Currently Obsessed With...Tumi Bags
MARKET COMMENTARY FOR WEEK OF August 6, 2018
We are a fan of all things lux and our love extends to travel. This is why we love Tumi . The luggage and handbag company literally has a bag for everything. Whether you are headed out of town for Paris fashion week or headed to the board room to discuss major money moves... Tumi’s got you. Tumi is owned by Samsonite (SMSOF:US) and the stock price at the close on Friday was $3.84, the bags are substantially more expensive.
Last week investors were poppin’ bottles because everything was coming up rose'. As companies continued to report their earnings, the S&P 500 rose .8% for the week and theNASDAQ finished the week up 1%. July’s jobs report was also released last week and it too stepped out in Gucci and posed for paparazzi pics. Though stocks did well across the board, there were a few overachievers. Let’s take a look at who wanted to be a smarty pants.
LET'S BE CLEAR...
The market had a lot going on last week with the release of the July jobs report and continued earnings releases. The U.S. economy added 157,000 new jobs and the jobless rate fell to 3.9%, reassuring investors that the labor market is Gucci. Through 2018, we are averaging 215,000 new jobs a month and wages are up slightly. Overall, this is a good sign for the economy.
Last week was the height of earnings season as 30% of the companies in the S&P 500 released their earnings for the second quarter. The news has been very strong overall with 80% of companies reporting earnings per share above expectations. Corporate earnings are up 24% and sales growth is up 10%. Clearly, some of us have been shoe shopping! Two companies in particular shined bright this week. Let’s put on our Dior shades and take a look.
Tesla released its second quarter earnings on Wednesday and we listened to the earnings call with popcorn...and vodka. After CEO Elon Musk’s fiasco on last quarter’s call where he told analysts they were “killing” him with “these dry questions," we’re guessing Teslaleadership needed something a little stronger than water to get through the call too. This time Elon was joined by a slew of Tesla officials responsible for this and that...basically anything to keep Elon from talking more than he should. He did however, apologize to the two analysts he snubbed on last quarter’s call and was very gracious. Tesla shares closed 16% higher on Thursday as Wall Street nerds seemed to accept his apology...that and Tesla’s 2nd Quarter numbers were pretty glossy too. Here are the highlights:
Tesla’s stock ended at $349.54 per share, its highest close since June 28, 2018
It also had its largest daily percentage gain since December 2013
It was the best performer on the Nasdaq 100 (Index with a high concentration of tech stocks) on Thursday
It ended flat on Friday, bringing weekly gains to 17%, its largest weekly gain since mid-May 2013
Revenue rose to $4 billion from $2.77 billion a year ago
Cue the glitter and confetti and have Beyonce take the stage... Apple became the first $1 trillion company on Thursday! Its shares hit $207 per share. Amazon was slated for this top spot but too bad, so sad Apple just took it!
Apple stock rose nearly 3% to a new all-time high for after-hours trading on Tuesday after the company released its earnings for the second quarter. Wait. You can still buy stock after the store is closed? Yep. Shares can still be bought and sold outside of the hours when the stock exchanges are open (9:30 a.m. to 4:00 p.m. EST.). After-hours trading uses an electronic communication network or ECN and is available to individual investors as well as institutions. On the earnings call, Apple’s CEO, Tim Cook shared just how much the company has been killin’ it. Here is the breakdown:
Wall Street nerds expected the current quarter (Ending in September) revenues to be $59.57 billion. Apple said nah, we’ll be between $60 and $62 billion.
While Apple didn’t sell as many iPhones as Wall Street predicted, they sold more of the higher priced versions. Wall Street nerds expected Apple to sell iPhones for an average price of $693. Again, Apple said, nope we sold those things for $724.
The last stat is particularly interesting as Apple usually has their worst quarter average iPhone prices in the Spring as they get closer to a release of a new iPhone. Clearly. Who buys a new iPhone when another is getting ready to drop? But Apple saw an increase this quarter from June of last year. Told you! Killin’ it!
Apple, like Drake, is "getting money both ways" because in addition to slinging iPhones, they make mad dough in services revenue. What’s that? Um, streaming services like Apple Music and third-party subscription video products...come again? You know when you watch Netflix (NFLX) from your Apple TV? Yea, Apple gets a cut. Video streaming subscription revenue is up 100% from last year.
They did a deal with the Queen. Yes, Apple and Oprah did the darn thing! O has signed a multi-year content partnership deal with Apple to create programs that will be released on Apple’s direct-to-consumer video service.
Continued double-digit growth in China generating $9.6 billion is sales up from $8 billion last quarter. Apple hasn’t seen any direct effect on their products due to all the trade noise but Cook said ultimately tariffs are passed onto the customer. Cook has been transparent about him pulling both China and the U.S. aside and saying, “Let me talk to you for a sec.” No one is interested in the cost of their iPhone or its servicing going up...no one!
FYI, Apple’s stock has gained 32% over the past 12 months.
PBDs (Pretty Big Deals)
Viacom (VIA) – The 9th largest revenue-generating broadcasting, cable, and media company (They own Paramount Pictures, Comedy Central, Nickelodeon, BET, VH1, MTV and all of its derivatives) had a great week as Paramount’s new “Mission Impossible” movie did $61.5 million at the U.S. box office during its opening weekend. This was the best opening for the Mission franchise and the second-best of Tommy Cruise’s career.
Trump threatens (again) – Last weekend Trump tweeted again that he would see the government shutdown in September unless Congress provided the cash needed for his wall...you know the one. For those getting shook about the possible effect on stocks, chillax, the market hasn’t been giving these types of headlines the time of day, so we should be good.
Starbucks (SBUX) – Everyone’s favorite morning starter is considering partneringwith Alibaba (BABA) for coffee delivery in China. Alibaba is a Chinese multinational e-commerce, retail, internet and tech company. Think Amazon but with more of a platform for brands.
NAFTA – U.S. and Mexican trade bosses are moving closer to a compromise on NAFTA. Wait, spell that out. The North American Free Trade Agreement establishes the rules of trade between the U.S., Canada and Mexico. It’s currently being renegotiated. Canada has been hanging back during these latest talks. But, hopefully our avocados will be safe after all.
The Lux List
BMW: The lux auto company owning BMW,Rolls Royce and Mini released earnings and they are on track with their glittery outlook for 2018.
Hugo Boss: The German luxury fashion brand has been strugglin’. It reported a 7% decline in profit for the second quarter. Despite the decline, the brand remains optimistic for the remainder of 2018.
We Ask and Our Squad Answers
Our squad is comprised of ten Wall Street experts from the top asset management firms. Each week we ask them a question, and they poll in!
Do you think job creation will continue at the same pace for the remainder of the year?
60% is Hopeful that the job creation will continue at the same pace.
40% say They can't say for sure
Agree with the squad? Tell us on Twitter #SavvySquadPoll