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April 29, 2005
Earnings reports will take a back seat as four big economic reports come our way by 10 o’clock this morning, and they cover the waterfront from consumer spending to inflation to consumer sentiment to the health of the manufacturing sector. Let’s hope it’s better news than we got from the 1st quarter GDP number yesterday.
March Personal Income and Consumption numbers roll at 8:30, both expected to be up 4 tenths of a percent. Alan Greenspan’s favorite inflation gauge, the PCE deflator, is expected to reflect a 3 tenths of one percent rise. That’s a very important number to the market, and, the lower the better.
The University of Michigan checks in with its final reading on April Consumer Sentiment at 9:45, and at 10 o’clock the Chicago Purchasing Manager’s Index is expected to decline to 62.5 from 69.2.
April 28, 2005
Take one part Proposed New Energy Policy, add two parts big build-up in weekly crude oil reserves. Sprinkle in a dash of good earnings. Fold into a choppy market and voila! That was yesterday’s recipe for a little stock market soufflé.
The futures indicate that the air has come out of those prices this morning. At 8:30 we’ll find out if Wall Street winds up with egg on its >st Quarter Gross Domestic Product number is announced. It’s expected that the economy grew at about 3½ percent in the first quarter versus 3.8% growth in last year’s 4th quarter. There’s a lot of worry about the economy hitting, in Alan Greenspan’s words, “a soft patch.” Three and a half percent is certainly not “soft” by historic standards. Yet a significantly lower number would not be good news.
7.6 billion dollars of profit. Granted, that’s not as much as they made last quarter, but not a bad quarter for ExxonMobil on 82 billion in sales. Procter and Gamble, Comcast, Aetna, Dow Chemical and Raytheon all with good earnings reports this morning.
April 27, 2005
We’re at the high point of earnings season today. In fact, Paul, if I took 10 seconds to talk about each earnings report that’s coming out today, you could take the rest of the day off. About 350 companies will be reporting today.
Last night, Amazon.com gave us a confusing report about last quarter which appears, after you sort out all the noise, to be a significant miss. Amazon also guided lower for the current quarter. The pre-market trading is guiding Amazon shares about 7% lower this morning. In Europe STMicroelectronics also disappointed, which is dragging the whole chip sector and European markets lower by more than one percent this morning.
Verizon beat expectations for sales and earnings. Boeing hit the earnings target, but missed on revenue. They should be down a buck or two at 9:30.
Later this morning, the Energy Information Agency will release the weekly report on oil reserves in the U.S. It’s expected that crude inventories rose by about 400,000 barrels.
April 26, 2005
The earnings reports continue to pour in. Never has it been clearer that what’s good for the oil business is bad for the chemical business. Oil-related companies Occidental Petroleum, BJ Services, Schlumberger and British Petroleum all made a good deal more money than even relatively rosy expectations. However, chemical company Dupont missed their number by about 5%, although they did make more than a year ago. They blamed -- what else -- higher energy and raw material costs.
At 10 o’clock this morning the Conference Board will release the March Consumer Confidence number. It’s expected that confidence dipped again last month, to a level of 98, due to – what else – higher energy costs.
There are indications that the accounting problems at insurance company AIG may be oh – a billion dollars or so more than thought. However, that number has been described as “fluid.” That means it could go much higher. Perhaps you’ve seen this movie before. Let’s hope this genre goes out of >
April 25, 2005
If it’s Monday, there must be a merger to talk about. This Monday’s merger will create the largest oil refiner in the country as Valero is buying Premcor. That’s an 8.7 billion dollar deal. Premcor is being priced at about a 22% premium to Friday’s closing price.
Through Friday, 202 of the S&P 500 companies have reported quarterly earnings. Earnings are running about 12% higher than a year ago, and that’s about 4 to 5 percent higher than expected.
Speaking of both good earnings and oil services, Cooper Cameron blew away estimates this morning, earning 53 cents per share versus an expected 40 cents. SBC beat estimates this morning by a penny per share.
At 10 o’clock, the report on March existing home sales is expected to show no growth from the February number.
April 22, 2005
Well, that’s more like it. Yesterday’s rally was the broadest we’ve seen in a long, long time. And while we’ll get a little pull back in stock prices at 9:30, it will be interesting to see if that 9 to 1 sell-off on Wednesday was capitulation day for the market correction.
No big economic reports are on the agenda today, and earnings reports will slow down a bit as well. The warning of the morning comes from Costco. Costco says that financial results for the next two quarters will be hurt due to the rise in gasoline prices. Speaking of which, light sweet crude is pushing close to 55 dollars per barrel after briefly dipping below 50 just a few days ago.
