 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Tuesday's Headlines 1. Markets Rise on Upbeat Outlooks 2. Coke Keeps Making New Highs 3. The IMF Lowers Global Growth Forecasts 4. The U.K.'s New PM's Hard Brexit Plan 5. China Direct Investment in U.S. Falls 6. DOJ to Open Antitrust Review of Google, Facebook, Apple, and Amazon Markets Closed
 Markets Today
U.S. markets rallied hard on Tuesday on the back of strong earnings reports from Dow components Coca-Cola and United Technologies, among others. More than 18% of S&P 500 companies have reported quarterly results as of this morning, and of those, more than 78% have reported better-than-expected profits. Those companies have also seen their earnings grow by an aggregate of 3.6%. That's better than expected, but this is how the dance goes...companies under-promise on their expectations, then over-deliver on their results.
Coca-Cola, which is trading at another all-time high, handily beat earnings expectations and raised its revenue guidance for the rest of the year. CEO James Quincey told CNBC that while the company saw "clouds gathering on the horizon, the storm never came."
Coca-Cola sells its products all over the world, so it is in a pretty good position to take the pulse of consumer demand in every market. As we have been saying, the consumer (particularly in the U.S.) is feeling strong these days.
Chipotle, the popular fast-casual chain, reported strong earnings after the market close, sending its shares up 4% in after-hours trading.
Starbucks and Visa, which are also heavily exposed to consumers (in different ways), will report their quarterly results over the next couple of days. Coca-Cola, Chipotle, Visa, and Starbucks are all at or near all-time highs.
chart courtesy koyfin.com  IMF Lowers Global Growth Forecasts
Not a big surprise here or a big revision, but the IMF did lower global growth forecasts from 3.3% to 3.2% for 2019 citing "negative surprises for growth in emerging market and developing economies that offset positive surprises in some advanced economies." While 3.2% growth is far from sluggish, the IMF has already lowered this forecast once and can do it again if weakness persists due to the trade war or other downside risks.
The IMF says that existing tariffs, and those that have been proposed, could knock 0.5% off of global growth in 2020. Other significant risks include a surprise slowdown in China, the lack of a recovery in the euro area, a no-deal Brexit, and escalation of geopolitical tensions.
Here's the IMF's breakdown on the forecasts for country by country growth in 2019 and 2020. The EuroZone is ground zero for that vulnerability.  The U.K.'s New Prime Minister Speaking of Europe... Alexander Boris de Pfeffel Johnson, known to most as Boris Johnson, was voted in as the new prime minister of the U.K. this morning, as expected. The former mayor of London, former foreign minister under Prime Minister Theresa May (until he resigned in protest in 2018) and former editor of The Spectator newspaper, has adopted a hard-line stance on Brexit throughout his campaign. In his victory speech this morning he promised to deliver Brexit "do or die, come what may," by the Oct. 31st, 2019 deadline, leading many to believe that he may push the U.K. towards a "Hard Brexit," which means leaving the E.U. without a deal in place.
Read more: Brexit Outcomes Explained
While his predecessor, Theresa May, attempted to reach compromises between the U.K.'s divided political parties and the leadership of the E.U. unsuccessfully, many don't expect Johnson to take the same tact.
The British pound fell in early trading on Tuesday, but recovered by mid-afternoon. That said, it has fallen hard against the U.S. dollar over the past several months leading up to and in the wake of May's resignation.  U.S. China Trade Talks Back On
Bloomberg News reported that the U.S. China trade talks are set to resume again in person as soon as next Monday, citing sources. That's the first inkling we've heard in awhile about the trade talks, and it was enough to encourage investors this afternoon. Industrial stocks like Caterpillar and 3M, which have been hurt as the trade war has raged on, rallied on the news—although Bloomberg reported that these negotiations will take a long time.
China's U.S. Business Investments Decline This may or may not be related, but according to a recent report from The Rhodium Group's China Investment Monitor, direct Chinese investment in the U.S. fell to $5.4 billion in 2018 from a peak of $46.5 billion in 2016, a drop of 88 percent. To be clear, direct investment is not the same as China buying U.S. Treasuries or U.S. products like soy or steel. It measures investments made by mainland Chinese companies in U.S. companies, real estate, and other ventures.
Those transactions are monitored in the U.S. by the Committee on Foreign Investment, which sits inside the U.S. Treasury Dept. The CFIUS has been behind the blocking of big deals between Chinese and U.S. companies like Broadcom's quashed bid for Qualcomm and the sale of MoneyGram to a unit of the Chinese e-commerce giant Alibaba last year.
The China Investment Monitor has a dynamic infographic that charts Chinese private investment in U.S. companies by state and dollar amount. It's pretty fascinating if you are interested in tracking such things. 
chart courtesy www.koyfin.com  Shares of Hasbro rose by almost 10% today amid reports of the toymaker easily beating its Q2 earnings and revenue—boosted by high demand for merchandise of the Avengers: Endgame film. Similarly, paint supplier Sherwin-Williams' stock increased by nearly 8% after posting record second-quarter results.  Shares for PulteGroup, alongside several other homebuilders, plummeted by over 8% after a much larger-than-expected decrease in existing home sales. Despite posting strong Q2 earnings, food production company Lamb Weston fell by almost 6% after reporting lower expected net sales for 2020.  Word of the Day AntitrustGiven the late breaking news that the U.S. Department of Justice is set to open a broad antitrust review of tech giants Amazon, Apple, Facebook, and Google, it's important to know what's at issue. Per the Wall Street Journal:
"The Justice Department is opening a broad antitrust review into whether dominant technology firms are unlawfully stifling competition, according to department officials, adding a new Washington threat for companies such as Facebook Inc., Alphabet Inc.'s Google, Amazon.com Inc. and Apple Inc."
What Is Antitrust?  photo courtesy www.ford.com
Today in Financial History July 23, 1903: The Ford Motor Company sells its first Model A.
With 12 investors and 1000 shares, the Ford Motor Company, which Henry Ford had incorporated earlier in the year, had spent nearly all of its $28,000. But by Oct. of 1903, the company managed to turn a profit of $37,000.
https://corporate.ford.com/history.html Bonus Pic: Here's Coca-Cola's logo evolution since 1886. It's remarkably consistent, as is its product. 
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Tuesday, July 23, 2019
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