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Charities stand to lose billions in donations if Republicans advance their tax overhaul, prompting nonprofits to carefully attempt to persuade lawmakers to reshape their plan. As a result of a proposal to double the standard deduction and prevent people from deducting state and local taxes from federal taxable income, fewer taxpayers would have the financial incentive to itemize their deductions, including their charitable gifts. More over each deduction would be worth less to individuals if marginal tax rates are reduced. People do not donate only for the tax deduction, but according to an Indiana University these backdoor limits on charitable deductions could reduce giving by $13 billion or 4.6% annually.
In its monthly Oil Market Report for August released Friday morning, the International Energy Agency (IEA) said that global crude supplies rose by 520,000 barrels per day in July, the third consecutive month that output has risen.
Commercial inventories in June in Organisation for Economic Co-operation and Development (OECD) countries totaled 3.021 billion barrels, a drop of 26 million barrels from the May total. OECD stockpiles are now 219 million barrels above the five-year average, down by 19.3 million barrels from the prior month’s total. The IEA said that preliminary indications show a “further fall” in July stockpiles.
For all of 2017, total demand is now forecast at 97.6 million barrels a day, up by 1.5 million barrels a day compared to 2016. For 2018, total demand is forecast to hit 100 million barrels a day in the fourth quarter and average 99 million barrels a day for the full year. Both estimates are slightly below prior month projections.
Organization of Petroleum Exporting Countries (OPEC) crude oil production rose by 230,000 barrels a day to 32.84 million barrels in July, led by a strong recovery in Libyan production. OPEC compliance with state production cuts fell to 75%, the lowest since the cuts were initiated in January.
The cartel and its 10 partners have achieved 87% compliance with the 1.2-million-barrel-a-day cut for the year to date. The OPEC and non-OPEC countries are currently producing about 470,000 barrels of oil a day above the agreed quota.
At the end of the second quarter of 2017, OECD commercial stocks of 3.021 million barrels have now fallen below 2016 levels. But if OECD stocks fell by 500,000 barrels a day until the end of the first quarter of next year when the current output agreements expire, stocks would still be about 60 million barrels above the five-year average.
Early Friday morning, West Texas Intermediate (WTI) crude for September delivery traded at $48.33 a barrel, down about 0.6% compared with Thursday’s closing price. Brent crude for October delivery traded down about 0.3% at $51.71 a barrel in London.
Stratasys Ltd. (NASDAQ: SSYS) reported second-quarter 2017 results Wednesday before markets opened. The 3D printer maker posted adjusted earnings per share (EPS) of $0.17 on revenues of $169.99 million. In the second quarter of 2016, the company said it had $0.12 in EPS and revenues of $172.07 million. Analysts had consensus estimates for EPS of $0.07 and $167.69 million in revenues.
In mid-May, Stratasys stock had posted a year-to-date gain of around 85%, but as of last night’s close shares have given back more than half that gain. Share prices for other 3D printing stocks have followed roughly the same pattern, and all seem to be suffering from the same ailment: they are growth stocks that are simply not growing very fast.
To that point, Stratasys this morning reiterated prior fiscal year guidance for revenue of $645 million to $680 million and adjusted EPS of $0.19 to $0.37. Consensus estimates are calling for EPS of $0.28 and revenues of $668.87 million.
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The company also said it expects non-GAAP operating margin of 3% to 5% and capex of $40 million to $50 million. On a GAAP basis, Stratasys forecasts a net loss of $53 million to $59 million ($0.73 to $1.00 per share).
CEO Ilan Levin said:
We continue to allocate resources towards deepening customer engagement within our key vertical markets, and we are pleased with our progress in developing higher quality revenue opportunities. … We have made significant progress in developing solutions that target high-value applications within our targeted markets, and we continue to focus on aligning our resources around this long term strategy. We believe this strategy will allow us to help grow the adoption of our products and services over time.
For the fourth quarter, analysts expect EPS of $0.05 and revenues of $162.11 million. Again, not much in the way of growth, but that doesn’t mean that investors aren’t willing to pile in on this morning’s beats.
Shares of Stratasys traded up about 5% at $23.50 in Wednesday’s premarket session. The stock’s 52-week range is $16.37 to $30.88, and the consensus 12-month price target before this morning’s report was $26.29.
AUGUST NEWSLETTER 5
Tyson Foods Inc predicted a continued boom in meat sales as consumers gfobble up more chicken strips and bacon even at higher prices. US restaurants are laying more bacon on entrees, and Americans are expected to consume a record 91.3 pounds of chicken each this year. On top of increased demand from boreign buyers. Tyson, the top US meat company says it is sometimes struggling to keep up We are essentially busting at the seams Tyson Chief Executive Tom Hayes said. Tyson shares climbed 4.9% on Monday after the company reported higher than expected profit and revenue for the second quarter. Tyson said it expects sales to increae 6% in it fiscal 2018 which begins in October.
NOT DOING WELL
PPI Report Resurfaces With Hints of Deflation Again
By Jon C. Ogg August 10, 2017 10:55 am EDTPrintEmail
It’s one thing to say that there is no serious inflation. It’s another issue entirely to be talking about the threat of deflation again.
The U.S. Department of Labor released its producer price index (PPI) for the month of July, and this measures the level of inflation that businesses are seeing from suppliers and partners they trade with.
On the monthly report, producer prices were down an unexpected 0.1% in July. This compares with a 0.1% gain in June and was less than the 0.1% gain expected by Bloomberg. In fact, the Econoday range’s worst estimate was just flat at 0.0%.
