The Moskowitz Report (ACOR, OXY, SAH, FB, MRO, AVAV, PSX, BBY, TSLA, APA, AAPL, XOM, AN, GOOGL, PXD, KR, COP, NKE, NFLX, BA, CXO, HAIN, RIG, FINL, NVDA, HES, SVU, BP, UAA, IBM, OAS, WMT, APC, GPI, MPC) - Stock Market Commentary for Wednesday, August 30, 2017
Well, today’s market was down hard at the open after last night’s North Korean missile launch that crossed over northern Japan. This guy just can’t help himself, but at some point everyone will get fed up with him and take some action. The players in this area are a lot less likely to act in the short term, but the Chinese or Japanese and their allies will figure out the best way to deal with him. The selloff was sharp but unable to hold and after opening down in the DJIA (135), S&P500 (20), NASDAQ (60) and the Russell 2000 the least – only 9, and we started to recover immediately.
By the end of the day we were actually up on the day and closing at or near the highs. The oil market was also soft again but held the lows just under $45.80 but also rallied back to close down only $ .20 at 46.37. But the product markets without having the ability to get refined distillates moved up. The oil stocks were lower again with CVX +.10, XOM +.01, APC-.56, OXY-.05, COP-.44, BP-.10, PSX-.14, RIG +.22, MPC-1.09, MRO-.04, HES-.17, PXD-.50, APA-.48, OAS-.08, CXO-.47, and XLE-.08.
However, make no mistake, aside from all of the human suffering and destruction from Harvey, this will turn into one of the most dramatic rebuilds in history. Our president is actually on top of this with his perspective as a developer and knows what can and cannot be achieved realistically. It is also the biggest infrastructure upgrade and we will see how well it is handled and how that may flow into more projects. The transports were also a part of the markdown (-70) and the turn to close higher (+80) but it is clear that there too will be winners and losers. The rails will probably slower to rebound than the truckers, but the truckers will have to deal with higher fuel costs in the short term.
Auto markets (used more than new) will be helped out in dramatic form. Estimates of the insurance companies as to how many autos will be junked run to between 500,000 to 600,000. Katrina’s number was barely half that. Companies like Group 1 (GPI) is down from 83 to 55 this year, Sonic Auto (SAH) down from 27 to 17, and Autonation (AN) 55-42, should all get a solid lift from the replacements. Of course it will hurt the insurers a bit now, but by New Year’s you can count on rising rates to make up the slack.
All of the big names recovered nicely except NVDA (-.27) worked their way higher; GOOGL +7.77, AMZN +8.67, AAPL +1.60. FB +.89, NFLX +1.84, TSLA +1.84 after being -10 earlier, BA+3.60 and IBM +.49.
On the earnings front we had BBY beat but give poor guidance and fall $7.45 (12%), as well as a warning by Finishline (FINL) and get hit for 35% early but closed –only $1.92 (19%) but also took NKE -1.00, UAA -.50 (3%) but -30% in 3 months, and DKS-.44 but cut in half since May.
Some other names today were ACOR -6.25 (24) on an FDA issue, HAIN -.56 after being +3 preopen, AVAV +3.00 on defense spending (drone maker). One more other area was the grocers with the AMZN / WFM deal closing yesterday were SVU, KR, SFM, and WMT all fell back and rallied to close near unchanged after reports of overwhelming acceptance by the public going to Whole Foods for their “Prime” members.
Tomorrow is another day...CAM
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