Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
January 31, 2006
To put this in Super Bowl terms, Alan Greenspan has scored 13 unanswered quarter-points and at 2:15 he will kick in the extra quarter-point as time expires on his Federal Reserve Chairmanship. A lot of people are hoping by Ben Bernanke will keep us scoreless the rest of the year.
OPEC announced this morning that there will be no production cutbacks in the near future. That has the price of light sweet crude backing up about 50 cents per barrel.
Lot of earnings reports are rolling in. Beating expectations, Merck, L3 Communications, Zimmer, Pepsi Bottling and Knight Ridder. The warning of the morning comes from Altria. They are guiding lower for 2006 due to a variety of factors, including a ban on smoking at restaurants in Spain. Altria is indicated about 2 bucks lower in the pre-market.
The State of the Union address tonight also has traders a bit tentative this morning.
Nothing much happening overseas. Japan was up a half percent or so. Hong Kong did not trade due to the Lunar New Year. European markets are mixed. In recent history, Open Market Committee Day means that stocks trade in a narrow range and get to 2:15 just about unchanged. The futures are giving us no indication that today will be any different. Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down about 8, but the NASDAQ futures are a little less than a point above fair value.
January 30, 2006
It’s going to be an interesting week.
The long-delayed Enron criminal trial begins today. Tomorrow, Alan Greenspan will preside for the last time over the Federal Reserve Open Market Committee and we’ll also hear the State of the Union address. Wednesday, the auto makers will release their December sales results, which could be critical news for GM and Ford. The January Jobs Report rolls on Friday, and all week long major companies will announce 4th quarter earnings.
Speaking of which, ExxonMobil just told us how much money they made last quarter. They didn’t use the word “gazillion,” but they came close. ExxonMobil made 10.71 billion dollars on 99 billion dollars of revenue. That’s $1.65 per share on an operating basis, versus an expected $1.44. Schering Plough reported in a penny per share short of estimates.
Stocks in Hong Kong were up 1 ½ percent overnight. European markets are mixed. It’s one of those mornings when the futures look like they’re pointing toward a weaker open, but they’re not. After you adjust for fair value, the S&P futures are up about a point, the Dow futures are up almost 18, and the NASDAQ futures are almost 1 ½ points above fair value.
January 27, 2006
Unless you are in, or deal with the steel industry, you may have never heard of Mittal Steel or Arcelor. Don’t bother memorizing both of those names, because one of them is going away. Mittal is buying Arcelor. It’s a 23 billion dollar deal and will produce a company with 70 billion in annual revenue.
Procter & Gamble beat earnings estimates by 3 cents this morning, which is good news. And sometimes, even not real great news can be good. Microsoft missed revenue estimates, and only met earnings estimates. However, there was so much pessimism in front of that report, Microsoft shares are up about 3 percent in the pre-market.
In ten minutes or so we’ll get the advance 4th quarter Gross Domestic Product report. Expect 2.8 percent, versus last quarter’s 4.1%.
The Nikkei in Japan was up 569 points overnight. That’s about 3 ½ percent. European markets are up. We’re headed north as well, absent any big disappointment with the GDP report.
Adjusted for fair value, the S&P futures are up almost 5 points, Dow futures are up 36, and the NASDAQ futures are about 16 points above fair value.
January 25, 2006
Disney….Pixar….Pixar….Disney. Finally, those of us with young kids may get more of the great animated movies we love before, well, those kids aren’t young anymore. Steve Jobs, who is kind of the Buzz Lightyear of the tech world, becomes a Disney board member and biggest shareholder as Disney buys Pixar for a net 6+ billion dollars.
Most of the earnings reports that have rolled out since last night have been strong. That and a slight dip in oil prices should get stocks off to a good start this morning. General Dynamics beat estimates by 3 cents on 2 dollars in earnings. St. Jude Medical beat estimates as did Netflix. Oil company Amerada Hess, surprise, surprise, made $4.31 last quarter, crushing the $3.26 estimate.
Asian markets may as well have stayed closed overnight – as prices stood still. European stocks are doing well this morning, up around about one percent.
At 10 o’clock, December Existing Home Sales numbers are expected to be down slightly from last month. Plenty more earnings are on the way, but at this point, adjusted for fair value, the S&P futures are up 3 ½ points, Dow futures are up 24, and the NASDAQ futures are about 7 ½ points above fair value.
January 24, 2006
Now that the Way Forward announcement is over, here comes the Way to Benz-into-the-future. DaimlerChrysler reckons that it can do without 6,000 managers and 20 percent of its administrative staff. You have to wonder, what unnecessary work were all those people doing? Anyway, Daimler shares are on the rise in Europe this morning.
Waves of big of earnings reports are washing ashore this morning. Five Dow components report today. United Technologies came up a little short on revenue, but earnings beat estimates and they confirmed 2006 guidance.
DuPont will be the trouble spot this morning. They beat the estimates that they lowered twice in the past month, but then warned that 2006 will come in significantly worse than expected.
Johnson & Johnson matched estimates. McDonalds met estimates, announced a one billion dollar stock buyback, and says that they will return 5 to 6 billion dollars to shareholders.
Japanese stocks rose about 2 percent overnight and we will get off to a good start as well. At this point, adjusted for fair value, the S&P futures are up about 3 points, Dow futures are up 32, and the NASDAQ futures are about 6 points above fair value.
January 23, 2006
It’s Way Forward Day at Ford, which could mean Another Way to Make A Living for 25 to 30 thousand Ford employees, not to mention all the employees of all the companies that depend on Ford business or just the existence of Ford facilities nearby. Remember, now, that it was about four years ago that Ford cut 35,000 jobs and the world continued to spin on its axis. And so it will after today’s announcement, as painful as it will be.
Ford did have a rather surprising earnings report about 45 minutes ago, making 26 cents per share on an operating basis last quarter. The market had expected only a penny per share. Ford shares are indicating up about 30 cents per share in the pre-market.
Bank of America with the earnings miss of the morning. They made 94 cents per share versus an expected $1.02. Eaton Corporation just issued a warning that the current quarter and 2006 results will fall short of estimates.
Albertson’s has finally been swallowed up by Supervalu and CVS. The purchase price is about an 8 percent premium to Albertson’s Friday closing price.
Overseas markets are down in the wake of our big dip on Friday. However, our futures are pointing toward slightly higher prices at 9:30. At this point, adjusted for fair value, the S&P futures are up almost 2 points, Dow futures are up almost 11, and the NASDAQ futures are about 2 ½ points above fair value.
January 20, 2006
The big restructuring announcement comes from Ford Motor next Monday. Of course, everyone is trying to get the jump on the details. Bloomberg News reported this morning that at least 25,000 jobs will be cut over the next four years. Bloomberg got the scoop from those always reliable “anonymous sources.” A Ford spokesman declined to verify the report.
The market is on edge in the >
Citigroup raised their dividend by 11%, but just missed analyst estimates for profits and revenues. General Electric likewise had a very narrow miss on earnings and revenues. Motorola guided analysts lower for the next quarter.
Johnson Controls beat estimates by 3 cents on strong sales. However, they also guided analysts a couple cents lower for the current quarter.
The U of M Consumer Sentiment number is expected to hit 92.5 at 9:45 this morning. But in front of that, it’ll be red arrows at 9:30. At this point, adjusted for fair value, the S&P futures are down 4 points, Dow futures are down 38, and the NASDAQ futures are about 7 points below fair value.
January 19, 2006
Last week we were looking forward to a bunch of pretty good earnings reports. Instead, the first three days of this week have served up a lot of disappointment, the latest of which was Ebay’s lackluster guidance last night.
But as they say, today is another day, and even tech companies are coming in better than expected this morning. Lam Research, QLogic and Seagate Technology all beat estimates and raised guidance.
Comerica beat their number this morning, Merrill Lynch made far more money than expected, and helping the Dow futures, Pfizer earned 51 cents last quarter. That tops the consensus estimate by over 20 percent. Revenue from Lipitor was up sharply after a price increase, but Pfizer reported better than expected sales from a bunch of drugs, including Viagra. Pfizer should open at least 75 cents higher at 9:30.
Oil inventory statistics will be reported at 10:30 this morning. They are always watched, although nowadays they are just a sideshow compared to whatever havoc the Iranians are stirring up.
We have green arrows across the board this morning. European markets are up around a half percent. Hong Kong rose over one percent, and Japan rebounded from its sell-off, rising almost 2 ½ percent. At this point, adjusted for fair value, the S&P futures are up almost 4 points, Dow futures are up almost 26, and the NASDAQ futures are almost 7 points above fair value.
January 18, 2006
Let’s start with the good news. The futures are in better shape than they were in a couple of hours ago. That’s about the end of the good news. If the market were to open right now, the Dow would dip almost 70 points.
