Tuesday, April 18, 2023

Markets drift lower after the latest earnings reports

Dow fell 134, decliners over advancers 3-2 & NAZ was off 8.  The MLP index is still sloshing around in the 226s & the REIT index slid back 1+ to 370.  Junk bond funds inched higher & Treasuries saw some buying which reduced yields.  Oil crawled higher to the 81s after yesterday's fall & gold went up 14 to 2021.

AMJ (Alerian MLP Index tracking fund)


 

 




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New US home construction fell less than expected in Mar as a retreat in mortgage rates helped to jolt homebuyer demand, but the housing market remains depressed.  Housing starts slid 0.8% last month to an annual rate of 1.42M units, according to the Commerce Dept.  That compares to the forecast for a pace of 1.4M units.  In a sign the deep freeze that has paralyzed the housing market for months is not over yet, applications to build, which measures future construction, tumbled 8.8% to an annualized rate of 1.41M units.  "While the start of spring typically brings new life to the housing market, the new home construction market has yet to see new growth," said Nicole Bachaud, senior economist at Zillow. "Builder confidence overall has been rising every month in 2023, but confidence that prospective buyers will return is still low, possibly a cause of lower home construction activity."  The data comes one day after the National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose one point to 45, the highest reading since Sep.  Any reading above 50 is considered positive; prior to 2022, the gauge has not entered negative territory since 2012, excluding a brief, but steep, drop in May 2020.   Despite the increase, the index still points to a slump in the housing sector ahead of the pivotal spring-selling season.  The index has fallen to ½ of what it was just one year ago, when it stood at 81, although it has increased from a low of 31.  It peaked at a 35-year high of 90 in Nov 2020, buoyed by record-low interest rates at the same time that American homebuyers – flush with cash & eager for more space during the pandemic, started flocking to the suburbs.

Housing starts resume downward spiral while building permits plummet

Amid persistent inflation, higher interest rates and recession worries, Americans have never been more negative about the economy, according to the latest CNBC All-America Economic Survey.  A record 69% of the public holds negative views about the economy both now and in the future, the highest percentage in the survey's 17-year history.  The survey of 1000 people nationwide, with a margin of error of +/-3.1%, found that about 2/3 of Americans say their wages are falling behind inflation & 2/3 say the nation is headed for recession or already in one.  The fallout from these negative views is hitting Pres Biden's approval rating.  His overall rating fell by 2 percentage points to 39% & his disapproval rating rose by a point to 55% compared with the Nov survey.  Americans disapprove of Biden's handling of the economy by a 62% to 34% margin, a deterioration from the 57% to 38% margin in the last survey.  It was the 2nd-worst reading of his presidency on the economy.  Biden lost support from several key groups.  Overall approval from Dems dropped 2 points to 77% compared with a year ago and by 9 points for independents to just 27%.  “It’s clear that as much as there is a partisan overlay to people’s attitudes, everybody is also feeling the squeeze including Democrats and that’s depressing numbers with the base,″ said Jay Campbell, partner at Hart Research, the survey's Dem pollster.

Public pessimism on the economy hits a new high, CNBC survey shows

Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, reported adjusted earnings & revenue that topped expectations & lifted its full-year forecast as it cited strong growth across all business units led by its pharmaceutical arm.  JNJ, whose financial results are considered a bellwether for many health companies, said Q1 sales grew 5.6% over the same qtr last year.  The consumer staples giant reported a net loss of $68M, 3¢ per share, related to its talc baby powder liabilities & costs tied to the upcoming spin-off of its consumer health business.  That compares to a net income of $5.2B, $1.93 per share, for the same period a year ago.  Excluding certain items, adjusted EPS was $2.68 for the period.  JNJ is now forecasting 2023 sales of $97.9-98.9B, about $1B higher than the guidance provided in Jan.  The company raised its full-year adjusted EPS outlook to $10.60 - $10.70, from a previous forecast of $10.45 - $10.65.   CFO Joseph Wolk said that JNJ raised its guidance due to strong growth across all 3 business sectors — consumer health, pharmaceuticals & medical devices.  “If you think about how we started the year and guidance in January, we were responsibly cautious,” he said.  “First-quarter growth was much stronger than even fourth-quarter growth for all three business units, and our positions kind of change to responsibly optimistic at this point. We feel very good about 2023.”  The stock dropped 4.42 (3%).
If you would like to learn more about JNJ
, click on this link:
club.ino.com/trend/analysis/stock/JNJ_aid=CD3289&a_bid=6aeoso5b6f7

Johnson & Johnson beats on earnings and revenue, raises full-year guidance

News is not impressive,  Earnings are coming in underwhelming, so investors are putting new money into gold & Treasuries.

Dow Jones Industrials

 






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