China Trade Reckoning Back in Focus, Plus Q4 Reports: JNJ, TRV, HAL

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Tuesday, January 22, 2019

After four straight “up” weeks in the markets – following a late-2018 crater in equities that did not begin to turn around until after Christmas – we now see a reckoning of sorts in today’s pre-market. Futures are down ahead of today’s opening bell, on fresh concerns about the slowing Chinese economy, and what President Xi Jinping is planning on doing about the ongoing trade war with the U.S.

China’s 6.6% annual growth was its lowest in nearly 30 years, and Xi has called a private meeting of party heads to discuss a way forward. Not much is very transparent in the country, of course – even the 6.6% figure ought to be taken with a grain of salt (not that we should assume it’s higher or lower, just that it’s not etched in stone) – but the mere fact that China’s leaders appear to be redirecting their efforts economically helps add question marks to the forward-looking terrain.

Much the way the U.S. government shutdown, now in its fifth week, was rather brazenly undertaken but no resolve is apparent, we can see parallels with the U.S.-China trade friction. After four weeks of relaxed attitudes about trade relations helped buoy up the markets from Christmas Eve lows, it would appear the struggle is far from over – on either side of the Pacific.

Q4 Earnings Roundup

Johnson & Johnson JNJ , a Zacks Rank #3 (Hold) stock, beat Q4 expectations on both top and bottom lines. Its earnings of $197 per share topped the Zacks consensus by two cents, while revenues in the quarter reached $20.39 billion, above the estimated $20.1 billion.

However, guidance of revenues below the previous Zacks estimate for next quarter, along with earnings guidance that puts our consensus at the top of the range, has sent Johnson & Johnson shares down 2% in today’s pre-market. For more on JNJ’s earnings, click here.

Zacks Rank #4 (Sell)-rated Travelers Insurance TRV also beat expectations on its top and bottom lines: $2.13 per share was easily above the $1.98 consensus, whereas $7.8 billion on the top line surpassed the $7.7 billion our analysts were looking for. Underwriting numbers were way down year over year, offset somewhat by growth in net written premiums. For more on TRV’s earnings, click here.

Oilfield services company Halliburton HAL , also rated a Zacks Rank #4 ahead of its Q4 report this morning, bea t earnings estimates by 4 cents in posting 41 cents per share. Revenues of $5.9 billion in the quarter beat our consensus estimate by 1%. Operating income from Production and Drilling Evaluation were both down notably year over year, on softer oil drilling output. Shares are also trading down 2% ahead of the bell. For more on HAL’s earnings, click here.

Mark Vickery

Senior Editor

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