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WJR February 2004 Reports



February 27, 2004


The final reading on February Consumer Sentiment out of The University of Michigan rolls at 9:45 this morning.  Expect a reading of 93.8.  The recent falloff in the U of M and the Conference Board’s confidence surveys confidence have rattled the markets a bit.


Good news for Four Seasons this morning, as they blew away earnings estimates.  Bad news for Coca-Cola and Coca-Cola Enterprises on a brokerage from downgrade.


An encouraging report on the Japanese economy overnight sent the Nikkei up more than 2 percent.  In Europe, investors are becoming convinced that the European is finally close to waking up, smelling the coffee, and dropping interest rates.  That has European stocks up about one percent.


Our futures are off their highs of the morning, but we’re still looking for little green arrows at 9:30.  Adjusted for fair value, S&P futures are up 2 points, the Dow futures are up 19 and the Nasdaq futures are about 2 points above fair value.

February 26, 2004


Well, you didn’t need your Greenspan-to-English dictionary yesterday to pick out the highlight of the Chairman’s speech.  Social Security discussions will fill the airwaves once again, just as they have periodically every couple of years over the past decade.  Unfortunately, the facts haven’t changed, and neither has the political reality that even IF people understand the math, they don’t want to give up their share of their kids future earnings.


Mortgage rates are dropping again, and Toll Brothers is still building a lot of homes.  They beat earnings estimates by 2 cents per share this morning.


The weekly jobless claims are expected to fall by 4,000.  Of course AT&T just announced a 4,800 job cutback.  Evidently those people won’t show up in line until next week.  The jobs number will come in ten minutes along with the January Durable Goods report. 


Count on those reports to give us some direction in the early going, because at this hour – we have no direction at all. Adjusted for fair value, and S&P futures are flat. The Dow and the Nasdaq futures are about a point above fair value.

February 25, 2004


This has all the makings of a pretty quiet morning for stock trading.  The only economic report on the way is the report on January existing home sales, which is not exactly what you’d call a market mover.


A man who regularly moves the market by speaking perfect English that no one can understand – that of course is Alan Greenspan – testifies before the House Budget Committee today on the state of the economy.  Greenspan spoke yesterday to a Senate Committee about a significant danger to our financial system that few seem to understand.  That’s the explosion of mortgage debt handled by government sponsored companies Fannie Mae and Freddie Mac.  Hopefully someone there was listening.


Overseas markets didn’t much like our consumer confidence number yesterday.  Asian and European markets are, for the most part flat to down a half percent or so.


The futures were extremely quiet and extremely flat all morning.  But about a half hour ago, they perked up a little.  At this point, adjusted for fair value, S&P futures are up almost 2, Dow futures are up 15 and the Nasdaq futures are about a point and a half above fair value.

February 24, 2004


Last week we talked about how amazing it is the Walmart can continue double digit sales growth given it >


Host Marriott with a big-time earnings warning this morning.  The adverse impact of settling insurance claims over the Marriott World Trade Center was part of the problem.  But revenue was down over 3 percent and revenue per available room was off 1 percent last quarter.


At 10 o’clock, the Conference Board’s reading on February Consumer Confidence is expected to show a big drop off to 92.5, from a level of 96.8 in January, which would put it somewhat at odds with the U of M’s latest Confidence Reading….so we’ll see.


The futures are indicating that the Nasdaq may hold it’s level at the open after yesterday’s big drop, but in general stocks will get off to a weaker start. Adjusted for fair value, S&P futures are down more than 3, Dow futures are down 14, and the Nasdaq futures are a point and a half below fair value. 

February 23, 2004


The stock market’s recent pattern held true again last week.  One good day, and declines the rest of the week.  We’ll see if we can break that trend this week, hopefully in a positive direction.  We’ll have some Consumer Confidence numbers later in the week, along with the advance Gross Domestic Product number.  Today, Treasury Secretary John Snow and the ever popular Alan Greenspan will deliver speeches.  Greenspan will be talking about what many people consider a looming problem – the level of household debt in this country.


