August 30, 2013
Even though more stock is traded by computers nowadays, rather than humans, traders are people too. And those people are arriving at work today, wondering the same thing that many of us are wondering – it’s Friday of Labor Day weekend. What the heck am I doing here?
Well, they’ll probably figure out about noon that it would be a lot nicer at the shore than at the Exchange, and we’ll likely see pretty light trading day. Let’s hope that they program those computers properly.
Salesforce.com will be one of the stars of the morning. A great earnings report and outlook last night have the shares pointing about 10 percent higher pre-market.
Pacific Sunwear beat estimates by 2 cents, but guided lower, and we all know what that means – Pacific Sunwear shares are indicated about 3 percent lower.
July Personal Income and Consumption numbers come at 8:30, and are expected to be a little weaker than the June numbers. But at 9:45 the August Chicago PMI is expected to read 53 versus the July reading of 52.3.
At just before 10, the final August Consumer Sentiment Reading from U of M might tick higher to 81. But after that, you may be more likely to run into someone on the freeway than at the office. Adjusted for fair value, the S&P futures are up 3½ points, Dow futures are up about 27, and the NASDAQ futures are a little more than 4 points above fair value.
August 29, 2013
The markets continue to await the possible military strike against the Syrian government. That strike is still very much a potential, rather than a reality as France and England appear to be hitting the pause button, and even President Obama appears to be soft-pedaling any possible military response.
All that has the price of oil lower for a change, but only by about 75 cents per barrel, still over $109 for West Texas Intermediate.
At 8:30, we’ll get our Government’s 2ndguess at 2ndquarter Gross Domestic Product, and it’s estimated that they’ll paint a more optimistic picture, at 2.3 percent, versus the earlier estimate of 1.7 percent.
Based on this morning’s earning report, I’d guess that clothing retailer Guess will see their shares rise about 15 percent at the open. A 52 cent quarterly operating profit beat estimates by 17 cents. Guess raised their full-year outlook, although some analysts were expecting even more. One the famous other hand, grocer Fresh Market met estimates but guided lower, and the shares are looking about 6 percent lower pre-market.
Jobless claims at 8:30 are expected to be down a touch to 330,000.
China was a little lower overnight, but just about everybody else overseas is higher. And we should follow suit at 9:30. Adjusted for fair value, the S&P futures are up 5 points, Dow futures are up about 54, and the NASDAQ futures are a little less than 12 points above fair value.
August 28, 2013
Yesterday started badly for stock prices and just got worse as the day wore on, giving the market its worst day an over two months. Now that we are pretty much done with corporate earnings, and Congress is not yet back to mess us up economic policy, the coming military action against Syria will be the flash point that keeps markets on edge.
Speaking of on edge, the price of oil is higher once again this morning, this time by more than a dollar per barrel. Look for sign of that at our local gas pump shortly.
There’s nothing of great significance on the economic calendar today. We’ll get the second reading on second quarter GDP tomorrow and a host of indicators on Friday. But today, it looks like everyone will be focused on the carnage Syria, which is unfortunate, but at least it’s distracting everyone from the dancing of Miley Cyrus.
Mortgage applications dropped another 2½ percent last week, as the average rate on the 30 year rose to 4.8 percent.
Lots of red arrows overseas, but our futures have been hugging the flat line all morning. Adjusted for fair value, the S&P futures are down a fraction, Dow futures are up 3, but the NASDAQ futures are a little less than 2 points above fair value.
August 27, 2013
Stock prices were rising along with the temperature yesterday until Secretary Kerry raised the prospect of U.S. military involvement in Syria. Although everyone expected that such a statement was coming, no one wanted to hear it, expect those shorting the market. This morning, our futures started lower and have been on a fairly steady slide lower since then.
In spite of what may happen today, high-end consumers were in a spending mood last quarter, at least those who shop at Tiffany’s. Tiffany reported 83 cents of operating profit. That’s 9 cents better than expected. Tiffany also raised full-year earnings guidance and the shares are bid about 2 ½ percent higher pre-market.
The June Case-Shiller national home price index will be released at 9 o’clock, so if your stock portfolio has been hurting, at least you can find out how much more your house was worth going into last month.
And then at 10, the August Consumer Confidence Index is expected to slip to 79, from 80.3, in all likelihood due to those lower stock prices. Oil is higher by 2 ½ dollars per barrel on the Syrian fears.
