Q2 Earnings Season
Equities start the day higher as Earnings season is upon us. I always love earnings season, it gives me a chance to read thru conference calls looking for economic nuggets, poke fun at analysts who say “great quarter guys”, and skewer the consumer facing company who blames weather for the fact that no one bought their stuff. As is the norm, earnings season kicks off with banks and God Bless you if you can make heads or tails of their numbers. These things have more moving parts than a Rube Goldberg machine so what I usually do is focus on what Jamie Dimon says because he runs one of the biggest banks in the World and is incredibly sharp. What exactly are we looking for over the next few weeks? To be honest all I really want to hear is this: things aren’t as bad as people say they are. I’d love to see CEOs and CFOs come out and report decent numbers (honestly that’s all we’d need) then say “guys, I know there’s a lot of noise surrounding trade wars and tariffs and the economy but what we are seeing isn’t that bad”. If that happens then earnings estimates for the rest of the year could flatten (maybe even increase?) and all of a sudden it’s not just multiple expansion carrying the day. Hey, did you know its $AMZN Prime Day? Can you believe a company can make up a day specifically to get people to shop on its website and that day is celebrated as a special event? Absolutely incredible, I love it, I’ve been dying to make Cold Brew coffee for my co-workers.
After the open it was completely dead, in fact I can’t believe I’m still writing this thing given how little happened. The S&P traded in a 5pt range over the first half of the session with the only real mover being SYMC which fell 11% on news that their merger talks with Broadcom are ending. Volume was about 15% below a 30 day average which I guess shouldn’t have surprised me, both Mondays and Fridays are slow during summer because who wants to punch buttons when the sun is shining. Winners were AMD, CF, WYNN, and RCL. Losers were the aforementioned Symantec as well as NBL, NFLX, ZION, and CMA. By lunch I was watching the market go nowhere while debating buying that insta-pot on Amazon. It’s been what…3 of these? 4? Every single time I put that insta-pot in my cart and then delete it. I just want good ramen in my life, is that too much to ask for?
Let’s wrap this up because you’re probably better off mowing your lawn than trying squeeze juice from this lemon. We closed at 3,014 which was basically unchanged from Friday. Hey, let’s switch gears and look at all of this from a Bears perspective shall we? I would think to be bearish here you’d want 1) earnings and growth to fall apart (not muddle along, completely fall apart) 2) the Fed to abandon its dovish stance 3) US China negotiations to fail (again) and 4) sentiment to get wildly bullish. Of those 4 we have our eyes on sentiment (its not wildly bullish but its elevated) yet the other 3 are still in the Bulls camp. Oh and if we had to weight the importance of the 4 it would look something like: Earnings 10%, Trade War 5%, Sentiment 5%, and Fed 80%. The Fed is casting a loooooooonnng shadow over Bears’ habitats my friends, Jerome Powell may as well be Ranger Smith (I wonder if this reference will hit home for anyone).
Final Score: Dow +0.1%, S&P500 flat, Nasdaq +0.17%, Rusk -0.5%
Slow day so I only have a couple links
- Read this technical update from JC. It’s quick, easy, and he breaks it down for us the right way
- Some really cool clocks here!! It’s long but I found myself mesmerized
- 10 Years, 10 observations, and 10 predictions
- Bill Mcbride is the best, check out his review of 10 Economic Questions for 2019. Bill isn’t even on recession watch.
- Necessity is the mother of invention
For tonight’s final link I wanted to share something you’ve probably already seen but I loved it so much I felt like it needed a spot in the recap. NYC can be a crazy place, especially when a blackout hits, but never forget that it’s filled with incredible people who do incredible things every single day. Imagine wandering by Carnegie Hall and this happening…
Have a good night