April 29, 2011
It’s good that the Royal Wedding is pretty much wrapped up at this point. How else could we possibly focus on the day’s earnings and economic reports? Focus, people, focus.
Last night, Microsoft announced better-than-expected earnings. However, there may be a canary in the coal mine here as Windows sales were lower than expected. Perhaps ipads and netbooks are spelling the beginning of the end for PC sales growth.
The clear hit of the morning is Caterpillar. $1.84 of profit beat the $1.31 estimate by about a mile and a half. Caterpillar also raised its full year 6 dollar estimate by about 50 cents.
Merck earned 92 cents, which was an 8 cent beat. However, last night Research in Motion shares were halted after-hours and eventually dropped about 11 percent on disappointing Blackberry sales.
Personal Income numbers, the Chicago PMI and the final reading from the Reuters/University of Michigan on Consumer Sentiment. All of that rolls out before 10 o’clock.
The British stock market was closed today for some reason or other. India and Australia had a rough go overnight, but China was up over one percent. Other markets are not showing any real significant movement.
Our futures have been on a slow steady rise out of the red this morning, although Microsoft and RIMM are weighing on the NASDAQ. Right now, adjusted for fair value, the S&P futures are up almost a point, Dow futures are up 25, but NASDAQ futures are still almost 3 points below fair value.
There was a valuable lesson to be learned from Ben Bernanke’s first-ever media gabfest yesterday. Everyone expected the Fed Chairman to predict the future and he kept saying the equivalent of “we’ll just have to wait and see.” That’s disappointing if you were looking for a flashy headline. But you have to ask yourself, if Bernanke can’t predict the economic future, how can you, or how can the guy you hear on a commercial who claims that ability? Fortune tellers should be for entertainment purposes only.
Now, if your favorite fortune teller predicted more good corporate earnings, he or she would have guessed correctly this morning. Pepsico beat the Street by a penny per share, Dow Chemical made 82 cents, and that was a 15 cent beat. ExxonMobil earned $2.14. That’s 7 cents above. Aflac earned $1.63 versus the expected $1.52 and Aetna blew the doors off, making $1.43 versus the expected 97 cents.
The major misses this morning were Proctor and Gamble, missing the 97 cent estimate by a penny and Waste Management, missing the 39 cent estimate by 2 cents.
At 8:30 this morning we’ll get the first estimate of first quarter Gross Domestic Product. Expect it to come in at 2 percent, versus the fourth quarter final of 3.1 percent. Jobless claims for the week are expected to total 390,000.
Japan was a percent and a half higher, China almost 2 percent lower and Europe is a mixed picture.
Right now, adjusted for fair value, the S&P futures are down about 2 points, Dow futures are down 9 points, and NASDAQ futures are about 5½ points below fair value.
As we wait for Uncle Ben to take the stage, earnings reports continue to roll. Last night, it was like old times for Amazon. They rang up an incredible 38% increase in sales last quarter. Unfortunately, the bottom line was left on hold, as Amazon earned 44 cents per share, which was 17 cents short of estimates. They also guided significantly lower profits for the remainder of the year.
There’s a similar margin-challenged story at glass-maker Corning. Sales were up 24 percent, although profit dropped by 9 percent from a year ago. However, Corning’s 47 cent profit was 3 cents better than expected.
Boeing and Hess reported both beat their numbers. BP fell 6 percent short, but announced a 7 cent per share dividend.
Add it all up, and the futures are still pointing a bit higher, although I wouldn’t be surprised to see things pretty flat by the time the Fed speak at 12:30. Right now, adjusted for fair value, the S&P futures are higher by almost 2 points, Dow futures are almost 9, and NASDAQ futures, in spite of the Amazon report, are about 4½ points above fair value.
So far, so good with corporate earnings reports this quarter. About 75 percent of the S&P 500 companies that have reported so far have trumped analyst estimates, which means that either the economy is improving or analysts have been sandbagged again, or both.