Who’s to blame? Well, round up the usual suspects. It’s a combination of oil, scandal and earnings. The cost of light sweet crude is up again on Nigerian and Iranian jitters, close to 67 dollars per barrel. Trading in Japan closed 20 minutes early overnight. They couldn’t handle the huge wave of sell orders. The Nikkei is down 6% over the past two days after word of a possible stock-trading scandal broke. Japanese trading will start a half-hour later than usual tonight.
Throw on the pile some lousy earnings reports, namely from Intel and Yahoo and a revenue disappointment from IBM, and you have the markets, especially the tech-heavy NASDAQ ready to take it on the chin.
In about 16 minutes, we’ll get the December Consumer Price Index. It’s expected to have risen only a tenth of a percent, which would give us a 3.6% increase for the year 2005.
At this point, adjusted for fair value, the S&P futures are down 9, Dow futures are down 66, and look out below - the NASDAQ futures are more than 29 points below fair value.
January 17, 2006
Quarterly earnings reports start to roll out by the bunch this week. Looking at the futures and overseas action, it looks like our market will be in serious need of some good news.
In Japan, market regulators raided the offices of a big internet company. The potential of a scandal knocked almost 3 percent off the Nikkei overnight. Hong Kong lost about half that much.
Compounding the problem, light sweet crude is once again over 65 dollars per barrel this morning, up over a dollar on the day. Worries about Nigerian supply and of course, uncertainty over the Iranian nuclear situation have oil traders on edge.
Intel is the headliner for the earnings show. They will report after the market closes. Intel stock is up 18% over the past year, but that puts is right about where it was 8 ½ years ago.
Dana and Yahoo also report today.
It looks like the battle for Guidant isn’t over yet. Boston Scientific has raised its bid for Guidant to 80 bucks per share. This, after Guidant agreed to Johnson & Johnson’s 71 dollar offer. The new offer expires at 5 o’clock this afternoon.
Most European markets are down one-half to one percent at this hour. At this point, adjusted for fair value, the S&P futures are down almost 7 points, Dow futures are down 57, and the NASDAQ futures are more than 12 points below fair value.
January 13, 2006
Happy Friday the 13th! Although maybe not so happy for a handful of companies that are warning that earnings will come up a little short. Put Lucent and Tyco in that column. Lucent’s income may be almost 20 percent shy of estimates. Tyco will also come up short, and confirmed rumors that it will soon be splitting itself up into three companies. Both stocks will open lower this morning.
Troubles of a different type are on the way for IBM and Home Depot. Both will be getting a visit from the SEC. IBM is being investigated for the release of some less-than-perfectly-accurate earnings guidance last year. Home Depot’s troubles stem from a lawsuit filed by a disgruntled former employee, questioning the propriety of Home Depot’s accounting for vendor credits.
General Motors did not actually release any earnings guidance this morning. But about a half hour ago they did indicate that internal cost cutting will start to kick in later this year, resulting in improved financial performance in 2006 and 2007. GM says that costs as a percentage of revenue will drop to 25% in 2010 from the current 34%.
The futures are about as flat as day old champagne at this hour. At this point, adjusted for fair value, the S&P futures are flat, Dow futures are flat, and the NASDAQ futures are about a point below fair value.
January 12, 2006
There’s a lot of smoke without a lot of fire this morning. Lots of brokers are out with upgrades and downgrades, but there won’t be a lot of actual earnings news until next week.
Apple shareholders will welcome an upgrade this morning. On the not so happy side of the coin, Coca Cola, JP Morgan Chase, Southwest Airlines and Visteon all being downgrades by various brokerage firms this morning.
Radio Shack says its fourth quarter will not live up to its previously stated guidance. However, nobody on Wall Street was buying the prior guidance anyway, so the stock may not suffer all that much today. On the other hand, Seibel Systems’ fourth quarter evidently resulted in better than expected revenue and gross margins.
The Bank of England and the European Central Banks held interest rates steady this morning.
Asian markets did pretty well overnight. Europe is mixed, and unless we get some help from the Weekly Jobless Claims number at 8:30, we’ll head south at 9:30. At this point, adjusted for fair value, the S&P futures are down almost 3 points, Dow futures are down 24, and the NASDAQ futures are almost 5 points below fair value.
January 11, 2006
Stock futures were in rally mode until about 7 o’clock this morning. That’s when Dupont announced that their quarterly earnings would be less than half of what the market expected. As usual, when results are good, it’s the result of great management. When results are lousy, it’s the weather. Dupont is blaming its bad chemistry on those fine southern belles Rita and Katrina.
Genentech announced a 64 percent increase in earnings for the quarter. That matched expectations. However, sales of the drug Avastin were a little on the light side. For a stock that trades at a pretty high multiple, “light” is not a word you want to hear. A major broker downgraded Genentech from “buy” to “neutral” this morning and the shares could be under some pressure.
Yahoo also took a downgrade this morning.
The oil inventory data at 10:30 this morning is really the only significant economic item on today’s agenda. Light sweet crude is down just a bit this morning, but is still more than 63 bucks per barrel.
All major foreign markets were either up overnight or are doing well at this hour. The Dupont news really took the wind out of our sails this morning, but absent any really bad news, this market seems that it wants to continue the New Year rally. At this point, adjusted for fair value, the S&P futures are up a little less than a point, Dow futures are up a point or so, and the NASDAQ futures are about 2 ½ points above fair value.
January 10, 2006
If you are a senior in college, you were probably in high school the last time the Dow Jones Industrial Average closed above the 11,000 level. All major indexes are at 4 ½ year highs as 4 o’clock yesterday afternoon. Enjoy it for the next hour or so, because we’re likely to see a fair->
The culprit? Well, oil is above 64 bucks again this morning, and that’s not helping. But after the close last night, Alcoa got the fourth quarter earnings season off to a flying stop. Blaming energy costs and the impact of the hurricanes, Alcoa presented a host of write-offs and missed estimates once again. The big question is whether they cleaned the closet this quarter, which would increase the hopes for better quarters ahead. However, Alcoa shares will be headed south at the open.
General Motors shares may pull back a little at 9:30 as well after rising over 7 percent yesterday. GM is rolling out another pricing strategy today.
Home Depot is doubling the >
Genentech reports earnings later today.
Hong Kong was flat overnight. Japan was down almost 2 percent. Most other foreign markets are down slightly. At this point, adjusted for fair value, the S&P futures are down 6 points, Dow futures are down 48, and the NASDAQ futures are more than 9 points below fair value.
January 9, 2006
Last week was quite a week for the market. In fact, if you measure stock results by the major indexes, last week was quite a year. With returns of 2 ½ to 4 ½ percent on the major averages, stocks did better over the 4 days of last week than the entire year of 2005.
But, one chapter doesn’t make a book, and this is Chapter Two. Entitle this chapter “Return of the Earnings.” Alcoa kicks off the fourth quarter earnings season later today and the reports will grow more numerous as the week rolls on. Earnings warnings have been few and far between, so look for some pretty good numbers.
IBM took its second broker downgrade in a week this morning. Of course, as hot as tech stocks were last week, IBM actually rose after last week’s downgrade. We’ll see if this one, from JP Morgan sends the stock south.
Cisco Systems is up in the pre-market on a brokerage upgrade. General Motors also enjoying an upgrade to “market perform” from “under perform” by Goldman Sachs.
Japanese stocks did not trade today, but all other major overseas markets are up. We’re looking toward a mixed open. At this point, adjusted for fair value, the S&P futures are down almost a point, Dow futures are down 10, but the NASDAQ futures are about a half-point above fair value.
January 6, 2006
If there ever was a wake-up call, this is it. See that fellow over there writing something on the wall? It’s time, folks to read the writing on the wall. If you are not of a mindset to save and save and save for your retirement, it’s unlikely that anyone else is going to do it for you. IBM, a company that for years was among the cream of the crop when it came to employee benefits, will stop funding it’s traditional pension plan for current workers in 2008. Retirees should see no change to what they’ve been promised. IBM will enhance company contributions to its 401k. However, the writing is on the wall, folks. You’d better be saving on your own, or planning to work a long, long time. And gentlemen, Home Depot needs only so many greeters.
Earnings warning season winds up today. While we’ve gotten a handful of warnings, it has again been a pretty quiet couple of weeks. That could mean some surprisingly good earnings reports could be in store starting next week.
The December Unemployment Reports rolls out in 15 minutes. Expect 200,000 new jobs to have been added and an unemployment rate of 5 percent. In front of that, most European markets are up a bit, and without a surprise at 8:30, we should head higher at 9:30.
At this point, adjusted for fair value, the S&P futures are up 4 points, Dow futures are up 34 but the Nasdaq futures are about 7 points above fair value.