How about those Google guys. Revenue doubled, income increased five-fold. Google made $1.29 last quarter versus an expected 92 cents. The stock was up 6 percent after hours. Look for it to add another 4 or 5 percent this morning.
Amgen released pretty good numbers last night. International Paper also beat estimates. Eastman Kodak missed their number by a mile, but haven’t changed their full year guidance.
Overseas markets are up, generally between a half and one percent in the backwash of our rally yesterday. We’ll be looking to open lower at 9:30. Adjusted for fair value, S&P futures are down 3, the Dow futures are down 33 and the Nasdaq futures are nearly 9 points below fair value.
April 21, 2005
A double dose of inflation scare shook stock prices yesterday. First off, a big increase in the core CPI, and then yesterday afternoon, more inflation hints in the Fed’s Beige Book spooked traders. Perhaps the good news from yesterday is the magnitude of the sell-off. Down volume swamped up volume by a factor of about 9 to 1. That’s the kind of massive selling that sometimes signals a market bottom.
IBM, by the way, is still “0 for April.” Big Blue has closed lower every trading day since March 31, and is more than 20% lower than it was three weeks ago.
The earnings reports continue to flow, and the news is generally good. Ebay went over a billion dollars of revenue last quarter and beat estimates. More than 10 billion dollars worth of stuff changed hands on Ebay last quarter. Motorola, UPS, McDonalds, Nokia and SAP also checked in with strong numbers.
April 20, 2005
There are a couple of hopeful signs this morning that may herald an end to the recent stock market correction. First, on the inflation front, the March Producer Price Index core rate came in yesterday at only one-tenth of one percent. What we need now is confirmation of that kind of low number in the Consumer Price Index. Expect an overall rate of a half percent and a core rate of two tenths of one percent when that report rolls about eight minutes from now.
The second hopeful sign comes from corporate earnings reports. After the last week’s crummy news from General Motors and IBM, traders were worried of a widespread disaster in earnings. Well, it ain’t happening, folks. Intel, Yahoo, Altria, Honeywell, General Dynamics, United Technologies, Juniper Networks, Wyeth and JP Morgan all beat estimates since the close yesterday. Heck, even Ford Motor beat estimates this morning with a 62 cent quarter versus a 39 cent estimate. Before you get too excited over that, note that Ford also lowered their second quarter outlook to “break even to a loss of 15 cents.” Ford’s full year outlook is still pretty much in line with analyst estimates.
April 19, 2005
This is one of those mornings for which they invented the word “plethora.” There is a plethora of financial news running rampant this morning.
Earnings are pouring out. If you want to call this good news, General Motors lost only $1.48 last quarter, versus and expected loss of $1.49. Lucent and EMC met estimates. Johnson Control raised their sales guidance.
Coca-Cola’s North American case volume was flat, but earnings beat estimates by 4 cents per share. Pfizer beat estimates, if you eliminate the charges related to Bextra, which is one of those little details those clever accountants call “special charges.” Those special Bextra charges could add up to three-quarters of a billion dollars this year.
Texas Instruments weighed in with a very good report last night and also reported that the inventory glut in the chip business is well along toward being worked through. Radio Shack beat estimates, but lowered guidance for the rest of the year.
Oil has reversed a 2 week slide, and is up about 69 cents per barrel at more than 51 bucks after going as low as the mid-49 dollar level yesterday.
In eight minutes we’ll get the Producer Price number for March. Estimates range from 6 to 9 tenths of a percent of a percent increase. Traders will be closely watching the closely watching the “core” inflation number in the PPI and the CPI "core"number tomorrow. A level of 2 tenths of one percent or less in would be a good thing for stocks.
April 18, 2005
The latest reading from on major survey of investor sentiment shows that currently only 16% of individual investors are bullish. That’s great news for the long term, but it also means that last week’s weakness may well extend into this week.
Half of the Dow and a third of the S&P 500 report earnings this week. Among companies that have issued guidance this year, just about 2 have lowered expectations for every one that has lifted estimates. That’s one of the reasons the market is in a funk.
This morning Bank of America reported much better than expected earnings, $1.14 versus an expected 97 cents. 3M beat estimates as well. Harbro lost 2 cents per share, versus an expected profit of 4 cents. Eli Lilly beat estimates, but revenue was a little of the low side and they lowered expectations for the 2nd quarter.
Light sweet crude was under 50 bucks per barrel an hour ago. Right now, it’s at 50.05.
In Tokyo, stocks closed 4 percent lower. Hong Kong was down 2 to 3 percent. Europe is down, in average, about 2 percent.
