August 29, 2014
The two or three traders who actually show up for work today in front of the long Labor Day weekend will likely see yesterday’s losses recovered in the early going, absent any disconcerting headlines out of the Ukraine.
Overnight, NATO charged Russia with a “blatant violation of Ukraine’s sovereignty.” Russia said “No we’re not invading, so try and stop us.” Besides, it’s just a traveling violation, so the ball’s in your court. And that’s where we sit this morning.
The big earnings news this morning comes from Big Lots. In a time when the discounters are struggling a bit, Big Lots beat the earnings estimate by a penny per share. They also lifted the low end of their forward guidance, but traders seem unimpressed as Big Lots shares are off about a half-percent pre-market.
It was kind of lost in yesterday’s earnings report, but Abercrombie & Fitch announced that they will be cutting way back on plastering its name on every piece of clothing it sells. Evidently teens are spreading the rumor that you can buy comparable clothes at a much lower price without it saying “Abercromie & Fitch” in large letters. Maybe education in this country is improving.
U of M’s final read on August Consumer Sentiment expected just before 10 at a reading of 80½.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 6½ points, the Dow futures are up 41, and NASDAQ futures are about 15 points above fair value.
We’re starting the slide into the long Labor Day weekend as trading volume is slowing to a trickle. However, the trading that is happening will be happening at lower prices early on this morning. The cooling of our recent rally started yesterday on the news that Russia has apparently started its long-feared invasion of the Ukraine.
There are a bunch of retailers out with earnings reports this morning, and while last quarter’s earnings weren’t all that bad, sales fell short in many cases and the forward earnings guidance wasn’t very good. As a result, pre-market trading has shares of Abercrombie and Fitch down about 6 percent, Guess down about 9 percent and Williams Sonoma down 10 percent.
The second guess at second quarter Gross Domestic Product that I told you was coming yesterday morning? Well, I jumped the gun by a day. It actually will be announced in about fifteen minutes. So, if missing that news yesterday ruined your day, it’s on me. In any event, expect GDP to have grown by 3.8 percent.
But make no mistake, the Ukrainian news will control the direction of stock prices today. Foreign markets are lower across the board. Our futures have been on the slide all morning. At this point, adjusted for fair value, the S&P 500 futures are lower by about 7 points, the Dow futures are down 58, and NASDAQ futures are about 11 points below fair value.
August 27, 2014
The Courtney rally continues unabated as the S&P 500 Index finally closed above the 2,000 level yesterday and the stock futures are pointing modestly higher once again this morning.
Participating in the good times this morning will be high-end retailer Tiffany. Tiffany‘s 96 cents of quarterly profit beat the average estimate by 11 cents. Tiffany also raised earnings guidance for the full year. On the famous other hand, although gun maker Smith and Wesson beat the earnings estimate by a penny, raising inventories are shooting the stock in the foot. Smith and Wesson lowered full year guidance and its shares are shooting about 12 percent lower pre-market.
In just over 15 minutes, we’ll get the Government’s second guess at the economy’s second quarter performance. The preliminary estimate of 2ndquarter GDP is expected in at 3.8 percent.
And in you think interest rates are low here, how’s this? The yield on the ten-year German government bond stands at just over nine-tenths of one percent this morning, at 0.913 percent.
Asian stocks rose overnight, but Europe is fairly flat. At this point, adjusted for fair value, the S&P 500 futures are higher by about a point and a half, the Dow futures are up 25, and NASDAQ futures are almost 3 points above fair value.
August 26, 2014
The Courtney Rally continues unabated this morning. Yesterday, the S&P 500 Index stormed above the 2,000 level, only to trade most of the day just below it before settling just shy of 1,998.
If you think that Tim Horton is still playing defense for the Maple Leafs, well, you’re dating yourself and have some serious catching up to do. Although Mr. Horton passed away in 1974, his little donut shop has done pretty well, and soon you may be able to get your donuts flame-broiled. As rumored yesterday, Burger King is acquiring Tim Horton’s restaurants. The combined company will have 18,000 locations and about 23 billion dollars in sales. The price is about a 39 percent premium to Tim Horton’s closing price of last Friday.
