Afternoon Note

Great Signs Beneath the Noise
By Charles Payne, CEO & Principal Analyst
2/1/2017 1:48 PM

Increasing volatility and more down sessions are discouraging, but the day to day action in the stock market is often just noise.  For a greater sense of where the economy and stock market are heading, look under the hood where current trends clearly point to momentum.  Three items to consider today.

Manufacturing

The ISM manufacturing report is a blockbuster coming at its highest level since November 2014. 

Segments are growing at a faster pace:

• New orders 60.4,
• Production 61.4 from 59.4
• Employment at 56.1 from 52.8  

Perhaps the most telling and encouraging were responses on commodities.  All commodity prices from aluminum to copper, nickel, steel (carbon, cold and hot rolled), titanium and corrugated boxes were higher, and none were lower or in short supply.  Demand is driving commodity price increases.

AVY Earnings

Avery Dennison shares are surging today after the company posted impressive results.   The packaging and labeling company is a proxy for forward growth.

• Label and Packaging Materials
• Graphics and Reflective Solutions
• Retail Branding and Information Solutions
• RFID
• Performance Tapes
• Vancive Medical Technologies

Highlights

• Company margins climbed to 9.1 from 7.3
• Labels sales came in at $1.06 billion, +9.6%, with operating margin edging higher to 11.3 from 10.6
• Branding sales were $375.9 million, +3.5%, with operating margin surging to 9.3 from 3.2
• Industrial sales slumped to $111.1, -8.2%, and margins to 8.8 from 12.4

ADP Jobs Report

As I pointed out this morning, the ADP report was a blockbuster, and while the BLS report on Friday could be completely different, I think there will be similarities.   The working man part of the report is also heartening with massive reversal of fortunes in key areas.  

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