December 31, 2008
It will again be a short day the options markets and the bond market will close at 2 o’clock. But in spite of the light volume this week, there’s been a small but consistent trend to the upside. At this point, it looks like that will continue this morning, but watch out for the first time Jobless Claims number at 8:30.
Traders are expecting a number in the high fives – say 585,000 or so. But anything substantially over 600,000 might be enough to snuff out the optimistic mood.
Dell Computer is shaking up its executive suite, with the President of Global Operations retiring and the head marketing guy, shall we say, looking for new opportunities.
The world’s third largest chemical company, LyondellBassell is reportedly looking for 2 billion in debtor-in-possession financing as they prepare for a Chapter 11 filing.
It’s the last day for recognizing capital losses, making 2008 charitable contributions and completing any required minimum distributions from IRA accounts, so make sure you’ve done what you have to do.
At this point, adjusted for fair value, futures on the S&P 500 are up almost 2 points, the Dow futures are up 33, and the NASDAQ futures are just about 3 points above fair value. Happy New Year!
The big news of the morning involves Detroit. Any hey – it’s good news. GMAC is getting $5 billion of TARP money from the Feds in return for 8% preferred stock and another billion will be made available to GM. That’s over and above the allocation of 17.4 billion the Government promised to GM and Chrysler earlier this month. GM and Ford shares are both higher in Europe this morning.
At 9:45 this morning, the December Chicago Purchasing Manager’s Index is expected to show another contraction in Midwestern business activity. Expect a reading there of 33 versus 33.8 last month. And then at 10 o’clock the Conference Board’s December consumer Confidence Index should show some improvement to a reading of 45.5. You may wonder why Consumer Confidence might go up in this economy. However, confidence survey results tend to be inversely correlated to the price of gasoline. You may not have a job, but if you can cruise Gratiot on the cheap, well, it makes you happy.
Japanese stocks closed out 2008 on a positive note, but still lost over 42 percent on the year. European markets are generally one to two percent higher. We should start off the second-last day of trading in the green as well.
At this point, adjusted for fair value, S&P futures are up a just about 10 points, the Dow futures are up 75 points and the NASDAQ futures are 10 points above fair value.
With three more trading days left in 2008, we’ll likely see a little more tax-loss selling as investors made the best out of a bad situation. With the S&P 500 down more than 40 percent this year, most people have plenty of loss positions from which to choose.
Anyone jumped on the Rohm and Haas bandwagon after Dow Chemical announced plans to buy Rohm and Hass is getting a big lump of coal in their stocking this morning. The Dow acquisition is now in doubt after Kuwait scrapped a 17½ billion dollar petrochemical joint venture with Dow. Rohm and Hass is indicated about 20% lower in the pre-market.
Speaking of petro-chemicals, the price of oil is actually up more than 2 bucks, over 40 bucks per barrel, no doubt reflecting the latest hostilities in the Mideast.
Overseas markets are back open after varying Holiday breaks, and they’re all in the green this morning. European markets are higher by one to two percent, and we’re looking just a touch higher, according to the latest futures.
At this point, adjusted for fair value, S&P futures are up a just about a third of a point, the Dow futures are up 26 points and the NASDAQ futures are 5½ points above fair value.
It will be a short day on this Christmas Eve. Stocks trade until 1 o’clock, bonds until 2. At that point, there’s absolutely no excuse for not starting your Christmas shopping.
At 8:30, the numbers roll on November Durable Goods orders. The October number was awful, with a decline of 6.2%. Expect a decline of only about half that much this time around.
A pillar of hope for 2009 is the rapidly falling interest rate on home mortgages. And don’t think that people aren’t noticing. The Mortgage Bankers Association reported this morning that the number of mortgage applications soared 48% during the past week. Re-financings were almost 63 percent higher, as the fixed rate on a 15 year mortgage dipped below 5 percent. Rates are now at the lowest level in over 5 years and are likely to go lower still, and will hopefully go low enough to allow a lot of the people who were suckered into option ARMs a few years ago to refinance into something that makes some sense.
