As expected, the Federal Reserve kept interest rates unchanged in a range of 2.25 percent to 2.5 percent after its meeting yesterday. The Fed also signaled it would be “patient” about further interest-rate moves, and even added that policymakers were open to slowing the pace of the runoff of its balance sheet if needed.
In December, the Fed said it still expected the next policy move would be to raise interest rates. But yesterday, the central bank backed away from any forward guidance about monetary policy, suggesting the next move could be to raise or lower interest rates.
The Fed also indicated a greater willingness to keep its roughly $4 trillion portfolio of government bonds, in the hopes that they would help prevent long-term rates from rising if the economy falters. That marks a shift from its prior plan to steadily shrink its balance sheet.
Thursday, January 31, 2019
Wednesday, January 30, 2019
Apple's Earnings Report
Apple reported earnings after the bell yesterday, right in line with expectations: First-quarter revenue was $84.3 billion, while Wall Street was looking for $83.97 billion. Total sales were $88.3 billion.
But iPhone revenue came in slightly below projections. Quarterly iPhone revenue was $51.98 billion vs. a $52.67 billion forecast, but sales of iPhones plummeted 15 percent during the holiday period. Apple said there were 900 million active iPhone users in the world — the first time the company has disclosed the size of that market.
Apple’s sales represent a year-over-year decline of 5 percent, its first annual revenue decline during a holiday season quarter since 2001. Apple says that 100 percent of that decline was driven by performance in China, where the company saw almost $5 billion less in revenue than a year ago.
But iPhone revenue came in slightly below projections. Quarterly iPhone revenue was $51.98 billion vs. a $52.67 billion forecast, but sales of iPhones plummeted 15 percent during the holiday period. Apple said there were 900 million active iPhone users in the world — the first time the company has disclosed the size of that market.
Apple’s sales represent a year-over-year decline of 5 percent, its first annual revenue decline during a holiday season quarter since 2001. Apple says that 100 percent of that decline was driven by performance in China, where the company saw almost $5 billion less in revenue than a year ago.
Tuesday, January 29, 2019
IPOs in Store for 2019
The just-ended government shutdown had the effect of shutting the IPO market as well, as the Securities and Exchange Commission was unable to provide the approvals that issuers need to move their registration statements forward to launch. Between the government shutdown and negative returns in 2018, there have been no IPOs in 2019 so far, compared with 17 deals that were completed in the same time frame in 2018.
Nine U.S.-based startups have been valued at more than $10 billion by private investors — and at least five are expected to go public in 2019. This would follow a big 2018, during which 38 companies valued at $1 billion or more went public.
Both Lyft and Uber have already filed confidential IPO paperwork, putting them on track for potential offerings. Other possible big name IPOs this year include Airbnb, Palantir, and Pinterest.
Nine U.S.-based startups have been valued at more than $10 billion by private investors — and at least five are expected to go public in 2019. This would follow a big 2018, during which 38 companies valued at $1 billion or more went public.
Both Lyft and Uber have already filed confidential IPO paperwork, putting them on track for potential offerings. Other possible big name IPOs this year include Airbnb, Palantir, and Pinterest.
Monday, January 28, 2019
Earnings Season, With a Caveat
The fourth quarter 2018 earnings season continued to pick up steam this week as more than 100 companies reported earnings. Next week things kick into full gear, however, with an estimated 325 companies set to report.
The readings have been strong so far, but with a major caveat. Historically, the earnings beat rate drifts lower as earnings season progresses. The bottom-line earnings per share beat rate now stands at 64.7 percent, which is roughly in line with the final reading seen last quarter - but it's also low for where we are in the reporting period.
On the revenue side, 54.9 percent of companies that have reported this season have beaten consensus revenue estimates. In this category, top-line beats this season are weaker than normal.
The readings have been strong so far, but with a major caveat. Historically, the earnings beat rate drifts lower as earnings season progresses. The bottom-line earnings per share beat rate now stands at 64.7 percent, which is roughly in line with the final reading seen last quarter - but it's also low for where we are in the reporting period.
