Tech companies haven’t been this negative about a quarter in six years

Tech companies are bracing investors for what could be the worst quarter from a revenue perspective in more than six years.

With first-quarter earnings season just a few weeks away, information technology firms have been revising their forward guidance considerably lower. In all, 31 companies have issued negative revenue guidance, which is well above the five-year average of 20 and the highest level since the 36 that did so in the fourth quarter of 2012, according to FactSet.

The revised expectations come against a generally dismal backdrop for corporate profits.

S&P 500 companies collectively are expected to show a 3.7 percent decline in earnings per share. If that holds, it will be the first negative reporting period since the second quarter of 2016. The large-cap index is still expected to see positive profit growth for the year, with FactSet projecting a 3.8 percent year-over-year increase, though that number has been trending lower.

Investors haven’t seemed to care about the declining outlook.

The Nasdaq, which has a comparatively high tech composition compared to the other major indexes, is up more than 16 percent year to date. Companies that have lowered guidance have seen an average 0.7 percent price drop over the next four days, the lowest since FactSet began tracking the metric in 2009.

Earnings in 2018 were stellar, with the S&P 500 reporting a 20 percent gain thanks in large part to a 112.4 percent surge in energy. Technology stocks were near the back of the pack among the 11 index sectors, with a 14 percent increase from 2017.

Energy and tech are the only sectors projected to show year-over-year revenue drops, with respective declines of 3.3 percent and 1.1 percent, according to current estimates. In tech, semiconductors and equipment are forecast to show an 8 percent revenue slide, while tech hardware, storage and peripherals are looking at a potential 6 percent drop. Software is expected to be the strongest revenue performer with a 10 percent rise.


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Apple and Intel are the big drags

As revenue looks to disappoint, so does profit.

On simple earnings per share, information technology has been by far the greatest number of downgrades, with 26 companies lowering expectations against just 13 raising. The 26 percent of total companies in the sector issuing negative guidance is well ahead of the five-year average of 20.2 percent, according to FactSet records. It’s also the highest level of companies issuing downgrades since the first quarter of 2016.

Apple and Intel have been the biggest contributors to the negative EPS picture, which has seen expectations for the sector to go from a 3 percent Q1 drop to a 10.7 percent slide.

Apple has cut its earnings expectations to $2.39 from $2.95 while Intel has gone to 87 cents from $1.01. Both companies have seen double-digit percentage gains in their share prices.

At a broad index level, 105 companies have issued guidance, with 77 going negative. That 73 percent rate is above the five-year average of 70 percent.


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Health care has also been lowering its revenue expectations sharply. So far, 16 companies have revised lower, which would be highest number since FactSet began tracking the numbers in 2006. On the upside, health care is expected to post the second-highest EPS growth of all sectors at 4 percent.

Source: cnbc.com | Original Link

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Dow jumps more than 150 points as drop in bond yields stabilizes

Stocks rose on Tuesday as a decline in Treasury yields stabilized, assuaging fears of an economic slowdown.

The Dow Jones Industrial Average jumped 159 points, led by a gain in Walt Disney. The S&P 500 rose 0.7 percent as the energy, tech and health care sectors outperformed. The Nasdaq Composite advanced 0.8 percent.

Apple rose more than 1.4 percent, recovering losses from the previous session as investors digested the company’s launch of a slew of different services. Shares of Facebook and Amazon traded more than 1 percent higher. Nvidia also traded higher.

The benchmark 10-year U.S. yield traded at 2.43 percent a day after reaching its lowest level since December 2017. The 10-year’s decline caused a so-called yield-curve inversion as the 3-month Treasury bill yield moved above the benchmark rate. Investors see a yield-curve inversion as a signal that a recession may be on the horizon, so a rise in long-term rates is being viewed as a positive right now.

The yield curve inverted amid the release of weak economic data from the U.S. and around the world as well as a downgraded U.S. economic outlook from the Federal Reserve.

“There’s lots of angst about global economic growth. That’s understandable because it has been slowing significantly since early 2018,” Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a note. “Furthermore, we can all observe that ultra-easy monetary and debt-financed fiscal policies aren’t as stimulative as policymakers have been hoping.”


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Housing starts fell 8.7 percent in February, widely missing expectations. Building permits declined, but at a slower rate than forecast by economists. Consumer confidence declined in March to 124.1 from 131.4 in February, according to data from The Conference Board.

