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Morning Commentary

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By Charles Payne, CEO & Principal Analyst
4/25/2019 9:30 AM
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Question of the Week

Should corporate America do more to stop the Socialist movement?


Post your answer below.

 

Let’s call it a lackluster session at best. After hitting new all-time high points, the S&P 500 and the NASDAQ tried, but couldn’t pull away on Wednesday.

That being said, there never was a sense of panic and buyers nibbled at the deepest pullback levels.

Market breadth was largely even, except the 52-week milestones, which saw significantly more new highs than new lows.

Lots of investors are waiting for earnings, including the slate that posted after the close, headlined by Facebook (FB).

The biggest names came through big time.

Facebook (FB)

Management led the company to records in revenue, profits, and users. Even the revelation that management is bracing for a fine in the neighborhood of $3.0 to $5.0 billion from the Federal Trade Commission (FTC ) didn’t bother investors. On the contrary, considering the strength of user growth and activity, it’s clear people don’t mind the bad behavior or money-making efforts of Facebook as long as the product is free.

The company saw mobile ad revenue climb to 93% of the total from 91%, as capital expenditure (CAPEX) investments popped to $3.96 billion. 

The new hip metric was a winner. The Average Revenue Per User (ARPU) climbed to $6.42. The street was looking for $6.39. By the way, the company’s headcount surged to 37,773 +36%, which is huge.

Microsoft (MSFT)

It’s all about the cloud, and boy did the company shine in this business segment - $9.6 billion +41% year-to-year.

Business Segments, Percentage Change Y/Y Constant Currency:

Additional Big Beats

Image result for picture of lemons

 

For these stocks and their shareholders, life is a bowl of cherries (at least for today).

   For some shareholders, today will be all about sour lemons.

Should corporate America do more to stop the Socialist movement?

Abigail Disney, the great-niece of Walt Disney, has essentially declared war on CEO Robert Iger’s compensation package. His $65 million was an increase of more than 23%, even as the stock went the exact opposite direction last year. Since then, the stock has gotten hot, breaking out to an all-time high. 

Has Iger done enough to justify his paycheck, and are all the scare tactics by the left even close to being honest?

Disney by the Numbers

Revenue Trends:

Five Year Stock Performance

DIS

VIA

CBS

CMCSA

T

DOW

NASDAQ

 

S&P

 

68%

-57%

-10%

+61%

-13.65

+61%

+97%

 

+56%

 

 

I would say without looking at his peers, Iger’s pay seems egregious, but the stock performance has dwarfed his main rivals. 

I think corporate America is blowing it big time. The billions in buybacks in stocks will lose value while management also lays off workers. Disney is not the poster child for this, but it’s an easy target and should get comfortable with the notion it will be a symbol of unbridled corporate greed.

Portfolio Approach

Communication Services

1

Consumer Discretionary

4

Consumer Staples

1

Energy

1

Financials

1

Healthcare

1

Industrial

3

Materials

3

Real Estate

0

Technology

2

Utilities

0

Cash

3

 

Today’s Session

The market will see the NASDAQ and S&P open higher, but a big miss and poor guidance at 3M (MMM) is weighing heavily on the Dow Jones Industrial Average.

Beyond that problem, I’m thrilled with earnings results in general, but reactions to misses and earnings are so punitive it, underscores how difficult it is to be an investor these days.

Business investments is surging according to the Durable Goods report this morning – this is something that wasn’t supposed to happen this year because the effects of the tax cuts were assumed to be over. 

 


Comments
Corporate American must be responsible for educating by example and action why capitalism has blessed America and how Socialism fails because no one takes responsibility for their lack of actions. We don’t need a ruling class, in fact, we need to eliminate what we currently have and replace it with “real” citizens.

Tim Nesler on 4/25/2019 10:19:07 AM
Great points Tim....I fear corporate America is tone deaf and too arrogant to act appropriately. CP

Charles Payne on 4/25/2019 10:33:49 AM
Socialism has been proven to be unfriendly to private enterprise. Corporate America must start defending itself.

Larry Leonard on 4/25/2019 11:07:18 AM
Corporate American started losing it's way long ago. They got in bed with the government and started sending jobs away from America instead of taking the lead to solve the labor issues they helped create. They were paid extremely well with middle class jobs going away and CEOs making sickening high salaries, bonuses and benefits. I see socialism as the result of corruption and lack of true leadership in both Corporate America and our Governmnet.

