From yesterday's research, analysts parsed 103 10-K filings and collected 16,566 data points. In total, they made 2,645 forensic accounting adjustments with a dollar value of $973 billion. Analyst Jacob McDonough found an unusual item yesterday in Dean Foods’ (DF) 10-K.
Dean Foods (DF) has delivered lower-than-expected results in the fourth quarter of 2017. Also, the company's earnings and revenues fell year over year.
Warren Buffett Maintained His Formidable Relevance
Dean Foods (DF) reported fourth-quarter 2017 results, wherein adjusted earnings from continuing operations of 25 cents per share missed the Zacks Consensus Estimate by a penny.
Falling US milk consumption hampers strategic revamp
Any hopes that the dollar may have halted its recent tumble have been, for now, dashed, when the greenback resumed its slide overnight, the DXY falling below 90 again and down for a third day against all G-10 peers ahead of Fed Chair Jerome Powell’s first Congressional testimony in which investors bet the new head of the Federal Reserve will steer a steady course on policy. “Given he’s speaking on behalf of the committee it would be a big surprise to see much deviation from recent Fed commentary, but much will probably be made of how he handles the scrutiny,” said Deutsche Bank's Jim Reid in preview of Powell's comments. “Powell’s testimony on Tuesday could be key in determining whether the recent market reluctance to price Fed much more aggressively despite inflationary impulses is warranted or not,” said Christin Tuxen, chief currency analyst at Danske Bank. “If Powell comes out hawkish, the potential for EUR/USD downside would be non-negligible. Possible downside EUR risks loom this weekend with the general election in Italy and the SPD vote.” Dollar weakness has pushed the euro higher and the yen strengthens after Governor Kuroda said "prices are gradually rising more and more" even as the BOJ has no plans to overhaul its current form of easing. U.S. 10-yr yields are little changed after falling 5bps Friday, while global stocks have all sprinted out of the gate in what right now is a sea of green... ... and S&P futures are currently at session highs, up 12 points or 0.4%. With the dollar slumping, and 10Y TSY yields failing to rise above 2.90%, European shares followed their Asian counterparts higher amid some modest concerns what Jay Powell may say tomorrow. In other macro news, the pound advanced, finding some support after the BOE Deputy Governor Dave Ramsden said in an interview that rates may need to be raised sooner than previously thought due to signs of accelerating pay growth. The euro rose ahead of ECB President Draghi’s statement before European lawmakers. Russia’s ruble appreciated the most in emerging markets after S&P Global Ratings boosted its credit score to investment grade. The yen firmed to a one-week high, gold climbed and European sovereign bonds were mixed. Asia’s emerging-market currencies rose as regional stocks tracked U.S. equities higher and lower Treasury yields supported demand for developing-nation assets. Most sovereign bonds also climbed. FX recap from BBG: The Bloomberg Dollar Spot Index falls for a third day as the euro grinds higher from a session low of 1.2280 to touch 1.2355. Treasuries pushed higher in Asian hours as Yen rallied, before sticking in tight range. Yield are lower by 1-1.5bps across the curve, with 7-year sector outperforming as futures lead gains The cable rose to a 10-day high ahead of a speech by opposition leader Jeremy Corbyn that is expected to see him back a softer Brexit The yen reversed earlier declines after BOJ Governor Kuroda said Japanese prices are rising; he also reaffirmed his view that the BOJ needs to continue with the current powerful monetary easing program to achieve its 2% inflation target New Zealand dollar reverses losses after fund-related sales against Aussie have filtered through the market Looking at global equities, the Europe Stoxx 600 Index jumped to its highest level in more than three weeks, with nearly all major industry groups rallying. The gains this morning have been largely broad-based across all major sectors, while material names outperform with miners tracking the moves higher in commodity prices which have been buoyed by the softer USD. Moves higher in the FTSE 100 have been capped by the GBP strength which had been given a boost by surprisingly hawkish comments from BoE’s Ramsden, while election risks have contained the upside in the FTSE MIB. All of 19 Stoxx 600 sectors rise; financial services sector has the biggest volume at 128% of its 30-day average; 529 Stoxx 600 members gain, 60 decline. Top Stoxx 600 outperformers include: Steinhoff International Holdings +6.5%, Telefonaktiebolaget LM Ericsson +3.8%, Nokia +3.8%, Swedish Orphan Biovitrum +3.5%, Suez +2.4%. "This week looks set to be a long wait for the Italian election and the German SPD vote on a new Grand Coalition on Sunday," Societe Generale strategists write in note. "While we expect a hung parliament in