 marking the fifteenth consecutive year the Company has increased dividends, highlighting its continued commitment to returning value to shareholders.

FactSet updated its annual outlook for fiscal 2020. Please see the “Annual Business Outlook” section of this press release for details.

The Company announced changes to its Board of Directors including a new chair, two new members, and the retirement of two current members. Please see FactSet’s press release dated June 24 and its Form 8-K filing on June 25 for more details.

“We had a strong third quarter and executed well in challenging circumstances,” said Phil Snow, FactSet CEO. “I am inspired by the efforts I see across the Company as FactSetters go above and beyond to support our clients and each other. The steps we have taken position us well to finish our fiscal year on target as we continue to evaluate and solve for evolving industry needs.”

Morning News: June 25, 2020
Posted by Eddy Elfenbein on June 25th, 2020 at 7:06 am

‘We Are Definitely Not Out of the Woods’

U.S. Recovery Looks to Be Ebbing in States With Virus Outbreaks

U.S. Layoffs Remain Elevated As Weak Demand Persists After Businesses Reopened

Wirecard Collapses Owing Creditors $4 Billion

Bayer Bets On Science In Bid To Prevent Future Roundup Lawsuits

LeBron James Gets $100 Million Investment to Build Media Empire

Airbus Executive Says Jetmaker Reaches New Production ‘Sweet Spot’

Masayoshi Son Resigns From Board of Alibaba; Defends SoftBank Group’s Investment Strategy

Books Are a Great Fit for Quarantine. The Book Business, Not So Much.

The Woman Who Warned of WeWork’s Downfall Tells Her Story

Joshua Brown: You Can’t Undrop The Bomb

Ben Carlson: How Would Investors React If We Finally Get Some Inflation?

Michael Batnick: Animal Spirits: Inflation Ahead & Will the Dollar Crash?

Roger Nusbaum: Personal Finance Wednesday

Jeff Miller: Investing for the Long Term: Time to be Wary

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The Nasdaq’s Win Streak Looks to End
Posted by Eddy Elfenbein on June 24th, 2020 at 10:53 am

The stock market is down sharply today. At its low, the S&P 500 was down about 1.6%. The Nasdaq Composite looks to snap its eight-day win streak.

There are concerns about the growing numbers of coronavirus cases. The seven-day average of news cases is up 30% from a week ago. There’s even talk of reversing some of the recent re-openings.

So far, Energy and Financial stocks are down the most while Consumer Staples and Utilities are down the least. This suggests the market is concerned about the economy’s underlying strength. Sonos, the speaker-maker, said it’s going to cut 12% of its workforce due to the coronavirus.

There’s not much in the way of economic news today. Next week will be interesting because the stock market will be closed on Friday, July 3. That means that the jobs report will come out on Thursday. Also, the jobs report will come at the same time as the jobless claims report. It will be interesting to see if traders want to be net long going into the three-day weekend.

Morning News: June 24, 2020
Posted by Eddy Elfenbein on June 24th, 2020 at 6:31 am

Gold Shines As Coronavirus Surge Unnerves Investors

U.S. Eyes $3.1 Billion of EU, U.K. Imports for New Tariffs

The Pandemic’s Worst-Case Scenario Is Unfolding in Brazil

The Tiny Bank That Got Pandemic Aid to 100,000 Small Businesses

Can a Private-Equity Giant Invest in Oil While Saving the Planet?

TaskRabbit C.E.O. to Step Down, a Blow for Silicon Valley Diversity

The New Escapism: Isolationist Travel

Disney Exits Language School Business in China, Citing Coronavirus

Nick Maggiulli: Roth 401(k) vs. 401(k): Which is the Better Option?

Ben Carlson: Why Are Credit Card Interest Rates So High?

Michael Batnick: The Biggest Stock Market Rally Ever

Jeff Carter: Great Companies, Tough Times

Cullen Roche: Three Things I Think I Think – Market Bonanza!

Howard Lindzon: Keep It Simple and $QQQ Over $SPY

Joshua Brown: “The German Enron” & Why Public Banned Its Users From Trading in Hertz Shares

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All-Time High for the Nasdaq
Posted by Eddy Elfenbein on June 23rd, 2020 at 10:31 am

The stock market is up nicely so far today. This could be our sixth gain in the last eight sessions. The S&P 500 may be able to close at its highest point in nearly two weeks.

The Nasdaq hit a record high today. Michael Batnick points out that the Big Five (Apple, Google, Amazon, Facebook and Microsoft) now account for 22% of the S&P 500. That’s over $6 trillion. Four of the five are at new highs today. Only Google is left out.

The markets were nervous overnight as there were concerns about a trade deal between the United States and China. I’m glad to see that’s gone.

