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WJR January 2004 Reports




January 30, 2003


Nortel Networks blasted through estimates with their quarterly earnings report.  On a 12% revenue increase, Nortel made 9 cents per share last quarter when only a two cent profit was expected.


That’s going to perk up interest in tech stocks this morning.  But the big news of the day will be economic.  The advance number on fourth quarter Gross Domestic Product is expected to come in just under 5 percent.  Remember that last quarter, GDP roared ahead at over 8 percent, surprising almost everyone.  Anything well over 5 percent would again surprise everyone, and most likely boost stock prices.  That number will roll out in ten minutes.


The University of Michigan’s final take on January Consumer Sentiment will be released just after the market opens this morning.  It is expected to come in at a level of 103.2.


The futures are off their worst levels of the morning, but we’re still looking at a mixed picture for stocks, at least until we get that GDP number.  At this point, adjusted for fair value, S&P futures down about a point, Dow futures are down 24, but the Nasdaq futures are 4 points above fair value.

January 29, 2004


I leave you alone with the stock market for one day.  What did you do to it? 


Stock traders that were waiting for an excuse to sell into this vertically inclined market got their wish yesterday when the Federal Reserve Open Market Committee hinted ever so slightly that short term interest rates will not stay cemented at 1% forever.  This, of course, is not news to anyone.  The news is that rate increases may be closer than we had been led to believe.


The weekly jobless report rolls at 8:30 this morning. Expect a decline of 1,000 claims. But the rest of the big economic news for the week comes out tomorrow.  The remainder of today will be filled with earnings reports.


Companies beating estimates this morning include ExxonMobil, Dow Chemical, Halliburton, Maytag, Verizon, Mylan Labs and the big health care company Anthem.  Anthem also raised their estimate of future earnings.  Matching estimates were Honeywell, JetBlue and Eli Lilly. The misses of last night and this morning are Baxter International and William Wrigley.


Overseas markets are down following our drop yesterday. But it looks like we’ll get a little bounce at 9:30.   Right now, adjusted for fair value, S&P futures are up 6, Dow futures are up 48 and the Nasdaq futures are 7 points above fair value.


January 28, 2004 - Ron is reading poetry in his daughter's first grade class this morning.  Occasionally, he needs a culture infusion. He'll be back tomorrow.


January 27, 2004


Once upon a time, what Alan Greenspan said AFTER meeting with the Federal Reserve Open Market Committee meant a lot.  Yesterday, it was what he said BEFORE today’s meeting that lit a fire under the market.  Greenspan said we can be confident that an improving economy will restore the number of jobs lost since he started raising interest rates about 5 years ago. Maybe not the same jobs, but the same number if jobs.  At which point, of course, he’ll probably start raising rates again.


Whatever.  That lit a fire under the market, lifting stock prices to levels we haven’t seen in 2 ½ years.


Of course a steady stream of good earnings news didn’t hurt either.  That stream kept flowing overnight and this morning.  Agilent was up 12% in after-hours trading after raising earnings guidance.  Texas Instruments, Xerox, Dupont and Quest Diagnostics all made more of a profit than expected last quarter.


The Conference Board’s reading on January Consumer Confidence is expected to hit 98.5 at ten o’clock this morning.


The futures indicate a little profit taking at 9:30.  Right now, S&P futures are down a point or so, Dow futures are down 14 and the Nasdaq futures are 3 points below fair value.

January 26, 2004


Stock prices didn’t move much last week, in spite of news that just about every company that reported earnings met or beat estimates.  Although the Russell 2000 index of small-cap stocks added another one percent, the Dow Jones Industrial Average actually lost ground for the week.   That’s the first downer week for the Dow in two months.


This is a new week, but we may be looking at the same result, as stock prices appear to have all the good news already built into them.  So far this morning, Lear beat estimates and raised guidance for the year.  Sysco, the food services company, Lexmark, L-3 Communications, Safeco, Dial, IDEXX Labs and Kimberly Clark all beat their numbers.  Kimberly Clark is also hiking their dividend by 18%. The only miss of the morning is drug maker Schering-Plough, which made a penny per share versus an expected four cents.


American Express, McDonalds and Texas Instruments will all report later today.  We’ll also get the December report on sales of existing homes at 10 o’clock.


January 23, 2004


It’s been a hectic week of earnings announcements. Once again, for the most part, corporate earnings have come in even higher than the optimistic projections.  Stock prices have meandered all week as traders digested the news, and it looks like we’re set to meander a little more today.


Microsoft, a company that’s a master at promising well, but delivering better, beat estimates by 4 cents per share last night.  Schlumberger, the big oil concern also beat estimates, after special charges.  Speaking of special charges, Visteon checked in with the big loss everyone expected, due largely to restructuring charges.  More interestingly, Visteon said that the current quarter will be a little weaker than expected, although they then said that the full 2004 year will be better.