Italy and a small majority in favor in Germany, uncertainty remains high." Asia was also green across the board, with Australia's ASX 200 (+0.7%) and the Nikkei 225 (+1.2%) both higher as earnings fuelled the biggest gainers in Australia, while Japanese exporters weathered a firmer JPY and led the region’s advances. Elsewhere, Hang Seng (+0.7%) and Shanghai Comp. (+1.2%) were in the green with Geely Auto the outperformer after reports its parent amassed a near 10% stake in Daimler, although Chinese property names were less fortunate with the Shanghai Comp. Property Index slumping 3% in early trade after the latest House data showed efforts to curb the sector were gaining fruition. Elsewhere, Bank of Japan Governor Haruhiko Kuroda said the central bank has no plan to overhaul its current form of easing, adding that he saw no need to do another comprehensive assessment of the effectiveness of the bank’s policies. Over in the US, as stocks rebound from their early February correction, the S&P P/E ratio is almost back to where it was when yields took off, which however is clearly not bothering investors for now. Much of the market’s focus during the coming week will be on monetary policy, with the heads of the European Central Bank and Bank of England set to give speeches. But they are likely to be overshadowed by Fed chair Jerome Powell. U.S. stock markets calmed on Friday after the Fed said it saw steady economic growth continuing and no serious risks on the horizon. Powell may help set a new direction for investors at a time when some of the biggest names in markets are at odds over the implications of this month’s surge in U.S. bond yields. Morgan Stanley put out a bullish call on Treasuries Monday, countering warnings on the securities from Goldman Sachs Group Inc. and Warren Buffett. Bond traders are still pricing less than the three quarter-point interest-rate hikes that Fed officials have signaled as likely this year. A quick look at the latest Brexit events, where the UK’s Office for Budget Responsibility is set for an embarrassing U-turn as it prepares to dramatically hike forecasts for UK growth just months after they were suddenly downgraded. Also, media reports suggested that three cabinet ministers warned PM May during private talks on Brexit at her Chequers retreat last week that her government could collapse this year. According to a report in the Sunday Times, senior ministers said there are discussions about whether the prime minister should turn the vote into a confidence issue, threatening a general election if Tory MPs vote with the opposition. Finally, the FT reported that opposition leader Corbyn is set to confirm today that the Labour Party will oppose PM May’s plans to take Britain out of the customs union with the EU. Also, the EU is said to stand firm over Northern Ireland border and that the Brexit treaty text is to not include crucial compromise language secured by UK PM May. In central bank speakers, BoE's Ramsden said there seems to be more impetus on wages and that they will keep a close eye on what happens through the early part of this year to see if that forecast [in a Bank survey] of wage growth picking up to 3% is realised. Ramsden also commented that certainly relative to where he was, he now sees the case for rates rising somewhat sooner rather than somewhat later. (Sunday Times) Note: Ramsden was one of the two dissenters on the MPC when the BoE decided to hike rates in November 2017, citing concerns over wage growth prospects as a reason to refrain from lifting rates. In commodities, oil prices steadied after hitting their highest level in nearly three weeks, supported by comments from Saudi Oil Minister Khalid Al-Falih who said OPEC and its allies may ease output curbs in 2019 in a way that won’t disturb the market. Bitcoin fluctuated around $9,500. Investors will watch for new home sales data, while Dean Foods, Fitbit and Tenet are among companies reporting results. Market Snapshot S&P 500 futures up 0.3% to 2,757.50 STOXX Europe 600 up 0.5% to 383.02 MXAP up 0.8% to 179.58 MXAPJ up 0.8% to 587.87 Nikkei up 1.2% to 22,153.63 Topix up 0.8% to 1,774.81 Hang Seng Index up 0.7% to 31,498.60 Shanghai Composite up 1.2% to 3,329.57 Sensex up 1% to 34,465.98 Australia S&P/ASX 200 up 0.7% to 6,042.18 Kospi up 0.3% to 2,457.65 German 10Y yield rose 0.2 bps to 0.655% Euro up 0.4% to $1.2339 Brent Futures down 0.2% to $67.16/bbl Italian 10Y yield fell 0.8 bps to 1.797% Spanish 10Y yield fell 3.2 bps to 1.565% Brent Futures down 0.2% to $67.16/bbl Gold spot up 0.8% to $1,339.00 U.S. Dollar Index down 0.3% to 89.59 Bulletin Headline Summary from Ransquawk A positive start to the week for European equities (Eurostoxx 50 +0.5%), which have taken the impetus from Asian equities overnight. The DXY is back below 90.000 yet again, and on broad losses for the Greenback vs G10 peers bar the Loonie (Usd/Cad holding above 1.2600 towards the middle of a 1.2615-60 range) Looking ahead, highlights include US New Home Sales and a slew of