Silence of the Chickens

Tale of the Tape

Good evening everybody. You gotta give this market credit and pay some respect. 👊🏻

Stocks shook off sober words from Warren Buffett over the weekend and the early weakness to rally late in the day and close higher. The S&P 500 opened down 1% plus yet managed a .42% gain by the close.

We’re still in a channel after the recent rally but the obvious take was that stocks would tank. As any student of markets knows, the obvious is often dubious and the unexpected must be expected.

Airlines couldn’t shake it off as easily on the news Buffett sold his entire stake. Delta closed off 6%, United off 5%, JetBlue off 4% – you get the idea.

Sector performance was a Tale of Two Cities – Energy and Tech were strong, which is what you want to see, while Financials and Industrials were weak, which is not what you want to see.

Later this week, we’ll do a little chart focus on the Industrials sector, because they are sucking eggs YTD and often go unappreciated in terms of their importance to the health of the broader market.

Here are the closing numbers:

S&P 5002,842+0.42%
Russell 20001,263+0.28%
Dow Jones23,749+0.11%

Silence of the Chickens

Tyson Foods, the largest meat supplier in the nation, reported a 15% decrease in profit and warned that it would be unable to predict profitability through the rest of 2020. It fell 8% on the day.

The company is having a difficult time on multiple fronts all related to the COVID-19 pandemic. Issues include the wellbeing of its employees, the supply chain, and a shift to increasing grocery shipments while decreasing restaurant shipments.

We can make all the campy headlines and post all the silly gifs we want (and we will), but this is serious stuff. The US takes the food supply for granted along with the complex web of interconnected systems required to get nutrient dense animal protein from the farm to your table.

For whatever faults they might have, at this moment you have to be rooting for the ingenuity of the agricultural industrial complex, not just Tyson, to solve a very difficult array of problems and get our nation’s food supply back to where it needs to be.

On a positive note, $TSN stock has not made a new YTD low, despite the bad news. Hang in there chicken.

“Too high”

Tesla snapped back and closed above where Elon Musk downgraded the stock via his lunatic Twitter rant last Friday.

Here’s the 15 minute chart:

$TSLA jumped 8.54% today and Morgan Stanley raised its price target from $480 to $660. 

If Tesla keeps ripping, will Elon keep tweeting? We kinda hope so…

Earnings After The Close

Shake Shack just posted an earnings beat but missed on revenue.

Here’s the numbers real quick:

EPS: $0.02 vs ($0.01) est.
Revenue: $143.17M +8.0% Y/Y

$SHAK was up 3% after hours.

Chegg, the service college students use to “help study”, posted strong earnings. The company beat on both the top and bottom lines, here’s the results:

EPS: $0.22 vs $0.15 est.
Revenue: $131.59M 35.1% Y/Y
Subscriber Growth: 35% Y/Y 🤯

$CHGG was up 16% after hours.

Fasten Your Seatbelts

Airline stocks fell today after Warren Buffett said he sold all of his airline holdings and voiced concern for the industry. Among other things, Buffett said, 

The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way. 

Even the Oracle has no clue what’s going on.

Airline ETF, $JETS, is down 57% YTD. 

Gold’s Gym Goes Banko

Gold’s Gym filed Chapter 11 bankruptcy as a result of the coronavirus pandemic. Here’s the statement from CEO, Adam Zeitsiff:

We are filing this to restructure the company, and this is strictly as a result of the pandemic. We were on a massive turnaround. We were refranchising stores, awarding company-owned stores to franchisees. We were all over the place growing our business. We were ahead of plan for the year. And then COVID-19 hit, and this is simply our way of acting swiftly to ensure we have a long-term viable and sustainable business.

Financial Literacy Works

It is astonishing what people will argue against it, but there are actual critics of financial education. It doesn’t work, they whine. It’s a waste of time, they chime.

Among other problems, we have a crisis in this country around the way people handle money. Debt is off the charts, especially for college loans, and the average Joe or Jolene doesnt have $500 in a safety account in case the roof leaks or the car breaks down.

So it is great to see scientific evidence of the benefits of financial education for our nation’s youth.

Tony Isola, who is a leading advocate for the financial wellbeing of teachers and students, summarizes the research. Thank you for your tireless effort, Tony.  Definitely check this out.


Earnings Tomorrow…

Be sure to know when your stocks report earnings. Here’s the full earnings calendar.

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