Citigroup is reaching into South Korea.  They will acquire South Korea’s 6th largest bank, KorAm for 2.7 billion in cash.  That’s the largest foreign investment ever in South Korea.


Qualcomm raised its 2nd quarter earnings target to 48 cents per share, all the way up from 36 cents.


Far Eastern markets were mixed, but European stocks are up a half percent or so.  And it looks like another decent start on the way for us.  Adjusted for fair value, S&P futures are up 3, Dow futures are up 34, and the Nasdaq futures are 8 points above fair value. 

February 20, 2004


Hewlett-Packard got a big boost from the falling dollar and met their earnings estimates last night on stronger than expected revenue.  However, sales in their printer business, which historically has been their bread and butter, weren’t quite what analysts expected.  HP is off about one percent in Europe this morning.


The only significant number on the agenda today is the report on Consumer Prices at 8:30.  The CPI used to be the big bad boss in predicting the Fed’s course on interest rates.  Nowadays it shares the spotlight with the jobs data.  But, it’s still important. Expect an increase of 4 tenths of one percent in overall inflation, mainly due to an increase in food and energy prices.  The core rate is likely to be up only a tenth of one percent.


Early this morning the futures were pretty solid, but they’ve been slip sliding away ever since.  We’re still positive at this hour, but just barely. Adjusted for fair value, S&P futures are up a little more than a point, Dow futures are up 10, and the Nasdaq futures are about 3 points above fair value. 

February 19, 2004


The weak housing starts number shook stock prices up yesterday.  But in the afternoon, once traders considered how lousy the weather was in January, prices recovered a bit. 


Of course, when the weather outside is frightful, Walmart sales get delightful.  It’s amazing to think that a company that sells $250 billion dollars worth of stuff each year can grow sales at double digit rates. Walmart met estimates for their fourth quarter; revenue up 12%, profits of 8%. They raised their guidance for the coming year slightly.


Nextel, Radio Shack and Applied Materials beat their numbers like a drum this morning. Hewlett-Packard checks in later today.


In about ten minutes, the weekly jobless claims number and the January Producer Price Index will be announced, and the 10 o’clock, the January Leading Economic Indicators are expected to rise about a half percent.


As long as we avoid a bombshell in those announcements at 8:30, we should head higher at 9:30.  Right now, adjusted for fair value, S&P futures are up more than 4, Dow futures are up 46, and the Nasdaq futures are about 13 points above fair value. 

February 18, 2004


The Disney Company just can’t stay out of the headlines this month.  With the Comcast deal is on the back burner for now, Disney had some really big news this morning, especially if you have household residents under the age of 5.  Disney has purchased the Muppets characters from the Jim Henson Company. 


Before Henson died in 1990, Disney had tried to buy the Muppets, which instead were sold to a German firm.  The Henson Company bought the Muppets back last year at a fraction of the former sale price.


So, while the House of Mouse is a little bigger this morning, we’ll find out at 8:30 how many new houses were started for the rest of us in January.  Expect a decline of 4% from December to an annualized rate of 2 million new housing starts.


During the past month we’ve seen a pattern of one really good day each week for stocks, and then a bunch of hemming and hawing the rest of the week.  Yesterday was definitely a good day, and it looks like we’ll hem, rather than haw at the open today.  Right now, adjusted for fair value, S&P futures are up 2, Dow futures are up 19, and the Nasdaq futures are about 3 ½ points above fair value. 

February 17, 2004


One takeover battle is over.  One may be just warming up.  But both are pushing stock prices higher this morning in Europe and in pre-market trading.


Cingular scored a technical knockout over Vodaphone buy offering $15 bucks per share in cash for AT&T Wireless.  You may remember that last Friday we were talking about a $12.50 per share offer.  So Cingular is the winner. The deal was signed this morning.  But investors are congratulating Vodaphone in European trading, bidding Vodaphone up over 6% for avoiding what may have been too costly a purchase.