January 5, 2006
Walmart reported a disappointing December sales number earlier this week, and this morning warned that earnings may well miss Street estimates. That put the market on edge about retailers in general. But, as a lot of retailers are reporting this morning, it’s clearly becoming a company-by-company story, as some did very well, while others didn’t measure up, Joseph A. Banks, Men’s Wearhouse, American Eagle Outfitters, Aeropostale and Nordstrom checked in with better than expected December sales results. Costco same store sales rose 7 percent, versus an expected 5.6%. On the other hand, Ann Taylor, Sears, Sharper Image and - surprise, surprise – Pier One came in lower than expected.
Oil inventory data comes out at 10:30 this morning. Light Sweet Cruse goes for $63.21 per barrel this morning.
Boeing and Merck both suffered broker downgrades this morning and IBM is looking lower as a major broker lowered earnings estimates.
It looks like a split decision for the open this morning, although just like yesterday, there’s strength in the technology companies of the NASDAQ that’s not apparent elsewhere. At this point, adjusted for fair value, the S&P futures are down a little more than a point, Dow futures are down 23 but the Nasdaq futures are about 2 points above fair value.
January 4, 2006
It’s fairly unusual to have the price of oil and the stock market spike up simultaneously. But yesterday’s release of the minutes of the latest Fed meeting overpowered a 2 dollar rise in the price of light sweet crude, and set off a world-wide stock rally.
The Open Market Committee hinted that the end of the road for rate hikes is just around the corner, which of course, is great news for all financial assets.
Expect a rise in December auto sales today to an annualized 16.9 million units from 15.7 million in November as a fresh round of incentives (weren’t those supposed to be over with?) helped out.
Japanese stock traded for the first time this year. It was only a half-day session, but the Nikkei was up about a percent and a half. The Hang Seng was up 1.7 percent and most European markets are up by a half to one percent at this hour.
The futures have rallied a bit over the past couple hours, but we still could see a minor pullback at 9:30. At this point, adjusted for fair value, the S&P futures are down a point and a half, Dow futures are down 15 and the Nasdaq futures are just a half point below fair value.
January 3, 2006
Well, the Santa Claus Rally never really materialized, so as we transition from one Wall street myth to another, traders will be on the watch for the “January effect.” For many years, January was a very good month for stock prices, especially for smallcap stocks. But of course, as soon as a “can’t miss” strategy is identified, it disappears as the market makes adjustments. Still, January is usually a pretty good month for stocks and it looks like we’ll get off on the right foot this morning.
Pilgrim’s Pride, the big poultry producer, put their right foot in the wrong place this morning. They issued a major-league earnings warning. Walgreen beat estimates for last quarter.
The December ISM index comes out at 10 o’clock and is expected at 57.4. That would be down a bit from November, and would indicate a slight slowing in the pace of expansion of the manufacturing sector. But the big deal of the day may be the release of the minutes of the Open Market Committee’s December 13th meeting. Stock traders are hoping that the Fed is good for two more rate hikes. Any indication in the minutes that the Fed will continue pushing rates higher would certainly reverse our early rally.
And rally we will at 9:30 At this point, adjusted for fair value, the S&P futures are up more than 6 points, Dow futures are up 57 and the Nasdaq futures are more than 8 points above fair value.
February 28, 2006
Between now and 10 o’clock this morning, we’ll get a load of economic data. And it looks like we’ll need some help from that data to avoid a little pullback.
At 8:30, the 4th quarter Gross Domestic Product is expected to be revised upward from its originally estimated 1.1 percent. Expect a revision to 1.6 percent. At 10 o’clock, we’ll get a triple header of data, with the Chicago Purchasing Manager’s Index expected to be flat to up slightly, January Existing Home Sales to be flat to down slightly, and the Conference Board’s reading on Consumer Confidence, which is expected to decline to about 104, from about 106.
Earnings are a mixed bag this morning. On the down side, Heinz missed and warned, King Pharmaceuticals missed estimates, even on an operating basis after some big charges. On the ever-present other hand, Staples beat estimates and raised their dividend. Teva Pharmaceuticals beat estimates as did BJ Wholesale. That’s not to be mistaken for BJ Services, the oil and gas company, which was hit with a broker downgrade this morning.
The futures, on their >
February 17, 2006
We’ll get a little economic data to go with our earnings reports this morning. Estimates for the January Producer Price inflation numbers are all over the place. The consensus is a 2 tenths of one percent increase in both the overall and the core indexes, but the overall number is really anyone’s guess this month. We’ll find out at 8:30.
The University of Michigan’s preliminary estimate for February Consumer Confidence at 9:45 is expected to come in at 91, which would be just a slight decline from last month.
Shares of Dell traded higher right after they issued their quarterly report yesterday afternoon. Yes, they beat estimates of revenue and earnings. But once analysts got their arms around the 2006 guidance, Dell shares came right back down. At least one broker downgraded the shares this morning. Dell is looking to open around 2 ½ percent lower than yesterday’s closing price.
Disappointing reports are out this morning from Radio Shack and Smuckers.
Japanese stocks were down 2 percent overnight, but most other markets overseas are up.
We’re pointing slightly lower at this point, but the PPI data in ten minutes could change all that. Adjusted for fair value, S&P futures are down less than a half-point, Dow futures are down 12, and the Nasdaq futures are just about a point below fair value.
February 16, 2006
Just in case you were thinking that stock trading pros know everything before you do, take heart. Hewlett-Packard stock lost 2 ½ percent yesterday, in front of its earnings announcement. Then, after the bell, HP announced earnings that were 4 cents better than forecast, revenue that beat forecast, and they raised guidance for 2006. Result? Hewlett-Packard is trading about 4 percent higher in Europe this morning.
Earlier this week, oil services firm Transocean had an inexplicably bad earnings report. Well, the explanation appears to be that it’s a company-specific problem. Baker Hughes, another big oil services firm reported better than expected earnings this morning, beating estimates by 3 cents per share.
Office Depot and JC Penney both out with good earnings this morning. The disappointments of the day are the reports from XM Satellite Radio and DaimlerChrysler. At DCX, the Mercedes division had a 2005 operating loss, and while Chrysler did well, it wasn’t up to expectations. The stock is down 2 percent or so in Germany this morning.
The futures have been on the rise during the past hour, Right now, adjusted for fair value, S&P futures are up a little less than a point, Dow futures are up 7 ½ , and the Nasdaq futures, on the strength in technology after the Hewlett-Packard report, are about 5 points above fair value.
February 15, 2006
Say what you will about Alan Greenspan. But perhaps his most amazing quality was his amazing patience when appearing before Congress. Faced with hour upon hour of political posturing that occasionally included a relevant question, Mr. Greenspan was virtually unflappable.
Later today we’ll find out how resolute Ben Bernanke can be under similar circumstances. The new Fed-head will spend the next couple of days on Capitol Hill fielding questions which can be boiled down to “Are we there yet? Are we there yet?” as is applies to short-term interest rates.
After the close of trading this afternoon Hewlett-Packard and Applied Materials will each report earnings. Expect operating profits from HP of 44 cents per share and 16 cents from AMAT.
Abercrombie & Fitch warned last night that 2006 profits will fall short of estimates. Light sweet crude is under 60 bucks this morning and that drop helped stock prices yesterday.
Yesterday’s rally, in fact, took the Dow up over 11,000 for the first time since last month. Don’t expect a lot of movement today until Bernanke starts to speak. In front of that, we should open slightly lower. Right now, adjusted for fair value, S&P futures are down 2 points, Dow futures are down 18, and the Nasdaq futures are about 3 points below fair value.
February 14, 2006
Happy Valentines Day. In addition to General Motors, which will be reaffirming its love for Michigan this afternoon, there are a lot of companies spreading the love this morning, as we’re looking at a bunch of pretty good earnings reports.
As unromantic as it sounds, things are pretty good in garbage. Waste Management made 46 cents last quarter, versus an expected 40 cents. Things are picking up elsewhere as well. 3M increased its dividend by 10 percent and authorized additional share buybacks. Qwest Communications broke even last quarter, but that’s a nickel per share better than estimates.
What’s not to love? Transocean, the big oil services firm, with flat earnings guidance, which is way below Wall Street estimates. Marsh & McLennan missed their number, Playboy missed by 4 cents and locally, Masco matched estimates of 50 cents per share, but then guided lower for the year.
The price of light sweet crude oil is dipping closer to the 60 dollar level. It’s down another 44 cents to $60.80. The report on January retail sales comes out at 8:30 and is expected to reflect a increase of 8 tenths of one percent, that would be up a touch from the December number.
Asia was up overnight. European markets are flat. Our futures are pointing higher. Right now, adjusted for fair value, S&P futures are up 2 ½ points, Dow futures are up 28, and the Nasdaq futures are just about 4 ½ points above fair value.
February 13, 2006
A lot of crosswinds are blowing this morning, which could make for an interesting stock market.