Money continues to pour into to stock mutual funds.  Another 5.6 billion according to AMD Data Services.  CORRECTION: the actual amount added In the past week was $4 billion.  About 5.6 billion was added in the prior week. That’s the 11th straight week we’ve seen stock funds pick up new money.


January 22, 2004


We have earnings all over the place this morning.  AT&T Wireless is the only major company to miss estimates, losing 3 cents per share, versus an expected breakeven.  However, they are officially putting themselves up for sale, which should launch a bidding war that has been simmering for over a week now.


Of those matching estimates, Southwest Airlines and Sara Lee. 


Companies beating estimates (with big ‘although’) were AT&T, although revenue was a bit light.  Eastman Kodak, although they will be cutting 15,000 jobs, or 20% of their workforce.


Beating estimates on an operating basis with some positive guidance were Pfizer, Ebay and Ford Motor.


The weekly jobless claims number comes out in ten minutes, and the December Leading Indicators at 10 o’clock are expected to be up 2 tenths of one percent.


A lot of Asian markets are closed for the Chinese New Year.  The year of the Monkey is coming, you know.  The futures may be a just bit of a monkey on our back this morning.   Right now, adjusted for fair value, S&P futures down a point, Dow futures are down 22, but the Nasdaq futures a fraction of a point above fair value.

January 21, 2004


It was a pretty tame State of the Union address last night, at least from the economic perspective.  Make the tax cuts permanent - that was certainly expected. Partial privatization of Social Security?  We’ve heard that long-overdue idea before.  But no new proposals on Retirement Savings or Lifetime Savings accounts.  Those ideas are being kept of the table for now, perhaps with a view toward stabilizing the tax rates first.


So, not much reaction in the futures to the President’s speech.  But as the corporate earnings continue to roll in, we’re looking at some weakness in technology stocks. 


Motorola beat estimates last night, but handset sales were not up to par.  RF Micro warned that the upcoming quarter would be soft.  That’s the bad news of the morning.  Among the many companies that beat estimates this morning, Lucent, JP Morgan, General Dynamics and Merrill Lynch.


December housing starts are expected to have slipped by a percent and a half, to just over 2 million houses.  We’ll find out in about ten minutes.


We’re looking for a mixed start at 9:30.  Adjusted for fair value, S&P futures up a fraction, Dow futures are up 16, but the Nasdaq futures are about 8 points below fair value.

January 20, 2004


A half dozen Dow components report earnings today.  Among them, Citigroup and United Technologies, 3M and GM each beat their estimates this morning.  General Motors reporting $1.47 per share on an operating basis versus an expected $1.22.


In case you haven’t noticed, the automotive supplier stocks have been on a run lately.  Shares of Delphi, for instance are up 44% in just the last two months.  Delphi, this morning, announcing 23 cents per share in quarterly earnings, versus an expected 21 cents.


Stocks in Hong Kong were up about 2 ½ percent overnight.  Also overnight, the Bank of Japan eased monetary policy in order to support the yen.  Europe, are you listening?


About a year ago the Bush administration floated a trial balloon for new saving vehicles called Lifetime Savings Accounts and Retirement Savings Accounts.  They were quietly deflated that balloon last year in order to get the tax cut passed.  Look for that balloon to rise again in the State of the Union speech tonight.  Think of the LSA as a kind of “Super Roth IRA”, where anyone could stash away $7,500 a year, withdraw their savings anytime for any reason, and pay no tax on the earnings. Of course, to maximize the benefit, you have to start with a spare $7,500.


The futures are in good shape. Adjusted for fair value, S&P futures are up 2, Dow futures are up 24, and the Nasdaq futures are about 6 points above fair value.

January 16, 2004


In just about an hour and a half, we’ll get our first indication of how those all those cranky consumers are feeling this month.  The University of Michigan Preliminary Consumer Sentiment Index is expected to come in at 94. That would be up about a point and a half from last month.


The big earnings reports of the day are already in without any surprises.  General Electric met estimates, as did Abbott Labs.  GE says that it sees good days ahead, possibly getting back to double digit earnings growth by 2005. GE stock is up over 2 percent this morning in Europe.


Keep an eye on mortgage rates.  The yield on the ten and thirty year Treasury Bonds has been diving since the first of the year.  Interest rates are now lower than they were a year ago, although still well above their lowest point this past June.  That means lower mortgage rates, and maybe a coming boomlet in refi activity if rates continue to drop.


