August 14, 2008
August 29, 2008
A much stronger-than-expected GDP number and a better-than-expected oil inventory report boosted stocks big time yesterday.
So, you might expect a little pull-back today. And, you’d be right, at least in the early going.
Lots of news is on the way starting at 8:30 with personal income and consumption data. At 9:45 we’ll also get the August Chicago PMI and final reading on Consumer Sentiment from U of M, which is expected to come in at a reading of 62.
Not helping things this morning is last night’s report from Dell. Cutting prices is great for building market share, but it doesn’t do much for profit margins. Dell made 31 cents per share last quarter versus last year’s 33 cents. Analysts expected 36 cents and traders have Dell trading more than 10 percent lower in Europe.
The bond market closes at 2 o’clock today and although stocks will trade until 4, volume should tail off quite a bit after lunch as traders stretch the three day weekend a wee bit more.
Overseas markets followed us higher overnight, but our futures are pointing a bit lower at this point. Adjusted for fair value, the S&P 500 futures are down almost 4 points, the Dow futures are down 31 and NASDAQ futures, on that disappointing Dell report, are about 13 points below fair value.
August 28, 2008
It is, quite literally, the calm before the storm this morning. Stock futures are wobbling around the flat line, while Tropical Storm Gustav makes plans to party crash all Labor Day picnics on the Gulf Coast. In response, oil prices, which were under 112 bucks a few days ago, are trading just under the 120 dollar per barrel level this morning.
The second estimate on second quarter Gross Domestic Product will be announced in about 10 minutes. The market is expecting the original estimate of a 1.9 percent increase to be increased to about 2.7 percent, based on strong exports, and don’t forget all those stimulus checks that were cashed and spent.
Sears Holdings reported operating earnings of 21 cents per share this morning. Analysts had been expecting a net of 28 cents. Lower results domestically at Sears and Kmart get the blame. Dell will report earnings later today.
The average interest rate of fixed-rate mortgages came down again last week. The 30 year fixed conventional loan averaged 6.60 percent.
Overseas markets are narrowly mixed. Our futures are indicating stable prices at this point. Adjusted for fair value, the S&P 500 futures are flat, the Dow futures are down 6 points and NASDAQ futures are about 4 points below fair value.
August 27, 2008
Everyone’s collective eye will be on a couple of potential storms today. The most obvious is the meteorological storm, named Gustav. The projected track of the storm has it plowing into the oil rigs in the Gulf Coast sometime Monday morning with wind speeds of 120 miles per hour or more. That threat has the price of a barrel of light sweet crude up 2 dollars this morning.
The financial storm that’s brewing was highlighted in the Wall Street Journal this morning. The Federal Deposit Insurance Corporation is reportedly making plans to borrow funds from the federal Treasury. Although the FDIC doesn’t know exactly how many banks could fail over the next year, it looks like the wave will swamp the reserves that the FDIC has available.
At 8:30, the July Durable Goods number is expected to come in unchanged from the June number.
Asian markets were mixed overnight, but European markets are mostly lower. At this point, adjusted for fair value, the S&P 500 futures are down more than 4 points the Dow futures are down 35 points and NASDAQ futures are about 4 points below fair value.
August 25, 2008
Yes, stock prices enjoyed a nice rally on Friday right into the close, which proves that there were at least two traders left at their desks at 4 o’clock. Trading volume was awfully light as people got an early start on the weekend, and a huge drop in oil prices didn’t hurt. Volume will likely continue on the light side right through Labor Day.
Today should be a relatively quiet financial news day. No major earnings reports are scheduled and the economic headliner will come at 10 o’clock from the National Association of Realtors. July sales of existing homes are expected to have risen just slightly to an annualized rate of 4.91 million units from June’s 4.86 million.
Overseas markets are mixed. Oil prices are up about 75 cents per barrel.
Our futures have been improving from earlier levels of the morning, especially during the past half-hour. If trading were to start right now, prices would decline just a slight bit. At this point, adjusted for fair value, the S&P 500 futures are down almost 3, the Dow futures are down 17 points and NASDAQ futures are about 8 points below fair value.
August 22, 2008
Call it a retreat, call it a working vacation, call it a boondoggle, call it a Friday in Jackson Hole Wyoming without a lot else going on. Whatever. At 10 o’clock Ben Bernanke gives the keynote speech at the Fed’s annual retreat in Jackson Hole. The theme of the speech is reportedly “financial stability.” A timely topic, if nothing else, but traders will be listening this morning, likely before heading home a bit early this afternoon.
Shares of The Gap may head higher this morning after reporting a 51% profit increase and a cutback in capital spending plans last night.
Our futures were fairly flat until about 45 minutes ago, when they started to head north. Perhaps it’s in response to light sweet crude prices which are lower by almost a buck thirty five per barrel. At any rate, at this point, we’re looking for higher prices at 9:30. Adjusted for fair value, the S&P 500 futures are up 7½, the Dow futures are up 59 points and NASDAQ futures are about 9 points above fair value.
