December 31, 2014
It’s the last day of the year for those charitable contributions, finishing your tax-loss selling, and thinking up those resolutions that you’ll probably abandon by the time the snow piles up around here.
As we head to 2015, keep in mind that the third year of a President’s term is usually a good one for stock prices. Also, a year ending in the number ‘5’ has a pretty good track record as well. Take those two tips and add all the prognostications you’ll hear on radio and television over the next few days and you’ll have something that’s about as valuable as the price you paid for them. In other words, stock prices remain a function of the prospects for interest rates and corporate earnings, neither of which pay any attention to the calendar on the wall.
If you’re a bond trader, or active in futures trading, you can get a head-start on your New Year’s partying today. However, the New York Stock Exchange will keep to its normal 4 pm closing time.
The 8:30 weekly Jobless Claims Report is expected to tell us about 286,000 new claims. The Chicago PMI and the Pending Home Sales will finish the 2014 economic reporting calendar by 10 o’clock.
No trading today in Japan, Thailand, Brazil, Philippines and Indonesia today and a bunch of other markets are holding half-day sessions. But the markets that are open are generally trading a little higher.
Adjusted for fair value, S&P 500 futures are higher by about 7½ points, the Dow futures are up 52, and the NASDAQ futures are now about 12 points above fair value.December 30, 2014
If you thought that the crash in oil prices would be bad news for the oil services business, well that’s pretty good thinking, and news of the leakage is starting. Smallcap oil services firm Civeo announced yesterday that future revenue and earnings will be far below estimates, and that they will let go 45 percent of their workers in the U.S. and 30 percent of their Canadian workforce. Civeo shares are suffering a little blowout pre-market. They’re down more than 35 percent.
At 9 o’clock, we’ll finally get the October Case-Shiller Home Price Index. It’s expected to estimate that home prices rose 4 ½ percent year-over-year in the U.S.
At 10, the Conference Board’s December Consumer Confidence Survey is expected to take a big jump higher to a reading of 93. Those sentiment readings are often inversely correlated to the price of gasoline, so a pretty good number is understandable.
Most markets overseas are lower. Japan closed 1½ percent lower and Portugal, which is losing about 2 percent, although most of Europe is off about one percent. Our futures are much more subdued. Adjusted for fair value, S&P 500 futures are lower by almost 3 points, the Dow futures are down only 11, and the NASDAQ futures are now about 3 points below fair value.
December 29, 2014
After a week of solid gains, we may be getting off to a slightly lower start today.
Although stock prices are known to rally in the Christmas week, the week between Christmas and New Year’s Day is known for that kind of rally.
Interest rates in Greece took a big step higher this morning after the Greek Parliament was unable to choose a new President. That means the country is headed for a snap general election on January 25th. The 10 year Greek bond is now yielding about 9 percent.
The Dallas Manufacturing Survey is about all we have to look at as far as economic news this morning.
It will be a short week of trading with the market, of course closed on Thursday. Trading volume should be light all week, which can lead to some price volatility, although so far this morning, the futures have been relatively calm, but are pointing a little lower.
Adjusted for fair value, S&P 500 futures are lower by almost 3 points, the Dow futures are down 22, and the NASDAQ futures are now about 8 points below fair value.
December 24, 2014
Santa Claus is apparently on his way to our stock market, although overnight, he apparently skipped China and India. And with a lot of European market already closed, it looks like a bunch of bourses will be left with a small lump of coal in their figurative stockings.
Only two data points left for the week and one is already out. The Mortgage Bankers Association reported this morning that the average 30 year mortgage is being written at an interest rate that hasn’t been this low in a year and a half. The average rate for a conventional loan is now 4.02 percent. Applications for home purchase mortgages AND refinancing loans both rose one percent last week.
At 8:30, the weekly Jobless Claims Report is expected to reflect 290,000 new applications for Unemployment benefits for the past week.
It’s a short day of trade as the stock market will close at 1 o’clock this afternoon so that I can start my Christmas shopping. The bond market closes at 2.
At this point, adjusted for fair value, S&P 500 futures are higher by almost 6½ points, the Dow futures are up 46, and the NASDAQ futures are now about 11 points above fair value.
December 23, 2014
Some people think that if stocks are at a record high, they must be primed for a fall. That theory has now been wrong 49 times this year, as the S&P 500 closed at its 50thall-time high of the year yesterday. With a 154 point gain, the Dow Jones Industrial average is within spittin’ distance of the 18,000 level, and if the future are any indication, we could well open above that level.