On the positive side of the ledger, it looks like another merger Monday. Merrill Lynch is talking to money manager Blackrock, considering an 8 billion dollar investment. Home Depot is reportedly buying 49% of a Chinese do-it-yourself retailer. Oil prices, although a little higher this morning, are still under 62 dollars per barrel.
On the other side of the coin, Starbucks was hit with a broker downgrade this morning and there were a couple of troubling articles in Barron’s magazine over the weekend. One questioned the valuation of Google, saying it could drop by 50 percent, and the other warned of a possible real estate and economic meltdown when all those variable rate, interest-only, sub-prime mortgage loans made a couple of years ago >
The Nikkei was down more than 2 percent overnight. European markets are up a half-percent or less. Our futures have improved somewhat over the past couple of hours, but there’s still a long way to go to avoid a pullback at 9:30. Right now, adjusted for fair value, S&P futures are down 3, Dow futures are down almost 27 points, and the Nasdaq futures are 8 ½ points below fair value.
February 10, 2006
There’s just not a lot on the schedule today. Earnings season is just about wrapped up, with no major reports due today. We will get some Foreign Trade numbers and the January Budget deficit number a little later on, but it will be a relatively sleepy data day.
Two significant companies will be talking it up with investors today. Pfizer holds a financial analysts meeting, and Microsoft will hold on conference on business solutions.
Visteon is now saying that they expect that only 42 percent of 2006 sales will be to Ford Motor as they continue to diversify their customer base. They expect over 11 billion dollars in sales overall, and expect EBITDA (that’s net earnings excluding interest expense, taxes, special items and other things we’d all like to ignore) of 45 to 75 million in 2006. Visteon also says the 2007 will be even better.
Japanese stocks were down one percent overnight, but most other markets overseas are just marking time. Our futures have been bouncing around in both directions at different times this morning. At this point, we’re looking toward a whole lot of nothing at 9:30. Adjusted for fair value, S&P futures are flat, Dow futures are up almost 4 points, but the Nasdaq futures are just about a point below fair value.
February 9, 2006
It’s not just the auto companies that are streamlining operations. Software maker Oracle is cutting a thousand jobs to realign as they assimilate Siebel Systems into the business.
In ten minutes, the government will report on Wholesale Inventories and the weekly jobs data, but those relatively mundane reports are the only data points on today’s agenda.
Earnings this morning from Aetna were better than expected. Aetna also raised their 2006 guidance. We heard the same story from Marriott International this morning. Unilever, sponsor of that highly-acclaimed Dove ad during the Super Bowl, disappointed on 2005 results, but their 2006 outlook is giving European traders even of a reason to push the shares up more than 1 percent this morning. Just a few minutes ago Best Buy reported a much better 4th quarter than expected. They also raised 2006 estimates.
It’s a sea of green overseas this morning. European markets up about one percent. We should head higher by just a little bit at 9:30. At this point, adjusted for fair value, S&P futures are up about a point and a half, Dow futures are up 8, and the Nasdaq futures are just about 4 points above fair value.
February 8, 2006
On the whole, earnings for the quarter have been okay. Not the blowout numbers we’ve been getting for the past few quarters, but on the whole, the fourth quarter earnings were fine. It’s the outlook for 2006 that has been the kibosh on our little January rally, and those concerns continue this morning.
For instance, Cigna reported earnings this morning that beat estimates handily, but then turned around and projected that 2006 earnings will be well below analyst estimates.
Deutsche Bank downgraded shares of General Motors to “sell” this morning, on concerns that the UAW will cause problems in the company’s turnaround plan.
A couple stocks should get a little pop at the open. Pfizer is trading 2 ½ percent higher in Europe after announcing that their consumer products division, which brings in about 9% of its revenue, is on the block. Cisco Systems is also looking up after a good earnings report last night.
Oil is down again after a big drop yesterday. In Japan, stocks lost more than 2 ½ percent, but it looks like we’ll head north at 9:30. At this point, adjusted for fair value, S&P futures are up a little more than 2 points, Dow futures are up 21, and the Nasdaq futures are about 10 ½ points above fair value.
February 7, 2006
Yesterday’s market started off slowly and rocketed into mediocrity as worries about the Iranian situation fought some pretty good earnings news to a draw. It looks like we may get more of the same today.
The announcement of the morning comes in ten minutes as General Motors lets us all know what happened at yesterday’s Board meeting. GM is expected to cut its dividend in half, from two dollars to a dollar per share. There is also speculation that they may take the opportunity to announce some additional white-collar job cuts or at the least, some salary cuts. Again, the announcement will be at 8:30, and the explanation to follow at 9 o’clock.
Coca-Cola announced sales and earnings that weren’t as bad as expected this morning, which, of course, is a good thing. Light sweet crude is down about 70 cents per barrel, which of course, is another good thing.
The not-so-good-thing? Markets overseas are down a little, and our futures are down a little more than a little. At this point, adjusted for fair value, S&P futures are down 3, Dow futures are down 20, but the Nasdaq futures are about 2 ½ points below fair value
February 6, 2006
It’s a big day for GM shareholders, as the Board of Directors will decide whether to, or more likely, how much to, cut the two-dollar per share dividend.
The current yield on GM is 8.64%, which doesn’t seem to make much sense, given the circumstances. Kirk Kikorian, who is back up to a 9.9 percent ownership interest after taking a giant tax loss in December, is pushing for a big cut in the payout.
There is one acquisition this morning. The women’s clothier J Jill will become a part of Talbot’s, with Talbot’s paying a 25 percent premium to Friday’s closing price.
Earnings season is winding down, but it’s far from over. Disney, Anadarko Petroleum, Yum Brands, Simon Property Group and more report in later today. Broker upgrades this morning for Alcan, Alcoa, Nike and Pier One.
The futures looked pretty good a few hours ago, but they have been on the slide ever since. If the market were to open right now, we’d be pretty close to the flat-line. Adjusted for fair value, S&P futures are down a fraction, Dow futures are up 10, but the Nasdaq futures are almost 3 points below fair value.
February 3, 2006
It’s been a week jammed packed with data for investors to ponder, and today is kind of the “Super Bowl” of data days. At 9:45 the University of Michigan’s final number on January Consumer Sentiment is expected to come in at 93. The December Factory Orders number comes at 10 o’clock. But the big number of the day rolls in just about ten minutes.
Nothing moves stocks quite like changes in interest rates. And last Tuesday, the Federal Reserve said in their statement that they will now be more “data dependent” in setting future rates. The data they consider most important is the monthly Job data. At 8:30, the January Jobs Report is expected to show an increase in 250,000 non-farm jobs. A low number, say under 150,000, would indicate a weakening economy -- not good. However, a strong number, say over 300,000 might indicate oncoming inflationary pressure – really not good. So if you are long stocks, you’re hoping for a Goldilocks number – not too hot, but not too cold. The unemployment rate is expected to hold steady at 4.9 percent.
The futures are nominally positive, but don’t get too excited. We won’t know which way the market is headed until the Jobs Report is announced at 8:30. At this point, after you adjust for fair value, the S&P futures are up a half point, Dow futures are up 10, and the Nasdaq futures, in spite of a lousy profit report from Amazon last night, are a half point above fair value.
February 2, 2006
The January car sales numbers released yesterday weren’t half bad, as they helped the market to a small late-day rally. But today it’s the retailers’ turn.
Last week the Commerce Department told us that the personal saving rate in the U.S. was actually NEGATIVE for all of 2005. It appears that consumers continued to out-do themselves in January—or at least outspend themselves.
Costco January same store sales were up 9 percent. Walmart was up 4.7 percent, American Eagle Outfitters came in way above expectations with an 11.2 percent increase and, wait, am I reading this right? Pier One’s January sales were up 8 percent or so. Pier One’s margins, however, will be about 4 points lower. Evidently big discounting drove that sales increase.
In about ten minutes we’ll find out just how productive we were in the fourth quarter of last year. Expect a big decrease from the 3rd quarter’s 4.7%, due to the fourth quarter slowdown in the economy we saw reflected in the GDP number last week. The productivity number should come in somewhere between 1 and 2 percent.
Most overseas markets are down this morning, although Japan was up another 1.4% overnight. Right now, adjusted for fair value, the S&P futures are down a little less than 3 points, the Dow futures are down about 17, and the NASDAQ futures are about 4 points below fair value.
February 1, 2006
Google reported last night with profits up over 70 percent and revenue up over 80 percent. But because of a higher tax rate, the numbers didn’t quite live up to Wall Street expectations. So what will happen to Google stock this morning? Well, think of a company the >
Boeing is the flip side of that coin, reporting adjusted profits of 58 cents per share last quarter, versus an expected 44 cents.
The January ISM Index at 10 o’clock is expected to come in pretty much in line with the December number of 55.6. We’ll also get the domestic oil inventory data later this morning, with expected levels of crude oil expected to rise 1.7 million barrels, a rise in distillates of 900,000 barrels. Gasoline is expected top rise by 1.3 million.