China was higher again overnight. Japan and most European markets are lower. We’re in for a rough go at the market open. Adjusted for fair value, the S&P futures are lower by a about 12 points, Dow futures are down 85, and the NASDAQ futures are almost 26 points below fair value.August 26, 2013
It’s Monday, so there might be a merger somewhere. Oh look! There it is.
Onyx Pharmaceuticals is going to become part of Amgen. It’s a nearly 10½ billion dollar deal, at $125 per share. Onyx shares are about 6 percent higher pre-market in response. Onyx has a promising multiple myeloma drug that Amgen would like to add to their stable of patented products. Onyx has pretty much been up for sale to the highest bidder for a while, and Amgen will pay the price.
At 8:30 this morning, the Commerce Department is expected to report that July Durable Goods Orders dropped by about 4 percent. No cause for alarm, however. The June number was boosted by an unusually large number of orders for new aircraft.
We’ll get another smattering of earnings reports from some retailers, with Joseph A. Bank and Coldwater Creek among them.
However, interest rates continue to dictate stock prices in a big way. This morning, the 10 year Treasury Rate is fairly calm at about 2.82 percent.
Chinese stocks were more than 2 percent higher overnight. No trading in the U.K. this morning, but most of Europe is a little lower.
Adjusted for fair value, the S&P futures are lower by a about 2 points, Dow futures are down 21, and the NASDAQ futures are almost 2½ points below fair value.
August 23, 2013
Yesterday morning, Abercrombie and Fitch issued a sour earnings report and outlook, resulting in a 17% drop in the stock price. Last night, right in step, Aeropostale said that same store sales were off 6 percent, and that next quarter’s outlook is lousy. Aeropostale shares are looking to open off about 14 percent.
Not that all clothing retailers are suffering the same fate. GAP actually beat their earnings estimate, partly on strong sales at Old Navy. GAP also raised their dividend again and their shares are gapping about 6 percent higher pre-market.
The world’s economists with the biggest travel expense budgets have descended on Jackson Hole, Wyoming this week and will be talking, fishing, and wandering around in the wilderness the rest of the day. After all, they’re experts. But, with Mr. Bernanke not in attendance, don’t expect any market moving announcements.
The New Home Sales Report comes at 10 today, but that’s about it as traders will likely head for the shore mid-afternoon. That is, if all the exchanges decide to stay open all day, given yesterday’s trading interruptus at the NASDAQ.
The futures had been slightly lower, but improved slowly over the past couple of hours, and at this point, they’ve made it just slightly into positive territory. Adjusted for fair value, the S&P futures are higher by a about a point, Dow futures are down 3, and the NASDAQ futures are about 3 points above fair value.August 22, 2013
The flash PMI Manufacturing Report out of China, if you believe economic reports out of China, was a little bit of good news overnight. The August reading of 50.1 indicates a little expansion in Chinese manufacturing activity, and is a lot better than July’s 47.7.
One number that’s definitely not a lot better is the earnings number from Abercrombie & Fitch. Same store sales were down 10 percent. Earnings of 16 cents per share were way below the 28 cent estimate, and Abercrombie shares are on the clearance rack this morning, currently about 18 percent lower pre-market.
Sears also checked in with a big miss, losing $1.46 per share, which was 36 cents worse than expected and Sears shares are down about 4 percent.
And of course last night, Hewlett-Packard met earnings estimates. But printer sales were down 4 percent and HP says that it does not expect any revenue growth in the fourth quarter of the year. So don’t expect any increase in HPs stock price this morning. It’s looking down about 8 percent.
China, India and most of Europe are a little higher. The rest of Asia is lower. Our stock traders are still trying to decide exactly how they feel about what the Fed minutes revealed yesterday. But in the meantime, the futures are holding at very slightly higher levels.
Right now, adjusted for fair value, the S&P futures are higher by almost 2 points, Dow futures are up 16, and the NASDAQ futures are about 9 points above fair value.
August 21, 2013
Sometimes, it’s not what you say, it’s what you do. Today, we’ll be watching the Federal Reserve in a case of “it’s not what they do, it’s a case of what they SAY they’re going to do.” We all know that the Fed’s 85 billion dollars of monthly bond purchases will end sometime. Today’s question is when we’ll arrive at the beginning of the end. Fed officials have been hinting that the pump priming might start to slow in September. But many doubt that our sluggish recovery can survive without the Fed’s version of performance enhancing drugs. In any event, we’ll get Fed meeting minutes at 2 o’clock this afternoon and we’ll see what we can see.
