by Jeremy Ryan, Wells Fargo Asset Management
Today’s Daily Advantage comes to us from guest writer Jim Durning.
Major stock indexes in the U.S. marked modest gains as oil prices recovered. Reports surfaced that Iran would attend meetings of the Organization of Petroleum Exporting Countries next month, raising hopes for an agreement to curb oil production in support of higher prices. The Dow added almost 18 points, with 18 of its 30 components advancing; the S&P 500 Index was more than 4 points higher; and the Nasdaq gained more than 15 points. Advancers led decliners by more than nine to four on the NYSE and about nine to five on the Nasdaq. The prices of Treasuries retreated. Gold futures increased $2.70 to settle at $1,346.10 an ounce. The price of crude oil increased $0.69, settling at $48.10 a barrel.
In earnings news:
- Best Buy Co. Inc. reported fiscal second-quarter results that beat expectations. For the quarter that ended July 30, earnings rose to $198 million from $164 million in the same period a year ago. Same-store sales increased 0.8%, compared with an estimate of a 0.4% decline. Shares (BBY) of the company gained 19.60% in trading.
- Toll Brothers Inc. posted third-quarter net earnings were $105.5 million, up from $66.7 million a year ago. Company shares (TOL) added 8.80% in trading.
- J.M. Smucker Co. reported a 7% decline in fiscal first-quarter revenue, which it attributed to lower prices, the divestiture of its milk business, and a disappointing performance in its pet foods segment. The company reaffirmed its full-year earnings target but said that price deflation is a result of consumers’ shift away from packaged goods and toward more fresh and natural options. The company reported that revenue fell to $1.82 billion from $1.95 billion. Shares (SJM) of the company fell 8.07% on the day.
In other business news:
- Japan’s financial regulator is extending provisions that help regional financial institutions get public funds in response to risks posed by Britain’s vote to leave the European Union, according to Reuters. The Financial Services Agency, the regulator overseeing banks, securities brokerages, and other financial institutions, is extending by five years a program allowing regional banks and credit unions to borrow from the public treasury more easily.
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Hazy shades of winter
I don’t like to think of myself as a pessimist, but I am pretty sure I’m doomed to be one. For example, as I was enjoying 79 sunny degrees, relaxing on the patio, sipping coffee, and reading the Sunday newspapers (in paper form), I was bedeviled by thoughts of winter. Some were not so pleasant (winter commuter-train delays) while others were more pleasant (the return of hockey—well, except for the injuries). I needed to find the bright side of winter—or at least solutions to the issues I dreaded.
Presto! Technology to the rescue, according to the news and sports pages of my Sunday paper.
First, our commuter rail service will test out Google Glass–like technology to speed up locomotive maintenance. Repair workers will test glasses with technology from AMA XPertEye, a Cambridge, Massachusetts–based startup.
When on-train personnel encounter trouble, the goggles will transmit images to the company’s central office technicians who will view images on a computer and direct repairs remotely. If you have seen the commercial, Comcast is using similar technology to determine whether tennis player John McEnroe’s cable line is in or out of the socket in his cable box. In any industry, quicker repair times and reduced delays is a potential that even a pessimist appreciates.
While we are talking about athletic endeavors, hockey also is leveraging wearable technology to buck the injury bug through new technology. Catapult Group International, Ltd., an Australian company, developed the OptimEye T5, a wearable device that includes an accelerometer, gyroscope, and magnetometer. It tracks and records speed, workload, and even the force of a skater’s stride. The idea is that by effectively monitoring exertion during workouts, practices, and games, team management might find a balance that ensures optimal preparation while stopping short of injury-causing over extension.
If this can be accomplished, the technology could be applied to other industries and their employees and bottom lines could benefit as well. Consider these statistics. According to Catapult, the average National Hockey League team loses 252 man-games per season to injury with more than 50% of its roster suffering some type of injury. At that injury rate, Catapult maintains that a team loses millions in revenue and incurs logistical costs insuring and replacing players. More gloomily, points lost to injury “could mean the difference between a postseason qualification and premature tee times—the latter of which costs people jobs.” That’s a pessimistic view.
Two teams that have tried the new technology adjusted practices, off-ice workouts, and recovery periods based on the data’s to reduce common strain-related injuries. Regrettably, according to reports, my favorite team has yet to apply the technology. They are not alone. There are management/labor issues to be resolved. So, even though it is only August, I am pretty much resigned to waiting until next year for hockey success. Maybe I am a pessimist after all.
