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September 1, 2009
A late rally pared the losses yesterday. But nevertheless, August wrapped up with about a 3½ percent gain for stocks. That runs the winning streak to six months for the market. Of course, now it’s September, which is always a cause for pause, if not always declines.
One thing that won’t decline is car sales for the month of August. Industry sales are expected to have run at about a 13 million unit annualized rate. We’ll know by the end of the day as the car makers will tell us just how much the “cash for clunkers” program goosed their numbers. Now, if only the government could buy everything for everybody.
There’s lots of economic news due starting at 10 o’clock. Foremost will be the August ISM Manufacturing Index which is expected to read 50.5. That would be the first time in some time that the index reflects a slight expansion in manufacturing activity.
Disney stock received a broker downgrade this morning after yesterday’s announcement of its acquisition of Marvel entertainment.
Asian markets turned a bit higher overnight, but Europe is losing some ground. Our futures have improved, but are still pointing toward lower prices at the open.
At this point, adjusted for fair value, the S&P futures are down nearly 4 points, Dow futures are down 37 and the NASDAQ futures are about 4 points below fair value.
August 31, 2009
It’s the last day of a pretty good month for stock prices. The S&P 500, not even counting dividends is higher by about 4.2%. Of course, dead ahead loom the months of September and October. Both are notorious over the years for many unhappy returns – and we won’t even talk about last year.
This morning, there’s a little merger news out as a couple of oil services firms are getting together. Baker Hughes is buying BJ Services for 5 ½ billion in cash and stock. That’s about a 16 percent premium to Friday’s closing price.
A report out over the weekend claims that investors in Cerberus hedge funds are pulling out in a major way, after the ill-fated Cerberus forays into Chrysler and GMAC. The report says that investors are withdrawing 71% of Cerberus assets. It should be noted that Cerberus isn’t alone, as a lot of major hedge funds are bleeding cash as their investors have had about enough.
Just after the market opens this morning, expect the August Chicago Purchasing Mangers Index to rise to a level of 48, which would indicate just slight contraction in the economy.
Shanghai stocks took it on the nose again overnight, dropping about 6 percent. The London market is closed, but Europe is lower by about one percent and we’ll get up on the down side of the bed as well.
At this point, adjusted for fair value, the S&P futures are down 8 points, Dow futures are down 68 and the NASDAQ futures are almost 12 points below fair value.
We should get off to a decent start this morning on the back of a couple of surprisingly strong earnings reports. This morning Tiffany reported better than expected earnings. 39 cents per share was 6 cents better than expected. Tiffany also raised estimates for the full year. Now granted, sakes are down as much as a third at major Tiffany stores, but things aren’t as bad as expected.
Last night, Dell reported earnings that were a nickel per share better than expected. Margins were higher and Dell also raised their guidance for the remainder of the year as they look forward to a computer refresh and upgrade cycle as new products are on the way from Microsoft and Intel.
At 8:30, personal income and consumption data is due and just before 10 o’clock, the University of Michigan gives its final reading on August Consumer Confidence. Expect a reading of 64, a bit higher than the original estimate.
The Shanghai Index in China fell again overnight. That’s four straight weeks of red numbers there after a white-hot rally earlier in the year. But our rally, that is now eight sessions old should continue at 8:30.
At this point, adjusted for fair value, the S&P futures are up 4 points, Dow futures are up 29 and NASDAQ futures are about 5 points above fair value.
August 27, 2009
The big earnings report of the day won’t come until after the close of trading. Dell is expected to report 23 cents per share. That’s down from 31 cents in last year’s second quarter. However, traders will focus on anything Dell has to say about next year. With the release of the much anticipated Windows 7, we could be looking at a major-league computer upgrade cycle. Question is – will corporations and individuals loosen up the purse-strings enough to make it happen.
At 8:30 we’ll likely find out how stocks will start the day. Weekly Jobless claims have risen for the past three reporting weeks, and that’s not a healthy trend. Also at 8:30, the first revision to the estimate of second quarter Gross Domestic Product is not expected to be pretty. Consensus says that the advance number of a negative one percent will be revised lower by a half-percent or so.
Japanese stocks fell about a percent and a half overnight, but most other markets overseas are just very slightly lower. There’s nothing going on with our futures as we await the Jobless Claims and GDP numbers at 8:30.
At this point, adjusted for fair value, the S&P futures are up a point, Dow futures are up 12 and NASDAQ futures are about 2 points above fair value.
