DAILY MARKET REPORTS
- The Dow Jones Industrial Average fell Friday, on track for its first weekly decline in seven weeks, as worries about trade tensions and slowing growth sent markets around the world sliding.
- Friday’s fall builds on Thursday’s declines, when the blue-chip index fell more than 200 points as White House economic adviser Larry Kudlow said the U.S. and China were still “far away” from securing a trade deal.
- Despite some disappointing economic data, many investors continue to believe the global expansion has further room to run.
- A report Friday showed German exports rose more than expected in December, offering analysts some relief after data a day earlier showed an unexpected slump in industrial production at the end of the year.
- Skechers USA soared 17% after the shoe company offered a stronger-than-expected first-quarter outlook.
- Mattel jumped 25% after its results topped analysts’ estimates for earnings and revenue.
- Tata Motors shares dropped as much as 30% after a surprise impairment charge at Jaguar Land Rover that amounted to more than half of its market capitalization.
US FINANCIAL MARKET
Philip Morris International beats earnings, revenue expectations
- Net sales declined nearly 10% to $7.5 billion, more than the $7.39 billion in revenue expected by Wall Street.
- When excluding currency, sales declined 4%.
- Cigarette shipment volume fell about 3% to 190.25 billion units in the quarter.
- Heated tobacco shipment volume fell 23% to 12.17 billion units overall.
- PMI reported fourth-quarter net income of $1.91 billion, up from $694 million a year earlier beating consensus.
- For 2019, PMI forecasts reported diluted earnings per share of at least $5.37. Analysts are expecting $5.29 per share.
- PMI’s forecast includes an expected decline in volume of about 1.5 to 2%, which PMI says compares to the total international decline, excluding China and the U.S., of about 2.5% to 3%.
Expedia profit falls as it faces a legal fight with United Airlines
- Expedia boosted fourth-quarter revenue by selling more hotel rooms and airline tickets, but write-downs pushed profit down 69%.
- Revenue rose 10% to $2.56 billion, compared to an expected $2.54 billion.
- Gross bookings jumped 11% to $22 billion in the quarter, and 13% to $99.7 billion over the full year.
- Net income fell to $25 million from $53 million a year earlier as the company booked $80 million in impairment and legal charges not present in 2017, but adjusted EPS beat estimates.
Phillips 66 quarterly profit beats on higher refining margins
- U.S. refiner Phillips 66 posted a better-than-expected profit as a fall in Canadian crude prices boosted its refining margins, sending its shares up 6% in premarket trading.
- The refiner’s utilization rate, the percentage of the total equipment or refinery involved in processing crude, reached 99%.
- The company said its realized refining margins rose to $16.53 per barrel in the fourth quarter, from $8.98 per barrel a year earlier.
- On an adjusted basis, net income rose to $2.26 billion in the quarter, from $548 million a year earlier, well ahead of expectations.
News Corp tops profit estimates as property listings unit grows
- Rupert Murdoch-controlled media group News Corp topped Wall Street estimates for quarterly earnings and revenue on Thursday, driven by stronger sales at its online real estate listings unit.
- Overall, News Corp’s revenue climbed 21% to $2.63 billion in the quarter, above the $2.61 billion expected by analysts.
- Revenue from its digital real estate services rose 7% in the final quarter of 2018, cushioning declines at its dominant news and information business that houses the Wall Street Journal and Dow Jones Newswires.
- Net income was $95 million, compared with a loss of $84 million a year earlier that reflected a $174 million expense related to changes in the U.S. tax law.
Mattel posts surprise profit as Barbie makeover lifts sales
- Mattel posted a surprise fourth-quarter profit on Thursday, as the toymaker benefited from a makeover of its iconic Barbie doll, while keeping a tight lid on costs, sending its shares soaring 19% in extended trading.
- Overall, Mattel’s net revenue fell 5.4% to $1.52 billion, but was still above analysts’ estimates of $1.44 billion thanks to sales rising 12% for Barbie and 9% for Hot Wheels, handily beating estimates for both brands.
- Gross sales in North America fell 10.1% to $744.5 million, reflecting Mattel’s struggles with finding a major retailer to make up for lost sales from the shuttering of Toys ‘R’ Us.