Even the core PPI reading on the monthly reading managed to turn in a −0.1% reading in July. This reading, which measures producer prices outside of the volatile food and energy prices, was down from a gain of 0.1% in June and was lower than a gain of 0.1% expected by the Bloomberg consensus. Even if you use an even more focused core PPI that removes trade services (on top of food and energy), the PPI was still only flat at a 0.0% reading in July’s month-over-month report.
There is at least some good news for the Federal Reserve and its ambition to tighten rates and reduce the Fed’s $4.4 trillion or so balance sheet. The annualized wholesale inflation reading for July of 2017 versus July of 2016 was up 1.9% on the headline and up 1.8% on the core reading. If you use the more focused core that excludes trade services too, that annualized gain was up 1.9% from July of 2016.
As a reminder, the Fed Chair Yellen and her fellow Fed members really need inflation to be running 2.0% to 2.5% annually to justify significant normalization efforts. It may seem close enough for rounding to have readings at the 1.8% and 1.9% level, but this is a deflationary reading on the monthly side.
All in all, this was the worst wholesale inflation number in 11 months. It’s one thing to be talking about prices not rising enough for the Fed target, but it’s entirely different to be having the deflationary bias again.
Tesla Inc.’s (NASDAQ: TSLA) offering of $1.5 billion in senior unsecured debt wasn’t big enough for investors, so the company upped the sale to $1.8 billion to satisfy the demand. The company’s first offer of junk-rated bonds was, by any measure, a resounding success.
Partly that has to do with investor hunger for high-yield debt and partly it has to do with timing. Returns on high-yield debt are falling, but for issuers like Tesla, raising cash by selling bonds is still cheap.
The bonds, originally set to yield 5.25%, were sold at a coupon of 5.3%. The notes are due in 2025. S&P rates the bonds B− and Moody’s assigned a rating of B3.
The offering came just two weeks after the launch of the Model 3, and the timing is no accident. Coverage of the launch was massive and new orders for the Model 3 spiked to 1,800 a day in the following week.
Tesla plans to build a total of 20,000 Model 3 sedans by the end of the year and ramp production to 500,000 a year by the end of 2018. To reach those goals will take substantial — and rapid — investment.
The company reported $3.04 billion in cash and equivalents at the end of the second quarter and $7.12 billion in long-term debt and $2.26 billion in other long-term liabilities. Since December, Tesla has burned through more than $350 million in cash, and the spending on ramping up Model 3 production is just beginning.
The company said it plans to use the net proceeds from the offering to “further strengthen its balance sheet during this period of rapid scaling with the launch of the Model 3, and for general corporate purposes.”
Tesla will offer the new debt only to institutional buyers and will not register the notes with the U.S. Securities and Exchange Commission.24/7 Wall St.
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The company’s stock has added about 67% for the year to date, after peaking at a year-to-date gain of nearly 80% in mid-June. The Nasdaq Composite is up about 16% over the same period, while GM stock has added just 0.3% for the year to date and Ford stock has declined more than 11%.
Tesla’s stock ended last week at $357.87 a share, in a 52-week range of $178.19 to $386.99. The stock’s 12-month price target is $313.24.
Blue Apron Holdings Inc. (NYSE: APRN) is scheduled to release its second-quarter financial results before the markets open on Thursday — its first earnings report as a public company. The food prep and delivery service provider has been under fire since it first came public, but a positive showing from this earnings report could alleviate some of the concerns.
Since the firm came public, the stock has dropped nearly 42%.
The consensus estimates from Thomson Reuters call for a net loss of $0.30 per share and $235.81 million in revenue. The most bullish estimates from analysts are a net loss of $0.15 per share and $236.6 million in revenue, while the biggest bear sees a net loss of $0.47 per share and $234.4 million in revenue.
Much of the pressure being felt in Blue Apron stock is from Amazon’s newest trademark application on a phrase that refers to prepared food kits. The e-commerce giant noted that the phrase covers prepared food kits ready for cooking and assembly as a meal.
Amazon’s massive customer base, including some 85 million Amazon Prime subscribers, could punch a serious hole in the plans of Blue Apron and other startups seeking to play in the meal delivery business.
During the quiet period, one analyst came forward with a Sell rating for the stock. Northcoast Research initiated coverage with that Sell rating and a $2 price target. Northcoast Research may not be a household name to investors, but analysts from the underwriting syndicate are still forced to remain mum during the imposed quiet period. Still, this is just one more bruise for Blue Apron’s bulls, and it came on the heels of a day when the stock finally managed to rally.24/7 Wall St.
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A few other analysts have weighed in on Blue Apron:
RBC has a Buy rating with a $10 price target.
Citigroup has a Buy rating with a $10 price target.
Raymond James has a Market Perform rating.
Oppenheimer has an Outperform rating with an $11 price target.
Morgan Stanley has an Equal Weight rating with a $7.50 price target.
Canaccord Genuity has a Buy rating with a $14 price target.
Needham has a Buy rating with a $10 price target.
William Blair has a Market Perform rating.
SunTrust Banks has a Buy rating with a $12 price target.
Stifel has a Buy rating with a $10 price target.
Barclays has an Equal Weight rating with a $7 price target.
Goldman Sachs has a Buy rating with an $11 price target.
Shares of Blue Apron were last seen at $5.84, with a consensus analyst price target of $9.50 and a post-IPO range of $5.51 to $13.29.
OIL PRODUCTION UP