Market 2018-01-25 (Housing, WDC, and more)

It is a choppy day in Market. It turns out that S&P and Nasdaq finish with little change. However, there are lots of big moves on individual stocks. Let's first start with Headline news.

New home sales tumbled 9.3% in December. Cold Weather might play a big role here. The median price of new home hits a record $335.4k, +2.6% YoY. On Wednesday, it reported that sales of existing homes fell 3.6% as well. For 2017, existing home sales totaled 5.51M (+1.1% YoY), most since 2006. Nevertheless, homebuilders are sharply down today ITB -2.1%, XHB -1%.

Mortgage rates surged to their highest levels in 10 months. The 30-year fixed-rate mortgage averaged 4.15% for the week ending Jan. 25, spiking from 4.04%, and the 15-year rate averaged 3.62%, surging from last week's 3.49%; last year at this time, they were 4.19% and 3.40% respectively.

Trump wants to see a strong dollar. Treasury Secretary's Mnuchin today says the short-term position of the dollar was "not a concern of mine.". UUP +0.1% today after all the mess.

Robinhood adds zero-fee Bitcoin and Ether trading, starting in February. Robinhood is a commission-free broker. If you are interested, you are welcome to use my referral (http://share.robinhood.com/minweis). Both you and me have the chance to get free stocks.

Samsung debuting Galaxy S9 on 2/25. AAPL -1.8% today. More on Apple: the company has added 24 self-driving Lexus SUVs to its fleet since April 2017, according to the California DMV. It is behind Google and Uber on self-driving cars. Apple adds a drama series from La La Land director Damien Chazelle to its slate of original programming. Apple reportedly set aside $1B in its original content push.

Winners

MMM +1.9% reaches all-time high after reporting: Q4 EPS of $2.10 beats by $0.07. Revenue of $7.99B (+9.0% Y/Y) beats by $110M.

MKC +5% also reaches all-time high after reporting: Q4 EPS of $1.54 beats by $0.02. Revenue of $1.49B (+21.1% Y/Y) beats by $10M.

Biotech companies continue to roll out nice earnings as I said yesterday, IBB +0.6%.

 BIIB +2.5%, Q4 EPS of $5.26 misses by $0.19. Revenue of $3.31B (+15.3% Y/Y) beats by $230M.

CELG +1.3%, Revenues: $3,483M (+16.9%); Net Product Sales: $3,479M (+16.9%). 2018 Guidance: Total Revenue: $14.4B - $14.8B (12% growth); non-GAAP EPS: $8.70 - 8.90 (18% growth).

Defense names: 

NOC +3.7%, Q4 EPS of $2.82 beats by $0.08. Revenue of $6.63B (+3.6% Y/Y) beats by $280M. Hikes dividend from $1/quarter to $1.1/quarter.

GD +3.3%,  extends yesterday's gains after BofA Merrill Lynch reiterates its Buy rating for GD and raises PT to $260 from $245. UTX +1.8%, LMT +1.2%.

Chinese Techs: 

BABA +1.4% (all-time high, little shy from $200), JD +1.4%, NTES +1.5%, MOMO +2.6% (breakout), YY +1.1%, QD +3.7% (breakout), YRD +3.8%...

NFLX +3.2%, GWW +5.3% continues the rally after their ERs.

GS +1% after WFC praises them.

 KR +2.6% after the company announces that the Simple Truth brand has racked up $2B in annual sales. COST +1.9%.

Losers

Airlines have another bad day even after great ERs from AAL (-3.2%), LUV (-3.3%), JBLU (-6.2%) and ALK (4.1%). UAL -4.3%.

F -4%, feels the pressure from inflation (high commodities). GM -2.6%.

LRCX -5%. It is shocking to see such a loss after great earnings.

URI (-2%) has a similar story after ER beats.

PM -2.8%, as FDA rejects Philip Morris iQOS claims. MO -2.3%. iQOS stands for "I quit ordinary smoking" -- is designed to reduce the health risks of smoking. It works by warming up the tobacco in the cigarette with an electrical heating element instead of igniting it.

Baker Hughes (BHGE -4.4%) extends yesterday's post-earnings losses. Morgan Stanley reiterates Outperform rating and $44 PT, believing that the stock's weakness presents a buying opportunity, given that BHGE's free cash flow will soon inflect higher. Wells Fargo also reiterates an Outperform rating.

AH Earnings

INTC -0.5%, Q4 EPS of $1.08 beats by $0.21. Revenue of $17.1B (+4.3% Y/Y) beats by $760M. Shares +4% in AH. Chip security problem doesn't matter, right? because people still need to buy intel chips.

KLAC -1.6%, Q2 EPS of $1.97 beats by $0.24. Revenue of $976M (+11.3% Y/Y) beats by $7.19M. Shares -1% in AH.

WDC +1.2%, Q2 EPS of $3.95 beats by $0.16. Revenue of $5.34B (+9.2% Y/Y) beats by $40M. Shares was down as much as -6% in AH. The report looks great! The company takes a provisional net tax charge of $1.6B, which seems to surprise the Street, sending stock price driving. The company generated approximately $1.2B in cash from operations during the second fiscal quarter of 2018, ending with $6.4B of total liquid. Revenue grows 9% with such cash flow, I would say "Buy the dip".

SBUX -0.5%, Q1 EPS of $0.65 beats by $0.08. Revenue of $6.07B (+5.9% Y/Y) misses by $110M. Shares -4% in AH as comparable store sales rose 2.0% below 3% expected. Starbucks expects FY18 EPS of $2.48 to $2.52 vs. $2.48 consensus and $2.30-$2.38 prior guidance.

