August 31, 2015
Welcome to the last day of a month that only a thrill seeker could love. This morning, our futures are off their overnight lows, but are still weak on word that the Chinese Government may not have its stock market’s back after all. Meanwhile, Goldman Sachs is backing off their estimate for China’s 2016 Gross Domestic Product. They lowered the estimate from 6.7 percent growth to 6.3 percent.
While traders continue to fixate on China, we still have an economy over here that may be worth considering. At 9:45 we’ll consider the Chicago Purchasing Manager’s Index for August. Expect improvement to a reading of 54.9 from July’s 54.7. Then at 10:30, the Dallas Fed Survey will give us an idea of just how tough things are in the oil patch. July’s reading of minus 4.6 is expected to improve to a minus 2.5. Still negative, but by not as much.
Reynolds American shares will split two for one after the close this afternoon.
The British market is closed for a bank holiday. The European markets that are open are mostly lower this morning, but not by a lot. The Shanghai Index is China closed less than one percent lower after trading at a 4 percent loss early on..
Adjusted for fair value, the S&P 500 futures are lower by about 11 points, the Dow Industrials futures are down 92, and the NASDAQ futures are about 20 points below fair value.
August 27, 2015
Yesterday was a great reminder that investors don’t mind volatility – as long as it’s UPWARD volatility. The problem with watching the stock market to closely is that you have to tolerate the other stuff too. It looks like we’ll have a bit more upward volatility in the early going today, following the Chinese government’s latest form of pump priming. This time they actually bought shares of stock in big Chinese companies. Some would call that “market manipulation.” Our central bank calls it “quantitative easing.” Our side just buys bonds rather than stocks.
Anyway, this morning we get to focus on the American economy, rather than China. At 8:30, the Government is expected to revise its first guess at second quarter Gross Domestic Product from 2.3 percent all the way up to 3.3 percent. Simultaneously we’ll get the Weekly Jobless Claims Report. Expect 270,000 new claims.
Shares of St. Jude Medical are indicated about 4 percent higher on a report that Abbott Labs is preparing a 25 billion dollar bid, although Abbott has denied the story. St. Jude shares had been indicated about 14 percent higher before that denial. Smuckers and Michaels Stores are out with better than expected earnings. Tiffany shares are indicated about 6 percent lower on an earnings and revenue miss.
China was up almost 6 percent overnight. European markets are about 3 percent higher. Our futures have fallen well off their highs of the morning, but are still positive. Adjusted for fair value, the S&P 500 futures are higher by about 16 points, the Dow Industrials futures are up 139, and the NASDAQ futures are about 39 points above fair value.
August 26, 2015
The grand Wall Street roller coaster ride continues, so please keep your hands and feet inside the vehicle, and nobody gets seriously hurt. A little nauseous, maybe but not seriously hurt.
After a strong rally failed in the last hour yesterday, we’re back on the rebound this morning as the Chinese Central Bank once again tried to right the listing economic ship. They’ll pump another 22 billion dollars into the Chinese economy. That was announced today, after cutting bank interest rates yesterday. Can’t wait to see what they try tomorrow.
In the meantime, we’ll get the July Durable Goods report at 8:30. If you ignore transportation orders, expect an increase of four tenths of a percent. All in, we should see a drop of four-tenths.
Abercrombie and Fitch shares are almost 15 percent higher pre-market on a surprise profit of 12 cents per share. On the famous other hand, Angry Birds maker Rovio is cutting 40 percent of its workforce.
In spite of the new stimulus, Chinese stocks dropped another 1½ per cent. Europe is down a little. Our futures are well off their highs of the morning, but are still pointing substantially higher. Adjusted for fair value, the S&P 500 futures are higher by about 42 points, the Dow Industrials futures are up 353, and the NASDAQ futures are about 92 points above fair value.
