Morning News: April 10, 2020
Posted by Eddy Elfenbein on April 10th, 2020 at 6:38 am

Global Oil Deal at Risk After Mexico Ditches Saudi-Russia Plan

Japan’s Battle With Pandemic May Mark End of Abe’s Fiscal Experiment

EU Finance Chiefs Dodge Coronabonds in $590 Billion Rescue

Do Pandemic Bonds Work?

With $2.3 Trillion Injection, Fed’s Plan Far Exceeds Its 2008 Rescue

Medical Supplies Free-for-All Has States Lashing Out at FEMA

A Wall Street Bank’s Hard-Driving Culture Pushes Traders Into the Office

‘Sudden Black Hole’ for the Economy With Millions More Unemployed

Boeing Considers 10% Cut to Workforce

Could the Pandemic Wind Up Fixing What’s Broken About Work in America?

Quarantine Bakers Are Making Flour a Hot Commodity

Nick Maggiulli: Has the Dust Settled Yet?

Ben Carlson: Buying Foreign Stocks After a Fall

Michael Batnick: I’m Struggling Here

Joshua Brown: The Fed Finds Another Kitchen Sink to Throw at Us

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The Fed Gives the Market a Lift
Posted by Eddy Elfenbein on April 9th, 2020 at 11:13 am

A newsworthy morning. The Department of Labor said that another 6.6 million Americans filed for first-time jobless claims. We’ve now lost 10% of the workforce is just three weeks.

The Federal Reserve announced details of a $2.3 trillion program designed to help alleviate the economic standstill.

Among the Fed’s measures were details regarding its Main Street business lending program and several other initiatives it is undertaking to backstop the reeling U.S. economy. The central bank also provided more detail on its market interventions, including plans to buy corporate bonds both at an investment-grade level as well as high-yield, or junk, bonds.

Under provisions outlined for the first time, the loans would be geared toward businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019. Principal and interest payments will be deferred for a year.

The Fed said the programs would total up to $2.3 trillion and include the Payroll Protection Program and other measures aimed at getting money to small businesses and bolstering municipal finances with a $500 billion lending program.

Stock futures had been trending lower but the Fed’s news turned that around. The S&P 500 has been up as much as 2.3% this morning.

Interestingly, today’s high for the S&P 500 was almost exactly the midpoint between the index’s recent high and its recent low. In other words, we gained back half of what we lost.

Shares of Disney (DIS) are getting a nice boost after the company said it’s up to 50 million Disney+ subscribers.

Shares of Trex (TREX) are up more than 30% over the last four trading sessions.

Morning News: April 9, 2020
Posted by Eddy Elfenbein on April 9th, 2020 at 7:09 am

Europe’s Big Economies Brace for Sharpest Drop Since World War II

OPEC and Allies to Decide on Historic Oil Production Cut as Coronavirus Ravages Demand

Unemployment Tally Expected to Surge by Millions

How A Cascade of Job Losses Left America’s Safety Net in Shreds

McConnell Sets Up Showdown With Schumer on Small Business Aid

The $90 Trillion Question Is How to Get People Back to Work

Wall Street Firm Dangled Up to 175% Returns to Investors Using U.S. Aid Programs

May is Crunch Time for U.S. Auto Suppliers Amid Coronavirus Shutdown

Fed Eases Wells Fargo’s Asset Cap to Lend to Small Businesses Harmed by Coronavirus

Joshua Brown: The S&P 500 is Mostly Concerned With Duration (Chart) & Heroes of the New Bear Market: What Are Your Thoughts?

Howard Lindzon: The Zoom Seders… An 8-80 Brand Has Been Born

Cullen Roche: This Isn’t the Next Great Depression

Roger Nusbaum: Fix It Before It Breaks & Capital Appreciation Or Capital Protection?

Ben Carlson: What Good is History When Dealing With an Unprecedented Crisis?

Michael Batnick: Animal Spirits: Some Good News

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RPM International Beats Earnings
Posted by Eddy Elfenbein on April 8th, 2020 at 2:36 pm

This morning, RPM International (RPM) reported fiscal third-quarter earnings of 23 cents per share. That beat estimates by two cents per share. This is for the three months ending on February 29 so it was before the coronavirus become a major business issue.

