February 29, 2012
Costco reported another better-than-expected three months of earnings this morning, making 90 cents versus the expected 87 cents, on sales that were likewise better than expected. Even more surprising this morning were the results from Sodastream (which I’ve seen for sale at Costco recently – maybe there’s a connection?) Anyway, Sodastream sales were more than 35% higher than expected and earnings were 32 cents per share, which was more than 50% better than expected. Unfortunately, the guidance was not so hot and Sodastream shares are looking about 12 percent lower.
Joy Global is out with a miss, but not much of one. They made $1.33, two cents less than expected. First Solar is also looking lower, after lowering guidance due to a drop in demand.
Don’t look now, but the market capitalization of Apple crossed the 500 billion mark overnight. Apple shares are indicated at about 539 dollars per share pre-market.
Ben Bernanke will show up to teach basic economics to a House of Representatives Committee this morning. He’s required to do that twice a year, although it doesn’t seem to help a whole lot
Anyway, Chevron picked up a broker upgrade this morning, Coinstar was hit with a downgrade.
The futures had been improving all morning, but have backed off a bit over the past half-hour. At this point, adjusted for fair value, the S&P futures are higher by 2 points, the Dow futures are up only 3, and the NASDAQ futures are about 2 points above fair value.
February 27, 2012
I’m sure that the G20 meeting in Mexico City last week was a nice affair. However, it wasn’t like Spring Break where everyone takes leave of their senses. The meeting ended without signatures on a blank check to bail Europe out of its woes. There will first have to be a little more evidence that those who will do the bailing won’t be bilked by those who are being bailed.
So, while the blank check hasn’t been signed, bond investors are evidently a lot more confident that the Mediterranean water has calmed a bit. An auction of six month Italian sovereign debt went off at a surprisingly low 1.2 percent this morning.
A little later on this morning we’ll get the Pending Home Sales numbers and the Dallas Fed Survey, but truth be told, the more meaningful numbers will come mid-week.
Home improvement retailer Lowe’s reported 26 cents per share of operating earnings. That was two cents better than expected on better than expected sales.
Asian markets were mixed overnight, but Europe is solidly lower, on the order of one percent or so. Our futures have been getting slapped around a bit this morning, and although they’re higher than they were a couple of hours ago, were still looking to open about a half-percent lower at 9:30. At this point, adjusted for fair value, the S&P futures are down about 7 points, the Dow futures are down 51, and the NASDAQ futures are 12½ points below fair value.
We’re heading into a three day trading weekend after a solid rally yesterday and a follow-on rally overseas.
Most of the earnings news this morning is pretty good. Campbell Soup reported 64 cents in operating earnings. That was 2 cents better than expected. Heinz earned 95 cents, nine cents better than expected and Applied Materials 18 cent profit was 50% higher than expected. Nordstrom’s $1.11 was 2 cents ahead. However Nordstrom guided lower for the current quarter, and General Mills said this morning that analyst estimates for sales, margins and profits for this year should be adjusted downward.
At 8:30 the January Consumer Price Index is expected to be up three-tenths of a percent overall and two tenths on the core. Perhaps more importantly, at 10 o’clock, the Leading Economic Indicators Report is expected to hit 0.5 from last month’s 0.4.
Greek stocks, which are pretty much irrelevant to the world economy, but surely are fun to watch are more than 5% higher this morning. We should push just a teensy bit higher at 9:30, absent a hot CPI number at 8:30.
At this point, adjusted for fair value, the S&P futures are higher by just a half-point, the Dow futures are up 19, and the NASDAQ futures are about a point above fair value.
Headlining the earnings news of the morning is the report from downtown. General Motors collected a record profit last year. 7.6 billion dollars amounts to $4.58 per share versus $2.89 a year ago, on revenue that was just a hair short of expectations. The bad news is that Europe continues to be a problem. GM lost 600 million in Europe, where things, in case you haven’t noticed, don’t look to be improving dramatically. Thirty nine cents of quarterly profit was two cents shy of Wall Street estimates, and GM stock is looking about two percent lower pre-market.
Elsewhere, Duke Energy beat estimates by 3 cents. However, Marriott missed by a penny per share, Blue Nile missed by a Blue Mile, earning 30 cents versus the estimated 43 cents. CBS, the broadcaster, earned 57 cents, a four cent beat. But revenue was lower year over year and the stock looks lower this morning.
Weekly Jobless Claims at 8:30 look to hit about 365,000. Producer Prices come at 8:30. Expect four tenths of a percent headline and two-tenths on the core. Then at 10 o’clock, the Philadelphia Fed Survey is expected to improve to a reading of 9.5.
