Markets

Stocks making the biggest moves premarket: BA, NFLX, AOBC, KO & more

Check out which companies are making headlines before the bell: General Motors, Boeing — Shares of GM and Boeing fell more than 1 percent in the premarket after President Donald Trump’s top economic advisor Gary Cohn resigned amid a steel and aluminum tariffs debate. GM and Boeing heavily use metals, so tariffs on steel and aluminum could adversely impact their businesses. Netflix — Analysts at Stifel downgraded the streaming giant’s stock to “hold” from “buy,” citing its recent appreciation in value. “We are attracted to Netflix’s business and competitive position but believe share price may have sprinted ahead of fundamentals in the short-term,” the analysts said. American Outdoor Brands, BlackRock — American Outdoor Brands, known for...

The case for a rally just got murkier with Gary Cohn’s departure

Here’s the recipe for a market rally in the days ahead — get President Donald Trump talking softer on tariffs and get a benign wage growth report from the closely watched jobs numbers on Friday. That was the bull scenario for this week, but the case for a rally was made much cloudier with the departure of Trump’s top economic advisor Gary Cohn. Stock futures pointed to a sharply lower open after Cohn resigned late Tuesday. True, the markets have had issues with the whole Trump tariff story. It’s not about whether a soup can would cost a fraction of a penny more under the tariffs, as Commerce Secretary Wilbur Ross famously noted on CNBC last week. It’s vastly bigger than that. “We are in the best environment for global trade in more than a decade,” Jeff K...

Some Steel Sector Indicators

which should give you pause for thought about national-security-rationalized tariffs. Output stable, real prices up. Figure 1: Raw steel production, 2012=100, Seasonally Adjusted (blue, left log scale), and Producer Price Index for Cold Rolled Steel Sheet and Strip, Jun 1982=100, Monthly, Not Seasonally Adjusted deflated by CPI less food and energy, seasonally adjusted (red, right log scale). NBER defined recession dates shaded gray. Source: Federal Reserve Board and BLS via FRED, NBER, and author’s calculations. The recovery has been driven in part by already implemented trade measures (anti-dumping, safeguard), so not asserting that we shouldn’t try to mitigate the effects of excess steel capacity abroad. Rather, it’s not clear that Section 232 is the way to go. From Palette and Dawsey i...

Nearly 35 Years of Daily EPU Data, Plotted

Ed Hanson asserts that by showing a plot of monthly data constructed as an average of daily data, I am changing the message of the data. In order to assure people that the Trilateral Commission/the Illuminati/CigaretteSmokingMan haven’t “gotten to me” to manipulate the data, I’m going to show permutations of the Baker/Bloom/Davis Economic Policy Uncertainty (EPU) data, news based index. First, the standard monthly series, shown in this post. Figure 1: Economic policy uncertainty index (news) (blue), NBER defined recession dates shaded gray, vertical solid lines at change of administrations, light orange shading denotes Trump Administration. Source: PolicyUncertainty.com and NBER. Second, the daily data, with centered 7 day moving average.Figure 2: US daily Economic Policy Uncertainty index...

Cohn’s exit from the White House a negative for markets

Gary Cohn‘s exit from the White House is the loss of one of the most important pro-investor voices in the Trump administration and could be a negative for stocks and the dollar. “It would seem to be not business friendly, not something good for investors. He was the voice against some of the trade protectionism,” said Marc Chandler, head of currency strategy at Brown Brothers Harriman. Stock futures sold off on the news of Cohn’s departure, with the Dow losing an initial 300 points. “I think going forward you lose another voice of moderation,” said Chandler. Cohn had been reportedly opposed to President Donald Trump‘s plan to tax imports of steel and aluminum from all countries. He was an architect of tax reform. Treasury Secretary Steven Mnuchin o...

Sales at toymaker Lego fall for the first time in 13 years

Lego’s sales fell last year for the first time since 2004 as the Danish toymaker struggled with tough retail markets in Europe and North America, highlighting the challenges facing the new chief executive. The privately owned company, famous for its colorful plastic bricks, could be facing its biggest test since flirting with bankruptcy in the early 2000s after a sudden halt to more than a decade of strong growth. Sales fell 8 percent to 35 billion Danish crowns ($5.8 billion) in 2017, compared with a 6 percent increase in 2016 and a far cry from the 25 percent growth achieved in 2015. The company said overall consumer sales were flat, but the figures were affected by a clean-up of inventories that were set high at the beginning of the year in anticipation of growth. Lego saw “...