Previously, RPM said it expected EPS “in the high-teens to low-20-cent range.” Three weeks ago, RPM revised that to say it expects to see earnings “at the higher end” of its previous range. They were right on that.

For Q3, adjusted EBIT rose 30.4% to $60.5 million and net sales increased by 2.9% to $1.17 billion. Due to the coronavirus, RPM has decided to suspend its guidance. They’re also canceling any share buybacks.

On the bright side, the company made it clear that they’re “well positioned to weather the pandemic due to strong balance sheet, significant liquidity, maintenance nature of products, potential for DIY uptick, and margin improvements from restructuring.” At the end of the quarter, RPM has a position of cash and revolving credit of $1.14 billion.

RPM’s business is divided into four groups. For Q2, Construction Products had a sales increase of 4.7%. Performance Coatings rose by 1%. The Consumer Group was up 5.4%. Specialty Products, the smallest group, was the laggard as organic sales fell 7.1%.

RPM’s Chairman and CEO Frank C. Sullivan said:

“We are pleased with our top-line growth during the third quarter, which typically generates our most modest results each year because it falls during the winter months, when painting and construction activity slow. Market share gains and pricing contributed to organic sales growth of 3.0%. This was partially offset by foreign currency translation of 0.8%, while acquisitions contributed 0.7% to sales. Our year-to-date cash flow from operations improved by $236 million over last year due to better working capital management and margin improvement from our MAP to Growth program.”

For the nine months so far of this fiscal year RPM has a sales increase of 2.1% to $4.05 billion. Organic growth is up 2.0%, acquisitions added 1.3% and forex reduced sales by 1.2%. For the first nine months of the year, RPM earned $1.94 per share.

The previous full-year guidance, which is now canceled, was for earnings between $3.30 and $3.42 per share. RPM said it expects to see a sales drop for Q4 of 10% to 15%.

The stock is currently up about 4% today. RPM owns Rust-Oleum and makes lots of workshop products. The company has raised its dividend every year since 1973.

Morning News: April 8, 2020
Posted by Eddy Elfenbein on April 8th, 2020 at 7:04 am

Stock Markets Slip as Grim Economic Data Arrives

Wobbly U.S. Fiscal Response Could Deepen Coronavirus Recession

Trump Team Preps Plans to Reopen Economy That Depend on Testing

Small Business Aid Program Stretches Agency to Its Limits

Trump Administration Seeks $250 Billion More in Aid for Small U.S. Businesses

The Virus Changed the Way We Internet

‘I Just Need the Comfort’: Processed Foods Make a Pandemic Comeback

Zoom Sued for Fraud Over Privacy, Security Flaws

Tesla to Cut Pay as Much as 30% While Virus Idles Production

Twitter’s Jack Dorsey Pledges $1 Billion to Charity, Including Coronavirus Relief

Nick Maggiulli: The Flight to Safety

Cullen Roche: Pragmatic Thinking on COVID-19 – The Podcast

Jeff Carter: Some Discoveries Are Happening

Ben Carlson: What Happened to Small Cap Value?

Michael Batnick: No, This is Not the Great Depression

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Don’t Think the Coast Is Clear
Posted by Eddy Elfenbein on April 7th, 2020 at 2:12 pm

The stock market is up again today. While the market has bounced impressively over the last two weeks, I encourage investors not to think the coast is clear.

Yes, there’s been better news about the battle against corona, but there’s still a long way to go. It’s a simple fact that the market likes to retest its lows. I hope this is an exception, but it’s safe to be prudent.

