#Alphabet earnings, #US-#UK trade talks, breastfeeding as class warfare

Good morning, Quartz readers!


Alphabet reports earnings. Google’s parent will likely take a hitfrom a $2.7 billion fine levied by EU antitrust regulators in June. The company is appealing the fine, but said it would report it in its second-quarter earnings. Alphabet may also break out revenue from YouTube for the first time.

The UK’s trade negotiator visits the US. Liam Fox begins discussions with his American counterparts amid warnings from British businesses that the government’s enthusiasm to produce an agreement may give American companies the upper hand.

Rodrigo Duterte delivers his State of the Nation address. Thetheme of the Philippine president’s speech in the second year of his presidency is “A Comfortable Life for All.” It comes just two days after Congress voted to extend martial law in the troubled southern province of Mindanao until the end of the year.

Ryanair announces first-quarter results. The Irish budget carrier may also provide updates on how Brexit is affecting its business. It warned earlier that it could reduce flights between the UK and the EU if aviation arrangements are not finalized by the end of the year.


The positive impact of ESG on bond performance. ESG investing encompasses everything from energy conservation to corporate management. Until recently, however, it was unclear if it had a positive impact on bond returns. A recent study by Barclays uncovers a positive link. Advertisement


Donald Trump may agree to a new round of sanctions on Russia. The president is open to signing legislation that would enforce tougher sanctions on Russia, a White House official said, after congressional Democrats and Republicans agreed on a bill targeting Russia, Iran, and North Korea. However, Anthony Scaramucci, Trump’s new communications director, said the president has not yet made a decision.

A robot may have found Fukushima’s nuclear debris for the first time. An underwater robot captured what could be the first images of melted nuclear-fuel deposits at the nuclear plant since the 2011 earthquake and tsunami in Japan, according to operator Tepco. The find could help the clean-up process and the eventual decommissioning of the plant, which could take decades.

Israel will keep metal detectors at the al-Aqsa mosque…Tensions are still running high between Israelis and Palestinians at the holy Jerusalem site, where two Israeli police officers were shot on July 14, leading to violent clashes. Some Israeli security officials have warned that the installation of devices like detectors and security cameras could cause violence to further spiral.

… And two died at a shooting at Israel’s embassy in Jordan.The shooting took place in the capital Amman, leaving two Jordanians dead and one Israeli wounded. The incident comes after thousands protested in the city on Friday against Israel.


Corinne Purtill and Dan Kopf on the class dynamics of breastfeeding in the US. “‘Breast is best’ has not always been the mantra of the upper classes in the US. While the cultural definition of the ‘best’ food for babies has fluctuated over the last century between infant formula and breast milk, one thing has remained constant: the most socially desirable form of infant nutrition has been whichever is harder for poor parents to access.” Read more here.


Police body cameras are a failure. The problem of police brutality in the US requires more than video footage.

Playing ball with Chinese censors hasn’t helped LinkedIn. The company is one of a handful of Silicon Valley tech giants that arefinding it harder and harder (paywall) to succeed in China.

The future of military robotics looks like Planet Earth II. Humans do not yet know how to replicate all the capabilities of animals like pigeons and cheetahs, but roboticists are trying.


Mongolians can keep a secret. Genghis Khan’s tomb will never be found because he wanted it to stay hidden—and Mongolians want to respect that.

Japan’s government has to force people to work from home.Authorities have declared July 24 “Telework Day” to make people more flexible about where and when they work, and as preparation for the 2020 Olympics, when trains are expected to be exceptionally packed.

Pirates watched the new Game of Thrones episode 90 million times. That’s nearly six times as many as the official view count.

There’s a new garbage patch in the South Pacific. By one estimate, the debris covers an area some one-and-a-half-times the size of Texas.

Vaccines could soon be delivered without needles. Star Trekfeatured a needle-free device, a jet injector called a “hypospray.”

Our best wishes for a productive day. Please send any news, comments, robot pigeons, and needle-less vaccines to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

CWS Market Review – July 21, 2017

CWS Market Review

July 21, 2017

“Don’t confuse brains with a bull market.” – Humphrey B. Neill

Second-quarter earnings season kicked off this week for our Buy List stocks. Unfortunately, we’ve had a few poor reactions to the earnings reports, even though the underlying fundamentals of our companies are still pretty strong.

We’ve had six Buy List stocks reports so far this week, plus Moody’s is due to follow later today. In a bit, I’ll go over all our earnings reports. I also have a few new Buy Below prices for you. Later on, I’ll preview six more earnings reports coming next week.

Overall, Wall Street has been in a buoyant mode. The S&P 500 has continued to make several new all-time highs. Volatility remains extremely low. Here’s an interesting stat: Only once in the last 14 trading days has the S&P 500 fallen by more than 0.1%. It’s almost as if every trading day, the market closes just a tiny bit higher. Now let’s take a look at what was a very busy week for earnings.

