What’s On Our Minds:

At a time when fewer business owners are deciding to take their companies public and more money is being invested privately, powerful players in the investment world have quietly been meeting over the past year to discuss corporate governance standards for public companies.  Late last month the group released a letter and report outlining “common sense” recommendations to improve corporate governance and ultimately the relationship between companies and shareholders.  Included in the bunch of concerned investors is Warren Buffet and a dozen other chief executives from major investment shops including Laurence Fink from Blackrock and Abby Johnson from Fidelity.  One of their major concerns is the pressure being put on companies offering earnings guidance as it can influence them to manipulate results to meet expectations.  In their letter they state, “the financial markets have become too obsessed with quarterly earnings forecasts … Companies should not feel obligated to provide earnings guidance – and should only do so if they believe that providing such guidance is beneficial to shareholders.”   The report also pushes for companies to have smaller and independent boards.  In our opinion, it’s positive to see this sort of thought leadership from Wall Street.  If put into practice, these new standards will allow America’s leading companies to focus on their long term success which should ultimately be beneficial to all parties.

Last Week’s Highlights:

In typical summer fashion, the markets saw very little trading volume.  The market was down slightly as analyst digested a heap of earnings reports.  Apple’s stock increased, iphone sales fell less than expected, Facebook shares hit a record high on strong earnings, and revenues that exceeded Wall Street’s exspectations. Alphabet, the parent company of Google, reported a 22% increase in sales mainly driven by mobile advertising.  Oil prices declined to a three-month low Friday which brought shares in energy companies down.  On Wednesday, the Fed noted improvements in the labor market which was seen as a potential for a September in interest rate increase.

Looking Ahead:

The S&P 500 is sitting near all time highs and we are about 2/3rds of the way through earnings season. Earnings releases continue this week with Proctor & Gamble and Pfizer on reporting Tuesday, Clorox and Twenty-First Century Fox on Wednesday, and Duke Energy and Transocean on Thursday, and EOG Resources and E.W. Scripts on Friday.  Friday is jobs day and it is estimated that we added 175,000 jobs in July.