In any event, there are only a few disappointments this morning. Coca-Cola missed the 87 cent estimate by a penny, which is probably explained by weakness in Japan after the earthquake. Printer maker Lexmark eared a dollar fourteen versus the expected $1.25. Office Depot missed the two cent per share estimate by two cents.
But outside of that, we have a bunch of better than expected news, starting with Ford Motor. 62 cents of operating profit was 12 cents better than expected on surprisingly good operating margins as fewer rebates were needed to move the metal. Ford shares are indicated right around 16 dollars pre-market. Also reporting positive surprises were UPS, Humana and 3M, which raised guidance for the full year.
At 10 o’clock, the Conference Board’s reading on Consumer Confidence is expected to rebound to 65, from last month’s disappointing 63.4. Confidence numbers usually reflect gasoline prices inversely, and that certainly was the case in March. We’ll see if consumers are becoming accustomed to the paid of 4 dollars at the pump.
The Fed starts a two day meeting today. Of course, traders will focus on tomorrow’s first ever post-meeting press conference with a Federal Reserve Chairman. It’s only scheduled to run 45 minutes, but in that it’s the first of its kind, people will pay attention.
Overseas markets are mixed, but Europe and our futures have turned higher. At this point, adjusted for fair value, the S&P futures are higher by 4½ points, Dow futures are up 41, and NASDAQ futures are about 5 points above fair value.
If you’re on the lookout for corporate earnings and economic news, some weeks are pretty quiet. This is not one of those weeks.
We’ll get performance reports from more than a third of the S&P 500 companies by the close of trading Friday. Perhaps more interestingly, Wednesday will bring us the first scheduled news conference by a Federal reserve Chairman to follow an Open Market Committee meeting. In years gone by, the Fed would control monetary policy is near-secrecy; not issuing statements, not commenting on future rates, and certainly not holding press conferences. So, Wednesday’s scheduled press conference is either a change is protocol or perhaps a reason to believe that some major change in Fed policy is in the offing.
Worries about further monetary tightening by the Chinese Central Bank sent Chinese stocks lower overnight. A host of markets overseas are closed today for Easter Monday.
At 10 o’clock this morning, the March New Home Sales number is expected to bounce back to the annualized rate of 280,000. That would be a bounce back, but only from the February reading of 250,000, which was a record low for a report that stretches back almost 50 years.
Earning reports from Johnson Controls and International Game Technology beat estimated earnings numbers this morning. Radio Shack matched estimates but guided a little bit lower.
At this point, adjusted for fair value, the S&P futures are higher by a point, Dow futures are up 9, and NASDAQ futures are about 5½ points above fair value.
It’ll be a busy, busy day as we pack all the late week news into one day. Stocks will not trade tomorrow, of course, on Good Friday.
The earnings continue to roll out, it a continuing story of higher profits than expected. A company that’s no stranger to that kind of performance, Apple, reported $6.40 of earnings last night. That beat estimates by more than a dollar. Even though Apple guided lower for next quarter, the stock is still bid higher this morning. They say that the ipad2 is so popular, Apple just can’t make them fast enough.
Other blue chips reporting better than expected results today include General Electric, Morgan Stanley, Verizon, DuPont, Travelers and Blackrock. Southwest Airlines matched estimates and Marriott missed by a penny. But overall, it’s pretty clear that business conditions continue to improve at an increasing pace.
Jobless Claims at 8:30 are expected to drop to 390,000 from last week’s surprisingly high 412,000. At 10 o’clock, the Philly Fed Index and the Leading Indicators are both expected to be weaker than last month, but the stock futures couldn’t care less.
Overseas markets, outside of Malaysia and Norway are higher, and that’s where we’re headed as well.
At this point, adjusted for fair value, the S&P futures are higher by 9 points, Dow futures are up 53, and NASDAQ futures are 24 points above fair value.
Corporate earnings reports were pretty much at stall speed last week. Well, someone lit the fuse on that rocket last night and this morning we have a host of much better reports, as well as raised guidance for the rest of the year. Stock futures have put it in overdrive as we head toward 9:30.
