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WJR April 2009 Reports

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April 30, 2009
 
Rumors of an imminent bankruptcy filing for Chrysler has a lot of Michiganders concerned this morning, but the overall market for stocks couldn’t seem to care less.  The futures are following yesterday’s rally with an indication of significantly higher prices at 9:30.
 
One bit of good automaker news – the Administration has reportedly decided to make TARP funds available to the auto companies, although they haven’t said WHICH auto companies they’re willing to help.
 
Earnings continue to surprise on the upside.  This morning, Dow announced earnings of 12 cents per share, and they were expected to LOSE 21 cents.  Viacom is in with 29 cents versus 26.  Procter & Gamble earned 84 cents, which is a 4 cent beat, although revenue was a bit on the light side.  P&G is bid higher, and will help push the Dow Jones higher.  ExxonMobil stock is also looking a little higher, even after missing its target by 3 cents.
 
In fifteen minutes, we’ll get the weekly jobless claims.  Traders will be looking at that number as an early indicator of a bottoming in the jobs market.  Breaking significantly below the 600,000 new claims level could signal the beginning of the end of the downward spiral.
 
Overseas markets are significantly higher after yesterday’s rally here, and we should keep things rolling at the open.
 
At this point, adjusted for fair value, the S&P 500 futures are up about 11½ points, the Dow futures are up 85, and the NASDAQ futures are almost 18 points above fair value. 
 
April 29, 2009
 
The good news is that the futures are pointing higher this morning.  The potentially bad news is that there is SO much news on the way we could swing around several times during the day.
 
At 8:30 we’ll get the preliminary estimate of first quarter Gross Domestic Product.  After a 6.3 percent decline in the fourth quarter, almost anything will look good.  Most expect a decline of about 4.7 percent.
 
The Federal Reserve Open Market Committee meets today and at 2:15 will likely announce no change in interest rate policy.  However, as is usually the case, the Committee’s statement will be the most interesting part.
 
Earnings reports continue to roll in, and they’re generally rolling in better than expected. Wyeth made 95 cents on an operating basis.  That’s 6 cents better than expected.  Aetna beat estimates by 3 cents.  Time Warner did 15 percent better than expected, earning 45 cents on better than expected revenue.  Time Warner stock is indicated about 10 percent higher in the pre-market.
 
Japanese stocks did not trade overnight, but other markets overseas are nicely higher, and absent a big negative surprise in GDP, we’ll head in that direction as well.  At this point, adjusted for fair value, S&P futures are up almost 9 points and the Dow futures are up 69, and the NASDAQ futures are about 9 points above fair value.
 
April 28, 2009
 
We’re waking up this morning, and waking up to the fact that the auto industry in this country is going to look very, very different in the future.  The latest proposals, which involve a UAW-run trust and the U.S. Government owning controlling interests in Chrysler and General Motors reflects on the one hand just how little equity value remains for what we used to call shareholders.  Yet, the deal that’s being offered to bondholders and their prior reluctance to cut a punitive deal has not taken the bankruptcy option off the table.
 
The April Consumer Confidence number comes at 10 o’clock from the Conference Board, and is expected to read 29.5, up from last month’s 26.
 
Pfizer reported earnings this morning that are down 2% from a year ago, but at 54 cents on an operating basis, they beat estimates of 48 cents.
 
Daimler shares were off over 5% in Germany this morning, on word of a 1.7 billion dollar first quarter loss.  European markets in general are off over 2 percent as the first cases of swine flu were confirmed on that side of the Atlantic.
 
Our futures aren’t that bad, but they’re not a lot better than that. At this point, adjusted for fair value, S&P futures are down 12 points and the Dow futures are down 91, but the NASDAQ futures are about 15 points below fair value.
 
April 24, 2009
 
Ford Motor is definitely the big story of the day.  Never have so many been so happy about a loss of 75 cents per share.  Analysts expected a loss of $1.23.  Revenue was almost 3 billion dollars higher than expected last quarter.  Ford had over 21 billion of cash on hand at the end of the quarter and announced that they will be INcreasing car production in the 2nd quarter.
 
Concurrent with the Ford announcement, Honeywell announced earnings of 54 cents that met expectations and they reaffirmed guidance for the remainder of the year.  Oil services firm Schlumberger is out with better than expected results.
 