August 21, 2008
When economic times get tough, there’s evidently one thing you can still count on. Ketchup. H. J. Heinz reported earnings than beat estimates by six cents per share and talked optimistically about the remainder of the year.
Lots of retailers report earnings today, but the two big numbers of the day will be the 8:30 weekly report on Jobless Claims and (what else?) the price of oil.
Expect new claims for unemployment benefits to have risen by 10,000 to about 460,000. And don’t look now, but light sweet crude is up over 118 dollars per barrel, and rising.
At 10 o’clock, the July Leading Indicators may well slip from last month’s negative one-tenth of a percent to a negative two-tenths. Traders will also be watching the Philly fed survey later this morning.
And evidently it does take one to know one. All the big investment banks appear to be taking turns downgrading each other. This morning it’s Citigroup’s turn to downgrade its estimates Goldman Sachs, Lehman and Morgan Stanley.
If the futures hold their position for the next hour, it looks as though yesterday’s gains may be totally reverse by 9:45 this morning. Adjusted for fair value, the S&P 500 futures are down about 8 points, the Dow futures are down 75 and NASDAQ futures are 13 points below fair value.
August 20, 2008
Another sell-off in financial stocks took the market down again yesterday. But last night’s report from Hewlett-Packard may shift the focus a bit. HP reported an 11 percent profit increase. Operating earnings were 86 cents per share, beating estimates by three cents. Almost 70 percent of HP’s sales come from overseas, and strength in China, India, Russia and Brazil drove those profits higher. HP stock traded almost 4 percent higher in the after-market session last night.
Chinese stocks rebounded in a big way overnight on word that the Chinese Government is considering easing monetary policy and up to 58 billion dollars in tax cuts.
Oil inventory numbers are expected to show declining inventories later this morning, and oil prices are on the rise in front of that report. Light sweet crude is again over $116 dollars per barrel, after dipping below 112 yesterday.
European markets are higher, but generally by less than one percent. Our futures are lower than they were an hour or two ago, but are still positive. Adjusted for fair value, the S&P 500 futures are up 2½ points, the Dow futures are up 30 and NASDAQ futures, on the good profit news in technology, are more than 10 points above fair value.
August 19, 2008
The speculators in Fannie Mae and Freddie Mac turned tail yesterday as the rumor mill cranked up the idea that the government will bail out the big GSE’s. That would most likely drive the value of Fannie and Freddie common stock to – oh – about zero, and the selling spread to financial issues in general.
Home Depot reported 71 cents per share in profit versus the expected 61 cents. However, like Lowe’s before them, sales are expected to slow the remainder of the year.
Hewlett-Packard reports in just after 4 o’clock this afternoon, but in just about 10 minutes we’ll get a couple of big economic readings. The July Housing Starts and the July Producer Price Index. The PPI is expected to come in at a half-point increase versus a rather shocking 1.8 percent increase in June.
Chinese stocks were up one percent overnight after a 5 percent dive the day before. Most other overseas markets are lower, in spite of another drop in oil prices. At this point, adjusted for fair value, S&P 500 futures are down 4, the Dow futures are down 35 and the NASDAQ futures are about 6 points below fair value.
August 18, 2008
The last of the Dow Jones 30 Industrial component companies report their quarterly earnings this week.
But outside of a smattering of earnings, there’s not a lot of economic news on the docket and we’ll probably spend another week held hostage to the price of crude oil.
This morning, we have a-soon-to-become-hurricane heading toward Florida and the Gulf of Mexico and a warning from Iran that oil production may by cut to offset its falling price. A month or so ago that combination would have sent oil prices soaring. This morning, oh, they’re up a half dollar per barrel.
Lowe’s reported 64 cents per share in profit for the quarter gone by. That’s a drop from last year, but is better than the expected 56 cent profit.
Chinese stocks dropped 5 percent overnight. Hong Kong was lower, although Japan was higher. Our futures turned positive about 6:30 this morning and are pointing toward a nice bounce at 9:30.
At this point, adjusted for fair value, S&P 500 futures are up 5, the Dow futures are up 46 and the NASDAQ futures are about 10 points above fair value.
August 15, 2008
It should be a relatively quiet day for financial news, and it’s the kind of late-summer Friday where you’d expect trading to get pretty light in the afternoon. Unfortunately, afternoon thunderstorms in New York City may well keep traders closer to their stations than to the shore.
Just before 10 o’clock we’ll find out if the overall population thinks the economy is a day at the beach. The preliminary consumer sentiment reading from the University of Michigan is expected to have improved slightly from last month. The market is expecting a reading of 62, up from 61.2.