Meantime, over at the magic kingdom, Disney’s Board said no to Comcast.  But they didn’t say “Go away.”  They rejected the Comcast offer on the basis of price.  Presumably, for the right price, a deal is still possible.  Disney stock goes for about 27 bucks per share.  Word is that Comcast may go up to 30 or 31, but that Disney’s Board may be looking for something in the 34 to 35 dollar range.


Krispy Kreme met estimates this morning and slightly raised their guidance for fiscal 2005.


Asian markets were mostly positive overnight.  All major European markets are up at this hour.  Adjusted for fair value S&P futures are up 6 ½ , Dow futures are up 53, and the Nasdaq futures are about 10 ½ points above fair value. 


February 16, 2004  No Report -- Happy President's Day!


February 13, 2004


Happy Friday the 13th, everybody.  Do you feel lucky? Do you feel blue? Do you feel like spending cash from here to Timbuktu?  The first reading on February Consumer Sentiment rolls at 9:45 this morning out of the University of Michigan.  It’s expected to pull back just a touch from January to a level of 103.3.


You’re probably feeling pretty lucky if you’re holding shares of AT&T Wireless.  Not that they’ve been anything to write home about since they came public four years ago.  But reports are that Vodaphone and Cingular are each going to put in bids to acquire the company.  The Wall Street Journal says the price may be $12.50 per share, which is almost a buck above last night’s close.


Dell Computer beat estimates last night on a 24% increase in income and an 18% increase in revenue.


Asian markets were mostly up overnight. European markets are mixed, with the U.K. being the best performer.  We’re looking for slightly higher prices on U.S. stocks. Adjusted for fair value S&P futures are up 2, the Nasdaq futures are about 4 points above fair value. The Dow is looking to open up about 15 points. 


February 12, 2004


Just another Greenspan rally yesterday.  Alan Greenspan sat in front of the House Financial Services Committee and said all the right things.  The economy is strengthening at a faster clip than earlier projections.  Of course, that not news to anybody who’s paying attention.   The comments that really sparked a rally in stock prices, though related to employment and inflation. 


Mr. Greenspan said that the job market is weaker than some of the statistics have indicated, but because of big increases in efficiency and productivity, the Federal Reserve is not likely to get spooked by inflation until the unemployment rate drops close to 4 percent.  Of course back in August of 1999, as the unemployment rate closed in on 4 percent, the Fed started raising rates, which proved to be the beginning of the end of the robust economy. Greenspan will regurgitate his comments to the Senate Banking Committee today.


Plenty of earnings today.  Aetna beat estimates by 14 cents per share as medical insurance premiums continue to soar.  Disney is up another half dollar or so in Europe as speculation continues over the Comcast merger bid.


The futures have been struggling back all morning after a pretty weak start, and they’re almost back to even.  At this point, adjusted for fair value S&P futures are up just a fraction, but Dow futures are down 5 points and the Nasdaq futures are less than 2 points below fair value.

February 11, 2004


The big news of the morning is that you have Comcast voice mail on your phone, the voice on your outgoing message may soon be that of Paul W. Smith, or Peter Jennings, or Mickey Mouse.  Take your pick.


Comcast, the country’s largest cable operator, made a bid to buy 58% of Disney this morning.  The proposal values Disney at about a 10% premium to yesterday’s closing price. That’s not a huge premium. However, in European trading Disney is trading even higher than that, as traders believe that the deal may be sweetened, or perhaps even attract another bidder. 


Disney’s head honcho, Michael Eisner, wants no part or the deal, so it is a hostile offer, and it promises to be an interesting one in the weeks ahead.


On the earnings front today, Coca Cola and beat estimates.  Alan Greenspan begins his Congressional testimony today in front of the House Financial Services Committee.