Although the Nikki in Japan was down one percent overnight, most other overseas markets are positive at this hour. Our futures have been on the comeback trail since Boeing reported, but are still indicating lower prices for stocks. Adjusted for fair value, the S&P futures are down almost 3 points, the Dow futures are down about 12, and the NASDAQ futures are about 15 points below fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
March 31, 2006
Sections 1113 and 1114 may sound like seating sections in the outfield to you, but they’re actually the bankruptcy code sections under which Delphi is expected to file a request today to have its contract with the UAW thrown out. This is not a process that happens overnight. And, unless a settlement is reached will likely take months. However, it’s just one more cloud over the shares of General Motors. But, what’s another cloud when it’s already raining pretty hard?
For the stock market in general, it’s the last day of the week, the month and the quarter, and a pretty good quarter it has been. Once again, for about the 12th quarter in a row, smallcap stocks keep rolling along in defiance of all the “expert” predictions. The so-called gurus have said repeatedly that the smallcap run is over and the large caps will outperform. Well, the Russell 2000 is up over 13 percent for the quarter. The Dow 30 and the S&P 500 are up just a bit more than 4% each.
Lots o data on the way this morning, including personal income and consumption numbers at 8:30, the Chicago PMI and Factory Orders at 10 o’clock, and sandwiched in between is the final University of Michigan Consumer Sentiment Index for March. Expect a slight upward revision to a reading of 87.
Unless the 8:30 reports give us a pleasant surprise, we’ll head a little lower at 9:30. Adjusted for fair value the S&P futures are down about 3, the Dow futures are down 14, and the Nasdaq futures are a little more than a point below fair value.
March 30, 2006
Given the auto industry’s problems, it’s a little difficult for Michiganders to believe that the American economy is humming right along. But according to most of the relevant data, humming it is, which is exactly why the Federal Reserve is giving no indication that it will take its foot off the interest rate brake any time soon.
Traders re-thought that Fed message yesterday and turned Tuesday’s loss into Wednesday’s gain in spite of another spike in oil prices.
The latest piece of data will be released in just a little more than fifteen minutes as we’ll get the final reading on how fast the American economy grew in the fourth quarter of 2005. Expect the preliminary number of 1.6% to be revised northward to 1.7%. While 1.7% doesn’t sound like stellar growth, keep in mind that we’re talking about the hurricane-ravaged fourth quarter. The current economy is thought to be doing much better.
Earnings are on the way from Best Buy a little later.
The futures are in better shape than a couple of hours ago, and if the momentum continues, we’ll open to the plus side on Wall Street. But if the market were to open right now, it would be a mixed picture. Adjusted for fair value the S&P futures are down less than a point, the Dow futures are down 4, and the Nasdaq futures are about 3 points above fair value.
March 29, 2006
Watching the market react to yesterday’s short term interest rate increase was like watching people stare at the sky in amazement the first time it snows in the fall. Like, hey, you didn’t expect this to happen again?
Stocks sold off sharply after the Fed released its statement at 2:15 that gave no hint as to when rates will stop rising. The market pretty much anticipates one more hike in May. However, the Fed has a history of not being done until they’ve overdone. That’s what has people on edge.
There’s not much on the agenda today, so keep an eye out for earnings warnings and the price of oil. Light sweet crude is down two bits, but it was over 66 dollars per barrel earlier this morning.
General Motors saw a lot of selling after hours after restating financials yesterday. GM will likely open lower and hope than traders change their minds as the day unfolds.
Overnight, Japan was up again, but Hong Kong was down. Europe is mixed, but most major European markets are up a bit and at the open, in honor of the basketball tournaments, we should get a little rebound as well.
Adjusted for fair value the S&P futures are up a little more than 2 points, the Dow futures are up 24, and the Nasdaq futures are almost 4 points above fair value.
March 28, 2006
It’s a pins-and-needles morning. Obviously, white collar workers at General Motors are sitting on the edge of their seats, awaiting word on whether they will be keeping those seats.
The rest of the world is awaiting the results of the first Federal Market Open Market committee meeting chaired by Ben Bernanke. We all know the Bernanke is a lot more plain-spoken than his predecessor. We’ll see if the Committee’s statement gives us any better indication of the future course of interest rates. First of all, don’t bet on it. Second of all, bet on another quarter point rate increase at 2:15.
If that isn’t enough tension for you, the Conference Board’s Consumer Confidence Index for March is due out at 10 o’clock. It expected to come in just about unchanged from February.
Asian markets edged up overnight, but Europe is flat to just slightly lower as everyone sits on the sidelines waiting for the interest rate decision. Our futures have veered above and below the flat line all morning. Right now they are indicating a slightly lower open for stocks. Adjusted for fair value the S&P futures are down about a half-point, the Dow futures are down 7, and the Nasdaq futures are a little more than a point below fair value.
March 27, 2006
It’s showtime for Ben Bernanke, and if the futures are any indication, it looks as if the market will wait around for the opening act before deciding whether to applaud or boo, although we are seeing a little strength in technology issues.
Twice per year the Federal Reserve Open Market Committee holds a two-day confab, and this is one of those meetings. The Fed meets today, but won’t officially announce the latest interest rate increase until tomorrow. However, increase the rate they will. Many market watchers are hoping that this is the end of the rate hikes, although the bond market is pricing in at least one more.
The only earnings reports due today comes a little later on from Walgreen.
Light sweet crude is down 29 cents per barrel, but is still hanging around the 64 dollar per barrel mark.
Asian markets were up a half percent or so overnight, but most European markets are down just a bit so far. At this point, adjusted for fair value the S&P futures are up less than a point, the Dow futures are up 10, and the Nasdaq futures are about 4 points above fair value.
March 23, 2006
It should be another interesting trading day for General Motors stock and traders try to digest the Delphi and UAW deals. Yesterday the stock was all over the place before closing only one cent higher on the day on volume that was about 12% higher than normal.
The 10 o’clock report of sales of existing homes is not usually a market mover. However, if you are on of the growing portion of the population who have had a house on the market for a longer time than you expected – well, this is starting to get personal. Expect February sales to come in at 6.5 million units versus 6.56 in January.
A few upgrades this morning should boost shares of Yahoo, ConocoPhillips and Marathon Oil. On the infamous other hand, YRC Worldwide, otherwise known as Yellow Roadway warned that the current quarterly profits will only be 65 to 70 cents per share. Analysts were expecting a dollar five.
India’s stock market was closed overnight. Other markets overseas are fairly flat to up a half percent or so. We’ll see if another mid-day rally saves our bacon today, but we’ll be starting with some egg on our >
March 22, 2006
The market will consider a couple of big corporate announcements this morning. The most far-reaching of the announcement is no doubt Microsoft’s news that the consumer version of their next-generation operating system will not ship until early 2007. That’s not only a big deal for Microsoft, it’s a big deal for personal computer makers and other software companies that were banking on a big Christmas selling season for new personal computers.
It’s better news for Bristol Myers and Sanofi-Aventis this morning. They will not >
Weekly oil inventory data flows at 10:30 this morning. Earnings are just in for FexEx. They made $1.38 versus the $1.30 estimate. JC Penney is raising their quarterly dividend by 44%, up to 18 cents per share.
The Mortgage Bankers Association says that mortgage applications dropped to their lowest level of the year, despite a drop in interest rates last week.
It looks like we’ll be heading a little lower at 9:30. At this point, adjusted for fair value the S&P futures are down 2 points, the Dow futures are flat, and the Nasdaq futures, weighed down by the news from Microsoft, are about 11 points below fair value.
March 21, 2006
Ben Bernanke gave a high-profile dinner speech last night to the New York Economic Club. And, since he wasn’t appearing before Congress, he was actually able to answer the questions that were asked.
Back in the days of the former Fed Chairman, many people complained that Alan Greenspan’s speeches were obtuse and extremely boring. Well, things have really changed. Last night’s speech was not obtuse.
By his own admission, Bernanke spent more time raising questions than providing answers. But stock traders will focus on one message this morning. Barnanke gave no indication the he favors a quick halt to the Fed’s interest rate hike campaign. As a result, we’re looking for a little pullback in prices at the open.
Oracle reported a 42 percent surge in profits last night, but the revenue number came up a little short of some estimates, so look for some pressure on Oracle shares at 9:30.
The February Producer Price Index is expected to decline by 3 tenths of a percent at 8:30 this morning, and later today Nike will report earnings.
The Japanese market was closed for a holiday overnight. Most European markets are a bit lower. Unless the PPI data at 8:30 turns us around, we’ll head lower at 9:30. At this point, adjusted for fair value the S&P futures are down 2 ½ points, the Dow futures are down 17, and the Nasdaq futures are almost 7 points below fair value.
March 20, 2006
There are two weeks to go in the quarter. That means that earnings warnings season is officially open, so keep your eyes peeled for potentially unpleasant surprises.
