Earnings, GDP And The Fed Meeting

By: Kent Engelke | Capitol Securities

Last Monday, I wrote this could be a significant week. This Monday, I am writing last week was indeed significant.

Commenting first on earnings, profits have exceeded expectations, but the psychology has changed dramatically, the result of Facebook’s massive miss. In my view, most were trying to spin AMZN’s mixed report positively. As widely noted, both issues are heavily recommended and the ownership/concentration of wealth is unprecedented.

APPL reports this week. In my view, the hype going into its release is in no way near as great as the hype surrounding FB, NFLX, AMZN and GOOG, two of which greatly missed expectations, one whose results were mixed and the fourth, (GOOG), exceeded in almost every dimension.

I will argue if APPL misses, market volatility can increase considerably. [MSFT is the sixth name that has dominated market performance and its results exceeded expectations.]

Speaking of volatility, the NASDAQ opened considerably higher on Friday only to succumb to persistent selling though out the day, ending lower by 1.50%, selling in the mega capitalized and highest price stocks.

Commenting about second quarter growth, the GDP expanded by 4.1%, the greatest pace since 2014. Some, me included, thought the print would be higher. Inventories, which I view as a sentiment indicator, subtracted about 1% from growth.

Reflecting upon the draw down in inventories, should this not have been expected given the myriad of concerns surrounding trade? The question at hand is will these spent stores be replaced during the third quarter, hence increasing the potential growth rate?

Commenting about inflationary pressures, the core PCE rose 2% for the second consecutive quarter, which is at or above the Fed’s inflationary speed limit.

In my view, the sub-indices indicate an economy that is gaining momentum.

The two major events of the week are APPL’s earnings and the Fed meeting. No change is expected in monetary policy. Little deviation from last week’s congressional testimony is expected in the post meeting statement.

Last night the foreign markets were down. London was up 0.04%, Paris was down 0.24% and Frankfurt was down 0.21%. China was down 0.16%, Japan was down 0.74% and Hang Sang was down 0.25%.

The Dow should open nominally lower ahead of a big earnings week where expectations are high and nervousness surrounding several policy meetings of the world’s biggest central banks. The 10-year is off 7/32 to yield 2.98%.


Who was more impressed?

By: T.F. Stern | Self-Educated American

I recently had the opportunity to visit historic sites associated with The Church of Jesus Christ of Latter Day Saints (LDS).  Topping the list would be the Hill Cumorah where the Angel Moroni hid the record of his people so they’d be kept safe until hundreds of years passed, long enough for the United States of America to be established with a Constitution that protected individual liberty and religious freedom along with my being able to visit the house where the Angle Moroni appeared to Joseph Smith Jr., as part of the restoration of the gospel in its fullness.

In case you’re not familiar with the history of the LDS Church and the restoration of the Fullness of the Gospel by Joseph Smith Jr., it can be found through links provided by the LDS Church.  This painting is on display on the 2nd floor of the Joseph Smith Home.

When Joseph was a young man there was great excitement regarding the topic of religion; each sect trying to show they were the one to join.  Joseph found it all a bit confusing and wanted to be sure he was joining the right church; but found each sect seemed to interpret the Bible differently, so much so that making the decision to join impossible without more information.

He read from James 1:5, “If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him”.

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