February 28, 2014
Yesterday’s steady-as-she-goes testimony from Janet Yellen laid the foundation for yet another rally in stock prices, and led to an all-time record close for the S&P 500 Index.
The big bitcoin exchange Mt. Gox has formally filed for bankruptcy protection, disclosing that oh, about a half-billion dollars worth of bitcoins have been lost. Easily mined, easily lost, I guess. Call me crazy, but I’ll just keep old-fashioned dollars in my wallet for now.
Pier One is warning that results for the current quarter are being hurt by the severe winter weather. Pier One stock is chilling by about 3 percent pre-market. But that’s nothing compared to Deckers Outdoor (they’re the makers of those Ugg shoe.) Deckers shares are off about 13 percent on a sloppy outlook. 3D Systems and Berkshire Hathaway report earnings later today.
The Government’s second guess at 4thQuarter Gross Domestic Product will be announced at 8:30 this morning. The advance number of 3.2 percent is expected to be revised to a new reality of about 2½ percent. Of course, we’ll get one additional guestimate later in March.
The final Survey result on February Consumer Confidence and the Chicago Purchasing Managers Index both come before 10 o’clock.
A number of overseas markets are closed today, and the markets that are open are posting mixed results. Our futures have been a little lower most of the morning, but right now, there’s a whole lot of nothing going on. Futures on the S&P, Dow and NASDAQ Indexes are all within a point of fair value.
Janet Yellen will finally get to finish up the second half of her first Humphrey Hawkins trip to Capitol Hill today. Her scheduled testimony before the Senate Banking Committee was given a “snow day” a couple of weeks ago. Traders will be listening for any change in tone from her market-boosting comments to the House a couple of weeks ago.
We have a flurry of reports from big box retailers this morning, and they’re all better than expected, although just detecting a pulse is exciting when you’ve already been given up for dead.
Sears Holdings “only” lost 96 cents last quarter, which was far less than the expected loss of $1.82. Although not surprisingly, same store sales were down more than 6 percent. Sear shares are indicated about 6 percent higher.
J.C. Penney shares are more than 20 percent higher pre-market, as their CEO predicts that the retailer’s turnaround will be complete by the end of the year. The fourth quarter loss of 68 cents per share was 17 cent better than expected. But some analysts still believe that a lack of cash, too much debt and too much competition may still be too much for Penney to handle.
Finally, Best Buy reported $1.24 of adjusted earnings for the fourth quarter, which was 23 cents better than expected. Best Buy shares are indicated about 6 percent higher pre-market.
Asia was mixed overnight, but Europe is lower. Our futures are lower, but have improved a lot over the past couple of hours. Adjusted for fair value, the S&P futures are lower by almost 5 points, the Dow futures are down 28, and the NASDAQ futures are now about 3 points below fair value.
February 26, 2014
Now that the Federal Government has apparently extracted its pound of flesh from JP Morgan Chase, it appears to be turning its attention to Bank of America. In a regulatory filing, Bank of America disclosed that they are being investigated for past foreign exchange practices as well as their involvement in a Government mortgage program. Perhaps if we never run out of big banks we’ll never have to have another tax increase. Of course, no one is admitting or denying they did anything wrong.
We all know that something went wrong with credit card security at Target last year. This morning, Target reported 81 cents of adjusted earnings for the 4thquarter. That was two cents better than expected. Target now says that they expect to earn about 67 cents this quarter. That’s 18 cents lower than analysts expected.
Another big retailer, Lowe’s matched the expected 31 cents in operating earnings. The increase in same store sales was a little lower than expected at 3.9 percent, but Lowe’s added another 5 billion dollars to its stock buyback program. Lowe’s shares are about 3 ½ percent higher pre-market.
Asian markets were mixed overnight. Europe is mostly lower, but we’re likely headed higher at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 5 points, the Dow futures are up 41, and the NASDAQ futures are now about 13½ points above fair value.
