Archive for May, 2020

• Morning News: May 26, 2020
  Eddy Elfenbein, May 26th, 2020 at 7:09 am

  BOE Isn’t Close to Implementing Negative Rates, Haldane Says

  Treasury Yields Rise As Coronavirus Vaccine Hopes Drive Risk-On Sentiment

  U.S. Small Firms Leave $150 Billion in Coronavirus Stimulus Untapped

  Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers

  ‘How About Next June?’ Small Meat Processors Backlogged As Virus Idles Big Plants

  ‘This Could Be The One That Gets Me,’ Says Oilfield Service Veteran

  A Florida Toy Importer Braces For Retail Upheaval

  Remember the MOOCs? After Near-Death, They’re Booming

  Latin America’s Largest Airline, LATAM, Files for Chapter 11 Bankruptcy

  Scared Americans Desperate to Travel Are Buying Up ‘Covid Campers’

  Travel And Leisure Stocks Rejoice On Summer Holiday Hopes

  German Court Orders VW to Compensate Customers Over Diesel Emissions Scandal

  Can’t You Just Fire Me? Man Paid to Do Nothing Wanted $2 Million

  ‘King of Gambling’ Who Propelled Macau Past Las Vegas Dies at 98

  Joshua Brown: Under Pressure

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• Thanks Vets
  Eddy Elfenbein, May 25th, 2020 at 9:16 am

  

• Morning News: May 25, 2020
  Eddy Elfenbein, May 25th, 2020 at 7:08 am

  German Economy Enters Recession As GDP Falls 2.2%

  Gold Falls As Potential Japan Stimulus Boosts Risk Appetite

  China Strongly Condemns U.S. Blacklisting Dozens of Its Firms

  Big Short in U.S. Stocks Needs Watching, Says One Market Veteran

  U.S. Grants Tentative OK for 15 Air Carriers to Suspend Service to 75 Airports

  Pay Cuts Become a Tool for Some Companies to Avoid Layoffs

  Hertz Files for U.S. Bankruptcy Protection as Car Rentals Evaporate in Pandemic

  The Artisans Behind Italian Fashion Tremble at Their Future

  The New Model Media Star Is Famous Only to You

  Bayer Reaches Deals on Big Share of 125,000 Roundup Weedkiller Suits

  Ben Carlson: Bubble Behavior During a Depression

  Michael Batnick: Talk Your Book: Investing in Commercial Real Estate & 10 Reasons Why Stocks are More Dangerous than Sports

  Roger Nusbaum: Bring Me Fama’s Head

  Jeff Miller: Weighing the Week Ahead: A Search for Balance in the Great Reopening

  Howard Lindzon: Momentum Monday – Flatten the Nasdaq Curve?

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• Morning News: May 22, 2020
  Eddy Elfenbein, May 22nd, 2020 at 7:10 am

  Fed Chair Warns This Is a ‘Downturn Without Modern Precedent’

  Rudderless After A Rally, Stock Markets Look For Next Catalyst

  Many Jobs May Vanish Forever as Layoffs Mount

  Millions of PPP Loan Forgiveness Requests Are About to Rain on Banks

  U.S. Strikes At A Huawei Prize: Chip Juggernaut HiSilicon

  Disease Is Ravaging the $25 Billion Banana Industry

  As Reports Swirl, What Could Amazon Want From JCPenney?

  A Drug Company Wagers the U.S. Won’t Dare Charge It With Crimes

  Real Estate’s Demise Creates a Graveyard for Fools

  Ben Carlson: The Best Source of Investment Income?

  Michael Batnick: How Sectors are Driving Value and Growth

  Jeff Carter: Professor Steve Blank Follows the Data

  Roger Nusbaum: Twitter War!

  Howard Lindzon: The Three Sides Of Risk

  Joshua Brown: Ten Rules for Retirement Investing

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• Ross Stores Reports a Big Loss for Q1
  Eddy Elfenbein, May 21st, 2020 at 4:16 pm

  Ross Stores (ROST) just released its fiscal Q1 earnings results. Well, they would be earnings if they had been open. Since the company closed all of its stores, they had a big operating loss.

