Strong corporate earnings, solid economic data from China, and a failed missile launch from North Korea, all contributed to a better mood on Wall Street. Corporate earnings continued to exceed expectations, with 75.8% of the 95 S&P 500 companies that have reported earnings this quarter topping analyst forecasts. At this pace, it should be the best growth in earnings since Q4 2011. The second largest economy in the world also provided some good news, with China GDP, industrial production, and retail sales all coming in very positively. The markets snapped out of a two-week losing streak, as the S&P 500 index rose 0.8%, while the Russell 2000 jumped 2.6%. The yield on the Ten-Year Treasury inched up one basis point to 2.24%.
I’m not a Rajon Rondo fan, nevertheless my prediction that the Bulls would upset the Celtics in the first round of the NBA playoffs was looking a lot better before he broke his finger.
I had the opportunity to visit Truett Hurst Winery in Healdsburg, CA last week. Not only was the wine good but I am glad to see that we got some livestock along with the deal.
A flurry of earnings reports should dominate trading, with it being the busiest earnings week of the quarter. There could also be market moving news from Washington, as both a major tax plan and another health care reform bill have been promised. The hotly contested French presidential elections might impact global markets. Mohamed El-Erian, Allianz SE’s chief economic advisor, has suggested that a victory by Nationalist Marine Le Pen would destabilize the construct of the European Union. Despite being in the two-person run-off, Bob Aliber points out that Le Pen is “far from winning”. The possibility of a U.S. government shutdown without a funding bill will also provide the news networks with lots of material, though probably not having much impact on the market. Since the Ford administration, there have been 18 federal shutdowns, during those 128 days of shuttered government, the Standard & Poor’s 500 index fell a mere 0.6%, on average. In any event, a shutdown is unlikely. Speaking of unlikely, Trump’s bold comments on Friday have been reduced to a statement of principles and priorities due out this Wednesday.
Stocks in the News:
Rocky Brands, Inc. (RCKY) reported that first quarter net sales increased 9.6% to $63.1 million compared to $57.5 million in the first quarter of 2016, and that first quarter net income was $1.5 million, or $0.20 per diluted share compared to a net loss of $0.2 million, or ($0.03) per diluted share in the first quarter of 2016. Mike Brooks, Chairman and Chief Executive Officer, commented, “Our first quarter results represent a solid start to 2017. We achieved approximately 10% top-line growth by more than doubling our military segment sales to a quarterly record $12 million. Importantly, we were able to fulfill this significant increase in military footwear demand at margins well above the last half of 2016 due to improved efficiencies at our company-operated production facility in Puerto Rico. At the same time, sales trends in our wholesale segment have stabilized, particularly in Work and Western, our two largest categories.
Blackstone Group LP (BX) reported that economic net income per share, which reflects the mark-to-market valuation of Blackstone’s portfolio, more than doubled to 82 cents from 31 cents a year earlier. Additionally, the Company said the sale of assets for top dollar allowed it to pay its second-highest quarterly dividend ever at 87 cents per common unit.
Janus Capital Group Inc. (JNS) reported first quarter 2017 net income adjusted for merger-related costs was $43.8 million, or $0.23 per diluted share. Fourth quarter 2016 net income adjusted for merger-related costs was $37.2 million, or $0.20 per diluted share. The Company also reported that average assets under management during the first quarter 2017 were $201.4 billion compared with $191.9 billion during the fourth quarter 2016 and $180.2 billion during the first quarter 2016.
Acme United Corporation (ACU) announced that net sales for the quarter ended March 31, 2017 were $27.7 million, compared to $25.3 million in the first quarter of 2016, an increase of 10%. Net income was $659,000 or $0.18 per diluted share for the quarter ended March 31, 2017, compared to $565,000 or $0.16 per diluted share for the comparable period last year, an increase of 17% in net income and 13% in earnings per share. Walter C. Johnsen, Chairman and CEO highlighted the recent acquisition of Spill Magic, Inc. as a driver of continued growth and investment in the near-term. Spill Magic products are leaders in absorbents that encapsulate spills into dry powders that can be safely disposed, helping to avoid slips and falls on our customers’ premises. Mr. Johnsen likes to use the example of someone dropping a pickle jar in a store aisle.
Murphy USA (MUSA) provided guidance on several metrics for 2017. While the company does not typically discuss full-year guidance on a quarterly basis, weaker-than-expected first quarter results will reduce the likelihood of achieving some of the company`s full-year guidance metrics. “The first quarter is typically a period of lower earnings for the company, but a variety of market conditions along with regulatory and political events have converged that will result in short-term underperformance versus historical Q1 results,” said President and CEO Andrew Clyde. “In our 20 year history, we have weathered a wide variety of challenging market conditions, which eventually experience mean reversion and we expect that this year will be no different.“Tagged: ACU, BX, Chicago, Chicago Investment Management, Eric Kuby, financial commentary, Fund Fact, Gold, JNS, Kuby's Commentary, Market Commentary, MUSA, North Star, North Star Financial Services, North Star Investment Management, NSIMC, Oil, RCKY, Russell 2000, S&P 500, Stocks In the News, VIX, Wealth Management.
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