No trading in Germany and France this morning. Japan was off 2 percent overnight, but other markets that are open are turning in a mixed performance. Our futures are a little sleepy this morning as well. At this point, adjusted for fair value, S&P futures are down a point and the Dow futures are 13 points below fair value. Merry Christmas, everyone!
December 23, 2008
It will be a day of data points, starting at 8:30 when we get the final revision of 3rd quarter Gross Domestic Product. The market is expecting a six-tenths of a percent decline in GDP, which would be a tenth of a percent lower than the last estimate.
Just before 10 o’clock, the University of Michigan’s final reading on December Consumer Sentiment is expected to read 58.7, and then at 10 o’clock, we’ll get the November numbers on both New Home Sales and Existing Home Sales. Of the two, the New Home Sales are expected to take the biggest hit, down about 4 percent. Wachovia shareholders will vote on the sale of the company to Wells Fargo today and PNC Financial shareholders will vote on the takeover of National City.
It’s the Emperor’s Birthday in Japan, so stocks there did not trade overnight. European markets are generally a little higher – but not much. We should head a little higher at the open, assuming no big surprises at 8:30.
At this point, adjusted for fair value, futures on the S&P 500 are up 4 points, the Dow futures are up 78, and the NASDAQ futures are just about 5 points above fair value.
December 22, 2008
Around these parts, we’ve gotten used to carmakers reporting losses from their automotive operations. However, for the first time since World War II, it looks like Toyota will slip into the red. This morning, Toyota forecast a loss for the current year, blaming the worldwide economic slowdown, and the stronger Japanese yen. Toyota is now forecasting a 1.7 billion dollar loss for the fiscal year ending March 31st, adding that the bottom of the car market is nowhere in sight.
Walgreen just reported quarterly earnings of 41 cents per share, versus the expected 46 cents, although sales were up 6½ percent.
A story in the Financial Times this morning forecast that British retailers will experience their worst Holiday sales in 30 years. British retailer stocks quickly traded lower. Ireland pumped the equivalent of 7 billion dollars into its three major banks this morning.
There’s nothing big on the economic calendar until tomorrow, and markets overseas are fairly calm. Hong Kong was off more than 3 percent, but Japan was higher overnight and Europe is narrowly mixed. At this point, adjusted for fair value, futures on the S&P 500 are up a point, the Dow futures are up 41, and the NASDAQ futures are just about 2 points below fair value.
December 19, 2008
We’ve seen changeovers, we’ve seen Holiday shutdowns. I can’t remember an auto company shutting all production plants for a month. But that’s where we are with Chrysler. Johnson Controls raised a lot of eyebrows with their outlook for 9.3 million auto sales next year, but they may know exactly what they’re talking about. Just two months ago, JCI had been expecting 12.3 million vehicle sales.
If you’re looking for the silver lining this morning, hey, if the price of oil keeps going, we may be back to dollar-a-gallon gas pretty soon. Light sweet crude is off another buck and a half per barrel this morning at around $34.50 per barrel. Remember $147 oil? It wasn’t that long ago.
Weyerhaeuser cut their dividend from 60 cents to 25 cents this morning and the Bank of Japan, not to be outdone by the Fed, cut their short term interest rate to one-tenth of one percent, which would make it the lowest rate in the industrialized world.
Stocks were higher in Australia overnight, but other major markets followed our trend lower.
Once again this morning, the futures look like they’re pointing to a lower open for stocks, but that’s not the case. At this point, after you adjust for fair value, futures on the S&P 500 are up 10 points, the Dow futures are up 103, and the NASDAQ futures are 18 points above fair value.
December 18, 2008
The weekly jobless claims number will attract a lot of attention at 8:30 this morning as traders look for more clues as to how many jobs the global recession is costing us.
A couple of other meaningful economic reports come at 10 o’clock. The November Leading Economic Indicators are expected to show a decline of 4 tenths of a percent. That would be a slight improvement from October. But still, negative numbers are not good numbers. We’ll also get the Philly Fed Survey, a measure of business activity in the Eastern United States. Expect a reading of minus 40, which would be a slightly worse than the last report.
