Ron's away for the rest of the year. Merry Christmas and Happy New Year to all! See you January 3rd!
December 23, 2011
If you’re shopping for stocks, it’s the last shopping day before the Christmas Holiday weekend. The bond market closes at 2 o’clock, although stock traders will theoretically be around until 4.
The last week or so of the trading year has the tendency to “melt up” in what’s known as a “Santa Claus rally,” and in some years, it’s been pretty dramatic. But, there are no guarantees, except that the Durable Goods Report for November will roll out in about 15 minutes. Expect a 2 percent rise, which would be a nice pickup from October. We’ll also get personal income and spending data at 8:30. Expect consumers to have continued outspending their incomes, spending three-tenths of percent more on a two-tenth of a percent income increase.
Sutterfly warned that fourth quarter revenue will fall short of estimates. Walgreen gets a broker upgrade this morning, with Paychex suffering a downgrade.
The Italian Senate approved a 30 billion euro emergency fiscal austerity program this morning, and that has Europe in a good mood. On average, stocks are higher by about one percent. Asian markets were mixed, although the Japanese market was closed.
We’re looking to open nicely higher once again. At this point, adjusted for fair value, the S&P futures are higher by almost 7½ points, Dow futures are up 59, and the NASDAQ futures are about 8 points above fair value.
For once, there are relatively little economic headlines out of Europe this morning, and what there is, is mildly positive. Britain’s Gross Domestic Product edged up to six-tenths of a percent. That a little better than expected We’ll get the third and final verdict on our 3rdquarter GDP in just about 15 minutes. It’s expected to hold steady at the preliminary estimate of 2 percent.
In fact, we’ll have a bumper crop of numbers for all the economic data geeks this morning, including the Weekly Jobless Claims Report at 8:30. This is a number that’s come in at better than expected levels for two weeks in a row. We’ll need to get below 380,000 to extend that streak.
At 9:55 the University of Michigan’s final word on December Consumer Sentiment is expected to read 68 and five minutes later, the November Leading Indicators are expected to slip to three-tenths of a percent from October’s nine-tenths.
Zeeland-based furniture maker Herman Miller shares may see some selling pressure this morning after warning last night that sales for the three months through December 3rdwere almost 5 percent lower, year over year. Backlog is down over 10 percent.
Asia was mixed overnight, Europe is mostly higher and our futures have been positive all morning long. At this point, adjusted for fair value, the S&P futures are higher by almost 4½ points, Dow futures are up 43, and the NASDAQ futures are almost 4½ points above fair value.
We’ve had quite an up and down morning already, and we’re still over an hour away from the open.
Things started off to the downside right after the close of yesterday’s massive rally, when Oracle reported earnings. 54 cents of operating earnings fell 3 cent short of estimates. That’s not great news for any company, but for Oracle, a firm that has been a relentless grower year-in and year-out, it’s kind of like Superman getting hit with a kryptonite snowball.
Then this morning, the European Central Bank announced a 3 year bank lending program to 523 banks, totaling 641 billion dollars, which was about 50% more funding than expected. That, like any hopeful news out of Europe, sent the futures skyward.
But since then, traders have started to think about the fact that 523 European bank NEEDED funding, which isn’t necessarily great news. Moreover, Walgreens missed the 67 cent earnings estimate by 4 cents. That final blow has had the futures pointing lower since about a half-hour ago.
China and most European markets are lower. Trading volume should be on the light side the rest of the week with the start of the Holidays, and to celebrate, Israel based Teva Pharmaceuticals announced a 3 billion dollar stock buyback plan.
At this point, adjusted for fair value, the S&P futures are down 3 points, Dow futures are down 21, and the NASDAQ futures are almost 15 points below fair value.
If you’ve come to believe that stock prices are whipped around based more on rumor and here-say rather than fundamentals – well – that just means that you’ve been paying attention.