Japanese stocks were up 2% overnight.  We should get off to a good start as well, in front of the long weekend.  Adjusted for fair value, S&P futures are up 4, Dow futures are up 41, and the Nasdaq futures are about 10 points above fair value.

January 15, 2004

It was only a couple months ago that I stopped calling it “NBD.”  Oh well, call it “Bank Once-Upon–a-Time” at this point.  JP Morgan Chase is gobbling up Bank One.  It’s a 58 billion dollar deal, the conversion ratio amounts to a 14% premium to Bank One shareholders, and early estimates are that about 10,000 jobs will go through the shredder over the next couple of years.


IBM was scheduled to report earnings next week, but just couldn’t keep its Big Blue mouth shut.  IBM reported $1.56 per share about a half hour ago.  That beats the estimate of $1.50.  Hardware and software sales were very good.  IBM is called up about 4 bucks per share in pre-market trading.


Intel beat estimates by 8 cents per share, on a 22% revenue increase and a doubling of profits.  Unfortunately, 6 cents of that was a one-time tax benefit, and their guidance for the upcoming quarter was a little guarded.  That’s going to result in some weakness in the Nasdaq this morning.


The Consumer Price Index and December Retail Sales reports roll in just about four minutes. At this point, adjusted for fair value, S&P futures are just about flat, Dow futures are up 14, but the Nasdaq futures are about 11 points below fair value.


January 14, 2004

Interest rates very low, business activity picking up.  It should be a recipe for the start of inflationary pressures at some point.  At 8:30 we’ll find out if that point is now.  The December Report of Producer Prices is expected to show a rise of 2 tenths of one percent.  While that would be a big increase from the 3 tenths of a percent decline we saw in November, a 2 tenths of a percent price increase shouldn’t really upset anybody.

Later today, the Federal Reserve releases its ever-fashionable Beige Book, which is the Fed’s report on regional economic conditions.

The big story of the day won’t be told until after four o’clock.  Intel, Apple and Yahoo! All report their earnings after the close of trading.  We’re pretty sure that last quarter was pretty good.  Focus on what they say about the coming year.

The futures are doing it again.  They started the morning in great shape but have weakened as the morning wore on.  At this point, adjusted for fair value, S&P futures are up 2 points, Dow futures are up 23, and the Nasdaq futures are about 6 points above fair value.

January 13, 2004

John MacMurray says baby, it’s gonna get cold, so get ready to pony up at the pump.  Oil prices hit $35 per barrel this morning, rising again in anticipation of the big cold snap the Midwest and eastern U.S. is facing later this week.

Earnings reports are starting to trickle in, although the floodgates really don’t open up until tomorrow, when Intel, Apple and Yahoo! report.  Accenture beat estimates by a nickel per share, but they don’t sound exceptionally cheery about the upcoming quarter.  German enterprise software maker SAP with a disappointing report this morning.

Big medical firms keep getting bigger.  Abbott Labs is buying TheraSense for 1.2 billion dollars.  That’s a 33% premium to last night’s closing price.  TheraSense makes blood sugar monitoring devices.

On the sur>

January 12, 2004

The Unemployment Report last Friday sure threw some cold water on stock prices.  We expected 150,000 new jobs – we got 1,000 new jobs.  One interesting figure, though, is that the unemployment rate actually dropped 2 tenths of a percent to 5.7%.  So, either a lot of people have given up looking for work and are sitting around watching Seinfeld re-runs, or they’ve become self-employed or gone back to school, which wouldn’t necessarily be reflected in the Labor department statistics.

Not that there’s anything wrong with that.


There’s a research report out this morning that predicts that semiconductor sales may rise 33% this year.  Japanese markets were closed overnight for “Coming of Age Day.”  Other overseas markets are slightly lower.


Our futures started out strongly this morning, but have been playing the slip-and-slide ever since.  At this point it looks like a slightly higher open for stocks at 9:30.  Adjusted for fair value, S&P futures are up less than 2 points, Dow futures are up 16, and the Nasdaq futures are just about even with fair value.

January 9, 2004

Earnings season is off to a good start.  Alcoa beat estimates by a nickel yesterday, and this morning, the Great Atlantic and Pacific Tea Company (that’s A&P to most of us) reported a loss of 32 cents per share.  That’s the bad news.  The good news is that they were expected to lose a buck and a half.

The big story of the day is “jobs.”  Most people agree that the economy is picking up steam, but the concern is that there are still too many people not picking up paychecks.  The December Payroll figures will be announced at 8:30 this morning.  It’s expected that businesses generated 150,000 new jobs last month.  That would be just about enough to keep up with growth in the work force.  That would translate into an unemployment rate of 5.9%, the same as November.

Asian markets were up nicely, on the tail of our rally yesterday.  Europe is mixed at this hour.