Best Buy has checked in with a checkered earnings report. Forty four cents of profit per share easily beat the 31 cent estimate. However, it was all on the back of cost cutting. Same store sales fell 2.7 percent, which was one percent more of a decline than expected, as more and more people prefer to shop in the store, but buy online (assuming that they bother to shop in the store at all.)
The Conference Board’s Consumer Confidence number comes at 10 o’clock.
Once again this morning, Asian markets are mixed, but Europe is higher. Our futures are off earlier highs, but are still pointing a bit higher. At this point, adjusted for fair value, the S&P 500 futures are higher by nearly 3 points, the Dow futures are up 27, and NASDAQ futures are about 4½ points above fair value.
August 25, 2014
Don’t look now, but the S&P 500 Index is getting very close to the 2,000 level. Granted, it’s just another number. But, it’s a big number. Especially when you consider that it was around 667 a little more than 5 years ago.
The high flyers of this morning will be the result of some merger news over the weekend. Intermune, which is a bio-tech company with a promising drug for the treatment for a fibrosis disease of the lung, is being acquired by Roche for 8.3 billion dollars in cash. That’s 74 bucks per share. It’s a 38 percent premium to Friday’s close, and 2½ times what Intermune went for less than 5 months ago.
Burger King would like to invest more in the United States. So, due to the wonderful incentives brought about by our upside-down, inside-out tax code, Burger King is looking to buy Canadian-based Tim Horton’s. That way, Burger King can become a Canadian company and save a ton of tax dollars. On that news, shares of BOTH Burger King and Tim Horton’s are about 16 percent higher pre-market.
There’s nothing big on the economic calendar until tomorrow’s Durable Goods Report. Asian markets were mixed overnight, but Europe is mostly higher and here we go again at 9:30.
At this point, adjusted for fair value, the S&P 500 futures are higher by more than 9 points, the Dow futures are up 67, and NASDAQ 100 futures are about 19 points above fair value.
August 22, 2014
It was another day, another little melt-up for stock prices yesterday, as the Dow Jones Industrials regained the 17,000 level and the S&P 500 closed at a record high for the 28thtime this year. This morning, news of 20 Russian trucks crossing into the Ukraine, escorted by pro-Russian rebels has the rally hitting the “pause” button, as traders await a speech from Janet Yellen. That speech starts at 10 o’clock, from the big Fed conference in Jackson Hole Wyoming. Most expect that Yellen’s comments will be pretty dovish. But any hint that an interest rate hike is around the corner could make a chunk of this week’s gains disappear in a hurry.
The only thing that appears to be disappearing at Footlocker is shoes off the shelf. Quarterly income of 64 cents per share beat estimates by 10 cents, same store sales were up 7 percent and the stock is about 3½ percent higher pre-market.
Most of Asia was a little bit higher, but most European markets are a little bit lower. Our futures have rallied back from earlier lows and are pretty much at a standstill. At this point, adjusted for fair value, the S&P 500, Dow Jones 30 and NASDAQ 100 futures are all within a point or so of fair value.
August 21, 2014
With nothing earth-shattering in the Fed minutes yesterday, stock prices continued to recover from their mid-summer swoon, if you’d like to call it that. To review, during the two weeks starting July 24th, the S&P 500 Index declined almost 4½ percent, prompting a lot of bluster about the “long overdue” correction. In the two weeks since that decline, the S&P is back up to 1986, about a point and a half from its all-time closing high. Yes, someday the correction will come. And someday people will try to recognize the impossibility of predicting just when.
Hertz will be an interesting stock to watch today. Yesterday, Hertz fell almost 4 percent after they withdrew earnings guidance, which spawned a bunch of downgrades. Seems that Hertz doesn’t have enough cars to rent due to automotive recalls. Well last night, Carl Icahn announced that his group had taken about a 7 percent stake in Hertz. Perhaps he believes that recalls will subside and he’s buying a stock on sale. In response, the stock is almost 2 percent higher pre-market.
And how does this sound for a retailer; declining margins, declining sales, and a 9thstraight quarterly loss totaling over a half-billion dollars? Welcome to Sears Holdings’ latest report. Sears shares are off almost 4 percent pre-market.