This morning, we have the results of the Ifo Institute Index, which is a survey of German businesses regarding how they feel about future business prospects. And, for the second month in a row, the survey has moved higher. Not a lot higher, mind you, but Europe will take what it can get in the category of “good news” nowadays, and that has pushed mainland European markets and our futures are nicely higher this morning.
At 10 o’clock, the November Housing Starts number is expected to hit an annualized rate of 635,000. That would be a bit better than October’s 628,000.
Better than expected earnings are out from Navistar and ConAgra this morning. Rad Hat reported 28 cents, which was a 2 cent beat. However, they warned about current quarter sales and that has the stock under pressure this morning. General Mills was a miss of the morning, earning 76 cents versus the expected 79 cents.
Oil has bounced back almost a buck and a half per barrel this morning, now over 95 dollars per barrel. Gold is up a little as well, back over $1,600 per ounce.
Asian markets were mixed overnight, but Europe is mostly higher. At this point, adjusted for fair value, the S&P futures are higher by 11½ points, Dow futures are up 94, and the NASDAQ futures are 21 points above fair value.
It will be a quiet day, if you’re looking for economic or earnings reports, in what should be a fairly quiet week. The bond market will close early on Friday, but stocks will trade a normal schedule this week, albeit likely on light volume.
At 9:30 this morning, the European Finance Ministers will hold a conference call which will attract way too much attention from traders over here. Then at 10 o’clock, we’ll get the result of a Confidence Survey from America’s Home Builders. And heck, if THEY can have confidence it must be time for the rest of us to man-up.
A survey conducted by the firm comStore reports that during the period November 1stthrough last Friday, consumers spent 31 billion dollars online. That’s a 15% increase from last year. So, even if people don’t have jobs, they’re evidently spending like they do.
The death of North Korea’s Kim Jong-il contributed to a decline in Asian markets overnight. However, European market are higher. Our futures turned positive about 2 hours ago.
At this point, adjusted for fair value, the S&P futures are higher by 3½ points, Dow futures are up 33, and the NASDAQ futures are 11 points above fair value.
I would love to see someone do a survey that asked people how much THEY think that the cost of living has risen over than past year. At 8:30 this morning, we’ll find out how much the Government thinks the cost of living has risen. It’s expected that in the Government’s eyes, consumer price have only risen one-tenth of one percent last month. That would, of course, extrapolate to just a touch over one percent per year, and lend credence to the definition of Washington D.C. being an area of 37 square miles, surrounded by reality.
In any event, inflation does seem to have slowed incredibly since Congress tied Social Security Benefit increases to the CPI. Such a coincidence.
This big week of initial public offerings wraps up when Zynga starts trading today. The IPO priced at 10 bucks per share, which was at the high end of estimates. Michael Kors, which IPO’d yesterday at 20 dollars finished the day at $24.20, or a 21 percent gain. Be careful, however. The vast majority of internet related IPOs this year haven’t traded north of their initial price for long.
Adobe Systems earned 67 cents last quarter. That beat estimates by 7 cents. United Rentals is buying RSC Holdings at a 58% premium to last night’s closing price.
Asia higher, Europe mixed. Our futures started today higher and have been rising for much of the morning. At this point, adjusted for fair value, the S&P futures are higher by 11 points, Dow futures are up 92, and the NASDAQ futures are almost 18 points above fair value.
December 15, 2011
Federal Express shares are indicated about 3½ percent higher pre-market. FedEx delivered $1.57 in quarterly profit. That beat estimates by a nickel and appears to be another indication of how much shopping of all stripes is being done online.
There are a couple of deals to talk about. Lam Research is acquiring Novellus. That will result in the fourth largest computer chip equipment manufacturer. FujiFilm is expanding their imaging capability, acquiring a company call Sonosite. Sonosite shares are looking to open about 27% higher.