This morning’s new-home sales report showed an increase to 676,000 (that’s the annualized figure). Wall Street had been expecting 640,000. The previous three months were revised down.

Morning News: June 23, 2020
Posted by Eddy Elfenbein on June 23rd, 2020 at 7:07 am

Defying Dire Predictions, China Is the Bubble That Never Pops

Betraying Frustration with China, E.U. Leaders Press for Progress on Trade Talks

Thumping Data Drives Stocks And Oil Higher

ADNOC Inks $10 Billion Deal, Keeps Tight Control Of Costs Amid Market Downturn

Culture of Inflating Oil Reserves Helped Stoke U.S. Shale Boom

White House Adviser Navarro Walks Back On Comments China Trade Deal ‘Over’

The Risk of ‘Overnight Ruin’

Fearful Commuters on Trains, Buses Hold One Key to U.S. Recovery

A Multibillion-Dollar Opportunity: Virus-Proofing the New Office

Pandemic Travel Patterns Hint at Our Urban Future

Former Wirecard CEO Arrested On Suspicion Of Falsifying Revenue

Michael Batnick: A Small Update on the Giants

Jeff Carter: The Workplace

Howard Lindzon: Momentum Monday…Gold, Chinese Internet And Biotech Look Good

Joshua Brown: Something To Hate For Everyone

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NAR: Existing-Home Sales to Post “Strong Rebound”
Posted by Eddy Elfenbein on June 22nd, 2020 at 11:24 am

The stock market opened down a bit this morning but is now in positive territory. The Nasdaq is hovering right at 10,000.

This morning’s existing-home sales report showed a drop of 9.7% for May. The good news is that the National Association of Realtors expects a “strong rebound” in the coming months. There’s also been more talk of a surge in coronavirus cases, but for now, the markets don’t seem too worried.

On our Buy List, Sherwin-Williams (SHW) increased its sales guidance for the second quarter.

The Company now expects second quarter 2020 consolidated net sales to decrease by a mid-single-digit percentage compared to the second quarter of 2019. The Company’s prior guidance, issued April 29, 2020, was for second quarter 2020 consolidated net sales to decrease by a low to mid-teens percentage compared to the second quarter of 2019.

Sherwin-Williams Increases Second Quarter 2020 Sales Guidance
Posted by Eddy Elfenbein on June 22nd, 2020 at 7:42 am

Press release:

The Sherwin-Williams Company (NYSE: SHW) today increased its net sales guidance for the second quarter of 2020. The Company now expects second quarter 2020 consolidated net sales to decrease by a mid-single-digit percentage compared to the second quarter of 2019. The Company’s prior guidance, issued April 29, 2020, was for second quarter 2020 consolidated net sales to decrease by a low to mid-teens percentage compared to the second quarter of 2019.

On a segment basis, second quarter net sales in The Americas Group are expected to be down by a high-single-digit percentage compared to the previous guidance of down by a low-double-digit to mid-teens percentage. Net sales in the Consumer Brands Group are expected to be significantly above the high end of the previous guidance of up by a high-single-digit to low-double-digit percentage. Net sales in the Performance Coatings Group are expected to be in line with the previous guidance of down by a high-teens percentage.

“Our employees have performed admirably during this challenging time to meet our customers’ needs,” said Chairman and Chief Executive Officer, John G. Morikis. “We are raising our second quarter sales guidance given our ability to capture and serve greater than expected demand in our North American architectural businesses.

“We are encouraged by the sequential improvement in all three of our business segments during the second quarter. In The Americas Group, we rapidly adapted to the pandemic by implementing curbside pickup in our stores, utilizing our fleet of over 3,000 delivery vehicles, and leveraging our e-commerce platform. We have gradually and safely reopened nearly all of our sales floors over the last month. DIY growth in our stores remains strong, while our residential repaint and new residential segments have improved at a faster rate than our property management, new commercial and protective and marine segments. In the Consumer Brands Group, the unprecedented demand from most of our retail partners has remained robust, driven by consumers who are nesting during the pandemic and focused on DIY projects. In the Performance Coatings Group, demand has been variable by end market and geography. Packaging remains our strongest performer, while demand in our coil business has been choppy following the slower reopening of many commercial construction projects. Our automotive refinish business remains under pressure as driving trends have not yet returned to pre-pandemic levels. Recovery remains sluggish in our general industrial and industrial wood businesses.

“Although uncertainties in the timing and pace of improvement in the U.S. and global operating environments continue, we remain confident in our ability to successfully manage through these challenging conditions while continuing to invest and execute on initiatives that will drive our long-term growth.”

The Company is scheduled to release second quarter 2020 financial results on July 28, 2020, at which time it will provide its outlook on third quarter sales and update its full year sales and earnings per share guidance.