Morning News: February 15, 2019
Posted by Eddy Elfenbein on February 15th, 2019 at 7:06 am

Here’s Why Saudi Aramco May Be Coming To An Oil Field Near You

U.S. Jobless Claims Unexpectedly Rise After Shutdown Ends

U.S. Push Against Huawei Gear Hits an Obstacle: Carriers That Love It

Facebook Fine Could Total Billions if F.T.C. Talks Lead to a Deal

The T-Mobile-Sprint Merger is Scrambling Telecom Politics

Dividend Cut Bombshell At CenturyLink

Amazon Will Pay a Whopping $0 in Federal Taxes on $11.2 Billion Profits

What Amazon Got Wrong About New York City

Nouriel Roubini and Crypto Community Agree: JP Morgan’s New Coin Is Not a Cryptocurrency

Killing the Airbus A380 Is an Act of Kindness

As Jeans Giant Levi Strauss Prepares To Go Public, New Billionaire Emerges

Former Apple Executive Accused Of Insider Trading By SEC

Ben Carlson: The Dreaded Earnings Recession & The Rich Man’s IRA

Michael Batnick: The Elimination of Risk

Howard Lindzon: The Glitch is Gone…Bring On The National Emergency

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Lousy Retail Sales Report
Posted by Eddy Elfenbein on February 14th, 2019 at 12:24 pm

This morning, we got a surprisingly bad retail sales report. In December, retail sales dropped 1.2%. In fact, it was so bad that some people think the numbers are just plain wrong. If the numbers are accurate, then there’s a greater chance of a recession.

Retails sales plunged 1.2 percent in December, shocking economists who expected a 0.2 percent gain.

The report immediately raised new fears of recession, but economists said the report is also so negative against other more positive data, that it appears suspect.

Even so, economists are slashing fourth quarter GDP growth estimates, and also keeping a wary eye on jobless claims, which showed a slight increase for a third week in a row.

The drop in sales raised new concerns about the consumer, which accounts for more than two-thirds of the economy.

The sudden and unexpected plunge in December’s retail sales data raised new concerns about a recession, but economists also say the biggest drop in nine years clashes with other data and may be suspect.

But nonetheless, Wall Street still took the data seriously and economists slashed fourth quarter GDP forecasts. JP Morgan cut its growth estimate to 2 percent from 2.6 percent.

“This literally came from out of left field… I thought January would have been bad,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “All our reports earlier were that holiday sales were sparkling.”

For now, I think this is a suspect report. I want to see more data that confirms this.

Morning News: February 14, 2019
Posted by Eddy Elfenbein on February 14th, 2019 at 7:07 am

Europe’s Middle Class Is Shrinking. Spain Bears Much of the Pain.

German Growth Stagnates as Trump Trade War Starts to Bite

India Proposes Chinese-Style Censorship

Venezuela and Saudi Arabia Ship Record-Low Oil to U.S.

U.S. Group Says Trump Trade Tariffs Cost Businesses $2.7 Billion in November

These Are the Signs a U.S. Recession May Be Coming

Airbus To Stop Production Of A380 Superjumbo Jet

Sorry Traders, T-Mobile’s Sprint Deal Is Anybody’s Guess

Why Walmart Farms Out Same-Day Grocery Deliveries to Low-Cost Freelance Drivers

Tesla Model 3 Drives Off The Demand Cliff

What if Carlos Ghosn Were Charged in the U.S.?

Why Flowers Get So Expensive on Valentine’s Day

Jeff Miller: Where Do You Go For Trading Ideas?

Jeff Carter: Good Ideas/Bad Investments

Roger Nusbaum: Everything About Finance Distilled Into A Short List

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Sherwin-Williams Raises Dividend by 31%
Posted by Eddy Elfenbein on February 13th, 2019 at 4:58 pm

Sherwin-Williams (SHW) just announced a 31% dividend increase. The quarterly payout will rise from 86 cents to $1.13 per share.

The Board of Directors of The Sherwin-Williams Company (NYSE: SHW) today announced a regular quarterly dividend of $1.13 per common share, an increase of 31% over the $0.86 paid in the same quarter in 2018, payable on March 8, 2019, to shareholders of record on February 25, 2019. This increase follows 40 consecutive years of dividend increases.

More Tame Inflation
Posted by Eddy Elfenbein on February 13th, 2019 at 12:49 pm

There’s more good news on inflation. According to the government, consumer prices were unchanged last month. To be precise, it’s the third month in a row of a teeny, tiny decline. Over the last year, inflation is running at just 1.55%.

Some of this is due to lower gasoline prices. The “core rate,” which excludes food and energy, rose by 0.24% in January. In the last year, core inflation is up by 2.15%.

Economists polled by Reuters had forecast the CPI edging up 0.1 percent in January and the core CPI rising 0.2 percent.

The dollar rose against a basket of currencies after the data, while U.S. stock index futures held gains. Prices of U.S. Treasuries were trading lower.

Despite the increases in the core CPI, underlying inflation remains moderate. The Fed, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.

The core PCE price index increased 1.9 percent on a year-on-year basis in November after rising 1.8 percent in October. It hit 2 percent in March 2018 for the first time since April 2012. PCE price data for December will be released on March 1.