At 8:30, the Weekly Jobless Claims Report expected to check in at the 390,000 level. At 10 o’clock the Philly Fed Survey is expected to perk up to a reading of 5, from last month’s 3.6
Gold and Oil, yesterday’s whipping boys, are both higher this morning, but only by about one-half of one percent. That, of course, is because the dollar is down against the euro, which in turn has European stocks and our futures pointing higher. Got that? Get used to those relationships, at least for another week or so
Asian markets had a rough go overnight on a bad PMI number in China, but we’re looking at a solid open on the way.
At this point, adjusted for fair value, the S&P futures are higher by 9 points, Dow futures are up 83, and the NASDAQ futures are about 15½ points above fair value.
Tomorrow is the big “data day” of the week, so we’re looking for (maybe hoping for) a quiet day of trading today.
The most interesting price action so far today has been in physical assets.
Oil is back down under $100 dollars per barrel this morning, down a buck and a half, on word that OPEC has agreed to hold production right around current levels. But more interestingly, an ounce of gold, which was around $1,900 as recently as September and $1,800 a month ago is down another 30 bucks or so just this morning, in the area of $1,630 per ounce. That’s about a 15% decline from the top.
More news is out on the mother of all “bear markets.” That, of course, is the housing market. While mortgage applications rose more than 4 percent last week, refinancings carried the water. Applications for mortgages needed to purchase new homes fell by more than 8 percent. Refi’s rose more than 9 percent.
First Solar warned about future results this morning not only for the quarter, but the year. Pre-market traders are warning us that First Solar shares are likely to open about 20 percent lower.
The vast majority of overseas markets are lower. Our futures, which were positive early on, are now indicating a pretty flat open. At this point, adjusted for fair value, the S&P futures are down a point, Dow futures are down 8, and the NASDAQ futures are about 5 points below fair value.
Happy 58thbirthday, Ben Bernanke. Clearly, he’s a man who knows how to celebrate. Ben will be getting together today with 11 of his closest chums to raise a glass or two of Perrier and plot the next round of economic quantitative easing. Don’t expect any big announcement in the Fed Statement at 2:15 this afternoon. Heck, Bernanke isn’t even holding a press conference today. Probably doesn’t trust himself to speak publicly after all that Perrier. Anyway, no big next-steps are expected out of the Fed before January.
The Germans are evidently trusting that the economic downturn that everyone sees coming won’t be THAT severe. The ZEW survey of economic expectations broke a nine-month losing streak this morning, rising 1.4 points.
At 8:30, the November Retail Sales Report is expected to hold steady at a pretty healthy one-half of one percent increase. Best Buy just reported 47 cents of quarterly operating earnings. That was four cents shy of estimates and Best Buy stock is looking to open perhaps as much as 9 percent lower this morning. DuPont shares looking higher as DuPont reaffirmed their strong outlook for long term growth.
Outside of India, Asian stocks fell overnight. Major European markets, however, are solidly green this morning. Our futures have been holding steady at higher levels At this point, adjusted for fair value, the S&P futures are higher by about 7 points, Dow futures are up 60 and the NASDAQ futures are 17 points above fair value.
Markets around the world are digesting last Friday’s European fix-it plan. Asia followed our Friday rally with a mixed performance higher overnight, but once the sun swung around to the Western hemisphere, the doubters started to point out that “the plan” really involves a lot of promises, but not a lot of concrete action. Perhaps they used the Washington D.C. model.
In any event, European markets are off anywhere between one half and two percent this morning and our futures are drifting lower most of the morning.
There aren’t any significant economic reports on the agenda today. We will get a look at the Federal budget for November, which is expected to show a monthly deficit of about 140 billion dollars. Please leave that kind of spending to the professionals. Do NOT try that at home.
However, if you like initial public offerings, this is the week for you. Eleven companies are planning IPOs this week, which would be the most in any week in four years.
If you prefer dividends to the IPO market, note that Ingersoll-Rand is increasing their dividend by 33 percent, to 16 cents per share.
At this point, adjusted for fair value, the S&P futures are lower by about 8 points, Dow futures are down 61 and NASDAQ futures are about 13 points below fair value.