Among the long, long list of companies that reported better than expected earnings since the close of trading yesterday, IBM, Yahoo, Intel, CSX, UTX, Abbott Labs, Eaton, St. Jude Medical, NASDAQ OMX, Freeport-McMoran, AT&T and Altria. Outside of Altria, just about everyone is reporting rising sales. Sales at Intel, in fact, were up 25 percent. Apple reports tonight.
The big-data day for economic reports is tomorrow, but at 10 o’clock this morning, we’ll find out about last month’s sales of existing homes. Yesterday, New Home Starts came in better than expected. Expect an annualized rate of 5 million units for sales of existing homes.
Most markets overseas are higher. Japanese stocks were up nearly 2 percent overnight. The German market is higher by nearly 3 percent. Our futures have been supercharged all morning on the strong earnings news, and they show no sign of backing off. At this point, adjusted for fair value, the S&P futures are higher by 18 points, Dow futures are up 161, and NASDAQ futures are 36 points above fair value.
Yesterday, Standard & Poor’s gave the Bickersons in Washington D.C. a bit of a mackerel to the >
Corporations are saying more and more about first quarter earnings. Last night, Texas Instruments missed the earnings estimate and warned that the Japanese earthquake is constraining component supply and will adversely impact future quarters.
This morning, Harley Davidson beat estimates but guided lower for the remainder of the year. Johnson and Johnson was a pleasant surprise, earning $1.35, which was 9 cents better than expected. They raised their full year outlook by a dime. And Goldman Sachs reported about fifteen minutes ago, making almost twice the 82 cent estimate. Goldman reported a net of $1.52.
IBM and Intel report after the close of regular trading at 4 o’clock.
Asia mostly lower, Europe mostly higher. Our futures have been modestly on the rise over the past 90 minutes. At this point, adjusted for fair value, the S&P futures are higher by almost 2 points, Dow futures are up 24, and NASDAQ futures are 4 points above fair value.
Welcome to tax day, at least if you’re a member of the half of the population that actually PAYS income taxes. Anyway, you have until midnight to hit the “send” button, or visit the post office, if you’re one of the shrinking pool of paper filers. If you’re not quite ready, Form 4868 gets you another 6 months of time to procrastinate. Just make sure that you’ve paid what you owe by today, or at least 90 percent of it.
Earnings season got off to a flying stop last week, with disappointing results from more than the normal percentage of big firms. The latest of which was Google, whose stock was punished accordingly on Friday. So far this morning, the news is a little more encouraging on the earnings front. Eli Lilly reported $1.24 of operating earnings, which was 7 cents better than expected and Keycorp checked in with 21 cents, versus the expected 16. Citigroup just reported 20 cents, that’s a penny ahead. Revenue, however, fell almost a billion short of expectations.
The National Association of Home Builders will release the results of a survey at 10 o’clock that is designed to measure the current and near-future prospects for the housing market. But that’s pretty much it for economic reports as we start this 4-day trading week.
Asian markets were pretty quiet overnight, but things in Europe are not so good, with major markets lower by one to two percent. Our futures have improved a little, but are still not a pretty picture.
At this point, adjusted for fair value, the S&P futures are down about 6 points, Dow futures are down 48, and NASDAQ futures are almost 7 points below fair value.
Worries about pent-up inflation have been giving active bond investors the willies for a while now. Well, the latest Government Report on the level of Producer Prices rolls out in about 9 minutes. Expect the overall level of the PPI to have risen one percent last month, with the “core” rate, excluding food and energy, up only two tenths of a percent.
In case you’re keeping score at home, over the past year, the PPI has risen 5.6 percent, versus a consumer price index that’s up only 2.1 percent. Why? Well, the CPI is designed to include more “services,” where prices have been rising more slowly. And, of course, the Government has changed the composition of the CPI quite a bit since Social Security Benefits were first indexed to the CPI. Strangely, reported consumer inflation has slowed quite a bit since then. Funny how that works. Nevertheless a hot PPI number this morning will not help stock prices one bit.