February 25, 2014
Another day, another rally yesterday. Although it looks like we might get a little pullback in stock prices early on today, the corporate earnings reports so far look pretty good.
Home Depot beat the 71 cent earnings estimate by 2 cents. Revenue was a little light, but same store sales looked fine. Tenet Healthcare beat the 34 cent estimate by 9 cents. Macy’s $2.16 of earnings was a penny per share short, and Cracker Barrel also missed the mark by a penny per share. However, traders don’t seem to mind in light of the severe Midwestern weather last quarter, as Cracker Barrel shares are high pre-market.
Home builder Toll Brothers earned 25 cents per share last quarter, which was almost 50 percent better than expected.
And speaking of 50 percent, shares of car maker Tesla, after closing at another record high last night, are higher by another 5 percent pre-market. Tesla shares are now more than 50 percent higher since the beginning of the year while the broad market is pretty much unchanged.
Japan higher overnight, but most other major markets were lower. Consumer Confidence numbers come at 10 this morning, but at this point, adjusted for fair value, the S&P futures are lower by about 3 points, the Dow futures are down 24, and the NASDAQ futures are now almost 3 points below fair value.
February 24, 2014
Today will be the lightest day of the week for economic news. Still, at 10:30 this morning, the Dallas Fed’s February Manufacturing Survey will be released, but don’t expect a lot of good news there. The February reading is expected to slump to 2½ from January’s 3.8.
The earnings miss of the morning comes from international banking concern HSBC. Blaming volatility in emerging markets, HSBC missed estimates and the stock is missing about 4 percent of its value this morning. EOG Resources and ONEOK, a couple of big energy concerns report earnings later today.
Verizon shares are off about a half percent pre-market, in spite of saying that they expect better margins and 4 percent revenue growth in 2014 due in part to the acquisition of the portion of Verizon wireless that they didn’t already own.
It’s Monday, and our seemingly obligatory merger is in the semiconductor industry. RF Micro and Triquint Semiconductor are merging in a stock for stock deal.
China was a bit of a mess overnight, leading Asia lower. European markets are mixed, but our futures have been on the rise most of the morning. At this point, adjusted for fair value, the S&P futures are higher by about 4½ points, the Dow futures are up 35, and the NASDAQ futures are now about 12 points above fair value.
February 14, 2014
If you’re planning to get your sweetheart something romantic for NEXT Valentines Day from, say, Eddie Bauer, you may have to go to a Joseph A. Bank store to get it.
For 825 million dollars in cash and stock, Joseph A. Bank will acquire Eddie Bauer from its private equity owner. Bank can still back out of the deal if it can somehow convince the Men’s Wearhouse folks to surrender in that takeover standoff. For their part, of course, Men’s Wearhouse is still trying to swallow Joseph A. Bank. On the Eddie Bauer news, Joseph A. bank shares are about 4 percent lower pre-market.
If you hold shares of the online real estate firm Trulia, you’ll be swallowing about a 12 percent loss in value this morning. Trulia reported a smaller profit than expected this morning on higher than expected marketing expenses. Weight Watchers is losing more the weight. The shares are off 22 percent this morning on a disappointing outlook for 2014.
The University of Michigan’s first look at February Consumer Sentiment is expected to decline a bit to a reading of 80. That comes just before 10 o’clock this morning.
Japanese stocks lost ground overnight, but every other major market overseas is higher. Our futures have been almost dug their way out of an early hole, but not quite.
At this point, adjusted for fair value, the S&P futures are lower by 2 points, the Dow futures are down15, and the NASDAQ futures are now just a point and a half below fair value.February 13, 2014
After being chased around by Charter Communications for the past few months, Time Warner Cable announced this morning that they have agreed to be acquired by Comcast. It’s a more than 45 billion dollar stock for stock deal, and values Time Warner Cable shares at nearly 159 dollars per share. The deal, of course, will have to run a regulatory review, as it is another step down the road of consolidation in the cable business. And as we all know, the most profitable way to deal with your competition is to eliminate it.