  For the 13 weeks ending on May 2, Ross Stores lost 87 cents per share. That’s down from a profit of $1.13 per share one year ago.

  On May 14, Ross began a phased reopening process. So far, approximately 700 stores have reopened. That’s good to hear. Ross has also halted its dividend.

  Total Q1 sales were $1.8 billion. That’s down from $3.8 billion for the same quarter one year ago. Q1 also includes a one-time charge of $313 million or 58 cents per share resulting from the extended period of store closures.

  Barbara Rentler, Chief Executive Officer, commented, “Our first quarter results reflect the unprecedented impact the COVID-19 pandemic has had on our business, which led to the closure of all stores and our first quarterly operating loss in more than 30 years. Operating margin for the period was negatively affected by the significant revenue decline from stores being closed for approximately half of the quarter and the aforementioned one-time, non-cash inventory valuation charge.”

  Ms. Rentler added, “In response to the economic disruption created by this global health crisis, we quickly took decisive actions to increase our liquidity and financial flexibility. These included drawing down $800 million under our revolving credit facility, completing a $2.0 billion public bond offering, suspending our stock repurchase program, and aggressively cutting costs throughout the Company, including ongoing expenses and capital expenditures. Today we are announcing several additional actions, which include the suspension of our quarterly dividend program and reduced new store openings for the year.”

  Looking ahead, Ms. Rentler said, “We have a deep bench of proven and experienced leaders throughout the business as well as a very strong financial foundation with over $3.0 billion in liquidity, which in addition to our cash balances includes a new $500 million revolving credit facility. All of this makes us confident in our ability to successfully navigate through these challenging times. We look forward to gradually reopening all of our stores fairly soon when we can return to our mission of providing compelling bargains in a safe environment for our associates and customers.”

  Ms. Rentler concluded, “The reopening of our stores will be largely dependent on guidance from health officials as well as government directives. Given the lack of visibility created by COVID-19 and the unknown extent of the impact the virus will have on consumer demand and store productivity, we are not providing second quarter and 2020 full year sales and earnings guidance.”

  Shares of Ross were up 6.58% in today’s trading.

• Hormel Foods Earns 42 Cents per Share
  Eddy Elfenbein, May 21st, 2020 at 1:58 pm

  This morning, Hormel Foods (HRL) reported fiscal Q2 earnings. It was a tough quarter for the Spam folks. Organic sales rose 6% but EPS fell to 42 cents. The latter matched Wall Street’s consensus.

  Hormel has withdrawn its guidance. For Q2, the company’s operating margin fell from 13.3% to 12.1%. That’s not a good sign.

  Hormel said it absorbed about $20 million in “incremental supply chain costs,” including employee bonuses and more cleaning expenses. Comparable sales volumes increased by 7%.

  “Our financial results this quarter demonstrate the value of our balanced business model and our team’s ability to react to a rapidly changing environment,” Snee said. “We continue to excel and gain market share in channels that are open and available to us, namely the retail channel. We know consumers are looking for trusted brands, and we will continue investing in our leading brands such as SPAM®, SKIPPY®, Jennie-O®, Hormel® Natural Choice® and Applegate®. Our strong balance sheet and stable cash flows give us the confidence to lean into our business and make the right long-term decisions for our team members, suppliers, customers and shareholders. Even though the COVID-19 pandemic has caused a dramatic shift in consumer behavior, operational disruptions and extreme volatility in raw material markets, we remain financially strong and well-positioned to weather the pandemic.”

  Here’s the breakdown by segment:

  Refrigerated Foods
  Segment profit down 17%
  Organic volume down 1%

  Grocery Products
  Segment profit up 22%
  Organic volume up 19%

  Jennie-O Turkey Store
  Segment profit up 54%
  Volume up 19%

  International & Other
  Organic volume down 1%
  Segment profit up 62%

  Hormel currently has over $600 million cash on hand. The company is in a strong financial position with limited debt and consistent cash flows. Total debt is $315 million, up from $250 million at the beginning of the year.

  

• Morning News: May 21, 2020
  Eddy Elfenbein, May 21st, 2020 at 7:07 am

  Wanted: New Head of WTO. Must Thrive Under Global Pressure and Conflict

  China’s ‘Crude Oil Treasure’ Promised Riches. Now Investors Owe the Bank.

