Just When You Thought It Was Safe…

Tuesday, August 29th, 2017

Just when you thought it was safe to focus on other things than North Korea, Kim Jong-un last night launched a missile from Pyongyang over Hokkaido, the main northernmost island of the country of Japan. It’s a clearly provocative move meant to get the attention of President Trump as much as anyone else.

Japanese Prime Minister Shinzo Abe wasted no time responding verbally: “This outrageous action of firing a missile over our country is an unprecedented, grave and serious threat that seriously damages peace and security in the region.” Abe also has called for an emergency meeting of the United Nations Security Council, and said he and President Trump spoke about the act for 40 minutes last night, with the president giving a strong commitment to Japan’s security.

For Trump’s part, instead of speaking in front of cameras in an impromptu manner – or by releasing a series of tweets, as per his normal method of disseminating information – Trump first met with his generals – Chief of Staff Kelly and National Security Advisor McMaster – before releasing an official White House statement: “The world has received North Korea’s latest message loud and clear: this regime has signaled contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior. Threatening and destabilizing actions only increase the North Korean regime’s isolation in the region and among all nations of the world. All options are on the table.”

The missile itself crashed into the Pacific some 700 miles off the coast of Hokkaido, while South Korea’s response was military, sending F15K fighter jets to drop bombs on a shooting range near the border in what was described as a “military drill,” but nonetheless should serve as a stern warning to its hostile neighbor to the north. A full-scale war on the Korean peninsula would likely open up an entirely new scenario on the world stage, and it remains to be seen what China – North Korea’s main trading partner – will do about this latest development.

Stock market futures are sufficiently spooked: the Dow Jones now looks to open lower by more than 100 points, with the SP 500 and Nasdaq indexes down as well. This follows a mixed day of trading yesterday, and the month of August looks as if it may be the first down month of trading in what has been a very strong 2017 overall so far. We even see gold prices climbing as a result of this conflict potentially getting worse.

Even with the dorms from Hurricane Harvey continuing to wreak havoc on Southeastern Texas, this looks to be the news story to influence markets for today – and perhaps beyond.

Quarterly Earnings Still Hitting the Tape

Zacks Rank #2 (Buy)-rated Best Buy BBY topped Q2 earnings estimates by 6 cents to 69 cents per share, 21% higher than the year-ago quarter. Sales in the quarter of $8.94 billion rose 4.8% year over year and outperformed the Zacks consensus estimate of $8.66 billion. Fiscal year guidance was also upped, led by expected 4% growth in its Enterprise business as opposed to the 2.5% expected earlier.

Shares of Best Buy initially were buoyed by this news, up 4%, before trending back into negative territory in the pre-market. Shares are now trading down almost 4%. Keep in mind this is a stock that had been up 46% year to date, so expect some of this is “sell the news.”

Hain Celestial HAIN is trading up nearly 8% this morning after also beating fiscal Q4 estimates and raising guidance. The tea and other snack brand retailer reported a 3-cent beat on the bottom line to 43 cents per share, while sales of $725 million in the quarter also beat estimates. Earnings guidance for fiscal year 2018 has been ratcheted up to a range of $1.63 – 1.80 per share, where consensus had previously been around $1.65.

Mark Vickery
Senior Editor

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