Harbro reported this morning that sales are absolutely flat with a year ago, but they only wish that profits were. Net earnings were 12 cents per share versus 40 cents a year ago. Google reports earnings after the close of trading this afternoon
Asian markets were mixed overnight, but Europe is lower.
After a first quarter when the markets seemed to rise almost every day, we’re on more of a one-step-forward, one-step-back kind of mode this week. Our futures aren’t horrible, but absent an unexpectedly pleasant surprise in the Producer Price number at 8:30, prices will head lower at 9:30. At this point, adjusted for fair value, the S&P futures are down about 7 points, Dow futures are down 52, and NASDAQ futures are about 18 points below fair value.
The S&P 500 Index has dropped four days in a row and yesterday significantly so. So, not unlike yesterday’s Detroit Tigers, it’s in need of a little rally. Stepping in the batter’s box with the bases loaded this morning was JP Morgan Chase. They didn’t hit a home run, but their earnings report was a hit this morning, with earnings of $1.28, against an average analyst estimate of $1.16. Now, the accountants played a role, as 29 cents of those earnings came from a reduction in loss reserves, which are down 80 percent from a year ago. Nevertheless, it’s a good report and helped push the futures, which were already in bounce-back mode a little higher.
We’ll get the Retail Sales report at 8:30 and the Fed’s Beige Book at 2 o’clock this afternoon. However, the market mover of the day may be President Obama’s speech this afternoon regarding his plan for tax increases and deficit reduction.
Overseas, we have the mirror-image of yesterday. Today, the only markets that aren’t higher are the ones that aren’t trading. The Shanghai Index in China is higher by about a percent and a quarter. Major markets in Europe are also higher by more than one percent.
And speaking of mirror images, our futures are higher by almost exactly the same amount by which they were lower 24 hours ago. At this point, adjusted for fair value, the S&P futures are up almost 7 points, Dow futures are up 62, and NASDAQ futures are about 14 points above fair value.
When major corporations reported their fourth quarter results back in January, more than 70 percent of them reported higher earnings than the average stock analyst expected. Of course, low-balling the average analyst is not a new game. However, as we move ahead, year-over-year comparisons are getting tougher as the economic expansion continues. The first quarter earnings season kicked off last night with Alcoa’s report, and so far we’re one-for-one. But that’s not necessarily good news for Alcoa stock or the market in general.
Alcoa reported earnings that beat estimates by a penny, but on slightly lower-than-expected sales. That revenue miss, and perhaps some worry about the rising cost of aluminum and other materials has Alcoa stock looking about three percent lower pre-market and our overall stock futures in a fairly significant hole.
Of course, it’s not just Alcoa. Japan’s nuclear disaster has been upgraded to a level 7, on a par with the Chernobyl meltdown 25 years ago. And Ford Motor warned this morning that part shortages from Japanese suppliers might slow production and hence sales and hence profits later this year.
The only overseas markets that weren’t lower overnight were the markets that were closed. Japan was lower by more than a percent and a half. We’re looking for discount pricing at 9:30 as well, although our futures have improved slightly during the past half-hour.
At this point, adjusted for fair value, the S&P futures are now down almost 7½ points, Dow futures are down 53, and NASDAQ futures are about 14½ points below fair value.
The first quarter earnings season officially kicks off today when Alcoa reports after the close of the regular trading session.
Corporate earnings are almost 40 percent higher over the past year, supporting a nice rise in equity prices. Of course, with stock prices, it’s not what you’ve done for me lately, it’s what are you going to do for me next. Traders will focus on corporate earnings guidance for the remainder of the year, as rising commodity prices threaten to pressure profit margins. The almost total lack of warnings last week is fueling hope of good news on the horizon.
Biogen Idec reported some good news this morning, announcing promising results for a multiple sclerosis drug in stage three tests.
Oil prices have been all over the map this morning. At one point, slight sweet crude futures broke the 113 dollar level. Now however, they’re back under 112 dollars on reports that Colonel Gaddafi has accepted an African Union peace proposal. There’s no word yet on whether Mr. Gaddafi will be returning Aretha’s hat.