Signature Bank Earns $2.21 per Share

On Wednesday, Signature Bank (SBNY) started off the second-quarter earnings season for our Buy List. The New York-based bank reported quarterly earnings of $2.21 per share, which matched Wall Street’s consensus.

But there’s a big caveat to that number. It doesn’t include Signature’s “provision expense and write-downs for the taxi-medallion portfolio.” As we’ve seen, SBNY took a bath on those medallion loans. Uber, Lyft and others have knocked the entire cab industry for a loop. But as I’ve said, this is a known problem, and SBNY has been working on it.

“We did not, nor did any others, foresee the dramatic decline in taxi-medallion values caused by a combination of rapid radical disruption by app-based hailing systems and inaction by governmental authorities. We did, however, see the disruption coming in time to set an upper limit on loan amounts and to stop our lending earlier than most,” said Scott A. Shay, Chairman of the Board.

I was more concerned with net interest margin. That’s the key metric for any bank. For Signature, their net interest margin for Q2 was 3.11%. That’s pretty good. Overall, this was an OK quarter for Signature. It’s largely what I expected.

Traders were not pleased with the earnings reports. The shares have struggled lately, but I still like SBNY. Don’t let the downdraft scare you. This week, I’m dropping my Buy Below on Signature down to $144 per share.

Five Earnings Reports on Thursday

Thursday was a very big day for us, as we had five Buy List stocks report earnings.
Leading off the group was Danaher (DHR). The diversified manufacturer said they made 99 cents per share for Q2. Danaher previously told us to expect earnings to range between 95 and 98 cents per share.

Thomas P. Joyce, Jr., President and Chief Executive Officer, stated, “During the second quarter, we delivered double-digit adjusted earnings per share growth, generated strong cash flow, and our two most recent large acquisitions – Pall and Cepheid – continued to perform very well.”

Joyce continued, “As we look to the second half of the year, we expect our core growth rate to accelerate compared to first half levels off of improving order trends and as recent acquisitions become part of our core revenue. We believe that the power of the Danaher Business System, significant opportunities across our portfolio, and a strengthening balance sheet position us well for the remainder of 2017 and beyond.”

Now for guidance. For Q3, Danaher said to expect earnings between 92 and 96 cents per share. Wall Street had been expecting 96 cents per share. The good news is that Danaher raised its full-year range. The old range was $3.85 to $3.95 per share. The new range is $3.90 to $3.97 per share.

Despite the higher guidance, the shares pulled 3% during Thursday’s trading. Frankly, the report looked just fine to me. The company is doing well. I’m keeping Danaher’s Buy Below at $90 per share.

Snap-on (SNA) said they made $2.60 per share for Q2. That was five cents better than expectations. Net sales rose 5.6% to $921.4 million. Diluted EPS rose by 10.2% over last year’s Q2.

The CEO said, “Our year-over-year improvement in operating margin before financial services reflects ongoing progress through our Snap-on Value Creation Processes. At the same time, these results also demonstrate continued advancement along our strategic runways for growth, as indicated by the notable increase in activity in the quarter. Despite some sales headwinds in the quarter for the Snap-on Tools Group, we believe the vehicle-repair markets in which we operate remain robust and afford significant ongoing opportunity. Furthermore, our acquisition of Norbar Torque Tools in the second quarter adds to our expanding product offering to customers in critical industries. Finally, these results would not have been possible without the dedication and capability of our franchisees and associates worldwide; I thank them for their extraordinary commitment and ongoing contributions.”

SNA was also punished by traders. On Thursday, the shares closed 4.7% lower. I don’t understand how a five-cent beat can result in a $7.37 falloff in the share price, but that’s Wall Street for you. This week, I’m dropping my Buy Below on Snap-on down to $161 per share.

Alliance Data Systems (ADS) was the ugly one this week. The loyalty-solutions people said they pulled in $3.84 per share for Q2. That was 11 cents more than expectations. Quarterly revenue rose 4% to $1.8 billion.

However, the big news is that ADS is lowering its full-year guidance from $18.50 to $18.10 per share. ADS said its brand-loyalty business “produced soft results.” But ADS is actually bumping up its revenue guidance from $7.7 billion to $7.8 billion.

The company also said it’s “comfortable” in giving initial 2018 guidance of $21.50 per share in core earnings. The consensus on Wall Street was for earnings of $21.42 per share. Still, Wall Street was not pleased with Thursday’s report. Shares of ADS dropped by 9.5%. I’m lowering my Buy Below to $252 per share.

Sherwin-Williams (SHW) had a big earnings miss. The company only made $3.80 per share last quarter. Wall Street had been expecting $4.57 per share. The reason for the earnings shortfall was the recent merger with Valspar.

Sherwin said they see Q3 earnings coming in between $3.70 and $4.10 per share. That includes a charge of $1.10 per share related to the acquisition. Wall Street had been expecting Q3 earnings of $4.91 per share.

For all of 2017, Sherwin now expects earnings to range between $12.30 and $12.70 per share. That will include $2.50 in charges related to the acquisition. Wall Street had been expecting $14.76 per share.

