April 30, 2015
Yesterday’s Gross Domestic Product Report was, well – pretty gross. The meager two-tenths of percent increase was blamed on the weather, the port strike, the strong dollar, the Patriots winning the Super Bowl, take your pick.
No matter, the economy continues to sputter along at far less than potential. Although stocks declined yesterday, the decline was muted by the thought that the weakness in the economy might keep short term interest rates from rising until the fall, the winter, or even 2016.
No fewer than 7 economic reports are due out by 11 this morning.
Germany and Italy are higher, but outside of that, major markets overseas are in the red, as are our futures, although they’ve improved a bit of late.
At this point, adjusted for fair value the S&P 500 futures lower by a little less than 4½ points, the Dow futures are down 24, and the NASDAQ futures are about 20 points below fair value.
April 29, 2015
It’s Federal Reserve non-decision day once again. The Open Market Committee’s statement will come at 2 o’clock and there’s no press conference scheduled this time around. So, those who profess the ability to know the unknowable will parse the statement for any clues as to whether interest rates will start heading higher in September, December or sometime in 2016.
No doubt about the direction of the price of Twitter shares yesterday. After reporting lower than expected revenue growth and lowering guidance, Twitter shares fell more than 18 percent and are indicated another one percent lower pre-market.
Out with better than expected news this morning are Time Warner, whose shares are looking to open almost 2 percent higher. Starwood Hotels also beat the earnings target, and said that they are evaluating “strategic options,” which is kind of like announcing that you’re off to the singles bar with a fat wallet, good looks and high hopes. Northrup Grumman not only beat estimates, but also raised guidance for the full year.
The Government’s first guess at 1stquarter Gross Domestic Product comes at 8:30. That may give stock prices some direction, which is for the most part lacking according to the stock futures.
At this point, adjusted for fair value the S&P 500 futures lower by a little less than 2 points, the Dow futures are down 21, and the NASDAQ futures are about 6 points below fair value.
April 28, 2015
The weather is starting to warm up a bit, but if you’ll be looking for Janet Yellen to round out your foursome on the golf course today, you can forget about it. That goes for everyone on the Fed’s Open Market Committee as they start another two-day meeting in Washington.
In Dearborn, Ford Motor announced some disappointing earnings news this morning. 23 cents per share came in three cents short of estimates. Revenue was more than 6 percent lower than expected. The earnings shortfall was blamed on a higher than expected tax rate and the sales shortfall was rather predictably blamed on the strength of the U.S. dollar.
Drug makers Pfizer and Merck both beat on the top and bottom lines. However, Merck guided higher, while Pfizer guided lower and the shares of each company are following suit pre-market. Coach’s earnings beat, but sales slipped and were off 23 percent in North America. Coach shares are off over 5 percent pre-market. Last night Apple crushed estimates, raised their dividend and buyback program. Apple shares are indicated about 2 percent higher.
The Conference Board’s Consumer Confidence number at 10 is expected to read 103.
Most overseas markets are lower this morning, as are our futures, although they have improved over the past hour. At this point, adjusted for fair value the S&P 500 futures are lower by about 3 points, the Dow futures are down 19. However, the NASDAQ futures are about 5 points above fair value.
April 27, 2015
The biggest rush of first earnings reports are now in the rear-view mirror, but the fun isn’t quite over yet. This week we’ll hear from VISA, Pfizer, Merck and ExxonMobil. Later today, Apple will check in. Operating earnings are expected to come in at $2.16 cents per share, which would be fifty cents per share higher than a year ago.
Last week was a good one, especially for the NASDAQ 100. However, most of the NASDAQ’s gains come from the big four of Apple, Microsoft, Amazon and Google. Given that broad rallies are much more sustainable than narrow rallies, some wonder if this rally is getting a little long in the tooth.
The Dallas Fed will release their latest economic report at 10:30 this morning. And speaking of the Fed, we have another two day meeting this week, starting tomorrow and ending with a new statement regarding future interest rates on Wednesday.
European markets are higher. In China, the Shanghai Composite was 3 percent higher overnight. Our stock index futures are indicating that the last week’s party is not yet over.
At this point, adjusted for fair value the S&P 500 futures are higher by about 5 points, the Dow futures are up 65, and the NASDAQ futures are about 14½ points above fair value.