Most overseas markets are lower. Our futures were looking good until about a half-hour ago, but have been on the slide, and are now just slightly positive. Adjusted for fair value, the S&P futures are now up just a fraction of a point, Dow futures are up 15, and NASDAQ futures are about 4 points above fair value.
It’s quiet. Maybe too quiet. No earthquakes, no mergers, no major earnings reports. The only thing that’s breaking the silence this morning is the sound of a sliding U.S. dollar. This morning, the dollar’s decline is being blamed on the threat of a temporary Government shutdown. Perhaps it would do better if we were expecting a permanent Government shutdown.
No matter, the sinking dollar has gold higher, silver at another record and the stock futures in rally mode once again after yesterday’s hiatus. Not to ruin your breakfast, but light sweet crude oil is again higher by more than a dollar, at 111 dollars per barrel.
The only economic report on tap is the rather minor report on Wholesale trade at 10 o’clock.
Expedia shares are looking to open about 14 percent higher this morning on word that they will spin of their Trip Advisor business.
Even Japanese stocks moved higher overnight by almost 2 percent, as the fear over yesterday’s 7.1 earthquake has settled out.
Clorox shares suffered a downgrade from a major broker this morning.
Major overseas markets are higher, and our leading indicators are leading us to greener pastures in the early going. At this point, adjusted for fair value, the S&P futures are higher by about 6 points, Dow futures are up 52, and NASDAQ futures are almost 8 points above fair value.
The hinted that they would, they warned that they would, and I’ll be darned – they did it. A little more than a half hour ago the European Central Bank raised short term interest rates. Granted, it’s only a quarter of a percent, from one percent to a percent and a quarter, but it’s the first rise in their interest rate in almost 3 years. It could be a sign of things to come as the EU is starting to worry more about inflation than using artificially low rates to prop up their economy. That worry is old news in China and India. We’ll see if our own Federal Reserve starts worrying any time soon.
By the way, Portugal has finally given up the ghost and asked the EU for a bailout that could be as much as 130 billion dollars.
Due in part to the late Easter this year, Target reported same store sales that dropped 5½ percent last month. That’s the bad news. The good news is that they were expected to drop about 6½ percent. Macy’s reported slightly higher same store sales, about 3 percent better than expected.
In just a few minutes minutes the Weekly Jobless Claims report is expected to continue its two year trend of creeping improvement. Expect 385,000 new claims, which would be a bit better than last week’s 388,000.
European markets have actually been on the rise since the ECB announcement and our futures, which had been negative until 20 minute ago, have now turned green, although it’s a light shade of green. At this point, adjusted for fair value, the S&P futures are higher by a fraction of a point, Dow futures are up 9, and NASDAQ futures are just about a point above fair value.
After all was said and done yesterday, a lot more was said than was done, whether you’re talking about the federal budget or domestic stock prices.
However, we have one report this morning is helping the futures get off and running. Atlanta Federal Reserve Bank President Lockhart is quoted this morning as saying that it is too early for the Fed to end its quantitative easing program. In his opinion, the economy is regaining its balance, but still too wobbly to remove the training wheels. Lockhart gives another speech at noon today. We’ll see if he expands on those remarks.
As that quantitative easing helps to weaken the dollar, metals prices continue to rise. Gold is nearly $1,460 per ounce, and silver is nearing 40 dollars. In the past year, the big GLD Exchange Traded Fund that owns gold is up almost 30 percent. Meanwhile, the SLV, its silver- based sister has more than doubled, up over 120 percent.
The Mortgage Bankers Association reported a two percent decrease in mortgage applications last week, but the devil is in the details here. Applications for mortgages to purchase homes rose almost 7 percent, perhaps goosed by a scheduled April 1stincrease in FHA insurance premiums. Re-financings, however, dropped again, this time by six percent as the number of people with the incentive (and the ability) to refinance appears to be on the wane.
European stocks are pretty solidly higher, and we’re heading in that direction as well. At this point, adjusted for fair value, the S&P futures are up 8 points, Dow futures are up 69, and NASDAQ futures are almost 18 points above fair value.