Shares of SHW got clobbered early Thursday. At one point it was down more than 6.1%. But the stock recovered some lost ground and closed down just 2.5%.

After the closing bell on Thursday, Microsoft (MSFT) reported fiscal-Q4 adjusted earnings of 98 cents per share. But that figure includes a tax benefit of 23 cents per share. Excluding that, MSFT earned 75 cents per share, which was four cents more than Wall Street’s consensus.

Revenue in MSFT’s Intelligent Cloud unit rose 11% to $7.4 billion. The company said that Azure revenue rose by 97%, while Office 365 revenue jumped by 43%. The CFO even said that Azure was the primary catalyst for the earnings beat. Microsoft said that LinkedIn brought in $1.07 billion in revenue, and had an operating loss of $361 million.

The software giant also gave upbeat guidance for the current quarter. The company expects Intelligent Cloud revenue to rise by between 8% and 11%. They see Productivity and Business Processes revenue rising by 21% to 24%. Overall, Wall Street seemed pleased by Microsoft’s results. The shares gapped higher during the after-market session, but that’s never a guarantee of what will happen on Friday. For now, I’m going to raise our Buy Below on Microsoft to $76 per share.

Six Buy List Earnings Reports Next Week

On Monday, RPM International (RPM) is due to report. This is the odd-man out this earnings season because RPM’s fiscal Q4 ended in May. The other added wrinkle is that usually around 40% of RPM’s annual earnings come during their fourth quarter. The company said it expects full-year earnings to range between $2.57 and $2.67 per share. That implies a Q4 range between $1.13 and $1.23 per share.

On Tuesday, Wabtec (WAB) is due to report. The freight-services company has been in the midst of an impressive turnaround. Only recently has it started to falter. In April, WAB said they see full-year numbers ranging between $3.95 and $4.15 per share. Wall Street expects Q2 earnings of 94 cents per share.

Express Scripts (ESRX) follows on Wednesday. The pharmacy-benefits manager has been a headache for us this year. I’ll be curious to hear any updates on the Anthem saga. Fortunately, regular business seems to be going well. Express told us they expect Q2 earnings to come in between $1.70 to $1.74 per share. That’s a pretty optimistic forecast, but I think they can do it.

Next Thursday will be another crowded day for us. We have three more Buy List earnings reports. AFLAC (AFL), the duck stock, said that if the yen averages between 105 and 115 for Q2, then they see earnings coming in between $1.55 and $1.70 per share. The yen has mostly been between 110 and 115 for the last few months.

Cerner (CERN) has been an excellent stock for us this year. The healthcare-IT folks pegged Q2 earnings between 60 and 62 cents per share. That’s a narrow range. I wanted to add that Cerner’s founder, Neal Patterson, recently died. You can read here about his extraordinary contribution to business.

Last is Stryker (SYK). For Q2, Stryker expects EPS between $1.48 and $1.52. The orthopedics firm has a full-year forecast of $6.35 to $6.45 per share. They should be able to achieve both.

Before I go, I wanted to mention that Smucker (SJMraised its dividend by 4%. The quarterly payout will rise from 75 to 78 cents per share. This is their sixteenth annual dividend increase. The new dividend will be paid on Friday, September 1 to shareholders of record at the close of business on Friday, August 11. Smucker remains a buy up to $131 per share.

Next week will be dominated by earnings reports. There’s actually a Federal Reserve meeting on Tuesday and Wednesday, but don’t expect much in the way of headlines. It’s highly doubtful the Fed will make any more on interest rates. The policy statement will come out on Wednesday afternoon. The big economic report for next week will come on Friday, when the government releases its first estimates for Q2 GDP growth. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
2223 Ontario Road NW, Washington, DC 20009, USA

#Trump-#Putin chat, #IBM’s blues, T. Rex couldn’t run

Good morning, Quartz readers!


The US and China hold a tense trade meeting in Washington.One hundred days after the countries formed the “US-China Comprehensive Economic Dialogue,” the US is threatening sanctions on Chinese steel, and president Donald Trump is criticizing his counterpart Xi Jinping for not reining in North Korea.

Citigroup names Frankfurt as its post-Brexit European hub.The US bank is expected to announce its retreat from London as the UK moves toward exiting the European Union. Meanwhile Citibank and Bank of America are planning to boost their presence in Dublin.

Germany mulls the future of diesel engines. A court in Stuttgart will hear a lawsuit that could force automakers to retrofit vehicles or even ditch them completely to reduce air pollution.


Look to the UK for a wave of breakthroughs in technology. From 3D printing to reliable developments in AR, explore four projects setting a new global standard.Advertisement


A second Trump-Putin G20 conversation came to light… The US president and his Russian counterpart had an undisclosed conversation—reportedly lasting about an hour and joined only by Putin’s translator—at the G20 summit earlier this month. The Trump administration said any suggestion it tried to hide the conversation was “absurd and malicious.”

