 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Tuesday's Headlines 1. U.S. Markets Flat on Tempered Trade Expectations 2. Massive Hack Attack on Capital One 3. Apple's Best Third Quarter 4. A World of Low Interest Rates Markets Closed
 credits: REUTERS / Robert Galbraith
Markets Today
U.S. markets traded slightly lower today as the U.S. China trade talks recommenced in earnest in Shanghai. The Trump administration downplayed the likelihood of the two countries reaching a broader deal that would prevent further tariffs being assessed and potentially drop the existing ones in place.
The trade war has taken a back seat to the Fed's decision on interest rates, due out tomorrow at 2 p.m. ET. As a reminder, the expectation is that the Fed will lower interest rates by 0.25%.
As for the trade war, investors seem to be accepting the fact that there will not be a favorable solution anytime soon, according to Goldman Sachs. While the trade war and China have been cited less in earnings reports last quarter than the first, the uncertainty is still weighing on industrial stocks.  Apple Earnings
Apple, one of the more pivotal companies to report quarterly results, delivered a solid bushel of good news this afternoon. Earnings and revenue topped expectations, as Apple brought in $2.18 per share in profit and $53.8 billion in revenue for the quarter. CEO Tim Cook called it the company's "Best June quarter ever."
More importantly, Apple gave strong guidance for the fourth quarter (Apple is on a fiscal calendar), saying sales will come in between $61 billion to $64 billion.
China Sales and iPhones Sales in China fell 4% in the quarter, far less than the 22% decline in the second quarter. In total, Apple pulled in $9.16 billion from China. CEO Tim Cook credited a reduction in a VAT (Value Added Tax) for Chinese consumers from 16% to 13% that helped pare the losses.
Sales of iPhones, which are mostly manufactured in China but not subject to tariffs (yet...) fell 12% in the quarter. CEO Tim Cook said in the company's press release that declining iPhone sales were offset by growth in Apple's Services business. Apple's Services business includes the App Store, iTunes, and its new media offerings. It accounted for $4.1 billion in the quarter.
Shares of Apple are up more than 20% so far this year and jumped 4% in after-hours following the earnings announcement. As we have said, it is the second most widely held stock among index funds (behind Microsoft) and one of the most widely held stocks in ETFs.
This might have something to do with it: In the third quarter, Apple returned $21 billion to shareholders, including $17 billion through open market repurchases of almost 88 million Apple shares, and $3.6 billion in dividends and equivalents.
Oh yeah... Apple has $210 billion in cash on hand and plans to release its credit card in August.
photo courtesy nbcnews.com  Greatest Misses While Apple scored, those companies that miss their earnings forecasts or take down their forecasts for the next 6-12 months are getting pummeled by investors in this cycle. There just isn't a lot of room for forgiveness in the market right now, and a few companies are feeling the wrath.
Under Armour (UA) Shares of the athletic apparel company fell more than 11% on Tuesday after the company said it expects North American sales to be down for the year after previously guiding them as "relatively flat."
Gartner (IT) Shares of the research and data firm plunged more than 17% today after the company reduced earnings and sales targets for the rest of the year, despite reporting better than expected results for the last quarter.
Beyond Meat (BYND) This is an unusual case of a company beating expectations on earnings, guiding higher for the rest of the year, but getting blasted by investors for a completely unrelated reason. But, then again, Beyond Meat is an unusual stock that has climbed as high as 800% since its IPO, giving it a market value larger than industry giants like Conagra and Wendy's. The company also announced a secondary offering of an additional 3.25 million shares, with three million coming from selling stockholders 250,000 shares from the company, at a yet-to-be-determined price.
After that announcement, the stock plunged to a loss of 14% after-hours and another 10% on Tuesday. With the company heading back to the equity market for what has been "easy money" since its IPO, investors are suddenly questioning whether its actually worth 40 times enterprise value.  Hack Attack
Capital One, the fifth largest credit card issuer in the Unites States, revealed Monday that a hacker accessed the personal information of around 106 million customers and applicants in the United States and Canada.
Read More: Capital One Data Breach Impacts 106 Million
The information that was accessed included highly personal details on consumers and small businesses, including names, social security numbers, income, and dates of birth as of the time they applied for one of several credit card products from 2005 through early 2019. Capital One also said that the alleged perpetrator of the hack has been arrested and is in federal custody.
While Capital One doesn't think that the personal data was used by the hacker, investors showed little tolerance for the credit card issuer's vulnerability, sending the stock down 6% today.  Japan Holds Rates Steady
Guess who's not cutting interest rates? The Bank of Japan says it is ready to "ease interest rates without hesitation," if necessary, but doesn't feel the need to do so now. Like the U.S. Federal Reserve, the BOJ is trying to guide its economy towards a 2% inflation rate. But with interest rates already negative, there is not a lot of room to cut. Japan's 10-year treasury bill yields -0.15%, as of this morning, making Japan one of several countries with negative treasury bond yields. It's been this way for three and a half years for Japan, which has also been performing its own version of quantitative easing.
Yields for 10-year government debt in nine countries, including Germany, Japan, Sweden, and France, are all trading at or below zero. That means investors pay more for the bonds than the total of their face value plus all future interest payments, effectively paying those countries to hold their money. According to Deutsche Bank Securities, around 25% of all bonds in the world now have negative yields.
While the U.S. has been raising interest rates over the past nine years, many developed countries have been cutting theirs in an effort to boost their economies. The chart below, courtesy of Bianco Research, shows the effects of those countries cutting their interest rates and treasury yields, leaving the U.S. nearly on its own with positive yields.
The U.S. is likely to join the club of interest rate cutters tomorrow, but don't expect the Federal Reserve to adopt a negative interest rate policy. 
chart courtesy www.koyfin.com  Although it fell on Monday, National-Oilwell's stock pulled a major recovery today, rising by over 11%. Martin Marietta Materials also won big today, its shares increasing by 10%, despite missing its Q2 earnings estimates.  Conversely, although it too had a strong second quarter, the research and advisory firm Gartner still suffered a massive drop of 19%. Shares of Under Armour decreased by almost 14% today, due in part to the mixed earnings results it reported for this quarter.  Word of the Day In light of the Capital One hack attack, it's time to reacquaint ourselves with this term.
A data breach (also known as data spill or data leak) is an unauthorized access and retrieval of sensitive information by an individual, group, or software system. It is a cybersecurity mishap that happens when data, intentionally or unintentionally, falls into the wrong hands without the knowledge of the user or owner.
 photo courtesy hfha.org
Today in Financial History July 30, 1863: Henry Ford, pioneer of the U.S. auto industry, is born on his family's farm in Greenfield Township, Mich.
Early on Ford demonstrated some of the characteristics that would make him successful, powerful, and famous. He organized other boys to build rudimentary water wheels and steam engines. He learned about full-sized steam engines by becoming friends with the men who ran them. He taught himself to fix watches and used the watches as textbooks to learn the rudiments of machine design. Thus, young Ford demonstrated mechanical ability, a facility for leadership, and a preference for learning by trial-and-error. These characteristics would become the foundation of his whole career.
Source: http://hfha.org/the-ford-story/the-birth-of-ford-motor-company/
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Tuesday, July 30, 2019
Shining
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