On the revenue side, 54.9 percent of companies that have reported this season have beaten consensus revenue estimates. In this category, top-line beats this season are weaker than normal.
Friday, January 25, 2019
Financial Satisfaction Takes a Hit
Americans’ personal financial satisfaction fell in the fourth quarter for the first time in seven quarters as market volatility took a toll on their confidence, the American Institute of CPAs reported yesterday. The AICPA’s personal financial satisfaction index clocked in at 30.9, a 1.4 drop from the third quarter. That erased 24 percent of the index’s gains from the previous three quarters.
The report noted that this was only the fourth time the index had decreased since climbing from a -42.0 bottom in the third quarter of 2011. But even with the decline, the PFSi, defined as the Personal Financial Pleasure Index minus the Personal Financial Pain Index, was still solidly in positive territory and not too far from recent record highs.
The single largest factor in the decline was the stock market's volatility in the fourth quarter of last year. The Job Openings and CPA Expectations outlooks also declined at a much smaller rate.
The report noted that this was only the fourth time the index had decreased since climbing from a -42.0 bottom in the third quarter of 2011. But even with the decline, the PFSi, defined as the Personal Financial Pleasure Index minus the Personal Financial Pain Index, was still solidly in positive territory and not too far from recent record highs.
The single largest factor in the decline was the stock market's volatility in the fourth quarter of last year. The Job Openings and CPA Expectations outlooks also declined at a much smaller rate.
Thursday, January 24, 2019
Early Warning for Valentine's Day
Make your alternate plans early: America’s favorite Valentine’s Day candy won’t be available this year. Sweethearts, the conversation candy hearts that say KISS ME or MAD 4 YOU, will be missing from shelves this Valentine’s season after its original producer went out of business last year.
Candystore.com reports that conversation hearts were the most popular candy for the holiday in 2018. But that didn’t keep its original producer, New England Confectionary Company, known as Necco, from going out of business in July. Spangler, a candy company best known for its Dum Dum lollipops, acquired the Necco wafer and Sweethearts brands in September but did not have the time to produce the conversation hearts for this Valentine’s Day.
Sweethearts were the most popular Valentine’s candy here in New Jersey as well. So this year, you may have to settle for M&Ms, which were in second place in the Garden State last year, or a heart-shaped box of candy, which was third.
Candystore.com reports that conversation hearts were the most popular candy for the holiday in 2018. But that didn’t keep its original producer, New England Confectionary Company, known as Necco, from going out of business in July. Spangler, a candy company best known for its Dum Dum lollipops, acquired the Necco wafer and Sweethearts brands in September but did not have the time to produce the conversation hearts for this Valentine’s Day.
Sweethearts were the most popular Valentine’s candy here in New Jersey as well. So this year, you may have to settle for M&Ms, which were in second place in the Garden State last year, or a heart-shaped box of candy, which was third.
Tuesday, January 22, 2019
Cracks in the Housing Market
The American housing market is starting to show some surprising signs of weakness. U.S. home sales tumbled to their lowest level in three years in December and house price increases slowed sharply, according to the National Association of Realtors.
Existing home sales declined 6.4 percent to a seasonally adjusted annual rate of 4.99 million units last month. That was the lowest level for that figure since November 2015. Existing home sales, which make up about 90 percent of U.S. home sales, dropped 10.3 percent on a year-over-year basis.
Meanwhile, the median existing house price increased just 2.9 percent from a year ago, to $253,600 in December. That was the smallest monthly increase since February 2012.
Existing home sales declined 6.4 percent to a seasonally adjusted annual rate of 4.99 million units last month. That was the lowest level for that figure since November 2015. Existing home sales, which make up about 90 percent of U.S. home sales, dropped 10.3 percent on a year-over-year basis.
Meanwhile, the median existing house price increased just 2.9 percent from a year ago, to $253,600 in December. That was the smallest monthly increase since February 2012.
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