The Federal Government is pretty much shut down today, but not because of any grandstanding politicians. The big snowstorm that put the South on ice yesterday is sweeping up the East Coast today, which will also likely put a damper on trading volume in New York.
One company that hasn’t minded this winter’s weather at all is Generac. The maker of all sort of natural gas generators reported $1.11 of quarterly profit, which was 21 cents better than expected. Generac stock is indicated more than 7 percent higher as anyone who can afford a generator is apparently scrambling to buy one.
Pepsico and Avon Products are also out with better than expected earnings reports.
No matter, our stock prices will start the day lower after a pretty lousy night in overseas markets. Japan was lower by almost 2 percent. Most other markets overseas were off on the order of a half-percent or so. At this point, adjusted for fair value, the S&P futures are lower by about 9 points, the Dow futures are down 72, and the NASDAQ futures are now 20 points below fair value.
February 12, 2014
Janet Yellen’s testimony gave us no big surprises yesterday and stock prices gave the testimony a big “thumbs up.” Markets like predictability and the Yellen Fed sure looks like a grand continuation of the Bernanke Fed so far.
If you’ve been yellin’ about a stalling problem in your planet-saving Prius, help is on the way. Toyota is recalling nearly 2 million units of the Prius to fix a possible software glitch. While we’re on the subject of innovative automobiles, shares of Tesla rose to more than 200 dollars per share yesterday, which is another all-time high, although Tesla shares are looking to open around 197 dollars per share this morning.
Deere shares are rising this morning on a good earnings report.
Mortgage applications fell about 2 percent last week on a week-over-week basis and the blame goes not to re-financings, but to a 5 percent decline in new home purchases. Don’t look now, but the index is down about 13 percent from a year ago. That of course reflects the much higher percentage of cash buyers in the market, or put another way, the percentage of people who just can’t get a mortgage.
We’ve heard a lot about layoffs is retail lately. Wonder where the jobs are going? Amazon has announced that they will be hiring another 2,500 distribution center employees.
Foreign markets are on the rise after our big rally yesterday. Our futures are lower, but not by any significant amount. At this point, adjusted for fair value, the S&P futures are lower by about 2 points, the Dow futures are down less than 15, and the NASDAQ futures are now about 3½ points below fair value.
February 11, 2014
At 10 o’clock this morning, brand-new Federal Reserve Chairman Janet Yellen will appear before the House Financial Services Committee. However, stock prices may react to her comments a bit earlier, as the text of her prepared remarks will be released in just about 15 minutes. Expect her to promise that the Fed’s zero-percent short-term interest rate policy will live on for a long, long time. We may also hear the term “data-dependent” a couple of times before the morning is over with respect to the Fed’s bond buying program.
CVS/Caremark, with stores that are still selling cigarettes (for the time being) beat the $1.11 cent estimate by a penny. Sprint lost much less than expected last quarter, losing 26 cents per share. That was 7 cents better than expected and Sprint shares are 5 ½ percent higher pre-market.
And if you have a business that employs between 50 and 99 workers, you’ll have another year to comply with the employer mandate in Obamacare. The already delayed deadline will now be extended until 2016 as the goalposts continue to move and the >
The National Federation of Small Businesses January Sentiment Index rose to 94.1 this morning, which was a little better than expected.
All major markets overseas are higher and we should head in that direction as well. At this point, adjusted for fair value, the S&P futures are higher by more than 5 points, the Dow futures are up 53, and the NASDAQ futures are now about 14 points above fair value.
February 10, 2014
Good news for AOL employees this morning. AOL announced some employee-unfriendly changes to their 401(k) plan last week, blaming the cutback in benefits as a counter-measure to the rising costs of Obamacare. Unfortunately, in an employee town hall meeting to discuss the change, the CEO also cited additional costs incurred by the company because on expenses incurred on behalf of a couple of employee families who experienced difficult childbirths last year. That registered about a minus 11 on the sensitivity scale, and that little attack of the foot-in-mouth virus led to severe employee blow-back. As a result, AOL told employees that it was just kidding, and that former 401k matching benefits would be restored, at least through the end of the year.
