Friday, February 23, 2018

Earnings Coming On Strong

This earnings season has been a banner one. S&P 500 companies are expected to post profit growth of 15 percent in the final three months of the year versus a year earlier, according to FactSet. That would mark the third quarter in the past four in which companies have reported profit growth of 10 percent or more.

Nearly three-quarters of reporting companies have topped analyst estimates, above the five-year average of 69 percent. And firms are expected to have grown their top-line sales numbers by a strong 8.1 percent last quarter.

So why is the S&P 500 is down about 2.4 percent since earnings season kicked off in mid-January? Most analysts seem to think that the strong earnings numbers came as no surprise to most investors. The strong numbers were already baked into stock prices - even before companies started reporting them.

Thursday, February 22, 2018

Inside Housing's Decline

The housing market is beginning to show signs of weakness: U.S. home sales unexpectedly fell in January, leading to the biggest decline in more than three years. Existing home sales dropped 3.2 percent last month.

Existing home sales, which account for about 90 percent of U.S. home sales, declined 4.8 percent on a year-on-year basis in January. That was the biggest year-on-year drop since August 2014.

The weakness in home sales is largely a function of supply constraints rather than a lack of demand. While the number of previously owned homes on the market rose 4.1 percent to 1.52 million units in January, housing inventory was down 9.5 percent from a year ago.

Wednesday, February 21, 2018

The Woes of Walmart

U.S. stocks snapped a six-day winning streak yesterday, with the Dow and S&P 500 both dropping by about 1 percent. The biggest culprit: The world's biggest retailer, Walmart.

The retail giant's stock notched the worst dollar decline in its history, after it reported its first earnings miss in ten quarters. Walmart's adjusted per-share earnings came in at $1.33, below the $1.37 consensus of analysts polled by FactSet.

Shares of Walmart lost $10.67 on the day. The stock price lost 10.2 percent of its value. That percentage decline represented the steepest one-day drop for Walmart since January 8, 1988, when it dropped by 10.3 percent.

Tuesday, February 20, 2018

The Millionaire State

There's a new study out from Phoenix Marketing International, breaking down the number of millionaires by state, and New Jersey places at a lofty No. 2. Fully 7.86 percent of all the households in our state qualify as millionaire households, with more than $1 million or more in liquid wealth, The total for the state is nearly 250,000.

All told, millionaire households across the nation increased by 6 percent between 2016 and 2017. They now total about 7.2 million households in the U.S.

The only state with a higher percentage of millionaires than New Jersey? Surprisingly, it's Maryland, where 7.87 percent of all households qualify as millionaires.




Monday, February 19, 2018

Assessing the Damage

Is the market downturn over with? For the moment, at least. The Dow Jones industrial average and the S&P 500 index each logged their sixth straight advances on Friday, notching a slight gain at the close.

The Dow last had a rally of this length in November, while the S&P’s last six-day advance was in January. For the week, the Dow rose 4.3 percent, marking its biggest one-week percentage rise since November 2016. The S&P 500 also gained 4.3 percent in its best week since January 2013.

But it wasn't enough to erase the damage of the correction. The Dow remains 5.3 percent below its all-time high, hit last month. The S&P is 4.9 percent below its own record. U.S. financial markets will be closed today in observance of Presidents Day.

Thursday, February 15, 2018

The Market's Moves

How much has the stock market been moving lately? The daily move in the S&P 500 has totaled nearly 17 percent during the first half of February, according to The Wall Street Journal’s Market Data Group.

That’s surpassed such moves for every full month since June 2016, when the index moved 17 percent amid market turbulence spurred by the Brexit vote. With half a month to go in February, the absolute move in the index has a good chance to surpass those levels.

Sliced another way, the average up-or-down daily move so far in February has been 1.7 percent, according to the Market Data Group. That’s the biggest such average since August of 2011, when S&P downgraded the U.S. credit rating.

A Nation of Debtors

We are increasingly becoming a nation of debtors. According to the New York Fed’s latest Quarterly Report on Household Debt and Credit, household debt rose in 2017 for the fifth consecutive year. In the fourth quarter of 2017, household debt grew 1.5 percent from the third quarter to $13.15 trillion. That’s equivalent to 68 percent of U.S. GDP.

Debt increased in all major categories: in mortgages (1.6 percent), student loans (up 1.5 percent), auto loans (up 0.7 percent) and credit cards (up 3.2 percent). On the other hand, it did fall 0.9 percent for home equity loans.

Although credit card debt led the fourth-quarter debt increase, consumers owe far less in credit card debt than in all other major categories, just $834 billion. That's compared with $8.88 trillion for mortgages, $1.38 trillion for student loans and $1.22 trillion for auto loans.