FedEx beat their recently lowered estimated profit by a penny. But, it’s no big surprise, in that they gave us that lowered guidance just last week.
Henry Paulson will give another speech later today. Hopefully, it will not be broadcast, since every Paulson speech lately seems to have cost us at least 50 to 100 points on the Dow.
Overseas markets are not much moved, and are mixed. We should head slightly higher at 9:30.
Adjusted for fair value, futures on the S&P 500 are up about 6 points, the Dow futures are up 61, and the NASDAQ futures are just about 6 points above fair value.
December 17, 2008
On occasion, over the past few years, there has been some dissension among members of the Federal Reserve Open Market Committee. Decisions have not always been unanimous. Yesterday, however, all members of the Committee evidently agreed – that they are scared half to death.
The Fed made money darned-near free and announced that everything, including the kitchen sink would be ripped up and thrown at the economy to get things kick-started. Granted, taking these extreme measures may well engender unintended consequences. But, the Fed is willing to kick that can down the road to avoid something worse than a recession.
Speaking of the “D” word, yesterday’s November Consumer Price Index, on a seasonally UNadjusted basis fell 1.9 percent. That’s the biggest decline since January 1932. If you don’t remember what the economy looked like then - well, let’s just move along.
Newell-Rubbermaid has lowered its fourth quarter profit estimate down from 32 cents to 8 cents. They will cut up to 10 percent of the workforce and institute a salary freeze. Morgan Stanley reported a loss of $2.24 per share loss, versus the expected loss of 34 cents.
On the good news side, the three month dollar-LIBOR lending index cratered to 1.58 percent, down more than a quarter point from yesterday. That helps holders of adjustable rate loans, which according to the Mortgage Bankers Association, continue to be refinanced at an increasing rate.
We’re going give back a chunk of yesterday’s rally this morning. At this point, adjusted for fair value, futures on the S&P 500 are down 11 points, the Dow futures are down 111, and the NASDAQ futures are about 18 points below fair value.
December 16, 2008
The Fed will likely go where no Fed has gone before at 2:15 this afternoon, cutting the target rate for short-term interest rates in half, down to one-half of one percent. The statement that will accompany the Fed’s announcement
Just within the last five minutes Goldman Sachs reported earnings, or should I say lack thereof, for the quarter gone by. The consensus estimate was a 3½ dollars per share loss, in sharp contrast to a more than 7 dollar profit a year ago. Goldman actually lost $4.97 for the quarter, but at least at this point, the stock is indicated higher.
Good news from Best Buy. They made 35 cents in the third quarter versus the estimated 24 cents. However, they did warn that the current environment is very difficult.
In less than 10 minutes we’ll find out about November’s Consumer Price Index. Remember the good old days, when we worried about inflation? Those days are, of course gone as deflation is the main worry. Expect the November headline CPI to have decreased 1.3 percent, after last month’s 1 percent decline.
We’ll get earnings the earnings outlook from General Electric and ITT later today. Johnson Controls is now predicting a first quarter loss.
Asian markets were mixed overnight, but most European markets are slightly higher. Our futures are indicating a higher open, but Fed Open Market Committee days usually stay pretty close to the flatline until 2:15 or so. At this point, adjusted for fair value, futures on the S&P 500 are higher 12 points, the Dow futures are up 110, and the NASDAQ futures are about 20 points above fair value.
Seldom have so many awaited something so historic that probably won’t make much difference. The Federal Reserve Open Market Committee begins a two-day meeting today. At 2:15 tomorrow afternoon, they are widely expected to cut the “official” target rate for short term interest rates to one-half of one percent. The actual short term market is already setting the rate just above zero, so the move is in part symbolic.
What’s real, however, is when you’ve “made off” with up to $50 billion dollars. I’m referring, of course to the Bernie Madoff fiasco, and the line of those who admit to being bilked is growing. Spain’s largest bank? Three billion. HSBC? One billion. Royal Bank of Scotland? 600 million. At least one charitable foundation was wiped out and will be closing. It just shows that even the big boys don’t always do the best due diligence.