speakers from the ECB, BoE and Fed Top Overnight News China’s Communist Party is set to repeal presidential term limits in a move that would allow Xi Jinping to rule beyond 2023, completing the country’s move away from a political system based on collective leadership. For pound traders seeking some degree of clarity on Brexit negotiations, speeches by Britain’s Prime Minister and the leader of the opposition will prove crucial in the coming week. Theresa May is scheduled to outline her plan on the future relationship in a speech on March 2, after Labour leader Jeremy Corbyn sets out his party’s Brexit position on Monday Bank of Japan Governor Haruhiko Kuroda reaffirms his view that the BOJ needs to continue with the current powerful monetary easing program to achieve its 2% inflation target. The White House said “we will see” after North Korean leader Kim Jong Un indicated he may be willing to hold talks, while reaffirming the U.S. insistence on Pyongyang’s “verifiable” denuclearization Angela Merkel nominated an up-and- coming conservative to a post in Germany’s new cabinet, part of a bid to reassert control of the party by placating critics while maintaining her centrist approach to policy NEX Group’s recently designed trading platform for China’s foreign exchange market saw 307 institutions conduct deals on Feb. 5 when phase 2 of the platform went live, the firm said in a statement Bank of England Deputy Governor Dave Ramsden says in an interview with The Sunday Times that interest rates might need to be raised sooner than he previously thought due to signs of accelerating wage growth Asian stock markets began the week on the front-foot as the region took impetus from last Friday’s late rally on Wall St and with energy names underpinned by recent strength in crude prices. ASX 200 (+0.7%) and Nikkei 225 (+1.2%) were both higher in which earnings fuelled the biggest gainers in Australia, while Japanese exporters weathered a firmer JPY and led the region’s advances. Elsewhere, Hang Seng (+0.7%) and Shanghai Comp. (+1.2%) were in the green with Geely Auto the outperformer after reports its parent amassed a near 10% stake in Daimler, although Chinese property names were less fortunate with the Shanghai Comp. Property Index slumping 3% in early trade after the latest House data showed efforts to curb the sector were gaining fruition. Finally, 10yr JGBs were marginally higher amid mild gains in USTs, while the Japanese yield curve was mixed as longer-dated bonds underperforming after the BoJ kept its operations concentrated in the belly. PBoC injected CNY 100bln via 7-day, CNY 30bln via 28-day and CNY 20bln via 63-day reverse repos. Chinese President Xi Jinping’s policy advisor Liu He is said to emerge as the front runner to head the PBoC when current Governor Zhou retires. China’s Communist Party is said to propose to drop limits on presidential terms which would allow President Xi Jinping to remain as the nation’s president indefinitely. BoJ Governor Kuroda reiterated that the BoJ will continue with powerful monetary easing to achieve the price target. Furthermore, Kuroda also commented that Japan's economy needs persistent monetary easing and that there is currently no plan for a new comprehensive assessment. Top Asian News Kuroda Vows to Keep Stimulus Unchanged, Won’t Reassess Policy China’s Xi Follows Putin in Laying Ground to Rule for Decades SoftBank Outlook Cut to Negative at S&P on Fund Investments Exxon Shuts Papua New Guinea Output to Inspect Quake Damage A positive start to the week for European equities (Eurostoxx 50 +0.5%), which have taken the impetus from Asian equities overnight. The gains this morning have been largely broad-based across all major sectors, while material names outperform with miners tracking the moves higher in commodity prices which have been buoyed by the softer USD. Moves higher in the FTSE 100 have been capped by the GBP strength which had been given a boost by surprisingly hawkish comments from BoE’s Ramsden, while election risks have contained the upside in the FTSE MIB. In stock specific news, the troubled lender, Profident Financial are trading with losses of over 13% ahead of their earnings tomorrow. Top European News Deutsche Bank Presses Ahead With Asset Management Stock Sale Renzi Cold Shoulder for Five Star Flirting: Italy Campaign Trail With Daimler Deal, Geely Puts China Flag in German Heartland PostNL Plunges as Profit Toll of Regulator’s Measures Increases It’s Dalio Versus Everyone Else as Money Flows to Europe Stocks In FX, the DXY is back below 90.000 yet again, and on broad losses for the Greenback vs G10 peers bar the Loonie (Usd/Cad holding above 1.2600 towards the middle of a 1.2615-60 range). Some market observers say the renewed bout of weakness reflects a pullback in yields, but that correlation remains tenuous given the fact that the Dollar did not rally in tandem with 10 year cash hitting peaks around 2.95% (circa 10 basis points above current levels) at the heights last week, or at least not to