NOVEMBER NEWSLETTER 2
The Conference Board may be best known for its consumer confidence readings, but the group also issues its Employment Trends Index. After a better snapback recovery in payrolls than the markets initially wanted to credit the U.S. economy for last Friday, the Employment Trends index confirms a solid recovery in October and higher revisions for September.
The index rose to 135.57 in October, and September’s level was revised to 132.86 from the 132.74 preliminary reading. The change represents a 5.4% gain in the index versus a year ago.
While the U.S. Department of Labor measures unemployment, payrolls, average hourly earnings, the workweek and other measures, the Conference Board’s Employment Trends Index measures eight labor-market indicators taken from its own data, the U.S. Department of Labor, the Bureau of Labor Statistics, the Federal Reserve, the Bureau of Economic Analysis and the National Federation of Independent Business Research Foundation.
The Conference Board said that October’s increase in employment trends showed gains in all eight index components.
As a reminder, last week’s report garnered a mixed reception. While unemployment was lower, the payrolls gains were lower than economists had projected, if you did not factor in the higher payrolls adjustments for September and August. The decrease in the hourly pay measured by the Labor Department also surprised some economists, but the one-cent rise on a month over month reading was actually up 2.6% from October of 2016.
The Conference Board’s October report said:
The bounce back in the Employment Trends Index in October was one of the largest monthly increases ever, and comes after two declines because of the hurricanes. As expected, the ETI picked up and continued its strong upward trend, suggesting that employment growth will remain solid in the coming months.
All in all, this report is not a market-moving one. It is still useful in aggregating the overall employment picture. If all eight components showed gains, maybe it lends more credibility to last Friday’s payrolls and employment report being better than it may have sounded
Planet Fitness Inc. (NYSE: PLNT) has only been public for a couple of years, but the stock is making a great case for itself with its most recent earnings report. The company reported its most recent results after the markets closed on Tuesday.The fitness chain posted $0.19 in earnings per share (EPS) on $97.5 million in revenue, which compares with consensus estimates from Thomson Reuters of $0.16 in EPS and $93.7 million in revenue.Systemwide same-store sales rose 9.3%. Separately, franchisee-owned same-store sales increased 9.6% and corporate-owned same-store sales increased 5.1%.
In terms of its segments, the company reported:
Franchise segment revenue, which includes commission income, increased $8.3 million or 30.6% to $35.6 million from $27.2 million in the prior year period;
Corporate-owned stores segment revenue increased $1.9 million or 7.1% to $28.6 million from $26.7 million in the prior year period; and Equipment segment revenue increased $0.3 million or 0.8% to $33.4 million from $33.1 million in the prior year period.
Looking ahead to the full year, the company expects to see EPS in the range of $0.80 to $0.82 and revenues between $425 million and $430 million, with systemwide same-store sales growth in the 9.5% to 10.0% range.
CEO Christopher Rondeau commented:
The strong top and bottom line momentum we generated during the first half of the year carried into the third quarter highlighted by a 9.3% increase in system-wide same store sales and earnings per share that exceeded expectations. With the increased brand awareness and reach of our welcoming, non-intimidating fitness offering combined with our asset-light business model that includes our fast-growing, high-margin franchise segment, we continue to expand market share and generate significant profitability and cash flow. While this year marks Planet Fitness’ 25th anniversary, I believe we are just beginning to scratch the surface of the Company’s full potential.
Shares of Planet Fitness were last seen up about 14% at $29.19, with a 52-week range of $18.32 to $30.01.
GAS PRICES UP
Last week, House Speaker Paul Ryan (R-Wis.) told a variety of conservative media outlets that the Republican tax plan would deliver “a tax cut for everybody.” When evidence emerged that millions of middle-class households would pay more under the GOP proposal, Ryan’s office conceded that the Speaker “misspoke.”
Evidently, there’s a lot of that going around.
Mitch McConnell, the Senate majority leader, acknowledged on Friday that the Republican tax plan might result in a tax hike for some working Americans, saying he “misspoke” days earlier when he said that “nobody in the middle class is going to get a tax increase” under the Senate bill.
