No change.
Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.
In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 2 to 2-1/4 percent.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Richard H. Clarida; Mary C. Daly; Loretta J. Mester; and Randal K. Quarles.
Earnings season is winding down with 20 of our 25 Buy List stocks now having reported Q3 earnings. Here’s a list of reporting dates, Wall Street’s consensus estimates and actual reported results.
| Company |
Ticker |
Date |
Estimate |
Result |
| Alliance Data Systems |
ADS |
18-Oct |
$6.20 |
$6.26 |
| Danaher |
DHR |
18-Oct |
$1.08 |
$1.10 |
| Signature Bank |
SBNY |
18-Oct |
$2.83 |
$2.84 |
| Snap-On |
SNA |
18-Oct |
$2.86 |
$2.88 |
| AFLAC |
AFL |
24-Oct |
$0.99 |
$1.03 |
| Check Point Software |
CHKP |
24-Oct |
$1.36 |
$1.38 |
| Torchmark |
TMK |
24-Oct |
$1.53 |
$1.59 |
| Cerner |
CERN |
25-Oct |
$0.63 |
$0.63 |
| Sherwin-Williams |
SHW |
25-Oct |
$5.75 |
$5.68 |
| Stryker |
SYK |
25-Oct |
$1.68 |
$1.69 |
| Moody’s |
MCO |
26-Oct |
$1.78 |
$1.69 |
| Cognizant Technology Solutions |
CTSH |
30-Oct |
$1.13 |
$1.19 |
| Wabtec |
WAB |
30-Oct |
$0.95 |
$0.95 |
| Carriage Services |
CSV |
31-Oct |
$0.22 |
$0.14 |
| Fiserv |
FISV |
31-Oct |
$0.77 |
$0.75 |
| Intercontinental Exchange |
ICE |
31-Oct |
$0.80 |
$0.85 |
| Church & Dwight |
CHD |
1-Nov |
$0.54 |
$0.58 |
| Ingredion |
INGR |
1-Nov |
$1.70 |
$1.70 |
| Becton, Dickinson |
BDX |
6-Nov |
$2.93 |
$2.93 |
| Continental Building Products |
CBPX |
8-Nov |
$0.48 |
$0.51 |
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Institutional Investor has a very good article on Wall Street’s abuse of math. Let me explain. Financial economics has an inferiority complex. As a result, the field needlessly uses fancy math to justify itself. This seeps into money management.
The financial industry uses mathematics in a manner that would be mortifying to any other field of science. Academic literature and industry research are rife with pseudo-mathematical nonsense. You don’t have to look far to see where the motivation lies: Many of the authors are either employed by or retained by richly paid investment management and consulting firms. Faced with soaring investor interest in algorithm-powered investment strategies, the habit — indeed, the requirement — today is for firms to use scientific language and notation to nourish the idea that they’ve proved mathematically that there’s a way to systematically beat the market.
They haven’t.
It’s not surprising that more is claimed by their suggestive language than they actually “prove” because the field suffers from a subtle corruption. There is a pattern developing of publishing a semi-quantitative paper and using it as the basis to establish an investment advisory firm, become the seller of an investment product “relying only on math,” and go off on a globe-circling marketing bender. The fastest-growing asset management firms are purveyors of investment products that draw upon mathematical finance research, so theories ridden with poorly specified mathematics and wildly exaggerated results abound.
This morning, Becton, Dickinson (BDX) reported fiscal Q4 earnings of $2.93 per share. That matched Wall Street’s estimates. It was also a nice increase from $2.40 per share one year ago. This was a big year for BDX because it was the first year they’ve operated after absorbing CR Bard. For the year, Becton made $11.01 per share. Adjusting for the acquisition, revenues were 5.8% for the fiscal year.
“Fiscal 2018 was a historic year for BD with the successful completion of the acquisition of C. R. Bard. We are extremely proud of our strong fourth quarter and fiscal year results, which demonstrate how agile we can be as an organization while executing concurrently on two transformative acquisitions,” said Vincent A. Forlenza, Chairman and CEO. “We enter fiscal 2019 with continued strong momentum and confidence in our ability to execute on our strategy, deliver on our commitments and create value for our shareholders.”
In fiscal 2017, Becton made $9.48 per share. Last November, the company originally pegged EPS for fiscal 2018 at $10.55 to $10.65. In February, they bumped the range up to $10.85 – $11 per share. In May, they raised the range again to $10.90 – $11.05 per share. Then in August, it went to $10.95 – $11.05 per share. Ultimately, they made $11.01 per share.
For the current fiscal year, BDX expects earnings between $12.05 and $12.15 per share. They’re looking for adjusted revenue to rise by 5% to 6%.
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Evelyn Y. Davis, one of Wall Street’s true characters, has passed on, aged 89. She was known as the original shareholder activist, which is a polite way of saying she grilled CEOs at shareholder meetings.
It’s a basic rule of our free enterprise system that if you own shares in a company, you are the owner. As a result, you’re fully within your right to question management. And question, Ms. Davis did.
For more than five decades, the Netherlands-born Ms. Davis attended annual meetings of Bank of America, Ford Motor Co. and Goldman Sachs Group Inc., among many other companies, to offer advice and demand changes. She advocated lower pay for executives and term limits for directors. Sometimes she advised CEOs to resign or commented on their looks.
At a Goldman Sachs annual meeting in 2011, when the investment bank was still facing regulatory and legal fallout from the 2008 financial crisis, she advised the CEO, Lloyd Blankfein, to step down. “I want people to know I have nothing against you personally,” she told Mr. Blankfein. “And you are not a bad-looking guy.”
Mr. Blankfein replied that he had no plans to resign.
She held stock in more than 80 companies and published an annual newsletter, Highlights and Lowlights, to recount her tussles with top executives. She charged $600 an issue and insisted that companies buy at least two copies.
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Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His Buy List has beaten the S&P 500 over the last 20 years. (more)
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