August 26, 2009
Earnings season is pretty much washed up. We will get Sun Microsystems report later today and this morning, Williams-Sonoma checked in with a quarterly profit of five cents per share. They were expected to lose nine cents. So much for the good news – Williams-Somona guided that same store sales for the year will be lower by 12 to 15 percent.
At 8:30 we’re expecting to hear good news about the sale of Durable Goods in July. Expect an increase of 3 percent, after June’s decline of 2 ½ percent. The July New Home Sales report at 10 o’clock is also expected to improve by just a little bit, with a seasonally adjusted number of 390,000 units expected.
On a related note, mortgage applications were up over 7 percent last week.
Asian markets perked up a bit overnight, but Europe is slightly lower, and unless we get a pleasant surprise from the Durable Goods number at 8:30, we’ll probably start the day a bit lower at 9:30.
At this point, adjusted for fair value, the S&P futures are down more than 2 points, Dow futures are down 13, and the NASDAQ futures are about 5 points below fair value.
August 25, 2009
There’s one less thing for the markets to worry about. At 9 o’clock this morning, President Obama will re-nominate Ben Bernanke for another four year term as head of the Federal Reserve. Not a big surprise, but a relief for the market, nevertheless.
Now that cash for clunkers is officially tapped out, Toyota, which sold a ton of fuel efficient cars under the program, announced that they will boost production this coming November for the first time in 16 months.
Earnings news this morning comes from Burger King, which made 43 cents versus the expected 33 cents, even though revenue missed expectations. Staples matched profit expectations. Although sales were up 9 percent from a year ago, they were a bit lower than expected.
Oil prices are pretty flat as we await inventory numbers later this morning. Last week’s surprising drop in inventories set off a rally in oil and in stocks, as traders interpreted as a sign of an improving world economy.
Asian stocks were lower overnight. European markets are just a touch higher, and we’re looking to start a little higher after a flat performance yesterday. At this point, adjusted for fair value, the S&P futures are up more than 6 points, Dow futures are up 51, and the NASDAQ futures are about 6½ points above fair value.
August 21, 2009
The big annual party in Jackson Hole Wyoming is over. I can’t imagine how rowdy it must get when you get all of those economists together and away from their slide rules for a few days. But in any event, we’ve come out of the weekend with no indication that interest rates will be moving higher any time soon. That has more cash on the move this morning and is pushing equity prices higher once again.
There’s nothing significant on the economic docket today. We’ll get the Conference Board’s reading on Consumer Confidence tomorrow.
Sears Holdings stock looks to open lower this morning after a bad-news story in Baron’s over the weekend.
There was a fairly strong rally in Asia overnight, with Japan higher by almost 3½ percent, which is the highest daily rise in over 3 months. Other major Asian markets higher by one percent or more. European markets are higher as well, but mostly by less than one percent.
Our futures have been moderately higher all morning, and haven’t moved around very much. At this point, adjusted for fair value, the S&P futures are up almost 4 points, Dow futures are up 36, although the NASDAQ futures are just about even with fair value.
August 21, 2009
Stock prices rose again yesterday, but once again volume was pretty light. We will presumably have a couple more weeks of light volume in store until traders (and Congressmen) get back to work in September.
Shares of GAP should rise this morning after reporting earnings last night. We’ve heard this story before – sales were down, but profits were better than expected due to cost cutting. J.M. Smucker reported 92 cents in profit versus the expected 80 cents. Brocade also beat estimates and Intuit lost a little less than expected.
Cash for clunkers will finally come to an end next Monday, after moving approximately a half million new cars off dealer lots. In a related event, J.D. Power has now cut its estimate of 2010 auto sales by 100,000 units, figuring that those sales have already happened, partially financed by taxpayer dollars.
Economists from around the globe are getting together for their annual meting in Jackson Hole, Wyoming today. Don’t expect any big announcements, but perhaps just a hint of future monetary policy moves from Chairman Bernanke.
Asian markets were mixed, but major European markets are solidly higher. At this point, adjusted for fair value, the S&P futures are higher by about 4½ points, Dow futures are up 29 and the NASDAQ futures are about 6 points above fair value.
August 20, 2009
The bullish reversal we enjoyed yesterday looks to remain in place this morning as the market continues to recover from Monday’s drubbing.
So far this morning we’re looking at a significant surprise and a significant disappointment on the earnings front. Evidently people are switching from steak to burgers, which makes it a good time to be in the ketchup business. Heinz checked in with better than expected sales, and reported 67 cents per share in profit versus the expected 62 cents.