April 24, 2015
It took a long time, like about 15 years, but the NASDAQ finally closed at an all-time high last night. This morning, it looks like the tech and biotech laden NASDAQ is just getting warmed up.
Some big tech companies released pretty good reports over the past 24 hours and if interest in the pre-market holds until 9:30, we might see Google open higher by more than 1 percent, Starbucks by more than 2 percent, Microsoft by more than 4 percent and Amazon by more than 13 percent.
On the famous other hand, drug high flyer Biogen missed on the top line and the bottom line. Xerox issued a report that wasn’t that bad, but earnings guidance was weak and the stock is indicated almost 5 percent lower.
Locally, Lear reported a 21 percent increase in profit to $2.28 per share, which was 9 cents ahead of estimates.
At 8:30, the March Durable Goods report is expected to show a recovery to a one-half of one percent increase, or three-tenths of a percent excluding transportation. The February Report showed a decline of 1.4 percent.
At this point, adjusted for fair value the S&P 500 futures are higher by 2 points, the Dow futures are up 10, and the NASDAQ futures are absolutely on fire, at about 41 points above fair value.
April 23, 2015
Very strong housing numbers helped pull stock prices out of an early hole yesterday although McDonald’s and VISA carried a lot of the water with respect to the Dow Jones Industrials’ performance. We’ll get one more bite at the Housing apple this morning at 10 with the report on March New Home Sales.
Beating earnings expectations this morning were Dow Chemical, on a 41 percent profit increase, Pepsico, Eli Lilly and Caterpillar, which reported $1.72 in quarterly profit which was way ahead of the $1.35 estimate. Caterpillar is indicated 3½ percent higher pre-market. Procter & Gamble’s 92 cents matched estimates. 3M missed estimates and cut earnings guidance.
The big miss of the morning is a local story. General Motors’ 86 cent profit missed by a dime per share. A 200 million dollar loss in South America and a higher-than-expected tax rate get the majority of the blame. Traders, of course, tend to sell now and ask questions later. GM shares are more than 3 percent lower pre-market.
Raising earnings guidance yesterday were Sallie Mae, Equifax and Cheesecake Factory. Companies guiding lower included Texas Instruments, EMC and Tupperware
Asia was mixed overnight. Europe is mostly lower and that’s likely to be our early direction as well. At this point, adjusted for fair value the S&P 500 futures are lower by 5½ points, the Dow futures are down 55, and the NASDAQ futures are about 14½ points below fair value.
April 22, 2015
It’s great to be a “growth” stock. It’s also tough to be a “growth” stock. Just ask Chipotle Mexican Grill. Chipotle reported earnings of $3.88 yesterday, which was 22 cents better than expected and 48 percent more than last year. Same store sales were up almost 10½ percent. Unfortunately, analysts have expected closer to 12 percent sales growth, and the shares lost about 37 bucks per share last night, which is more than 5%, although they’re showing a little recovery in the pre-market this morning.
Coca-Cola’s 48 cents in profit beat the 42 cent estimate. Sales were also better than expected. McDonald’s $1.01 of operating profit was a nickel light. Domestic same-store sales were lower by more than 2½ percent.
The Mortgage Bankers Association says that mortgage applications for both purchases and refinancings rose last week as the snow has now melted off all the “For Sale” signs. We’ll get readings on the overall health of the housing market at 9 and again at 10 this morning.
Overseas markets are mixed. Our futures are a little off their lows of the morning, but are still predicting lower stock prices at 9:30.
At this point, adjusted for fair value the S&P 500 futures are lower by about 4 points, the Dow futures are down 47, and the NASDAQ futures are 5 points below fair value.
April 21, 2015
The cupboard is bare of economic reports today. But it’s okay, there are more big companies reporting earnings than we could fit into a five minute rant. So, I’ll just try to hit the highlights.
United Technologies posted surprisingly strong numbers this morning, beating the Street estimate of $1.45 per share by 13 cents. Moreover, UTX says that the impact of a stronger dollar trimmed earnings by 7 cents per share.
Kimberly Clark was also hit by the strong dollar, as profits fell. However, $1.42 beat the lowered expectation of $1.33 per share. Of course, if domestic companies are hurt by a strong dollar, foreign companies stand to gain. Put German software maker SAP in that camp. The weak euro help boost profits, and they needed it, as profit dropped over 20% on their transition to a cloud-based platform.
