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Business News Archives for 2018-08


It is the last trading day of the month of August. The S&P 500's incredible summer rally continues, as U.S. stocks are on track to post their fifth straight monthly gain. The S&P 500 has also performed surprisingly strong this month, as its 3% gain is its second-biggest rally in August since 2000. (LPL)

The S&P 500 Index closed at a new all-time high for four consecutive days this week. The longest such streak since six in a row to start 2018. The all-time record for consecutive new highs was 12 in a row in 1929, while in more recent times there was a streak of 11 in 1964. Interestingly, this is the first time the month of August has seen four consecutive new highs since 1987. New highs in August are somewhat rare, as since 1950, no month has "fewer" new highs than August. (LPL)

Consumer spending grew 0.4% month over month in July, boosting its year-over-year growth to 5.2%, the strongest pace since October 2014. Consumer spending accounts for about 70% of economic output. (LPL)

Join us this weekend on this great station for Financial Focus Radio, the truth can wealth building. This way people talk about the coming bear market.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Same store sales at Dick's Sporting Goods stores tumbled 4 percent during the latest quarter. Dick's raised its profit outlook for the full year. Dick's said online sales increased 12 percent during the quarter. (Reuters)

The Mortgage Bankers Association said total home loan application volume decreased 1.7 percent last week.

Tailored Brands said it expects second quarter earnings to be better than expected. The parent of the Men's Wearhouse and Jos. A. Bank clothing chains also said Chief Executive would retire at the end of September. (CNBC)

GDP revision reinforces solid second-quarter growth. Gross domestic product growth was revised up to 4.2%. The contribution to output from business spending was 0.15% higher and the contribution from net exports was 0.11% higher. This puts us on track for GDP growth in 2018 to be at or above 3%. (LPL)

Hood River-based, Tofurky, the vegetarian food-maker, is suing Missouri to defend its right to describe its products with meat terminology such as "sausage" and "hot dogs. The Missouri Cattlemen's Assoc supported the new law banning plant based products from using the terms. (AP)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      

 



The Conference Board's consumer confidence index rose to 133.4 in August, its highest level since October 2000.
Consumers expecting business conditions will get better over the next six months increased to 24.3 percent.

In June, home prices nationally rose 6.2 percent year-over-year, according to the S&P CoreLogic Case-Shiller Indices. That is down from the 6.4 percent annual gain in May.

Campbell Soup will announce this week that it does not plan to sell the entire company, according to sources quoted by the New York Post.

Data for July showed the U.S. merchandise trade deficit widened to $72.2B, its biggest m-o-m increase since March 2015. Last month's growth in the trade deficit was driven by a sharp decline in exports, reflecting the impact of imposed tariffs over the past few months. (LPL)

Record short position, those speculating on the direction of rates in 10-year Treasury futures, has increased to its biggest size on record.

Oreo's parent company Mondelez announced that its two newest iterations of the cookie, hot chicken wing and wasabi-flavored, are now available in China. (Fortune)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                    



Outstanding earnings season by many measures. Second quarter numbers were strong even without the boost from the new tax law, while guidance was generally positive despite tariffs and trade policy uncertainty. With just 15 index constituents left to report, S&P 500 Index earnings rose 25% year over year, nearly matching the 26% growth rate from the quarter before. Even without the boost from tax cuts (estimated 6-7%) earnings growth came in at a still-outstanding 18-19%. (LPL)

The S&P 500 just made its first new high in 7 months last Friday. Since 1950, the S&P 500 had gone more than 6 months without making a new high 18 other times. What happened after that first new high was made? It was higher a year later 17 times. (LPL)

Oregon has been a smoky place this summer and it comes with a cost. Wildfires have cost the Oregon Shakespeare Festival $2 million in lost revenue because of smoky conditions. (AP)

Oregon hazelnut farmers anticipate a bumper crop this fall and projects Oregon production will double over the next few years as newly planted planted acreage reaches maturity. (AP)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart. 



The Commerce Department said orders for U.S.-made capital goods increased 1.4 percent in July. Core capital goods orders increased 7.2 percent on a year-on-year basis.
 
