February 28, 2013
Now that we have the Italian election panic out of the way, all the chatter has turned to “sequestration.” The meat-cleaver budget cuts will happen unless Congress and the President can agree to another course by 11:59 tomorrow night. Of course, right on cue, Congressional representatives and the President will meet tomorrow to point fingers at each other, and perhaps – just perhaps do their jobs.
So, if you’ve been yelling at your kids because they don’t do their homework until just before it’s due, relax. They probably have a future in Washington.
Meantime, the Dow Jones Industrials should open within about 85 points of an all-time high. Why? Well, sequestration could lead to a loss of jobs, which could slow the economy, which would keep the Federal Reserve interest rate policy ridiculously low for a long time to come. Recall investing rule number 1 - Don’t fight the Fed.
If you’re looking for some peace and quiet today, perhaps you should spend some time at JC Penney. Quarterly same store sales down 32 percent. Penney lost over a half billion dollars last quarter and the stock is looking 15% lower pre-market. Not to be outdone, Groupon shares are looking 25% lower on a lousy earnings report last night. Sears and Kohl’s beat estimates.
Preliminary 4thquarter GDP comes at 8:30, but absent any surprising news, stock prices should go relatively nowhere at 9:30.
Adjusted for fair value, the futures on the S&P are up about 2 points, the Dow Jones futures are higher by almost 5, and the NASDAQ futures are 2 points above fair value.February 27, 2013
Quarterly results of the country’s biggest retailers continue to trickle in. This morning, we’re taking aim at Target. A strong January boosted fourth quarter operating earnings at Target to $1.65 per share, which is 17 cents better than expected. Revenue was a little higher than expected and Target now expects fiscal 2014 earnings of about $4.95 per share. The average Wall Street estimate is currently $4.82.
The January Durable Goods number comes this morning at 8:30 and we may get a positive surprise, if for no other reason that expectations are so low. Expect a minus 4 percent reading, versus December’s surprisingly strong 4.6 percent. A big slump in the transportation orders gets most of the blame.
Ben Bernanke visits the House of representatives today after a fairly feisty session with a Senate Committee yesterday. His patience may finally be wearing thin.
Stocks in Japan, Portugal and Ireland are slipping a bit, but most other major markets are positive.
Our futures started the morning solidly in the red, but have fought their way back into the green within the past hour. It’s a very light green, but green nevertheless. Adjusted for fair value, the futures on the S&P are fairly flat, and Dow Jones futures are higher by about 5, and the NASDAQ futures are just about even with fair value.
February 26, 2013
The Dow Jones Industrial Average was 80 points higher early on yesterday, before reliable exit polls rolled in from Italy. Upon hearing the news of the three-way tie, the Dow dropped about 300 points, with 150 of that coming in the last hour of trading. Not that the results should have been a surprise. The Achilles heel of any democracy is the power of the people to vote themselves the wealth of others. We’ve seen that demonstrated as recently as this past November.
In any event, the results in Italy are casting doubt on the European rescue plan and are already having an impact over there. This morning, the Italian Government had to issue some six month bills. Last month they had to pay only about three-quarters of a percent on the six-month bill. This morning, they had to pay interest of about one and one-quarter percent, an increase of 75 percent.
Home Depot is out with a solid earnings report, beating estimates by three cents, authorizing a share buyback and raising their dividend by more than 30 percent. Macy’s also reported better than expected earnings.
Ben Bernanke goes to Capitol Hill today and tomorrow, to talk to the guys who can’t seem to talk to each other. It’s an awful task, but then again, that’s why they pay him the big bucks.
Overseas stocks followed us lower overnight, but we could have a little bounce back at 9:30. At this point, adjusted for fair value, the futures on the S&P are up about 4 points, and Dow Jones futures are higher by about 57, and the NASDAQ futures are about 6 points above fair value.
February 25, 2013
It looks like we’ll start off Monday the way we left off on Friday. However, there is a possible fly in the ointment. Exit polls from the Italian elections will start to roll out after the polls close at 9 this morning. Any indication of a win by former Prime Minister Berlusconi might throw a wrench into things.
In the meantime, wrenching about 18% higher this morning are shares of Barnes and Noble. Their Chairman is proposing to buy the bookstores of Barnes & Noble – but not the Nook E-reader business. Also gaining ground pre-market is Elan Pharmaceutical on a buyout bid from Royalty Pharmaceutical.