IBM, DuPont and Harley Davidson all beat on earnings. UnderArmour did too, but guidance was weak and UnderArmour shares are off about 4 percent pre-market. Travelers posted a rare earnings miss, but they announced a $5 billion stock buyback and an 11 percent dividend increase.
Most markets overseas are higher, and our futures are in the green as well. At this point, adjusted for fair value, the S&P 500 futures are higher by about 8 points, the Dow futures are up 72, and the NASDAQ futures are 21 points above fair value.
April 20, 2015
No matter which way the markets move this week, there will plenty of supposed reasons. That is, if you’re one of those people who pretend to know WHY markets move in any given direction on any given day.
A loosening of reserve requirements for Chinese banks should have rallied Chinese stocks overnight, but it didn’t. Continuing fears of a Greek exit from the Euro should have European stocks lower – but they’re higher.
So let’s go out on a limb and say that better than expected earnings could rally the U.S. markets. At least so far, that seems to be happening. Over a third of the Dow 30 companies and a quarter of the S&P 500 report earnings this week.
Morgan Stanley’s 85 cents in profit beat the 78 cent estimate. Hasbro shares are almost 8 percent higher pre-market on a good earnings report. Halliburton reported 49 cents of operating profit, which was 12 cents above severely lowered expectations, with revenue down 4 percent. Suntrust also beat the bogey, and Costco is raising their dividend to 40 cents per share and will buy back 4 billion dollars in stock. IBM reports later today.
Our futures were higher earlier this morning, but we’re still looking at a partial recovery from Friday’s swoon in stock prices. At this point, adjusted for fair value, the S&P 500 futures are higher by about 12 points, the Dow futures are up 127, and the NASDAQ futures are nearly 21 points above fair value.
April 17, 2015
Earnings reports are a dime a dozen this morning, and we’ll get three big economic reports by 10, but our stock futures are decidedly lower this morning because of some changes in Chinese stock trading rules. Henceforth, fund managers in China will be allowed to lend shares that they own to those interested in “shorting” the stock. That little rule change and an extensive outage of Bloomberg terminals this morning appears to have the trading machines in a really bad mood.
Just before 10, the University of Michigan will tell us about the mood of the Consumer through the first half of April. Expect a reading of 95, which would be up 2 points for March. The Leading Indicators and the Consumer Price Index numbers are also on the way.
Shares of Advanced Micro is advancing in reverse this morning, down about 12 percent after a lousy earnings report. It’s all confetti and champagne at Party City after shares rose 21 percent in its first day of trading. And Mattel is looking about 5 percent higher, even though sales of an aging Barbie doll continue to sag.
Once again, Chinese stocks rose overnight, but that’s about it for major markets in the green. At this point, adjusted for fair value, the S&P 500 futures are lower by about 7 points, the Dow futures, which were down more than 150 earlier this morning, are only down 78, and the NASDAQ futures are about 23 points below fair value.
April 16, 2015
A trio of big financial firms are seeing their stock prices rise this morning after reporting better than expected results. Blackstone beat the $1.04 per share estimate by a penny per share on much higher than expected revenue.
Goldman Sachs shares are indicted more than one percent higher pre-market. $5.94 cents per share in earnings dwarfed the $4.26 cent estimate. Goldman also raised their dividend form 60 cents to 65 cents per share. Citigroup’s $1.52 beat the $1.39 estimate.
Netflix shares are looking to rise as much as 12 percent pre-market on strong subscriber growth.
At 8:30 the Weekly Jobless claims report comes from the Labor Department, but we’ll also get the March Housing starts. That report will get the most attention, as starts are expected to post a strong rebound from a surprisingly awful February Report, which was blamed on bad weather. Expect an annualized rate topping 1 million units.
Word is that the curtain is about to go up for another act in the Greek financial tragedy. May first is the next debt repayment deadline, and Greece may be looking for an extension.
Asia was mostly higher overnight, but Europe is a bit of a mess on the Greek rumors. Our futures have been lower all morning and at this point, adjusted for fair value, the S&P 500 futures are lower about 7 points, the Dow futures are down 49, and the NASDAQ futures are about 11 points below fair value.
April 15, 2015
Happy Tax Day, everyone, especially all you last-minute Johnnys who are just starting to search the house for your From W-2.
An extension of time to file your individual tax return is automatic nowadays. However, make sure that you’ve fully paid in what you owe for 2014. Extended filing is allowed. Extended payment will hit you with interest and penalties.