On the famous other hand, when people aren’t buying and selling homes, it’s not a great time to be selling appliances. Sears checked in with a 17 cent operating loss, even though the Kmart unit showed some improvement. Analysts were expecting a profit. Investors can expect a loss this morning as Sears stock looks to open about 11 percent lower.
Weekly jobless claims at 8:30 are expected to decline to about 550,000 and at 10, the July Leading Economic Indicators are expected to rise about seven tenths of a percent, which would run the string of positive results to four consecutive months.
Overseas markets are higher. Our futures have been on the rise all morning long. At this point, adjusted for fair value, the S&P futures are higher by about 7 points, Dow futures are up 52 and the NASDAQ futures are about 7½ points above fair value.
August 19, 2009
The Chinese stock market, which had been on fire for most of this year has apparently run a little short on oxygen. The Shanghai Index was down over 4 percent overnight. That brings the total decline over the past two weeks to more than 20 percent. Other overseas markets are lower in sympathy.
Hewlett-Packard reported better than expected earnings and raised guidance last night, but noted that business spending is not yet picking up and HP stock is indicated a little lower this morning.
Shares of Deere have done an about >
The brokers are busy making placing their bets this morning. Receiving upgrades were Target and Ann Taylor. Downgrades were doled out to Alcoa and Cigna.
At 10:30 this morning we’ll get the oil and gasoline inventory report from the Energy Information Administration, but in front of that stock prices will head lower.
At this point, adjusted for fair value, the S&P futures are down almost 9½, Dow futures are lower by about 87 points and the NASDAQ futures are about 17½ points below fair value.
When we met here last year, news was just breaking that the government might have to bail out Fannie Mae. Fannie was an 8 dollar stock (it’s about a dollar now) and the worst, of course was yet to come.
At lot of people are suspecting another unpleasant September surprise this year, however, so far it looks like we’ll get a little bounce-back from yesterday’s 2 percent loss.
Home Depot reported earnings that easily beat estimates on slightly lower than expected revenue. They also raised earnings guidance for the rest of the year, although Home Depot is still projecting lower profits, but only by about 17 percent.
At 8:30 we’ll get information on producer prices and housing starts. Headline PPI is expected to have dropped by four tenths of one percent with the “core” rate rising by one-tenth of a percent. Housing starts are expected to have risen by a little less than 3 percent.
European markets are holding on to slight gains this hour.
At this point, adjusted for fair value, S&P 500 futures are up 7, the Dow futures are higher by about 68 and the NASDAQ futures are about 12 points above fair value.
August 17, 2009
When we met here last year, the S&P 500 was about 30 percent higher, Fannie Mae was an 8 dollar stock (it’s about a dollar now) and the worst of the financial storm was yet to hit.
Since early March, however, stock prices have rallied about 50 percent, and just about everyone has been waiting for a little pullback in that rally. A little pullback started in Asia overnight, and we should see lower stock prices at 9:30.
Japan’s Gross Domestic Product rose 0.9 percent from April through June. That breaks a string of four declines. So, the good news is that the recession may be ending in Japan. However, a slightly better number was expected. The Nikkei fell 3 percent and stocks in China fell almost 6 percent, which is the worst day there since last November.
A lot of traders will be squeezing in the last of their summer vacations this week, so expect some price volatility on lower than normal volume.
Europe is lower on the order of 2 percent or so.
We will open lower, although the futures have improved from their worst levels of the morning. At this point, adjusted for fair value, S&P 500 futures are down 17, the Dow futures are down 143 and the NASDAQ futures are about 23 points below fair value.
August 7, 2009
It’s the first Friday in August and the game plan on Wall Street for the day is pretty simple; read the Jobs Report at 8:30, react to the Jobs Report at 9:30, head for the Hamptons around noon.
It’s all about the July Unemployment Report this morning as traders look for evidence that the economy is – well maybe not getting better, but getting worse at a slower rate. Last week, the consensus number for lost jobs in July was about 375,000. Earlier this week, numbers like 325,000 were batted around. Now, there’s talk about only 250,000 to 275,000. Suffice it to say that the lower the number the better, for jobs seekers and stock investors.
The Unemployment Rate is expected to inch up to 9.7% and the average hourly wage is expected to have risen only a tenth of a percent.
AIG, the company we all love to hate, (as well as own) reported surprisingly higher profits this morning, at $2.30 per share versus the expected $1.67. That’s the first quarterly black ink at AIG since 2007. Maybe we will get back some of our 180 billion dollars after all.
Japanese stocks rose a bit, but just about everybody else is lower overseas. We’re in neutral as we await the Jobs Report at 8:30.
