The Long Term Investor

HERE is my Home Depot earnings.

Home Depot expects sales to weaken as consumers grow more cautious

https://www.cnbc.com/2024/08/13/home-depot-hd-q2-2024-earnings.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Home Depot’s fiscal second-quarter earnings and sales beat expectations, but it said it expects comparable sales to decline this year.
• The home improvement retailer’s CFO told CNBC that homeowners are now deferring projects due to a “sense of greater uncertainty in the economy.”
• Home Depot kicks off a wave of retail earnings from companies like Walmart and Target, which investors and economists will watch for signs of consumer weakness.

Home Depot on Tuesday topped quarterly expectations, but cautioned that sales will be weaker than expected in the back half of the year as high interest rates and consumer uncertainty dampen demand.

The home improvement retailer said it now expects full-year comparable sales to decline by 3% to 4% compared with the prior fiscal year. It had previously expected comparable sales, a metric that takes out the impact of store openings and closures and other one-time factors, to decline about 1%.

Home Depot’s total annual sales will get a boost from its recently completed acquisition of SRS Distribution, a company that sells supplies to professionals in the landscaping, roofing or pool businesses. Total sales are expected to increase between 2.5% and 3.5% including a 53rd week in the fiscal year and approximately $6.4 billion in sales from SRS. Yet excluding sales from SRS, its new full-year forecast would have amounted to a revenue cut.

In an interview with CNBC, Chief Financial Officer Richard McPhail said Home Depot has contended with consumers who have a “deferral mindset” since the middle of 2023. Interest rates have caused them to put off buying and selling homes and borrowing money for bigger projects, such as a kitchen renovation.

Yet over the past quarter, he said surveys of customers and home professionals like contractorshave captured another challenge: a more cautious consumer.

“Pros tell us that, for the first time, their customers aren’t just deferring because of higher financing costs,” he said. “They’re deferring because of a sense of greater uncertainty in the economy.”

Here’s what the company reported compared with what Wall Street expected for the three-month period that ended July 28, based on a survey of analysts by LSEG:

• Earnings per share: $4.60 vs. $4.49 per share expected
• Revenue: $43.18 billion vs. $43.06 billion expected

The company’s shares rose slightly in early trading, after falling by as much as 4% in pre-market trading.

Home Depot kicks off a wave of retail earnings, as economists, investors and politicians pay close attention to the health of the American consumer and try to forecast the economic outlook, including the odds of a recession. Though inflation has cooled, higher prices – particularly for everyday costs like groceries, energy and housing – continue to frustrate customers. They’ve also become a major talking point on the 2024 campaign trail.

Consumer clues will keep coming this week and next, as Walmart reports earnings and the government shares retail sales numbers on Thursday. Other retailers, including Target, Macy’s and Best Buy, will also post results in the coming weeks.

Compared with many other retailers, Home Depot has a more financially stable customer base. About half of its sales come from home professionals and about half come from do-it-yourself customers. About 90% of those DIY customers own their own homes.

Yet Home Depot still felt the impact of consumer uncertainty, McPhail said. He said the company saw slower demand for a wide range of project-driven items, including lighting and flooring.

Home Depot’s net income for the fiscal second quarterdecreased to $4.56 billion, or $4.60 per share, from $4.66 billion, or $4.65 per share, in the year-ago period.

Revenue rose slightly from $42.92 billion in the year-ago period.

Comparable sales dropped 3.3% in the quarter across the business and declined 3.6% in the U.S. That was worse than the 2.1% decrease that analysts expected, according to StreetAccount.

It marked the seventh consecutive quarter of negative comparable sales at Home Depot.

Shoppers visited Home Depot’s stores and its website less frequently, and spent less when they did, during the quarter compared to the year-ago period. Customer transactions fell nearly 2% and average ticket dropped slightly to $88.90 from $90.07 in the year-ago quarter

Consumers have postponed projects in part because of a widely anticipated rate cut by the Federal Reserve, McPhail said.In late July, Fed Chair Jerome Powell said policymakers could cut rates at the central bank’s September meeting if the data supports it.

That would lead to lower mortgage rates and borrowing costs for homeowners who want to tack on an addition or finance a project, such as a bathroom remodel.

“What our customers tell their pros is, ‘Everything I read tells me interest rates will be lower in three to six months,’” McPhail said. ”‘Why would I borrow to finance the project now rather than just wait a few months?’”