Asia was mixed overnight, but Europe is higher, and if the S&P closes where it’s likely to open, it will close at an all-time high.
There’s a lot of economic data due by 10 this morning, but at this point, adjusted for fair value, the S&P 500 futures are higher by 3½ points, the Dow futures are up 39, and the NASDAQ futures are almost 6 points above fair value.
August 20, 2014
Home Depot’s excellent earnings adventure yesterday gave rise to high hopes for this morning’s report from Lowes. On the earning side, Lowe’s did not disappoint, reporting $1.04 per share, which was two cents better than expected. However, the devil was in the forecast. Lowe’s lowered their estimate for same store sales for the remainder of the year to a 4½ percent increase from 5 percent. Traders are lowering the price of Lowe’s shares by about 2½ percent pre-market.
Target just reported adjusted earnings that were a penny below the 79 cent estimate. They also cut their full year earnings estimate fairly significantly. Target shares are indicated about 2 percent lower this morning.
Mortgage applications perked up by 1.4% last week, but all of the gain and then some came from refinancing. New purchase mortgage apps were actually down a bit.
At 2 o’clock this afternoon, traders will parse every word in the minutes of the latest Federal Reserve Open Market Committee meeting, searching for hawkish sentiment regarding interest rates, and you have to believe there is some.
Asian markets were mixed overnight, and Europe is slightly lower on average. Our futures have spent most of the morning crawling out of a significant, but not huge hole. We were back to about even about 15 minutes ago. But, we’ve been sliding lower since then. At this point, adjusted for fair value, the S&P 500 futures are lower by 5 points, the Dow futures are down 27, and the NASDAQ futures are about 7 points below fair value.
August 19, 2014
In the continuing look for signs of economic strength, home building takes center stage. New home building spurs all kinds of other spending, whether furnishings, appliances, communications, electric fences for the dog….well, you get the idea.
A little later this morning, we’ll get a report on new home starts, and it’s expected to reflect a significant pick-up in new home starts, to an annualized level of about 970,000 units. And speaking of home building and renovation, Home Depot just reported quarterly profit of $1.52 per share, which was 7 cents better than expected. Home Depot also raised full-year guidance and Home Depot shares are looking to have a good morning, up almost 4 percent.
Elizabeth Arden shares, on the famous other hand, may not fare so well. Disappointing sales of their Taylor Swift and Justin Bieber fragrances get the blame. Can you imagine not wanting to smell like Justin Bieber?
The July consumer inflation report comes at 8:30 today. Expect a paltry one-tenth of a percent increase in inflation, which would pretty much keep in place the 2 percent annualized rate we’ve seen for much of the last three years.
Overseas markets are higher, and our rally of yesterday should continue in the early going today.
At this point, the S&P futures are higher by about 4 points, the Dow futures are up almost 45, and the NASDAQ futures are 9 points above fair value.
It’s another Monday, when we find out which big companies that dated each other over the weekend have decided to tie the knot. This morning, it’s more of a love triangle with lots of dollars involved.
We knew that Dollar Tree had already proposed marriage to Family Dollar. Now, however, a prettier suitor has shown up. Well, if not prettier, at least richer. Dollar General is offering $78.50 per share to get together with Family Dollar, potentially leaving Dollar Tree a day late and about four dollars short. Even though the current offer is an almost 10 billion dollar deal, with the prospect of an even bigger engagement ring on the way, Family Dollar shares are about 4½ percent higher pre-market, at $79.50 per share.
At 10 o’clock, we’ll hear from the National Association of Home Builders about the state of the housing market in August. The July survey jumped to 53 from June’s 49. The August reading is expected to hold steady at that 53 level.
Word is that tensions are easing in the Ukraine, and that has markets around the world in rally mode. European markets are higher ion the order of about one percent.
Right now, adjusted for fair value, the S&P 500 futures are higher by about 11 points, the Dow futures are up 89, and the NASDAQ futures are about 21 points above fair value.August 15, 2014
We’ll get some interesting economic reports by 10 o’clock this morning, if you’re into that kind of thing. It starts with the 8:30 report on producer price inflation. The June number was a potentially-concerning four-tenths of a percent inflation in producer prices. Although that was only two-tenths of a percent excluding food and energy, the overall July number is expected to settle down to just one-tenth of a percent.