Lowe’s reported better than expected earnings and sales and raised their guidance this morning, as the home improvement sector continues to do well. Target just reported operating income of 98 cents, which was two cents above the average estimate. Target, however, guided toward the low end of current estimates for the full year. And Staples look almost 9½ percent lower pre-market on a disappointing outlook.
Asians markets were mixed overnight, but Europe is mostly lower. Our futures have improved over the past hour and are almost back to the flat line, but the real action will start at 2 this afternoon.
Right now, adjusted for fair value, the S&P futures are lower by about 2 points, Dow futures are down 13, and the NASDAQ futures are about 4½ points below fair value.
August 19, 2013
It should be a pretty quiet news day for the financial markets. Earnings are on the way from clothing retailers Urban Outfitters and Guess?. But as far as market moving economic news, we’re probably on our own until Wednesday. That’s when the Federal Reserve Open Market Committee releases the minutes from their latest meeting.
This morning, trader’s eyes are fixed on the rising interest rate on the 10 year Treasury Bond. Just a couple of hours ago, the 10 year yield touched 2.88 percent. It has since backed off a couple of basis points. However, you may remember that not long ago, the 10 year yield was around 1.66 percent. So someday, short and intermediate term debt may actually start giving you a return on your money. But in the meantime, rising rates are giving bonds and stocks a bit of a headwind.
Japanese and Chinese stocks rose overnight, but finding any other major markets overseas that are higher is a tall task.
At this point, the futures are indicating that stock prices will continue the slightly downward trajectory established Friday afternoon. Right now, adjusted for fair value, the S&P futures are lower by about 4 points, Dow futures are down 24, and the NASDAQ futures are about 1½ points below fair value.
August 15, 2013
We’re going to start the morning in a bit of a hole, due in part to some disappointing forecasts, in part to some job cuts, and perhaps in part to some questionable reporting by a major wire service that can at best be called “sloppy.”
This morning, Walmart matched the $1.25 earnings estimate for last quarter, but revenue missed and Walmart lowered full-year profit forecast from $5.30 to $5.20.
Last night Cisco Systems beat the 51 cent profit estimate by a penny, but warned of problems ahead due to a “challenging and inconsistent economic environment.” They will also cut 5 percent of their workforce. That would be 4,000 Cicso workers who will be hitting the bricks.
And this morning, Reuters reported that Berkshire Hathaway had dramatically cut its holdings in Well Fargo and American Express. Problem is, if you bother to look at the numbers before you issue your report, you might come to a different conclusion. Berkshire actually increased its Wells Fargo stake and maintained its American Express holdings. Reuters, of course, is reportedly the same outfit, that was (until recently) slipping the results of the University of Michigan’s Consumer Sentiment Index a couple of seconds ahead of public release to “preferred clients.”
The July Consumer Price Index is expected to print two-tenths of a percent at 8:30.
At this point, adjusted for fair value, the S&P futures are lower by about 10 points, Dow futures are down 79, and the NASDAQ futures are about 26 points below fair value.
August 14, 2013
Just about 15 minutes ago, Macy’s released their quarterly earnings report, and their stock is getting taken out back and roughed up. Earnings of 72 cents fell 6 cents short of estimates. Sales of 6.07 billion dollars fell almost 200 million short, and Macy’s shares are about 5 percent lower pre-market.
Deere is also out with their story, and it’s a better one. Strong farm business in North and South America resulted in $2.58 cents in profit, much better than the $2.17 estimate. Deere’s shares are little changed however, as a lot of this year’s sales came as a result of strong corn prices last year. With corn prices much lower this year, next year’s equipment sales may not look so good. Cisco Systems reports in later today.
Today it will be St. Louis Fed President out on the speaking circuit, so look out for that. And at 8:30 the Producer Price Index is expected to come in at a one-half percent increase.
At this point, adjusted for fair value, the S&P futures are lower by a little more than 2½ points, Dow futures are down 19, and the NASDAQ futures are about 2 points below fair value.
August 13, 2013
The July National Association of Small Business survey results were released this morning, and the small businesspeople surveyed were not exactly brimming with optimism. The survey’s index rose only six-tenths of a point to a reading 94.1. That’s a pretty ho-hum level, with only about 9 percent of small businesses expecting to add jobs in the near future.
At 8:30 we’ll get July Retail Sales. Expect a three-tenths of a percent increase. That would be just a tenth of a percent cooler than the June rate. A slowing rate of increase in auto sales is expected to get the blame.
Atlanta Fed President Dennis Lockhart is out on the speaking circuit again. Last week, Lockhart’s comments on Fed policy set off a little panic among traders.