…And Trump made his pick for US ambassador to Russia. The White House said he’ll nominate Jon Huntsman, who was ambassador to China under Barack Obama. A former governor of Utah, Huntsman has long been expected to be Trump’s pick for the job. The nomination requires confirmation by the senate.

McCormick said it will buy the food business of Reckitt Benckiser for $4.2 billion. The US maker of spices and seasonings will get brands like French’s mustard and Frank’s RedHot sauce with the acquisition. The sale will allow UK-based Reckitt Benckiser, maker of Durex condoms, to focus more on its newly acquired infant nutrition unit.

Apple named its first-ever managing director for Greater China. Isabel Ge Mahe, who has worked in wireless technology at Apple for about a decade, will coordinate teams across China. Revenue from the region has declined year-on-year for the past five quarters, but it drives much of Apple’s growth.

Nauto lured investments from tech and auto heavyweights. The two-year-old Silicon Valley startup, which makes software for self-driving vehicles, closed a $159 million funding round led by SoftBank and VC firm Greylock Partners. GM, BMW, and Toyota are also on board. CEO Stefan Heck said the firm’s post-funding valuation was shy of $1 billion—”unicorn” status—but he added, “We’re getting there.”

IBM reported its 21st straight quarter of year-on-year revenue declines. On the plus side, Big Blue saw a surge in its cloud business, with sales reaching nearly $4 billion. The tech stalwart isstruggling as it transitions from traditional businesses to newer fields like cybersecurity, artificial intelligence, and data analytics.


Michael Coren on all the times Elon Musk has trash-talked his own stock. “Tesla CEO Elon Musk keeps telling investors Tesla’s stock price is wildly overpriced based on today’s performance despite his faith in its future. Investors keep ignoring him. Tesla is now one of the world’s most valuable carmakers.” Read more here.


Senate dysfunction? / It’s good business. Record highs / everywhere today.


Apple is experiencing diseconomies of scale. The next iPhone will always be constrained by its own immense production demands.

Robots will take fake news to a new level. Technology could allow us to make videos of events that never happened.

The UK’s new Jane Austen banknotes are a flirtatious lie. The famously plain author has been given the “Georgian equivalent of an airbrushing.”


Manchester residents don’t know how to share. Widespread vandalism and antisocial behavior is making life difficult for a Chinese bike-sharing startup.

Britain is banning ads with gender stereotypes. New legislation prohibits typecasting girls as ballerinas and boys as engineers.

Vomit is a big problem for driverless cars. Ride-sharing companies that go driverless will have to deal with people’s “nasty habit of throwing up in moving vehicles.”

Conservative India’s moral policing extends to Airbnb. Many listings in the country use a version of this caveat: married couples only.

T. Rex was too big to run. New research suggests the dinosaur’s legs would have snapped had it moved any faster than a “brisk walk.”

Our best wishes for a productive day. Please send any news, comments, Tesla trash talk, and vomit-free vehicles to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

Weekend edition—#Robot twins, rude conversation openers, and doomsday biobanks

Good morning, Quartz readers!

We already rely on machines to build our cars, trade our stocks, and answer our customer-service calls. In the near future, they’ll likelydrive our cars for us, care for our elderly, and even, in a limited form,replace us when we die. This week we explore this future in Machines with Brains, a 13-part series on the nature of humanity in an increasingly automated world.

But although machines are learning to do what only humans could once handle, how they learn is very different. A human artisan, trader, driver, or caregiver relies to a large degree on empathy—her ability as a human to infer what another human might want. Even bored ticket sellers or call-center operators use empathic cues to figure out how to serve you, not least because they have been on the other side of that conversation. Algorithms, though, learn through pattern-matching and repetitive training against quantified goals, and while this can make them very good—even better than humans—at certain things, they achieve them without any true understanding of what a human actually wants.

As computers serve more of our needs, empathy is drained out of our interactions, forcing us to adapt to the machine mind. You query Google using weird Google-search-speak, modify your enunciation for Alexa or Siri, spend minutes trudging obediently through automated phone menus when a single sentence could easily communicate what you want. It’s not only our digital servants who are being trained. So are we.

Increasingly, empathy will be treated as a luxury. We’ll pay more for a real human whose job is to understand us just as we are. As with bespoke shoes, artisanal coffee, or handmade clothes, we’ll shell out a premium for financial services, medical care, and even companionship that isn’t machine-made. Normally it’s the rich who benefit first from new technology; the irony of the AI revolution is that the rich will be those who can afford to benefit last.—Mike Murphy and Gideon Lichfield


How to visualize an iceberg. A trillion-ton formation, freshly split from an Antarctic ice shelf, inspired a global flurry of size comparisons. Zoë Schlanger, Jennifer Brown, and Katherine Ellen Foley created a handy, global guide to give you some context, whether you live in Spain (10 Madrids), or Turkey (four Istanbuls).

Russia’s helping hand. From Humphrey to Kennedy, there’s a long history of the Kremlin offering support to their favorite US candidates— what’s unusual about the Trump campaign is that they actually took them up on it writes Casey Michel.