The Empire Manufacturing Index is also on the way, along with the University of Michigan’s first look at August Consumer Sentiment, which is expected to improve from 81.8 to 82.3.
Monster Beverage shares are experiencing a bit of a rush this morning. They are higher by about 21 percent on word that Coca-Cola, which has been losing a little fizz, is taking a nearly 17 percent ownership stake in Monster.
For a stock that goes for under 10 bucks a share, it’s hard to believe that a 75 cent per share operating loss is good news. However, analysts expected JC Penney to lose about 93 cents per share. Same store sales were up 6 percent and margins were better. The stock is a little higher this morning for a retailer that still has a long way to go.
A number of markets overseas were closed overnight. But, the ones that did trade traded at higher prices following our rally yesterday. Right now, adjusted for fair value, the S&P 500 futures are higher by 6½ points, the Dow futures are up 53, and the NASDAQ futures are about 15 points above fair value.
One lousy earnings report and a couple of disappointing outlooks headline stock news this morning.
King Digital, the company that graced the world with the Candy Crush video game met earnings expectations last night. However, weak forward guidance has the shares of King getting crushed by about 22 percent this morning.
Deere shares also a little weaker this morning on cautious guidance. Locally, Ford Motor shares are looking to open almost 2 percent higher on an upgrade from a major broker.
Retailer Macy’s just reported earnings of 80 cents at the top of this hour. Unfortunately, the target (pun intended) was 86 cents, and Macy’s shares are off about 4 percent pre-market.
You may recall that in April, Japan raised its sales tax to 8 percent from 5 percent. It should be no surprise this morning, to anyone other than a politician, that Japanese Gross Domestic Product collapsed by almost 7 percent in the second quarter.
But in the counter-intuitive world of stock prices, Japanese stocks actually rose overnight as the weak economic data gave rise to hope of more economic stimulus to offset the impact of the tax increase. Then again, most overseas markets are higher, as are our futures.
Right now, adjusted for fair value, the S&P 500 futures are higher by about 10 points, the Dow futures are up 68, and the NASDAQ futures are about 19 points above fair value.
August 12, 2014
High flying Tesla shares hit another record yesterday on an upgrade from a big brokerage firm. However, there may be a little fly in the ointment. Consumer Reports, which has given the Model S a score of 99 out of 100, now has commented on some possible reliability problems with the $90,000 cars. Nothing much more than a creaky A frame so far. But, I guess nobody’s perfect.
The FDA has approved a new non-invasive colon cancer screening test developed by a company called Exact Sciences. Exact Science shares are higher in the pre-market by almost exactly 7 percent.
The Labor Department’s ne JOLTS report comes at 10 o’clock. It measures Job Openings and Labor Turnover trends.
The German ZEW survey, which is a sentiment survey regarding future business conditions in Germany, was pretty lousy this morning. That’s understandable, given the trade relationship between Germany and Russia.
But make no mistake, anything untoward out of the Ukraine will grab traders’ attention in a hurry the rest of the week.
Asia was generally a little higher overnight, but European markets are just a bit lower this morning. Our futures were higher earlier, but took a turn a turn for the worse during the past hour or so. Right now, adjusted for fair value, the S&P 500 futures are higher by about a point and a half, the Dow futures are flat, and the NASDAQ futures are about a point above fair value.
August 11, 2014
The first four days of the week will feature a good number of earnings reports, but on the whole the week will be light on economic data. Not that it matters much, in that geopolitics (specifically the Russian threat to the Ukraine) have been the big market movers of late.
As bond yields have all but disappeared, a lot of yield-hungry investors have added Master Limited Partnerships to their portfolios. MLPs are not corporations, have certain tax advantages, and have been known to throw fairly generous (and partially tax-sheltered distributions) to their limited partners. Oil firm Kinder Morgan was one of the first corporations to promote the MLP format. It started a number of subsidiary MLPs that have been pretty popular. This morning, Kinder Morgan announced a 44 billion dollar buyout to absorb those MLPs under its corporate mantel. Both Kinder Morgan AND its subsidiary MLPs are higher in the pre-market.