- Mattel reported net income of $14.9 million in the quarter, compared with a loss of $281.3 million a year earlier, when it took a one-time charge related to changes in U.S. tax laws.
Hasbro suffers as lack of Disney Princess movie adds to Toys “R” Us woes
- Toymaker Hasbro missed estimates for quarterly profit on Friday as the absence of a major Disney movie release compounded its struggles to recover sales lost from the collapse of retailer Toys “R” Us, sending its shares down 10%.
- Revenue fell to $1.39 billion in the fourth quarter, from $1.6 billion a year earlier, while analysts were expecting $1.52 billion.
- Net revenue in Harbro’s Partner Brands division, which makes Disney dolls and Star Wars action figures, fell 20% in the quarter.
- The company reported net income of $8.8 million, compared with a loss of $5.3 million a year earlier, when it took a one-time charge related to changes in U.S. tax laws.
Skechers surges 16% after ‘a year of record sales’ and strong guidance
- Skechers stock rocketed 16% higher in trading Friday after the shoemaker gave strong profit guidance for the quarter ahead while reporting better-than-expected fourth-quarter earnings Thursday evening.
- Skechers had record sales of $1.08 billion, driven in part by an 18.4% increase in international wholesale sales.
- The company posted net income of $47.4 million compared to a loss of $66.7 million a year ago due to a charge from U.S. corporate tax reform.
- Skechers provided a first quarter 2019 earnings forecast of 70 cents a share to 75 cents a share, well above Wall Street’s expectation of 63 cents a share.
Coty rebounds, sees profit in second half; shares surge
- Cosmetics and perfume maker Coty said it expected to post a profit in the second half of fiscal 2019 as it reported holiday quarter revenue and adjusted earnings that beat Wall Street estimates, sending its shares up 19%.
- Net revenue fell 4.8% to $2.51 billion in the second quarter, but beat expectations of $2.47 billion.
- In the second quarter, sales in its luxury beauty segment rose 7%, beating market expectations.
- Net loss was $960.6 million in the quarter, compared with a profit of $109.2 million a year earlier, as the company incurred an asset impairment charge.
Amazon CEO Jeff Bezos Accuses Tabloid of Attempted Blackmail
- Jeff Bezos, founder of Amazon.com, accused National Enquirer’s publisher of trying to blackmail him by threatening to release embarrassing photos, escalating a fight that began with the tabloid’s revelations of his alleged extramarital affair.
- In a lengthy post, Mr. Bezos alleges that American Media demanded that he call off investigators he brought in to determine how the Enquirer obtained his personal text messages for the initial article and whether it had untoward motives.
- Mr. Bezos, who also owns the Washington Post, said he resisted the alleged extortion attempt.
- He included emails he said his legal team received from executives at American Media that detailed the photos the tabloid threatened to run, including sexually explicit selfies of the tech tycoon.
Arconic Eyes Breakup After Strategic Review
- Arconic executives are planning to break apart the company, culminating a long-running strategic review after nixing a potential deal to go private and replacing the chief executive.
- The aluminum–parts maker on Friday said it plans to separate its portfolio into two units—aerospace-focused engineered products and forgings, and global rolled products aimed at the auto industry—and spin off one of them.
- The company, a big supplier to Airbus, Boeing, and jet-engine makers, also said that it would sell businesses that don’t fit into the newly created units.
Dell explores sale of cybersecurity company SecureWorks – sources
- Computer maker Dell Technologies is exploring a sale of SecureWork, a U.S. provider of cybersecurity services with a market value of close to $2 billion, people familiar with the matter said on Thursday.
- A sale of SecureWorks, in which Dell holds an 85% stake, would allow the latter to trim its $50 billion debt pile, after it decided to become a publicly traded company last year through a complex deal involving its software subsidiary VMware.
- SecureWorks is working with investment bank Morgan Stanley on a sale process for the entire company that is in its early stages, the sources said, asking not to be identified because the matter is confidential.
US ECONOMY & POLITICS
No talks between Trump and China’s Xi before trade deadline
- U.S. President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal.
- The remarks confirmed comments from administration officials who said the two men were unlikely to meet before the deadline, dampening hopes of a quick trade pact and sparking a drop in U.S stock markets.