Stocks making the biggest moves premarket: TGT, AAPL, JWN, AMZN, HOG & more

Check out which companies are making headlines before the bell: Target — The retailer reported mixed quarterly results, with revenue surpassing expectations while earnings missed estimates. Target posted earnings per share of $1.37 on revenue of $22.8 billion. Same-store sales — a key metric for retailers — rose 3.6 percent in the quarter, topping expectations. Harley-Davidson — Harley-Davidson said retaliatory tariffs by other countries on its motorcycles would have a “significant impact” on the company’s sales. The company made the statement after European Commission President Jean-Claude Juncker said last week the European Union would impose tariffs on Harley’s motorbikes if U.S. President Donald Trump implemented steel and aluminum tariffs. Apple — Baird reitera...

Target shares drop on profit miss, wage hikes offset sales gains

Target‘s refurbished stores with more open layouts and the launch of several exclusive home furnishing and apparel brands are helping lure more people to shop there. However, a decision to hike employee wages weighed on profit margins during the fourth quarter. The discount retailer fell short of earnings estimates, sending shares down more than 3 percent Tuesday morning on the news. Here’s what the company reported for the quarter ended Feb. 3, compared with what analysts were expecting based on a Thomson Reuters survey: * Adjusted earnings per share: $1.37 vs. $1.38 expected. * Revenue: $22.8 billion vs. $22.5 billion. * Same-store sales: 3.6 percent growth vs. an increase of 3.1 percent. Target’s holiday quarter was robust in comparison to some of its peers, with same-...

Is Trump “Special”? Economic Policy Uncertainty Levels in Perspective

The answer is “yes”. Reader Ed Hanson asserts that economic policy uncertainty is no higher under Mr. Trump than during other periods of election, transition and new administration. Your post always have a point, so what is it? Are you showing that for the Trump administration, and despite the constant anti-trump rants we read and see in the main media, that uncertainty index is generally falling? And that means what, that Trump seems better than most recent politicians to mean his promises and to follow through on them and people are now realizing this and uncertainty is reduced? Sure wish you had extended your plot to cover other administrations so we could see if the pattern of rising uncertainty just before gaining office, followed by reducing uncertainty is the normal trend. Is it? I ...

Economic Policy Uncertainty and Risk Indices: March 5, 2018

Remember those quaint notions of policy uncertainty holding back growth? Well, what to make of recent moves in uncertainty and risk indices, given all the talk of trade wars? Figure 1: US daily Economic Policy Uncertainty index from Baker, Bloom and Davis (dark blue), and seven day centered moving average (red). Orange shading denotes Trump Administration. Source: policyuncertainty.com, and author’s calculations. Figure 1: Seven day centered moving average of US daily Economic Policy Uncertainty index from Baker, Bloom and Davis (red, left scale), and VIX (blue, right scale). 3/5 observation for 2PM EST. Orange shading denotes Trump Administration. Source: policyuncertainty.com, and author’s calculations.

Trump may have doomed North American free trade deal

President Donald Trump’s declaration of broad tariffs on imported steel and aluminum complicates North American trade talks and threatens to doom them altogether. Negotiators have been meeting in Mexico this week in the seventh round of talks aimed at revamping and modernizing the 24-year old North American Free Trade Agreement. On Monday, trade representatives from the three countries are expected to comment on their progress. But now NAFTA is caught in the middle of what could rapidly become an ugly global tit for tat against U.S. trade actions. The European Union has already threatened tariffs on American jeans, bourbon and motorcycles, and other countries have said they could retaliate. “The key question people are asking is whether this is a signal that the administration ...

Angry Birds’ head of games departs after profit warning

“Angry Birds” maker Rovio said on Friday its head of games was leaving, a week after the Finnish company issued a profit warning that sent its shares plunging 50 percent. “It’s time to pass the hoodie and move on,” Wilhelm Taht said in a statement, without giving reasons for his departure. Rovio said Taht was leaving with immediate effect for personal reasons and Chief Executive Kati Levoranta would assume his position for the time being. Rovio shares, which debuted at 11.50 euros ($14.16) apiece in September, fell a further 10 percent to a new low of 4.30 euros ($5.29) as the company gave new financial details that some analysts said were worse than expected, even after the profit warning. Last week, Rovio forecast a 2018 operating margin of 9 percent to 11 p...