Written by Gary
US equities markets climbed today (SPY +0.3%), boosted by Apple’s sixth straight day of gains and by a surge in oil prices to their highest levels since 2014.
Todays S&P 500 Chart
The Market in Perspective
| Here are the headlines moving the markets. | |
 | In Omaha, preparing for change at Berkshire HathawayOMAHA, Neb. (Reuters) – The first question Warren Buffett was asked at Berkshire Hathaway Inc’s annual meeting on Saturday was whether he was “semi-retired,” having given four lieutenants oversight over the company’s operating businesses and some investments. |
| Nestle and Starbucks strike $7.15 billion coffee licensing dealLOS ANGELES/LONDON (Reuters) – Swiss-based Nestle , the world’s largest food and beverage company, will pay Starbucks Corp $7.15 billion in cash for exclusive rights to sell the U.S. chain’s packaged coffees and teas around the world, tying a premium brand to Nestle’s global distribution muscle. |
| Exclusive: Lockheed resumes F-35 jet deliveries to PentagonWASHINGTON (Reuters) – The U.S. Department of Defense resumed accepting F-35 jet deliveries from Lockheed Martin Corp last week after reaching an agreement on who would cover the costs to fix a production error, the Pentagon told Reuters on Monday. |
| Icahn, Deason want at least $40 per share for Xerox(Reuters) – Activist investors Carl Icahn and Darwin Deason would consider a bid for Xerox Corp of at least $40 per share, or a split with Fujifilm that will leave the company independent, to resolve an ongoing proxy fight, they said in a letter on Monday. |
| Apple and oil lead Wall Street higher(Reuters) – Wall Street climbed on Monday, boosted by Apple’s sixth straight day of gains and by a surge in oil prices to their highest levels since 2014. |
| Walmart to restrict opioid dispensing at its pharmacies(Reuters) – Walmart Inc said on Monday it would restrict initial acute opioid prescriptions to no more than a seven-day supply as the retailer aims to curb an opioid epidemic that has plagued the United States. |
| ‘Facebook effect’ turns Swedish steel town into tech hot-spotOSLO (Reuters) – Facebook will double the size of its data center in Sweden’s northern city of Lulea, raising its total investments in the region to about 8.7 billion crowns ($987 million), the company said on Monday. |
| Blackstone to buy Gramercy Property in $7.6 billion deal(Reuters) – U.S. private equity firm Blackstone Group LP will buy commercial real estate manager Gramercy Property Trust in a $7.6 billion all-cash deal, the companies said on Monday. |
| Investor Carl Icahn sells stake in AIG: sources(Reuters) – Billionaire investor Carl Icahn has sold his stake in American International Group Inc , ending a more than two-year association with one of the largest U.S. property and casualty insurers, according to a person familiar with the matter. |
| “Sell The News” Stalls Biggest Short Squeeze In Two Years, Bonds ShrugEverything was calmly elevating just how the central banks want it… and then Iran headlines hit… “Don’t Panic”… Stocks soared overnight and extended gains through the open with Small Caps (strong dollar) and Nasdaq (tech short squeeze) outperforming. Then when Trump headlines hit about tomorrow’s Iran decision, the S&P and Dow dumped to unchanged…the bounced…
Futures show the overnight hump and then buying panic at the open…
… |
| For The First Time Since August 2008, Credit Card Debt Hits A PlateauWhile many celebrated the record high US household wealth in the latest data from The Fed, what most missed was a record $1.0 trillion of credit card/revolving loans, a record $1.3 trillion of auto loans, and a record $1.5 trillion of student loans.
As we previously noted, among these, credit card and auto loans, in particular, have been experiencing accelerating delinquencies, but the very gradual increase in aggregated Net Charge-Offs has allayed any economist concerns about the state of the US consumer. But, a modest scratch below the surface, and a surprising discovery emerges. |
| All Downhill From Here? Market Refuses To Reward Earnings Beats, Punishes MissesWith the bulk of earnings season now behind us, one chart summarizes best the unprecedented divergence in surging EPS actual vs consensus:
Some more details on what has transpired so far, courtesy of BofA: as of Week 4, 409 companies, or 87% of S&P 500 1Q earnings, have reported. The remainder (chiefly Retailers/Tech) will be spread out over the rest of May/June, after which we’ll issue a final update. Bottom-up EPS surged to $37.98 from $37.53 last week (led by Energy), now 5% above analysts’ expectations at the start of earnings season (biggest beat in three years) and 4% above our forecast. In case it’s not clear, it has been an avalanche: all 11 sectors have seen earnings beat, led by Tech, Financials and Industrials, with 72% of companies beating on EPS, 73% on sales and 57% on both – the highest proportion of EPS and sales beats in BofA data history (since 2000). Digging deeper, tech saw the most beats on both (87%, a record high), followed by Health Care and Industrials (71% and 63%, both near-record highs). With Q1 2018 earnings growth tracking +23% YoY – the best in 7+ years – BofA contends that this is more than just lower taxes, as the beat in pre-tax profits is tracking 3%, and growth in pre-tax profits is a healthy +13% YoY (suggesting ~ … |
| Trump “Committed To Regime Change” In Iran: GiulianiPresident Donald Trump is committed to regime change in Iran, said Rudy Giuliani, Trump’s newest controversial attorney (although perhaps not for long) and longtime informal advisor. Speaking to reporters after a Saturday keynote to the Iran Freedom Convention for Democracy and Human Rights in Washington, Giuliani said “We got a president who is tough, who does not listen to the people who are naysayers, and a president who is as committed to regime change as we are.” In other words, pulling out of the Iran nuclear deal is now being conflated with regime change in Iran. Giuliani says he’s been a supporter of regime change for “ten years,” that it’s the only way to peace in the middle east, and that it’s “more important than an Israeli-Palestinian deal.”
The former Mayor of New York City, who was at one point under consideration for Secretary of State, pretended at one point in his speech that his notes were the Iran nuclear deal – ripping them up and spitting on them. “With Secretary of State Pompeo now on his right hand and his national security advisor John Bolton… on his left side, what do you think is going to happen to that agreement, that nuclear agreement?� … |
| Glencore’s Wild West—And East—Is Getting RiskierPart of Glencore’s success has been its willingness to take risks others wouldn’t in unstable places. The strategy has paid off, but makes it vulnerable to changing political attitudes in the U.S. and China. |
| Videogame’s Big Shooters Need to Aim HighIt takes more than a Fortnite to shoot down Call of Duty. But what happens when even more bullets start flying |
| Why It’s Not Crazy to Buy a Mall Giant in the Age of AmazonThe company betting billions to create a trans-Atlantic shopping-mall giant is playing a riskier game than its investors are used to. But in a riskier retail world, that may be no bad thing. |
| Economic Report: Consumer credit growth in March slowest in six months as credit-card use dropsThe Federal Reserve said consumer credit in March grew at a seasonally adjusted annual rate of 3.6%, or $11.6 billion, to mark the slowest gain since September. |
| Market Extra: An inverted yield curve is a recession indicator, but only in the U.S.The yield curve’s unerring knack for preceding recessions appears exclusive to the U.S. |
| Commodities Corner: Oil prices have surged above $70—here are 4 key reasons behind the rallySupply concerns surrounding the possible reinstatement of sanctions on Iran aren’t the only reason for the climb in U.S. benchmark oil prices above $70 a barrel to their highest levels since late 2014. |
Summary of Economic Releases this Week
Earnings Summary for Today
leading Stock Positions
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