February 26, 2010
Major corporate earnings announcement are pretty much wrapped up for the week, and with a big snowfall hitting Manhattan today, trading may be on the light side as we wrap up the week.
There will be a lot of economic data to digest during the next couple of hours. In thirteen minutes, we’ll get the second estimate of 4thquarter ’09 Gross Domestic Product. Expect no change in the first 5.7% estimate. At 9:45 the February Chicago Purchasing Managers Index is expected to read 59, which would be a bit of a decline from the January number.
And then, just before the January Existing Home Sales number at 10 o’clock, the University of Michigan’s final read on February Consumer Confidence is expected to tick up a little to a reading of 74.
Private equity firm Thomas H. Lee is buying CKE Restaurants. That’s the parent of the Hardee’s chain. The bid of 11.05 is a 24 percent premium to last nights close.
Our futures were positive most of the morning on some weakness in the dollar, but lost steam on word that AIG may need more help from the Government to meet its obligations.
At this point, the S&P, Dow and NASDAQ futures are all virtually even with fair value.
The euro is pretty much a mess this morning. That, of course, means a stronger dollar and likely a rough start for stock prices when we get going at 9:30.
However, there are a couple of reports coming just about 15 minutes from now that could help the cause, whatever your cause happens to be. The January Durable Goods Report is expected to reflect a 1.5% increase, which would be an improvement from December’s 1 percent report. Concurrently, the weekly jobless claims number is expected to improve slightly to the 460,000 level, from last week’s 473,000.
Coca-Cola formally announced the acquisition of the North American operations of their largest bottler, Coca Cola Enterprises, for about 15 billion dollars. And the ketchup continues to flow faster than anticipated, as Heinz announced earnings of 83 cents per share, which was 6 cents better than the average estimate.
Ben Bernanke’s continuing testimony, the big health care snow job and a big healthy snowstorm will likely keep Congress from doing too much damage today.
Chinese stocks were higher, but most other markets saw red overnight.
We’ll see if the 8:30 reports change things up a bit, but for right now, stock prices are looking weaker. At this point, adjusted for fair value, S&P 500 futures are almost 6½ points lower, the Dow futures are down 51, and the NASDAQ futures are about 8½ points below fair value.
The temperature may be rising in the Washington D.C. area today, given all the hot air due to be released. Speeches and/or testimony by Ben Bernanke, Timothy Geithner, Barack Obama, and Mr. Toyoda will keep headlines changing.
The major economic news scheduled, besides Mr. Bernanke’s testimony before the House Financial Services Committee will be the report on January New Home Sales, which are expected to have risen about 4 percent to an annualized rate of 355,000 units. That report will be issued at 10 o’clock, which is coincidentally the time at which Bernanke will start yakking.
H&R Block lowered earnings guidance this morning. The tax return prep business at Block is off as lower income folks are filing fewer and fewer income tax returns. Some estimates put the number of Americans no longer paying income taxes has reached 40 to 50 percent.
Mortgage applications fell to their lowest level in 13 years, so said the Mortgage Bankers Association this morning, although bad weather last week may have had something to do with the decline.
Asian markets were mixed overnight, but European markets aren’t showing a lot of direction at this hour, but are trending a little bit higher. The dollar index is lower by 15 basis points, and our stock futures are pointing a little higher. At this point, adjusted for fair value, S&P 500 futures are up 2 points, the Dow futures are higher by about 27, and the NASDAQ futures are about 10 points above fair value.
The retailers’ earnings reports dominate the business news this morning. On average, they’re a bit better than expected. Home Depot, for instance, earned 24 cents per share last quarter. That beat expectations by 7 cents. Home Depot also raised their dividend by 5 percent. That’s their first dividend hike in about 4 years.
Sears Holdings announced the closing of 21 Sears and Kmart locations, but earnings checked in at $3.69 cents, easily clearing the $3.48 estimate. Same store sales at Kmart are improving, but Sears stores declined by more than 6 percent.
Macy’s checked in with $1.40, which was a 3 cent beat, and although Nordstrom earned 2 cents less than expected, profit more than doubled from last year’s fourth quarter.
A German business sentiment gauge declined for the first time in ten months this morning, and that has Europe in a bit of a funk. Asian markets were mixed. The dollar index is higher by about a tenth of a percent, and, not surprisingly, our stock futures are lower by just a little bit.