This week, the new Head of the Fed, Janet Yellen will get her first turn in the Humphrey Hawkins hot seat. That’s when you get to spend two mornings sitting in Washington, trying your best to hold your patience and possibly teach our Congressional representatives SOMETHING about economics. Her visit with the House comes tomorrow, and the Senate on Thursday.
Conglomerate Loew’s is out with a disappointing earnings report this morning.
McDonald’s shares are a little higher this morning. January same store sales worldwide rose 1.2 percent, which was a full one percent better than expected.
Overseas markets are mixed after our back-to-back rallies last Thursday and Friday. Our futures are off their earlier lows, but are still pointing a bit lower. At this point, adjusted for fair value, the S&P futures are lower by almost 3 points, the Dow futures are down 29, and the NASDAQ futures are now about 2 points below fair value.
February 7, 2014
What DAY is it? Well, it’s not Hump Day. What it is, is the first Friday of the month, and that means that at 8:30 well get the Labor Department’s Report on New Jobs, the Unemployment Rate and the average hourly wage.
Most expect that about 190,000 new jobs were created in January, and that the Unemployment Rate dropped to 6.6 percent. Of course, the Fed has pegged 6.5 percent as the rate at which it said it will start thinking about a change in their interest rate policy. However, no matter what the number, expect traders to take it with a grain of road salt, given the extreme weather that the country experienced in January.
Although stock prices rose yesterday, you might say that the market was a bit “anti-social.” Social media stocks, which have been market darlings for the past year went offline yesterday. First, it was the bloodbath in Twitter shares. Then, after the close, LinkedIn reported adjusted earnings that were only a penny better than the 38 cent estimate. However, the usage numbers and the guidance were disappointing and LinkedIn shares are more than 7 percent lower pre-market.
An AOL is changing their 401(k) program. They will only contribute matching funds at the end of each year and only to those who are still with the company through the full year. They are making the change to offset additional costs brought on courtesy of Obamacare.
We could change direction with the jobs report at 8:30. However, at this point, adjusted for fair value, the S&P futures are higher by almost 5 points, the Dow futures are up 26, and the NASDAQ futures are now about 14 points above fair value.
February 6, 2014
If something in your head convinced you to buy shares of Twitter over the past couple of months, you’re getting that head handed to you this morning. Last night, Twitter reported two cent per share of quarterly profit, which was 4 cents better than expected. Problem is, growth in new subscribers and growth in usage by current Tweeters were WAY below expectations. When your stock is priced not on a multiple of earnings, but on a multiple of dreams, that’s not good. Twitter shares are more than 20 percent lower pre-market.
On the famous other hand, shares of Green Mountain Coffee Roasters are more than 40 percent higher pre-market on word that Coca-Cola is investing over 3 billion dollars to take a 10 percent interest in Green Mountain. Coke has the right to increase their stake up to 16 percent.
General Motors with a major league miss this morning. That’s not surprising in a quarter that is the former CEO’s last at the helm, but it is concerning nonetheless. Perhaps it was the weather, but GM reported 67 cents per share of operating profit, 21 cents short of estimates. Revenue missed by more than a billion dollars.
The Challenger Layoff Report this morning told of 45,000 announced layoffs in January. That was up from 30,000 in December and included a lot of retailers cutting back on staff as they close brick and mortar stores.
Weekly Jobless Claims and Fourth Quarter Productivity number come at 8:30. No change in interest rates in Europe this morning. Our futures are well off their highs of the morning, but are still positive. Right now, adjusted for fair value, the S&P futures are higher by just almost 4 points, the Dow futures are up 48, and the NASDAQ futures are now about 13 points above fair value.