Another Greek drama has stocks in decline around the world once again. Apparently the Greeks don’t want those who are bailing them out of their fiscal irresponsibility to interfere in their internal affairs. Meanwhile those providing the funds are interested in making sure that the Greeks will be fiscally responsible in the future. Gosh, where have we seen THAT movie before?
Anyway, at this point, adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down 17, and the NASDAQ futures are about 2 points below fair value.
This afternoon we’ll get the details of just what the Fed’s Open Market Committee discussed at their last meeting. While that's usually about as exciting as waiting for a bus, this time around we’re expecting some hints as to how soon the Committee members might be considering more “quantitative easing.”
And speaking of money for nothing and your chicks for free, it looks like the Bickersons in Washington D.C. have reached a tentative agreement to extend the 2 percent payroll tax cut AND to make sure that Medicare reimbursements to doctors aren’t cut 27% this year. And how to they propose to pay for it? Oh, be serious. You don’t really have to pay for stuff like that, do you? It’s an election year, after all.
If your potato chips start tasting a little like Raisin Bran, don’t to be surprised. Kellogg is acquiring the Pringles unit of Procter & Gamble for 2.7 billion dollars. The unit was originally expected to go to the troubled Diamond Foods.
Comcast earned 47 cents last quarter. That was 6 cents better than expected. Comcast is also raising their dividend by almost 45 percent.
Economic stats out of Germany and France were better than expected this morning, and that has European markets higher, except for Greece. Asia was mostly higher overnight and it will be risk-on when we open at 9:30, although the futures dropped rather significantly about 5 minutes ago.
At this point, adjusted for fair value, the S&P futures are higher by about 4 points, the Dow futures are up 37, and the NASDAQ futures are about 12 points above fair value.
Happy Valentine’s Day everyone. It’s a time to appreciate love and ignore those who are moody. At least that’s what overseas markets are doing this morning. Moody’s rating service downgraded the debt of a long list of European countries last night, and those downgrades are being roundly ignored this morning, or at least counteracted by a surprisingly strong business sentiment index in Germany.
The ZEW index for February was expected to read a negative 11. It checked in this morning at a plus 5.4. That’s a dramatic improvement from a minus 21 reading in January. Given the Germany is really the big dog of European economies, that optimism has most European markets slightly positive. A little more good news …. Interest rates in this morning’s Italian bond auction came in at less than half the rates hit last November.
Marsh McLennan beat estimates this morning, with Avon Products posting the big miss, making 39 cents versus the expected 51 cents.
Overseas, markets paint a mixed picture and our futures haven’t picked a firm direction yet, either, although they are a bit lower than a couple of hours ago.
At this point, adjusted for fair value, the S&P futures are down about a point, the Dow futures are down 4, but the NASDAQ futures are a fraction of a point above fair value.
After six weeks chock full of earnings reports, we’ll take a breather this week. Overall, earnings were once again better than expected, although the number of positive surprises was down somewhat from the results posted in the past 3 or 4 quarters. About 70 percent of companies reporting matched or beat their expected profit numbers for last quarter, That, and the Federal Reserve’s promise to keep short term interest rates at zero until the cows come home have stock prices up almost 7 percent year-to-date.
The tear gas is billowed and store-fronts burned in Athens over the weekend, but last night the Greek Parliament approved the austerity program that will pave the way for a 130 billion euro bailout. That will allow Greeks to make good on almost 15 billion euros of debt that comes due next month. So now that the Greeks have a deal, we’ll see long the line becomes as other debt-laden countries seek their piece of the funny money pie.
Goldman Sachs downgraded the shares of Baker Hughes today, but their target price on the stock is still a few dollars higher than where it currently trades.
The Shanghai Composite was pretty much unchanged overnight, but most every other major market overseas is higher on the Greek can-kicking exercise. The Greek market is almost 7 percent higher.
If our futures at this point are any indication, and they usually are, we’ll be making up Friday’s losses right off the get-go this morning. At this point, adjusted for fair value, the S&P futures are higher by more than 10 points, the Dow futures are up 85, and the NASDAQ futures are almost 21 points above fair value.
Our recent series of late day rallies may continue today, but the market will have its work cut out for it. Late last night, euro-zone officials told Greek politicians that their proposed economic reforms were nice, and they’d be willing to take them seriously, if the cuts were 430 million dollars greater, AND if they were approved by the Greek Parliament, AND were guaranteed to survive the new Greek Parliament that will be seated in April. The euro-zone officials may have been born at night – but apparently it wasn’t last night.
Of course, this morning there are protests in the streets of Athens and Greek unions have called a two-day strike to get their point across to legislators. There’s a vote scheduled for Sunday, but the leader of a junior party in the ruling Greek coalition says the cuts are a no-go. Greek stocks are down 4 percent and Monday could be interesting.
