See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“History is a set of lies agreed upon.” – Napoleon Bonaparte
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Investors came into the day in a positive mood as gains overnight in Asia and a positive morning in Europe flowed through to the pre-market in the US. Crude oil and gold were also up about 1% with WTI trading at a lucky $77.77 per barrel.
One of the biggest catalysts for this morning’s positive tone has been in shares of Wal-Mart (WMT) which is poised to gap up over 7% in reaction to earnings. For perspective, if the gains hold through to the closing bell, it would be the first time since at least 2001 that the stock rallied more than 5% in reaction to back-to-back earnings reports.
A slug of economic data just hit the tape, and nearly all the reports came in better than expected, including Retail Sales which doubled expectations (1.0% vs 0.4%), while initial and continuing claims were better than expected. In response, futures have taken another leg higher as fears of economic weakness have been eased even as a September rate cut remains likely.
Between the monthly Retail Sales report, earnings from Wal-Mart (WMT), and other companies from the sector, it’s been a busy morning for the retail sector. On a non-earnings-related move, shares of Ulta Beauty (ULTA) are surging more than 12% following news after the bell yesterday that Berkshire Hathaway had taken a position of 690K shares worth $266 million in the company as of the end of Q2. To put that in perspective, even after Berkshire cut its stake in Apple (AAPL) by more than half this year, that position is still more than 300 times larger than its current stake in ULTA. Nevertheless, the Buffett seal of approval alone is enough for investors to flock to the stock.
Looking at the performance of ULTA over the last year, Berkshire’s purchase wasn’t the timeliest in the short term. While we have no way of knowing at what point in the quarter the stock was purchased, even after accounting for its pre-market surge, it is trading below where it traded at any point in Q2. From April 1st through June 30th, shares of ULTA traded in a range of $375.31 to $529.67. While it’s unlikely that Berkshire entered the position anywhere near the high end of that range as it only traded there for a couple of days early in the quarter, it’s just as unlikely that Berkshire bottom-ticked it. That’s because the stock doesn’t often trade more than a million shares a day, so a 690K trade would have greatly impacted the stock. The fact that Berkshire remains underwater on the stock doesn’t mean that ULTA won’t end up as a winning stock, but even when it comes to the best investors in the world, timing isn’t always perfect.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.