If you were looking for relief on your state tax deduction you are going to be disappointed. The Treasury and IRS issued new rules to block high tax states' attempts to circumvent the new $10,000 cap on state and local tax deductions. (CNBC)
 
Procter & Gamble (PG) has applied to trademark millennial-friendly internet acronyms including "LOL," "WTF," "FML" and "NBD" for use on soap and cleaning products. (NY Post)
 
In the midst of the China currency and economic concerns of 2015, three years ago was the first time that the Dow ever fell 1,000 points. It didn't close down 1,000 points and on a percentage basis this wasn't the largest drop ever, but it was still a harsh reminder that volatility can come at any time. Only two other times in history has it dropped 1,000 points during the day and both of those were this past February. On a percentage basis, the Dow was down 6.62% at the lows three years ago today. The largest ever was 25.33% during the Crash of '87. (LPL)
 
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Short positions in Treasury futures were historically high just two months ago, and now they are 50% higher. Many of these short positions were put on over the last six months while the 10-year Treasury yield has hovered in its current 2.8-3.0% range. Yield moves meaningfully below that level could squeeze short positions, pressuring shorts to buy Treasury futures to cover their positions, which could pressure rates downward further. (LPL)

The Wall Street Journal reports that the unemployment rate for Americans ages 16-24 is at its lowest since 1966. The unemployment rate is 9.2 percent, down from 9.6 percent last year. However, the share of young people looking for work is below the peak hit in 1989.

Barron’s says that the “combination of last winter’s brutal cold and this summer’s droughts has hurt” the wheat crop. Prices will reach “levels not seen since 2012,” with the USDA predicting global wheat production will fall to 730 million tons.  

ValueInsured Modern Homebuyer Survey found that in Q3 2018 only 48 percent of Millennials see value in buying a home, a decrease from 54 percent in Q2. Housing “confidence and enthusiasm of Millennials has plummeted to a record low.”

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Today the current bull market tops the 1990s bull market as the longest ever. However, be aware that the 1990s bull market saw the S&P 500 Index gain 417%, while the current bull market is up approximately 320%—so you can’t call this the greatest bull market…yet. (LPL)

The S&P 500 Index made a new all-time high yesterday its first since January 26, 2018 (LPL)

Treasury yield curve flattens back to decade lows. The spread between 10- and 2-year Treasury yields is now back below 25 basis points. This bout of flattening is mainly being driven by a modest decline in longer-term yields over the past two weeks (as opposed to a rise in short-term yields). With market expectations pricing in a 90% chance of a September rate hike and a 55% chance of a subsequent December hike, upward pressure on the front end of the curve has not waned, despite risk-off sentiment leading to long-end bidding. (LPL)

Nabisco-parent Mondelez has redesigned the packaging of its animal crackers, showing the animals roaming free instead of in cages, after pressure from PETA. (AP)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



S&P 500 earnings growth is now tracking to +24.6% year over year for the second quarter. Revenue growth is tracking to +9.4% year over year. (LPL)

The Conference Board's Leading Economic Index increased 0.6% in July, its 26th consecutive monthly gain.  The LEI, which is a composite of 10 economic indicators (like manufacturers' new orders, stock prices, and weekly unemployment claims), shows that the economic expansion is still intact and healthy. The LEI is up 6.3% year over year. The longer-term trend in the LEI is especially important, as the LEI has turned negative YOY before every economic recession dating back to the 1970s. (LPL)

Guinness is opening the $90 million Guinness Open Gate Brewery & Barrel House Aug. 3 near Baltimore, its first U.S. brewery in more than 60 years. The attraction is expected to host 300,000 visitors a year. (CNBC)

Constellation Brands who for seven decades has made its money off beer, wine and whiskey, sees its future in marijuana. They will spend about $3.8 billion to boost its stake in Canadian grower Canopy Growth Corp., betting legalization will gain traction around the world and especially in the U.S. (FBN)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                     
 



The S&P 500 Index posted its most volatile week since early June. The index was up about 0.3% for the week, posting and average daily move of 0.7% over the period. The S&P 500 has closed within 2% of record highs for 12 consecutive trading days, the longest such streak since September 2017.  (LPL)

Economic data a mixed bag. The Philadelphia Federal Reserve's business outlook survey fell to 11.9, a 21-month low. Housing starts grew 0.9% last month (missing expectations of 7.4% growth) after declining 12.3% in June, indicating cooling in U.S. new-home construction. Applications for unemployment benefits fell to 212k last week. The 4-week rolling average for jobless claims is now 214k, hovering near its lowest point of the economic cycle. (LPL)

Intel, Oregon’s largest employer, has purchased a three-year-old Seattle artificial intelligence startup called Vertex.AI. The terms of the deal were not disclosed.
(Oregonian)

SodaStream the Israeli-based at-home carbonated drink-maker agreed to be bought by U.S. beverage giant PepsiCo for $3.2 billion in cash, or $144 per share. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart. 



Concerns about global trade and Turkey shouldn't be dismissed as misplaced or paranoia. Though mostly currency driven, we have seen some signs of fundamental deterioration recently in the form of earnings estimate reductions for the MSCI EM Index. Specifically, over the past three months, EM estimates for the next 12 months have come down by 3.9%, while comparable S&P 500 estimates have risen 3.5%. (LPL)

Wholesale used-vehicle prices climbed 1.51% last month. The increase in prices lifted the Manheim Used Vehicle Value Index to 136.9, the highest level ever recorded by the auto auction company. The index is also up 5.1% in the past year.