Japanese stocks did not trade overnight.  Europe is up a touch.  Adjusted for fair value S&P futures are flat, Nasdaq futures are flat, but based on the Comcast bid for Disney the Dow futures are 22 points above fair value.


February 10, 2004


One has to think that oil prices should weaken a bit over the next few months.  The worst of the cold weather is over in the U.S. and the summer driving season is a long way off.  All this is not lost, of course, on the boys from OPEC.  They’re meeting today and will announce just what they will be doing with oil production in the near future. An output cut is not expected, but some sort of crackdown to enforce existing output quotas is expected.  You know, those OPEC countries are known to spit out a few more barrels of output than they promised, you see, when no one’s looking.


Earnings of the morning are a mixed bag.  Marriott made 69 cents per share versus an expected 61, but guided slightly lower for 2004.  UBS (which includes the old Paine Webber) beat estimates.  BP Amoco, though, with the tail wind of rising oil prices, mysteriously missed their number.  Viacom, still basking in the hubbub over the Super Bowl, met estimates and indicated that it may be time to spin off their Blockbuster unit. 3M, boosted their dividend 9%, that’s the 45th year in a row.


The futures are indicating that everyone may just as well show up a little late today, because not much is likely to happen when the market opens.  Adjusted for fair value S&P futures are flat and the Dow and Nasdaq futures are two points above fair value.

February 9, 2004


Good earnings reports from Alcan and Hasbro this morning.  But earnings season is winding down at this point, and when the numbers stop the speeches begin.  That’s the likely driver for stocks this week.


Over the weekend, the G-7 finance ministers huffed and puffed about the weak dollar.  This morning, recognizing the huffery and puffery, the dollar continued its fall against the euro.


President Bush speaks about the economy later today in Missouri. OPEC is meeting this week, so expect a speech about oil prices.  But the speech of the week will be the semi-annual report on the economy from Alan Greenspan.  Those speeches on Wednesday and Thursday before the House and Senate used to be known as the Humphrey-Hawkins testimony.  Any hint as to the timing of future interest rate increases should bounce prices around.


Sharper Image says that sales for 2004 should increase at least 20%.  Those remote-control messaging lounge chairs with stereo sound and built-in nose hair trimmers seem to be very popular.


Japan was down overnight, but most other foreign markets are doing very well, thank you.  Our futures look to be way up, but adjusted for fair value, they’re indicating a very slight rise in prices at 9:30.  S&P futures are down  a fraction, Dow futures are up 4 and the Nasdaq futures are about 2 points above fair value.

February 6, 2004


The stock market today will be just like the upcoming election – it’s all about the jobs.  At 8:30 this morning, the Labor Department will tell us just how many non-farm jobs were created in January.  It’s expected that 160,000 to 170,000 new jobs were added.  Of course, we expected about that number in December as well, and all we got was 1,000 new jobs.  The unemployment rate is expected to rise a tenth of a percent, to 5.8 percent.


Speaking of jobs, 3,000 of them will disappear at Cigna.  Cigna will be getting out of the retirement planning business to focus on its healthcare business.  They’ll also be taking a charge of up to 100 million bucks and cutting their dividend after the retirement business is sold.


Asian markets were mainly in the plus column overnight.  European markets are up across the board, especially tech stocks on the back of a good earnings report from Swedish phone maker Ericsson.


Pay little attention to those futures behind the curtain.  Our direction at 9:30 will be determined when the jobs report comes out at 8:30.  For what it’s worth at this point, adjusted for fair value, S&P futures are up 2 points, Dow futures are up 13 and the Nasdaq futures are about 7 points above fair value.

February 5, 2004


Technology stocks had an impressive rise in January.  Say bye-bye.  The Nasdaq gave back all those gains as of the close last night.  The less-than–inspiring report from Cisco Systems that we mentioned yesterday helped clip 2 ½ percent off the Nasdaq Composite and almost 9% off the price of Cisco.