I, robot. As part of Quartz’s Machines with Brains series, Mike Murphy documents his journey to create a digital twin using a messaging app that distills thousands of messages into a chatbot replica of oneself. In the process, he tries to figure out what robots can teach us about being human.

The groundbreaking case of the gay seagulls. In the 1970s, a pair of scientists discovered lesbian seagull couples in California. Zoë Schlanger explores how the scientific discovery, and resulting controversy, ruffled feathers and challenged the most trenchant argument about gay humans: That being gay isn’t “natural.”

A classic American conversation-opener is considered rude in much of the world. “What do you do?” is an innocuous cocktail-party question for most North Americans that doesn’t transcend borders. Lila MacLellan looks to small-talk experts for better lines to engage strangers, from the French to descendants of manners-maven Emily Post.


Paravel is reimagining the future of travel. We’re design-obsessed travel junkies on a quest to create the perfect bag for every adventure, no matter the size. Our collection of ultra-lightweight bags is made from stain-proof, waterproof Italian cotton canvas engineered using a zero-waste treatment. Looking for the perfect travel companion? The Grand Tour duffel or the new Aviator backpack marry an eye-catching look with unrivaled performance while the Stowaway overnight bag collapses flat for easy storage. Use the code DailyBrief10 for 10% off your order over $100 through July 21.


Earth is not designed to survive climate change. The most frightening insight of David Wallace-Wells’s exploration of the consequences of the world’s warming in New York magazine is not that we are beyond the point of no return. It’s the realization that living through a hell of dislocation, epidemics, famine, and global conflict could be the only way humankind can be convinced to save itself.

The view from the bog. Political reporter Mark Leibovich susses out the changes in the US’s most famous “swamp” six months into Donald Trump’s presidency for the New York Times. Rather than draining DC, Trump has created a different creature altogether, throwing the Republican establishment off-kilter in the process.

Google’s academic influence. For the past decade, Google has paid professors from Harvard to Berkeley up to $400,000 to provide research that benefits their business. The Wall Street Journal’s Brody Mullins and Jack Nicas investigate (paywall) the company’s little-known campaign to defend their market dominance through academic studies.

Fox News’s Tucker Carlson is shaking up conservative media. The TV host is doing “something extraordinary” writes The Atlantic’s Peter Beinart: Challenging conservative orthodoxy on foreign policy with stimulating debates, presenting “a glimpse into what Fox News would look like as an intellectually interesting network.”

Will doomsday “biobanks” save us from ourselves? When the Svalbard Global Seed Vault, a “modern-day Noah’s ark” for crop seeds, flooded last October, no one noticed. But with climate change back in the spotlight after Donald Trump announced he was pulling the US from the Paris accords, Malia Wollan and Spencer Lowell of the New York Times chronicle the many banks—from caches of milk to cell cultures—scientists are building to understand, and perhaps save, the world.

Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, robot replicas, and crop seeds tohi@qz.com. You can follow us on Twitter here for updates throughout the day, or download our apps for iPhone and Android.

#Honda recall, #Emmy nominations, witch translators

Good morning, Quartz readers!


France celebrates Bastille Day. This year’s military parade, which marks the 100th anniversary of America’s entry into WWI, will be led by US troops for the first time. US president Donald Trump’s attendance follows an amiable meeting with his French counterpart Emmanuel Macron in Paris, where Trump hinted at a possible renegotiation of the Paris climate accord.

China takes a bird’s-eye view of its financial system. Chinese leaders convene for two days in Beijing for the National Financial Work Conference, held every five years, to consider ways to improve the country’s complex financial system. On the agenda this year:handing regulation responsibilities over to China’s central bank.

The US reviews June economic activity. The commerce department releases June retail sales data—the struggling sector(paywall) is expected to grow only 0.1% after a 0.3% drop in May. Also due today: inflation data and industrial production figures.


Look to the UK for a wave of breakthroughs in technology.From 3D printing to reliable developments in AR, explore four projects setting a new global standard. Advertisement


The Trump administration prepared new sanctions on China.US officials said the White House could impose sanctions on small Chinese banks, shell companies, and other “low-hanging fruit” within two weeks, in retaliation for China’s failure to rein in North Korea.

Honda recalled 1.2 million vehicles. Engine compartments in Accords from the 2013 to 2016 model years can catch fire, the company said. The problem has cropped up in US states where winter roads are cleaned with salt, which corrodes and possibly shorts out inadequately sealed battery terminals. The recall follows Honda confirming this week the 11th customer death in the US tied to faulty Takata airbags.

Trump offered details on the proposed US-Mexico border wall.In his most definitive statements yet on the matter, the US president said the wall—a key campaign promise—could run for just 700 to 900 miles (1,448 km), and not the entire length of the border (about 2,000 miles). The wall, he added, should be see-through for security reasons.

