What a momentous week for us all. The 45th U.S. president is in the White House and the 44th is on his way to California for a much-needed rest. Yesterday, we had Donald J. Trump sworn in as president, and I must say that his speech was rather impressive. Now the hard work begins for him, for his staff, his cabinet and for all of us going forward. However, politics is not my forte by any means, so I will leave it at that.
We started off the holiday-shortened week after the MLK holiday with fear building about how the Trump rally was running out of steam. As the week went on that became a self-fulfilling prophecy to the delight of the Wall Street noise machine, which is designed to make the naive churn and burn their accounts. Lots and lots of noise about how far stocks have run, how expensive stocks are, how the day of reckoning was near and how the end of the world will soon follow. After all of that noise and screaming and shouting accompanied by intense hand-wringing, the Dow will finish 0.50% lower than where it closed last Friday as will the S&P 500 and the Nasdaq (at the time of this writing). So, a whole lot of shouting and screaming and attempts to scare everyone with no real change at all.
C'est la vie.
Oh, and by the way, I don't see much of that Dow 20,000 breathlessness on the boob tube much anymore. I guess it will start up again next week. Spare us!
We had an interesting week as far as earnings were concerned. Companies that reported great numbers, ala Goldman Sachs (GS) , but had run way too much since President Trump won the election saw their shares drop. On the flip side you had Netflix (NFLX) , which had actually lagged the indices since election night, report strong results and actually see the shares pop. So, a definite tale of two stocks, both great franchises and both with stellar results but reaction to their results was a drop for one and a pop for the other.
I expect the same going forward. Companies that were caught up in the euphoria since the election and have rallied way too far will see their shares pull back, no matter how strong the numbers and guidance looks. Meantime, most tech companies, which were sold off equally hard on the downside, will see their shares pop if the results and guidance are good.
As of this writing, there were no Fed heads scheduled to speak next week so at least we will be spared that drivel unless something changes in the schedule over the weekend.
As of the end of last week, we have had 50 of the S&P 500 companies report earnings and 88% of them reported higher EPS results, year on year, and 12% reported earnings declines on a year-over-year basis. Pretty good, I would say, no?
Key economic data to watch for next week here at home includes, but is not limited to, manufacturing PMI and Richmond Fed manufacturing on Tuesday, the usual jobless claims, Chicago Fed National Index, U.S. PMI, and new homes sales on Thursday, and on Friday fourth-quarter GDP and durable goods orders.
On the international economic data front, we have Japanese manufacturing on Monday, German and euro zone manufacturing on Tuesday, and U.K. GDP and Japanese CPI on Thursday.
Talking about international economic data, did you happen to catch the Chinese economic data released overnight on Friday? Retail sales were up 10.9%, industrial production jumped 6% and 4Q GDP was 6.8%. Yes, I know, the data is all manufactured and cooked up by the Chinese government willy-nilly. However, stop for a moment and think, "What if it isn't?" We will soon have a few premier Chinese companies reporting numbers for the December quarter that would be hugely and positively impacted by the big jump in retail sales. Something to think about, despite the hand-wringing about all data from China being manufactured, no?
Next week takes us into the heart of tech company earnings season with Yahoo (YHOO) on Monday after the close, Alibaba (BABA) before the opening bell and Seagate (STX) and Texas Instruments (TXN) after the close on Tuesday, AT&T (T) , eBay (EBAY) , Lam Research (LRCX) , Qualcomm (QCOM) and Western Digital (WDC) all reporting after the close on Wednesday and finally Action Alerts PLUS holding Alphabet (Google) (GOOGL) , Flex (FLEX) , Intel (INTC) , Juniper Networks (JNPR) , Microsoft (MSFT) , Paypal (PYPL) and VMware (VMW) are all reporting after the close on Thursday.
Whew, I am tired already.
On the lighter side:
"No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant." -- Warren Buffett
With that, I wish each and every one of you a safe and joyful (long) weekend with your loved ones. Thanks as always for reading my articles.
I guess no more "Go Cowboys" for a while now. Although a great season given Romo and back-up Moore both go down in the pre-season. Congrats on a great season to the entire Cowboys players and coaches.