At 2 o’clock today, the plot thickens for the 19 biggest banks in the country.  We’ll find out more about the rules of the “stress test” that the banks must undergo.  The banks themselves will get preliminary results.  They will then have until Tuesday to complain about the rules and until Monday the 4th of May to come clean on how they did, and what they’re going to do about it.  Perhaps the stress test will shake out the weak from the strong.  Or, perhaps we’ll visit Lake Wobegone, where all of our children are above average.
 
Asian markets were mixed overnight, but Europe is solidly higher. Our futures were in the red until the Ford and Honeywell results come out at 7 o’clock.  That turned things on a dime and we’re looking for slightly higher prices at 9:30. Adjusted for fair value, the S&P 500 futures are up about 4 points, the Dow futures are up 22, and the NASDAQ futures are almost 8½ points above fair value. 
 
April 23, 2009
 
At 10 o’clock this morning, we’ll get the national Existing Home Sales number.  Expect a slight decline to an annualized rate of 4.68 million, although lately, foreclosure and short sales have been whipping that number around a bit.  Also getting attention, the weekly Jobless Claims figure will be out in about 10 minutes.
 
Meanwhile the torrent of earnings reports continues.  The big disappointment of the morning is delivery firm UPS.  They reported earnings of 52 cents per share.  That missed the mark by 4 cents.  UPS also warned the next quarter might only bring 45 to 55 cents in profit, versus the expected 65 cents.
 
Now that we have the bad news out of the way, there’s the list of companies that reported better than expected results: Apple, Ebay, Goodrich, Black & Decker, Marriott, Sun Trust Bank, Autonation and fifth Third Bank.
 
Overseas markets are almost all positive, and fairly strongly so. Our futures are higher, but they are not nearly as healthy as they appear on an unadjusted basis. After you adjust for fair value, the S&P 500 futures are up only about 3 points, the Dow futures are up 16, and the NASDAQ futures are almost 6 points above fair value. 
 
April 22, 2009
 
No big economic releases are scheduled today – but no matter.  We’re right in the heart of 1st quarter earnings season, and some of the biggest of the big are reporting in.
 
So far this morning, AT&T reported 53 cents per share in operating profit, which was a nickel better than expected.  Kimberly-Clark and Altria both beat estimates by a penny per share.  Ingersoll-Rand cut their dividend, but reported a much small loss than expected – 4 cents versus 12, and the stock is bid higher.
 
Also bid higher is Boeing.  They missed estimates by a nickel and lowered their guidance, but didn’t lower it as much as analysts were already expecting.
 
Wells Fargo made 56 cents, blowing away the expected 41 cents, although the stock is indicated lower, as is Capital One.  Capital One is the largest issuer of Visa and Mastercard credit cards and they are projecting bigger write-offs than expected for the remainder of the year.
 
Overseas markets are mixed.  Our futures are indicating lower prices, taking a turn for the worse over the past half-hour. Adjusted for fair value, the S&P 500 futures are down 6 points, the Dow futures are down 55, and the NASDAQ futures are about 6½ points below fair value. 
 
April 20, 2009
 
It may be raining outside, but if you bought shares of Sun on Friday, you have a sunny smile on your >
 
Eli Lilly reported earnings of $1.20 this morning, versus the expected 99 cents.  Hasbro matched estimates of 14 cents per share. 
 
In the banking sector, Bank of America was expected to earn 4 cents per share.  Instead they made 44 cents.  Yet, Bank of America shares are indicated almost 10 percent lower in the pre-market.
 
And it looks like the Government, in all its infinite wisdom, will make another 30 billion dollars available to AIG, as long as they DON’T file for bankruptcy.  Maybe GM should change its name to “American International Group Motors” and seek equal treatment.
 
At 10 o’clock, the March Leading Indicators from the Conference Board are expected to be down only 2 tenths of a percent.  That would cut the February decline in half.  However, we’re in for some rough sledding at the open today.
 
Adjusted for fair value, the S&P 500 futures are down 17 points, the Dow futures are down 147, and the NASDAQ futures are about 29 points below fair value. 
 
April 17, 2009
 
We’re opening the day with the Dow Jones Industrials at 8,125.  I was just reading a report that market savant Harry Dent now says that the Dow will fall to 3,800 within the next three years.  The good news is that Harry Dent is the same guy who nine years ago predicted that the Dow would go to 40,000.  Gosh, I wonder if he’s got a book for sale.
 
The earnings continue to roll in, and as with many things in life, the key to happiness is sufficiently low expectations.
 
Dow components General Electric and Citigroup reported results this morning, and while miserable on a year-over-year basis, both beat expectations.  Citigroup lost only 18 cents per share versus the expected loss of 34 cents.  Revenue was lower than expected.  General Electric reported an operating profit of 26 cents.  That beat estimates by a nickel.
 