Robot thriller Westworld scored 22 Emmy nominations. The sci-fi drama helped HBO rack up the highest number of nominations, at 111. Netflix followed with 91, nearly doubling last year’s nods. HBO’s Game of Thrones, which won best drama for the past two years, was ineligible due to a later start date. The awards will be presented by talk show host Stephen Colbert—also up for an Emmy—in September.


Oliver Staley on “chiefiness” taking over the corporate world.“As the proliferation of chiefs spreads, the title has become less a position of authority, and more a reflection of a company’s current culture. To stress its pizzas are made with fresh ingredients, Papa John’s promoted a senior vice president to chief ingredient officer. Mars, the candy and food company, is making a push toward sustainability, so it named a chief agricultural officer.” Read more here.


The pollyanna / Street. It finds only good news / Amid the chaos


Universal basic income is bad for everyone except billionaires.It’ll help Silicon Valley sleep better, while compounding social inequality.

Nobody really believes in free-market health care. If they did, they’d be willing to forego saving some patients (paywall).

There’s a right and wrong kind of popularity. Likability, not status, is a more meaningful trait for people to pursue.


Our perception of time is warped by the number of important events we remember. That’s why the Trump presidency already feels like a lifetime.

A Chicago library is seeking a witch translator. Volunteers are needed to help make sense of a mysterious 17th-century book of charms.

Some narcoleptics hallucinate their own death. A lesser-known aspect of the sleep disorder prevents sufferers from distinguishing between dreams and reality.

People miss almost 10% of their faces when they apply sunscreen. UV photos reveal that they’re especially lax around their eyes.

A Google search helped the US SEC nab an insider trader. He was allegedly looking for tips on “how sec detect unusual trade.”

Our best wishes for a productive day. Please send any news, comments, dubious searches, and extra sunscreen to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

CWS Market Review – July 14, 2017

CWS Market Review

July 14, 2017

“You can get in way more trouble with a good idea than a bad idea,
because you forget that the good idea has limits.” – Ben Graham

After a long wait, Q2 earnings season is finally here. Next week, six of our Buy List stocks are due to report earnings. I expect most of them to top expectations, but I’m also curious to see if they’ll raise guidance for the rest of the year. Right about now, companies have a good idea of how the year is shaping up.

In this week’s CWS Market Review, I’ll preview all of the earnings reports. Also this week, Janet Yellen testified before Congress and struck a cautious note about interest rates. There’s a good chance we’ll only get one Fed rate hike over the next 12 months. Not that long ago, the Fed was looking for a few more hikes.

The market is also undergoing a pronounced rotation away from consumer staple stocks. This is having an impact on some of the stocks on our Buy List. I’ll explain what it all means. But first, let’s look at our upcoming earnings reports.

Six Buy List Earnings Reports Coming Next Week

Here’s a look at the Earnings Calendar for our Buy List stocks this earnings season. Over the next few weeks, 21 of our 25 stocks will report earnings. On the table below, I’ve listed each stock’s reporting date and Wall Street’s consensus estimate:

Company Ticker Date Estimate
Snap-On SNA 20-Jul $2.55
Microsoft MSFT 20-Jul $0.71
Alliance Data Systems ADS 20-Jul $3.73
Danaher DHR 20-Jul $0.97
Sherwin-Williams SHW 20-Jul $4.56
Moody’s MCO 21-Jul $1.33
RPM International RPM 24-Jul $1.18
Express Scripts ESRX 26-Jul $1.71
Stryker SYK 27-Jul $1.51
Cerner CERN 27-Jul $0.61
Aflac AFL 27-Jul $1.64
Fiserv FISV 1-Aug $1.23
Ingredion INGR 1-Aug $1.84
Intercontinental Exchange ICE 3-Aug $0.75
Cognizant Technology Sol CTSH 3-Aug $0.91
Signature Bank SBNY n/a $2.22
CR Bard BCR n/a $2.64
Wabtec WAB n/a $0.93
Axalta Coating Systems AXTA n/a $0.39
Cinemark CNK n/a $0.48
Continental Building Products CBPX n/a $0.35

There are a few stocks where I don’t have the earnings date just yet. Some of these companies are less forthcoming than others. Be warned that the earnings calendar may not be exact, but I’ll track all of our earnings news at the blog.

Next Thursday, July 20, will be a particularly busy day for us. Five of our Buy List stocks are due to report.

Microsoft (MSFT) has had some outstanding earnings reports in recent quarters. Their “Intelligent Cloud” business has been especially strong. For the June quarter, which is the fourth quarter of Microsoft’s fiscal year, Wall Street expects earnings of 73 cents per share, which is only two cents above last year’s fiscal Q4.

The stock got caught up in the brief tech swoon from last month. Lately, however, MSFT has been on the rise. MSFT has rallied the last five days in a row and is near another all-time high.

Meanwhile, Snap-on (SNA) hasn’t been well lately, which is a bit of a surprise. The company had a good earnings report three months ago, and the stock gapped up. But that didn’t last long, and SNA gradually gave back all its gains and dropped to its lowest point since the election. Wall Street expected earnings from Snap-on of $2.55 per share.