Better than expected housing data has the UK market higher this morning. In fact, just about all markets overseas are higher at this hour. Greece is the only significant laggard, down almost one percent.
Yum Brand’s Chinese sales were way off last month, reportedly due to really hot weather. Earnings reports are due from Cree and JDS Uniphase. But in front of that, we should see stocks rise at the open. At this point, adjusted for fair value, the S&P futures are higher by a little more than 5 points, Dow futures are up 56, and the NASDAQ futures are about 8 points above fair value.
August 12, 2013
We will get a smattering of earnings news this week, including reports from Deere, Cisco Systems, and lots of major retailers. Economic reports will include both consumer and producer inflation, retail sales and the University of Michigan’s first look at August Consumer Sentiment. So while there will be a lot to choose from later in the week, the docket is pretty much empty today, as everyone is taking the day off to play golf in support of Detroit PAL.
In spite of Prime Minister Abe’s massive stimulus program, the Japanese economy cooled off a bit in the second quarter. On a seasonally adjusted basis, Japan’s GDP rose only six-tenths of a percent, almost half of the 1 percent gain in the first quarter and below the nine-tenths of a percent estimate.
Japanese stocks were lower overnight on the GDP miss. Chinese stock rose 2 ½ percent, but Europe has turned lower after earlier gains. That, on the heels of a report that the German Bundesbank says that another Greek bailout may be needed in 2014. Nothing like getting ready for next year’s crisis ahead of time.
Our futures are lower, but have recovered somewhat over the past hour or two. At this point, the S&P futures are lower by about 9 points, the Dow futures are off 64, and the NASDAQ futures are 12 points below fair value.
If you enjoy buying initial public offerings, perhaps you should get a better hobby. But in the meantime, today is the day for you. A half-dozen firms are coming public today. Good luck out there.
Meanwhile, summer, along with earnings season, is getting a little long in the tooth. And although the weather forecast for New York City calls for clouds and storms this afternoon, we still may see trading tail off as traders try to stretch the weekend.
The price of Priceline shares is stretching higher this morning. Priceline reported $9.70 per share of quarterly earnings. That beat the $9.36 estimate handily. Priceline shares are more than 6 percent higher pre-market, just about 6 bucks under $1,000 per share.
A big drop in sales of the cancer drug Provenge has shares of Dendreon in critical condition this morning. Dendreon’s loss of 48 cents per share was a little worse than expected. But the 17 percent drop in Provenge sales has coincidentally led to about a 17 percent drop in Dendreon’s stock price pre-market.
No major markets overseas are showing a great deal of movement today.
Our futures have been lower all morning, but have recovered some ground during the past fifteen minutes. At this point, adjusted for fair value, the S&P futures are down about 4 points, Dow futures are lower by 34 points, and the NASDAQ futures are about 3 points below fair value.
August 8, 2013
No Federal Reserve officials are out on the rubber chicken circuit today, so stock traders may refocus the economy and corporate earnings, rather than worrying about when the Fed will start to deny the stock market the $85 billion dollars a month of its performance-enhancing drug, otherwise known as economic stimulus.
A rather shocking earnings report last night from automaker Tesla. They reported a nickel per share of profit, for a quarter that was expected to produce a 17 cent loss. Tesla delivered 5,150 vehicles, which was about 15 percent more than expected, and Tesla shares are about 17 percent higher pre-market.
This morning, Costco reported a disappointing 4 percent increase in same store sales. Analysts expected 5.1 percent. On the famous other hand, McDonald’s same store sales were up seven tenths of a percent last month, which more than doubled the three tenths of a percent expectation.
Weekly Jobless Claims come at 8:30. Expect 336,000 new unemployment claims, compared with last week’s 326,000.
The Bank of Japan held policy in place overnight, sending the Nikkei lower. But our futures are telling us that we’re headed in the other direction.
At this point, adjusted for fair value, the S&P futures are higher by 8 points, Dow futures are up about 84 points, and the NASDAQ futures are almost 18 points above fair value.
August 7, 2013
Lots of times, when it comes to government policy, transparency can be a good thing. However, when it comes to interest rate policy, too much “transparency,” or at least what some people think of as “transparency,” can be a bad thing.
Lots of Federal Reserve regional leaders are out giving speeches this week. Yesterday, some managed to speak out of at least two sides of their mouth, introducing so much confusion about the future of fed policy that traders decided that it might be a good time to pull back on the recent rally. A couple more Fed leaders are speaking today, so look out below.