February 5, 2014
Earlier this week the ISM Manufacturing Index disappointed in a big way, helping the Monday’s stock prices swoon. At 10 o’clock, we’ll hear how the services sector of the economy did in January. While the December ISM services reading was 53, the range of expectations for the January number is 52 to 55.
Just minutes ago, ADP, the big payroll processing firm estimated that 175,000 payrolls were added in January. That missed the 193,000 estimate, but may raise hope that the Fed may taper the rate of the taper, as stock index futures improved just a bit on the news. Of course, the Labor Department’s Nonfarm Payroll Report comes this Friday.
Time Warner reported $1.17 per share in quarterly profit this morning. That was two cents better than expected. Time Warner will raise their dividend by 10 percent and will buy back 5 billion dollars worth of their own shares. 3M is increasing their buyback program from 7½ to 12 billion dollars.
Drug maker Merck missed the 89 cent expectation by a penny.
In a very interesting move, CVS/Caremark announced that by October 1st, CVS stores will no longer sell tobacco products. If it’s hard to imagine a drug store not selling tobacco, remember that there was a time that the thought of a smoke free workplace seemed impossible as well.
Japan recovered a little overnight. A lot of Asian markets are closed for Chinese New Year. European markets are mixed. We should head lower at the open.
Right now, adjusted for fair value, the S&P futures are lower by just about 11 points, the Dow futures are down 67, and the NASDAQ futures are now about 19 points below fair value.February 4, 2014
Well, February is off to a flying stop, as far as stock prices are concerned. Yesterday gave us the worst February start for the S&P 500 since 1933. Of course, it’s been years since we’ve experienced a 10 percent “correction” in this nearly five year old bull market. Historically, we’ve seen at least one correction of that magnitude each year.
Comparatively, the domestic stock market has actually fared relatively well through all this. In Japan, for instance, stocks dropped more than 4 percent overnight, and are now down more than 14 percent in 2014
Shares of YUM Brands should pop a little higher in the early going. Adjusted earnings last quarter of 86 cents beat estimates by 7 cents per share. YUM shares are about 4% higher pre-market. Heading about 3 percent lower are shares of Take Two Interactive, in spite of an earnings beat last night.
Gannett, Aflac and Gilead Sciences all report in today. And in case you think that you’re too old to start a successful new business, keep in mind that today is Facebook’s 10thbirthday. Think again.
Our futures have been bouncing around quite a bit this morning and are pointing a little higher. Of course they were doing that 24 hours ago. Keep in mind that the futures are only giving us an indication of the direction of prices in the first ten minutes or so of trading. After that, traders can take it in a totally different direction, as we saw yesterday. Right now, adjusted for fair value, the S&P futures are higher by just about 6 points, the Dow futures are up 43, and the NASDAQ futures are now almost 14 points above fair value.
February 3, 2014
Sooner or later, you come to realize that all the crystal balls in the world are broken. However, those who still seek a simple indicator to foretell the future of stock prices are really conflicted this morning.
First of all, it is said that “as January goes, so goes the year.” Well, January was a stinker, with the S&P 500 down around 3½ percent. Now, on the famous other hand, when an NFC team wins the Super Bowl, stocks have a history of rising 10 percent for the year, well above the typical 4 percent rise when the AFC wins. Oh, the confusion!
Perhaps a little clarity, at least for today will come at 10 o’clock. There’s a report due on December Construction spending and we’ll also get the January ISM Manufacturing Index. Expect a slight decline in that index to a reading of 56.5.
Chrysler reported an 8 percent year over year increase in sales this morning. Earnings are on the way from Anadarko Petroleum and food service firm Sysco. After the close, Yum Brands and Take Two Interactive check in.
Overseas markets are mixed. Our futures, which had been negative earlier this morning, shot quite a bit higher just within the past half-hour. Adjusted for fair value, the S&P futures are higher by just about 4 points, the Dow futures are up 36, and the NASDAQ futures are now about 5½ points above fair value.
Daily Reports @ WJR
For an explanation of "fair value" please click here.