Alliance Data Systems (ADS) has been a frustrating stock for us, but I’m glad that our patience is finally paying off. On Thursday, in fact, ADS got to a fresh 52-week high. If you recall, this stock absolutely cratered in early 2016, and it’s been gradually clawing its way back ever since.

ADS runs a great business. They’re the loyalty-rewards people. Three months ago, Oppenheimer initiated coverage on ADS with an “Underperform” rating. Nice timing. A few days later, they crushed earnings and the stock jumped $20 per share. They reiterated their full-year forecast for earnings of $18.50 per share. That means the stock is going for 14.3 times this year’s estimate. That’s a decent valuation. For Q2, Wall Street expects earnings of $3.53 per share.

Danaher (DHR) is about as steady as they come. They told us to expect Q2 earnings to range between 95 and 98 cents per share. Wall Street had been expecting 99 cents per share. However, Danaher stuck by its full-year forecast of $3.85 to $3.95 per share. This stock doesn’t get nearly the amount of attention it deserves.

Sherwin-Williams (SHW) has been a great stock for us this year; it’s up 32% so far in 2017. For Q2, Sherwin expects earnings to range between $4.40 and $4.60 per share (that doesn’t include an adjustment of 25 cents per share for acquisition costs). Wall Street had been expecting $4.43 per share. For the whole year, Sherwin expects $14.05 to $14.25 per share (40 cents for acquisition costs). Their previous range was $13.60 to $13.80 per share.

Then on Friday, July 21, Moody’s (MCO) is due to report. This is one of my favorite long-term stocks. Last quarter, they earned $1.47 per share, which was 23 cents more than estimates. Revenues were up nearly 20% from the year before. Moody’s adjusted operating margin is close to 50%.

Moody’s had said they expect full-year earnings between $5.15 and $5.30 per share. In May, they added that they expect it to be in the upper range of that forecast. Wall Street expects Q2 earnings of $1.33 per share. Moody’s is currently a 32% winner for us this year.

Please note that a few of these stocks are currently above my Buy Below prices. I’ll probably adjust them soon, but I want to see the earnings reports first just to be sure.

The Market Rotates against Consumer Staples

Twice a year, the Chair of the Federal Reserve heads off to Capitol Hill to testify on monetary policy. This is usually done near the hottest and coldest days of the year in Washington. A few times, I’ve gone down to the hearing rooms to watch. In fact, once I got the seat directly behind Ben Bernanke.

On Wednesday, Janet Yellen gave what was interpreted as a more dovish stand on inflation and interest rates. Perhaps she was trying to underscore the point that the Fed aims for a gradual approach toward rate increases.

As a result, we saw a lot of financial stocks lag the market on Wednesday. That makes perfect sense, because banks want to see short-term rates go higher. Still, over the past five weeks, financial shares have performed quite well against the overall market. This period, of course, included the Fed’s last rate hike. I think that in general, Wall Street has been surprised by the firmness of the Fed’s stand on interest rates.

This is especially interesting because the rise in financials has been matched by a dive in consumer staple stocks. I should explain that consumer staples are classic defensive stocks. This means they’re the type of business that isn’t much hurt by a broad economic recess. Folks really don’t cut back on their toothpaste buying when the economy gets bad. Instead, they stop buying cars and houses.

When staples lag, as they’re doing now, that’s usually a signal of economic expansion, and the willingness of investors to shoulder more risk. The Consumer Staples ETF (XLP) has seemed to trail the market nearly every day since early June. Bear in mind that people like to buy these stocks because they are so conservative.

We’ve certainly seen this effect on our Buy ListHormel Foods (HRL) and JM Smucker (SJM) have been lagging badly lately. As you might expect, I’m not concerned about either stock. In May, Hormel missed earnings by a penny. For some reason, that was an excuse to punish HRL. This week, the shares dropped to a 20-month low.

Smucker also dropped to a new low this week. Barron’s jumped to the stock’s defense earlier this week when they said, “it’s time to buy Smucker.” Here’s a sample:

Expect more uncertainty if Amazon.com’s (AMZN) $13.2 billion deal for Whole Foods goes through. All this helps explain why Smucker shares have fallen by more than 25% in the past year. But it doesn’t justify the severity of the selloff.

Is it time to nibble? We think so. In fact, we recommend a hearty bite.

Fetching a forward price-to-earnings multiple of less than 14.4 times earnings, Smucker trades at a 19% discount to its historical average. Moreover the stock, at $114.45, offers a market-beating 2.6% dividend yield.

Tuesday morning, Hilliard Lyons analyst Jeffrey Thomison upgraded Smucker from Neutral to Long-term Buy, arguing that the valuation had fallen to attractive levels. Over the next two years, he sees the stock rising almost 22% to $140 a share as earnings growth accelerates.

