Archive for May, 2021

• Trex’s Earnings Are Due Out After the Close
  Eddy Elfenbein, May 10th, 2021 at 11:33 am

  The big news for today will be Trex’s (TREX) earnings which are due out after the close.

  The Nasdaq has been getting knocked around lately. On Friday, the index snapped an eight-day streak of losing against the S&P 500. But its victory margin on Friday wasn’t that much. The index is back to lagging today. The Nasdaq is very close to dipping below its 50-day.

  Last week, Cerner (CERN) beat earnings, approved a new buyback program and raised guidance. The stock promptly dropped 4.7%. Then it rallied. It’s as if the market had a chance to make some second thoughts.

  This is a good reminder that sometimes the market is far from rational. Wall Street acts like a mob because that’s what it is.

  

• Morning News: May 10, 2021
  Eddy Elfenbein, May 10th, 2021 at 7:07 am

  Stocks Cheer Prospects for Low Rates, Oil Jumps on Pipeline Outage

  U.S. Govt, Top Fuel Supplier Work to Secure Pipelines As Closure Enters 4th Day

  Biden Turns to Emergency Powers to Counter Colonial Pipeline Disruption

  Inflation Brews for U.S. Producers While Services Wages Pick Up

  Dogecoin Tumbles After Elon Musk Calls It A ‘Hustle’ on ‘SNL’ Show

  What the Dogecoin Army is Saying as the Cryptocurrency’s Tumble Triggers a Bearish Break in the Long-term Trend Line

  Underwriters Puzzle Over How to Make Pandemics Insurable Again

  BioNTech to Build Covid-19 Vaccine Facility in Singapore By 2023

  How Uber and Lyft Are Losing the Race to the Electric Future

  UBS Dangles $40,000 Bonuses to Slow Junior Banker Defections

  Policymakers Used to Ignore Child Care. Then Came the Pandemic.

  Mattel Wants You to Send Back Your Toys When You’re Done With Them

  Ben Carlson: How to Lose Money When the Stock Market is at All-Time Highs & Is It Harder For Young People to Get Rich Today?

  Michael Batnick: The CAPE Ratio is Very High & Retail Is Staying in the ARKK

  Jeff Carter: Closing the Pits

  Joshua Brown: Saturday Night Live is the Modern Cay Shoeshine Boy

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• April NFP = 266,000
  Eddy Elfenbein, May 7th, 2021 at 8:37 am

  The April jobs report is out. The U.S. economy created 266,000 jobs last month. Expectations were for one million.

  The jobs number for February was revised higher by 68,000 and March was revised lower by 78,000. The unemployment rate went up 6.1%. Manufacturing lost 18,000 jobs. The labor force participation rate is now 61.7%. Average hourly earnings rose by 0.7%.

  Many economists had been expecting an even higher number amid signs that the U.S. economy was roaring back to life.

  There was more bad news: March’s originally estimated total of 916,000 was revised down to 770,000, though February saw an upward revision to 536,000 from 468,000.

  The battered leisure and hospitality industry saw the biggest hiring gains, adding 331,000 workers though that still left the industry nearly 2.9 million shy of where it was before the pandemic.

  The report comes amid robust growth that saw gross domestic product rise at a 6.4% annualized pace in the first quarter, and as many economists see a burst of 10% or more in the second quarter.

  

• Morning News: May 7, 2021
  Eddy Elfenbein, May 7th, 2021 at 7:01 am

  Cryptocurrency Investors Should Be Prepared to Lose All Their Money, Bank of England Governor Says

  U.S. Economy Likely Created Nearly A Million Jobs in April

  Meme Stocks and Archegos: Fed Calls Out Financial Weak Spots

  Fed Warns About Potential for ‘Significant Declines’ In Asset Prices as Valuations Climb

  Traders Ramp Up Bets on a Hawkish Fed Surprise at Jackson Hole

  U.S. SEC Chair Tells Congress He Plans New Rules on Climate Risk, Trading

  The Lithium Gold Rush: Inside the Race to Power Electric Vehicles

  Climate Adaptation Should Be a Public Good, Not an Asset Class

  Millions Are Unemployed. Why Can’t Companies Find Workers?

