Markets Breathe As Earnings Roll In, Powell Presser, and Super Bowl Week-
I'd love to have a lasting impact as far as growing the game. It would be cool to be remembered as a major champion. I'd like to be remembered as a great golfer but also a great person, as far as growing the game and charity work. The whole well-rounded athlete. Rickie Fowler
If you are a sports fan, or you enjoy watching commercials, next week might be as good as it gets all year because a week from tomorrow is the Super Bowl. Here in Las Vegas, the town is always jammed with people visiting to enjoy the week. All over the United States and the globe, families, and friends get together to watch the two remaining teams play to decide which one will be the champion. In most years and sports, the championship-caliber groups have very few weaknesses and are considered well balanced. In drawing a comparison to the sports world, if one wants superior performance with your investments, let's call it having better returns than the major market indexes, I believe you have to invest using multiple approaches and in a wide range of categories. In this regard, especially with respect to stocks, you want to own great businesses. It is the foundation of a good portfolio, but how you come to the conclusion a holding is a fabulous business can be viewed from a wide variety of lenses. It is in this realm that the flexibility of your investment process is important. Growth and value are tied at the hip, and a well-rounded investor can use both styles to find holdings that suit a client’s portfolio. Equally important is for investors to have a long time horizon. As we have repeatedly learned, markets are volatile, but great businesses seem to endure, adapt, and constantly improve and change to overcome competitors and grow larger, year after year, after year. The well-rounded investor, like championship teams, is able to constantly improve and bolster shortcomings in an effort to deliver returns.
In a shortened week, there were plenty of earnings reports of note. The chip sector generally had a nice week with good numbers posted by Texas Instruments and Xilinx, offset by poor guidance at the 800-pound gorilla, Intel. Southwest, long the best company in the airline's area, posted better profit and traffic figures than expected. Spice giant McCormick missed for the first time in many years and gave a downbeat forecast. Giants in the rail and pharma sectors, Union Pacific and Johnson and Johnson, beat expectations but the market remains unimpressed, especially with JNJ. Comcast posted a nice quarter with its well-balanced business of connectivity and content. In the oil sector, Halliburton exceeded estimates but warned about a slowing China and cutbacks in exploration and production budgets. Also in the energy area, the continuing crisis in Venezuela continues to emote rumors of sanctions from the Trump administration on Venezuelan oil, which could be either imports or exports. Venezuela’s heavy oil is exported to the Gulf Coast refiners. Refiners have been running at full capacities for a long time, but crack spreads for gas has dropped quite low, with distillate prices for diesel and jet fuel remaining solid. The oil majors will report their earnings in a week or so, and I am sure they will comment on that situation as well.
On deck for the market over the next five days will be the always important press conference by Federal Reserve Chairman Jay Powell. He is scheduled to speak on Wednesday after the Open Market Committee meets for two days. On the earnings front, plenty of heavyweights will report as well, including 3M, McDonald’s, Amgen, eBay, AT&T, Harley Davidson, HCA-Healthcare, Xerox, Wynn Resorts, and Rockwell Automation.
In the mess that we call politics, it seems appropriate that the government has been shut down for nearly a month. Both sides bear responsibility, and it is fitting and also unfortunate for the country. With air travel affected, and many predicting a more severe economic slowdown because of the political dysfunction, it seems self-inflicted wounds are the standard operating procedure of the United States government, regardless of which political party is running the show. It is further evidence of why trying to work on one's own situation, improving areas that need fortifying and being a well-balanced individual, just as Fowler suggests, are probably a better use of one’s valuable time.
Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog, Investing in securities involves risk and the potential loss of ones principal. Past performance is no guarantee of future results. All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation. The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.