Walgreens shares will likely have a nice open. Walgreen’s reported quarterly operating earnings of 81 cents, which was 7 cents better than expected. Walgreen’s shares are already up 29 percent this year and are indicated up another 1 ½ percent pre-market.
The Government’s final word on third quarter Gross Domestic Product will be announced at 8:30. Expect a pretty healthy 4.3 percent increase in our economic output.
We’ll also get the Durable Goods Report and Consumer Sentiment this morning as we pack just about all the week’s data into one day, in advance of Christmas.
China was sharply lower overnight, but most other markets overseas are higher this morning. We should open higher as well.
At this point, adjusted for fair value, S&P 500 futures are higher by about 4½ points, the Dow futures are up 52 points, and the NASDAQ futures are now about 14 points above fair value.
December 22, 2014
Christmas week, other than being a short week for trading, has the reputation of being a week of rising stock prices. At least in the early going this morning, it does look as though prices will head North once again. Maybe not all the way to the North Pole, but North nevertheless.
The pharmaceutical sector has been a market darling this year, but what traders give, they can also take away. Gilead Pharmaceuticals and AbbVie are headed in opposite directions this morning, on word that Express Scripts will stop buying Gilead’s very expensive treatment for hepatitis C, in favor of a still expensive, but slightly less expensive drug from AbbVie. AbbVie shares are about 4 percent higher pre-market, while Gilead in slumping about 9 percent.
Achillion Pharmaceuticals has had a wild ride pre-market ride, up more than 50 percent at one point today. At nearly 16 bucks per share, Achillion shares are now about 12 percent after a positive test for a new drug. Those shares went for about 3 dollars just six months ago.
Oil services firm Tesco warned about fourth quarter results this morning. That’s likely to be a recurring theme in that sector due to the crashing price of oil.
Most markets overseas are higher, and we should get off to a higher start as well.
At this point, adjusted for fair value, S&P 500 futures are higher by nearly 9 points, the Dow futures are up 86 points, and the NASDAQ futures are now about 10 points above fair value.
December 19, 2014
We were wondering if the Santa Claus rally would ever get here – well, never bet against Santa Claus. Yesterday morning’s big push higher never let up throughout the day as the Dow Jones Industrials tacked on another 421 points.
A couple of somewhat sour earnings reports aren’t doing a lot to stall the rally, either. Blackberry reported that their planned turnaround strategy is starting to take hold. They reported a small profit for the third quarter, namely a penny per share, which was better than the expected 5 cent loss. However, sales were down 34 percent year on year and were lower than expected. Blackberry shares are looking about 5 percent lower pre-market. Finish Line may also hit the starting line about 5 or 6 percent lower after their report.
Looking to rise pre-market are shares of Ally Financial. The Government has announced that it will sell its remaining stake in Ally, and thus free it from the TARP program, which you probably thought wasn’t even around anymore.
The Kansas City Fed Manufacturing Survey will be released at 11 this morning, but that’s about it for economic data as we head toward Christmas week.
Asia followed us higher overnight. Europe is painting more of a mixed picture. We’ll apparently paint the canvas green once again, at least in the early going At this point, adjusted for fair value, S&P 500 futures are higher by nearly 12 points, the Dow futures are up 76 points, and the NASDAQ futures are now about 19 points above fair value.
December 18, 2014
Everything seems a bit calmer this morning. Yesterday, Janet Yellen assured everyone that the Fed was paying attention and would eventually take action, but wasn’t in any hurry to remove the zero-interest rate punch bowl. Overnight, Vladimir Putin assured the Russian people that while they are currently in pain, the pain will go away in two years. Coincidentally, a lot of Americans feel the same way, although at least they can now import good cigars in the meantime.
Put it all together, and stock prices, which rose about two percent yesterday are looking to surge again this morning.
RiteAid shares are tacking on almost 10 percent pre-market after rising 4 percent yesterday. They beat estimates and guided higher. Accenture shares are also indicated higher on a good earnings report, although Accenture warned that currency issues could pressure full year results.
Weekly Jobless Claims at 8:30 are expected to total 295,000. We’ll get the Philly Fed Survey and the Leading Economic Indicators at 10 this morning.
Chinese stocks were a little lower overnight, but everybody else is seeing green. At this point, adjusted for fair value, S&P 500 futures are higher by about 25 points, the Dow futures are up 196 points, and the NASDAQ futures are now about 55 points above fair value.