August 25, 2015
We’ll get the results of the Conference Board’s August Consumer Confidence Survey at 10 o’clock. It’s expected to improve to a level of 94, from 90.9. However, more importantly, we’ll find out about INVESTOR confidence before day’s end after a string of brutal selloffs that has the S&P 500 almost 12 percent below its recent record high.
Yesterday’s wild swings in stock prices would likely have been even wilder if trading “circuit breaker” rules hadn’t kicked in over 1,200 times, temporarily halting trading. Some big ETFs were actually trading 30 or 40 percent lower at points during the day.
The July New Home Sales Report is expected to surge higher to a 516,000 annualized rate, but the big news of the morning came in the 6 o’clock hour this morning. The Chinese Central Bank cut its benchmark interest rate for the fifth time since November. That move added fuel to a rebound that was already underway in Europe, which are now about 4 or 5 percent higher.
In fact, outside of China and Japan, just about every market is in rally mode at this hour.
Our futures have been very volatile again this morning, but the only question is whether we’re going to open a lot higher or a lot-lot higher. At this point, the S&P futures are higher by about 49 points, the Dow futures are up 427, and the NASDAQ futures are 136 points above fair value.
August 21, 2015
Yesterday was a great day to do just about anything – except watch stock prices if you’re long the market. It turned out to be the worst day for prices in about a year and a half. And, if you thought that our downdraft yesterday would lead to more trouble overseas – well, you’d be absolutely right. Mainland China was down 4 percent today, Japan off 3 percent, Greece off two percent, and most European markets are a bit more than one percent lower.
Overnight, a key manufacturing survey in China that focuses on smaller companies in August read 47.1. Anything below 50 indicates a slowdown. The official Chinese PMI sits right on that break-even level of 50.
Our August Manufacturing PMI will be released at 8:30 and is expected to show some growth, reading somewhere between 54 and 55, the consensus being 54.2.
Equipment maker Deere reported better profit than expected. However, sales missed the estimate, guidance was lowered, and Deere shares are almost 2 percent lower pre-market. About 2 ½ percent higher on a profit and revenue beat are shares of Foot Locker.
It’s been a long time since we’ve had a 10 percent correction. We’ll head toward the open with the S&P 500 about 4½ percent off its recent high. And we’ll get closer to that 10 percent in the early going today.
At this point, adjusted for fair value, the S&P 500 futures are down about 15 points, the Dow Industrials futures are down 143, and the NASDAQ futures are about 43 points below fair value.
August 20, 2015
Yesterday’s stock prices were way down, then back to even after the Fed minutes were read, but then back down to a substantial loss. Apparently, traders concluded that even if the Fed delays a hike in short term interest rates, the reason for the delay – a weakening global economy – was not very good news. And, short sellers, if you liked yesterday, you’ll love this morning, as stock futures are pointing substantially lower.
It’s been an eventful week for a little company called Sprout. First the Food and Drug Administration approved Sprout’s female libido drug. This morning comes word that giant pharmaceutical company Valeant will buy Spout for about one billion dollars.
Weekly Jobless claims, Leading Indicators, Existing Home Sales and the Philadelphia Fed Survey all come at us by 10 o’clock this morning. Four big earnings reports are scheduled after the market closes today, including Intuit, Hewlett-Packard, GAP and Salesforce.com.
Oil futures are plunging again, with West Texas Intermediate at a 6 ½ year low, just north of 40 dollars per barrel.
Chinese and Greek stocks are about 3 percent lower. Most European markets are down about one percent. As I mentioned earlier, our stock index futures are a mess. At this point, adjusted for fair value, the S&P 500 futures are down about 18 points, the Dow Industrials futures are down 159, and the NASDAQ futures are nearly 38 points below fair value.
August 19, 2015
The big bouncing ball called the Chinese stock market bounced around quite a bit once again overnight. After being down another 5 percent at one point, Chinese stocks finished more than one percent higher on renewed belief that the Chinese Government will ride to the rescue with additional stimulus. Conventional wisdom would have us believe that any additional weakening in the yuan will make the decision for our Fed to raise rates all the more difficult. While many think that our rates will start heading higher in the next few weeks, but more than anything, stock traders would like the uncertainty of interest rate policy put to bed.
