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Friday November 15, 2019



Disney Reports Strong Earnings

The Walt Disney Company (DIS) reported its quarterly earnings for the fourth quarter on Thursday, November 8. The company's revenues and profits both exceeded Wall Street's expectations.

Disney reported revenue of $14.3 billion, up from $12.8 billion during the same quarter last year. This beat analysts' expected revenue of $13.7 billion.

"We're very pleased with our financial performance in fiscal 2018, delivering record revenue, net income and earnings per share," said Robert A. Iger, Chairman and CEO of The Walt Disney Company. "We remain focused on the successful completion and integration of our 21st Century Fox acquisition and the further development of our direct-to-consumer business, including the highly anticipated launch of our Disney-branded streaming service late next year."

Disney posted quarterly net income of $2.3 billion, up from $1.7 billion at this time last year. On an earnings per share basis, the company reported $1.55 per share, up from $1.13 per share last year.

The entertainment giant's Studio Entertainment segment raked in $2.2 billion in revenue for the quarter, a 50% increase from last year's fourth quarter. Disney's Parks and Resorts segment and its Media Networks segment each posted quarterly growth of 9%. Consumer Products and Interactive Media was the only segment in which Disney posted a loss for the quarter, with an 8% decrease.

Walt Disney Company (DIS) shares ended the week at $118.00, up 1.9% for the week.

CVS Reports Earnings

CVS Health Corporation (CVS) released its latest quarterly earnings on Tuesday, November 6. The drug store company showed increases in revenue and profits for the quarter.

The company reported revenue of $47.3 billion. This was an increase of 2.4% from revenue of $46.2 billion during the same quarter last year.

"Strong revenue and adjusted EPS, along with significant cash flow year-to-date, demonstrate our success in driving value," said CVS CEO Larry Merlo. "Our year-to-date results continue to validate our confidence in the strength of our model. As we approach the closing of our transformative acquisition of Aetna, our integration teams are making great progress to assure that once final approvals are obtained, we can begin to execute on our integration plans."

Net income for the quarter totaled $1.4 billion, up 8.2% from $1.3 billion at this time last year. On an earnings per share basis, the company earned $1.36 per share.

CVS announced on Tuesday that the pending merger with health insurer Aetna will likely close before Thanksgiving. The deal, which was announced in late 2017, was approved by the Justice Department in October of this year. CVS expects the merger to facilitate an expansion in the services it provides at its retail locations.

CVS Health Corporation (CVS) shares ended the week at $79.83, up 8.8% for the week.

Roku Delivers Earnings Results

Roku Inc. (ROKU) announced earnings for the third quarter on Wednesday, November 7. The company exceeded analysts' earnings projections.

The technology company reported revenue of $173.4 million for the quarter, up from $124.8 million during the same quarter last year. This exceeded Wall Street's revenue expectation of $169.1 million.

"Roku delivered outstanding financial and operating results in Q3 2018," said Roku Founder and CEO Anthony Wood in a letter to shareholders. "Robust active account and streaming hour growth contributed to another great quarter with our advertising business showing continued strong momentum."

The company reported a loss of $9.5 million for the quarter. This was an improvement over the company's reported $46.2 million net loss at this time last year.

Roku, maker of online video streaming devices, also produces a software platform for use on smart TVs. The company reported $100.1 million in revenue for its Platform segment for the third quarter. While up sharply from $57.5 million in revenue for the third quarter of last year, this figure fell short of analysts' expected revenue of $103.2 million.

Roku Inc. (ROKU) shares ended the week at $43.94, down 24.2% for the week.

The Dow started the week of 11/5 at 25,261 and closed at 25,989 on 11/9. The S&P 500 started the week at 2,726 and closed at 2,781. The NASDAQ started the week at 7,344 and closed at 7,407.

Treasury Bonds Dip Following the Fed's Decision

Yields on U.S. Treasury bonds fell on Friday after the Federal Reserve announced it would leave interest rates unchanged. Earlier in the week, yields hit their peak prior to the release of the midterm election results.

On Thursday, the Federal Open Market Committee signaled that it would continue on its current path of gradual rate increases. The announcement was in line with analysts' predictions that the Fed would leave policy and rates unchanged.

"It was a benign statement, boring," said Michael Schumacher, rates strategist at Wells Fargo, referring to the Fed's statement which was taken from previously released statements. "It kept in the comment about further rate increases and there was no change in the interest on excess reserve."

On Friday, the U.S. Labor Department released the U.S. producer price index (PPI) had its largest monthly gain in over six years. After rising 0.2% in September, the PPI rose 0.6% in October. Economists were expecting to see a 0.2% increase.

"Inflation has been surprising to the upside but we believe this is later cycle behavior and has somewhat to do with tariffs between the U.S. and China," said Jim Caron, bond manager at Morgan Stanley Investment Management. "We still see inflation peaking in 2019 at core personal consumption expenditure levels around 2.2 percent and gross domestic product growth slowing to about 2.6 percent."

The 10-year Treasury note yield closed at 3.19% on 11/9, while the 30-year Treasury bond yield was 3.39%.

Mortgage Rates Continue Upward Trend

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 8. The report showed significant increases in average mortgage rates.

This week, the yield on the 30-year fixed-rate mortgage averaged 4.94%, up from last week's average of 4.83%. At this time last year, the 30-year fixed rate mortgage averaged 3.90%.

The 15-year fixed-rate mortgage averaged 4.33% this week, up from 4.23% last week. Last year at this time, the 15-year fixed-rate mortgage averaged 3.24%.

"The economy continued to show resilience as strong business activity and growth in employment drove the 30-year fixed mortgage rate to a seven year high of 4.94% — up 11 basis points from last week," said Freddie Mac Chief Economist Sam Khater. "Higher mortgage rates have led to a slowdown in national home price growth, but the price deceleration has been primarily concentrated in affluent coastal markets such as California and the state of Washington."

Based on published national averages, the money market account closed at 1.22% on 11/9. The one-year CD finished at 2.64%.

Published November 9, 2018

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