December 17, 2014
Up and down and all around was the order of the day yesterday, as traders tried to keep track of oil prices that reversed direction a couple of times, as did the value of Russian currency, which is now around 66 rubles to the dollar. Ongoing danger of a currency crisis and an upcoming Greek election, their possible withdrawal from the European Union and possible debt default, will likely keep things volatile at least through the end of the year.
In the meantime, we’ll get a press conference at 2:30 this afternoon from Janet Yellen, which will follow the Federal Reserve’s 2:00 o’clock proclamation regarding interest rate policy. While Fed officials have gone out the their way to hint that interest rates will start rising by mid-2015, listen for any reassurances that the Fed will still be “data-dependent” in their decision making.
One piece of that data comes at 8:30, with the release of the November Consumer inflation figures. Expect overall prices to have declined one-tenth of a percent in November, but to have increased a tenth of a percent absent food and energy.
FedEx disappointed on earnings this morning, missing the $2.22 estimate by 8 cents. China’s Baidu is taking a stake in Uber, which is now carrying an inferred value of about 40 billion dollars. Go figure.
Asia was, on average, a little higher overnight. Europe is a bit lower. Our futures are off their earlier highs, but at this point, adjusted for fair value, S&P 500 futures are higher by about 11 points, the Dow futures are up 93, and the NASDAQ futures are now about 23 points above fair value.
December 16, 2014
You would think that with a couple of quarters of strong GDP readings, non-existent inflation and low gasoline prices, our stock market would be a pretty happy place. And it probably will be again, once we find out what’s going to happen to our good friends in Russia.
For months, the West tried to find the right combination of sanctions that would bring Mr. Putin to heel. Well, they may have hit on something. The diving value of oil has the Russian economy is a nose-drive. Overnight, Russia raised its benchmark interest rate from 10½ percent to 17 percent in order to stem capital flow out of the country. Well, that didn’t work. The ruble, which was valued at about 35 to the dollar a month ago, is now at 72 to the dollar, after hitting near 78 to the dollar earlier this morning. What’s next? No doubt more action by the Russian Central Bank. But with a situation this volatile, stock traders are much happier with dry powder than long positions, and stock prices worldwide, outside of China, are slumping.
The price of West Texas Intermediate oil is at a 5½ year low, going for less than 54 dollars per barrel. Speaking of oil, Respol is buying Canada’s Talisman Energy for a 56 percent premium in an 8.3 billion dollar deal.
Our stock index futures have been whipping around wildly most of the morning. For instance, the Dow Jones futures were up about 75 points earlier. But then, on word of the collapsing value of the ruble, the futures dove deep into the red before recovering just a bit. At this point, adjusted for fair value, S&P 500 futures are now lower by about 10, the Dow futures are down 55 points, and the NASDAQ futures are now about 20 points below fair value.
December 15, 2014
The Merger Monday headlines feature two private equity firms this morning, with one selling and one buying. Over the weekend, Berkshire Hathaway announced the acquisition of Charter Brokerage from a private equity firm. This morning, we’re looking at the biggest private equity purchase of the year. BC Partners has reportedly out-bid a number of other private equity firms and will acquire Petsmart for 8.2 billion dollars. Petsmart shares are almost 5 percent higher pre-market.
The price of oil is actually a little higher this morning on word of the closure of a couple of Libyan oil terminals that are under fire (if not on fire.)
Another two day Fed meeting starts tomorrow, which will make Wednesday afternoon rather interesting. Later this morning, the Empire Manufacturing survey is due. The November Industrial Production numbers at 9:15 are expected to be pretty strong, with a seven-tenths of one percent increase.
Our futures are currently almost as much above fair value as they were below it at this time on Friday. Perhaps traders are convinced that the big sell-off was a bit of an over-reaction. Of course, where we end the day is more important than where we start. But, prices will start higher this morning. Adjusted for fair value, S&P 500 futures are now higher by about 11, the Dow futures are now up about 98 points, and the NASDAQ futures are now about 29 points above fair value.
December 12, 2014
Yesterday’s big early rally faded into the close and that fade looks to continue in the early going today.
Also fading once again is the price of a barrel of oil. Earlier this morning, oil dipped below 59 bucks, although it’s recovered a little since then. Suddenly, oil’s bottom is everyone’s favorite guessing game. For a little context here – the last time oil left a big skid mark was six years ago, when the price of a barrel fell from $145 bucks to just over 30 dollars per barrel in less than six months.