Honeywell reaffirmed their earnings guidance for the year.
Japan’s tankan survey, which is a measure of business confidence, absolutely stunk up the house overnight, plunging from September’s minus 3 to minus 24 this quarter. That’s the fastest dive since 1974. But in spite of that, Japanese stocks rose over 5 percent overnight. Europe is slightly higher, and that’s where we’re likely to go at 9:30.
Yes, the futures look down, but they’re not. At this point, adjusted for fair value, S&P futures are up 4½ points, the Dow futures are up 55, and the NASDAQ futures are about 4 points above fair value.
The Senate said no to the automakers last night, a major-league Ponzi scheme has been uncovered on Wall Street. Bank of America will cut between 30,000 and 35,000 jobs. That’s 11 percent of the combined Bank of America / Merrill Lynch workforce. Let’s see here….there’s got to be some good news somewhere around here today. Well, maybe not.
It looks like the fate of car makers will now rest directly with the Treasury Department. It is still possible that the Administration will change it’s insistence to not use TARP funds to shore up the car business. In the meantime, GM has reportedly hired bankruptcy counsel.
And, as if Main Street mistrust of Wall Street, the government and the SEC wasn’t bad enough, the former Chairman of the NASDAQ stock market allegedly bilked his hedge fund and other wealthy clients out of $50 billion dollars or so. OF course the regulators were all over this one – after, but not before Bernard Madoff’s sons ratted him out.
The Producer Price report will come out at 8:30, later on we’ll get the U of M Consumer Sentiment data. But in front of that, things are not looking good. Overseas markets are off anywhere between 2 and 5½ percent.
At this point, adjusted for fair value, S&P futures are down 33 points, the Dow futures are down 278, and the NASDAQ futures are about 34 points below fair value.
Stock prices hemmed and hawed yesterday, seemingly in response to the hour-by-hour prospect for an auto-industry bailout. This morning, the bluster about a filibuster in the Senate has the futures under some moderate pressure.
Procter & Gamble’s stock is down less than 20 percent this year. That normally would be considered a disaster, but in comparison to most stocks – it’s not that bad. This morning P&G reported that they probably won’t meet their estimated sales gain of four to six percent this quarter. However, they say that their profit target should still be reachable.
The Federal Reserve Open Market Committee meets again next week and it will be interesting to see what, if any steps they take on the apparent march to take short term interest rates to zero. This morning, the three month LIBOR rate dropped another 10 basis points, breaking the 2 percent level. That’s a little stress-reliever for borrowers, and for an economy that is about as stressed as any we’ve even seen.
The weekly jobless claims number rolls at 8:30, but the big economic numbers of the week will come tomorrow.
Overseas markets are mixed without any great big moves one way or the other. Our futures are pointing mildly lower that this hour. Yes, they look a little higher, but they’re not.
At this point, adjusted for fair value, S&P futures are down 6 points, the Dow futures are down 57, and the NASDAQ futures are about 7 points below fair value.
December 10, 2008
I don’t know the dictionary definition of the word “fear.” However, when we get to the point where people are wiling to PAY the government to hold on to their money for three months, it’s safe to say that people are scared. Yesterday, the yield on the three month T-Bill actually went negative for a time, perhaps as the proceeds from year-end tax loss selling are not yet finding their way into other risk assets. The Treasury will auction three-year notes today.
On the good news side of the interest rate story, the 3-month LIBOR rate dropped below 2.1 percent this morning, the first significant downward move in a couple of weeks.
Speaking of risk, the compromise auto bailout bill heads to the House of Representatives for a possible vote today, although things will get a lot more interesting when the bill gets to the Senate.
And just in case you’re wondering what the already spent government bailout money is going to cover, there’s a report this morning that AIG owes major Wall Street investors 10 billion dollars for bets gone bad on the direction of mortgage and corporate debt investments.
Australian mining company Rio Tinto is cutting 14,000 jobs worldwide and Kodak is withdrawing all revenue and earnings guidance for the rest of the year.
