Your Thursday Market Blip 8/15/19

Your Thursday Market Blip 8/15/19

Stocks traded back and forth during the day, but at a much more mellow level than recent sessions. After yesterday’s fire sale, the Dow finished up 99.97 points and closed at 25,579. Partly propping up the Dow was a positive earnings report from Walmart. Conversely, Cisco saw a sell off despite a good earnings report, as there are still concerns around companies with reliance on China.

Walmart reported earnings, beating analyst estimates and more importantly raising their expectations for fiscal year 2020. Revenues came in at $130B for the quarter, which shows good consumer strength, and is also more sales than the next 24 grocery store retailers combined. Walmart has improved their online sales by 37%, and have started to gain ground in this area since their acquisitions of and Flipkart. The stock was up about 5% on the news.

As investors continue to pile into treasuries for the 1.55% yield, bank stocks continue to be unloved. The big banks now have $1.5 trillion in excess reserves, and are trading at a forward stock price of nine times earnings, which is half the rate of the S&P 500. In addition, the average dividend yield is 3.1%, about double that of the 10 year treasury note, and 50% more than 30 year bonds.

Bernie Madoff whistleblower, Harry Markopolos, has spoken out against the financial reporting of GE, and has provided his report to law enforcement. He believes their accounting is highly questionable, to the likes of Enron. There are some lingering questions regarding this report as there could be a conflict of interest considering he is working for an undisclosed hedge funds that could be short the stock. Markopolos says GE is hiding significant losses, such as $29 billion in long-term care losses, that he believes will lead them to file for bankruptcy. His data shows GE paying $5.27 in claims for every $1 collected in long-term care premiums, and this margin continues to widen. GE released a statement saying that they stand behind their financial reporting. The stock traded off more than 10%.

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