At 8:30 this morning, expect the November Producer Price for Final Demand to read about one-tenth of a percent higher. And just before 10 we’ll get the University of Michigan’s preliminary reading on December Consumer Sentiment. It’s expected to creep up to a reading of 89 or so.
Adobe released a better-than-expected earnings report last night and SeaWorld shares are indicated higher this morning on word that their CEO is being kicked upstairs and a search for a new CEO has begun.
Overseas markets are mixed, but Europe is generally lower. Adjusted for fair value, S&P 500 futures are now lower by almost 12 points, Dow futures, which were 150 points lower earlier this morning are now down about 104, and the NASDAQ futures are now about 26 points below fair value.
December 11, 2014
Let’s say that you’re looking to stretch the value of your dollars on your next overseas vacation. Perhaps you should consider a trip to the garden spot known as “Russia.”
Since January, the Russian ruble has lost more than 40 percent of its value against the dollar, as falling oil prices continue to undermine (pun intended) the very resource-dependent Russian economy. The short term interest rate in Russia was raised to 10½ percent today as the government struggles to rein in inflation, attract cash to the country (or at least keep it from leaving.)
Teen retailer Wet Seal may be leaving the land of the living soon. Wet Seal is warning this morning about a possible bankruptcy filing.
Another retailer may be turning things around. With their new CEO at the helm, Lululemon reported 42 cents per share in profit, which was 4 cents better than expected on sales that fell a little short of estimates. Shares of Staples are higher by almost 12 percent pre-market on news of an investment by an activist investor that may press for a merger with Office Depot.
At 8:30, the Weekly Jobless Claims are expected in at 295,000. Also at 8:30, November Retail Sales are expected to have risen four tenths of a percent.
Stocks in Greece are ANOTHER 5 percent lower this morning. We should see a little recovery from yesterday’s drubbing at 9:30, although our futures have weakened a bit. Adjusted for fair value, S&P 500 futures are now higher by 3½ points, Dow futures are up 39, and the NASDAQ futures are now about 2 points above fair value.December 10, 2014
It’s yet another quiet day for economic news, but it doesn’t seem to much matter. Stocks’ recent downdraft looks likely to continue in the early going.
The one data point that is out there is the report from the Mortgage Bankers Association. Last week, mortgage applications rose more than 7 percent. However, the increase in applications for loans to BUY a house rose only 1 percent, while refi’s rose 13 percent. The total of new purchase mortgage loans this year is just over a trillion dollars. That’s down from 1.8 trillion in 2013 and less than half of the total of 2.7 trillion in 2006. So yes, the housing market is better, but it’s a far cry from where it was.
Speaking of which, home builder Toll Brothers is out with a slightly disappointing earnings report. Costco, on the famous other hand reported $1.12 of quarterly operating profit, which was 3 cents better than expected. Yum Brands and Krispy Kreme shares could be under some pressure on lower guidance.
Chinese stocks gained back over half of yesterday’s losses today, but Tokyo was lower and yesterday’s basket case, Greece, is down another 3 percent this morning.
We probably won’t lose three percent, but we will likely start the morning lower Adjusted for fair value, S&P 500 futures are lower by almost 7 points, Dow futures are down 53, and the NASDAQ futures are now about 10 points below fair value.
December 9, 2014
It will be a rough ride in the early going, and the trouble started overseas. The Chinese Government, in spite of yesterday’s week import and export numbers, effectively tightened borrowing rules today. That sent stock prices tumbling by more than 5 percent in Shanghai.
Not to be outdone, the economic accident waiting to happen again reared its ugly head in Greece. Worries about the need for another European Union bailout and doubts about its availability has the Grecian market lower by about 10 percent at this hour.
On the earnings front, Autozone is out with a better than expected report. $7.27 per share in profit beat estimates by 11 cents. Lower gasoline prices helped out there. And small business owners are choosing to look on the bright side, and it could be a result of the November election results. The National federation of Independent Business says that its November survey came in at 98.1, which is the best reading on small business optimism since 2007. They say that the rise is based on business owners’ view of the future, rather than present conditions.
Present conditions of markets overseas are -- well – don’t ask. Europe is on average lower by about 1½ percent.
Adjusted for fair value, S&P 500 futures are lower by 14½ points, Dow futures are down 111, and the NASDAQ futures are now more than 31 points below fair value.