The Wall Street Journal reports the USDA monthly world Agricultural Supply and Demand Estimates, forecast that US soybean production will reach a record-high 4.6 billion bushels in 2018-19.

Bloomberg says Amazon captured around five percent of retail spending in the US last year, excluding cars, car parts and restaurants and bars. Rival Walmart took around 10 percent of such spending. With Amazon’s revenue increasing its share of that spending may rise to six percent this year.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      
 



U.S. stocks halted a multiday tumble yesterday, with the three main equity benchmarks advancing as Turkey’s currency slide abated, allowing investors to focus instead on a healthy domestic economy and strong corporate results.

The National Federation of Independent Business small business optimism index rose 0.7 points in July to 107.9. The NFIB said it was the second-highest level in history and just under the 1983 peak.   The single most important issue flagged by small businesses were concerns about the quality of available labor.

The debt burden of U.S. households is the smallest it’s been in nearly 16 years.  Household debt — including mortgages, credit cards, auto loans, student loans and other credit, is $13.29 trillion, which relative to disposable income is the lowest it’s been in 16 years.
Home improvement retailer Home Depot reported earnings and revenue that beat expectations and upped their outlook. It is the continuation of a trend that has persisted for a few years: in the face of lean housing inventory and little new supply on the horizon, Americans are increasingly choosing to take matters into their own hands.

With Northwest Quadrant Wealth Management, I’m Tyler Simones



U.S. stocks closed lower yesterday, with the S&P 500 down for a fourth straight session as the ongoing turmoil in Turkey dampened investors’ appetite for riskier assets.

Don’t look now, but on August 22, 2018, this current bull market in stocks will top the 1990s bull market as the longest ever. However, be aware that the 1990s bull market saw the S&P 500 Index gain 417%, while the current bull market is up approximately 320%—so you can’t call this the greatest bull market…yet.

2nd Quarter earnings season is entering the final stretch. With more than 90% of S&P 500 Index companies having reported second quarter results, year-over-year earnings growth for the index is tracking to an impressive +24.4%, nearly 4% above expectations as of June

Shares of the food distribution giant Sysco were sharply higher yesterday after the food distribution giant reported a fiscal fourth-quarter profit and revenue that topped expectations.  Sysco’s stock has rallied 33% over the last 12 months.

With Northwest Quadrant Wealth Management I’m Tyler Simones



Turkey’s problems are spilling over into the broader markets this morning, as the Lira touched an all-time low against the dollar and plunged 13% overnight as Turkish president Erdogan called on citizens to convert their dollars and gold into Lira.  The Euro also touched a 13 month low against the dollar over concerns of European Banking exposure to Turkey.  

In Delaware, US Federal Judge Leonard Stark has authorized the seizure of Citgo Petroleum to satisfy a Venezuelan government debt owed to a defunct Canadian gold miner.  The ruling could likely set off a scramble among Venezuela’s many unpaid creditors to wrest control of its only obviously seizable U.S. asset, as Venezuela’s oil production continues to plummet.  

With us GDP growing at a 4.1% clip last quarter and the job market solid, consumer inflation has become the wild card for economists. The latest figure, which could be the highest in more than six years, will be released this morning by the Labor Department. Expectations are for CPI to have increased 2.3% Y/Y, and headline CPI (including food and energy) to have reached a 3% Y/Y pace for the first time since December 2011.

With Northwest Quadrant Wealth Management a Registered Investment Advisor I am Josh Fenili.



U.S. stocks closed mostly lower yesterday following a batch of weak earnings reports from high-profile firms such as Walt Disney and Snap.  However, the Nasdaq extended its winning streak to a fifth session as technology shares outperformed the broader market.

China just announced they are slapping additional tariffs of 25 percent on $16 billion worth of U.S. imports from fuel and steel products to autos and medical equipment, the Chinese commerce ministry said, as the world's largest economies escalated their trade dispute.

The CEO of Tesla, Elon Musk, famously tweeted earlier this week that he was considering taking the company private.  Now the Securities and Exchange Commission has made inquiries to Tesla over Elon Musk's going-private tweet, including examining whether the chief executive's statement was factual and why the disclosure was made on Twitter rather than on an official filing.  We are sure to hear more about this in the future.

As we near the end of earnings season, two trends are clear: Profits have gone through the roof, helped by lower corporate income taxes. But sales have also increased remarkably, and that trend started before the tax cuts went into effect.

