Market 2017-11-9 (Tax Reform, M, and more)

Three indexes return to opening after a choppy day (depressing morning and sunshine afternoon). Nasdaq recovers from -1.5% to -0.6%.

Three sectors (Energy, Telecommunications, Non-cyclical consumer goods) perform best today. The later two are the most beaten-down sectors this year --- Sector rotations (click this brief introduction). Utilities sector is also fine today.

Three sectors (Tech, Industrial, Basic Materials) perform worst today. All these three are hot sectors this year.

The Senate Republicans tax plan is out: featuring 7 individual tax brackets, the repeal of deductions for state and local taxes, a doubling of the death tax exemption and an increased child tax credit. The Senate bill also maintains the EV tax credit, the deduction for medical expenses and the $1M cap on the home mortgage interest deduction.
For business, as reported earlier, the corporate tax reduction to 20% from 35% would be delayed until 2019, although corporations would be able to deduct all capital investments in 2018.

There is no way Trump can sign a bill before Thanksgiving as he said earlier. It is also highly doubtfull that he can sign by Xmas as he claimed recently. 

 I think the market rally will take a pause in the rest of the year. As the year-end approaches, investors need to prepare for their tax form --- lock-in capital gains, and cut bad positions for tax deduction.

Winners

ROKU (+55%) jumps after its 1st ER.

Overstock (OSTK +31%) Q3 EPS of -$0.03, Revenue of $424.01M (-4.0% Y/Y). I don't understand their business. Can anyone explain?

 M (+11%) Q3 EPS of $0.23 beats by $0.04. Revenue of $5.28B (-6.2% Y/Y) misses by $30M. Gross margin is 39.9% better than 39.8% a year ago. The new Star Rewards loyalty program has positive response from high-spending customers, along with double-digit growth in digital and the potential of Backstage in Macy’s stores (similar to Marshall), which are all encouraging. Stock price initially dropped to $16 in pre-market before reversing quickly. JCP +9.6% (short-squeeze), JWN +4.5%.

KSS (+0.9%) Q3 EPS of $0.70 misses by $0.02. Revenue of $4.33B (flat Y/Y) beats by $30M. They also revise the full year guidance a little higher. Stock price recovers fully from -8% gap down in early hours.

PRGO (+8.4%) Q3 EPS of $1.39 beats by $0.28. Revenue of $1.2B (-3.2% Y/Y) beats by $30M.

Losers

Many in tech and industrial space, such as AMD, KLAC, AMAT, even LMT, CAT

Earnings AH

NVDA: Q3 EPS of $1.33 beats by $0.26. Revenue of $2.64B (+32.0% Y/Y) beats by $280M. flat AH

DIS: Q4 EPS of $1.07 misses by $0.08. Revenue of $12.78B (-2.7% Y/Y) misses by $560M. Media networks $5.47B (-3%); Parks and Resorts $4.67B (+6%); Studio Entertainment $1.43B (-21%); Consumer Products & Interactive Media $1.22B (-6%). ESPN is still causing pain. I am not worried here, will hold my long position. -3.5% AH

JWN: Q3 EPS of $0.71 beats by $0.07. Revenue of $3.63B (+2.5% Y/Y) beats by $40M. Shares -2.8% AH

 RDFN: Q3 EPS of $0.12 misses by $0.01. Revenue of $109.5M (+35.1% Y/Y) misses by $1.11M. Shares -7.8% AH

HTZ: Q3 EPS of $1.42 beats by $0.10. Revenue of $2.57B (+1.2% Y/Y) in-line. Shares +11% AH

My Trades Today

Unload half position in M, still hold 7% weight. M has resistance @ $20, then $22, $24.

Comments

  1. UnknownNovember 9, 2017 at 2:14 PM

    More on Disney:
    ESPN's upcoming streaming service --- ESPN Plus will start in 2018 spring with a fully redesigned app, and offer scores and highlights along with (authenticated) streaming of channels for cable subscribers, and the ability for all to subscribe to live events. Pricing is still undetermined.
    The general Disney-content streaming --- in the latter part of 2019, will include content from Disney's four major brands (Disney, Pixar, Star Wars/Lucasfilm and Marvel). It will have 4-5 exclusive feature films per year, as well as original series: Already in development is a Star Wars live-action series, and other series based on its Monsters film and High School Musical series.
    Probable another trilogy of Star Wars-canon films.
    Stock price almost recovers from the earlier drop now.

    ReplyDelete

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