The market reopens after being closed for Presidents Day. Investors will get the latest on U.S. brick-and-mortar shoppers via financial results from Walmart (WMT). And perhaps, this is the start of a greater understanding of the depths of the economic impact on American businesses from the coronavirus after Apple (AAPL) released a statement yesterday, noting it would not achieve its first-quarter revenue guidance. 

The guidance was wide, to begin with ($63.0 to $67.0 billion), which signaled confusion at the time of the last earnings release. The news sent equity futures slightly lower over yesterday, although everyone expected this sort of news from Apple and others with exposure to China. Meanwhile, one of the greatest drivers of the rally is the rally itself and its associated wealth effect. 

According to the University of Michigan Sentiment Survey, households now say their stock wealth is approaching $200,000 – spiking to its highest level ever.

The Wicker Revolution Has Run its Course

Pier 1 Imports (PIR) filed for bankruptcy protection yesterday, effectively putting itself up for sale. It’s been a tough slog for the company, which once set the furniture world and the stock market on fire.  I haven’t been there in years. The last time I was there, I just picked up a few candles.

So, while the filing isn’t a surprise, it’s a sad momentum that underscores the efficiency of creative destruction.

Portfolio Review

Today’s Session

News from two major names is moving the market this morning, although the initial reaction is more muted than anyone would expect. Apple (AAPL) guidance and Walmart’s (WMT) earnings disappointment.

Apple Investor Update on Quarterly Guidance

https://www.apple.com/newsroom/2020/02/investor-update-on-quarterly-guidance/

Cupertino, California — February 17, 2020 — As the public health response to COVID-19 continues, our thoughts remain with the communities and individuals most deeply affected by the disease, and with those working around the clock to contain its spread and to treat the ill. Apple is more than doubling our previously announced donation to support this historic public health effort.

Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.

The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.

The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.

Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations.

Walmart (WMT)

• Revenue $141.67 billion estimate $142.48 billion
• Comp store
• Transaction +1.0%
• Tickets +0.9
• Total +1.9%
• E-commerce +35%
• Earnings $1.38 negatively impacted $0.05 on legal actions in Chile and elsewhere.
• No business impact from coronavirus even at China stores

 It’s been three days since the last session, and we are beginning the day under pressure…let’s see if the talking heads can trigger more selling.