Yet Home Depot leaders have emphasized home improvement’s bright long-term outlook, referring to the country’s aging homes, its shortage of houses and significant property value gains, especially during the years of the Covid pandemic.

And McPhail said most of Home Depot’s customers remain financially healthy and employed, even if they’re spending less on home improvement right now.

Shares of Home Depot closed at $345.81 on Monday. As of Monday’s close, the company’s shares are down less than 1% so far this year, trailing behind the S&P 500′s 12% gains. "

MY COMMENT

A good BEAT......from a premier company. I will definately continue as a long term holder. I am surprised that the stock is actually UP.....with the guidance.

The issues they are having have nothing to do with the actual company.

 

The general news of the day.

US producer prices rise less than expected in July

https://finance.yahoo.com/news/us-producer-prices-rise-less-124035096.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (Reuters) - U.S. producer prices increased less than expected in July as a rise in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate.

The producer price index for final demand gained 0.1% last month after rising by an unrevised 0.2% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast the PPI gaining 0.2%.

In the 12 months through July, the PPI increased 2.2% after climbing 2.7% in June.

Slowing inflation and a cooling labor market have led financial markets to anticipate that the Federal Reserve will start its easing cycle in September. With the U.S. central bank now increasingly concerned about labor market weakness, after the unemployment rate surged to near a three-year high of 4.3% in July, a rate cut of 50 basis points cannot be ruled out.

The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for a year, having raised it by 525 basis points in 2022 and 2023."

MY COMMENT

One down two to go.....CPI and Retail Sales. Looking good so far.

 

Looks like a BIG SALE on CMG right now. Wish I had some money to put in.

As to SBUX......I dont see it.....the company is not CMG. Their issues go way beyond the CEO. They have HUGE issues with their pricing and business.

 

NOT relevant to most people....but interesting.

Murdoch family battle highlights Nevada’s secret trust boom

https://www.cnbc.com/2024/08/13/murdoch-battle-nevada-trust-boom.html

Protect Your Wealth For Generations With a Dynasty Trust

https://alliancetrustcompany.com/services/trustee-services/dynasty-trusts/

 

The other story of the day.......the Ten Year Treasury down to 3.869%.

https://www.cnbc.com/quotes/US10Y

 

A BIG start to the day for stocks. It puts me on the path to making some BIG BUCKS today. BUT in the end....it is the finish that counts....not the start.

The SP500 and NASDAQ are doing particularly well. Lets see how we do at mid morning and mid day when the profit takers come in along with the AI TRADING PLATFORMS.

I really like how things are stacking up right now for the next 6-12 months. The ONLY big "potential" negative.....the ELECTION.

 

These are the issues of the day......NOW.....I watch and wait.

 

As to trusts. I once thought I would do a dynasty......perpetual..... grandchild trust. But the management fees and income taxes are too high. It is nice that the Rule Against.....Purple-Tuberties.....(actually "perpetuates")...as now been basically broken and thrown away due to dynasty trusts that in some states can last from 300 to 1000 years.

So my current plan after thinking about it is:

Set up a revocable trust for Grandchild.

Since it is revocable any earnings or income each year will be taxed to me. This will save me having to do a trust tax return each year. It will also save on taxes since an irrevocable trust will pay taxes at the highest level where my taxes are very low in retirement. It will also allow me to make sure over the next 20 or so years....hopefully....that the grandchild should get the money or if there should be restrictions.....in the final irrevocable trust.

I will include in the trust and/or my will a provision to make the trust irrevocable on the death of the last of me or my wife. At that point there will need to be a trust tax return and presumably my kid and probably SCHWAB as trustee.

I will as strongly as possible direct that the trust HAS to be fully invested in the SP500 for the life of the trust. I will set it up so the grandchild does not receive the first payment (half of the total amount in the trust) till age 34 and half at ages 44, 54, 64, and the final distribution of the entire rest of the trust at age 74.

I want their parents to have to provide any needed college or help before age 34 and I want them to have to get educated, get a job and make their way before age 34. I dont want them to be a trust fund baby. I dont want to deprive or discourage my kid from doing what they should be doing for their own kid.

I will fund this grandchild trust with $200,000 in the SP500 when they are age 10....three years from now. This will give the money 24 years to grow till the first distribution.

My kids will inherit everything else from all the family when the time comes.

That is my current thoughts on this....but....I have three more years till it needs to happen.