Just before 10 this morning, the April Consumer Sentiment Index from the University of Michigan and at 58 it’s expected to be a little better than the March number.
 
European markets are higher.  At this point, adjusted for fair value, the S&P 500 futures are up a point, the Dow futures are up only 2, but the NASDAQ futures are still about 4 points below fair value. 
 
April 16, 2008
 
Another late day rally pulled the major indexes out of the soup yesterday as a rally as the financials again led the way.
 
For months now, many have speculated that the next shoe to drop in this economic mess is the collapse of commercial real estate.  This morning, General Growth Properties, the second-largest mall owner in the country, filed for bankruptcy protection.  Once again, the inability to roll over debt on a lot of properties that have dropped in value sank the ship.
 
JP Morgan Chase turned in better profits than expected this morning, making 40 cents per share, versus the expected 32 cents.  However, they threw in some big reserves against future losses, even against some prime loans.
 
At 8:30, we’ll find out about the rate of New Housing Starts in March.  Expect a decline to an annualized rate of 540,000 units from last month’s 583,000.
 
Want a ray of hope?  It’s been more than a year since an IPO has priced above estimates.  This morning, language software company Rosetta Stone’s offering priced at 18 bucks, which is 1 to 3 dollars higher than expected.
 
Most overseas markets are a bit higher, but absent a big surprise in the Housing Starts we’ll get of to a mixed start. At this point, adjusted for fair value, S&P futures are down a point and the Dow futures are down 14, but the NASDAQ futures are about 9 points above fair value.
 
April 15, 2009
 
Happy tax filing day everyone.  The number of the morning is 4868.  That’s the form you need to extend the filing deadline until October 15th.  If you owe, you have to pay today.  But, you if you file the 4868, you still have six months to continue your current state of procrastination and disorganization.
 
The organization in the spotlight this morning is investment firm UBS.  UBS said this morning that their first quarter loss will be 1.8 billion dollars, and that another 8,700 employees will have plenty of time for golf this summer.  UBS stock dropped 9 percent in Europe this morning.
 
Lat night, Intel beat estimates of 3 cents per share with a profit of 11 cents and said that the inventory overhang is dissipating and that business is “bottoming.”  They did not, however, say that business is “rebounding.”  In fact, Intel’s not saying much about the current quarter, and that has the stock under some pressure.
 
At 8:30, the Consumer Price Index is expected to check in at a one-tenth of a percent increase.  This afternoon, we’ll get the Fed’s beige book of regional economic activity.
 
Overseas markets were mixed overnight.  Our futures have taken a turn for the worse during the past half hour or so.  At this point, adjusted for fair value, the S&P 500 futures are down 3½ points, the Dow futures are down 28, and the NASDAQ futures are about 11 points below fair value. 
 
April 14, 2008
 
We’ll get a speech from the Administration today on the state of the economy.  Perhaps today has been chosen in that it’s also the day that we get the March Retail Sales results, which are expected to turn slightly positive, from a negative reading in February.
 
Also at 8:30, the report on March wholesale-level prices is expected to check in absolutely unchanged from the February level.
 
And, of course, earnings continue to roll in. Last night, Goldman Sachs beat estimates handily.  Goldman made $3.39 per share versus the expected $1.64.  They will also raise 5 billion dollars though a share offering so that they can pay back the TARP money and not put up with as much government oversight.  Of course, this comes AFTER Goldman was made absolutely whole on its $13 billion dollars of AIG exposure because of government funding. Too bad that Chrysler and GM’s creditors can’t get the same deal.  You wonder why.  Then again, not many former GM executives work in the Treasury Department.
 
About a half-hour ago, Johnson & Johnson reported $1.26 of profit for the first quarter of the year.  That beat estimates by four cents.  Although revenue came in 400 million lower than expected, J&J shares are being bid higher in the pre-market.
 
The futures, which had been lower all morning, turned positive just minutes ago.  At this point, adjusted for fair value, S&P futures are up a fraction, the Dow futures are up 11 and the NASDAQ futures are about 2 points above fair value.
 
April 13, 2009
 
The Treasury Department has reportedly given General Motors a big order, but it’s not an order for a bunch of new cars.  GM has been told to prepare a bankruptcy plan by the end of May, in case the UAW and the bondholders don’t play ball.
 
