The Dow Jones Industrial Average is doing nothing today. But that doesn't mean stuff isn't happening. In today's Morning Movers, we...
•...wonder what medication the market's taking; •...highlight General Motors (GM) big jump on SoftBank's investment; •...and marvel at Sears Holdings (SHLD) big earnings-related drop.
Yes, Roseanne Barr's on Ambien. But are investors on Xanax?
Witness the market's sudden decision to shrug off the crisis in Italy and start humming happy tunes instead.
Markets are steady, Italian bonds are rallying, and the euro continued its surge following the brief tremor at the start of the week, as apparently the markets have decided there's no big worry at all.
Anyone who thinks that was a "panic" has forgotten what a panic looks like. (But then, to most market traders, 2008 is already ancient history).
Even after the swings of the past few days, Italian ten-year Treasury bonds still sport a yield of just 2.74%. That's less than you'd get from the equivalent U.S. Treasuries. It's nearly a full percentage point less than the yield on investment grade US corporate bonds of similar maturity, and it's less than half what you'd get from a basket of high-yield US corporate bonds.
Based on bond market inflation forecasts, the nominal yield on Italian Treasury bonds right now is about half the real, inflation-adjusted yield of a basket of high-yield US corporates.
So I guess there's no risk that this political crisis will flare up again. And I guess there's absolutely no risk, none, that Italy might, say, crash out of the euro, let alone the European Union.
Wow. Who knew things were so rosy?
1. The leading euroskeptic parties in Italy are now polling about 57%.
2. What's news today will be old tomorrow, because Italy changes governments more often than you change your mobile phone. (Don't believe me? Italy has had at least 65 governments since the Second World War. That's about one per year. How often do you change your phone?)
3. In the twenty years since the launch of the euro, according to International Monetary Fund data, Italy's real per capita gross domestic product has effectively not budged.
4. Meanwhile, over the same twenty years, Italy's national debt has risen from 100% of GDP to 120%.
But I guess there's no at all risk the Italians might decide to quit the euro. None at all.
Smiley face emoji. Happy dance.
In other news, Asian markets boomed overnight. The Shanghai Composite jumped 0.8%, Hong Kong's Hang Seng 1.4%, and Japan's Nikkei 225 0.8%. So I guess there's no risk of a trade spat either.
Yes, it's all good.
Earnings & News
Box (BOX) is down 5.5% to $26.24 after reporting first-quarter earnings. The cloud computing firm lost seven cents a share on revenue of $140.5 million. Analysts were looking for earnings of eight cents a share on revenue
of $139.65 million. For the full year, it expects to lose between 16 cents and 19 cents a share, compared with the 19 cent per-share loss consensus estimate.
Burlington Stores (BURL) is up 5.3% to $143.71 after reporting first-quarter earnings. The off-price retailer earned $1.26 a share on revenue of $1.52 billion. Analysts were looking for EPS of $1.09 a share on revenue of $1.49 billion. For the full year, it expects to earn between $5.90 and $6 a share, compared with the $5.85 per-share consensus estimate.
Cars.com (CARS) is up 3.4% to $27.49 on reports that it may have hired JPMorgan to explore a potential sale of the company.
Dollar General (DG) is down 7.1% to $89.70 after reporting first-quarter earnings. The discounter earned $1.36 a share on revenue of $6.11 billion. Analysts were looking for earnings of $1.39 a share on revenue of $6.18 billion. For the full year, it expects EPS of $5.95 to $6.15, compared with the $6.07 consensus.
Dollar Tree (DLTR) is down 8.3% to $88.34 after reporting first-quarter earnings. The discounter earned $1.19 a share on revenue of $5.55 billion, while analysts were looking for earnings of $1.23 a share on revenue of $5.56 billion. For the full year, it expects to earn between $5.23 and $5.62 a share on revenue of $22.73 billion to $23.05 billion. Consensus calls for EPS of $5.64 on revenue of $22.97 billion.
General Motors (GM) has jumped 11% to $42.07 on reports that SoftBank invested more than $2 billion in its self-driving car unit.
Guess (GES) is up 0.5% to $24.44 after reporting first-quarter earnings. The apparel retailer lost 23 cents a share on revenue of $521.3 million. Analysts were looking for a 23 cent per-share loss on revenue of $508 million. For the full year, it sees EPS of 88 cents to 99 cents, compared with the 97 cent-per share consensus.
Sears Holdings (SHLD) is down 7.5% to $2.97 after reporting first-quarter earnings. The department store lost $3.93 a share on revenue of $2.89 billion. The single analyst estimate called for a $1.51 per-share loss on revenue of $2.86 billion. Sears also said it would close 72 underperforming locations.
United States Steel (X) has gained 4.2% to $37.77, while AK Steel (AKS) has climbed 4.8% to $4.80 on reports that the Trump administration will let tariffs on steel and aluminum take effect. - Teresa Rivas
Upgrades & Downgrade
Biogen (BIIB) is up 1.2% to $298 after Canaccord Genuity upgraded it to Buy.
Corning (GLW) is up 2.2% to $26.92 after Morgan Stanley upgraded it to Overweight.
Micron Technology (MU) is down 2.9% to $60.80 after Morgan Stanley downgraded it to Equal Weight. Momo is up 1.4% to $43.72 after UBS upgraded it to Buy.
Paccar (PCAR) is down 1.4% to $63.37 after Goldman Sachs downgraded it to Neutral. - T.R.
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