At 9:55 this morning, we’ll find out whether or not consumers on our own turf are optimistic about the U.S. economy. The University of Michigan’s preliminary reading on Consumer Sentiment is expected to drop just a bit to 74 from last month’s 75.
Ben Bernanke speaks at a home builders conference later on, but there’s not a heck of a lot else on the economic agenda.
Stocks in China and New Zealand were higher overnight, but everywhere else it’s a red arrow day. At this point, adjusted for fair value, the S&P futures are down about 13 points, the Dow futures are down 102, and the NASDAQ futures are 21 points below fair value.
It looks like we may have a deal in Greece. About 10 minutes ago, the Financial Times in London reported that Greek politicians have agreed to an austerity package. You have to realize how difficult this is – they’ve cut the minimum wage 22 percent, cut government jobs and wages. The last sticking point was a reduction in pension benefits, but perhaps even that has been resolved now.
Elsewhere, we have the Bank of England doing what central banks do best this morning – they’re printing more money. Another 50 billion pounds of “quantitative easing” is on the way in England. Short term rates were left unchanged at one-half of one percent.
The horror story of the morning here is Diamond Foods. Diamond will restate their 2010 financial statements and have removed their CEO and CFO after announcing that improper payments were made to walnut growers, of all people. Diamond Foods stock is looking to open about 40 percent lower this morning.
Lorillard, Cisco Systems and Pepsico all beat earnings estimates. Pepsico also announced that they will cut 3 percent of their global workforce.
Expect weekly Jobless Claims at 8:30 to read 370,000, up a tad from last week.
European markets are a little higher. We’ve seen the futures rally this morning out of a bit of a hole, and we actually broke above fair value about 10 minutes ago. At this point, adjusted for fair value, the S&P futures are higher by about 2½ points, the Dow futures are up 31, and the NASDAQ futures are about 5 points above fair value.
Have you heard this one? Some Greek politicians and some Eurozone officials walk into a bar, and they walk out with a Greek bailout agreement. Okay, until now it’s been a joke, but TODAY MAY BE THE DAY! Don’t bet on it, but they are reportedly going over the details of a tentative agreement as I speak.
There aren’t any significant economic reports due today, but we do have a flurry of earnings reports to review. Last night, Disney beat the estimated profit number, but revenue was a little on the light side. However, when you have profits up 12 percent on revenue that was only one percent higher, your margins are improving, and that’s the case with Disney.
This morning, Time Warner reported 94 cents versus the expected 87 cents. Revenue beat, and Time Warner raised their dividend by 11 percent. Also raising their dividend on an earnings beat is Wyndham Worldwide. CVS Caremark met expectations. The morning’s miss was Sprint/Nextel, losing 43 cents per share, which was 6 cents worse than expected. However, the guidance was encouraging and Sprint shares are looking about 5 percent higher pre-market. McDonald’s global same store sales are up 6.7% versus a 5.9% estimate.
Cisco Systems, Akamai and Groupon are among the many companies still to report today.
Most overseas markets are higher. We’ll start with stocks at their highest level since 2008. Adjusted for fair value, the S&P futures are higher by 2 points, the Dow futures are up 23, and the NASDAQ futures are about 4 points above fair value.
Another one of those familiar late-afternoon rallies almost brought stock prices back to even yesterday - but not quite. We’ll be digging out of another little hole this morning, and once again, our morning blues start in Europe.
German Industrial Output in December was expected to rise two-tenths of a percent. Instead, this morning’s report indicated a decline of 2.9 percent. That’s not exactly great news out of the only European economy that appears to have its head on straight. Negotiations on the Greek bailout continue today and are even more tense in light of a union-led strike and the collapse of the Romanian government yesterday over austerity policies.
Ben Bernanke appears before the Senate Banking Committee today, which should be interesting in light of last Friday’s blowout Employment Report.
Coca Cola beat estimates by 2 cents. Emerson Electric missed by a penny per share, Becton Dickinson beat, but guided lower. BP is raising their dividend 14% to 8 cents per share. Toyota raised guidance and the miss of the morning appears to be Swiss Financial firm UBS. Earnings of 10 Swiss francs were lower than last year by 76 percent and missed estimates by about 40%.
Asia was mixed, Europe is mainly lower, except for the Greek market, which is up a little bit. Go figure. Adjusted for fair value, the S&P futures are down almost 5, the Dow futures are down 33, and the NASDAQ futures are about 7 points below fair value.
It’s halftime for fourth quarter earnings reports, and we’re clinging to a slim lead. Although fewer companies bested estimates than in recent quarters, on the whole, earnings were pretty healthy. With the very positive Jobs Report from last Friday, the last recent major worry on the table is Greece.