Priceline and Dean Foods and food-service firm Sysco will report earnings today and Zillow may see some selling pressure after a negative article in Barron’s magazine over the weekend.
Japanese stocks were more than 2 percent high overnight, as all major market overseas are higher after out Friday rally. And it doesn’t look like we’re quite done yet. At this point, the S&P futures are higher by about 6 points, the Dow futures are up 43, and the NASDAQ futures are 10½ points above fair value.
There’s some very good news if you hold shares of a biotech company called Tekmina Pharmaceuticals this morning. Tekmina shares are about 17 percent higher in the pre-market as the Food and Drug Administration has lifted its hold on a drug that Tekmina produces for the treatment of the Ebola virus.
Lululemon is about 5 percent higher on word that the company’s founder has sold about half of his shares to a private equity fund.
And, don’t look now, but Zynga is back in the news. The stock is getting “Zynga’d” again this morning. Their earnings report fell short last night and the shares are almost 11 percent lower pre-market. Don’t expect good things form McDonald’s stock today. The same-store sales report, issued about 15 minutes ago, was a big miss is every region of the world, especially in Asia, where there have been supplier food-safety issues. Asia-Pacific same store sales were off more than 7 percent in July.
Chinese stocks rose a bit overnight. Europe is now mixed after seeing big red numbers earlier. Japan, however, did close lower by about 3 percent.
It’s been about a year since stock prices have fallen for three consecutive weeks. But that’s what we’re set up for, absent a big rally today.
After President Obama’s comments about Iraq last night, the Dow futures were actually lower by triple digits. However, the futures rallied this morning and turned positive about an hour ago on some possibly promising news out of Russia.
Right now, adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 27, and the NASDAQ futures are about 9 points above fair value.
August 7, 2014
It’s a seemingly never-ending list of big-dollar Government settlements with big banks, where nobody has to admit that they did anything wrong. Latest in line appears to be Bank of America. Word is that they are close to forking over 17 billion dollars in connection with something that might have gone awry in their mortgage business a few years ago. Nine billion dollars of the settlement would go to the Treasury, and eight billion would come in the form of “consumer relief.” Perhaps lower mortgage rates or fees or maybe nicer toasters when you open an account. Remember those?
A couple of stocks are moving higher this morning on the backside of better than expected earnings. 21stcentury Fox, a day after walking away from its bid for Time Warner (at least for the time being) is about 5 percent higher. They reported 45 cents per share of profit, which was 7 cents better than expected.
Transocean’s $1.61 blew away the $1.02 estimate, on lower expenses. Transocean shares are about 2 percent higher pre-market.
The Bank of England and the European Central Bank each held their respective monetary policies steady this morning. In just about 16 minutes, Weekly Jobless Claims are expected to check in at 305,000.
Overseas markets are mixed. Our futures have improved quite a bit over the past ten minutes or so. Right now, adjusted for fair value, the S&P 500 futures are higher by about 9 points, the Dow futures are up 63, and the NASDAQ futures are 17 points above fair value.
August 6, 2014
A couple of big corporate marriage proposals were left in ashes at the altar last night. Sprint called off their get-together with T-Mobile due to regulatory concerns, and 21stCentury Fox wasn’t feeling the love from Time Warner, so Rupert Murdoch picked up his stock and cash and moved to the sidelines.
Time Warner, for their part, reported 98 cents per share in operating profit this morning, which was 14 cents better than analysts expected. A lot of people think that the Fox/Time Warner story isn’t over, and that the jilted Rupert Murdoch may yet come up with a bigger engagement ring.
In one merger that IS going to happen, Walgreen’s will buy British firm Alliance Boots. However, bowing to a barrage of political pressure, Walgreen’s will NOT potentially save hundreds of millions of dollars by moving its tax home overseas. In response, traders have moved Walgreen’s stock price about 10 percent lower this morning as the political bully pulpit is once again employed by Washington in lieu of doing the harder, yet more beneficial work of fixing our broken tax code.
Overseas markets are lower, especially in Portugal (down 3½ percent) and Italy (down 2 ½ percent) as Italy reported negative GDP for the second consecutive quarter, thus officially falling into recession.