All they had to do is get 27 different people, all who represent different countries to agree to change their respective country’s Constitution and agree to run their economies with some fiscal discipline, answering to a foreign body.
That should be easy, right?
Of course, in Washington, we can’t get two political parties who represent the SAME country to even look at each other.
Nevertheless, it looks like an all-night screaming session has reached somewhat of an agreement. England has agreed to not agree – they won’t sign on. A few other countries basically said “sounds good, but we’ll get back to you.” However, there is a general agreement, and whether the I’s get dotted and the T’s get crossed, it’s enough to get stock prices moving higher this morning.
Texas Instruments said last night that their cellphone chip business is fine, but slow PC sales will put the crimp on this quarter’s earnings. Traders will likely put the crimp on TI shares early on. This morning, DuPont warned about the quarter and Dupost stock is looking about 4% lower premarket.
The University of Michigan’s first look at December Consumer Sentiment is expected to read 65.8 at 9:55 this morning. The November number was 64.1.
Asia was lower, Europe is higher. We’re way off our earlier levels, but the futures are still pointing north. At this point, adjusted for fair value, the S&P futures are higher by 9½ points, Dow futures are up 79 and NASDAQ futures are about 11 points above fair value.
Oh, why break a trend – let’s start with news from Europe this morning. As expected, the Bank of England held interest rates steady at one-half of one percent this morning, and the European Central Bank cut rates by a quarter-percent, to an even one percent. That’s the second successive cut for the Eurozone, as they now seem to realize that something fiscal is amiss among them.
Of course the world awaits tomorrow’s promised Euro repair plan. Let’s hope it’s substantial and also believable.
Believe that Smithfield Foods is doing pretty well. They reported 76 cents in operating profit for last quarter, which beat estimates by 7 cents. Costco reported in-line profits of 80 cents on revenue that was a sliver lower than expected.
McDonald’s same store sales continue to impress. Global November same-store sales rose 7.4% at Mickey-D’s. Domestic sales were up 6½ percent. Both numbers far exceeded expectations
At 8:30, the weekly Jobless Claims are expected to decline to 395,000. Of course, we expected that LAST week, when they rose to 402,000.
Asian markets were slightly lower overnight, European markets are narrowly mixed, and our futures have wavered quite a bit over the past couple of hours.
At this point, adjusted for fair value, the S&P futures are higher by a point, Dow futures are up 21 and NASDAQ futures are about 4 points above fair value.
College bowl season hasn’t started yet, so if you’re looking for a big get-together, it looks like Europe is the place to be. The Greek Parliament is voting on the new austerity budget, and the pre-meetings start today in front of the big European Summit. The promise out of France today is that the Summit will be fruitful, it will result in big policy changes and that all will be well with the world and that everyone’s children will henceforth be above average. That type of promise has supported rising stock prices lately. Let’s hope it’s not a case of buy the rumor and sell the news on Friday.
In a case of buy the house or refinance the house, the Mortgage Bankers Association reported this morning the mortgage applications rose almost 13 percent last week. Purchase mortgage applications rose more than 8 percent, with refi’s up more than 15 percent.
Citigroup announced a 400 million dollar charge this morning and will usher 4,500 employees to the unemployment line. That’s a much deeper cut than expected. ON the famous other hand, Monsanto raised their first quarter earnings guidance fairly significantly.
Asian markets were mainly higher overnight, but Europe has just turned lower.
Our futures we nicely higher early on, but have lost most of their mojo. At this point, the S&P down 5, Dow down 36 and NASDAQ futures are about 5½ points below fair value.
Yesterday afternoon, Standard & Poor’s warned the 15 Eurozone members that aren’t in the soup already that there’s a sovereign debt rating downgrade in their future if everyone doesn’t play nice at the European Summit this coming Friday. Our stock market came off its intra-day highs in response, but then rebounded, recognizing that S&P was just doing their job of confirming what everyone knew already.
Evidently the news of a possible economic slowdown has reached all the way down under. Overnight Australia’s Central Bank cut its policy interest rate by a quarter point to four and a quarter percent. That’s the second cut in a month in Australia.