 ISRG +3.2%. Q4 EPS of $2.54 beats by $0.27. Revenue of $892M (+17.8% Y/Y) beats by $41.4M. Stock price reaches all-time high today. Very solid results may send it higher.

My Trades Today

  • Double down on LUV @ $60.
  • Added FIT @ $5.4, still a very small position.
  • Sold 1/3 OHI @ $27.8. Rising treasury yield makes me nervous.

Major Earnings Tomorrow pre-Market:  ABBV, HON, NEE

Comments

Post a Comment

Popular posts from this blog

Wanna Retire Early, Start Planning Now!

Image
It is very important to plan your retirement  as early as possible.  Why? It is because the money you put into investment will grow fast. If you put $1k into your retirement account at age 20, it will grow into $15k when you reach age 60, assuming 7% annual return rate. As comparison, if you put $1k at age 30, it will only grow into only $7.6k, about half of the former case! One popular topic these days is to get retired early, for instance, at the age 50. Assuming the average yearly expense (including medical cost) is $100k and you live to age 90, you need at least $4M by age 50. Of course if you plan to get retired at age 60, then the retirement fund will be smaller ( $3M ). There is a new phrase " Million Dollar Poor "  ---- $1M may only support you from age 70 to 80 --- retire @ age 70 and decease @ age 80. In this article, I would like to introduce the possible stable income sources for retirement. (This is a brief introduction, for more details, please ask your
Read more

Impacts of Tax Reform --- My First Thoughts

Senate passed the messy tax reform bill last night. The new tax code will start in 2019 (not 2018). The next step will be negotiation between Senate and the House to put together the final bill for Trump to sign. Put aside how the tax reform will affect personal finance, one thing is for sure --- corporate tax rate will drop from 35% to 20% . Multinational companies will also bring cash back to US. Corperate Tax Rate Drop Well, many big companies have already managed to pay low tax rate, for instance, IBM pays only ~10%. You can find tax rate information in companies' ER. Therefore, not everyone benefits from the 20% tax rate. Following are a few companies who are paying tax rate > 35% (most in retailers and restaurants). Restaurant: CMG, DENN... Retailers: CVS, LVS, GPS, JWN, M... Auto retailers: AN, KMX... Healthcare: Anthem, HUM, DGX, DVA... Transportation: JBHT, LUV... Energy: COP, PSX... Industrial: GWW... Financial: SCHW, PAYX... Utility: WEC...
Read more

Market 2018-02-05 (WOW.... Bloody)

The quick bounce in the morning turned out to be a trap. The selloff is so violent that there are almost no survivors. The deep dip  around 3pm is especially evil. The market is definitely in panic mode. Dow -4.6% to 24,343. S&P -4.1% to 2,649. Nasdaq -3.8% to 6,967. And the selloff continues in AH. The money floods into Treasuries : 30-year +1.12%. 10-yr +0.74%. 5-yr +0.51% . 10-yr note drops from above 2.85% to 2.7% (about last Tuesday/Wednesday level). This may calm some nerve. Currently it is hard to predict how much lower indices will go. I would suggest to prepare your own shopping list and start to add positions. I am fully positioned myself. I plan to hold and wait. Commodities: Crude -2.73% to $63.66 . Gold +0.28% to $1,341.00 . Bitcoin is also facing another run of selloff as major US & UK banks ban Bitcoin credit card purchases . The lowest price today is below $6600 from coindesk. To be honest, there is no particular bad economic news today. Instead, we
Read more

US Treasuries and Yields

Image
Rising Treasury Yields have been a hot topic in the past few weeks, which is blamed to be the reason behind recent  market correction. Some people are totally panicked as 10-year yield approaches 3%. I would suggest to " Keep Calm and Carry On ". In this article, I would like to give you some background, and possible trend. US Treasuries Basically US treasuries, including short-term and long-term, are the national debt of United States (国债). US currently have debt of $20T . Debt/GDP ratio is 104% in 2017 , as shown in the chart below (grey bars represent recessions). As comparison, China Debt/GDP ratio is 46% in 2016; Japan is 238% . The debt falls into two broad categories: Intragovernmental Holdings and Debt Held by the Public. Intragovernmental Holdings $5.6T, 30% of total. This is the portion of the federal debt owed to 230 other federal agencies, such as the Social Security Trust Fund. This part is not affected by market. Debt Held by the Public $1
Read more

Market 2018-02-06 (XIV, MU, MOH, and more)

It is a choppy day. The early tradings are similar to yesterday --- opened low followed by a quick bounce. However, indices hung around afterwards and marched north around 2:30 pm. Dow +2.3% , S&P +1.7% & Nasdaq +2.1% . I think the -10% correction is over. The indices retreated back to pre-TAX-Reform level in the intraday low. However, it could remain the choppy way for near-term. Utilities has the worst performance, XLU -1.5% despite the broad market rally in late hours. Treasurys: 30-year -0.9%. 10-yr -0.6%. 5-yr -0.4% . 10-yr note stays @ 2.8%. Commodities: Crude -1.1% to $63.45. Gold -0.9% to $1,324 . The American Petroleum Institute (API) reportedly shows -1.05M barrels of crude oil for the week ending Feb. 1 vs. last week's build of +3.23M barrels. Gasoline reportedly shows -227K barrels and distillates show a build of +4.52M barrels. I think refiners face margin challenges. Yesterday, many analysts called for buying dip instead of being panic. Goldman's D
Read more