Abercrombie & Fitch beat earnings estimates this morning, but its full year guidance has the stock indicated lower.
Same store sales were off 4.3 percent at JC Penney. And even though earnings were a bit better than expected, the outlook for the remainder of the year is not terrific.
It’s Independence Day in South Korea and India. Their markets were closed overnight. Other markets overseas turned in a mixed performance. However, it looks like another pullback in commodities will have our stock market in a moderately good mood at the open. Adjusted for fair value, the S&P 500 futures are up about 2 points and the Dow futures are up 21 and the NASDAQ futures are about a half point above fair value.
August 14, 2008
Inflation and weekly jobless claims reports headline the day. At 8:30, the July CPI is expected to come in at a four-tenths of a percent overall increase. The July number may be discounted at a backward-looking number now that oil and commodity prices have deflated. Nevertheless, the lower the number, the better.
Walmart boosted the stock index futures earlier this morning. Walmart reported earnings of 86 cents per share versus the expected 84 cents, They also raised their earnings guidance for the entire year. Although that revised guidance is still a bit short of Street expectations, Walmart stock is indicated higher in the pre-market.
Estee Lauder also beat estimates this morning and should open almost 10 percent higher
Martin Marietta is raising its dividend by 16 percent. General Dynamics was downgraded by JP Morgan.
Japanese stocks were a bit lower overnight, but most other overseas markets are higher. Pending bad news on the CPI or jobless claims at 8:30, we should start higher as well. Adjusted for fair value, the S&P 500 futures are up about a point and a half, the Dow futures are up 28, and the NASDAQ futures are about a half-point above fair value.
August 13, 2008
The futures took a little dip this morning after the earnings report from Deere. Cost increases caused Deere to miss the expected $1.37 per share profit by a nickel. Deere’s also warned that rising raw material prices will hurt the current quarter’s results. Deere’s stock is indicated about 7 percent lower in the pre-market.
Macy’s and Liz Claiborne are the good news stories of the morning. Macy’s easily beating a 19 cent profit estimate with operating earnings of 29 cents. Claiborne was expected to break even, but instead made a profit of 9 cents per share.
At 8:30 this morning, the report on July Retail Sales will take center stage. Analysts are expecting a one-tenth of a percent decline, due in large part to a big drop in automobile sales. And watch out for the weekly oil inventory report later this morning. It’s expected that inventories in the U.S. are up due to declining demand. However, in front of that report, oil is bid slightly higher this morning.
Overseas markets are off one to two percent after our slippage of yesterday. Early on this morning, it appears that more slippage in on the way. Adjusted for fair value, the S&P 500 futures are down 5 points, the Dow futures are down 41, and the NASDAQ futures are about 5 points below fair value.
August 12, 2008
The only good thing about 145 dollar per barrel oil is that is makes 113 dollar oil look pretty cheap. That’s where we are this morning, with light sweet crude down another dollar on word of a Russian cease fire in Georgia.
We’ll get earnings news from Applied Materials and Nvidia today, but over in the financial sector the red ink continues to run.
JP Morgan is writing off another billion and a half of mortgage related debt. Morgan Stanley is buying back 4½ billion dollars worth of Auction Rate Securities, following similar moves by Merrill Lynch, Citigroup and UBS.
And speaking of UBS, instead of “you and us,” perhaps it will be “you, us, him and that other guy” in the future. In the future, UBS will operate their beleaguered investment bank separately from their private bank and separately from their wealth management businesses. UBS clients have reportedly pulled 40 billion out of the combined group in the second quarter.
Asian stocks were mainly lower, European markets are just barely higher and we really haven’t made up our mind. Adjusted for fair value, the S&P 500 futures are down a point, the Dow futures are down 20, and the NASDAQ futures are less than a point above fair value.
August 11, 2008
We’ll see if last week’s rally has legs this week and if the price of oil continues down a slippery slope. Its currently up a buck to $116 per barrrel.
The major part of earnings season is pretty much wrapped up and hasn’t been all that bad. This morning, food company Sysco beat estimates by 3 cents per share. Later this week, the economic news will take center stage as we get readings on retail sales, inflation and consumer sentiment.
Waste Management is apparently getting serious in their bid for Republic Services, raising their all-cash bid to 37 dollars from 34 dollars per share. Also on the merger trail, UPS is reportedly thinking about a 15 billion dollar bid for Dutch firm TNT.
The Olympics have everyone looking at China, but don’t look at their stock market. The Shanghai Index fell over 5 percent overnight after a 4 percent pull back on Friday.
It’s one of those funny mornings when the futures look higher, but aren’t. They have rallied somewhat over the past couple of hours and could continue to do so. But at this point, we’re looking toward slightly lower stock prices at the open. Adjusted for fair value, the S&P 500 futures are down a point, the Dow futures down 18, and the NASDAQ futures are less than 2 points below fair value.