Morning News: April 7, 2020
Posted by Eddy Elfenbein on April 7th, 2020 at 6:38 am

Christine Lagarde’s $810 Billion Coronavirus U-Turn Came in Just Four Weeks

Billions Idled at Banks After Regulators Balk at Following Fed

Trump Says OPEC Has Not Asked Him For a U.S. Oil Production Cut

Oil Companies Are Collapsing, but Wind and Solar Energy Keep Growing

Trump Eases Covid-19 Export Ban Amid Backlash Around World

Coronavirus Muddies U.S. Economic Data as Business Closures Push Down Response Rates

Greed and Fear Collide: Wall Street Calls Traders Back to Office

Michael Burry of ‘The Big Short’ Slams Virus Lockdowns in Tweetstorm

Some Insurers Offer a Break for Drivers Stuck at Home

Zoom Video Stock Falls On School Ban As Microsoft Teams Gains Traction

Joshua Brown: What if the Bull Market Didn’t Actually End? & Apple Shipping 1 Million Face Shields to Hospitals This Week

Howard Lindzon: Momentum Monday…How Did We Miss The Crash? …And PATIENCE

Roger Nusbaum: Did Congress Just Give Us A Free Pass To Access Our 401ks? & What Are You Learning From The Pandemic?

Michael Batnick: Is the Bull Market Over?

Ben Carlson: Does Experience Matter During a Bear Market?

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Sixth-Best Day for the Dow in 87 Years.
Posted by Eddy Elfenbein on April 6th, 2020 at 10:53 pm

This was a very strong day for the stock market. The S&P 500 gained 7.03%. The Dow increased by 7.73%.

Today was the sixth-best percentage gain for the Dow in the last 87 years, but only the third best in the last month.

Today was also a fairly broad rally. Lately, it seems like small-caps have lagged every uptick. The S&P 500 Equal Weight Index was up by 7.61% which is basically in line with the rest of the market.

On our Buy List, Ross Stores (ROST) gained more than 16%. Ansys (ANSS), Fiserv (FISV), Stryker (SYK) and Globe Life (GL) were all up by more than 10%.

Shares of AFLAC (AFL) are now up over 50% from their low reached less than three weeks ago.

Today was the highest close for the S&P 500 since March 13. Going by closing numbers, the S&P 500 lost 33.92% from peak to trough. Off the low, the index has gained 19.05%. Today’s close is down 21.34% from the highest close.

The S&P 500 has gained back roughly 3/8th of the points it lost.

Two Weeks Since the Low
Posted by Eddy Elfenbein on April 6th, 2020 at 1:06 pm

The stock market is having a very good day so far. The S&P 500 is currently up more than 5%. It’s now been two weeks since the market made its low.

There were some signs, and I don’t want to overstate this, that the virus may be peaking in different parts of the world. Of course, we’re a long way from victory. This could be the toughest week.

The yield on the two-year Treasury is all the way up to 0.25%. I know that’s puny but it’s the highest yield in a week. Ross Stores (ROST) is up 16% today.

Homebuilding stocks are doing especially well today. Today’s rally is pretty broad, which is nice to see. The minnows are joining in, not just the big fish. The S&P 500 needs to close above 2,630.07 to reach a post-low high.

Morning News: April 6, 2020
Posted by Eddy Elfenbein on April 6th, 2020 at 7:11 am

Stocks Jump on Virus Hopes, Oil Hit By OPEC+ Delay

European Banks Prepared for a Crisis. But Not This One.

Fed Goes All Out To Keep Economy Alive During Coronavirus Shutdown

U.S. Is Nowhere Close to Reopening the Economy, Experts Say

Canada, U.S. Farms Face Crop Losses Due to Foreign Worker Delays

‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System

Wells Fargo Says Fed Cap Is Limiting Small-Business Relief

Berkshire Hathaway to Join Global Debt Bonanza

Virus Spurs Global Free-for-All Over $597 Billion Medical Trade

The Solar Industry Was Poised for a Strong Year, But Now Demand is Plummeting

NYC Department of Education is Banning Zoom Over Privacy Concerns for Students and Teachers

Lawrence Hamtil: After Three Crashes, Consumer Staples Reign Supreme

Jeff Miller: Weighing the Week Ahead: Navigating the Maze of Models

Michael Batnick: Animal Spirits: The Great Unwind, Their Rightful Owners, The Same, But Different, The Irresistible Force

Ben Carlson: The Relationship Between Earnings and Bear Markets, Would You Rather: Buy Too Early or Buy Too Late in a Bear Market?, Why Valuations Don’t Always Matter in a Bear Market

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