At this point, adjusted for fair value, S&P 500 futures are lower by 1½ points, the Dow futures are down about 9, and the NASDAQ futures are about 4 points below fair value.
Most of the big economic reports are packed into the back half of this week. However, we are getting a fair number of earnings reports this morning and so far - so good.
Home improvement retailer Lowe’s reported 14 cents per share in operating profit, which was two cents better than expected. Lowe’s CEO also came out with some pretty optimistic comments, saying that the worst of this economic cycle is over and that he sees signs of rebounding consumer confidence. Earnings guidance, however, fell a little short of estimates.
Campbell Soup also reported in this morning, and although revenue was a little on the light side, Campbell made 74 cents, matching expectations. DTE Energy will also be reporting earnings today.
News broke on Friday that oil services firms Schlumberger and Smith International might be getting together. That stock for stock deal is confirmed this morning and values Smith International at about a 20 percent premium to its closing price of last Thursday. Light sweet crude, by the way is back up over 80 bucks per barrel this morning.
Major indexes in Japan and Hong Kong were almost 3 percent higher overnight, although China was a bit lower and other markets overseas are turning in a mixed performance. Our stock futures have been higher all morning long. At this point, adjusted for fair value, S&P 500 futures are higher by 4 points, the Dow futures are up about 37, and the NASDAQ futures are about 8 points above fair value.
China’s week-long lunar New Year Holiday is right around the corner and overnight the Chinese gave the world a little New Year’s present that is giving us a bit of a hangover this morning. For the second time in quick succession, Chinese bank reserve requirements will be raised within the next two weeks as the country tries to dampen their torrid economic growth.
Earnings season here is winding down, with only a couple of significant companies checking in today. Ingersoll-Rand is out with a pretty lousy scorecard this morning, missing on revenue, earnings and lowering guidance.
We will get a little more economic data than had been on the docket. When Son of Snowmageddon shut down Washington mid-week, it pushed yesterday’s scheduled report on business inventories off until today. December inventories are expected to have risen three-tenths of one percent. That report is due at 10 o’clock. But, just before 10 this morning, the University of Michigan’s first reading of February Consumer Sentiment is expected to creep up to 75, versus January’s 74.4.
Asian markets were generally higher overnight. Europe is mixed. Our stock futures are off their worst levels of the morning, but with the dollar three-quarters of a percent higher, we’ll definitely start the morning with red arrows rather than green as traders digest the Chinese policy changes. At this point, adjusted for fair value, S&P 500 futures are down more than 7 points, the Dow futures down 67, but the NASDAQ futures are 10 points below fair value.
The President of the European Union says that a deal has been reached to resolve the Greek debt crisis. Reportedly it does not involve a direct bailout, but an agreement by the Union to monitor Greek fiscal policy and come to the rescue if needed.
At 8:30 we’ll get the weekly jobless claims numbers that are estimated to check in at the 467,000 level, which would be a little better than last week’s 480,000. An even lower number would likely be well-received.
AutoNation is out with better than expected earnings this morning, at 29 cents versus the expected 27 cents. Viacom also beat their number, although revenue was a little light. Pepsico’s earnings and sales were right in light with expectations.
Light sweet crude is back up over the 75 dollar per barrel level once again. New Zealand was lower, but the rest of the Eastern markets traded higher overnight. Europe is more of a mixed picture, and although our futures have been higher all morning, they’ve slid back toward the flat line over the past half hour or so.
At this point, adjusted for fair value, S&P 500 futures are up a half point, the Dow futures up 10, but the NASDAQ futures are now just about even with fair value.
A lot of things can influence stock prices. But I don’t remember the last time a travel agent caused a big rally. Yesterday, word leaked out the European big-wig Trichet had changed his travel plans, which fed rumors that a resolution to the Greek debt problem was at hand. That sent stock prices soaring mid-day. Well, we’re still waiting, but although something IS in the works, the late word out of European officials is that we may have to wait a while longer.
The snow we had overnight and then some is descending on Washington D.C. on a morning when Ben Bernanke was scheduled to explain how the Fed intends to return to a normal interest rate policy before the House Financial Services Committee. The testimony won’t happen, as the House has declared a “snow day” and the committee members will likely stay home playing their video games all day. However, Mr. Bernanke’s written statement will be released for all to peruse at 10 o’clock this morning.
Disney reported terrific earnings last night. They made 47 cents per share versus the expected 38 cents.