the same degree. Hence, it is concerns about the US fiscal situation and rising deficits that are still weighing on sentiment alongside some political angst as President Trump continues to push protectionist policies. Even month end demand has not given the Usd much of a boost, as yet anyway, with Eur/Usd firmly back above 1.2300 and testing 1.2346 DMA resistance despite bearish cross flow via Eur/Jpy that has tested near term chart support just ahead of 131.00. Cable has breached its 21 DMA and 1.4050 amidst ongoing Brexit uncertainty, and Usd/Jpy has retreated to 106.50 from 107.00+. The Greenback may derive some support from big option expiries, with circa 2 bn in both Cable and Usd/Jpy at 1.4000 and 107.00-05 respectively In the commodities complex, WTI and Brent crude futures pulled off best levels with WTI running into resistance around USD 64 to move back down to the mid-USD 63s. Over the weekend, Saudi Energy Miniset Al Falih stated that he expects production cuts to ease next year (Current OPEC/ Non-OPEC production cut due to expire at year-end). Elsewhere, Barclays sees a significant risk of a market correction in H2 as a result of builds in inventories. Barclays says 2018 crude forecast of USD 60bbl for Brent and USD 55bbl for WTI is unchanged -Barclays expects backwardation in WTI and Brent Futures curves to subside later this year -Barclays also sees a significant risk of market correction in H2 2018 due to builds in inventories We start the week with the January Chicago Fed National activity, February Dallas Fed manufacturing index and new home sales data are also due. Onto other events, the ECB’s Draghi will addresses the EU Parliament while the incoming ECB VP Mr De Guindos will also attend his confirmation hearing at the Parliament. Elsewhere, the ECB’s Coeure, BOE’s Cunliffe and the Fed’s Bullard will speak. US Event Calendar 8:30am: Chicago Fed Nat Activity Index, est. 0.2, prior 0.3 8am: Fed’s Bullard Speaks on U.S. Economy and Monetary Policy 10am: New Home Sales, est. 647,500, prior 625,000 10am: New Home Sales MoM, est. 3.6%, prior -9.3% 10:30am: Dallas Fed Manf. Activity, est. 30, prior 33.4 3:15pm: Fed’s Quarles Gives Assessment of U.S. Economy Key events on deck this week: ECB President Mario Draghi speaks in Brussels on Monday. Bank of Korea has policy decision and briefing on Tuesday. Powell testifies before a House panel on Tuesday. He’ll discuss the Fed’s Semi-Annual Monetary Policy Report and the state of the economy. Powell returns on March 1 before a Senate committee. Companies announcing earnings this week include: Vale, BASF, Standard Chartered, Bayer, Lowe’s, Galaxy Entertainment Group, Anheuser-Busch InBev, Peugeot, WPP, and London Stock Exchange Group. U.K. Prime Minister Theresa May delivers a speech on Britain’s relationship with the European Union after Brexit. A barrage of data is expected out of Japan including retail sales and industrial production Wednesday, and capital spending Thursday. In China, the official and Caixin purchasing managers’ indexes on Wednesday and Thursday respectively may show growth momentum slowed slightly in February, though the signal may be clouded by the holidays. DB's Jim Reid concludes the overnight wrap The highlight this week is new Fed Chair Powell’s inaugural testimony before the House Financial Services and Senate Banking Committees on Tuesday and Thursday, respectively. Given he's speaking on behalf of the committee it would be a big surprise to see much deviation from recent Fed commentary (the recent Fed minutes the best template even if before recent inflation surprises) but much will probably be made of how he handles the scrutiny and grilling. Staying with the US, Thursday also brings the core PCE deflator which is the Fed's preferred inflation series and therefore an important release given the current market focus on prices. DB expect a pick-up (+0.3% forecast vs. +0.2% previously; +0.3% expected) with medical and healthcare increases in the recent CPI and PPI reports providing some impetus. Also on inflation, Tuesday sees Germany's latest numbers with the various European country and composite readings over the following 24 hours. Thursday sees the first of the month with the usual PMIs. The rest of the week's highlights are printed at the end but remember that next Sunday sees the long awaited Italian election with no one really sure what the outcome will be but not many people being that concerned about a particularly negative scenario. Our economists have suggested that a hung parliament is slightly more likely than a centre-right coalition with the latter potentially more positive in the short-term but with risks to debt levels and the European/Brussels relationships later down the road given the likelihood of it being associated with fiscal easing. The former is likely to lead to a grand coalition (more likely) or fresh elections with both scenarios only likely to play out slowly and could therefore increase uncertainty in the short-term. See DB’s report here