Earnings season got off to a reasonably good start, with 81% of the 28 S&P 500 companies exceeding estimates. Almost half of the companies discussed the impact of the hurricanes on the quarter, which has resulted in a reduction in the expected growth rate for the quarter to 2.1% from 6.0% prior to the storms. Auto sales, largely replacements in the hurricane ravaged areas, contributed to a nice jump in retail sales for September. Inflation remained contained, and the yield on the Ten-Year Treasury edged down 9 basis points to 2.28%. The equity market continued its remarkably quiet and low volatility advance, with the S&P 500 gaining 0.2% to reach new record highs.
Fires ravaged Northern California, causing at least 40 deaths, burning hundreds of thousands of acres, and resulting in billions of dollars of losses.
In biblical times, the string of darkness (solar eclipse), hurricanes, and fire, probably would have been interpreted as a sign. I will go with Stevie Wonder on this one: “When you believe in things you don’t understand, then you suffer, Superstition ain’t the way.”
56 of the S&P 500 companies will be reporting results. There will be a lot of economic data out of China, which kicks off its National Congress, and media reports suggest that North Korea could fire some missiles during the week (an act of defiance?). Recently, the market has been immune to news from China and North Korea. The US tax process continues, with a budget resolution vote scheduled for Thursday. Given the contentious tone in Washington, it’s not clear that any compromises can be reached on any issues.
It’s the 30th anniversary of the 1987 market crash. Barron’s cover article “Echoes of the 1987 Crash” highlights the risk of a similar downturn. I think they published a similar article on the 25th anniversary as well.
Stocks in the News:
Truett-Hurst, Inc. (THST): Reported a modest decline in 4th quarter earnings and revenues. “Fiscal year 2017 was a year of significant change for our company, “commented President and CEO Phillip L. Hurst. “We moved our wine production to a new custom crush facility and purchased state of the art winemaking equipment”. The company also provided an update of the impact of the fire, stating “At this time, our Estate and Tasting Room in Dry Creek has been spared by the fire…..our Kenwood facility has gone without power thereby reducing much needed cooling and ventilation. We haven’t had access to the winery, so we don’t know the fate of the 2017 vintage.”Tagged: Chicago Investment Management, Eric Kuby, finance, financial commentary, Fund Fact, Gold, Kuby's Commentary, Market Commentary, North Star, North Star Financial Services, North Star Investment Management, NSIMC, Oil, Russell 2000, S&P 500, Stocks In the News, THST, VIX, Wealth Management.
The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates (“North Star”) may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one’s investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation’s Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.