  Walmart Deal Shows Expansion in Telehealth, New Front With Amazon

  Adidas Shrugs Off China Boycott Call to Raise Outlook

  JPMorgan Memo Warned $875 Million Payment Was Graft Risk

  Joshua Brown: Taper Tantrum 2.0 Any Day Now

  Howard Lindzon: Measuring Everything in Dogecoin

  Michael Batnick: Animal Spirits: Is Art Recession-Proof?

  Ben Carlson: 10 Things You Shouldn’t Care About As An Investor

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• Two More Earnings Reports
  Eddy Elfenbein, May 6th, 2021 at 10:26 am

  We had two earnings reports this morning. Let’s start with Middleby (MIDD). The company reported Q1 earnings of $1.79 per share. That beat Wall Street’s forecast of $1.62 per share.

  “We have positive momentum entering 2021 with strong orders and rising backlogs in all three business segments. Profitability across all three business segments increased as well, as we realized the benefits of our operating initiatives while also to moving forward our strategic initiatives with investments in sales, technology and service capabilities. We continue to proactively manage ongoing challenges due to COVID, particularly with supply chain disruption and rising costs, to minimize customer impact. Employee safety remains our top priority and we have kept the precautions at our facilities in place to best protect our workforce,” said Tim FitzGerald, CEO of The Middleby Corporation.

  Zoetis (ZTS) reported Q1 earnings of $1.26 per share. That was 23 cents more than expectations. The company also lifted its full-year outlook. Previously Zoetis expected earnings of $4.36 to $4.46 per share. The new guidance is for $4.42 to $4.51 per share.

• Jobless Claims Fall Below 500,000
  Eddy Elfenbein, May 6th, 2021 at 10:17 am

  We had some good economic news this morning. The initial jobless claims report was “only” 498,000. This is a new pandemic low. Of course, that’s normally a very high number, but in the age of Covid, it’s pretty good.

  In fact, 498,000 is closer to previous peaks in other cycles. A little over a year ago, jobless claims peaked at six million. Jobless claims are now lower than they were during any time over the 12 months immediately following the financial crisis (November 2008 to November 2009).

  While the jobs market still has a long way to go before it fully heals from the pandemic damage, improvement has accelerated in recent weeks as restrictions on activity continue to be lifted.

  Though the pace has eased lately, the U.S. is still vaccinating more than 2 million people a day and soon will have half the population with at least one shot.

  The claims decline comes a day before the Labor Department releases its nonfarm payroll count for April. Economists expect that the economy added another 1 million jobs during the month, with hiring likely to be the quickest in the hospitality sector, which sustained the worst of the pandemic-related damage.

  However, continuing claims actually ticked higher last week, rising 37,000 to just below 3.7 million. The four-week moving average for claims edged down to 3.68 million, the lowest since March 28, 2020, just as mass layoffs were beginning to combat the spreading coronavirus.

  

• Morning News: May 6, 2021
  Eddy Elfenbein, May 6th, 2021 at 7:01 am

  Companies Warn of U.S. Labor Shortages Economists Call Temporary

  U.S. Vaccine Patent Shock Roils Pharma as Talks Move to WTO

  Moderna Raises 2021 Sales Forecast for COVID-19 Vaccine to $19.2 Billion

  The Chip Shortage Keeps Getting Worse. Why Can’t We Just Make More?

  Gas and Power Sellers Rack Up Billions in Profit from Texas Freeze

  Biden Leans Into Plans to Tax the Rich & Biden’s Audit-the-Rich Target of $700 Billion Seen as Tall Order

  Facebook Oversight Board Upholds Social Network’s Ban of Trump

  British Political Veteran Steers Facebook’s Trump Decision

  Tesla Developing Platform to Allow Car Owners in China Data Access

  Why Trouble May Loom for Stock Market if Cathie Wood’s ARK Innovation ETF Fails to Bounce

  Cryptocurrency Dogecoin Surges Ahead of Elon Musk’s ‘SNL’ Gig

  Space Aged: Bottle of Wine from Space Station Could Sell for $1 Million

  Jeff Carter: Inflation, or Is It Inflation?

