Ron's away for the rest of the year. Merry Christmas everyone! Here's to a prosperous 2013!
December 21, 2012
Today may or may not mark the end of the world, but it sure looks like it may be the end of what had been a pretty impressive December stock market rally.
Speaker of the House Boehner will speak at 10 o’clock this morning, and it will be interesting to see if he wears a full suit this morning, after he was effectively “pantsed” by the right wing of his own party last night. Boehner’s proposed “Plan B,” which proposed to only raise taxes on those making over a million dollars per year was not brought to a vote, after it became apparent that the tea-partiers were digging in their heels on ANY increase in tax rates. The problem that the stock market perceives this morning is that they may effectively be digging everyones’ heels into a pool of quicksand at the bottom of the “fiscal cliff.”
Walgreen’s earnings hit a bit of quicksand last quarter. Adjusted earnings of 58 cents per share missed the consensus estimate by 12 cents. Walgreen shares are lower by almost 4 percent pre-market.
Not to be outdone, Research In Motion, the Blackberry phone people, are seeing their stock drop 14% premarket. RIM lost less money than expected last quarter, but announced a change in their subscription model that is getting a “thumbs-down” from traders.
Durable Goods at 8:30, Consumer Sentiment at 9:55, Boehner at 10, end of the world a little later.
At this point, adjusted for fair value, the S&P futures are down about 16 points, the Dow futures are down 145, and the NASDAQ futures are more than 32 points below fair value. Merry Christmas and Happy New Year everyone! (I'll be back January 2nd, 2013.)
December 20, 2012
All I want for Christmas is a budget deal.
The Obama/Boehner dance appeared to change from the Fox Trot to the Viennese Waltz yesterday as the players moved farther and farther apart. Let’s hope we’re not watching a break dance by the weekend.
However, hope springs eternal and our futures have sprung higher again this morning on hopes that everyone will make nice before it’s too late.
The Bank of Japan took a page out of the Bernanke playbook overnight, announcing 120 billion dollars of government bond purchases. That move was anticipated by Japanese stock traders earlier in the week as stocks rallied. The Nikkei Index sank about one percent today on the news.
We’re about to enter the last week of trading for the fourth quarter, so look out for more earnings warnings, which have been a lot more prevalent than in quarters gone by. Later today, we get earnings news from Research in Motion, Nike, KB Homes and Conagra.
The Government’s final word on 3rdquarter GDP comes along with the weekly Jobless Claims Report at 8:30. A little gaggle of economic reports is due at 10, but make no mistake – all eyes will be on events in Washington, D.C.
December 19, 2012
Another day older and another day closer to the cliff. Stock traders appear to be convinced that an agreement in Washington is at hand. Either that, or they’ve gotten a hold of the egg nog a little early and it’s really, really good this year, if you know what I mean.
Whatever, as we wait for Washington, there are a couple of interesting earnings reports out this morning. Last night, software giant Oracle reported an 11 percent increase in software sales. That drove earnings to 64 cents per share, which was 3 cents better than expected. Oracle shares are looking 2 percent higher pre-market.
FedEx also reported in, and although the numbers for last quarter weren’t so hot due to Super Storm Sandy, earnings of $1.39 were still within 2 cents of estimate. FedEx reaffirmed full year guidance and the stock price is, shall we say “up” by more than one percent.
The Treasury Department just announced that they will dispose of all 500 million of its General Motors shares over the next 12 to 15 months. GM shares are up 6 percent pre-market because GM will buy the first 200 million shares from the Treasury at $27.50 per share. The likely sales price of the rest of the shares will still result in a significant loss for taxpayers on the GM rescue deal, as opposed to the profit taxpayers made on the AIG rescue and the TARP program overall.
The pre-Santa Clause rally looks to continue this morning. At this point, adjusted for fair value, the S&P futures are higher by 4½ points, the Dow futures are up 33, and the NASDAQ futures are almost 11 points above fair value.
December 18, 2012
Remember, if you’re one of those people who believes that the world will end on Friday, today’s the last day to sell your stocks if you want to take the cash with you (wherever you happen to be going.)
And if you’re one of those who believes that the budget deadlock in Washington D.C. will come to an end on Friday, you may just have a little ray of hope. Last night, President Obama finally redefined the term “rich people” as only those who make more than $400,000 per year, rather than 200 or 250,000 thousand. By the way, the salary of the President of the United States happens to be $400,000, which I’m sure is a coincidence.
Anyway, Representative Boehner’s latest proposal limited marginal tax rate increases to those making more than a million dollars per year. Of course, “rich” is a relative term. It has a lot to do with who your relatives are. So, we’re getting closer to a bi-partisan definition, but we’re not there yet.