At 7 o’clock this evening, Ben Bernanke will speak to the New York Economic Club. While he’s not expected to say anything provocative, you never know. It’s his first big non-congressional speech as head of the Federal Reserve. Maybe an extra glass of wine at dinner? You never know what might slip out.
William-Sonoma matched estimates this morning. Oracle will issue their earnings report card after the market closes this afternoon.
The only economic report on the way is the report of February Leading Indicators. That report, at 10 o’clock, is expected to show a drop into negative territory, say three tenths of a percent, after last month’s increase of 1.1 percent.
Overseas stocks are having a nice day. Tokyo closed up about one and three quarters percent. European markets are up on the order of a half percent or so at this hour. At this point, adjusted for fair value the S&P futures are up less than a half-point, the Dow futures are up 11 points, and the Nasdaq futures are about 4 points above fair value.
March 16, 2006
The February Consumer Price Index leads the parade of eonomic data today. At 8:30 this morning, expect the core inflation index to have held steady at a two tenths of a percent increase. The CPI including food and energy costs is expected to drop to a scant one tenth of a percent after last month’s spike to seven tenths of a percent.
Also at 8:30 the February Housing starts are expected to drop to just over 2 million units, and later on this morning, we’ll get the Philadelphia Fed Survey.
On the “news we really didn’t need” front, Ford Motor shares were downgraded by a major brokerage this morning, going from an “overweight” to an “underweight.” Declining share of the SUV market was cited, and the last time Ford Motor shares were cited, they were down about 3 percent in the pre-market.
The S&P and the Dow closed at their highest level since May of 2001. Overseas markets are mixed, and in front of the CPI number our futures are pointing down just a tiny bit. Right now, adjusted for fair value the S&P futures are down about a point, the Dow futures are down about 9 points, and the Nasdaq futures are less than a point below fair value.
March 15, 2006
Between the hedge funds and the leveraged buyout firms, there sure is a lot of money sloshing around out there. KKR is reportedly offering up to 13 billion dollars for a controlling interest in GMAC. That gives General Motors another option as they consider monetizing the family jewel.
And not to be outdone by the other automakers, DaimlerChrysler is expected to announce some cuts in health care benefits for salaried employees later today.
In a couple of hours the weekly report on domestic oil, gasoline and distillate inventories may stir up energy prices a bit. Analysts expect rather sizable drawdowns in gasoline and distillates.
Sears Holdings shares will be stronger at the open this morning. Same store sales at Sears and Kmart stores fell noticeably last year, but the sales that they made were more profitable. Sears Holdings made $4.03 per share in the fourth quarter, versus an expected $3.62. Tight cost controls and fewer markdowns get the credit. To no one’s surprise after the Goldman Sachs report yesterday, Lehman Brothers beat estimates this morning for the quarter gone by.
All major overseas markets are doing well at this hour. Hong Kong was up over one percent. We’re looking at a mixed open, with technology looking a little stronger than the overall market. At this point, adjusted for fair value the S&P futures are down less than a point, the Dow futures are down about 11 points, and the Nasdaq futures are almost 4 points above fair value.
March 14, 2006
Just as merger news was trying to drive the market higher yesterday, a three percent rise in oil prices fought the market to a standstill. Although those oil prices are down a bit this morning, we’re hitting some other headwinds that should start us off a bit lower.
Procter & Gamble had been forecasting a 5 to 7 percent rise in organic growth this quarter. Last night, they narrowed that range to a 5 to 6 percent increase. Not horrible news, but it’s not going to help the price of P&G this morning.
One new merger story is out. According to the Wall Street Journal, Comcast is apparently in talks with Disney to acquire the 40% share of the E! Entertainment television network that it doesn’t already own. That could mean an extra a billion or so for Mickey’s money stash.
February Retail Sales are expected to have slipped about 8 tenths of a percent. We’ll find out in about 10 minutes. Goldman Sachs just reported a profit of $5.41 versus an expected $3.29 on 10 billion dollars of revenue versus the expected 7.2 billion. So, once again, no matter how well the market is doing, you can always count on Wall Street to make money.
Overseas markets are flat to slightly lower. Absent some unexpectedly good news on retail sales at 8:30, we’ll start the day a touch lower as well. At this point, adjusted for fair value the S&P futures are down less than a point , the Dow futures are down about 18 points, and the Nasdaq futures are about 3 ½ points below fair value.
March 13, 2006
Even if you’re not interested in college basketball, you may want to hold on to that NCAA Tournament bracket sheet, if only to keep track of all the companies that are merging or being bought out this morning.
Knight Ridder, the publishing company that has been up for bid, has agreed to be bought by McClatchey for 6 ½ billion dollars. McClatchey will, in turn, be selling a dozen of their collection of newspapers, including two papers in Philadelphia and the Akron Beacon Journal. McClatchey claims that they will not be getting rid of editorial staff. That would make this deal the exception rather than the rule for big corporate media mergers.
Elsewhere, Capital One is buying North Fork Financial in a 14 ½ billion dollar deal and specialty pharmaceutical company Watson Pharma is buying Andrx at a 16% premium to Friday’s close. There’s also a big pharma deal cooking in Germany this morning.
It’s Labor Day in Australia, but elsewhere overseas, everyone’s in the green, with Japan leading the way on a rise of over 1 ½ percent. Our futures have weakened during the past half hour, but are still pointing toward a slightly positive open. At this point, adjusted for fair value the S&P futures are up 2, the Dow futures are up about 20 points, and the Nasdaq futures are about a point and a half above fair value.
March 10, 2006
The February Jobs Report will set the tenor of the market this morning. In ten minutes or so we are expecting to hear that just over 200,000 new non-farm jobs were created in February. The Unemployment Rate is expected to hold steady at 4.7 percent. This may be one of the months when a weaker number may be better received than a strong one. Interest rate worries have had the stock market on edge recently, and anything that suggests that the Federal Reserve may have some wiggle room might be a good thing.
Aeropostale is out with a better than expected earnings report, on better than expected same store sales and a better than expected forecast. You might expect a better than expected stock price as well.
At this point, the major European markets and our index futures are suggesting a wait-and-see on the Jobs Report, although there appears to be a little weakness in technology once again. Adjusted for fair value the S&P futures are flat, the Dow futures are up about 4 points, and the Nasdaq futures are weaker, at about 4 points below fair value.
March 9, 2006
A big drop in oil prices yesterday helped stocks partially recover from what otherwise was a pretty ugly day. Those oil prices are sticking just north of 60 bucks per barrel this morning.
The Bank of Japan has announced the end of free money. While you thought 0% financing only helped deflating auto and furniture sales, the Japanese Central Bank has maintained what amounts to a 0% short term interest rate policy for years now to combat deflation in the entire Japanese economy. Anyway, the Bank of Japan says that the battle is over, deflation has been conquered, and interest rates there will start to rise. We’ll see. The Japanese still count energy prices as part of their core inflation rate. If oil prices do come back down, the statistics may not look so great.
AstraZeneca stock is up over 4% in Europe this morning on takeover speculation. Novartis is the potential buyer. Johnson and Johnson is being bought – by Johnson and Johnson. J&J will be buying back 5 billion dollars worth of its own stock.
Japanese stocks were up over 400 points overnight. European markets are up ½ to 1 percent, and we should get off on the right foot as well. At this point, the S&P futures are up almost 3 points, the Dow futures are up 20, and the Nasdaq futures are up about 8 points above fair value.
March 8, 2006
General Motors joined the parade yesterday. Recently, Ford, Verizon, IBM and others joined the line-up of companies freezing traditional defined benefit pension plan benefits. Now more and more employees are waking up to the real-world reality that if you are going to have resources when (and if) you retire, you’d better start saving them yourself.
If you’re a financial type looking for a new job, and you have a propensity for doing dumb things, there may be an opening soon at Google. Last week, Google stock went for a tumble after some loose-lipped comments from their CFO. This morning, Google is trading about 3% lower in Europe after they announced that a recent slide presentation to analysts contained some internal sales estimates that shouldn’t have leaked out. Perhaps Google should ask the Chinese Government for a little help censoring their finance department.
McDonald’s February same store sales were up 4.7 percent, versus the expected 4.2 percent.
Asian markets were off about ¾ of a percent overnight. Europe is down about one percent at this hour. Our futures have improved over the past couple of hours, and if they keep improving, we may avoid lower prices at 9:30, but they’re not quite there yet. At this point, the S&P futures are down 2 points, the Dow futures are down 21, and the Nasdaq futures are a little more than 4 points below fair value.
March 7, 2006
If we’re going to get a snap-back from yesterday’s losses, it will have to come later today. Barring the unforeseen, we will be following overseas markets lower at the open.