As investors it’s important to determine if a stock is falling because it’s not doing well, or it’s simply in an out-of-favor sector. With both Hormel and Smucker, the latter appears to be the case. With investing, there’s not much you can do when a good company gets brought down because it’s in an unpopular sector. Actually, that’s often a good time to look for bargains.

Another stock that’s been doing poorly for us has been Ross Stores (ROST). The deep discounter has itself been deep discounted. I think the retailer is going for a very good price here. This week, I’m lowering my Buy Below to $55 per share.

That’s all for now. Next week will be dominated by earnings reports. However, there will be some key economic reports. On Wednesday, the housing starts report comes out. Then on Thursday, we’ll get leading economic indicators plus the initial jobless claims. Jobless claims peaked more than eight years ago, and we’re still close to multi-decade lows. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
2223 Ontario Road NW, Washington, DC 20009, USA

#Trump in #Paris, #Daimler emissions probe, ant towers

Good morning, Quartz readers!


Donald Trump visits Emmanuel Macron in Paris. The US president is reportedly keen on seeing tomorrow’s Bastille Day military parade. Today he and his French counterpart will dine in the Eiffel Tower, tour a museum, discuss Syria—and hold a press conference. It will be the first such conference for Trump since news broke of his son Donald Jr. meeting with a Russian lawyer promising dirt on Hillary Clinton.

Nintendo Switch users get a video app. In Japan, Nintendo isfinally offering a video-streaming app for its fast-selling Switch, a hybrid gaming console launched in March that’s equally at home in the living room and on a subway. Called Niconico, the app allows user comments to appear on livestreams.

Delta Air Lines releases second-quarter earnings. The No. 2 US airline by passenger traffic is expected to report a rise in quarterly profit and revenue thanks to improving average fares. Its stock recently hit a record high.


Details of the Daimler emissions probe emerged. The carmaker faces allegations it sold vehicles with illicit emissions controls for nearly a decade, reported Germany’s Sueddeutsche Zeitung. Citing a court document, the newspaper said more than a million cars could be affected, and two employees are being investigated.

China’s June trade figures beat expectations. Exports from the world’s second-largest economy rose 11.3% from a year earlier, while imports were up 17.2%. The strong performance came amid strong global demand and despite a cooling property market at home.

The Dow rose to a record-high close following Janet Yellen’s testimony. Investors were cheered after the US Federal Reserve chair signaled the Fed will gradually raise interest rates and unwind its massive balance sheet, helping alleviate concerns over a recent dip in inflation.

Brazil’s former president was found guilty of corruption. Luiz Inácio Lula da Silva, a former union leader known as the nation’s “first working-class president,” was sentenced to nearly 10 years in prison for accepting bribes. He remains popular six years after leaving office, and had planned to run for president again next year. His lawyers said he’s innocent and will appeal.

Google dodged a $1.3 billion tax bill in France. After a six-year legal battle the tech giant finally won its case. At issue was whether it avoided taxes in France by routing sales in the country through a subsidiary in Ireland. US tech companies, including Apple, are facing increased scrutiny from European regulators.

The maker of Havaianas flip-flops was sold for $1.1 billion.Alpargatas, the Brazilian firm behind the brand, was owned by the J&F group. The latter aims to offload businesses after being involved in a series of corruption scandals. Three prominent Brazilian banking families teamed up for the purchase. Some 200 million pairs of Havaianas flip-flops are produced every year.


Siyi Chen on how robots will help China take care of its elderly.“China needs robots to care for its large, and growing, elderly population—it’s home to a quarter of the world’s seniors. As fewer Chinese are able to care for their aging parents, the number of retirement homes nationwide is mushrooming. And yet fewer than 20% of retirement homes in China are making a profit. High labor costs are a big reason why.” Read more here.


Yellen won’t say she / Wants another term with Trump / And can you blame her?


Android’s “panic button” should be a part of every user interface. Panic detection modes protect users—and bring operating systems closer to understanding us.

A brown lead won’t make Aladdin any less racist. The best of casting intentions for the Disney film’s live-action remake won’t fix the film’s troubling stereotypes.

We don’t need to ban kids from using smartphones. Panicking over new technology won’t protect them from its negative effects.


Umbrella-sharing startups are all the rage in China. The newest company lost track of almost 300,000 umbrellas weeks after launching.

The Calibri typeface is at the center of a Pakistani corruption case. The authenticity of a deed is in doubt because it’s dated a year before the font it’s typed in was released.

Eastern and western cultures have opposite views of success.Americans want to be big fish in a small pond, while the Chinese are more impressed with small fish in bigger ponds.

Ants make tiny Eiffel Towers to tackle tall obstacles. The sinking structure gets wider as it grows taller, allowing ants to better distribute their weight while climbing.

The first object has been teleported into space. Chinese researchers sent a photon from a station in Tibet to a satellite built for quantum experimentation.

Our best wishes for a productive day. Please send any news, comments, teleported photons, and font histories to hi@qz.com. You can follow us on Twitter for updates throughout the day or downloadour apps for iPhone and Android.