Speaking of which, at 2 o’clock, the minutes from the latest Fed meeting will be released. Perhaps we’ll get some hints regarding what’s up their collective sleeve.
Yesterday, Home Depot issued a pretty good earnings report. Not so much with competitor Lowe’s this morning. $1.20 in operating profit missed the mark by 4 cents. Although Lowe’s reiterated their full-year forecast, shares are about one percent lower pre-market. Target beat the consensus earnings estimate by about 10 percent and raised full year guidance. Target shares are about 3½ percent higher pre-market.
The Consumer Price Index, which no one seems concerned about anymore, comes at 8:30.
European markets are lower, as are our futures. Adjusted for fair value, the S&P 500 futures are down about 7 points, the Dow Industrials futures are down 67, and the NASDAQ futures are almost 8 points below fair value.
August 18, 2015
We have a couple of members of the Dow Jones Industrial Average reporting earnings this morning, and the news is not exactly encouraging.
On the bright side, Home Depot matched the $1.71 cent per share profit estimate. That was a bit better than the $1.52 in earnings from a year ago. Sales were better than expected and Home Depot raised guidance for the rest of the year and its shares are about one percent higher pre-market.
With less than wonderful news, Walmart checked in with $1.08 per share. That was four cents below the average estimate, even though sales were better than expected. Same store sales at Walmart were nine-tenths of one percent higher, although if you adjust of gasoline sales, same store sales were up about a percent and a half. Walmart shares are on the discount rack – about 3 percent lower this morning.
The July Housing Starts Report at 8:30 is about the only economic report on the docket today.
Chinese stocks hit a more than 6 percent downdraft this morning. Most Asian markets were lower. Europe has now turned lower as well. Our futures have been lower all morning long.
Adjusted for fair value, the S&P 500 futures are down about 5 points, the Dow 30 Industrials futures are down 57, and the NASDAQ futures are almost 13 points below fair value.
August 17, 2015
We’ll get a little more information on the heath of Home Sales this morning. The National Association of Home Builders will release its August report at 10 o’clock. Most expect it to decline a little from the July reading.
This will be a relatively quiet week for economic reports. We will get a smattering of earnings reports today. Estee Lauder is out with a revenue miss for last quarter. Urban Outfitters will report after 4 o’clock this afternoon. Walmart reports quarterly earnings tomorrow.
And while a company’s stock typically heads lower after a new stock offering, Tesla shares are more than 5 percent higher this morning after last week’s new share offering announcement. Today’s boost comes courtesy of a broker upgrade.
The oil patch is hurting again this morning as West Texas Intermediate Crude Oil futures are down almost 2 percent now.
There’s no trading in Argentina today. Asian markets were mixed, but mostly higher.
Our futures have slipped from earlier levels, and took a turn for the worse about 10 minutes ago. Adjusted for fair value, the S&P 500 futures are down about 3 points, the Dow 30 Industrials futures are down 21, and the NASDAQ futures are just about 2 points below fair value.
August 14, 2015
We’re hitting a bit of a lull in earnings reports, but there are a few out this morning that are interesting. King Digital shares are almost 11 percent lower pre-market. Declining revenue from the legal addiction called Candy Crush gets the blame.
El Pollo Loco same store sales were only up 1.3 percent last quarter. That’s way below expectations and the Crazy Chicken’s shares are getting plucked by more than 17 percent.
On the famous other hand, JC Penney shares are looking about 4 percent higher. They lost 41 cents per share last quarter, but that was 7 cents less of a loss than expected on a 4 percent rise in same store sales.
If you’ve been waiting to buy Tesla shares at a discount, here you go. Tesla will offer 2.7 million new shares at $242 per share. Don’t get too excited, though. It amounts to a two-tenths of one percent discount to yesterday’s close, although the news has existing shares trading higher this morning.