There’s a lot of concern about the leveraged American consumer. Variable rate credit card debt, variable rate mortgage debt – it’s all apparently manageable as long as those variable rates stay low. Don’t look now, but the yield on the 10 year Treasury Bond, which is indicative of the index used to set a lot of mortgage rates has been moving markedly higher every day since February, and is rising again this morning. We’re up to 4.8 percent on the 10 year. That’s a two-year high and it’s up one full percent since last June. With the short-end, the Fed funds rate, soon to be at four and three quarters percent, money is no longer so cheap.
Texas Instruments is our frustrating stock of the morning. TI is down sharply in Europe. They narrowed their quarterly guidance last night to within the high-end of expectations. Unfortunately, the market was looking for higher-than-expected, and the stock is selling off.
Fourth quarter productivity numbers come out in ten minutes, but in all likelihood, it will be all about interest rates the rest of the day. At this point, the S&P futures are down 3 ½ points, the Dow futures are down 28, and the Nasdaq futures are 3 points below fair value.
March 6, 2006
The more things change, the more they stay the same. Another mother-and-child reunion this morning, as AT&T, which you may remember as SBC, which you may remember as Ameritech, is buying BellSouth, which you may not remember at all. But BellSouth, Ameritech and SBC were all created by the 1984 ruling that broke up the old Ma Bell. Assuming this reaggregation is approved, we’ll be back down to three – AT&T, Verizon and Qwest. AT&T is paying about an 18% premium.
Lots of auto related news over the weekend, as General Motors is expected to get over 2 billion dollars for most of its interest in Suzuki Motors as GM continues to raise cash for its restructuring. Perhaps we’ll hear more about the GMAC sale this week as well.
And of course, in Toledo, Dana filed for Chapter 11 bankruptcy protection Friday. The filing covers its domestic operations only, but is designed to assure that production will continue while Dana reorganizes. That’s good news for Ford and GM, who rely on Dana for components.
The January Factory Orders will be announced at 10 o’clock, and are expected to dive about 5 ½ percent.
Japan was up a percent and a half. Europe is also doing well this morning. Our futures are kind of stuck in neutral. At this point, the S&P futures are up a half point, the Dow futures are down 3 ½, but the Nasdaq futures are a little stronger. The Nasdaq futures are sitting at almost 5 points above fair value.
March 3, 2006
You borrow money, you miss an interest payment, people get upset. Yesterday Standard & Poor’ and Moody’s both downgraded shares of Dana for the second time in a week. Dana announced on Wednesday that it had skipped interest payments on some of their senior debt. The price of Dana stock, which was $1.85 at the time, has almost halved, closing yesterday at $1.04. Just last July, Dana traded at about 17 bucks.
A little later this morning the University of Michigan’s February Consumer Sentiment Index will be announced, and the ISM Manufacturing Index also comes out this morning. That number is expected in at 58 versus January’s 56.8, which would reflect continuing expansion in the domestic manufacturing industries.
People must be lovin’ their latees lately at Starbucks. Same store sales at Starbucks last month were up 8 percent. Analysts expected 6.6 percent, so expect a little caffeination in Starbucks shares this morning. Oh by the way, if you’re trying to figure out just how big this coffee thing has gotten – the market capitalization of Starbucks is currently over 27 billion dollars. That’s bigger than General Motors and Ford – put together.
Asian stocks were down overnight, but Europe is up a bit. At this point, the S&P futures and NASDAQ futures are both a fraction of a point below fair value, but the Dow futures are in a little better shape. The Dow futures are at this point about 9 points above fair value.
March 2, 2006
The stock market’s one-step-forward, one-step-back fox trot will shift to the back foot this morning.
This morning’s culprits are the February retail sales reports. The excuse of the morning, at least from clothing retailers, is that Easter is late this year, so February was a lousy month. Well, maybe. Analysts expected that sales were weak in February at the Gap, but not this weak. Gap same store sales were down 11 percent in February. Hot Topic, Pier One, Chico’s, Aeropostale all disappointed on sales.
If you’re looking for a bright spot, even though profits were off a little, Costco beat revenue estimates, with same store sales up about 8 percent. Over at Walmart, same store sales were up 3.2 percent, exactly as expected.
Oil prices are up about one percent this morning. We’ll get new oil and natural gas inventory data later this morning, and at 8:30, the weekly jobless claims number, which nobody seems to care about anymore, is expected to rise to 285,000.
Overseas markets are mixed, but we will most likely be looking at red arrows at 9:30. At this point, adjusted for fair value, S&P futures are off about 3 points, Dow futures are down 31, and the Nasdaq futures are about 2½ points below fair value.
March 1, 2006
Another healthy helping of economic data is on the way today, as the stock market should make an early attempt to recover from yesterday’s pounding. At the top of the list of yesterday’s poundees would be Google. After Google’s Chief Financial Officer made some comments that could be roughly translated to “trees don’t grow to the sky,” Google sold off a quick 14%, before recovering half that loss by the end of the day. Still, even at the current price, Google’s P/E ratio of 72 promises a lot of future earnings growth that they’d better be able to deliver.
Speaking of earnings news, American Eagle Outfitters, Liz Claiborne and AutoZone all checked in with better than expected numbers this morning.
And speaking of numbers, January Construction Data and the February ISM Index are both expected to rise slightly from previous month levels. Those numbers will be out at 10 o’clock.
Japanese stocks sold off by a percent and a half overnight. Hong Kong was off about a half percent, but most European markets are stronger at this hour. We should recover a bit at 9:30 as well. At this point, adjusted for fair value, S&P futures are up about 2 points, Dow futures are up 23, and the Nasdaq futures are about 3 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
April 28, 2006
How about all the oil-related outfits with suddenly lower-than-expected results? ExxonMobil, ConocoPhillips, the Edmonton Oilers all came up short during the past couple of days. Anadarko Petroleum missed this morning. Chevron reports a little later on. Surprising? Maybe, but oh so politically convenient.
Stock prices just didn’t know which way to turn yesterday. Ben Bernancke’s Congressional testimony gave the market an indication that the one-and-done scenario regarding future interest rate hikes may be about to happen. Stock prices soared on that comment.
But after that, the market was kind of like the dog who finally catches the car he’s been chasing – like okay, what do you do with it now?
Last night, Mircosoft gave us an earnings report that disappointed on a number of levels. They missed their number for last quarter’s earnings and guided lower for the rest of the year. Microsoft shares are looking about 8 percent softer in the pre-market.
At 8:30 we’ll get the first estimate of 1st quarter Gross Domestic Product. Expect a strong reading of around 5 percent. The Chicago PMI and the U of M confidence numbers also come out this morning, but that GDP number should set the early tone for the market.
At this point, adjusted for fair value, the S&P futures are down a point, the Dow futures are down 7, and the Nasdaq futures, suffering the worst from the Microsoft hangover, are about 7 points below fair value.
April 27, 2006
The earnings reports continue to roll in, and they are almost all above expectations once again, but the futures are roundly ignoring that good news this morning. First of all, it’s become pretty obvious that last quarter was an outstanding quarter for profits. But second of all, China’s decision to raise its base interest rate to 5.85% sent a chill through markets around the world. That was their first rate hike in a year and a half. Add to that a 10 o’clock appointment that Ben Bernanke has with the Joint Economic Committee of Congress, and we’ll be walking on eggshells this morning.
One rather high-profile company missed their numbers about fifteen minutes ago. ExxonMobil reported profits of $1.37 per share on revenue of 88.9 billion. Analysts were expecting $1.47 on 100 billion in revenue. So like ConocoPhilips yesterday, revenue and profit at big oil is being reported to be not as strong as expected. Not that they can control this kind of thing, but it IS a time when big oil probably wouldn’t want to brag about terrific profits.
Stocks in Japan and Hong Kong were up a touch. However, European markets are taking it on the chin in the China interest rate move. They’re down about one percent. At this point, adjusted for fair value, the S&P futures are down almost 4 points, the Dow futures are down 26, and the Nasdaq futures are now about 5 ½ points below fair value.
April 26, 2006
We should get some early relief early on from a couple of down days for stocks. But how well the market holds will likely depend on the oil inventory number at 10:30 and the Federal Reserve’s Beige Book mid-afternoon.
In front of all that, the March Durable Goods number is expected to reflect a 1.7 percent increase and at 10 o’clock, March New Home sales are expected to come in at an annualized rate of 1.11 million units, versus 1.08 in February.
On the earnings front, Boeing made 88 cents versus a 76 cent estimate. However, the news isn’t all rosy. Revenues were lower than expectations and that should hurt the stock by a dollar or so this morning. Elsewhere, oil services company Baker Hughes came in at a 93 cent profit versus the expected 76. Monster Worldwide also beat estimates. On the flip side, Sprint/Nextel missed by 2 cents.
Overseas markets are generally up a half-percent or less. Our futures have cooled a bit during the past hour, but are still indicating higher prices at 9:30. At this point, adjusted for fair value, the S&P futures are up almost 3 ½ points, the Dow futures are up 16, and the Nasdaq futures are now a little more than 2 points above fair value.