With Northwest Quadrant Wealth Management, I’m Tyler Simones
 



The S&P 500 Index posted its second highest close ever yesterday, less than 0.5% away from a new all-time high. The S&P 500 has now gone 133 trading days (over six months), without a new high. Since the bull market started in March 2009, this is now the second longest stretch without a new high (the longest was May 2015 until July 2016). (LPL)

10-year hits the 3% wall. The 10-year Treasury yield has run up against the psychological 3% level yet again. After closing barely above 3% last Wednesday for the first time since May 22, the 10-year yield has steadily inched back down, currently trading near 2.95%. (LPL)

Tariffs are having little impact on overall earnings guidance. Forward four quarter estimates have impressively risen 0.6%. With less than 100 S&P 500 companies left to report (47 coming this week) suggests tariffs have had little broad impact on companies' outlooks. (LPL)

The Wall Street Journal reports employment in the manufacturing sector has increased since the end of the last recession in 2009, and growth has increased over 2018. Factory hiring is more than twice as strong this year as it was during January- July 2017.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



With 404 S&P 500 Index companies having reported second quarter 2018 earnings results, a solid 79% have exceeded earnings targets, delivering robust 23.5% year-over-year growth on a nearly 3% upside surprise. Revenue growth of 9.2% is a solid 1.1% above expectations. (LPL)

S&P 500 on its hottest streak of the year. The S&P 500 capped its fifth straight positive week. The first such streak since the week ending Dec. 22, 2017. Five-week winning streaks are a rare feat of strength for the S&P 500: the index has posted 8 five-week winning streaks since February 2013 (and five 6-week winning streaks over that same period). The S&P 500 gained 0.8% last week.  (LPL)

More trouble for Wells Fargo. According to the Wall Street Journal it is under scrutiny from federal regulators over the bank's purchase of tax credits designed to fund low income housing.

The laws of economics still apply. Supply and demand rule the day. Oregon report enforcement found nearly 70 percent of the legal recreational marijuana grown goes unsold. (AP)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      
 



The Labor Department  says a record 155,965,000 people were employed in July, the 11th record-breaker since President Trump took office 19 months ago. The unemployment rates for adult men (3.4 percent) and Whites (3.4 percent) declined in July. The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), and Blacks (6.6 percent) showed little or no change. The unemployment rate for Hispanics hit a record low of 4.5 percent. The labor force participation rate, at 62.9 percent in July, was unchanged. Hourly earnings rose by 7 cents to $27.05. For the year, hourly earnings have increased by 71 cents, or 2.7 percent.

Milwaukie, Oregon-based Bob's Red Mill Natural Foods says that Bob Moore will give up the CEO title 40 years.
Dennis Vaughn, the company's chief operating officer and vice president of operations, will take over as CEO. Moore, 89, founded the company in 1978. (PBJ)

Forbes contributor Jon Bird says consumers are “turning a blind eye to the environmental cost of online retail, particularly when it comes to packaging.” For instance, Blue Apron “sends out around 8 million meals a month, each one containing two six-pound ice packs,” and the “freezer pack waste is about 192,000 tons per year.”

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



The US economy added 157,000 jobs in July according to the US Department of Labor. The unemployment rate stands at 3.9%.

Global manufacturing activity is slowing. Markit's global purchasing managers' index slipped to a still expansionary 52.7. Eurozone activity held steady. China's reading slowed for the second straight month, which reflects some impact from ongoing trade disputes. (LPL)
The official ISM Manufacturing Index in the U.S. came in at 58.1 in July, adding to evidence that tariffs and risk of escalation are beginning to impact US manufacturers. However, this reading is still quite strong. (LPL)

U.S. and EM still look like better bargains than Europe. The S&P 500 Index is trading at a reasonable 16.5x earnings estimates for the next four quarters, 2% above the post-1995 average. The MSCI Emerging Markets Index, at 11.5x, is trading 3% below its average for this period. Europe, at 14x, is trading 12% above its 23-year average which, given that market's relatively more defensive sector mix, is expensive.

Join us this weekend for Financial Focus Radio. Check listings at www.financialfocusrasdio.com .

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



U.S. stocks traded mostly lower yesterday after the Federal Reserve left interest rates unchanged but signaled another imminent rate increase.  Fresh worries over the U.S.-China trade friction dampened investor sentiment although positive results from Apple buoyed the tech sector and helped the Nasdaq to keep a foothold in positive territory.


According to the payroll company ADP companies in the private sector added 219,000 new employees to their payrolls in July, showing that firms are managing to fill a record number of job openings despite growing shortages of skilled labor.


According to data from S&P Dow Jones Indices, 80% of the S&P 500 stocks that have reported second-quarter earnings so far have topped profit expectations, well above the historical average of 67%.


Car maker Tesla reported 2nd quarter earnings losing more than expected.  Tesla said they lost $718 million, or $4.22, in the quarter, compared with $336 million, or $2.04 a share, in the year-ago period.  The company continues to have a very high cash burn rate.

With Northwest Quadrant Wealth Management, I’m Tyler Simones


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