The Greek Parliament approved Bailout 3.0 today, and the Chinese Government appears to have stopped tinkering with the yuan for a while. There’s not much price movement overseas, but whatever movement there is – is a little bit lower.
Adjusted for fair value, the S&P 500 futures are lower by about 4 points, the Dow futures are down 24, and the NASDAQ futures are about 9 points below fair value.
August 12, 2015
The only way to say that the futures look good at this hour is to compare them to the way they looked overnight. Another stock free-fall in China was partially stemmed in the final minutes as the Chinese Government reversed course and moved to SUPPORT the yuan. That rallied Chinese stocks to close only about one percent lower.
While we’re on the Chinese topic, Alibaba reported slightly better than expected earnings this morning, but revenues were short, and in spite of a new buyback program, Alibaba shares are looking about 5 percent lower pre-market. Yahoo shares are about 4 percent lower on that news as well.
And as if we didn’t have enough bad news already, Macy’s just reported operating earnings of 64 cents, which is a 12 cent miss. Same store sales were down more than 2 percent. Macy’s is also lowering full-year guidance. Macy’s stock is indicated about 3 percent lower.
Mortgages taken for home purchases declined by 4 percent last week, but a 3 percent increase in the number of refis pulled overall activity back to even.
At 10 o’clock, the Labor Department will release their JOLTs report, concerning Job Opportunities and Labor Turnover.
European markets are lower by anywhere from 1 to 2½ percent at this hour. Our futures were in much worse shape overnight, but that doesn’t mean that they’re looking good. Adjusted for fair value, the S&P 500 futures are lower by about 15 points, the Dow futures are down 125, and the NASDAQ futures are about 32 points below fair value.
August 11, 2015
Yesterday’s big rally on Wall Street is suffering a little hangover this morning. Perhaps a little too much Moutai is to blame. Chinese officials devalued the yuan by 2 percent against the dollar overnight in a move to boost their stock market as well as their apparently slowing economy. That will make the going tougher for non-Chinese companies that sell into the Chinese market, and stock prices around the world have reacted in a not-so-pretty way.
Sitting pretty this morning are shares of Shake Shack. Revenues and earnings both topped estimates this morning and the Shake Shack shares are almost 9 percent higher. Google shares are indicated almost 6 percent higher after spelling out a corporate restructuring, using the name Alphabet.
This morning, the monthly Survey of Business Optimism from the National Federation of Independent Businesses came in at 95.4, which was a bit better than the consensus estimate, but within the full range of expectations.
A look at second quarter unit labor costs and productivity comes at 8:30. The labor cost number has been running pretty hot the last two quarters. Most expect a much more tame one-half of one percent increase in costs and a 1.6 percent rise in labor productivity.
Nevertheless, the music will likely start on the downbeat today. Markets across the globe are lower, but most are lower by one percent or less.
Adjusted for fair value, the S&P 500 futures are lower by about 13½ points, the Dow futures are down 133, and the NASDAQ futures are about 19 points below fair value.
August 10, 2015
Warren Buffett is up to old tricks again as it looks like Berkshire Hathaway will acquire Precision Castparts. It’s a company that a lot of people have never heard of, but it ranks near the middle of the pack in the S&P 500, so it’s no minor pick-up for Berkshire. 235 dollars in cash makes it a 37 billion dollar deal and a 21 percent premium to Friday's closing price.
Atlanta Fed-head Dennis Lockhart, who recently signaled that the Fed will be acting soon to raise the short term interest rate gives another speech this afternoon, as the odds of a September rate hike continue to climb.
Gasoline prices dropped about 11 cents per gallon nationwide last week. Get ready for even cheaper gas in the future as the price of oil continues to fall this morning. We’ll get earnings reports from a lot of retailers this week, along with other companies that keep their books on a January fiscal year end.
Chinese stocks rose about 5 percent this morning, even though Chinese economic data was pretty weak, with exports declining by 8 percent. But, once again, the prospect of more economic stimulus from Beijing is putting a bit of a trampoline under prices. European markets are little changed at this hour.