And in case you’re keeping score of the fairness of our tax system, the 80/20 rule applies. The top 20 percent of income earners pays 80 percent of all income tax. The top 1 percent of incomes carry 46 percent of the overall tax burden.
Carrying the burden of a less-tan inspiring earnings report this morning is Bank of America. Earnings of 27 cents were 2 cents short of estimates, and revenues also missed. Last night, Intel reported earnings, missed on revenues, but issued a rather upbeat outlook. Intel shares are looking about 3 percent higher pre-market.
The European Central Bank held interest rates steady this morning, which was not a surprise. The euro is now worth less than $1.06. And Nokia reportedly has a deal to acquire Alcatel-Lucent for more than 16 billion dollars.
Our futures have been hovering around the flat line much of the morning. At this point, adjusted for fair value, the S&P 500 futures are up almost 8 points, the Dow futures are up 62, and the NASDAQ futures are about 18 points above fair value.April 14, 2015
Now, things get busy.
Johnson and Johnson and JP Morgan Chase are both out with earnings this morning, and so far, so good. J&J beat the $1.54 estimate by 2 cents. They estimate that the full-year earnings will come in at $6.11, if you take the mid-point of their range. That’s a nickel short of current estimates, due to the strong U.S. dollar, and J&J shares are of about a quarter of a percent higher pre-market.
JP Morgan Chase’s earnings helped the major indexes this morning, earning $1.45 versus the $1.40 estimate. Wells Fargo just checked in with $1.04 in profit, which was a six-cent beat.
A couple of economic reports are due at 8:30 and are expected to reflect a turnaround from declining numbers from January and February. Producer Prices for Final Demand are expected to have risen two-tenths of a percent, or one-tenth if you ignore food and energy prices. Also at 8:30, the March Retail Sales Report should give us a 1.1 percent increase, up six-tenths of a percent excluding auto sales.
Asian markets were mixed overnight, but Europe is mostly lower. Our futures have been hovering around the flat line much of the morning. At this point, adjusted for fair value, the S&P 500 futures are flat, the Dow futures are down 19, and the NASDAQ futures are less than 2 points below fair value.
April 13, 2015
Corporate earnings reports start flowing in force tomorrow, with traders bracing for bad news, if for no other reason than the strong U.S. dollar. Earnings estimates have been revised lower for many companies. But even so, the forward price/earnings ratio of the S&P 500 stands at 16.9, which is more than a dollar more than a year ago and also substantially above the 25 year average. Any big collapse in earnings or any quick rise in interest rates could spell trouble for stock prices. Having said that, either one of those events would be quite a surprise.
China surprised overnight with the worst export data in more than a year, with a 15 percent drop in exports. However, as we know, bad news CAN be interpreted as good news. Chinese stocks rose about 2 percent once again this morning on the belief that the weak data would lead to looser monetary policy.
Other markets overseas are mostly lower at this hour and our futures are pointing a little bit lower as well.
At this point, adjusted for fair value, the S&P 500 are lower by about 3½ points, the Dow futures are down 31, and the NASDAQ futures are just a fraction of a point below fair value.
April 10, 2015
General Electric, one of the most iconic names in American industry, has also been one of the sleepiest stocks around over the past decade or so. Not so this morning, on word that General Electric wants out of the banking business. Most of the assets of GE Capital are moving out in a big restructuring. Blackstone and Wells Fargo are the big buyers. The proceeds will be used in a stock buyback, and General Electric stock will likely open more than 8 percent higher this morning.
On the famous other hand are shares of Citrix Systems. After lowering their first quarter sales and earnings outlook, blaming a restructuring and, of course, the negative impact of a strong U.S. dollar, Citrix shares are off about 7 percent pre-market.
There’s absolutely nothing on the calendar as far as economic reports today, although there are a couple of Federal Reserve Regional Bank Presidents running around trying to make headlines.
And the Apple Watch becomes available today for all those people who just HAVE to have the latest gadget, but somehow just can’t figure out how to pay off their credit card balances.
Chinese stocks rose another 2 percent overnight. And although Japan was lower, Europe is mostly higher.
As we head toward 9:30, stock prices look to rise a bit once again. At this point, adjusted for fair value, the S&P 500 are higher by almost 5 points, the Dow futures are up 45, and the NASDAQ futures are about 4 points above fair value.