Lowe’s reported a 1.9% increase in same store sales last quarter, a stock buyback and earnings of 26 cents, which was 3 cents ahead of estimates.
Zynga is looking about 9% higher after passage of a new law in Nevada legalizing online gaming. Perhaps someday, you won’t even have to get dressed to get out and give your money away at a casino. That opportunity may soon be coming to a wireless device near you.
Overseas markets that are trading are trading high at this hour. At this point, adjusted for fair value, the futures on the S&P are up nearly 8 points, and Dow Jones futures are higher by about 57, and the NASDAQ futures are about 18 points above fair value.
February 15, 2013
The big mover of the morning is the stock of Herbalife as billionaire investors Bill Ackman and Carl Ichan continue to duke it out. Ackman is certain that Herbalife is a pyramid scheme poised for eventual collapse. Icahn disclosed yesterday that he has taken a nearly 13 percent position in the stock, driving shares up more than 20 percent this morning. There’s no love lost between the two men, and it remains to be seen if Icahn’s moves will eventually cause Ackman to be squeezed out of his short position in Herbalife. But for now, the battle continues.
The leaders of the world’s top 20 economies meet in Moscow starting today. We’ll see if there’s any way they can reach an agreement to prevent all countries that can print their own currency from running the printing machine 24/7/365 until inflation finally rears its ugly head, which is something no one outside of a gold bug wants to see.
GNC and Discover Communications raised earnings guidance yesterday while Procter & Gamble, Agilant and Waste Management guided lower.
The University of Michigan’s first reading on February Consumer Sentiment comes just before 10 this morning. Expect an increase to 75 from January’s 73.8.
Overseas markets are mixed, but generally a bit lower.
Our futures started the morning in a hole that has almost closed at this hour. At this point, adjusted for fair value, the S&P futures are down about a point and a half, the Dow futures are lower by 5 points and the NASDAQ futures are 4 points below fair value.
General Motors announced quarterly earnings this morning. On a year-over year basis, revenue and profits are higher, although market share was a little lower. Quarterly operating earnings of 48 cents fell about 4 cents short of estimates, and GM shares are about one percent lower pre-market.
Pepsi reported $1.09 in profit for the quarter. That’s a four cent beat. Pepsi also raised their dividend. On the flip side, Weight Watchers shares are quite a bit skinnier after disappointing report last night.
It’s Valentine’s Day, so I supposed it’s appropriate for some big companies fall in love with each other. American Airlines and US Air announced their long-anticipated merger this morning, and Berkshire Hathaway and 3G are buying Heinz in a 28 billion dollar deal, at a 20% premium to yesterday’s closing price.
Weekly Jobless Claims at 8:30 are expected to once again hang right around the 360,000 level. But the market is taking its cue this morning from the 4thquarter Eurozone GDP report, which came in at a very disappointing decline of nine tenths of a percent year-over-year.
Although off their earlier lows, our futures are still solidly in the red, in honor of Valentine’s Day. At this point, the S&P futures are down almost 5, the Dow futures are lower by 45 and the NASDAQ futures are 10 points below fair value.
February 8, 2013
We always knew that today would be a light day for economic data, but we didn’t know how light that trading would be. With a big snowstorm bearing down on the East Coast, a lot of traders will be, shall we say “working from a remote location” today and not bothering to get out of their jammies to do it. Nice work if you can get it.
AOL has evidently done some good work. Earnings of 41 cents per share were better than expected, as was revenue. The AOL Board also authorized up to a 100 million dollar stock buyback and the shares are higher by about 2 ½ percent pre-market. Moody’s, the big ratings firm is also out with better than expected earnings.
McDonald has announced January same store sales. Domestic sales were higher by almost one percent, which is much better than the four-tenths of a percent estimate. Overseas sales, however, were a pretty significant disappointment.
Not such a great day in Japan, India, Indonesia or Russia. But most other markets overseas are a little higher. Our futures, just as they were yesterday are about as sleepy as sleepy can be. Let’s just say they’re still in their jammies.
At this point, adjusted for fair value, the futures on the S&P are down a half point, and Dow Jones futures are down 5, but the NASDAQ futures are about 3 points above fair value.