Our stock prices will recede this morning as well. Right now, adjusted for fair value, the S&P 500 futures are lower by about 8 points, the Dow futures are down about 54, and the NASDAQ futures are 18 points below fair value.
August 5, 2014
It’s likely the one-step-forward, one-step back story again today, although for the most part, earnings are a pleasant surprise once again.
Publisher Time, which was just spun off from Time Warner, reported a GAAP loss of 30 cents per share, but adjusted for all those messy little one-off costs, the company reported a profit of 30 cents per share, which was almost double the expected profit.
And Gannett is jumping on the “get rid of your publishing division” bandwagon. They will spin off their publishing business and buy the remaining shares of cars.com that it doesn’t already own. Gannett shares are about 7 percent higher pre-market.
Better than expected results are out from Coach, CVS/Caremark and Toyota. Archer Daniels Midland beat estimate, but revenue came up short. Motorola Solutions looks like the loser of the morning, down 4 percent on weak earnings. Not far behind is retailer Target. Target shares are lower by 3½ percent on lowered guidance.
Japanese stocks were lower by one percent overnight, leading much of Asia lower. European markets are mixed, but generally a little higher. We, on the other hand, will give up some ground at 9:30.
A couple of surveys on the health of the services industries and the June Factory Orders will be in by 10 o’clock. But if the market opened now, it would open lower.
Right now, adjusted for fair value, the S&P 500 futures are lower by about 9 points, the Dow futures are down 67, and the NASDAQ futures are about 19 points below fair value.
August 4, 2014
The stock market’s late-week dive gave rise to plenty of “the sky is falling” headlines over the weekend. Of course, there have been plenty of “the sky is about to fall” headlines during the past 4 years, as stock prices continued to climb. But where would we be without the self-proclaimed fortune tellers?
In any event, the futures, which have a somewhat better track record, are predicting a little bounce-back in the early going today.
One stock that well be bouncing back a bit after a 20 percent drop from its all-time high is retailer Michael Kors. Earnings of 91 cents per share beat the estimate by 10 cents, as Michael Kors same store sales rose 24 percent last quarter. The shares were up about 8 percent earlier this morning, but are now indicated almost 3 percent higher.
Cardinal Health and Berkshire Hathaway are also out with better than expected results. HSBC, Europe’s largest bank, is out with another disappointing quarterly report.
And, as if there aren’t enough of these things flying around, we have a NEW economic report debuting this morning. The Gallup organization is now polling random consumers to inquire about their monthly spending. That report comes at 8:30 this morning.
For the most part, overseas markets are higher. Right now, adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 37, and the NASDAQ futures are about 14 points above fair value.
August 1, 2014
If you’re invested in stocks, you have to hope that August begins a little better than July ended. The 317 point drop in the Dow Jones Industrials yesterday pulled the Dow into a loss for the year, although the broader market is still higher.
Historically, as a month, August hasn’t been horrible for stocks. Although since the 1950’s, it has been near the bottom for stock returns compared to other months.
Obviously, events in Argentina, the Ukraine and Gaza had an impact yesterday. Today, the focus turns to the monthly Employment Report at 8:30, and it’s a hard one to handicap. Extremely high new job creation may be interpreted as a warning that the Fed will hike interest rates sooner than expected, which would hurt stocks. However, a punk number would indicate that this slow-motion economic recovery still has a long way to go. Look for 230,000 new non-farm jobs in July and a 6.1 percent unemployment rate.
GoPro still has a long way to go to prove that its hot stock performance isn’t just a flash in the pan. Last night, GoPro reported a nickel per share in profit, which was 2 cents better than expected. However, expenses are surging and the stock is deflating by 10 percent pre-market. Procter & Gamble beat the 91 cent estimate by four cents, but revenue was a little light.
Iceland and Lithuania stocks are not lower today, but only because their markets are closed. Everybody else overseas has followed us lower. Our futures are well off their lows of the morning, when the Dow futures were down almost 120 points. Nevertheless, stock futures are almost exactly as ugly as they were 24 hours ago. Right now, adjusted for fair value, the S&P 500 futures are lower by about 10 points, the Dow futures are down 76, and the NASDAQ futures are about 19 points below fair value.
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