  Michael Batnick: The Real World

  Ben Carlson: Animal Spirits: We Should Be In A Bubble

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• Earnings from Miller Industries and Ansys
  Eddy Elfenbein, May 5th, 2021 at 4:45 pm

  After the closing bell, Miller Industries (MLR) reported fiscal Q1 earnings of 28 cents per share. That’s a drop of 41.5%. Sales fell 3.5% to $169.9 million. No analysts follow the stock.

  Also after the close, Ansys (ANSS) reported Q1 earnings of $1.12 per share. That’s an increase of 17% in constant currency over last year’s Q1. Wall Street had been expecting 84 cents per share.

  For Q2, Ansys expects earnings to range between $1.43 and $1.67 per share. Wall Street had been expecting $1.57 per share. For revenue, the company expects $415 million to $445 million.

  For the whole year, Ansys expects earnings between $6.69 per share and $7.10 per share. Wall Street had been expecting $6.76 per share. Sales are expected between $1.81 billion and $1.875 billion.

• Crossing Wall Street Gets Results
  Eddy Elfenbein, May 5th, 2021 at 1:04 pm

  One year ago, FactSet (FDS) announced a 7% increase to their quarterly dividend. That brought the dividend from 72 to 77 cents per share. In their press release, the company said:

  ”The $0.05 per share increase marks the fifteenth consecutive year the Company has increased dividends.”

  But that was incorrect. It was really their 21st dividend hike in a row. It turns out, FactSet had not adjusted for stocks splits. (Which is a little embarrassing for a financial data company!)

  I have to credit Dividend Growth Investor for catching the error. I wrote the company to inform them of the mistake.

  This morning, the company announced a 6.9% increase to their quarterly dividend, bringing it to 77 cents per share.

  And guess what it says in the press release!!

  “The $0.05 per share increase marks the twenty-second consecutive year the Company has increased dividends on a stock split adjusted basis”

  We get results!

  

• Cerner Beats Earnings
  Eddy Elfenbein, May 5th, 2021 at 11:40 am

  This morning’s ADP report showed an increase in April payrolls of 742,000. While that’s a huge number, it’s still short of Wall Street’s expectations of 800,000. The official jobs report is this Friday.

  Leisure and hospitality, the sector hurt the most by pandemic-related business lockdowns, led growth with 237,000 new positions. The industry is still about 3 million shy of where it was before the pandemic but has been adding jobs steadily since federal and state governments have been relaxing restrictions.

  Trade, transportation and utilities also was a major contributor, adding 155,000 new jobs, while professional and business services contributed 104,000 and education and health services increased by 92,000 as students headed back to in-school learning.

  Services typically account for the bulk of job growth, and that was true again in April as the sector added 636,000 positions.

  Jessica Alba’s Honest Company raised $412.8 million in its IPO. The ticker symbol is HNST. The company is valued at $1.44 billion. She started the company in 2011. Good for her!

  The WSJ reports that Berkshire Hathaway’s stock is too high for the Nasdaq’s computers. The highest number the exchange can use is 2 to the 32nd minus one, but they use four decimal places. That means the highest possible price is $429,496.7295. This morning, the A shares have been as high as 427,435.12.

  This morning, Cerner (CERN) reported earnings of 76 cents per share. Wall Street had been expecting 74 cents per share. Cerner has also approved a new share buyback program, which lets Cerner to repurchase up to $3.75 billion through the end of 2023.

  For Q2, Cerner sees 20% earnings growth over last year’s Q2. The company made 63 cents per share in last year’s Q2, so that implies earnings of 76 cents per share which matches Wall Street’s forecast.

  “Cerner’s first quarter results reflect a solid start to the year,” said Brent Shafer, chairman and CEO. “We are sharpening our focus and moving forward with a renewed sense of urgency in delivering value to our clients and shareholders. These efforts are reflected in Cerner’s improved earnings outlook for the year.”

  “The new repurchase program reflects the Board of Directors’ and our entire leadership team’s belief in Cerner’s long-term potential and emphasizes our ongoing commitment to returning capital to shareholders,” said Mark Erceg, executive vice president and chief financial officer. “With our strong balance sheet and anticipated future cash flow, we are well positioned to continue making investments in growth while also executing a balanced capital allocation strategy.”

  Cerner raised its full-year guidance to over $3.20 per share. The previous range was $3.10 to $3.20 per share.

  Update: Shares of Cerner were down as much as 4.85% today but only lost 1.17% by the closing bell.