Ford Motor is denying this morning a Wall Street Journal story that a search is underway to identify Alan Mulally’s successor. Evidently the Journal doesn’t understand that Mr. Mulally will live and want to work forever.
There’s evidently trouble in the Garden of Olives. Darden Restaurants warned that second quarter earnings will be 41 cents. That’s way short of the 54 cent estimate. Apparently someone’s been spending too much time at the all-you-can-eat pasta bar
Stocks in Great Britain are a little higher, but most overseas markets are lower. Our futures are bucking that trend so far.
At least for now, adjusted for fair value, the S&P futures are higher by about a point and a half, Dow futures are up 15 and the NASDAQ futures are about 5 points above fair value.
Anyway, the hope is – and it’s only a hope – that the European odd couple of Sarkozy and Merkel will come up with a magic plan later today and that it gets adopted at the European summit on Friday. Meantime, the European ISM Index for November improved a little bit from October but still indicated economic contraction with a reading of 47. We’ll get the ISM number for our services sector a little later this morning.
Dollar General is out with a good earnings report this morning, earning 50 cents per share, which was 3 cents better than expected.
Chinese and Indian stock markets declined overnight, but most of Europe is higher.
Our futures have been slowly rising most of the morning, and we’re looking to start the week with some significant gains. Right now, adjusted for fair value, the S&P futures are higher by almost 16 points, Dow futures are up 129 and the NASDAQ futures are about 30 points above fair value.
Welcome once again, my friends to the First Friday of the Month. That, of course means that the Monthly Employment Report is ready to roll in just 10 minutes from now. Whether early Holiday season hires or just a general improvement in the economy gets the credit, we’re expecting that 125,000 new jobs we’re created in November. That would be more than the total of the last twelve months. The Unemployment Rate, however, is expected to hold steady at 9 percent.
Not so steady is the valuation of the Playbook inventory at Research in Motion. RIMM will take a special write-down this quarter, and they now warn that full-year earnings will not meet the roughly $5.60 expectation.
All that being said, we’ll again take our early direction from Europe. The German Chancellor suggested this morning that when European Union leaders meet in Brussels next week, there will be a new plan on the table that may bring the various Euro national economic policies under firmer control. Games always seems to go a bit more smoothly when you put a referee in charge.
Asian markets were mixed overnight, but Europe is higher on the order of one to two percent.
Absent a disastrous number on jobs at 8:30, stock prices will be heading significantly higher at 9:30. Right now, adjusted for fair value, the S&P futures are higher by about 15 points, Dow are up 145 and the NASDAQ futures are nearly 30 points above fair value.
Start with some monetary easing in China. Add in a coordinated liquidity plan from a bunch of central banks. Sprinkle in a bunch of hedge funds that were short the market and POOF! Yesterday’s monster rally certainly made the bulls feel better, although trading volume remained petty light for a day when the Dow rose almost 500 points.
We learned this morning that the Chinese Purchasing Managers Index moved into negative territory in November. That’s the first sign if contraction in China in a long time, and may explain the monetary loosening move made yesterday. Our November ISM will be announced at 10 o’clock and is expected to check in at 51.5. Anything over 50 suggests economic expansion.
This morning, Lululemon Athletica reported 27 cents per share of operating profit, which was 2 cents better than expected, but sales fell short of projections and Lululemon shares are indicated more than 11 percent lower pre-market. Limited declared a special 2 dollar per share dividend today and Disney hiked their dividend by 50 percent.
Retailers will be reporting November sales today. So far the surprise is Target, which reported 1.8% increase and that was a full percent lower than expected
Jobless claims come at 8:30. Expect 390,000 new claims.
Our futures, which were lower early on, have been floating right around the flat line during the past hour or so. Right now, adjusted for fair value, the S&P futures are down a fraction of a point, Dow are up 9 and the NASDAQ futures are about 4 points above fair value.
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