The news there is that there is STILL no news, but that’s not good news, in that Greek officials have repeatedly led us to believe that resolution was at hand. It appears this morning that the Greek Government is a lot more interested in making announcements than implementing austerity. Two big Greek Unions will go on strike tomorrow.
Fortunately, the Greek default threat that shook worldwide stocks last year has the futures lower this morning, but not by a lot.
Hasbro announced $1.06 in quarterly profit this morning. That was a penny better than expected, and they raised their dividend. However, sales were light and the stock is looking lower. Humana raised their guidance, but still below Street estimates and Eli Lilly says that they will freeze the pay of most employees this year.
No big economic reports are on the agenda. Asia was mostly higher, but Europe is mostly lower and the Mexican market will not trade today.
At this point, adjusted for fair value, the S&P futures are down 6, the Dow futures are down 46, and the NASDAQ futures are about 10 points below fair value.
This time around we’ll follow up Groundhog Day with Jobs Friday. At 8:30 about 121,000 new jobs are expected to come out of hiding and see their shadows. The Unemployment Rate in expected to hold steady at 8½ percent. The January Report is always a bit of a squirrely one, as the Labor Department struggles to adjust the December and January numbers to account for all the temporary Holiday-related jobs that pop up late in the year, only to vaporize after Christmas. The January Report will also include “adjustments” to the last 12 months of guesstimates which could yield some belated surprises.
The big rush of fourth quarter earnings reports is just about over. But this morning, Estee Lauder matched the expectation of $1.01 in operating profit. However, they guided lower for the year and the shares are 7 percent lower pre-market. Beating estimates were Aon, Digital River, Weyerhaeuser, Booz Allen Hamilton and Wynn Resorts, although Wynn is looking a little lower pre-market.
The Greek Government said that their deficit will be lower than previously thought due to a new real estate tax, which is evidently one which they actually figured out a way to collect.
Overseas markets are mixed. Our futures are higher, but could slide back toward the flat line as we head toward the Labor Report at 8:30. The better that number comes in, the higher prices will be at the open.
At this point, adjusted for fair value, the S&P futures are higher by about a point, the Dow futures are up 23, and the NASDAQ futures are about 5 points above fair value.
It’s February 2nd. Of course, that means that it’s the day Ben Bernanke comes out of his hiding place to announce that he’s seen his shadow and that means we’ll have another 3 years of zero interest rates. Okay – not really. But Mr. Bernanke will be giving his outlook on the economy to the House Budget Committee today at 10 o’clock.
Outside of being the week that includes Groundhog Day, this is the week that contains a lot of information about jobs. The Labor Department’s monthly report comes Friday. The ADP Report came yesterday. But today, not such great news from the Challenger Layoff Announcement Survey. Job cut announcements in January were up 28 percent from December and 39 percent year over year. Pharmaceuticals, Financials and Retailers were hit hardest.
On the earnings front, Green Mountain Coffee had a great report last night, and the shares are looking to open more than 20% higher this morning. Also out with positive news, Cummins, Sara Lee, Kellogg and Starwood Hotels. Missing the mark were Dow Chemical, The PulteGroup, Cigna and Sony.
Costco reported comp sales up 8 percent in January, which beat estimates by almost 2 percent. Target sales were up 4.3 percent, beating the 2 percent estimate.
Asia mainly higher, Europe a little lower. At this point, adjusted for fair value, the S&P futures are lower by a point and a half and the Dow futures are down 19, although the NASDAQ futures are more than a point above fair value.
Yesterday, some lousy mid-morning economic reports punched the wind out of an early rally. However, par for the recent course, stock prices recovered by the close, wrapping up the best January that stock prices have seen in 15 years.
This morning, better than expected manufacturing data out of China, Germany, the U.K. and the eurozone sparked a rally in Europe that we will carry through to higher prices here at 9:30.
One stock that will not be heading higher in the early going is Amazon. Last night, Amazon announced a big drop in fourth quarter profit and guided much lower for the first quarter. Revenue was almost a billion dollars short of expectations and margins were weak. Amazon may, in fact, lose money in the first quarter. Amazon stock has lost about 9 percent in the pre-market trade.
Chrysler is out with good news. January Sales were up 44% from a year ago and topped the 100,000 level. That’s the best January performance in 4 years.
In December, the ADP Employment survey sparked quite a rally with an estimate of 325,000 new private sector jobs. That number was revised lower this morning to 292,000. The January report was released just seven minutes ago and estimates 170,000 new jobs. That’s a little higher than the 125,000 number were expecting out of the Labor Department on Friday and the news has done nothing to shake the rally in the futures we’ve seen all morning long.
Mainland China, Hong Kong and Australia were lower overnight. Most other major markets are higher. Adjusted for fair value, the S&P futures are higher by almost 8½ points, Dow futures are up 79, and the NASDAQ futures are about 11½ points above fair value
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