for more. Over the weekend in China, the Party’s Central Committee announced it is seeking to change the Constitution to allow the President and VP to serve more than ten years, potentially enabling President Xi to stay beyond 2023. Ahead of the National People’s Congress meetings from 5th March, our Chinese economists highlight ten issues for investors to watch. These include: amendments of the constitution, economic growth targets, fiscal and monetary policy and property market policy. Turning to central bankers commentaries. In the UK, the BOE’s Ramsden who was against the November rate hike, now “see(s) the case for rates rising somewhat sooner rather than later”, in part as he is “more confident than (he) was that wages are picking up”. Back on Friday, the Fed’s Williams said that “we should be moving ahead with a rate increase relatively soon, in the near future” and that “it makes sense to think about three or four rate increases in 2018”. This morning in Asia, markets are trading broadly higher, with the Nikkei (+1.2%), Hang Seng (+0.72%), China’s CSI 300 (+1.25%) and the Kospi (+0.18%) all up as we type. Elsewhere, BOJ’s Kuroda noted the Japanese economy is expanding smoothly and “its’ essential for the BOJ to continue monetary stimulus so as to hit the price target” and there is “no plan for a new comprehensive assessment (of the bank’s monetary policy) at this point”. The YEN is up c0.3% against the USD this morning. Now recapping market performance from Friday. Core government bonds were firmer with the UST 10y and Bunds both c5.4bp lower while Gilts fell 2.4bp, in part as the Fed’s semi-annual report on monetary policy didn’t seem to add to the relatively hawkish Fed Minutes earlier in the week. The weaker European PMIs last week also put a dampener on the recent rises in yields. Elsewhere US equities rebounded c1.5% (S&P +1.60%, Dow +1.39%; Nasdaq +1.77%) with all sectors within the S&P up and gains led by the utilities, tech and energy stocks. The VIX fell 11.9% to 16.49. In Europe, the Stoxx 600 and DAX edged up c0.2% while the FTSE and Spain’s IBEX fell 0.11% and 0.55% respectively. Turning to currencies, the US dollar index and Sterling strengthened 0.16% and 0.11% respectively while the Euro fell 0.28%. In commodities, WTI oil was up 1.24% to $63.55/bbl. Elsewhere, precious metals weakened c0.3% (Gold -0.25%; Silver -0.46%) and other base metals were mixed but little changed (Copper -0.41%; Zinc -0.30%; Aluminium +0.39%). Staying in the US, three unnamed sources noted to Bloomberg that President Trump wants the impose the harshest tariffs on steel and aluminium imports, which could include a global tariff of 24% on steel imports and up to 10% duty on aluminium imports. The process is ongoing and a final decision by President Trump on the recommendations made by the US Commerce Department is due before April. Before we take a look at this week’s calendar, we wrap up with other data releases from Friday. In Europe, the final reading for Euro area’s January core CPI was unrevised at 1% yoy (headline CPI at 1.3% yoy). In Germany, the final reading of the 4Q GDP was also unrevised at 0.6% qoq and 2.9% yoy. Elsewhere, China reported January new home prices rose in 52 of 70 cities, down from 57 cities in December. According to a Reuters, the average rise across all cities was 0.3% mom and 5% yoy after excluding data on affordable housing (vs. 5.3% yoy previous if including affordable housing). We start the week with the UK’s January Finance loans for housing. Across the pond, the January Chicago Fed National activity, February Dallas Fed manufacturing index and new home sales data are also due. Onto other events, the ECB’s Draghi will addresses the EU Parliament while the incoming ECB VP Mr De Guindos will also attend his confirmation hearing at the Parliament. Elsewhere, the ECB’s Coeure, BOE’s Cunliffe and the Fed’s Bullard will speak. The UK’s opposition leader Corbyn is expected to set out the Labour Party’s Brexit position today with the party set to announce that they would stay in the Customs Union. This will cause problems for Mrs May who has said the country will leave. Parliament is generally in favour of staying so this raises the possibility of a lost vote somewhere down the line.
Dean Foods (DF) is on track with its smart volume initiative to drive efficiencies, core business and cost productivity plans. However, soft volumes and higher raw milk costs remain potent threats.
P/B ratio is emerging as a convenient tool to identify low-priced stocks that have high-growth prospects.
Zacks.com highlights: Western Digital, Citizens Financial Group, Dean Foods and Vishay Intertechnology
Zacks.com highlights: Western Digital, Citizens Financial Group, Dean Foods and Vishay Intertechnology
This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per-share basis, the lower the number, the better.
Zacks.com featured highlights include: Verso, Dean Foods, Tutor Perini, Hilltop and PennyMac
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