February 7, 2013
The weekly jobless claims report and the non-farm productivity reports are the economic highlights of the day. At 8:30, expect 360,000 new Jobless Claims. That would be a bit of an improvement from last week, as the claims numbers continue to decline at an agonizingly slow rate.
Non-farm productivity in the fourth quarter is not expected to be good. Quarter-over-quarter productivity is expected to be down 1.3 percent and unit labor costs are expected to have rocketed up over 3 percent.
The Bank of England left short term interest rate at a half-percent this morning – right where they’ve been for four years now. The European Central Bank also admitted their hands are tied, leaving their short term rate target at three-quarters of a percent.
Costco and Limited and Target reported better than expected January same store sales this morning. Costco up 4 percent and Limited up 9, Target up 3 percent.
There’s just not any big trend coming from markets overseas. Some up, some down, but all said, not by much. And, so go our futures. The futures on the S&P and Dow indexes are relatively flat. The NASDAQ futures are about 3 points below fair value.
February 6, 2013
It’s the middle day in a very quiet week for economic reports. Just about the only thing to review today is a message from the Mortgage Bankers Association reporting that mortgage applications rose 3.4 percent last week. Both new mortgage apps AND refinancings rose, in spite of a little tick higher in interest rates.
A number of stocks could tick higher this morning. Time Warner looks about 4 percent higher on a better than expected earnings report. Disney and CVS Caremark both beat expectations and their stocks are 3½ and 1 percent higher, respectively in the pre-market. The winner of the morning may be shares of Shutterfly, which are flying 18 percent higher on a good earnings report and reaffirmed guidance.
The drama at Hewlett-Packard continues as break-up rumors have the stock a little higher this morning.
And RBS is the latest big bank to get a slap on the wrist regarding the LIBOR rate-rigging scandal.
The Japanese market rose almost 4 percent overnight. Other markets are lower, for the most part. Our futures have been slipping over the past couple of hours, and over the past 15 minutes, slipping pretty quickly.
At this point, adjusted for fair value, the S&P futures are down about 6 points, the Dow futures are down 41, and the NASDAQ futures are about 12 points below fair value.
February 5, 2013
Stock prices started on the weak side yesterday and got weaker much of the day, handing us the worst stock market day of the year so far. However, it could just be some profit taking. This morning, our futures appear to be almost the mirror image of what we saw 24 hours ago.
At 10 o’clock this morning we’ll get the January report on the non-manufacturing segments of our economy. It’s expected that the index will slip one point from December’s reading of 56.1. A similar survey was released regarding the Eurozone this morning, and came in better than expected, giving European markets a boost.
Oil giant BP reported better than expected earnings this morning. BP shares are up about a percent and a half pre-market. Disney and Chipotle will report later today.
Yum! Brands looks lower this morning on lowered guidance. JC Penney shares also lower on some issues raised by bondholders.
Japanese stocks never recovered from a slow start overnight and finished down almost 2 percent. Chinese stock rose just a touch, however, and Europe is generally in the green.
At this point, adjusted for fair value, the S&P futures are higher by almost 8 points, the Dow futures, which were down 95 at this point yesterday, are up 73 today, and the NASDAQ futures are about 13 points above fair value.
February 4, 2013
The Dow Jones Industrial Average finished last week just about 150 points from an all-time high, and could take a run at the record this week. However, that run will likely start in reverse this morning. Remember 2012? When our market fretted over every little headline out of Europe? It’s back to the future this morning.
Word of a possible corruption scandal in Spain (can you imagine? A corruption scandal in politics?) and concern over the upcoming elections in Italy have European shares and our futures in a bad mood this morning. As the campaigning heats up in Italy, the worry is that the winner might repeal tax increases that were part of the Italian bailout deal.
At 10 o’clock, we’ll see if the December U.S. Factory orders report can get us in a better mood. The November Factory orders number was flat. Expect the December number to have picked up by about 2.3 percent.
Humana reported $1.19 in earnings, which beat the estimates by 8 cents. We’ll get Simon Properties, Anadarko and Yum Brands a little later.
Asian markets were mixed, but as I mentioned, Europe is a bit of a mess. At this point, adjusted for fair value, the S&P futures are down almost 10, the Dow futures are down 95, and the NASDAQ futures are about 16 points below fair value.
Daily Reports @ WJR
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