The Dow closed Monday with a small gain. News that special counsel Robert Mueller did not find evidence that President Donald Trump colluded with Russia in the 2016 presidential race bolstered the markets by removing some uncertainty. Investors were also hopeful that with the Mueller investigation out of the way, Trump will turn his attention to cementing trade deals.

However, concerns regarding the global economy capped market gains in the broader market.

“Expectations are for a pretty weak first quarter overseas to go along with a fairly weak U.S.,” said Sam Stovall, chief investment strategist at CFRA Research. “The real question is whether it’s just a weak first quarter and then it recovers. Our expectation right now is that it is more of a soft landing.”

“I think we’re just going through a pretty healthy digestion of gains,” Stovall said. “Q1 softness will probably be followed by a recovery in Q2, both on an economic perspective as well as an earnings outlook. I would tell investors you are probably better off buying than you are bailing.”

Equities rallied to start off 2019, with the S&P 500 rising more than 11 percent year to date.

Shares of Bed Bath & Beyond skyrocketed more than 26 percent after The Wall Street Journal reported three activist investors are trying to replace the company’s entire board of directors.

Nvidia shares rose 2.2 percent after Piper Jaffray initiated coverage of the chipmaker with an overweight rating, noting its attractive valuation.

Source: cnbc.com | Original Link

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The story behind Doug Casey’s once-in-a-lifetime 86,900% gain

Doug Casey’s known for his controversial views…

The Washington Post even wondered, “Who’s Doug Casey and why’s he saying these terrible things?”

But it’s far less known that Doug’s controversial world view is also how he built up multiple multi-million dollar fortunes over the past 5 decades.

In other words, Doug’s a politically incorrect speculator in the same way that he’s a politically incorrect thinker.

We call it the “Doug Casey Method.”

It has led Doug to outstanding once-in-a-lifetime gains of 86,900%… 63,000%… and 5,000%.

A longtime reader of Doug’s named Michael, used the Doug Casey Method to make $1 million with one stock…

It can work for you, too.

For the first time in Casey Research history, Doug sat down in front of a camera and laid out his entire method in a detailed interview.

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He also revealed FIVE controversial predictions for the rest of 2019 and beyond along with 5.

The video’s called Totally Incorrect: LIVE and it will premiere at 8 pm on Wednesday, March 27th.

Admission is free and you can register here

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Here’s a short list of Casey Research recommendations over the years:

  • 4,329% Altius Minerals
  • 667% Anatolia
  • 154% Alberta Star
  • 390% AuEx
  • 243% First Majestic Silver
  • 434% Gammon
  • 233% Golden Queen
  • 118% JNR Resources
  • 711% Northland Resources
  • 263% Osisko Mining Corp.
  • 106% Sanu
  • 155% Strathmore Minerals
  • 158% Virginia Mines
  • 487% Wolfden Resources
  • 193% Brett Resources
  • 104% Bear Creek Mining
  • 123% Eagle Plains Resources
  • 198% Fronteer Gold
  • 681% Glamis Gold
  • 335% Iam Gold
  • 258% Lundin Mining
  • 282% Northern Peru Copper
  • 622% Quest Capital Corp.
  • 129% Sherwood Copper
  • 324% Tenke Mining
  • 102% West Timmins

 


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Dow futures point to solid gains as investors keep an eye on the bond market

U.S. stock index futures were higher Tuesday morning, as investors focus on what the bond market is signaling about the economy.

At around 6:30 a.m. ET, Dow futures indicated a positive open of more than 160 points. Futures on the S&P and Nasdaq were in the green, as well.

Wall Street closed Monday with small gains. News that the special counsel Robert Mueller did not find evidence that President Donald Trump colluded with Russia in the 2016 presidential race bolstered the markets by removing some uncertainty. Investors were also hopeful that with the Mueller investigation out of the way, Trump will turn his attention to cementing trade deals. Overall, however, concerns regarding the global economy capped market gains.


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Investors are still monitoring the bond market, where last Friday the yield curve inverted for the first time in more than a decade. The three-month Treasury bill yield topped its 10-year counterpart on Friday — this is usually perceived as a sign of an impending recession.

On the economic front, Tuesday’s calendar is quite heavy. There will be housing starts and building permits out at 8.30 a.m. ET. Also there will be consumer confidence figures as well as the Richmond Fed surveys at 10 a.m. ET.

On the corporate calendar, Carnival and KB Home are due to update investors with their latest earnings.

Source: cnbc.com | Original Link

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