In the meantime, the morning earnings reports continue to impress. Time Warner beat the 76 earnings estimate by 7 cents. Revenue at Time Warner was higher than expected and they raised guidance for the year, now foreseeing an EPS growth rate in the mid-teens year over year.
AOL announced and acquisition of ADAP.TV and beat estimates by three cents. Walt Disney reported a two-cent beat, earning $1.03 per share.
Overseas markets are mostly lower. Japan is the standout, with the Nikkei down 4 percent overnight. Our futures are in much better shape than a couple of hours ago, but are still pointing toward lower prices at the open. At this point, adjusted for fair value, the S&P futures are lower by about 3 points, Dow futures are down about 28 points, and the NASDAQ futures are 4 points below fair value.
August 5, 2013
The news flow should settle down a little this week, as earnings season begins to wind down. We will have a bunch of Federal Reserve officials running trying the deliver speeches that really don’t say much. And at 10 this morning we’ll find out about growth in the services sector of the economy. The ISM non-manufacturing index is expected to rise to 53 from 52.2. Anything above 50 supposedly indicates economic expansion.
TrimTabs is a company that tracks investment flows. This morning TrimTabs tells us that they’ve saw the most violent move between bond and stock flows that they’ve ever seen over the past couple of months. For June and July, investors pulled 80 billion dollars from bond funds and ETFs. Forty billion went into equity funds in July alone, but a lot is sitting quietly by in cash, as investors wait either for better prices or simply try to figure out what they’ll do next.
Tyson Foods reports earnings today, along with 21stCentury Fox. So far this earnings season, 3 of every 4 companies have reported better than expected results, with about 55% beating the revenue estimates as well.
China was higher by one percent overnight. Japan was lower by almost a percent and a half. Europe is mixed and we’re not really tipping our hand as of yet. As this point, adjusted for fair value, the S&P futures are lower by about 2 points, Dow futures are down about 18 points, and the NASDAQ futures are about even with fair value.
August 2, 2013
Federal Reserve policy and a ton of (mainly positive) earnings reports have driven stock prices higher this week. But today, it’s just about all about the economy. Specifically, look for the July Jobs report that will come from the Labor Department at 8:30. It’s expected that the Unemployment Rate might drop to 7½ percent and that about 185,000 new non-farm jobs came into being in July.
However, this might well be a case of “good-news-is-bad-news.” A very strong number – say 220,000 or so might be a sign to traders that the Fed is more likely to put the brakes on its monetary stimulus program sooner rather than later. Of course, a really lousy number would mean that the economy is faltering. However, the ADP report this week was pretty good and yesterday’s Weekly Claims number was better than expected, so a big shortfall in Jobs would be a surprise.
LinkedIn surprised with a much better than expected earnings report last night, beating the 31 cent estimate by 7 cents. LinkedIn shares are looking to open about 9 percent higher. Viacom missed estimates by a penny, but increased their share buyback program by 10 billion dollars.
Stocks in India were about three-quarters of a percent lower overnight, but most other overseas markets are slightly higher as everybody waits for the Jobs Report in about 15 minutes.
As this point, adjusted for fair value, the S&P futures are up about a half-point, Dow futures are up about 2 points, and the NASDAQ futures are about 4 points above fair value.
August 1, 2013
The Federal Reserve spoke, yet said nothing yesterday. And that’s good news for stock prices in the near term. The Fed gave no clues as to when they will start to stop buying every bond in sight, and while stock prices got a little boost off of flat levels at the time of the Fed’s statement yesterday, we finished the day pretty much unchanged.
Not so this morning, however. A Drop in the 10 year bond rate from about 2.7 percent to about 2.6 percent, combined with another handful of good earnings reports has the futures pointing decidedly higher.
Proctor & Gamble and Cardinal Health are two very different companies with two very similar earnings reports this morning. Both companies reported operating earnings of 79 cents, and both were expected to earn 77 cents per share. Both had higher sales than expected and both P&G and Cardinal Health are looking to open higher. Beazer Homes lost 22 cents per share, but that was 15 cents less of a loss than expected.
The miss of the morning appears to be ExxonMobil. They reported only $1.55 of profit, which appears to be 35 cents short of expectations.
The European Central Bank left short term rates unchanged a one-half of one percent this morning. But it looks like it will be “risk-on” for stocks at 9:30. As this point, adjusted for fair value, the S&P futures are higher by almost 12 points, Dow futures are up 104 points, and the NASDAQ futures are more than 21 points above fair value.
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For an explanation of "fair value" please click here.