Asians markets were again mixed overnight, but Europe is higher. Our futures were higher earlier this morning on a weaker dollar. However, about 20 minutes ago, the dollar index rose and the stock futures turned just a bit lower.
At this point, adjusted for fair value, S&P 500 futures are flat, the Dow futures are down 4 points, and the NASDAQ futures are still a little less than a point below fair value.
It’s a new day, and a new recall for Toyota. This time, 437,000 units worldwide, including the popular Prius and some Lexus models. According to the company, this is the caboose on the recall train. Toyota shares are down more than 13 percent during the past month.
Coca-Cola is out with their quarterly earnings report. They hit the 66 cent profit target right on the button on better than expected revenue. Their reported and projected case volume numbers were pretty good and the stock looks like it will bubble up a bit.
Swiss Banking giant UBS swung to a profit last quarter, but also reported that customers continue to withdraw funds from the firm at an accelerating rate. Evidently, the loss of Swiss Bank secrecy has some people concerned. Not that they were trying to hide something, mind you. Like perhaps some taxable income. Nah – that never happens.
McDonald’s global same store sales are up 2.6% versus the expected 1.4%, although U.S. sales were a little lower than expected. Disney will report earnings after the close of trading today.
Asian markets were mixed overnight. Most European markets are higher. So let’s check in with old reliable – the dollar index is lower by almost a half of one percent, and - no surprise here - our stock futures are responding with a rally.
At this point, adjusted for fair value, S&P 500 futures are up 12 points, the Dow futures are up just a bit more than 100 points, and the NASDAQ futures are about 16½ points above fair value.
Traders continue to be torn this morning between good earnings reports and Greek debt worries. The hope was that we would get some sort of a Greek rescue plan out of the European Union over the weekend. But, outside of an “austerity plan” from the Greek Government, we’re still waiting. If Friday’s market movements are any guide, we’re in for another wild day courtesy of your friendly neighborhood hedge fund.
Speaking of good earnings news, Hasbro reported $1.09 of operating profit for last quarter. They were only expected to make 81 cents, and the stock is being bid strongly higher in the pre-market.
There will be a few Treasury Auctions later today, but the major economic news for this week will have to wait for Thursday and Friday.
Overseas markets are mixed, although most major European markets are now slightly positive.
Our stock futures have been all over the place this morning. Just about a half hour ago, the Dow futures were lower by more than 50. Then the dollar index turned lower, and the stock futures rallied. Adjusted for fair value, they’re still slightly negative, even though they look positive on their >
It’s all pretty simple, this morning. The first Friday of the month will bring us the Labor Department’s Unemployment Report in about 10 minutes. Analysts expected that we may see the first positive number – that is an indication of jobs being created – in a long, long time. The consensus calls for 13,000 new jobs. Anything substantially more than that would be good news, and the stock market could use some good news after yesterday’s drubbing.
Keep in mind that even if we get a positive number, the Unemployment rate may continue to rise. Businesses have to create well over a hundred thousand new jobs a month to keep up with the rising workforce population. This time around, the rate is expected to hold at an even 10 percent.
Earnings reports slow down a bit today. But so far, Tyson Foods is the star, earning 42 cents per share against the expected 17 cents. Simon Property Group produced funds from operations of $1.40. That’s down from last year’s $1.86. Teco Energy came up a penny short on their earnings, and Dollar Tree took a downgrade from a major brokerage house.
Overseas markets all saw red numbers overnight. The dollar Index is higher by almost four-tenths of a percent, and pending the unemployment report at 8:30, that will send us lower at 9:30.
At this point, adjusted for fair value, S&P 500 futures are down about 5 points, the Dow futures are down 31, and the NASDAQ futures, for now anyway, are about 2 points below fair value.
The week-and-a-half old day-to-day drama that has been Toyota Motors took some new twists and turns overnight. While the recall over sudden acceleration accelerates, Toyota now admits that the Prius has a not-so-sudden de-acceleration problem. Reportedly, it’s a problem that is solvable with a tweak to the Prius’ software, but it adds fuel to the fire-sale in Toyota shares that has the stock selling at 20 percent lower levels than just 9 trading days ago. In the >
January retail sales reports are coming in generally better than expected this morning. Macy’s same store sales rose 3.4 percent. They were expected to be flat. Limited Brands saw a 6 percent increase, which was 5½ percent more than expected.
