Wall Street Calm Before Earnings Storm

NASDAQ: QQQ | Invesco QQQ Trust, Series 1 News, Ratings, and Charts

QQQ – A slew of earnings are on tap this week.

After all the ups and downs this past week, all three major indices closed basically close to unchanged. For the year, the Nasdaq (QQQ) is far and away the best of the performers, gaining just over 13% on the year. The S&P 500 (SPY) has gained nearly 5% and the Dow Jones Industrial Average (DIA) is up just over 1%. The Nasdaq will be my tell as enter the week, considering the expected earnings results from the likes of Facebook (FB), Google (GOOGL) (GOOG), Amazon (AMZN), and Intel (INTC).

President Trump once again dominated the overall headlines with the markets swinging about as we were getting headlines surrounding the President’s meeting with Russian president Vladimir Putin in Helsinki, Finland on Monday. Lots of media opinions regarding what many considered the President being too chummy with the Russian leader. One thing about President Trump is that he stays consistent to what he believes in, putting politics aside. He’s preached about Russia being considered an ally and he’s not being influenced by some in the media’s dislike. The point in bringing this up is for investors who may be afraid of the markets and how they will react. Wall Street has sponged up all the controversy in stride to this point, so unless things get messy for POTUS, Wall Street seems little concerned about the global headlines. Case in point, late in the week, President Trump came out in an interview with hints the U.S. is intending to slap tariffs on $500 billion worth of Chinese goods. While futures did pull back, dip-buyers came in and for much of the day the markets held, only to close slightly lower. So Wall Street has built a thicker skin with regards to headlines out of the oval office, but from an investor standpoint, we continue to watch and report. One thing’s for certain, it’s never usually a boring day with the current administration.

One interesting battle for POTUS that’s worth watching closely for the bond and income investors especially is President Trump’s public statement about not being thrilled with further interest rate hikes, following Federal Reserve Chairman Jerome Powell giving Congress his semi-annual update on the economy and monetary policy before both the Senate Banking Committee and the House Financial Services Committee this past week. The chairman’s testimony basically reinforced the view that improving economic conditions should allow the Fed to continue hiking rates gradually. Not a instant reaction from the bond market, but we did see some late-day slippage Friday, as the 10-year Treasury closed out at 2.90%. Last Friday, it closed at 2.83%. Still far from the high we saw several months back when the 10-year got up to 3.07%.

Back to earnings from this past week, the street especially liked the results out of CSX Corp. (CSX), ASML Holding N.V. (ASML), and United Continental Holdings (UAL). On the flipside, traders ran for the exits when Alcoa (AA) and Netflix (NFLX) reported and issued guidance that spooked Wall Street. Besides the big tech giants I mentioned at the start, we’ll be getting results from Visa (V), Mastercard (MA), Verizon (VZ), Boeing (BA), and  McDonald’s (MCD) just to name a few. This week sets up to be one of the busiest for third quarter earnings so settle in and get ready for the earnings deluge about to begin.

Work Smart But Work Very Hard

Amazon.com has built an amazing business partly because they have focused on learner margins and higher volume. It takes a lot of courage to go down that route, especially when the opposite is what has been preached as being the end-all business. Maybe it’s the fact that Amazon understood trust is as big a driver of long-term success than just higher margins. The scariest opponent is the one willing to die for the win Tends to be a movie cliche, but it’s really the truth in certain businesses. Working smart is often lauded as the optimal way to approach one’s daily output, but how scary is it when a company work smart and work hard. That’s the camp I want to be in from an organization standpoint. As a former little league baseball coach, I was into coaching my players to do both. Be smart and work hard in practice. Putting this approach into anything from sports to business is really the only way to compete.

Thanks for reading and have a great weekend!

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