Eli Lilly has announced a 1½ billion dollar stock buyback. Yesterday, Compuware received an $11 per share buyout offer from an activist hedge fund that already owns 8 percent of the company, and word this morning is that Neilsen (the television ratings people) will buy Arbitron (the radio ratings people) for 48 bucks per share. That’s a 26% premium to yesterday’s closing price.
Optimism on the budget talks lifted stocks overseas overnight and we’re headed higher once again as well. At this point, adjusted for fair value, the S&P futures are higher by 7 points, the Dow futures are up 55, and the NASDAQ futures are 18 points above fair value.
December 17, 2012
Overnight, Asian markets were mixed, but the Japanese and Chinese markets were both higher. In Japan, the Liberal Democratic Party’s election win promised even more economic stimulus and monetary easing. In China the Xinhua news service reported that the People’s Bank of China may well be open to more stimulative policies in 2013.
On the famous other hand, or should I say other side of the world, the Eurozone’s trade balance, which was 11 billion euros in August, shrunk to 7.9 billion euros in September, which was well short of the 10.8 billion euro estimate. European stocks are a little lower in response.
A published report says brokers at UBS may find the bonus pool relatively dry this year. UBS is expected to be fined a billion dollars in the LIBOR rate-fixing scandal. Barclay’s, the original-named bad guy in that flim-flam, was fined less than a half-billion dollars back in June.
Sprint will buy the remaining outstanding shares of Clearwire for $2.97 per share. Unfortunately for shareholders, Clearwire had already run up to $3.37 per share last Friday.
Most stocks should be on the rise at 9:30. At this point, adjusted for fair value, the S&P futures are higher by 7 points, the Dow futures are up 54, although more weakness in Apple shares, on a downgrade from Citigroup, are again a drag on the NASDAQ. However, the NASDAQ futures are still almost 5 points above fair value.
December 14, 2012
The tension is growing in the market, as we are just about two weeks from the fiscal cliff. There was one meeting of the powers that be last night. Unfortunately, President Obama doesn’t seem to understand that he needs to cut spending, and the Congressional Republicans don’t seem to understand that they lost the election. So, we are still at an impasse. Of course, ask any Mayan you run into, and they’ll tell you it really doesn’t matter, anyway, since their special deadline arrives a week from today.
What might matter to the market today is the November Consumer Price Index. Expect that prices reported by the Government rose two tenths of a percent if you exclude food and energy, but actually declined two-tenths of a percent if you eat or drive a car.
Alcatel Lucent is the apparent star of the morning, higher about 11 percent as they’ve secured a new round of financing. Of course, 11 percent sounds great, until you realize it’s barely more than a one dollar stock.
Overnight the Chinese manufacturing PMI rose to a one-year high of 50.9, which set off some fireworks in the Chinese stock market. The Shanghai Composite Index was higher by more than 4 percent overnight. That was the biggest daily rally there in three years. Other major markets overseas painted a rather mixed picture. We’re rather mixed as well.
At this point, adjusted for fair value, the S&P futures are higher by a point, the Dow futures are up 23, although Apple shares are 2 percent lower pre-market, which has the NASDAQ futures 5 points below fair value.
December 13, 2012
Well, we have the Fed meeting out of the way, although traders appear to be a bit underwhelmed by Mr. Bernanke’s newfound focus on the unemployment rate. And this morning, it looks like Greece is temporarily out of the way, as well. European leaders agreed to release the latest tranche of bailout funds. So that leaves us to focus on the giant game of chicken that the President and the Congress are playing with our economy.
Yesterday, House Speaker Boehner told colleagues to cancel Christmas plans, so if you are trying to do any year-end financial planning of your own, you should probably plan on spending New Year’s Eve with your CPA®. Oh, that sounds like a party.
Best Buy and Clearwire are each indicated about 12% higher pre-market on rumored and actual buyout offers, respectively.
At 8:30 the Weekly Jobless Claims are expected to hold steady at 370,000, the Producer Price Index is expected to dive a half-percent on lower gas prices, and the November Retail Sales are expected to have risen six-tenths of a percent.
Japanese stock rose overnight, but most everybody else overseas is pulling back a bit. Our futures have been lower all morning, but are almost back to even. At this point, adjusted for fair value, the S&P futures are lower by less than a point, the Dow futures are down only 3 and NASDAQ the futures are less than 2 points below fair value.