April 9, 2015
We’re staggering into the first quarter earnings season this morning, with some good news and some not-so-good. Alcoa unofficially kicked things off last night with quarterly operating earnings of 28 cents per share. That was better than the 25 cent estimate, but revenues were lower than expected and Alcoa shares are about 3 percent lower pre-market. Bed Bath and Beyond shares are also 3 percent lower pre-market on a gloomy outlook.
Zynga shares are getting zinged by more than 8 percent pre-market as the old CEO is now the new CEO as the recent CEO is now the ex-CEO. Zynga shares, which traded at more than 15 bucks per share 3 years ago, are now about $2.65 per share.
On the famous other hand, Constellation Brands shares, which went for about 19 bucks less than 3 years ago, are looking to open around 119 dollars this morning on $1.03 in quarterly profit, which was 9 cents ahead of estimates.
Asian markets were mixed overnight, but Europe is solidly higher.
Our futures, which were in a bit of a hole earlier this morning, have turned it around. At this point, adjusted for fair value, the S&P 500 are higher by about a point and a half, the Dow futures are up 31, and the NASDAQ futures are 7 points above fair value.
April 8, 2015
It’s no secret that two of the most important factors that influence stock prices are corporate earnings and interest rates. While the guessing continues regarding how soon interest rates will normalize, the big calendar-year-end companies start rolling out first quarter earnings reports tonight. Corporate earnings, especially for companies that sell their product overseas, are expected to be under pressure this quarter because of the strength of the American Dollar.
After the market closes today, Alcoa will lead the parade. Expect 25 cents of operating earnings from Alcoa. A year ago, Alcoa earned only 9 cents per share.
Two European energy heavyweights are merging. Royal Dutch Shell is buying the BG group (which has nothing to do with Saturday Night fever) for 70 billion dollars in cash and stock. That’s a 50% premium to yesterday’s closing price for BG. We’ll get a report on domestic oil inventory levels later this morning.
At 2 o’clock this afternoon, the Federal Reserve Open Market Committee will release the minutes from their last policy meeting.
Lululemon gets a broker upgrade this morning, while Apple suffers a downgrade.
Chinese stocks rose again overnight. Most of Europe is lower.
At this point, adjusted for fair value, the S&P 500 are higher by a little more than a point, the Dow futures are up 15½, and the NASDAQ futures are almost 5 points above fair value.
April 7, 2015
The knee-jerk reaction to last Friday’s lousy Jobs Report was despair at a slowing economy. But it didn’t take traders long to re-interpret the soft economic signal as a sign that the Federal Reserve will be in no hurry to raise short term interest rates. That interpretation fueled a broad-based rally that looks like it will continue this morning.
At 10 o’clock, the Labor Department will release another view of the country’s employment situation with its relatively new “JOLTs” report. The Job Openings and Labor Turnover will be closely watched for signs of weakness outside of the oil patch, where jobs are being cut at a pretty fast clip.
Quarterly corporate earnings start to roll out tomorrow.
Oil is higher again this morning after a big spike higher yesterday. Just about all overseas markets are in the green after yesterday’s rally stateside. Mainland Chinese stocks rose more than two percent overnight.
Our futures are off their earlier highs, but are still pointing to a solid start for stock prices. At this point, adjusted for fair value, the S&P 500 are higher by 4½ points, the Dow futures are up 48, and the NASDAQ futures are about 9½ points above fair value.
April 6, 2015
Alcoa unofficially kicks off what is expected to be a pretty weak first quarter earnings season on Wednesday. But today, we’ll get a couple of early-reporters, including insurer A. J. Gallagher.
By 10 o’clock, two survey results are on tap regarding how the services sector of the economy did in March. The PMI Services Index is expected to rise a little to 58.4, while the ISM Non-Manufacturing Index is expected to decline a bit to 56.7. Perhaps the most important thing is that they are both about the stall-speed level of 50.
Oil prices are about 2½ percent higher on a price hike by Saudi Arabia for their shipments to Asia.
Many, many overseas markets are closed today for Easter Monday, but most were a little higher on Friday.
Although the domestic market was closed on Good Friday, the U.S. Index futures took a dive after the March Employment Report came in much weaker than expected, and those futures continue to suggest a lower open for stock prices this morning. At this point, adjusted for fair value, the S&P 500 are down 14 points, the Dow futures are down 124, but the NASDAQ futures are about 30 points below fair value.
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