 

A real BOOMER today in the markets. Lots of money being made...hopefully by everyone on here. I got my share.

I had a single red stock today....CMG....down by 7.5% due to the CEO story-line. I also beat the SP500 today by 1.47%

 

As to CMG keep in mind that my position is a small one....since I want to give the company a trial for a year or two. I have ZERO doubts about the company....although at this moment.....I have a definite loss.

I dont care about the short term loss since it is a long term hold. Sometimes that is just the price you have to pay.

It is nice that the current CMG CFO will now delay his retirement indefinitely and stay with the company to help out with the CEO situation. I dont know but perhaps he is thinking that he has a shot at CEO. The COO appears to also be a good manager and will be taking over as temporary CEO. From what I see they have a deep and talented management team....to get through the short term drama.

Chipotle stock tumbles over 10% after CEO departs for Starbucks

https://finance.yahoo.com/news/chip...fter-ceo-departs-for-starbucks-123754763.html

(BOLD is my opinion OR what I consider important content)

"Chipotle stock (CMG) fell more than 10% Tuesday morning after the company announced the departure of its CEO, Brian Niccol, who will take the same role at Starbucks (SBUX) starting next month.

Niccol has been the CEO of Chipotle since 2018. Scott Boatwright, its COO, will serve as the company's interim CEO.

Niccol has been integral to Chipotle's rebound over the last several years as the company recovered from an E. coli crisis that began in 2015 and weighed on shares for years.

In the year before Niccol joined the company, Chipotle's annual revenues were around $4.5 billion; by 2023, revenue had more than doubled, totaling $9.9 billion for the year. In the past five years, the stock has rallied more than 240% against an 85% gain for the S&P 500.

Amid the executive shake-up, Chipotle CFO Jack Hartung, who had announced plans to retire in 2025, has agreed to remain with Chiptole "indefinitely" as a president of strategy, finance, and supply chain.

"Chipotle is in a very good place," Wedbush analyst Nick Setyan told Yahoo Finance. "They're in very good hands ... Both gentlemen here that are taking over, I credit both of them with the turnaround as much as I credit Brian Niccol. So I think they're in very good hands."

He added, "They're on autopilot, frankly. And not much has to change."

Bernstein senior research analyst Danilo Gargiulo agreed Chipotle is well positioned for the change.

"The brand has evolved itself from being just a CEO-driven and CEO-led," Gargiulo said. "And I think over time it has proven itself that it's larger than its own management ... Right now we are talking about potentially a cookie cutter approach that Chipotle will need to be deploying into more areas and expand the number of units.""

MY COMMENT

Probably an opportunity for the company to put a long term....expansion and operations focused management team in place at the top of the company. I always say.....when you have to make a change....make sure it is an UPGRADE. See it as a positive opportunity not a negative.

 

A final....hindsight word....on the markets today.

Stock market today: Tech stocks lead rally after inflation data sets table for CPI

https://finance.yahoo.com/news/stoc...lation-data-sets-table-for-cpi-200100627.html

 

I will be out of here about noon today and out of touch for the rest of the week. Feel free to post over the rest of the week......and......keep these markets rolling upward for me.

HERE....is the little story of the day.

Annual inflation rate slows to 2.9% in July, lowest since 2021

https://www.cnbc.com/2024/08/14/july-consumer-price-index.html

(BOLD is my opinion OR what I consider important content)

"Inflation rose as expected in July, driven by higher housing-related costs, according to a Labor Department report Wednesday that is likely to keep an interest rate cut on the table in September.

The consumer price index, a broad-based measure of prices for goods and services, increased 0.2% for the month, putting the 12-month inflation rate at 2.9%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 3%.

Excluding food and energy, core CPI came in at a 0.2% monthly increase and a 3.2% annual rate, meeting expectations.

The annual rate is the lowest since March 2021, while the core is the lowest since April 2021, according to the Bureau of Labor Statistics report. Headline inflation was 3% in June.

A 0.4% increase in shelter costs was responsible for 90% of the all-items inflation increase. Food prices increased 0.2% while energy was flat.

Stock market futures were mildly negative after the report while Treasury yields were mostly higher.

Though food inflation was soft on the month, multiple categories saw sizeable increases, most notably eggs, which were up 5.5%. Cereals and bakery items declined 0.5% while dairy and related products fell 0.2%.