December 12, 2012
Chubby Checker’s rendition of “The Twist” only lasted two minutes and thirty eight seconds. Well, the needle will hit the spindle on Ben Bernanke’s “Operation Twist” in less than 3 weeks, after a six-month run. At 2:15 this afternoon we’ll find out what number Bernanke punches up on the jukebox next. Given the state of the economy, it’s pretty clear that he can’t let the music stop now. The Fed will wrap up day two of their two-day meeting today by announcing their interest rate decision at 12:30 and discussing policy at 2:15.
DuPont shares are indicated 2½ percent higher this morning on the announcement of a stock buyback, and Apple is reportedly testing various versions of “Apple TV” which could of, course, be the next “big thing.” Apple shares are indicated almost one percent higher on that report.
Indian stocks were lower overnight, but just about all other major markets overseas are higher. The Dow Jones Industrials and S&P 500 have a five-day winning streak on the line this morning, and it looks like, at least in the early going, we’re headed for six.
That’s because our futures are higher once again, and just above as much higher as they were 24 hours ago. At this point, adjusted for fair value, the S&P futures are higher by 7½ points, the Dow futures are up 55 and NASDAQ the futures are 13½ points above fair value.
December 11, 2012
Stock futures are on the rise this morning as it appears that all sides in the “fiscal cliff” negotiations are getting serious about talking to each other, not posing for photo ops every half-hour and not touring the country giving speeches as if they were still running for something. Or maybe FROM something. Whatever.
One group that will be meeting today and not talking until tomorrow is the Federal Reserve Open Market Committee. The Fed’s latest gimmick to inflate the economy and deflate the currency, known as “Operation Twist” is set to expire at the end of the month. However, it will likely be replaced with an asset buying program that is at least as big, if not bigger. Such a program, if past is prologue, should give stock prices a boost.
There are signs that a lot of people may have gotten their Holiday shopping done early this year. The Goldman Retail Sales Index reported year over year same store sales were 2.5 percent higher last week. That’s down from 3.2 percent the week before and 4 percent during Black Friday week.
China was lower overnight, Tokyo was pretty much unchanged, but most major European markets are higher.
At this point, adjusted for fair value, the S&P futures are higher by 6 points, the Dow futures are up 53 and NASDAQ the futures are 14 points above fair value.
As we hope that our esteemed leaders to stay in Washington long enough to decide what the 2012, let alone the 2013 tax rates will be, a new fiscal crisis may be budding across the Atlantic. The Italian caretaker Prime Minister Monti announced that he has tired of the job, especially since former Prime Minister Berlusconi wants his old job back. That has European, and especially Italian stocks in a bit of a funk this morning, on the theory that Berlusconi might not follow through on Italian economic reforms.
Overnight, Asian stocks were stronger on pretty good industrial production and retail sales reports in China, although some weak trade figures tempered the gains.
It’s a sleepy day for economic reports. But in somewhat of a pleasant surprise, McDonalds same store sales for November came in a lot better than expected, gaining about 2½ percent. Domestic sales were expected to be about one percent lower.
We’ll get earnings from Winnebago a little later on.
Oil and gold are higher, and in case you’re keeping track, Apple is down another 6 bucks premarket at about $526 per share.
Our stock futures are lower, but not be much, and they have been improving over the past 15 minutes. At this point, adjusted for fair value, the S&P futures are lower by almost 2 points, the Dow futures are down 10 and NASDAQ the futures are 7 points below fair value.
It’s not only Friday. It’s Jobs Report Friday. At 8:30 the Labor Department is expected to announce that only about 80,000 to 90,000 new non-farm jobs were created in November. The Unemployment Rate is expected to hold at 7.9 percent. This is, of course, the first post-election Jobs Report. We’ll see if any of the prior number get, shall we say, “adjusted.”
Just before 10, we’ll get the University of Michigan’s first crack at December Consumer Confidence. Expect a small decline to 82 from November’s 82.7
More major corporations are forecasting lower earnings for the coming quarter than analysts are expecting. Yesterday, lululemon guided lower on earnings, although Smith and Wesson guided higher. So, perhaps people are preparing for the fiscal cliff by giving up on yoga, and just arming themselves. Be careful out there. Einstein Bagels is the latest company to jump on the special dividend bandwagon. They’ll pay a special dividend of 4 dollars per share.
Japanese shares were a little lower overnight after the latest earthquake. German stocks were a little lower after the latest growth forecast from the Bundesbank. Our futures are a little lower as we await the jobs report at 8:30.
At this point, the S&P futures are lower by almost 4 points, the Dow futures are down 26 and NASDAQ the futures are all about 5½ points below fair value.
