Plus, week two of public hearings in the impeachment inquiry begin today, Home Depot disappointed in its earnings release, and Kohl’s shares are tanking.
The three main indexes traded around the breakeven line to start Tuesday with the Dow losing 15 points, or 0.1%. The S&P 500 hovered near the flatline, while the Nasdaq added 0.2%.
In yesterday’s meeting with Federal Reserve Chairman Jerome Powell, President Trump said the meeting was “cordial” but that he “protested” U.S. interest rates that he believes are too high relative to other developed countries. “At my meeting with Jay Powell this morning, I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries,” Trump tweeted. “In fact, our rates should be lower than all others (we are the U.S.). Too strong a Dollar hurting manufacturers & growth!” According to the Fed, Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy,” and that policy makers would set policy “to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.” New York Fed President John Williams said in a speech this morning that he considers the U.S. economy to be “in a very good place.” “I think we’ve gotten the adjustments that we need at least right now. Monetary policy is well-positioned given the recent actions. My outlook is one for continued growth. I think we have monetary policy in the right place. Our key thing is we’re not linked in to any specific decisions” at future meetings.
Goldman Sachs said in a note from yesterday that the trade war’s drag on the world’s two largest economies will gradually fade in 2020 as tariffs on imports from China have likely peaked. According to the note from economists led by Jan Hatzius, the recent progress toward a partial phase one trade deal and expectations of an extended truce implies that the drag will disappear, benefitting both countries as well as the global economy. However, former White House chief economic advisor Gary Cohn said that he believes President Trump will go ahead with the tariffs planned to go into effect on December 15 if the U.S. and China haven’t yet agreed to a trade deal. “I think he thinks that that’s a forcing function and if he keeps blinking, he loses credibility in the Chinese eyes,” Cohn said to CNBC.
Week two of the public impeachment hearings on President Donald Trump begins today with testimony from Alexander Vindman, director for European Affairs on the National Security Council, and Kurt Volker, who until recently was Trump’s special envoy to Ukraine, among others. Other witnesses have described Volker as a key player in the efforts led by Rudy Giuliani at Trump’s behest to push Ukraine into launching a public probe into former Vice President Joe Biden, a Trump rival, and Biden’s son. Volker is expected to tell the House Intelligence Committee that he wasn’t involved in discussions where financial aid was linked to the probe may have been brought up. Vindman said in his testimony this morning that he reported his concerns about the July 25 call between Trump and the Ukrainian president “in official channels, to the proper authorities in the chain of command. My intent was to raise these concerns because they had significant national security implications for our country.” Vindman also called Rudy Giuliani and Ukraine prosecutor general Yuri Lutsenko “disruptive actors” in Ukraine during his testimony, saying they were “promoting false information that undermined the United States’ Ukraine policy. …The NSC and its inter-agency partners, including the State Department grew increasingly concerned about the impact that such information was having on our country’s ability to achieve our national security objectives.”
Home Depot shares are down more than -5% this morning after the home improvement retailer cut its 2019 forecast and reported same-store sales that were well below expectations. The company said Q3 revenue, which came in at $27.22 billion vs. $27.53 billion expected, was hurt by investments it is making in its business. “Our third-quarter results reflected broad-based growth across our business, yet sales were below our expectations driven by the timing of certain benefits associated with our One Home Depot strategic investments,” said CEO Craig Menear in a news release. “We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions.” Home Depot said it expects sales growth of just 1.8% for the year, down from a prior estimate of 2.3%, and also cut its same-store sales forecast to 3.5%, down from 4%, for the fiscal year.
And Kohl’s shares have tanked -18% this morning after it slashed its profit outlook for the year in its quarterly report as earnings and sales missed estimates. For its fiscal Q3, Kohl’s reported earnings per share of $0.74 on revenue of $4.36 billion, compared to Wall Street’s expectations for earnings of $0.86 per share on revenue of $4.40 billion. “The quarter started off positive in August with another successful back-to-school season and ended strong in October,” said CEO Michelle Gass in a statement. “We enter the holiday the holiday period with momentum and are strategically increasing our investments.” Gass added that the company is “investing in the short-term,” which should help the company “drive profitable growth over the long-term.” The disappointing report from Kohl’s sent other retailers reeling, including Macy’s and Nordstrom, whose shares are currently down -10.8% and -6.6%, respectively.
Stocks We’re Watching
CoStar Group Inc (NASDAQ: CSGP): CoStar shares rose as much as 3% yesterday after the company reported fiscal third-quarter revenue of $353 million, representing a 15% year-over-year increase, while net income jumped 24% year-over-year to $79 million. “We chained very strong third quarter 2019 financial results,” said Andrew C. Florance, Founder and CEO of CoStar Group in a statement. “We continue to deliver excellent results as we generated Company-wide net new bookings of $50 million in the third quarter, an increase of 27% year-over-year. Through the first three quarters of this year, our quarterly net new bookings average was $52 million, a 32% increase over the average quarterly bookings for the comparable period in 2018. We are also very pleased with the continued growth of Apartments.com, which generated 20% year-over-year revenue growth in the third quarter of 2019 and is now at an annual revenue run rate of over $500 million.”