 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Wednesday's Headlines 1. Markets stall as the earnings parade marches on Markets Closed
 Getty Images/Rick Friedman
A Very Busy Tape The Nasdaq hit an intra-day record today, but couldn't hold the gains. The S&P500 and the DJIA barely budged, but ended the day slightly lower.
More than 40% of S&P500 companies have reported earnings so far, with 13% of them doing so today, including some big names. Here are a few highlights, courtesy of Reuters.
Tesla's Big Miss Tesla had warned that its first quarter results would be underwhelming, but investors may have been surprised at just how bad they were. The company reported a loss of $2.90 versus an expected loss of $0.69 cents. Revenue came in at $4.54 billion versus $5.19 billion expected. The automaker was hit by a perfect storm of the loss of a $7500 tax credit for prospective Tesla buyers, manufacturing and delivery issues for its new models, and a $920 million debt payment it had to pay in the first quarter. Shares fell 2% today but are up a little over 1% in after hours trading. Maybe all the bad news is out?
That's just a smattering of the results that came in during the day, but, as you can see, it's a pretty mixed bag. Boeing also reported today, and we take a closer look at the issues besetting the airplane maker a little later on.
Disconnected The S&P500 is off to its best yearly start since 1987. As we dance around record highs yet again, it's hard to ignore the disconnect between what's happening in the market and what is happening inside the companies that make up the market. We've written about how everyone has forecast lower earnings growth for 2019 and 2020 given the global economic slowdown and the fading tailwind of the 2017 corporate tax breaks. We know this rally can be attributed to the Federal Reserve's about-face on interest rates at the beginning of the year, which has made stocks more attractive given the low yields that fixed income securities like bonds are providing. We also know that analysts and investors may have cut their earnings forecasts too much going into this reporting season, which is evidenced by the number of companies who are handily beating those forecasts.
That said, the divergence between forward earnings and the actual performance of the stock market in the U.S. is dramatic.
Read More: Why the Rotation out of Growth Stocks Spells Trouble
Remember - stocks are priced based on their forward earnings estimates. How much profit or free cash flow will a company generate in the future? In the case of non-profitable companies, investors typically look for revenue and margin growth, which can eventually lead to profits. Still, the stock market is cruising while future corporate profits are deteriorating. That's a worrisome development. If not for low interest rates, who knows what 2019 would've looked like.
Here's what that disconnect looks like, courtesy of Bianco Research.  On the Other Hand... U.S. consumers are feeling pretty strong right now. The U.S. Dollar is dominant again, which might hurt companies like Caterpillar who do a lot of business outside the U.S., but purchasing power is strong here at home. Wage growth and the jobs market are both healthy while inflation is tame. Gas prices are starting to rise again - thanks to rising oil prices - but they are still relatively manageable. Home sales are starting to pick up - thanks to low interest rates and the joy of Spring - so consumers are feeling confident.
As Brad MacMillan of Commonwealth Financial likes to remind us, "Confidence is a key driver of stock values. Anything that pushes confidence higher—like headlines announcing a new high—can act to push stocks even higher."
Brad chartered the Case/Shiller S&P500 Price to Earnings Ratio against consumer confidence over the past 10 years to show the correlation. It sounds complicated, but it isn't. Even when corporate profits were low, like they are now, the stock market climbed if consumer confidence was high. This is another way of saying that sometimes fundamentals don't matter... It's how we feel that can drive market sentiment and direction. Here's the chart. 
 chart courtesy tradingview.com
Boeing's Problems Multiply Boeing reported first quarter earnings this morning that were mostly in line with analysts expectations, but the airplane maker, which has been beset by investigations and a production halt to its 737 AirMax Jet due to two fatal crashes, pulled its 2019 forecasts.
Earnings: $3.16 a share vs. $3.16 a share expected Revenue: $22.92 billion vs. $22.98 billion expected
The company announced it is also pausing share buybacks for the time being and is focusing its efforts on "... safety, returning the 737 Max to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public."
Boeing's commercial airlines division, the company's largest, reported a 19% drop in airplane deliveries, mostly due to the grounding of the 737 Max. Goldman Sachs says the 737 Max accounts for up to 33% of Boeing's revenue over the next 5 years.
Boeing reported that it has completed more than 135 test and production flights of updated software for the 737 Max. The Federal Aviation Administration, as well as regulators in other countries, grounded the airplane in mid-March after the crash of an Ethiopian Airlines plane. That fatal crash came five months after a Lion Air 737 Max crashed in Indonesia. A total of 346 people died in the crashes.
Charts courtesy of www.koyfin.com  Anadarko is the flavor of the month. See why it is the inspiration for our 'Word of the Day', today.  AT&T is dealing with the integration of Warner Media and some subscriber slippage.  A rough day of trading for global markets, unless you are in Egypt, Nigeria, Qatar and Switzerland. Word of the Day In light of Occidental Petroleum's bid to buy Anadarko Petroleum for $38 billion, outbidding Chevron, which had already made a bid for the driller for $33 billion, we have chosen Bidding War as our word of the day.
Simply put, a bidding war refers to a circumstance in which two or more prospective buyers of a property compete for ownership through incrementally increasing bids.
There is nothing unusual about another suitor coming in to outbid another company in a takeover battle. It happens all the time. What might be a problem for Anadarko is that, according to the WSJ, its board agreed to boost the pay of its CEO Al Walker and other executives the day before the Chevron bid was announced. Their pay would be increased in the event of a sale of the company.
Smells kind of oily, right?  photo courtesy of mikemilken.com
Today in History On April 24, 1990, Michael Milken, known as the "Junk Bond King", pleads guilty to five technical counts of violating securities laws. He is sentenced to ten years in federal prison but is released early for good behavior.
Since his release, Milken has been remaking his image and is attempting to secure a pardon for the charges that he was convicted of in 1990. He created The Milken Institute, an economic think tank that hosts conferences around health, politics, media and culture.
Read More: Who is Michael Milken?
Source: Jesse Kornbluth, Highly Confident: The Crime and Punishment of Michael Milken (William Morrow & Co., New York, 1992), p. 300.
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Wednesday, April 24, 2019
An Earnings Parade
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