Morning News: February 13, 2019
Posted by Eddy Elfenbein on February 13th, 2019 at 7:22 am

Europe Looks Like the Real Weak Link in the Global Economy

National Strike Grips Belgium, Canceling Flights and Shutting Breweries

Trump’s Shifting Trade Talk Deadline

Job Openings Push Further into Record Territory at End of 2018

The Government Shutdown Made the I.R.S. Even More Frustrating

Smaller Tax Refunds Surprise Those Expecting More Relief

Google Cloud Chief’s Plan to Catch Amazon and Microsoft: Sales Reps

First Big Depression Advance Since Prozac Nears FDA Approval

T-Mobile CEO to Defend Sprint Deal in Congress

Private Equity Likes the Look of Blackstone’s Real Estate Model

Toys `R’ Us Plans a United States Comeback

Carlos Ghosn Replaces Lawyers, Hires ‘the Razor’ to Lead Defense

Nick Maggiulli: The Cognitive Aristocracy

Joshua Brown: A Missive From ETF Land

Michael Batnick: The Case for Permanent Life Insurance & The Rich Man’s IRA

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New High for AFLAC
Posted by Eddy Elfenbein on February 12th, 2019 at 1:44 pm

Thirteen months ago, The Intercept ran a series of articles claiming fraud at AFLAC (AFL). I wasn’t terribly impressed by the allegations.

The next day the stock fell by 8.7% during the day. Trading volume was about 10 times the level as the day before.

Here we are more than a year later and nothing’s come of the allegations. AFLAC is doing fine. The stock just hit another new all-time high.

So much of investing simply boils down to patience.

Stryker’s Amazing 2018
Posted by Eddy Elfenbein on February 12th, 2019 at 1:29 pm

Stryker (SYK) had a great year last year. I wanted to take a step back and show you how the company progressed in 2018.

For 2017, Stryker made $6.49 per share. Let’s start in January 2018 when Stryker forecasted Q1 earnings ranging between $1.57 and $1.62 per share. For full year 2018, Stryker expected earnings of $7.07 to $7.17 per share.

Now let’s jump to April when they reported $1.68 per share for Q1. Stryker also raised full year estimates to $7.18 – $7.25 per share and gave Q2 guidance of $1.70 to $1.75 per share.

In July, they said they made $1.76 per share for Q2, again exceeding their range. For Q3, they forecasted earnings between $1.65 and $1.70 per share. Wall Street had been expecting $1.69 per share. Again, they raised full-year guidance. This time to $7.22 to $7.27 per share.

In October, Stryker said they made $1.69 per share for Q3 (Wall Street’s original forecast). For Q4, Stryker said they expected $2.13 to $2.18 per share. Again, they raised full-year guidance. This time to $7.25 – $7.30 per share. That’s three increases.

In December, the shares dropped 16% in just seven trading days.

Then in January, Stryker reported $2.18 per share for Q4. For 2018, they earned $7.31 per share which beat the top end of their guidance. That’s an increase of 12.6% over the $6.49 per share they made last year.

Morning News: February 12, 2019
Posted by Eddy Elfenbein on February 12th, 2019 at 7:19 am

Oil Up Nearly 2% on Saudi and OPEC Cuts

U.K. Economy Falters as Brexit Looms. Amsterdam Sees Risks, and Opportunity.

Traders With $515 Billion Boycott Stocks for Cash Despite Rally

Wall Street’s Biggest Traders Are Building Their Own Exchange

Best U.S. Job Numbers Ever? Not If You’re Out of Work for a Year

Latest Warning Sign for Markets: A Possible ‘Earnings Recession’

U.S. Solar Jobs Down for Second Year as Trump Tariffs Weigh

Apple’s Chinese Failure Leaves iPhone Facing Massive Problems

Walmart, Google-Backed Deliv End Online Grocery Partnership

Tencent Is the Kind of Bogeyman Redditors Thrive On

Nissan Books $84 Million Ghosn-Related Charges, Cuts Outlook

In China, This Video Game Lets You Be a Tiger Mom or a Driven Dad

Jeff Carter: Why The Valuation Should Be “Goldilocks”

Roger Nusbaum: Defying Convention & Have You Figured It Out?

Howard Lindzon: Momentum Monday – The Battle At The 200 Day Moving Average

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Earnings Notes
Posted by Eddy Elfenbein on February 11th, 2019 at 3:14 pm

There are two minor earnings notes I wanted to mention. Companies sometimes bury key data in earnings calls and not in their press releases.

In their earnings report, Becton, Dickinson (BDX) said they see full-year earnings ranging between $12.05 and $12.15 per share. On the earnings call, BDX added that Q1 earnings should range between $2.50 and $2.60 per share.

Cognizant Technology Solutions (CTSH) said they expect full-year earnings of at least $4.40 per share. However, the company has altered their accounting definitions slightly. From the earnings call:

Going forward, our adjusted operating margin and EPS will no longer exclude stock-based compensation expense and acquisition-related expenses. When calculated under the new methodology, the full year of 2018 adjusted operating margin was 18.1%, and adjusted EPS was $4.02.

So the estimate of $4.40 per share is a 10% increase.

Broadridge (BR) said they see earnings growth of 9% to 13% for this fiscal year which is already half over. Since they made $4.19 per share last year, the guidance works out to $4.57 to $4.73 per share this year. Wall Street expects $4.66 per share. Broadridge has already made $1.35 per share for the first half of this fiscal year.

We also have three Buy List stocks with quarters that end in January. Hormel Foods (HRL) will report on February 21. JM Smucker (SJM) is due to report on February 26. Ross Stores (ROST) hasn’t announced an earnings date yet but it should be in late February or early March.