Starwood hotels, Moody’s, Burger King and Sara Lee all reported better than expected earnings. Cisco Systems reported strong earnings and revenue growth and raised guidance for the current quarter.
The Bank of England and the ECB held interest rates steady this morning. The Bank of England also paused their bond-purchase program for now.
Overseas markets are generally lower. The dollar index is higher by a quarter of a percent, and as you would expect, our futures are under a little pressure.
At this point, adjusted for fair value, S&P 500 futures are down about 3½ points, the Dow futures are down 29, and the NASDAQ futures are close to 3 points below fair value.
The refinancing rush is on. It’s been pretty well advertised that the Feds will wind down their mortgage market support this spring. That means mortgage rates will likely head higher. Last week, refinance applications rose 26 percent and new mortgage apps rose over 10 percent as homeowners look to lock in low rates while the lockin’ is good.
Also looking good this morning are the shares of Time Warner. Earnings last quarter of 55 cents beat estimates by 3 cents and Time Warner is increasing its dividend and share buyback program. Not to be outdone, Comcast also beat estimates on higher than expected revenue. Pfizer missed the earnings target by a penny and lowered guidance just slightly. McDonald’s shares received an upgrade from Goldman Sachs.
At 10 o’clock, the ISM non-manufacturing Index, which measures strength in the services sector, is expected to show a tiny expansion to 51 from 50.1 last month.
Then at 10:30, we’ll get the oil inventory report from the Energy Information Agency which could move the price of light sweet crude, which have been bubbling up again this week at over 77 bucks per barrel.
Asian markets were generally higher, Europe just turned a bit lower.
It’s one of those funny mornings when the futures have looked a bit higher most of the morning, but adjusted for fair value, they’ve actually been indicating slightly lower stock prices all morning long. At this point, adjusted S&P 500 futures are down about 4½ points, the Dow futures are down 30, and the NASDAQ futures are about 9½ points below fair value.
The automakers will roll out their January sales reports throughout the day, which will give the industry something to talk about other than Toyota’s sticking accelerators and the lawsuits with which they’ll eventually be stuck.
There’s nothing major on the economic calendar this morning, but earnings reports continue come in and this morning, and the reporting companies must all be seeing their shadows, because all major reports are coming in sunnier than expected.
Dow Chemical reported an 18 cent per share operating profit. That was 7 cents higher than expected. UPS’s 75 cents was a penny better, Hershey beat by 3 cents, ADP by a nickel. Archer Daniels Midland earned 88 cents, versus 72 cents and Whirlpool made $1.64, which was a 32 cent per share beat on better than expected revenue.
ExxonMobil received an upgrade from a major broker this morning.
Treasury Secretary Geithner and former Treasury Secretary Volker each testify at different Congressional hearings today.
Interest rates in Australia were held steady overnight, which was somewhat of a surprise. Although Asian markets were mixed overnight, Europe is solidly higher and we should build on yesterday’s rather substantial rally at 9:30, although we’ve been sliding back toward even during the past 20 minutes or so.
At this point, adjusted for fair value, the S&P 500 futures are up about 3 points, the Dow futures are up 16, although the NASDAQ futures are just about even with fair value.
If you are in the market to buy some red ink, you’d better hurry – there may be a shortage pretty soon. President Obama will send his 2011 budget to Congress this morning, and the red ink is all over the place. The proposed budget adds about a trillion dollars to the national debt each year for the next five years, even after a big tax increase on the $250,000 per year and up club. In spite of what Austin Powers’ Dr. Evil thinks, a trillion is more than a billion or a million. Teach your children about the difference, because they are the ones who’ll owe those trillions.
Speaking of billions, ExxonMobil made 6 of them over thee past three months. That computes to $1.27 of operating earnings per share. That’s 8 cents better than expected.
At 10 o’clock this morning, the ISM Manufacturing Index is expected to reflect a slowly expanding manufacturing sector. Any number over 50 signals expansion and analysts expect a reading of 55½.
Reports on December Personal Income and Consumption are due at 8:30. Both are expected to have risen three-tenths of one percent.
Overseas markets are a mixed picture, but “old reliable” is working again – the dollar index is down 2/10 of a percent and that has the stock futures on the rise. There’s virtually no fair value adjustment this morning, so it’s “what you see is what you get” on those futures. And what you see is positive. The S&P 500 futures are up 6½ points, the Dow futures are up 57, and the NASDAQ futures are about 8 points above fair value.
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