If the direction of our futures holds up in stock prices throughout the day, our seven-day losing streak may be coming to an end. 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 about 22 points above fair value.
August 7, 2015
The Dow Jones Industrial Average is sliding into the Monthly Jobs Report on a six-day losing streak, losing more than 330 points during that stretch. At 8:30 we’re likely to get one of the more interesting Employment Reports of the year.
Wednesday’s ADP Report was weaker than expected, and although that report isn’t always a great indicator, any new jobs number significantly below the expected 212,000 MAY give the Fed a reason to hold off on a September rate increase. A September hike, based on some statements made recently, seems more and more likely. Also watch the average hourly wage. After flat-lining last month, it’s expected to tick up by two-tenths of a percent. A big increase there might hasten an interest rate hike.
Getting hiked higher this morning are shares of Sotheby’s, up about 5 percent, after a good earnings report. Groupon shares were about 6 percent higher early on today based on their earnings report, but have slumped back to a slight downtick as guidance disappointed.
In case you haven’t noticed the potentially good news for future gasoline prices, oil has had a terrible week and is close to 45 bucks per barrel for the September contract.
The two overseas markets gaining the most ground this morning were China and Greece, each up around 2 percent. Unfortunately, most other overseas markets are lower.
Adjusted for fair value, the S&P 500 futures are down about 3 points, the Dow futures are down 24, and the NASDAQ futures are about 7 points below fair value.
August 6, 2015
After a rather weak Employment Report from ADP yesterday, the Challenger layoff Report this morning said that layoff announcements in the U.S. spiked to a four-year-high last month. More than half of the cuts were Government military jobs. But a big surge of future job-seekers might keep the unemployment rate from declining further. That may influence the Fed on an interest rate hike – but then again, their course may already be set.
Yesterday saw a bloodbath in media names, after Disney issued a gloomy outlook for the cable industry. Disney, Time Warner and Comcast all took it on the chin. This morning’s disaster-du-jour appears to be stock of Keurig Green Mountain. Already down about 30 percent this year, Keurig shares are down another 30 percent this morning on weak sales.
Fitbit shares are looking 10 percent lower on weaker margins. Tesla may lose 7 or 8 percent on downbeat guidance. On the famous other hand, snack-maker Mondelez looks to open about 5 percent higher on word the activist investment firm Pershing Square has taken a 7½ percent stake.
European markets are a little higher. Our futures were pretty flat most of the morning, but perked up a bit along with Europe. Adjusted for fair value, the S&P 500 futures are up about 2 points, the Dow futures are up 19, and the NASDAQ futures are about 6½ points above fair value.
August 3, 2015
If you’ve been on the edge of your seat waiting for the Greek stock market to re-open, you’ve been sitting there for five weeks now. But it’s your lucky day. You can stand up now, although stock prices in Greece are getting off to a flying stop. The Athex Composite Index is now lower by about16 percent on the day, after being off more than 20 percent a couple of hours ago.
We’ll be hearing about July Automobile Sales all day long. Fiat Chrysler will be first to report. Fiat, Ford and General Motors are also expected to have pretty good news on the way.
By 11 this morning we’ll get a couple of readings on the Manufacturing segment of the economy. Neither the ISM nor the PMI surveys are expected to be much changed in July from the June results.
Sears Holdings will announce earnings later this week and is expected to report its first overall profit in about three years. But, don’t get too excited – it’s the result of spinning off real estate. Kmart same store sales are expected to have dropped 6 percent form a year ago, with Sears’ sales down more than 14 percent.
Asian markets were mostly lower overnight. European markets, other than Greece, have turned a little bit higher.
Our futures have been slightly positive all morning, but have lost some of those earlier gains. Adjusted for fair value, the S&P 500 futures are pretty much flat, the Dow futures are up 13, and the NASDAQ futures are about 2½ points above fair value.