Markets “In a Nutshell” for October 22, 2019
Investment Week at a Glance
Stocks finished mostly up for the week. The Dow Jones Industrial Average was down 0.17%, the S&P 500 rose 0.54%, the New York Stock Exchange Composite (2,000 stocks) rose 0.62% and the average investors index (Value Line Index) was up 0.79%. Foreign stocks (DJ Global ex U.S.) were up 1.21%. Bond prices were unchanged for the week, with the 10-year U.S. Treasury ending the week at 1.75%. (Data source: Wall Street Journal)
Earnings Season Begins Positively
3rd quarter earnings season has started off better than expected, with companies reporting results that are showing earnings growth has been about flat for the past 12 months, but much better than the negative low single digit earnings analysts were expecting. While we’re only through the first wave of earnings reports, early positive signs like this tend to be reflective of the wider business environment and it’s reasonable to expect similar results from the broad market. As always, company management’s forward guidance for the 4th quarter and into 2020 will be crucial to how stocks will perform in the near term. (Barron’s)
Entertainment Stocks Look to Navigate Changing Market
In Barron’s cover story this week, there is an in depth look into how the shift from cable to streaming is affecting various entertainment businesses and the possible implications on their stock prices. With Disney, Apple, WarnerMedia, and NBC all about to enter the streaming service competition, high-flying tech stock Netflix is about to see an amount of competition for subscribers and content that it hasn’t had to deal with in its relatively brief history. There is no consensus on how the cord cutting and subscription bundling will eventually shake out, but the mere presence of increased competition will certainly hamper Netflix’s debt-fueled growth. How this plays out for traditional media companies like WarnerMedia and NBC is much more difficult to predict, but seems like a necessity to survive in a world where there are 11 million less traditional cable TV subscriptions, but an ever increasing premium on content. (Barron’s)
China Growth Slows
China’s GDP growth continued to slow in the 3rd quarter with a reported figure of 6%, bringing the country’s growth to new lows that haven’t been seen since the country’s current measure of GDP was adopted in 1992. While 6% GDP growth is envied by the U.S. and the rest of the developed world, it is a cause for concern in China, where the accuracy of their data is already questionable. With the downward pressures building, the chances of positive trade developments with the U.S. are building with the “phase 1” deal expected to be implemented in the near future. (Wall Street Journal)
With a vote to finally solidify Brexit on October 22, 2019, how many days has it been since the United Kingdom voted to leave the European Union?
Have a Great Week!
4) It has been 1,216 days since the United Kingdom voted to leave the European Union on June 23, 2016.