April 15, 2005
Happy income tax day, or as many investors refer to it - extension day. By the way, if you’re a little peeved at your brokerage firm for sending you an amended Form 1099 or two or three, keep in mind, it’s probably not the broker’s fault. The tax law change a couple of years ago that made certain dividends “qualified” and others “non-qualified” have made tax reporting a more complicated chore, especially if you invest the foreign stock or real estate oriented mutual funds.
They were not scheduled to release earnings last night. However, IBM’s stock price had fallen 10 days in a row. Clearly, word was leaking out that something was amiss. So, after the close of regular trading yesterday, IBM announced a big earnings miss. Evidently, a lot of expected business did not close late in the quarter. IBM came up 1½ billion dollars short on revenue, and made 85 cents on the quarter versus a 90 cent expectation. IBM looking to open at about 80 bucks per share.
Of course, there’s always another hand. And on that other hand, General Electric beat earnings estimates by 2 cents and beat revenue estimates by a billion.
Hey, how’s this? Prudential is upgrading General Motors to an “overweight” this morning, saying that the recent decline in the stock, and the talk about possible bankruptcy are overdone. Let’s hope they’re right.
April 14, 2005
A very weak retail sales report had stocks on the clearance rack yesterday. Concerns are building that the U.S. economy may be slowing down more quickly than expected. A little slowdown wouldn’t be the worst thing in the world – unless of course, the Fed keeps hiking interest rates. The last time that happened was early 2000, and I don’t think we need to be reminded how THAT played out.
A lot of things are playing out on ipods. Apple announced earnings of 34 cents per share, absolutely blasting past everybody’s expectations. So naturally, the stock traded down after hours. Apple’s projection for next quarter, which is probably a low-ball estimate, disappointed traders.
Lots of earnings reports this morning. Most beat estimates, including Southwest Airlines. Pepsi and United Heatlthcare. Misses of the morning include Unisys and Advanced Micro Devices. However, AMD is being upgraded by a major broker this morning on word that they will spin off their flash memory division.
April 13, 2005
Oil at 51.35 per barrel, down another half-buck. Yesterday was refreshing, because for once oil prices were not the big driver of stock prices though the day. Yesterday’s market turned 180 degrees when the minutes of the Federal Reserve’s March 22nd meeting were released. The minutes are not going to challenge Harry Potter as your new favorite read, but they gave traders assurance that the Fed is not about to go nuts with interest rates.
Inflation concerns were raised, and the governors discussed whether they should remove the “measured” pace language from their policy statement. But the bottom line is that cooler head prevailed with the view that the long-term inflation rate is expected to moderate. Stock prices, which had been weak all day, immediately rallied well over 100 points on the Dow, and we finished with a nice gain.
Harley Davidson is warning that 2005 sales may only increase 5 to 8%. They had been expecting mid-teens. However, McDonald’s raised their guidance about 20 minutes ago. March same store sales were up almost 7 percent. The March retail sales report at 8:30 is expected to show an increase of 8 tenths of a percent.
April 12, 2005
A lot of traders will be paying attention to the Federal Reserve Open Market Committee today. But it won’t be what they say, it will be what they said. Or maybe better than that, “What were they thinking?” The minutes from the Fed’s March 22nd meeting will be released today. You may remember that in its statement after the March 22nd meeting, the Fed warned that inflation was bubbling up. We’ll find out this morning just what they were considering that convinced them to get all chatty about it.
Two “12 percent” numbers to consider this morning. BMC Software is cutting their workforce by 12%. Procter & Gamble is raising their dividend by 12%.
Apple reports after the 4 o’clock close tonight. The consensus estimate is 24 cents per share, but the whisper number is 28 cents. So, Apple may have to hit a home run to make everybody happy. Black and Decker is making everybody happy this morning, blowing away estimates of $1.07 with a profit of $1.33.
April 11, 2005
Of course, the big local story of this morning happened last Friday, after the close of trading, when Ford Motor warned that rising material costs, health care costs and intense competition will drive profits about 900 million dollars lower than expected. This comes as a surprise only to those who have been in a coma for the past couple of weeks. However, this morning Ford is looking at a negative outlook on its credit rating from Standard & Poors. Ford stock changed hands late Friday well below 11 dollars per share, at 10.45 down more than 5% from the 4 o’clock price.
Earnings start to roll out in earnest tomorrow. The consensus estimate is that the earnings increase among the S&P 500 companies will average about 8%. That’s well down from the 27% increase we saw a year ago. Of course, we’re comparing against those year-ago numbers now, and that will make the going a lot tougher the rest of the year.
Oil prices are down about 9% from a week ago. This morning we’re at 52.56 per barrel as OPEC says they will be hiking production again.