Some unexpectedly good news from WalMart this morning.  Walmart’s January same store sales were up 5.3%.  Including Sam’s Club make that 5.7%.  Both of those numbers are higher than expected.


Franklin Resources is the fourth largest mutual fund family in the country.  Franklin is also the latest fund complex to be charged with securities fraud by Massachusetts regulators.  Investigations by New York, California and the SEC are continuing.


The weekly jobless claims report and 4th quarter productivity reports could shake up the futures in ten minutes, but at this point we’re looking for a little bounce back at the open of trading.  Adjusted for fair value, S&P futures are up 2 points, Dow futures are up 17 and the Nasdaq futures are about 7 points above fair value.

February 4, 2004


We were given a steady stream of pretty good earnings reports yesterday.

But just like they did Monday, prices hemmed and hawed, slumped and rallied.  They basically finished the day little changed as traders decided to wait for Cisco Systems to report last night.  Well, Cisco did report, and now we have some direction. Cisco beat estimates by a penny per share, but CEO John Chambers noted that businesses are still “very cautious” about additional capital expenditures and hiring.


In the pre-market, traders are focusing on those cautious comments and are pulling Cisco down about 5 percent.


Not exactly a bang-up report for domestic car sales yesterday, either.  Although overall domestic sales were flat, GM sales were down 2 percent and Ford sales dropped by 10 percent.


Not much on the calendar today.  The ISM report on the services industry (if you can call services an industry) rolls out this morning.  We’ll also get the December Factory Orders number at 10 o’clock.  But that’s about it.


In Japan, stocks lost 2 percent overnight. European markets are down, on average, about one percent.  Our futures are indicating some sharply lower stock prices at 9:30.  Right now, adjusted for fair value, S&P futures are down 7, Dow futures are down 53 and the Nasdaq futures are 19 points below fair value.

February 3, 2004


If you’re in the market to buy some euros this morning, they’ll cost you more than a buck and a quarter a piece.  The value of the U.S. dollar is again on the slide, apparently on concerns about the budget deficit and the ricin scare at the Senate Office complex.


That shrinking dollar isn’t going to help you if you’re traveling in Europe.  But, if you are a U.S. company selling stuff overseas, well, this is the stuff profits are made of. Loads of earnings reports this morning all meeting or beating estimates.


Meeting expectations were Mattel, Emerson Electric and Aflac.  Beating estimates, Colgate-Palmolive, Tyco, Transocean, Sprint and Caremark, among others.


January car sales reports roll out later today.


Chinese stocks rose overnight, but that was about the only overseas market that did.  Most of Europe is down about a half percent at this hour.  Our futures are indicating that we’ll slump a bit at the open.  Right now, adjusted for fair value, S&P futures are down less than a point, Dow futures are down 8 and the Nasdaq futures are 2 points below fair value.


February 2, 2004

Today’s a big day for predictions, of course.  It’s the day that the groundhog wakes up, stands up, and barring any major wardrobe malfunctions, tells when spring will bust out.


Same type of thing goes on with the stock market.  The market’s performance in January has predicted the market’s full year direction in all but 5 of the last 54 years. All three major stock indexes rose in January, so if the groundhog gets it wrong, let’s at least hope that the January indicator holds true. 


The Super Bowl Indicator?  Another story.  The win by New England yesterday would indicate a down market this year.  So who knows?  That’s the point.  NO one knows, and anyone who proclaims to know, should be widely ignored.


By 10 o’clock this morning we’ll know whether the manufacturing industry continued its recent expansion in January.  The ISM Index is expected to register a score of 64.  That indicates expansion, but at a slower rate than in December.


European markets are generally up at this hour.  Right now, adjusted for fair value, S&P futures are up 2, Dow futures are up 15 and the Nasdaq futures are 3½  points above fair value.

WJR March 2004 Reports
WJR January 2004 Reports

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