December 8, 2014
In honor of Monday rolling around on the calendar once again, there is a fairly significant merger to consider. Cubist Pharmaceuticals specializes in development of antibiotics. Its shares have been rather sleepy this year, up only 8 percent in the hot pharmaceutical market. Well, sleep no more, Cubist shareholders. Merck is in talks to pay 8 billion dollars and assume a billion or two of debt to acquire Cubist. That’s a 37 percent premium to last Friday’s closing price.
This will be a very light week for economic data, especially early in the week. Atlanta Federal Reserve President Lockwood will present a speech at 12:30 this afternoon. But outside of that, the economic cupboard is pretty bare.
McDonald’s just issued a pretty lousy sales update. November same store sales in the U.S. dropped 4.6 percent, which was more than twice the expected drop. McDonald’s shares are slumping more than 2 percent pre-market.
Overseas markets are mainly lower. The green arrow surprise from overnight flashed in China, as the lousy economic numbers gave hope to more accommodative economic policy. Most other markets overseas are lower.
Although the Dow flirted with the 18,000 level last week, we’ll likely start this week by taking a step in the other direction. Adjusted for fair value, S&P 500 futures are lower by 5 points, Dow futures are down almost 52, and the NASDAQ futures are now more than 12 points below fair value.
December 5, 2014
Like it or not, the first Friday of the month has rolled around again. That of course means that the Labor Department will come forth with a whole bunch of numbers at 8:30.
Three of those numbers will be headliners. The Unemployment rate is expected to hold at 5.8 percent. It’s expected that about 230,000 new non-farm jobs came into being last month, while the average hourly wage rose two-tenths of per percent. Higher job creation numbers should help stock prices. A larger-than-expected increase in Labor costs, while good for your paycheck, would not be so great for your portfolio. We’ve seen nine straight months of job growth, which is the best stretch in almost 20 years.
It appears that flame-broiled donuts may be on the way. The powers-that-be in Canada have approved the purchase of Tim Horton’s by Burger King. Corporate headquarters will be in Canada.
Kroger raised their profit estimates yesterday, while Smith and Wesson, American Eagle and Five Below guided lower. American Eagle shares are about 6 percent lower pre-market. Five Below is about 10 percent below yesterday’s close.
Asia was mixed overnight, Europe is higher. Adjusted for fair value, S&P 500 futures are higher by 3 points, Dow futures are up 32, and the NASDAQ futures are now 10 points above fair value.
December 3, 2014
With one day down and one day up this week, it looks like we’ll start the day in pretty much a holding pattern as we await a little flood of reports that only an economist could love.
The ADP Employment Report for November comes at 8:15. Expect that 225,000 new non-farm jobs came into being last month. Later in the morning, reports on Productivity and costs, the PMI Services Index and the ISM Non-manufacturing report will give us some idea of activity among businesses that serve, rather than make.
Finally, after noon three Federal Reserve officials will give speeches before and after the two o’clock release of the Fed’s Beige Book.
Abercrombie & Fitch reported better than expected earnings for last quarter, but nobody cares, in that same store sales were down 10 percent. ANF shares are down about 5 percent pre-market. Brown Forman is also out with a revenue miss.
Overseas markets are all over the place, and there’s not much shaking with our futures, although the red numbers from earlier this morning have turned very light green. Adjusted for fair value, S&P 500 futures are higher by about a point, Dow futures are back to break even, and the NASDAQ futures are about 3 points above fair value.
We’re off to a bit of a sleepy start this morning, as we recover from a weekend of hot turkey sandwiches. So let’s start off with a happy thought:
For the past 90 years or so, the month of December has been the best month of the year for stock market performance, with nearly 3 out of every 4 Decembers resulting in higher stock prices. And the second-best month for stocks? Well, that would be January.
A couple of weak economic reports have overseas markets seeing red this morning. The official Chinese Purchasing Managers Index fell to 50.3. A reading below 50 would indicate contraction in economic activity. Not to be out-undone, the Eurozone’s November PMI checked in at just 50.1 this morning. Yes the bad news in Europe could wind up being short-term good news if it spurs a bit of quantitative easing in Europe. But, it sure would feel better if we could rely on healthy business conditions, rather than another bail-out from another central bank.
Our PMI Manufacturing Index and the ISM Index will both be out by 10 this morning.
Oil futures are getting slammed again after OPEC refused to cut production. West Texas Intermediate is now hovering around 66 bucks per barrel.
Everybody overseas is lower. Our futures have rallied a bit, but are still pointing lower at this point. Adjusted for fair value, S&P 500 futures are lower by about 7 points, Dow futures are down 45, and the NASDAQ futures are about 9 points below fair value.
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