Stocks were popped after the White House threatened to slap a 5% tariff on products that come over the border from Mexico in an effort to force more cooperation from Mexico regarding immigration. The duties will hit avocados, cars and hooch. Markets reacted to the unexpected news with a high-volume selloff and the Dow finished the day lower by 355 points at 24,815. For the week, the Dow is down about 745 points or 2.9%. For the month of May it was off roughly 6.5% but since January 1st the Dow still has a 6.5% positive gain. Both IBD and BTS market signals are negative and BTS has recently moved its portfolio to US treasury bonds which is an indicator that Dan the Man over at BTS thinks market risk could linger a bit longer.
Costco reported earnings yesterday beating both revenue and net income estimates. Revenue gained 7% and net income grew by 11%. Same store sales were up 5.6% and memberships gained by 400,000. The company has opened 11 new stores so far this year and is on track to open 21 stores in 2019. On August 27th Costco is planning to open its first store in China. E-commerce sales were up 22% and top selling items were electronics and products in the health and beauty segment. Costco bought back $44 million in stock. Regarding tariffs, the company said some prices will rise but is working to source more products from within the US and suppliers outside of China.
Uber reported its first earnings as a public company and revenue was up a solid 20% and even while they continue to lose money the net loss for the quarter was less than expected. Shares were actually higher today in an otherwise down market. Uber is thinking of opening up a brewery. They will call it “Ubeer”. Ha ha
US personal incomes rose 0.5% for the month of April making this the second highest reading in the past two years. Spending by consumers also gained a respectable 0.3% coming on the back of a 1.1% increase in March. These numbers bode well for the economy as we are now two thirds of the way through the second quarter.