We’ll find our direction in ten minutes or so when those jobs numbers come out. But at this point, adjusted for fair value, S&P futures are down less than a point and a half, Dow futures are down 14, and the Nasdaq futures are about 4 points below fair value.

January 8, 2004

There’s always a silver lining.  If you have the flu, you’re probably convinced that there’s nothing good about it.  How about this – Proctor & Gamble says that their second quarter earnings will be better than expected because of this year’s early flu season.

The ticker symbol is “AA” the name is Alcoa, Not only is it at the beginning of the alphabet, it’s the company that traditionally kicks off the “earnings season” every three months.  Alcoa is expected to announce earnings of 34 cents per share for the quarter gone by later today.

Walmart with a little surprise this morning.  December same-store sales rose 4.3%.  Analysts were expecting a rise somewhere in the 3’s. Walmart still says that their earnings will be at the low end of expectations. Costco says that December same store sales were up 11%, overall sales up 14%.

Overseas stock markets rose overnight.  Our futures are indicating a mildly positive open, but a lot hinges on the weekly jobless claims number at 8:30.  At this point, adjusted for fair value, S&P futures are flat, Dow futures are up 13, and the Nasdaq futures are about 7 points above fair value.

January 7, 2004

We’re at the tail end of earnings warning season, as the actual earnings reports start to roll out tomorrow.  The only significantly bad news of the morning comes in the form of a short circuit at Circuit City. Same-store sales are down 1% from a year ago.  Those sales were expected to rise about 6%.  With its competitor Best Buy chugging along at 6 to 8%, some re-wiring may be in store.

Holidaysales were strong at Coach and at Brookstone.  Coach raised their quarterly earnings estimate by four cents per share to 48 cents.  Brookstone is raising their estimate by 10 cents, to a buck and a quarter.

No significant economic reports are due today.  A major brokerage firm downgraded shares of oil companies BP and Shell this morning.  They a down a bit in the pre-market.  Asian stocks were mixed overnight.  European markets are down, but generally less than a half-percent.

Futures are pointing to a slightly lower open in our markets as well.  Adjusted for fair value, S&P futures are down less than 2 points, Dow futures are down 23, and the Nasdaq futures are about 3 points below fair value.


January 6, 2004

We had a pretty impressive day for the stock market yesterday.  It was an even more impressive day for Kmart.  Kmart announced that although same-store sales in November and December were way down from 2002, the company was no longer selling stuff at a loss and trying to make it up on volume.  What a concept.  Kmart’s fiscal year doesn’t end until January 28, but in November and December, they may have made over 200 million bucks. Kmart stock rose 27% yesterday.

Three reports to watch today; November Factory Orders are expected to have fallen about a percent and a half.  The ISM index of activity in the services, or non-manufacturing industries is expected to hit a level of 60.8.  Perhaps the most interesting report is the December report on job cuts from the outplacement firm Challenger, Grey and Christmas.

Gold up another dollars to a new 15 year high.  Stock futures have been improving all morning, but at this point are still slightly negative for the U.S. open. Adjusted for fair value, S&P futures are down 2, Dow futures are down 15 points, and the Nasdaq futures are about 5 points below fair value.


January 5, 2004

Auto company stocks should get a lot of attention this week with all the buzz surrounding the Auto Show. December car and truck sales figures roll out today. Overall sales are expected to have risen a little over 2 percent.

Over the weekend, Alan Greenspan and a Federal Reserve governor were real "Chatty Cathys." Their comments have the dollar falling faster Europe this morning than Oklahoma in the BCS computer. Ben Bernacke, the Fed governor reiterated the Fed’s stance that American short term interest rates will be low for a long, long time. That has stalled European stocks, but should put U.S. stock prices in overdrive at 9:30.

Siebel Systems raised their 4th quarter estimates this morning. Eli Lilly lowered their 2004 projection slightly.

Asian markets were up again overnight, as we will be at 9:30. Adjusted for fair value, S&P futures up more than 5 points, Dow futures are up 46 but the Nasdaq futures are 8 points above fair value.

A bunch of Asian stock markets are still closed for Chinese New Year.  It’s the Year 4702, in case you’re keeping track.  European stocks are down a bit, and it looks like a softer start here as well. Adjusted for fair value, S&P futures are down 1 ½ , Dow futures are down 9, and the Nasdaq futures are 3 ½  points below fair value.

Nothing much shaking with the futures. We’re looking for stable prices when trading starts. Right now, adjusted for fair value, S&P futures are up a fraction, Dow futures are up 5, but the Nasdaq futures are a point below fair value.

WJR February 2004 Reports
WJR December 2003 Reports

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