  China’s Got a New Plan to Overtake the U.S. in Tech

  Another Grim Tally of U.S. Unemployment Is Expected

  In Fink We Trust: BlackRock Is Now ‘Fourth Branch of Government’

  U.S. Raises Ante in Vaccine Race With $1.2 Billion for Astra

  Coronavirus Shut Down the ‘Experience Economy.’ Can It Come Back?

  While U.S. Economy Slides, Heartland Auto Dealers Cry Out For More Trucks

  Americans Use Their $1,200 Stimulus Checks to Splurge at Walmart and Target — Here’s What They’re Buying

  In SoftBank Slides, Tofu, a Goose and Unicorns Underpin Sales Pitch

  Pandemic-Baking Britain Has an ‘Obscene’ Need for Flour

  Ben Carlson: Is the Stock Market Overvalued?

  Michael Batnick: Animal Spirits: Is the Stock Market Wrong?

  Roger Nusbaum: This Is The Next Black Swan

  Howard Lindzon: Old Bears, Young Bulls and Middle Aged Bearistas

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• Morning News: May 20, 2020
  Eddy Elfenbein, May 20th, 2020 at 7:08 am

  Too Big to Fail: The Entire Private Sector

  Futures Jump As Investors Hold Out For Recovery

  What Hedge Funds Are Buying During the Pandemic

  How Private Equity Is Ruining American Health Care

  Johnson & Johnson to End Talc-Based Baby Powder Sales in North America

  Target Profit Sinks 64% As COVID-19 Costs Offset Gains From Sales Surge

  The Nasdaq Exchange Aims to Delist Luckin Coffee After Employees Falsified $310 Million in Sales

  Tesla Owners Try to Make Sense of Elon Musk’s ‘Red Pill’ Moment

  Coronavirus Shutdowns Weigh on Book Sales

  Saudis Wonder If Virus Will End Another Custom in the Kingdom

  Joshua Brown: A Degenerate Gambler Walks Into a Stock Exchange…

  Howard Lindzon: Josh Kopelman on The Business of Venture Capital and Being a Founder

  Nick Maggiulli: Why Failed Predictions Don’t Matter

  Ben Carlson: Low Bond Returns Are Nothing New

  Roger Nusbaum: A 2% Withdrawal Rate? Are You Kidding?

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• Walmart’s Comp Sales +10%
  Eddy Elfenbein, May 19th, 2020 at 1:59 pm

  The stock market is flat today. The large-cap tech stocks are doing well while much of the rest of the market isn’t doing much. The S&P 500 has a shot of making it four up days in a row.

  Steve Mnuchin, the Treasury Secretary, told Congress today that the Treasury is “fully prepared to take losses in certain scenarios” on the money remaining to be distributed from the CARES Act.

  Walmart (WMT) had a good earnings report this morning. Their e-commerce sales were up by 74%. Walmart’s comp-store sales rose by 10%.

• Morning News: May 19, 2020
  Eddy Elfenbein, May 19th, 2020 at 7:07 am

  UK Jobless Claims Jumped 70% in April as the Coronavirus Hit Employment

  Nasdaq to Tighten Listing Rules, Restricting Chinese IPOs

  Fear of Risk Could Diminish the Economic Rescue by the Treasury and Fed

  Trump Threatens to Permanently End W.H.O. Funding

  Eleven Hedge Fund Traders Scored Big During Worst of the Crisis

  Loaded With Cash, Real Estate Buyers Wait for Sellers to Crack

  Warren Buffett Cuts Crisis-Era Bet on Goldman

  Disney’s Head of Streaming Is New TikTok C.E.O.

  U.S. Overtakes China as Most Attractive Country for Renewables Investment

  Uber Lays Off More Than 3,000 Workers as Silicon Valley’s Implosion Continues

  It Took a Pandemic, but 7-Eleven in Japan Is Letting Stores Take a Break

  Michael Batnick: The Beginning of the End?

  Howard Lindzon: Momentum Monday – Everyone Knows You Buy Cloud Stocks and Biotechs After a Pandemic

  Joshua Brown: Three Things You Can’t Do In This World

  Jeff Carter: Work From Anywhere?

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