April 7, 2005
After months of delaying a decision and soliciting public comment, a lot of which was apparently ignored, the Securities and Exchange Commission made a controversial rule permanent yesterday. On a unanimous vote, the SEC ruled that stock brokers who call themselves “financial planners” or “investment advisers” and charge a fee for their efforts do not have to comply with the Investment Act of 1940. That means that the brokers are not fiduciaries, and are not technically required to act in their client’s best interest. In other words, things haven’t changed, although the new rule apparently requires a little more disclosure to investors. So, look for the fine print to get even smaller.
Alcoa and Bed Bath and Beyond both reported better than expected numbers after the market closed last night. Both stocks traded higher in the after-hours. American Eagle Outfitters same store sales are up over 28% again this quarter.
Big broker Smith Barney downgraded General Motors stock from a “hold” to a “sell” this morning and downgraded Ford, which was at a “buy” to a “hold.”
April 6, 2005
The Blackberry. If you have one, you love it. If you don’t, you can’t understand how you big fingers can work a keypad that small. Whatever. They’re selling twice as many of the little things as they were a year ago. Unfortunately, Wall Street was looking for quarterly sales of $410 million rather than the 404 reported last night. So, forget about the fact that on an operating basis they made six cents more per share than expected – Research in Motion stock is trading down by about 6% in Europe and will likely have a softer open here at 9:30.
Alcoa reports their 1st quarter results after the market closes today. That officially kicks of earnings season. Outside of dire predictions from the domestic auto makers and a bunch of software companies, we came through earnings warning season in pretty good shape.
As we head toward the open, the only number that seems to matter anymore – the price of oil – in down 43 cents to 55.61 per barrel. That has stocks up in Europe and should push us higher as well.
April 5, 2005
We’re getting a little break in the price of light sweet crude this morning. It’s down about a half dollar to 56.50 per barrel.
The stock price of one of the biggest companies in the world has taken a major swan dive during the past five years and the past year in particular. I’m talking about Pfizer and Pfizer will be talking to stock analysts today. There’s a lot of speculation about possible strategy changes at Pfizer as it >
Napster is out with good earnings news this morning as they are raising 4th quarter guidance.
Outside of those cranky Norwegians, overseas markets are all positive on the day. Our futures have been climbing over the past couple of hours as oil prices have been receding. At this point, it looks like a good looking open is an hour and change away. Adjusted for fair value, S&P futures are up almost 2 points, the Dow futures are up 22, and the NASDAQ futures are almost 6 points above fair value.
April 4, 2005
Once again this morning, it’s all about the oil. Light sweet crude is up over 58 dollars per barrel at 58.06, and you know what that means for the direction of stock prices, although at this point, the futures are pointing just moderately lower.
Given what’s happening, ChevronTexaco likes the idea of owning oil reserves. That’s why they are buying Unocal at 62 dollars per share in cash and stock. That deal has been cooking for a while, but was just announced about 10 minutes ago.
There are more full page ads in the Wall Street Journal today as the big fish at Morgan Stanley keep nipping at each other’s tails. Just look out for that shark in the water, guys. A story ran in a British paper this morning that HSBC, the big financial services company, may be interested in buying the soap-opera ridden Morgan Stanley.
First quarter earnings reports start to roll out Wednesday when Alcoa reports. Jumping the gun a bit, Joseph A. Bank beat their estimate by 4 cents per share this morning and guided higher for the rest of the year.
Stocks were up a bit in Hong Kong overnight, but are down just about everywhere else at this hour. Adjusted for fair value, S&P futures are down 1 ½ points, the Dow futures are down 11, and the NASDAQ futures are about 3 points below fair value.
April 1, 2005
The big economic report of the week will be released at 8:30 this morning. The March Unemployment Report is expected to show that somewhere around 200,000 to 225,000 new jobs were created last month. Perhaps more importantly, the index of “average hourly earnings” is expected to be up only two-tenths of one percent. Any indication that wages are accelerating at a faster pace may convince traders that interest rates will be going up faster than expected. That would almost certainly push stock prices lower.
The car makers will report their March sales figures later this morning. General Motors’ numbers will be closely watched, and are expected to be down a little from last March.
In Japan, stocks closed higher in spite of a disappointing number in the “tankan” survey of business sentiment. Most European markets are up a half-percent or more at this hour.
There’s not much of a fair value adjustment this morning, so what you see is what you get with the futures. Absent any surprise with the Jobs Report, we should get off to a good start. At this point, adjusted for fair value, S&P futures are up almost 4 points, the Dow futures are up 35, and the NASDAQ futures are 7 points above fair value.
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