September 16, 2019 BARRON’S 15
A SOFT LANDING?
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The FOMC announces its monetary-policy
decision. Wall Street widely expects the central
bank to cut its federal-funds rate by a quarter of a percentage point, to 1.75%-2%.
Wednesday
Monday 9/
Japanese marketsare closed in ob-
servance of Respect for the Aged Day.
Coca-Cola holdsan investor meeting
in London to discuss its approach to
sustainability.
The Federal ReserveBank of New
York releases its Empire State Manu-
facturing Survey for September. Econ-
omists forecast a 3.5 reading, roughly
even with the previous two months’
data.
Tuesday 9/
Adobe, Chewy,andFedExreport
quarterly results.
KLA and Mascohold investor days
in New York.
The 74th United NationsGeneral
Assembly convenes in New York.
The National Associationof Home
Builders releases its NAHB/Wells
Fargo Housing Market Index for
September. Consensus estimates are
for a 66 reading, even with August. The
survey suggests home builders are still
bullish about the single-family housing
market for the next six months.
Wednesday 9/
General Mills reportsearnings for
the first quarter of fiscal 2020.
The Census Bureaureports residen-
tial-construction data for August. Ex-
pectations are for a seasonally adjusted
annual rate of 1.25 million housing
starts, up from July’s 1.19 million.
Building permits are seen coming in at
1.3 million, about even with July’s data.
Thursday 9/
Darden Restaurantsholds a
conference call to discuss earnings.
The Bank of Englandand Bank of
Japan announce their monetary-policy
decisions. Both central banks are ex-
pected to keep their key short-term
interest rates unchanged at 0.75% and
negative 0.1%, respectively.
Nike holdsits annual meeting of
shareholders in Beaverton, Ore.
Navistar InternationalandSeagate
Technologyhold investor days in
Lisle, Ill., and New York, respectively.
The Conference Boardreleases its
Leading Economic Index for August.
Economists forecast a 0.1% rise, after
a0.5%jumpinJuly.
The National Associationof Real-
tors reports existing-home sales for
August. Consensus estimates are for a
seasonally adjusted annual rate of
5.4 million, even with July’s figure.
Friday 9/
The Federal Reservereleases its
Financial Accounts of the United
States for the second quarter. In the
first quarter, household net worth
jumped 4.5%, to $108.6 trillion, the
largest quarterly gain since 2004. Net
worth is unlikely to rise as much in
the second quarter. The S&P 500
returned 4.3%, after a 13.6% gain in
the March quarter.
ATrouble
Area in Tech
After leading the tech parade for much of the year,
software stocks have run into some turbulence. The
S&P 500 software index, a group headlined byMicro-
soft,Salesforce.com, andAdobe,isdownover4%
since peaking in July, underperforming the rest of tech.
As the momentum trade seized up this past week,
software stocks were hit particularly hard. The iShares
Expanded Tech-Software Sector ETF (ticker: IGV) fell
1.5% on Monday even as the broad market squeezed out
a gain.
Barron’swarned that software stocks were looking
frothy, just as they peaked in July. Much of the group
has little or no earnings to report, and, at the time, the
average stock was valued at more than seven times an-
nual sales versus just two times for the S&P 500. Since
the story, the iShares software ETF is down 7%.
Software investors will get some new data to digest
next week when Adobe reports earnings on Tuesday
after the market’s close. The Photoshop creator is down
11% from its July peak, even though Wall Street is ex-
pecting another strong quarter from the software giant,
with 20%-plus revenue growth and a 14% gain in year-
over-year earnings, to $1.97 per share.
The company has a history of outperforming those
estimates. Adobe’s per-share earnings have come in
ahead of consensus estimates in 20 of the past 21 quar-
ters, according to FactSet. During that period, Adobe
shares are up 312%. At a recent $278, the stock trades at
30 times projected earnings for the next 12 months, just
below a five-year average multiple of 31.—Evie Liu
Cooling Off
Sincepeakinginmidsummer,the
iSharesExpandedTech-Software
SectorETF(IGV)hasdeclined7%.
But Still Hot
Wall Street expects Adobe sales
to be up more than 20% for a
15th straight quarter.
Jan. ’
2017
Q
2018
Q
2019
Q
2018
Q
May Sept.
1
220
$
2
$3 billion
3Q consensus
forecast
180
160
0
200
Source: FactSet
Source: FactSet
Quarterly revenue
Day Consensus Estimate Year Ago
T
Adobe (3Q) $1.97 $1.
Apogee Enterprises (2Q) 0.61 0.
Fedex (1Q) 3.18 3.
Cracker Barrel Old Cuntry Str (4Q) 2.48 2.
More Earnings on Page M
Coming Earnings
Day Consensus Est Last Period
T August Industrial Production 0.2% -0.2%
W August Housing Starts 1,250,000 1,191,
TH August Existing Home Sales 5,380,000 5,420,
August Leading Indicators 0.0% 0.5%
Unless otherwise indicated. a-Advanced; f-Final; p-Preliminary;
r-Revised
Source: FactSet
Consensus Estimate
For more information about coming economic reports - and
what they mean - go to Barron’s free Economic Calendar at
Elias Stein http://www.Barrons.com
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