“I misspoke on that,” Mr. McConnell, a Kentucky Republican, said in an interview on Friday with The New York Times.
Remember, the ostensible point of the entire exercise was the GOP’s stated desire to lower taxes on the middle class. And yet, last week, both the top Republican in the House and the top Republican in the Senate acknowledged some in the middle class will pay more in taxes, not less, under their plan.
This seems likely to create political problems for the party, but before we go too far down that road, GOP leaders are confronting a more immediate problem: their tax plan may not be able to pass.
The legislative procedures get a little tricky, but the problem is relatively straightforward: congressional Republicans, hoping to circumvent a Democratic filibuster, are pushing their tax plan through something called the budget reconciliation process. Under Senate rules – specifically, the “Byrd Rule” – bills passed this way can’t increase the deficit after 10 years.
By the GOP’s own admission, the current version of the Republican tax plan adds roughly $1.5 trillion to the deficit in its first 10 years – which is quite a bit for a party that occasionally pretends to care about balancing the budget – but then keeps running red ink in the years that follow. (According to the Joint Committee on Taxation, the Senate bill is even further from budget neutrality than the House bill.)
In other words, the GOP tax plan, at least in its current iteration, is at odds with the procedural rules Republicans are counting on. The arithmetic isn’t complicated: if the tax cuts aren’t deficit neutral by 2028, Republicans will need 60 votes in the Senate, not 50.
And with that in mind, GOP leaders have some options:
1. They can make the budget arithmetic work. They’ve had quite a while to figure out how to make their numbers add up, and so far, the plan’s GOP architects haven’t been able to figure this out.
2. They can find some Democratic friends. After excluding Democratic lawmakers from the process entirely, and writing the plan in secret, Republicans could try to find eight Senate Dems to vote for a tax plan, making the reconciliation rules unnecessary. My advice to GOP leaders: don’t get your hopes up on this.
3. They can let the tax breaks expire. When Bush/Cheney-era Republicans passed their tax breaks, they didn’t worry about trying to offset the costs; they simply put the bills on the national charge card. The catch was, the tax cuts couldn’t be permanent because they violated the aforementioned Byrd Rule. This year, GOP leaders say they’re determined to make permanent changes to the tax code, but if they change their mind, they could allow their policies to sunset in 2027.
4. They can blow up the reconciliation process. The GOP majority, if it really wanted to, could rely on nuclear-option tactics and rewrite the existing procedural rules, effectively blowing up the filibuster. This would likely face some resistance from several Senate Republicans, but no one should assume this is off the table.
5. They can go after health care benefits. GOP leaders, at Donald Trump’s behest, are reportedly eyeing repeal of the Affordable Care Act’s individual mandate, which according to the Congressional Budget Office, would give Republicans an additional $338 billion to play with. On the other hand, the CBO also found that this change would end health care coverage for 13 million Americans – and if Republicans stripped 13 million people of their insurance in order to finance corporate tax breaks, some voters would probably be a little peeved.
6. They can fail and start over. A variety of GOP lawmakers have insisted of late that failure is not an option on this issue. They’re mistaken.
Certified Public Accountants FAX 732-516-9778
328 Amboy Ave, Metuchen NJ 08840
STRONG JOB MARKET
You know how we’ve told you time and time again that you don’t have to actually wait for Black Friday 2017 to score killer deals? Well guess what: Best Buy’s early Black Friday sale just went live and you’ll find fantastic deals on gadgets and gizmos from just about every consumer electronics category you can think of.
Some of the best deals currently available in Best Buy’s early Black Friday 2017 sale include $600 off a massive 70-inch 4K smart TV from Sony (though it’s actually $1 cheaper on Amazon, where you might not have to pay tax), Apple Watch Series 1 models starting at just $199, an iPhone 6s for just $9.99 a month, big savings on Beats wireless headphones, the insanely popular Ring Video Doorbell for a penny under $100, a Vizio sound bar also for a penny under $100, and plenty more.
You’ll find our picks for the 10 best deals in Best Buy’s big early Black Friday 2017 sale below.
