Yesterday, the S&P 500 opened at a new record high and held on for the rest of the session. For a moment, it looked as if the NASDAQ Composite might have joined the party, but it came up short at the last minute.  

The market breadth was more impressive than the actual print for the major indices:

NYSE

• Advancers: 1,588
• Decliners: 1,350
• Up Volume: 1.9 billion
• Down Volume: 1.7 billion
• New Highs: 154
• New Lows: 22

NASDAQ

• Advancers: 2,019
• Decliners: 1,116
• Up Volume: 1.4 billion
• Down Volume: 606 million
• New Highs: 167
• New Lows: 54

After the close, Alphabet (Google) posted quarterly financial results that initially sent shares tumbling more than 4%: 

• Revenue: $40.5 billion, consensus: $40.3 billion
• Earnings: $10.12, consensus: $12.42
• Ad Revenue: $33.92 billion
• Paid Clicks: +18%
• Traffic Acquisition Costs (TAC): $7.49 billion from $7.48 billion
• Properties Revenue: $28.65 billion +19%
• Pixel/Cloud Revenue: $6.43 billion (consensus $6.23 billion); a year ago: $4.64 billion

Google Building for Future

Google is investing big time in its future and its race against other behemoths, while all seem to ignore the fact the larger they get, the bigger the bullseye on their backs.

• Capital Expenditure (Capex): $6.73 billion from $5.28 billion

The company plans to triple its annual Cloud revenue from $8.0 billion, which played a role in the massive hiring during the quarter when new Cloud executives were among the 6,450 new employees. Interestingly, management suggested its recent breakthrough in quantum computing could power its cloud growth - no wonder the company’s rivals tried to throw cold water.

I wouldn’t consider selling the stock for a nano-second if I was a long-term holder. 

Any Bite Without FANG

Today is going to be a great test for the market, which has been rallying with so-called FANG stocks mixed at best. Keep watching semiconductors and software names to power Technology.

Coming into the week, FANG’s influence on the S&P:

• Capitalization: 9.6%
• Earnings: 3.6%
• Revenue: 0.4%
• Forward Price-to-Earnings (Forward P/E) with FANG: 17.1
• Forward Price-to-Earnings (Forward P/E) without FANG: 16.0

S&P 500 Index	+0.56%
Communication Services (XLC)	+0.93%
Consumer Discretionary (XLY)	+0.31%
Consumer Staples (XLP)		-0.20%
Energy (XLE)		-0.57%
Financials (XLF)	+0.52%
Health Care (XLV)	+1.03%
Industrials (XLI)	+0.28%
Materials (XLB)	+0.31%
Real Estate (XLRE)		-1.06%
Technology (XLK)	+1.27%
Utilities (XLU)		-1.3

Portfolio Approach

We closed on Fastenal (FAST) for an 8% gain over a very short period. I like the stock, but I wanted cash and felt that the stock price could meander and grind away in the near term.  We added a new Consumer Discretionary yesterday as well. 

Communication Services	Consumer Discretionary	Consumer Staples
1	3	2
Energy	Financials	Healthcare
1	2	2
Industrials	Materials	Real Estate
3	1	1
Technology	Utilities	Cash
3	0	1

Today’s Session

Earnings Parade

General Motors posted great financial results:

• Revenue $35.5 billion consensus $33.8 billion
• Earnings per share $1.72 consensus $1.31

Note: UAW strike had $1.0 billion negative impact on revenue during the quarter.

Operating Income

• North America $3.0 billion
• International -$63 million

GM Segment Volume	3Q2019	3Q2018	Share
Chevy Cars	75,000	118,000	7% from 10.4%
Chevy Trucks	249,000	231,000	30.8% from  30.8%
Chevy Crossovers	183,000	136,000	14.2% from 11.4%
US	739,000	695,000	16.6% from 15.8%

 

Cadillac	40,000	37,000
Buick	52,000	46,000
GMC	141,000	127,000

Merck (MRK)

• Beat revenue
• Beat earnings
• Guides higher

Pfizer (PFE)

• Beat revenue
• Beat earnings $0.75 estimate $0.62
• Guides higher

Kellogg’s (K)

​

• Earnings $1.03 estimate $0.91
• Organic sales $3.41 billion from $3.33 billion
• Organic net sales growth was supported by consumption growth momentum in key brands such as Pringles, Cheez-It, Rice Krispies Treats, and Pop-Tart

 

MasterCard (MA)

• Beat revenue
• Beat earnings $2.15 versus consensus $2.01
• Gross Dollar Volume

• Credit cards $245 billion +14.9%
• Debit cards $249 billion +8.8%

Auto Nation (AN)

• Comp store +3.0% consensus +1.9%
• Domestic car income +5%
• Import car income +2%
• Premium luxury car income +16%

The major indices are set to open under a little pressure. 

Comments

And this great President is going to be impeached while the economy and markets thrive. Disgusting. William on 10/29/2019 10:57:06 AM

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