This will be the first full week of first quarter earnings reports.  Charles Schwab, J.B. Hunt and St. Jude Medical lead the parade today.  St. Jude is the only one of the three that’s expected to have better numbers than a year ago.  Later in the week, a lot of big-time financial firms report, which should give us some idea of just how many asset write-downs have yet to be taken.
 
Broker downgrades for Boeing and Wells Fargo this morning and an upgrade for Microsoft.
 
Japanese stocks were a bit lower overnight.  Many overseas markets are closed today for Easter Monday.
 
If we’re going to see a sixth straight week of higher stock prices, we’ll have to rally back from where we’re likely to start this morning.  Adjusted for fair value, the S&P 500 futures are down about 8 points, the Dow futures are down 86, and the NASDAQ futures are about 10½  points below fair value. 
 
April 10, 2009 - Markets are closed for Good Friday.  Have a great Easter weekend!
 
April 9, 2009
 
It should be a relatively quiet day for trading as many markets head for a three-day weekend.  The bond market, in fact, closes at 2 o’clock this afternoon.
 
A lot of potential excitement dissipated yesterday. The SEC, rather than taking any concrete step to corral short selling, decided to punt the ball down the road for the next five months.  Proving that they are indeed a committee, the SEC floated five variations on short-selling restrictions, asking the public to comment, and then the SEC will judge. It all seems vaguely reminiscent of “American Idol,” in that it will take at least five months to accomplish something that could have been over with yesterday.
 
Wells Fargo put a spark in the futures just minutes ago, estimating that first quarter profit will be 55 cents per share, versus the expected 23 cents.  That’s the first hard proof that big banks will have trouble NOT making money in this zero-interest rate environment.
 
Walmart and Costco both disappointed will their March same-store-sales reports, but that Wells Fargo report will send stocks higher at 9:30.
 
Adjusted for fair value, the S&P 500 futures are up 14 points, the Dow futures are up 98, and the NASDAQ futures are about 13½ points above fair value. 
 
April 8, 2009
 
Everybody expected Alcoa to disappoint with their quarterly report last night and they did not disappoint in that regard.  Alcoa lost 59 cents versus the expected 57 cents due to what they termed an “historic drop” in aluminum prices and demand.
 
There is also news about Sharp and news about the TARP. In Japan overnight, Sharp said that their loss for the year ended March 31st will be 30% more than expected.  Sharp shares are off about 6 percent. 
 
In Washington, word is that a dozen or so insurance companies, at least those with bank subsidiaries, may be allowed a bailout with under the TARP program.  Perhaps TARP will become know as the acronym for “those annuities R problems.”  On that news, insurance stocks are up 10 percent or so in the pre-market.
 
We have a new largest homebuilder in the country as Pulte announced a merger with Centex this morning.  It’s a stock deal that values Centex at $10.50 per share, which is about a 26% premium to last night’s close.
 
Asian markets were 2 to 3 percent lower overnight.  Europe is lower, but not by much.  At this point, our futures are a mixed picture and have been steadily improving over the last fifteen minutes.  Adjusted for fair value, the S&P 500 futures are up a point, the Dow futures are down 4, but the NASDAQ futures are actually about 9½ points above fair value. 
 
April 7, 2009
 
First quarter earnings season starts this afternoon, and if the futures are any indication, traders are looking to get the heck out of the way.
 
Alcoa is expected to announce an operating loss of 57 cents per share.  That comes after a profit of 44 cents last month.  Ruby Tuesday and Bed Bath & Beyond are also scheduled to check in.
 
A report this morning says that the IMF estimates that total toxic debt worldwide might be as much a 4 trillion dollars.  That dwarfs the total write-downs already recognized and suggests that the world financial system may have a long way to go on their walk out of the hinterlands.
 
American Express was upgraded to hold from sell this morning at Citigroup this morning.  I’ve always wondered, if people listened to your “sell” recommendation, how could they possibly “hold” it now?  Maybe I’m over-thinking this whole brokerage-rating system thing.
 
Anyway, overseas markets are generally one to two percent lower and we’re headed in that direction as well.
 
At this point, adjusted for fair value, the S&P 500 futures are lower by about 16 points, the Dow futures are down 122 and the NASDAQ futures are 20 points below fair value. 
 
April 6, 2009
 
We’re on the cusp of a very highly anticipated earnings season.  Stock prices, after all, are a function of interest rates, earnings and the future prospects for both.  Alcoa officially kicks off the first quarter earnings season tomorrow, as we begin to learn just how hard the collective bottom line is sagging.
 