Inflation readings have been gradually drifting back to the central bank’s 2% target. A report Tuesday from the Labor Department showed that producer prices, a proxy for wholesale inflation, rose just 0.1% in July and were up 2.2% year over year.

Fed officials have indicated a willingness to ease, though they’ve been careful not to commit to a specific timetable nor to speculate about the pace at which cuts might occur. Futures market pricing currently points to about an even chance of a quarter- or half-percentage point reduction at the Sept. 17-18 meeting and at least a full point in moves by the end of 2024.

As inflation has eased, percolating concerns about a slowing labor market seemed to have raised the likelihood that the Fed will start cutting for the first time since the early days of the Covid crisis.

“Coming down but the sticky areas continue to be sticky,” Liz Ann Sonders, chief investment strategist at Charles Schwab, said in describing the CPI report. “We have to keep a close eye on both the inflation data as well as the employment data.”

There were several crosscurrents in the report that indeed suggest inflation is stubborn in some areas."

MY COMMENT

We are now SOLIDLY in the normal historic inflation range of 3-4%. A very healthy place to be for the economy.

This report is not good new for my Social Security cost of living raise.....but is good news for....rate cuts. A good start to the day.

 

HERE are the markets today.

Stock market today: Stocks edge higher as key inflation report matches expectations

https://finance.yahoo.com/news/stoc...on-report-matches-expectations-133044841.html

We will be seeing some of the big retail earnings this week, as earnings wrap up....otherwise now that PPI and CPI are out of the way....a relatively normal and calm week.

 

YES....we are MORONS. But this is a long way off as this winds its way through the legal system.

Alphabet Stock Slides As Department Of Justice Considers Push To Break Up Google: What Investors Need To Know

https://www.benzinga.com/news/24/08...s-push-to-break-up-google-what-investors-need

Our government at work.....to kill the US economy and destroy our world class companies. Our government....the FED, the regulators, the bureaucrats, the lawyers, etc, etc.....are constantly on a mission to trash the markets and the businesses that make up the markets.

 

As to the above on the SS cost of living this year.

2025 Social Security COLA: Inflation data points to small increase in benefits
July CPI shows overall inflation continuing to cool. That data will be used to calculate next year's checks.

https://finance.yahoo.com/news/2025...-to-small-increase-in-benefits-140920163.html

(BOLD is my opinion OR what I consider important content)

"Seniors, the time has come to steel yourselves for a modest increase in your Social Security check next year.

The annual COLA, or cost-of-living adjustment, is likely to be 2.6%, less than the 2024 COLA of 3.2%, which bumped up the average monthly benefit by more than $50, and well below the 8.7% increase in benefits received two years ago.

The reason: easing inflation, which is a good thing overall.

The crystal ball COLA estimate is based on inflation data from the Bureau of Labor Statistics released Wednesday morning that showed consumer prices in July rose 2.9% over the prior year, a tiny downtick from June’s 3% increase.

The COLA is calculated by averaging inflation data for the third quarter of the year — July, August, and September of 2024 — and then comparing that figure with the same data from last year. based on the Consumer Price Index (CPI) for all urban wage earners and clerical workers (CPI-W).

The Social Security Administration is expected to announce the actual 2025 COLA in mid-October after the release of the September CPI data.

We “expect a substantially lower COLA for next year after the 3.2% COLA in 2024,” Shannon Benton, executive director of the Senior Citizens League, told Yahoo Finance........"

MY COMMENT

BUMMER......for me.

 

Yes...my kids will be totally secure from inheriting ALL family money some day......and.....they are both well into GREAT careers with college degrees.

So my focus is on Grandchild. I think by starting with $200,000 in the SP500 24 years early...it will grow to enough to give her a hefty first distribution at age 34 and will grow over the ten year intervals to give BIG distributions every ten years till age 74. With a little luck each distribution should be well over $1MILLION......with some of the later distributions over $2-3MILLION.

I will leave it to my kids to provide for the generations after that.....they should be in a nice position to pass on a BIG amount of money to the generations after them.

 

My last post today.

I have a lot of stuff to get ready. I fly out tonight and will return late Monday. My wife, horses, and dogs are on their own for five days. They are used to it.......from when I was touring full time..... so no big deal. The markets are on their own as well.

I currently am in the green in spite of COST, AAPL, AMZN and GOOGL being in the red.

TAKE CARE EVERYONE.....and.....MAKE US SOME GOOD MONEY. (I would even take some "bad" money....so if you happen to make us any of that....I am all good)