Asia was sharply higher overnight. Europe is mixed. Our futures are higher, but are well off their best levels of the morning. Adjusted for fair value, futures on the S&P 500 are higher by about 8 points, the Dow futures are up 99, and the NASDAQ futures are about 11 points above fair value.
December 9, 2008
The Dow traded above the 9,000 level for a little while yesterday. We’ve now risen 9 of the last 11 trading days as we recover from the scary action of November 20th.
But – not so fast.
Last night, Texas Instruments lowered their quarterly forecast to a profit of 13 cents versus the 33 cents that had been expected. FedEx cut its forecast for the year from 5 bucks down to about $4.25.
We’ll get the report on October pending existing-home sales a little later on, as well as a smattering of earnings reports. But once again, talk about the prospects of the auto bailout will likely get a lot of attention.
Oil is holding fairly steady this morning, up about 15 cent to just under 44 bucks.
Overseas markets are mixed, although for the most part, European markets are higher.
It’s one of those funny days when the futures looked higher until about 10 minutes ago, but don’t believe it. They’ve been lower all morning. After you adjust for fair value, futures on the S&P 500 are down almost 6 points, the Dow futures are down 77 points, and the NASDAQ futures are about 16 points below fair value.
December 8, 2008
It looks like we’ll start the morning with another Obama-driven rally. The President Elect’s comments over the weekend about help for the automakers and his “bridge-to-everywhere” infra-structure program lit a spark under markets overseas and should push our stock prices higher in the early going.
3M came out with an earnings warning this morning and announced that another 1,800 workers will be joining the 1,000 3M employees who hit the unemployment line last month. UBS is reportedly going to cut another 4,500 jobs, on top of the 9,000 people already let go. Dow Chemical will also reportedly be cutting 11 percent of its global workforce.
Updates from Texas Instruments and National Semiconductor are on the way later on. We’ll also get speeches from a couple of Fed governors. Also, in a meeting that could make could make watching grass grow sound exciting, SEC Chairman Chris Cox will address a meeting of the American Institute of Certified Public Accountants. We’ll see if we get any interesting comments about “mark to market” accounting for financial companies.
Japan and Europe are up about 5 percent. Hong Kong is up almost 9 percent overnight.
At this point, adjusted for fair value, futures on the S&P 500 are up 25 points, the Dow futures are up 206 points, and the NASDAQ futures are almost 35 points above fair value.
December 5, 2008
It’s not really a question of whether the Monthly Employment Report will be bad today – it’s a question of just how bad will it be. The consensus estimate is a loss of 350,000 non-farm jobs and an unemployment rate of 6.8 percent. A 350,000 drop would be the worst monthly report we’ve seen in almost 30 years.
On the earnings front, Brown-Forman and Big Lots each reported earnings that were just about in line with expectations. Brown-Forman actually raised their estimate for future profit. Brown-Forman makes Southern Comfort and Jack Daniel’s, so maybe that’s not a big surprise.
If you fly a lot, you’re probably looking forward to the rollout of Boeing’s 787 Dreamliner. Be prepared to look a little further forward. For what would be the fifth time, Boeing is reportedly going to delay delivery of the first 787 until the summer of 2010.
Overseas markets are generally lower, and we are drifting in that direction as we await the Employment Report at 8:30. At this point, adjusted for fair value, futures on the S&P 500 are down 8 points, the Dow futures are down 58 points, and the NASDAQ futures are almost 8 points below fair value.
December 4, 2008
Just a month ago, the Bank of England’s target interest rate was 4½ percent. Today, the Bank of England cut rates to 2 percent, which is the lowest rate they’ve had since 1939. Just about a half hour ago, the European Central Bank cut its target rate by three quarters of a percent, to 2 ½ percent.
Many retailers report November sales today. Leading off the morning with a bit of a negative surprise, Costco reported a 5 percent decline in same-store sales. Domestic sales were off 2 percent, but international sales, which had been a source of strength, were down 15 percent. Walmart, on the other hand, reported same store sales, excluding fuel, up 3.4 percent, which is way better than the expected 2.1 percent.