IBM has evidently decided that Sun Microsystems is too hot to handle at $9.55 per share.  They reportedly lowered their offer to buy Sun to $9.50.  Sun’s Board says “Thanks, but we’re hotter than that.” So, the acquisition is off for now, but don’t think that the dance is over.
 
A former Deutsche Bank banking analyst issued a report this morning on 11 major banks, and it isn’t pretty.  Yes, in a zero-interest rate environment, it’s incredibly difficult for a bank to NOT be profitable.  The point however, is that the bad asset problem on the banks books has not gone away, and may well get worse.
 
A handful of Asian markets were closed overnight.  Europe’s a little higher, but we could start a little lower.
 
The futures, which had been positive all morning, turned negative about an hour ago and have been on the slide ever since. At this point, adjusted for fair value, the S&P 500 futures are lower by about 6½ points, the Dow futures are down 41 and the NASDAQ futures are 11 points below fair value. 
 
April 3, 2009
 
There’s been a lot of discussion of recession versus depression lately, although one of the more understandable definitions remains.  A recession is when you neighbor looses his job.  A depression is when you lose YOUR job.
 
In ten minutes we’ll find out how many people were in depression in March.  Early estimates were for 660,000 people losing their jobs in March and an 8½ percent unemployment rate.  However, in light of Wednesday’s report out of ADP, don’t be surprised if the numbers run even higher. By the way, we haven’t seen an 8½ unemployment rate in over 25 years.
 
Ben Bernanke gives a speech later today, but outside of the Jobs Report, there’s not a lot on the docket.  It’s kind of a calm before the earnings report storm that will roll into town next week.
 
Markets in India were closed overnight, and there’s not a lot of movement in overseas markets that are trading. At this point, our futures are pointing to yet another positive open.
 
At this point, adjusted for fair value, the S&P 500 futures are higher by about 7 points, the Dow futures are up 28 and the NASDAQ futures are 12 points above fair value. 
 
April 2, 2009
 
The Financial Accounting Standards Board is expected to announce a possible change to the “mark to market” accounting rules today.  You might put “mark to market” in the category of “seemed like a good idea at the time.”  Or, you might want to put changing it in the category of “in case of emergency, break glass.”  Some would say this is simply a matter of “when you’re losing the game, get the rules changed.”  Whatever.  Good idea or not, the market is anticipating a relaxation of “mark to market” for financial institutions and that has the futures in a good mood this morning.
 
The European Central Bank cut interest rates this morning, but not as much as expected.  The ECB’s rate is now 1¼ percent.  Remember that the short term rate in the U.S. is effectively at zero.
 
Earnings are on the way from Micron Technology today.  Monsanto made $2.16 on the quarter versus the $2.06 expected. The full flow of first quarter results won’t start rolling in until mid-next week.
 
Stocks in Hong Kong rose almost 7½ percent overnight.  The Nikkei in Japan was up over 4 percent.  European markets are around 2 to 4 percent higher.
 
At this point, adjusted for fair value, the S&P 500 futures are higher by about 18 points, the Dow futures are up 148 and the NASDAQ futures are 21 points above fair value. 
 
April 1, 2009
 
In years gone by, if you mentioned the words “bankruptcy” and “General Motors” were spoken in the same sentence, you’d likely say “Oh, it must be April Fool’s Day.”  Unfortunately, that was then and this is now.  A Bloomberg media report today say that although it’s not the preferred option, President Obama believes that a government-sponsored, “surgical” bankruptcy might be necessary to restructure GM into a competitive entity.
 
The March auto sales reports will start rolling in at noon with Ford’s numbers.  Hopefully we’ll get something better than what’s expected.
 
Outplacement firm Challenger, Gray & Christmas reports that job cuts last month were at their lowest level since October, to about 150,000.  That’s down 19% from February, yet 188 percent higher than a year ago.
 
ADP just reported that 742,000 private sector jobs were lost in March, which is a higher number than expected.
 
Mortgage applications were up almost 70 percent from a year ago. Almost 80 percent of those applications were refis as homeowners (who can) take advantage of record low interest rates.
 
Japanese stock rose about 3 percent overnight, but most other markets overseas are a bit lower.  Our futures, that had perked up a little, took a bit of a U-turn on the ADP report. At this point, adjusted for fair value, the S&P 500 futures are down about 10 points, the Dow futures are down 94 and the NASDAQ futures are 15 points below fair value. 

WJR May 2009 Reports
WJR March 2009 Reports

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