Sony – 70″ Class (69.5″ Diag.) – LED – 2160p – Smart – 4K Ultra HD TV: $1,199.99 (reg. $1,799.99)
Apple Watch Series 1: Starting at $199
Save $50 or $100 on Select Bose Headphones
Save $220 on Select Beats Studio Wireless Headphones
iPhone 6s: Starting at $9.99/Month
LG 2.1-Channel Soundbar System with Wireless Subwoofer: $119.99 (reg. $279.99)
Jaybird – Freedom F5 Wireless In-Ear Headphones: $49.99 (reg. $149.99)
Ring Video Doorbell – Satin Nickel: $99.99 (reg. $179.99)
Lenovo Yoga 710 2-in-1 15.6″ Touch-Screen Laptop (Core i5, 8GB RAM, 256GB SSD): $599.99 (reg. $829.99)
VIZIO 3.0-Channel Soundbar with Digital Amplifier: $99.99 (reg. $149.99)
Best Buy’s big sale ends this Saturday at 11:59 CST. You can shop the entire sale the Best Buy website’s special early Black Friday 2017 sale page. For info on hundreds of killer deals Best Buy has lined up for its in-store and online Thanksgiving Day and Black Friday sales, be sure to check out our earlier coverage. Today’s early Black Friday 2017 deals are still great, mind you, but there’s a lot more planned at Best Buy in two weeks
GOAL IS SMOOTH
For the second consecutive week, U.S. gasoline prices were higher Monday morning than they were in the prior week. And sharply higher too — the price of a gallon of regular gasoline cost on average about seven cents more Monday morning than it did last Monday.The national average this morning was $2.53, up from $2.46 last week and nearly four cents a gallon higher than the month-ago price.Gasoline inventories fell by 4 million barrels last week, according to U.S. Energy Information Administration (EIA) data. Crude oil inventories also dropped in the week ended October 27, and seasonal maintenance continues at some refineries.
Most significant may be continuing strong demand. Patrick DeHaan, head of petroleum analysis at GasBuddy, said:
It’s been a frenzied week at fuel pumps across the country, but without a hurricane driving up prices, many motorists have been dumbfounded about what’s taking place with the unseasonable upward trend. Such a strong weekly upward move is rare in the fall, but is explained by a confluence of factors, including oil prices hitting a new 2017 high, a major pipeline leak resulting in disruption, autumn refinery maintenance, but perhaps among the more surprising- robust demand for gasoline so late in the season. Such demand has magnified relatively mundane factors into a major gas price event for much of the United States and Canada. But some slowdown is expected in the Great Lakes, the region hardest hit with price spikes in the last week, as repairs [to the] Explorer Pipeline have been completed, but some additional bumps in the road ahead can be expected for motorists elsewhere.States where prices moved most last week were: Ohio and Illinois (up 18 cents); Indiana and California (up 15 cents); Wisconsin (up 12 cents); Michigan (up nine cents); Missouri (up eight cents); Delaware and Iowa (up six cents); and Kentucky (up five cents). The sharp jump in California is most likely due to a 12-cent per gallon increase in state gasoline taxes.States with the lowest average prices last week included Alabama ($2.21); Mississippi ($2.22); South Carolina ($2.24); Texas, Arkansas and Louisiana ($2.26); Tennessee ($2.27); Virginia ($2.30); and Oklahoma and Georgia ($2.33).The highest average prices per gallon last week were reported from California ($3.21); Hawaii ($3.10); Alaska ($3.06); Washington ($2.91); Nevada ($2.81); Oregon and Pennsylvania ($2.75); Connecticut and Indiana ($2.72); and Illinois ($2.70).
West Texas Intermediate (WTI) crude oil for December delivery traded up nearly 2% Monday morning at $56.37, while Brent for January delivery traded at $63.62. The price differential (spread) between WTI and Brent crude is now more than $7 a barrel, indicating that WTI export quantities could remain at recent highs and perhaps go even higher, putting more upward pressure on U.S. pump prices.ALSO READ: 7 Oil and Gas Stocks Analysts Want Yo