At this point the S&P, Dow and NASDAQ futures are all within a point or two of fair value.
August 6, 2009
The European Central Bank held their target short term interest rate steady this morning, as did the Bank of England. However, the Bank of England surprised by increasing their bond purchases by 40 percent. That kind of quantitative easing is a sure sign that they don’t think that they’re out of the recessionary woods just yet.
We’ll be getting July same store sales figures from the retailers today. One of the first to check in is Costco. Comparable sales were down 7 percent, just fractionally more than expected. However, if you exclude the deflation in gasoline prices, sales were off only about 2 percent. Macy’s just reported a sales decline of 10.7 percent, which was worse than expected.
Cisco Systems beat expectations last night, but warned that margins may be lower in the coming quarters as Cisco increases involvement with some lower-profit products.
MBIA, Comcast and Prudential Financial report in later today.
Almost all major markets overseas were solidly higher overnight and we are likely to follow suit. At this point, adjusted for fair value, the S&P futures are up more than 5 points, the Dow futures are up 50, although the NASDAQ futures, burdened a bit by the Cisco earnings report, are less than 4 points above fair value.
August 5, 2009
Late day money continues to come to market as once again yesterday an otherwise negative day turned positive for stocks in the last half hour of trading.
We may be in a bit of a holding pattern for the next couple of days as we look forward to Friday’s Unemployment Report from the Labor Department. In the meantime, recruiting firm Challenger Gray and Christmas reported that layoffs were down 33 percent in June, and the number of automotive job cuts is down dramatically. That’s the good news. The bad news is that announced layoffs are now nearly at the one million mark year-to-date.
Procter & Gamble and March McLennan both beat estimates by a penny per share, but the big movers of the mornings are likely to be GPS-device maker Garmin and Devon Energy. Both of those firms beat estimates by more than 50 percent.
Asian markets were a little lower overnight, but Europe is modestly higher. Our futures have been pretty much unchanged much of the morning, although they ticked a little lower about 5 minutes ago when ADP reported their estimate of June job losses. At this point, adjusted for fair value, the S&P futures are down 2, the Dow futures are down 5, and the NASDAQ futures are just about even with fair value.
August 4, 2009
We’ll get a little breather, at least early in the day, from the seemingly relentless market rally that continued yesterday. The S&P 500 topped the 1000 level yesterday, and that’s a better than 50% increase from the intra-day low of 5 months ago. The NASDAQ closed above 2,000 yesterday for the first time since early October.
This morning, Toyota reported their third straight quarterly loss, but more importantly, trimmed their loss forecast for the entire year.
BMW made more than twice as much money as expected, but the profit is still down 60% from last year, and BMW shares are lower in European trade.
Swiss Bank UBS continues to post big-time red ink. The second quarter loss at UBS is 1.3 billion dollars due to restructuring charges and a continuing exodus of asset management clients who curiously are sensitive about how much the IRS knows about their offshore accounts.
CVS, Marvel Entertainment and Henry Schein all issued better-than-expected results this morning. Emerson Electric came up short of expectations.Most major overseas markets have turned lower and absent a big surprise in the June Income and Consumption data at 8:30, we’ll head lower this morning as well. At this point, adjusted for fair value, the S&P futures are down almost 5 points, the Dow futures are down 43 and the NASDAQ futures are 11½ points below fair value.
August 3, 2009
It looks like we’ll get August off to a rip-roaring start this morning. Positive earnings news from the banks triggered a European rally earlier this morning and we should piggyback that at 9:30.
They’ve evidently moved it up to 11 o’clock now (from noon.) Ford Motor will reportedly announce their first monthly sales increase in two years. Credit the “cash for clunkers” program, which gives all of us who are not in a position to buy a new car the opportunity to contribute our tax dollars to those who are.
At 10 o’clock this morning, the July ISM Manufacturing Index is expected to check in at 46.5 versus June’s 44.8. That would indicate manufacturing activity still contracting, but doing so at a slower rate.
We have better than expected earnings this morning from Tyson Foods, Humana and Lowe’s. Broker upgrades for JC Penney, 3M and Gap. Ann Taylor was downgraded.
You may want to fill-er-up soon. The price of a barrel of light sweet crude oil is suddenly back over 71 bucks this morning.
Japanese stocks were pretty much unchanged overnight, but everybody else overseas is seeing green.At this point, adjusted for fair value, the S&P futures are up about 9 points, the Dow futures are up 77 and the NASDAQ futures are almost 19 points above fair value.
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