Headlines This Week
- 40% of the S&P 500 companies have reported earnings thus far.
- 80% of those reporting have exceeded expectations despite an overall decline in S&P 500 third-quarter earnings growth.
- According to FactSet, companies with higher Global exposure underperformed, because of softer economy abroad and the strength of the U.S. Dollar.
- This is the 3rd quarter of declining year over year earnings, but overall revenue so far has increased by 2.8% in the 3rd quarter.
Money & Banking
- Both China and European Central Banks kept their rates unchanged.
- China’s one-year loan prime rate was kept at 4.2%.
- European Central Bank’s (ECB) deposit rate remains at -0.5%, the lowest on record.
The Week Ahead
Earnings season continues next week with 13 of our portfolio companies releasing results.
Alphabet (GOOGL) starts things off on Monday, with Merck (MRK), Pfizer (PFE), and Mondelez (MDLZ) following up on Tuesday. The majority of those remaining come through on Wednesday, including Apple (AAPL) and Facebook (FB), while Chevron(CVX) rounds things out on Friday.
- Analysts expect Chevron’s earnings to fall due to a tough third quarter for Oil.
- Apple recently reclaimed its $1 trillion valuation on the back of strong iPhone 11 demand, as well as its growing services sector.
- Alphabet and Facebook continue to come under governmental scrutiny for privacy concerns, amongst other issues.
There are a few notable stories coming out of the U.S. next week, with the Fed’s interest rate decision and the Q3 Gross Domestic Product figures out on Wednesday, and the Nonfarm Payrolls figure on Friday.
- Experts overwhelmingly (90%) believe the Fed will enact yet another 0.25% reduction in interest rates next week.
- The consensus Nonfarm Payrolls figure is right around 105,000 jobs added for the month of October.
Brexit is once again in the headlines as the European Union will need to agree to how long of a delay they grant this time around.
- Brexit was set to take place next week on October 31st.
- While the EU has agreed on the need for a delay, they are set to reconvene next week to determine how long of a delay they can accommodate.
The Bank of Japan is set to announce its own interest rate decision next week.
- While admittedly more mixed, the market seems to generally be leaning towards holding rates steady this time around.
Stock Highlights From Max
Tech on the lam
REIT holding Ventas Inc. (VTR) was stung by poor results from senior housing despite mostly good news in the medical office building and health research properties. With only one holding it may not be appropriate to list the REIT sector as the biggest laggard, so we will call out the health care sector for that distinction. The leading sector this week was energy as Philips 66 Co. (PSX) topped expectations by a wide margin. This, fueled by results from PSX on Friday energy stole the crown of the best sector from technology. Which had not one but three earnings season stars in…
- Lam Research Corp. (LRCX) beat earnings expectations on sales of $2.17 Billion, which was almost 7% lower than in 2018. All the excitement for the semiconductor equipment maker was centered on future guidance and hints of a gradual up-cycle in microchips. Speaking of microchips…
- Intel Corp. (INTC) helped confirm what was foreshadowed by Lam Research Corp. when the chipmaker surprised investors with their results. Intel topped expectations on the back of a spike in data center spending and improving the personal computer market. Intel also boosted future guidance. Results from both companies helped soothe investors who were caught off guard by poor results from a peer of Intel’s earlier in the week. Another earnings star from the technology space was…
- Microsoft Corp. (MSFT) also beat expectations. Revenue was up 14% year over year and outperformed in all segments. Azure, the cloud computing segment reported decelerating growth decline which was viewed very positively by investors. Azure grew revenue year over year by an astounding 63% but is lower than 64% it reported in the previous quarter and 73% the quarter prior to that.
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets over $1.3 billion.Overview
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.