- If the talks do not succeed, Trump has threatened to increase U.S. tariffs on Chinese imports. Another round of talks is scheduled for next week in Beijing.
U.S. considers withdrawal of zero tariffs for India – sources
- India could lose a vital U.S. trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies, people with close knowledge of the matter said.
- A move to withdraw the Generalised System of Preferences (GSP) from India, the world’s largest beneficiary of a scheme that has been in force since the 1970s, would be the strongest punitive action against India since President Trump took office in 2017.
- The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way Amazon.com and Walmart-backed Flipkart do business in a rapidly growing online market set to touch $200 billion by 2027.
- The U.S. Trade Representative (USTR) is completing a review of India’s status as a GSP beneficiary and an announcement was expected over the next two weeks.
U.S. Military Sets April Target Date for Leaving Syria
- The Pentagon is preparing to pull all U.S. forces out of Syria by the end of April, even though the Trump administration has yet to come up with a plan to protect its Kurdish partners from attack when they leave, current and former U.S. officials said.
- With U.S.-backed fighters poised to seize the final Syrian sanctuaries held by Islamic State in the coming days, the U.S. military is turning its attention toward a withdrawal of forces in the coming weeks, these people said on Thursday.
- While President Trump has put no firm deadline on withdrawing troops from Syria, he has directed the Pentagon to get all forces out of the country, an order that has led to the current U.S. military timeline to leave by the end of April.
Another Virginia Official Has a Yearbook with Blackface Photos
- A top Republican Virginia lawmaker was forced to defend his role editing a college yearbook with photographs of students in blackface, as the state’s political crisis spread to both parties Thursday.
- Senate Majority Leader Thomas Norment served at Virginia Military Institute as managing editor of the 1968 yearbook that included the blackface photos and racial slurs.
- Gov. Ralph Northam, a Democrat, faces calls to step down following the emergence last week of a photo from his medical-school yearbook that showed a person in blackface and another in Ku Klux Klan garb.
- Mr. Northam now says he wasn’t in the picture, after first saying he was.
Acting Attorney General Agrees to Testify Before Congress
- Acting Attorney General Matthew Whitaker is expected to testify before Congress on Friday, after a dispute between Democrats and the Justice Department over his conversations with the White House on the special counsel’s Russia investigation threatened to forestall the appearance.
- Mr. Whitaker’s late Thursday agreement to testify Friday morning narrowly averted a showdown with Democrats who are eager to use their newfound power to probe the Trump administration.
- Democrats have vowed to press Mr. Whitaker about a number of issues, namely whether he has revealed anything about the investigation to Mr. Trump. In the past, Mr. Whitaker has been openly critical of Mr. Mueller’s probe.
‘Green New Deal’ Democrats Position Climate Change as Central Issue in 2020
- Democratic officials and activists are pushing the party to unify behind a plan to quickly wean the U.S. economy off fossil fuels and cement climate change as a central issue in the 2020 election.
- The plan, released on Thursday and dubbed the “Green New Deal,” aims to dramatically overhaul the country’s energy and transportation infrastructure to “achieve net-zero greenhouse gas emissions” in the next 10 years.
- The Green New Deal offers Democratic candidates for president a contrast with President Trump, who has cast doubt on the human role in climate change and on predictions by U.S. government scientists that climate change could cost the U.S. economy hundreds of billions of dollars a year by the end of the century.
EUROPE & WORLD
German exports rise more than expected in bright spot for economy
- German exports rose more than forecast in December in a rare positive surprise, contrasting indications that the eurozone’s largest economy may be slowing.
- Exports rose to €96.1bn, 1.5% more than the previous month, but were down 4.5% from a year earlier, while imports rose 1.2%.
- A Reuters poll showed analysts expected monthly exports and imports to rise 0.2% in December.
- Nonetheless, the country’s surplus fell in 2018 from the previous year, with the foreign trade balance at €227.8bn, down from the 2017 figure of €247.9bn, the Federal Statistics Office said on Friday.
Tata Motors posts record $4 billion loss on Jaguar woes, shares crash
- Jaguar Land Rover’s owner Tata Motors stunned markets by posting the biggest-ever quarterly loss in Indian corporate history of about $4 billion on slumping China sales, sending its shares crashing as much as 30%.