Robert Clanton on 4/25/2019 11:22:33 AM
I am not sure how Corporate America can do much in this arena. They could run ads about how private enterprise raises everyone’s boat, but I am not sure that would overcome the chorus of socialist academicians who contribute little to society except their disproven opinions. The takers don’t want to listen to anyone except those who say they will give for free because everyone (regardless of how little they contribute) “deserves” a free ride. If Corporate America talks about how much they give to charity, it only reinforces the entitlement attitude that is the garden for socialist propaganda.

Bob G on 4/25/2019 11:29:33 AM
Charles, THANK YOU FOR SCHOOLING Stuart varney today. The mrkt breadth is incredible in the USA President Trump ECONOMY. Also President should REVERSE the Obama damages to our colleges, and schools. Paying money for No crimes REPORTED to fake school statistics, Florida coward county sherriff Israel waiting to go in during the ongoing mass shootings. At a school that DID have massive problems, but did NOT REPORT THEM, OR DISCIPLINE ANY STUDENTS, that would have been the red flag BEFORE SHOOTINGS, BUT the school got Obama praised and $$MONEY for NO REPORTS OF CRIME. Just clear out All the SOCIALIST COMMUNIST DEMOCRATS, Obama &HRC have filled the colleges with. Turning our next generation of lawyers, judges, and executives into INDOCTRINATION CAMPS FOR SOCIALISM COMMUNISM PARTY DEMOCRATS. Use their own affirmations action in a new way, a school or college MUST HAVE EQUAL hired& standing in status, tenured professors who are Republicans, Conservatives, and allow Differences in opinion &THOUGHTS, how are they to learn, if Not included are different OPINIONS, debates on FACTS, and TRUE DIVERSITY, NOT BY RACE ONLY, BUT POLITICAL and Historical values REASONS to learn, NOT banning them. We learn from HISTORY the bad, the good, it ALLOWS US The KNOWLEDGE of the difference between them. Thank you Charles PAYNE &FBN. THANK YOU PRESIDENT TRUMP. PLEASE AG, IG Investigate ALL of them, & bring EQUAL JUSTICE FOR ALL. KNOWLEDGE of how, who, & what a USA Coup means and almost did to our country, generations will judge why and be better from the FACTS.

Ed on 4/25/2019 12:18:01 PM
My sentiments as well Robert... Capitalism, like gravity, is a Law of Nature, any product ever created was through some form of competition... Socialism is trying to steal some of those benefits from the workers in the guise that it is to help every one else, while keeping a lump sum for those in control and their trustee supporters...

Andrew B Newallo on 4/25/2019 12:41:09 PM
Absolutely yes. If not for the sake of the country, at least for the sake of their shareholders.

David Howley on 4/25/2019 1:24:20 PM
Great point David its good and smart business. CP

Charles Payne on 4/25/2019 1:31:46 PM
Corporate America should tell the youth to: "Stop being stupid jerk slaves." (full stop, double pause... and then) Corporate America should tell those youth slaves to tap into the Republican Party's knowledge about how to do a small business and go out and start their own business. (full stop, pause... and then) Corporate America should tell those youth slaves how the corporate dynamic will use the cunning of its mind-set to use their own Socialist Movement stupidity to enslave them even more if they refuse to go out and start their own business and get the remaining stupid jerks be slave workers serving that business's self-interest. ||| Simple. Truth always is the easiest way to make people do what what would be best to support the sovereignty of the nation and support the individual sovereignty of our nation's population. "... and the pursuit of happiness."

Robert Fay on 4/25/2019 1:38:40 PM
Yes! If a crazed, communist ever get elected, it might be too late if the election also had more socialists elected. Our culture would die. Corporate leaders and boards should be out there now making the case for our wonderful system. They need to support efforts to educate the public, as reality is not being taught in most schools.

Mitchell Schiff on 4/25/2019 3:39:36 PM
Yes they should. They seem to work in the opposite direction though. It's as if they want us desperate and poor so they have continuous access to cheap labor.

PAULETTE WHINNERY on 4/25/2019 6:26:19 PM
Yes. Corporations should put effort into financial education for young people. Since history shows that socialism cripples an economy, students will see that it makes no financial sense.
Kids age 8 and up can benefit from financial education. Junior Achievement programs offer some of this education but it doesn't go far enough to address socialism. We know what makes a person/family/stat/nation successful financially. It is prudent to explain this to young people.
When young people are taught that the keys to good financial health include low debt, controlled spending, and saving methodically, they will determine that socialism runs contra to financial success. Corporate America can help with this effort - they have a lot of influence and benefit in the long run as well.

Erin on 4/26/2019 3:41:31 PM
Yes Erin great point. Ironically, its been socialist groups that have been pushing further into secondary schools and colleges. Its working as young Americans are abandoning capitalism and religion. CP

Charles Payne on 4/26/2019 3:46:32 PM
 

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