It looked like a mixed market yesterday, and I guess it was, if Apple stock is part of your mix. The Dow Jones Industrial Average rose by over a half percent on a rally in the financials, while the NASDAQ 100 Index fell about three-quarters of a percent. However, that NASDAQ decline was solely due to a nearly 6½ percent decline in Apple shares, which shows you how heavily Apple is weighted in that index. Apple’s loss yesterday wiped out over 35 billion dollars of its market capitalization. Put another way, Apple shareholders lost more yesterday than the individual worth of all but 83 companies in the S&P 500.
Apple will go to court later today, asking a judge to ban the sale of all Samsung phones in the United States due to alleged patent violations. Good luck with that one. Apple shares are down another eight-tenths of a percent pre-market.
Tomorrow, we’ll get the monthly Jobs Report and the probable revisions to the numbers reported before the November election. We’ll warm up today the weekly jobless claims number. Expect 375,000 new claims. Earlier this morning, the Challenger Layoff report told us that planned layoffs rose for the fourth month in a row in November.
The Bank of England and the European Central Bank held interest rates steady this morning.
Overseas markets are mixed, but mainly a little higher. Our futures have been hugging the flat line most of the morning. At this point, the S&P, Dow and NASDAQ futures are all within a point or so of fair value.
President Obama will be meeting with members of The Business Roundtable this morning as part of his continuing advertising campaign for tax increases. Not for everyone, mind you. But I’ll bet that most members of the Business roundtable are in the $200,000 and up club.
We all know that no matter what comes out of Washington over the next four weeks, tax rates on capital gains are going higher.
Of course, if you hold shares of Pandora or Darden Restaurants, you have less of a capital gain to worry about this morning. Yesterday, Darden, which is home to the Olive Garden and Red Lobster chains warned about some unappetizing financial results, which dropped the stock by 10 percent. Not to be outdone, internet music-streamer Pandora missed on earnings and guided lower last night, which has Pandora shares lower by 18 percent pre-market.
Facebook shares, which have been rallying lately, will get another shot in the arm, as Facebook will be joining the NASDAQ 100 next week to replace Infosys, which is switching its listing over to the NYSE.
Gold is back up above the 1700 dollar mark this morning after a big dive yesterday
Asian markets were higher overnight, led by a 3 percent gain in China on some new shifts in Government policy. Europe is also higher. Our futures have slipped a bit over the past fifteen minutes, but are still positive. Adjusted for fair value, the S&P futures are up about 4, the Dow futures are up 46, and the NASDAQ futures are about 2½ points above fair value.
The stock market was perking right along yesterday until a weak ISM number weakened the rally early on. Then, late in the day, more signs of intransigence in the name of compromise out of Washington D.C. sent prices into a little tailspin.
Today, of course, is another day and it started on the other side of the globe with a quarter-percent cut in interest rates by the Australian Central Bank. That move was expected and takes the Aussie short term rate down to 3 percent, which is still about 3 percent lower than ours.
There’s nothing on the economic calendar today, and quite frankly, nothing major due out until the monthly Employment Report on Friday. More than 110 major companies have now announced special or accelerated December dividends, and that trend isn’t nearly over.
Yields on Spanish and Italian bonds continue to fall, which is good news. In fact, Italian yields are as low as they’ve been in about 2 years.
Oil’s a bit lower and gold is down about 17 bucks, closing in on the $1,700 per ounce level. And although overseas markets are mixed, we should recover some of yesterday’s losses early on. Adjusted for fair value, the S&P futures are up a little more than a point, the Dow futures are up 14, and the NASDAQ futures are about 3 points above fair value.
For all the fear and trepidation regarding what the November elections could do to the stock market, November turned out to be just fine, thank you. Yes, the Dow Jones Industrial Average pulled back by 71 points on the month. However, the broader indexes of the S&P 500 and the NASDAQ finished the month with gains, and it looks like we’ll pick up a little more ground this morning.
At 10 o’clock, we’ll find out how the manufacturing sector of the U.S. economy fared in November. Expect that it held on to the slight rate of expansion shown in October with an ISM reading of 51.7.
Overnight, we learned that the Chinese manufacturing sector actually expanded to a sixteen month high in November. The reading of 50.6 means that expansion is weak, but it’s expansion nonetheless.
In Europe, contraction continued with a reading of 46.2, but that number is better than expected, and is an improvement from October’s 45.4.
November car sales will be announce as the morning rolls on. Chrysler just reported an over 14% sales increase, which was better than expected.
China and India lower overnight, but most other major markets overseas are higher. Adjusted for fair value, the S&P futures are higher by almost 7 points, the Dow futures are up 53, and the NASDAQ futures are about 17 points above fair value.
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