There they go again. As we wake up this morning, we’re learning that the Chinese Central Bank raised interest rates again overnight. Although our Fed cannot seem to perceive any creeping inflation, the Chinese have the creep’s picture hanging in the Post Office. The one-year lending rate in China now stands at 6.31%. The one-year deposit rate is 3.25 percent. Remember when our one-year savings earned 3¼ percent? By the way, it’s widely expected that the European Central Bank will get on the rate hike train on Thursday.
Texas Instruments shares will be under pressure this morning, on last night’s announcement that TI will buy National Semiconductor in a 6 ½ billion dollar deal. The $25 price is a 78% premium, but Texas Instruments claims that the deal will be accretive to earnings in very short order.
At 10 o’clock, we’ll get the Institute for Supply Management’s read on the services sector of the U.S. economy in March. This is a survey of 400 firms across the country. Anything over 50 indicates expansion, and the March number is expected to match the February reading of 59.7.
Chinese stocks rose overnight, even in the >
We should give back some of yesterday’s gains in the early going. At this point, adjusted for fair value, the S&P futures are down about 3 points, Dow futures are down 18, and NASDAQ futures are about 6½ points below fair value.
If macro-economic reports really float your boat, this would be a good week to put in in dry-dock, as the galley cupboard is fairly bare.
Take today, for instance. Speeches by the Atlanta Fed head at 9 o’clock and another by Ben Bernanke this evening are pretty much all we see on the calendar.
It’s probably better to again be on the lookout for corporate earnings warnings. First quarter earnings reports will start coming out by week’s end, and companies that know they’ll be coming up to the microphone with disappointing numbers often like to leak the word early. Last week we had a couple of major companies warn, but certainly not enough to indicate that there is trouble afoot.
Pfizer announced this morning that they’ll be buying back even more stock than the 5 billion dollars of buybacks already planned.
Ford Motor stock is up 20 percent over the past twelve months. This morning, Credit Suisse upgraded Ford stock to “neutral” from “underperform.” Evidently, they now see something that at least makes them noncommittal on Ford stock.
Chinese and Indian stock indexes rose about a percent and a half overnight, but most other overseas markets are pretty sleepy at this hour.
Oil futures are up over $108 dollars per barrel. Our stock futures are modestly higher as well. At this point, adjusted for fair value, the S&P futures are up almost 3 points, Dow futures are up 21, and NASDAQ futures are about 7 points above fair value.
It’s April Fools’ Day, and there is a lot going on. And, no, I’m not fooling.
Front and center, ten minutes from now is the March Unemployment Report from the Labor Department. Expect the Jobs picture, which has been slowly but steadily improving since August of 2009 to improve a little bit more. Estimates are than 195,000 new non-farm jobs were created in March, with the Unemployment Rate holding steady at 8.9 percent. The average work week and average wage are both expected to edge higher.
Then at 10 o’clock, the ISM Manufacturing Index, which has been more or less steadily improving since December of 2008, is expected to back off just a bit to 61.2 from the last report of 61.4.
The battle over the NYSE/Euronext stock exchange rages on. NASDAQ and the Intercontinental Exchange offered $42.50 per share this morning, which is 19% higher that the offer from Deutsche Boerse. Stock of NYSE/Euronext is only indicated higher, but only to about 39 dollars this morning, evidently on doubt that the deal might not get an anti-trust blessing.
So NASDAQ is buying, but General Motors is selling. GM will offload its remaining stake in Delphi for 3.8 billion, booking a 1.6 billion dollar gain on the sale. By the way, March car sales numbers, which are expected to be on the whole about 16 percent higher, will be announced from the various car companies as the day goes on.
It’s fairly common for the futures to be pretty flat in front of the monthly Unemployment Report, but the futures aren’t waiting this morning and they are indicating higher stock prices at 9:30. At this point, adjusted for fair value, the S&P futures are up 6 points, Dow futures are up 55, and NASDAQ futures are almost 12 points above fair value.
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