HI Financial Services Commentary 08-14-2018
You Tube Link: https://youtu.be/vjgLpq-zU5M
What I want to talk about today?
Headline news of Turkey problems
What poses a problem for our banks? JPM, C, BAC?
Europe Exposure? BBVA? Spain, Italy
Tough for companies in Turkey to pay debt in dollar and euros.
Bank of America makes money on US treasury yields.
What happening this week and why?
Can you say strong dollar and weak Emerging markets with Turkey getting creamed
I didn’t know how many were getting creamed other than Russia, South Korea, Brazil and Argentina
The only reason I knew they were having a rough go was because of the news.
Where will our markets end this week?
SPX – Bullish
Where Will the SPX end August 2018?
Tues: AAP, HD, TRP, A, CREE, DDS
Wed: M, CSCO, NTAP
Thur: JCP, JD, WMT, JWN, AMAT, NVDA
Tues: NFIB Small Business Index, Import, Export,
Wed: MBA, Retail Sales, Retail Ex-auto, Productivity, Unit Labor Costs, NAHB Housing Index, Industrial Production, Capacity Utilization, Business Inventories,
Thur: Initial, Continuing, Housing Starts, Building Permits, Phil Fed
Fri: Leading Indicators, OPTIONS EXPIRATION
How am I looking to trade?
IN protective puts or collar trades for earning
www.myhurleyinvestment.com = Blogsite
UPDATE 2-Disney quarterly profit misses as programming costs surge
Lisa Richwine and Vibhuti Sharma
Published 4:53 PM ET Tue, 7 Aug 2018Reuters
Aug 7 (Reuters) – Walt Disney Co missed Wall Street profit targets on Tuesday as it lost more subscribers at its cable sports network ESPN and invested in technology and programming to try and capture audiences migrating to streaming television.
Shares of one of the world’s biggest entertainment companies, which have gained nearly 9 percent this year, fell 1.9 percent to $113.66 after the bell.
Disney reported earnings of $1.87 per share excluding certain items, an increase from a year earlier but below Wall Street’s average forecast of $1.95, according to Thomson Reuters I/B/E/S.
Operating income at Disney’s media networks unit declined 1 percent to $1.8 billion. The division recorded a loss from its investment in streaming technology company BAMTech. ESPN, its biggest network, reported higher programming costs and a decline in subscribers, while the fees it collects from distributors rose.
Disney is trying to transform into a broad digital entertainment company as its networks including ESPN are losing viewers to Netflix Inc and other online options. The company is scheduled to launch its own streaming service for family entertainment in late 2019.
Disney also is on the verge of gaining new film and television properties in a $71 billion purchase of assets from Rupert Murdoch’s Twenty-First Century Fox. The Fox properties would bring Disney new franchises such as “Avatar” and “The Simpsons” to mine for future subscription services.
For its fiscal third quarter ended June 30, the company’s theme parks division recorded a 15 percent profit increase to $1.3 billion with increases at domestic and international resorts.
Disney’s movie studio enjoyed blockbuster success with “Avengers: Infinity War” and “The Incredibles 2.” Operating income at the studio rose 11 percent to $708 million.
At consumer products, operating income declined 10 percent to $324 million.
Net income attributable to Disney rose to $2.92 billion, or $1.95 per share, in the quarter, compared with $2.37 billion, or $1.51 per share, a year ago.
Total revenue rose 7 percent to $15.23 billion, but missed analysts’ average expectation of $15.34 billion. (Reporting by Vibhuti Sharma in Bengaluru and Lisa Richwine in Los Angeles; Editing by Arun Koyyur and Bill Rigby)
IS WARREN BUFFETT PREDICTING A MARKET CRASH?
Warren Buffett, the world’s third-richest person with about $86 billion in net wealth, is known as one of the most successful stock market investors of all time.
“Warren Buffett is still having difficulty in finding value in U.S. — and perhaps global — stocks.”
Buffett started buying stocks when he was 11 years old, and he filed his first tax return at the ripe old age of 13.
Now 87 and the founder and CEO of Berkshire Hathaway, Buffett has dialed back his company’s investments the past couple of years.
At the end of the second quarter, Berkshire Hathaway had $111 billion in cash on hand, the most in the company’s history — and his company’s reluctance to invest that money could be seen as a bad sign for the market as a whole, according to Business Insider.
Considering his company’s reluctance to invest much since 2017 and Buffett’s market expertise, it could be a sign that stocks are currently riding too high and too expensive.
Valuations have only gotten more stretched over that period (since 2017), suggesting that an already tenuous situation has worsened.
Russ Mould, an investment director at AJ Bell, has taken notice. He’s wary of the speculative deal fervor he sees accompanying record stock prices.
“M&A tends to peak when animal spirits are running high and often when executives feel their own shares are expensive enough to make them a valuable acquisition currency,” Mould wrote in a client note. “Warren Buffett is still having difficulty in finding value in U.S. — and perhaps global — stocks.”
Mould points out — and indicates in the chart above — that Berkshire Hathaway’s cash balance has been an effective proxy for market levels over history. As you can see, Buffett held comparatively high levels of cash in the periods preceding the two most recent market crashes, in 1999 and 2007.
Of course, this doesn’t mean the market is set to crash tomorrow, but it is a question investors should weigh when deciding how, when and where to spend their money as we approach the mark for the longest bull market run on record, a mark that could soon be coming to an end.