Thursday, January 30, 2020
The initial read on fourth quarter Gross Domestic Product (Q4 GDP) hit the tape ahead of today’s opening bell, with results better than analysts had been predicting: +2.1% was 30 basis points higher than the 1.8% expected, and exactly in-line with the third and final read on Q3 GDP. This brings the initial 2019 GDP tally to 2.3% growth, the lowest rate since 2016.
Digging into the details a bit, what stands out is a negative number on Business Investment, -1.5% in the quarter, while Consumption (consumer buying power) was up 1.8%. On this initial read, this is a notable drop from the 4.6% Consumption read in Q2 and the 3.6% in Q3. Then again, we will be seeing a couple revisions to this report in the months to come; perhaps these figures will come in stronger over time.
A couple healthy numbers from this report came from Housing, +5.8% in Q4 and +4.6% averaging the past two quarters together, and Federal Spending +3.6% — partially on increased defense spending. The all-important Personal Consumption Expenditures (PCE) price ides came in at 1.6% in the quarter; core PCE was 1.3%. These are overall tepid numbers, but shouldn’t be hard for market participants to live with.
Initial Jobless Claims saw a big upward revision to results from two weeks ago — +12K to 223K — and then came down by 7000 claims for last week, to 216K. This is solidly in the middle of our long-term 200-225K range consistent with a robust U.S. labor market. Continuing Claims, reported for the week previous, continue to dwindle down from the 1.8 million we saw a few weeks ago, and have moved down from 1.747 million to 1.702 million this go-around. Any figure beneath 2 million for long-term jobless claims is very good, and we have not seen those levels in several years.
Turning to Q4 earnings season, Verizon VZ actuals came up a tad short on the bottom line — $1.13 per share from $1.15 expected, though a penny better than the year-ago quarter — on revenues of $34.78 billion, up 0.74% from the Zacks consensus and an improvement from the $34.28 billion reported in Q4 2018. Shares, which had already fallen 3% year to date, are down another 1.3% in today’s pre-market. For more on VZ’s earnings, click here.
Coca-Cola KO beat estimates on both top and bottom lines this morning, beating on the bottom line by a penny to 44 cents per share, while revenues of $9.07 billion outpaced expectations by 1.82% and way up from the year-ago $7.06 billion. Shares of Coke had grown 3% year to date, and have increased this by more than 1% in early trading. For more on KO’s earnings, click here.
Sherwin-Williams SHW shares are falling 4.8% on an earnings and sales miss in its Q4 today, with a headline $4.27 per share underperforming the $4.40 expected, on $4.11 billion in sales which missed expectations by 1.7%. Both figures were up year over year, however, from $3.54 per share and $4.06 billion, respectively. This is what happens when a company reports a negative surprise while the entire market is selling off. For more on SHW’s earnings, click here.
After today’s closing bell, we look forward to new earnings results from Amazon AMZN, Visa V, Amgen AMGN and homebuilder Beazer Home BZH.
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