- Tata Motors also warned that the Jaguar Land Rover (JLR) unit, which brings in most of its revenue, would swing to an operating loss in the year to March versus an earlier projection for breakeven, given weak sales at the luxury British carmaker.
- Tata Motors turned in a third-quarter loss of 269.93 billion rupees ($3.8 billion), more than half its current market capitalization of $6.1 billion, mostly due to a massive impairment at JLR. Analysts were expecting a profit.
- Tata Motors took a non-cash charge of 278.38 billion rupees for an impairment at JLR in the quarter. Changes in market conditions, especially in China, technology disruptions and rising cost of debt led to the charge.
Birkin bag maker Hermes says Chinese sales momentum still strong
- French luxury handbag label Hermes said on Friday that sales momentum in its Chinese stores stayed strong in the fourth quarter, adding to reassuring signals from rivals over enduring demand in one of the industry’s biggest markets.
- Fourth quarter revenues rose 10.1% on a reported basis to 1.7 billion euros ($1.93 billion).
- Sales in Asia Pacific, excluding Japan, were up 13.1% at constant currencies, picking up from 11.7% growth in the third quarter.
- The French label, whose $10,000-plus Birkin bags are famed for drawing waiting lists, said it expected its operating margin to be close to 34% for 2018, potentially dipping from the 34.6% record reached in 2017.
Margin concerns dampen L’Oreal shares after solid sales report
- Disappointment about margins dampened enthusiasm for L’Oreal’s shares on Friday even after the world’s biggest beauty company reported forecast-beating sales figures for the fourth quarter.
- Sales rose 2.8% for the quarter in that division on a like-for-like basis, which strips out currency effects and acquisitions, up from 2.3% a quarter earlier.
- For 2018 as a whole, operating profit rose 5.3% to 4.7 billion euros ($5.3 billion), giving a margin of 18.3% of sales, up from 18% at the end of 2017.
- Earnings per share rose 6.5% to 7.08 euros.
Sony stock jumps after first-ever share buyback announcement
- Sony announced its first-ever major share buyback on Friday, worth 100 billion yen ($910 million), helping its stock recover from a hammering just days earlier when investors freaked over lackluster earnings.
- Sony said its buyback, its first ever aimed at boosting shareholder returns, will be equivalent to 2.36% of its outstanding shares and will be conducted through March 22.
- Sony shares plunged 14% to their lowest in over a year after the firm reported sagging numbers in its previously thriving gaming business. Sony also cut its outlook for imaging sensors, citing weakness in the global smartphone market.
Brazil’s Vale Evacuates Hundreds Over Safety Fears at Another Dam
- Brazil’s Vale SA, the world’s largest iron ore miner, said Friday it is removing 500 residents from a rural town near a dam containing mining waste in Minas Gerais state.
- The evacuation comes two weeks after another Vale dam burst in Brumadinho town, also in Minas Gerais state, spewing a wall of mud from which 157 bodies have been recovered. Some 200 missing are feared dead.
- Separately, ArcelorMittal said Friday it had evacuated around 200 people from the area surrounding its Serra Azul mine also in the state of Minas Gerais, citing concerns over the safety of a tailings dam.
Saudi-Commissioned Report Contests U.S. Finding About Khashoggi’s Killing
- The Saudi government, unsurprisingly, is contesting a prominent element of a CIA assessment that concluded Saudi Crown Prince Mohammed bin Salman likely ordered the killing of Jamal Khashoggi, as Riyadh seeks to mend its reputation after the death of the journalist and political activist.
- A confidential report prepared for the Saudi public prosecutor found that none of the WhatsApp messages exchanged between Prince Mohammed and top aide Saud al-Qahtani on the day Mr. Khashoggi was killed, concerned the journalist or his murder.
- The existence of those messages between the Saudi prince and Mr. Qahtani—who oversaw the team that killed Mr. Khashoggi, according to people familiar with his work—was one piece of evidence cited in the highly classified CIA assessment.
- Intelligence officials acknowledged in the report, which was completed in November, that they were aware of the communications between the two men, but “we do not know their content.”
TODAY in HISTORY
- Mary Queen of Scots was beheaded. (1587)
- President Jimmy Carter revealed his plan to reinstate selective service draft registration. (1980)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.