The Detroit 3 will be pleading their case to the Senate Banking Committee again today. Let’s hope that their revised plans are taken seriously, and not just an opportunity for some political grandstanding.
Abode, Philips, Merck, DuPont and Nokia all lowered their outlooks this morning. For Nokia, that’s the second warning in a month.
Weekly jobless claims are due at 8:30. In front of that, AT&T says it will be cutting 12,000 jobs, starting this month.
Asian markets were mixed, but Europe is slightly higher. Unless we get a big surprise at 8:30, we’ll head lower at 9:30. At this point, adjusted for fair value, futures on the S&P 500 are down 16 points, the Dow futures are down 172 points, and the NASDAQ futures are almost 28 points below fair value.
December 3, 2008
The Challenger Gray & Christmas Job Cut Report is out, and it’s not a pretty sight. Total 2008 job cuts are now over 1,000,000. Cuts of 181,000 in November alone were up 61 percent from October. For once, automotive job cuts did not lead the way. Financial service job cuts totaled over 91,000 for the month, with 60 percent of those cuts coming from Citigroup.
Blackberry maker Research in Motion cut its earnings estimate for the quarter. The new target is 83 cents per share rather than the expected 93 cents. RIMM stock has rung up a 67 percent decline over the past three months or so.
There’s lots of stuff going on today. The ADP employment report reflected a loss of 250,000 private sector jobs. On the way are the third quarter productivity report, the ISM services Index, the Fed’s Beige book, a speech by the President of the Richmond Fed – we’ll have plenty of chance to change direction during the day, but for now, the direction is lower.
Asia was higher, Europe is lower. At this point, adjusted for fair value, futures on the S&P 500 are down about 14, the Dow futures are down 120 points, and the NASDAQ futures are 21 points below fair value.
December 2, 2008
The good news his morning is that the Dow futures are higher by about 150 points. The bad news is that gets us back just about what was lost in the last half-hour of trading yesterday.
Ben Bernanke’s hints that the Fed may start buying long term Treasuries to help lower interest rates sent the yield on 10 year Treasury notes to 2.7 percent yesterday. Yes, you can lock up a fine 2.7 percent yield for 10 years. Don’t pay any attention to Mr. Inflation standing there behind the curtain. Things are getting silly out there.
Today, we’ll have car news all over the place. The Detroit 3 make the trek back to Capitol Hill with their individual “road maps” to profitability if only the government will help get them there. And, as if to underscore the urgency of the request, November car sales are expected to be 28 percent lower than a year ago. Those reports will be dribbling in all day.
Sears Holdings was expected to lose 49 cents per share last quarter. Well, make that a 90 cent loss as domestic same store sales were off 9 percent form a year ago.
Japanese stocks lost over 6 percent overnight as the Nikkei Index closed below the 8,000 level. Other Asian markets are lower as well, but European markets are generally higher.
At this point, adjusted for fair value, futures on the S&P 500 are up 14, the Dow futures are up 131 points, and the NASDAQ futures are 19 points above fair value.
December 1, 2008
If you liked the last five trading days, the best five days in 75 years, with the S&P popping up almost 20 percent, you’re not going to like the early going today. Some profit taking is to be expected. We’ll see if it goes on all day.
President-elect Obama’s daily press conferences certainly helped out last week. Let’s hope that he has something scintillating on tap for today. His competition will be speeches from Ben Bernanke and Hank Paulson, which, if my short-term memory is correct, have been rather depressing for stock prices.
For the retailers, Black Friday revenues were unexpectedly up 7 percent from last year. Of course, with some retailers moving the goods at 50 to 70 percent off, it remains to be seen if those sales will lead to profits. Many believe that the consumers will now sit on their collective hands until December 20th or so unless presented with more deep discounts.
At 10 o’clock, the report on October Construction Spending is expected to have declined by one percent.
Oil is down about 3 dollars, at about 51.50 per barrel.
Hong Kong and China were up overnight. Everybody else is lower. At this point, adjusted for fair value, futures on the S&P 500 are down 23, the Dow futures are down 189 points, and the NASDAQ futures are 26 points below fair value.