April 24, 2006
The Nikkei Index in Japan lost almost 500 points overnight. That’s almost 3 percent, or put in perspective, the Nikkei’s worst day in almost 2 years. A weak U.S. dollar is taking the blame.
It’s the busiest earnings week of the quarter. We’ll get reports from a half-dozen of the Dow 30 stocks and over a third of the S&P 500 this week. Leading the charge this morning is Caterpillar. Caterpillar stock is up by over a third since the beginning of the year, and now we know why. Cat earned a dollar twenty during the quarter. Analysts expected only a dollar five. Revenue was up, and they raised their own guidance for the year, although not to a level higher than analysts were already expecting.
Xerox and Hasbro are two companies that are two companies that have disappointed investors in recent history, and here we go again. Both missed their numbers this morning. After the close of trading today, American Express and Sun Microsystems will report.
The futures have improved a bit, but are still indicating a weaker open for stocks. At this point, adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 12, and the Nasdaq futures are now just about a point below fair value.
April 21, 2006
Ford Motor’s report was a little bit sunshine and a little bit rain this morning. Of course, the overall first quarter loss of 1.2 billion is a big number. But, if you strip out Way Forward and other supposedly one-time charges, Ford earned 24 cents per share. Unfortunately, Wall Street was expecting 26 cents. The good news is that revenue, although down 9 percent from last year, was a little higher than expected. In the long run, getting those revenues up – selling more cars at better margins – is where the earnings are going to meet the road.
3M beat estimates by 3 cents. Wyeth also came in better than expected, and McDonalds just reported earnings of 50 cents per share, which was a penny better than expected. In the oil patch Schlumberger and Halliburton are also out with good reports. Let’s hope you’ve owned some oil stocks this year so that you can afford your next tank of gas.
Speaking of oil, light sweet crude is down 64 cents, but is still over 73 bucks.
Google’s tremendous earnings report last night is giving the Nasdaq futures a little shot in the arm this morning.
At this point, adjusted for fair value, the S&P futures are up 2 ½ points, the Dow futures are up 14, and the Nasdaq futures are about 5 points above fair value.
April 20, 2006
Good news on just about all fronts this morning. General Motors results were certainly a big improvement from a year ago. Not much of the well-reported cost cutting has kicked in, but GM reported significantly improved numbers. In fact, the bottom line was better by a billion dollars, due in large part to $1,000 more revenue per vehicle sold. Yes, it sure helps the bottom line when you’re not giving your product away.
The only earnings miss of the morning was a one penny per share miss by Hershey. Outside of that, corporate earnings continue to impress. Nokia shares are up over 7 percent in Europe after they reported.
Here’s a partial list of winners this morning, just in case your favorite team played; beating estimates were Apple, Altria, Union Pacific, Merck, Lilly, EMC, Baxter and Schering Plough. Sound like big pharma is on the rebound.
Oil is down a few cents, but is still north of 72 bucks. Gold is up almost 8 bucks per ounce at $643.50.
The Nikkei in Japan was off just two tenths of a percent overnight, but most other markets overseas are in the green. We’re looking at a slightly higher open. Adjusted for fair value, the S&P futures are up a fraction, the Dow futures are up 13. and the Nasdaq futures are 2 points above fair value.
April 19, 2006
Yesterday afternoon, the Federal Reserve released the minutes from the Open Market Committee’s March meeting. Concurrent with that release, Wall Street released a bunch of pent-up bullishness. Many of the Fed governors voiced the view that the end of rate hikes is near. Put that together with a tame Producer Price number and a bunch of good earnings reports, and the market turned in its best day in a year.
Watch the Consumer Price Index less than 10 minutes from now. Economists expect 2 tenths of a percent increase in the core rate and 4 tenths of a percent overall. Numbers lower than that will reinforce the bull run that looks to continue at 9:30.
The earnings continue to roll in and they are uniformly good. Johnson Controls, JPMorgan, St. Jude Medical, United Technologies, Pfizer, Coca Cola, Honeywell all reporting better than expected earnings, and there’s another dozen companies on that list that I could mention.
Overseas stocks are way up on the heels of our rally, and we are looking to pick up right where we left off. Adjusted for fair value, the S&P futures are up 4 points, the Dow futures are up 41. and the Nasdaq futures are almost 11 points above fair value.
April 18, 2006
It will be a battle between earnings and oil today. We’ll see if confidence in strong earnings can overcome the fear of runaway gasoline prices. So far, if the futures are any indication, the earnings are winning out, but rising crude oil prices are giving them a run for their money. Light sweet crude is closing in on 71 dollars per barrel this morning at $70.80.
On the earnings front, Merrill Lynch continues to roll in profits. The brokerage firm made 44 cents versus an expected 35, and that's after some bigone-time charges. United Health beat estimates by 4 cents, National City Bank beat by 2 cents and homebuilder D.H. Horton issued in line earnings on higher than expected revenue, but they lowered their outlook for the remainder of the year. Johnson & Johnson had better profits than expected. However, revenue was up only a little over 1 percent.
At 8:30 we’ll get the March Producer Price Index. Expect a headline increase of 4 tenths of one percent.
Asian stocks were up overnight. However Europe is a bit lower on the oil price rise. Absent a PPI surprise at 8:30, we’ll start a little higher. Adjusted for fair value, the S&P futures are up 3 ½ points, the Dow futures are up 20. However, the Nasdaq futures are almost 4 ½ points above fair value.
April 17, 2006
Happy tax day everybody! Get those returns or extensions filed by midnight, with, of course, the cash that you owe. For the first time this year, your individual return extension is automatically good for six months, rather than four, giving you one less thing to do while you concentrate on your procrastination this summer.
Earnings start to roll in earnest this week. So far this morning, Citigroup reported earnings that appear to be a little better than expected. It’s a confusing report because of some new accounting rules that kicked in this quarter. However, Citigroup continues to grow, especially overseas.
Eaton reported better than expected results of $1.40 per share. They also raised their guidance for the rest of the year.
There could be some interesting movement in the shares of Hewlett-Packard this morning. Barron’s magazine had a very positive article on H-P over the weekend.
At 8:30, the New York Fed will release the results of a survey of the executives of 175 manufacturing companies in New York State. Expect a reading of 23.8. But outside of that, no big economic reports are due.
Japan was down overnight. Europe is higher. We are about as flat as flat can be. Adjusted for fair value, the S&P futures are down a fraction, the Dow futures are down a fraction, and Nasdaq futures are a fraction of a point below fair value.
April 14, 2006
You have to go back to 2002 to remember the last time the 10 year Treasury Bond carried a yield north of 5 percent. But we closed at 5.05 percent yesterday as money continued to flow out of long term bonds. The 30 year is now up to 5.11 percent. Given strong March retail sales numbers and some fairly hawkish comments by a Federal Reserve governor, the bond market is now fully pricing in another short term hike in May and a 60 percent chance that short rates will be going to 5 ¼ percent in June. So look forward to higher payments on your variable rate debt, and higher rates on new fixed interest loans in the future.
If you’re struggling with your tax return this year, you’ll get two extra days to struggle. File your return or file for an automatic 6 month extension of time to file by Monday. That would be form 4868. Just make sure that the taxes you still owe for last year are paid by then, or the clock starts on interest and possible penalties.
The Nikkei index in Japan was up two-tenths of a percent overnight. Stocks in China rose over 2 percent and South Korea closed at an all-time high overnight. Other major markets, including our own are closed today in observance of Good Friday. Have a great Easter Weekend!
April 13, 2006
The big earnings guns won’t roll out until next week. Today we’ll have a smattering of reports, including some March retail sales, which are expected to have risen about a half percent, after a revised decline of 1.4 percent in February. McDonald’s, this morning, reported strong March same-store sales.
At 9:45, the University of Michigan will give us their preliminary April Consumer Sentiment number, which is expected to hold almost steady at 89.
There’s one curious update on the earnings front this morning. Oil refiner Tesoro said that they are going to miss their projected earnings number. How a refiner falls short in this energy environment is a head-scratcher. But outside of that, the earnings warnings remain few and far between.
General Electric reported in line with expectations.
Don’t look now, but the 10 year Treasury is yielding over 5% this morning. That rate is of course indicative of the direction of mortgage rates. Some are now predicting 7% on the 30 year fixed rate mortgage by year’s end.
The futures are pointing toward a mixed, but slightly lower open. At this point, adjusted for fair value, the S&P futures are down about a point and a half, the Dow futures are down 9, but Nasdaq futures are now almost 2 points above fair value.
April 12, 2006
Without a lot of earnings or economic news out yesterday, traders had plenty of time on their hands. So they did what they do best – they worried. Worry about rising commodity prices, worry about the Iranian nuclear situation, worry about rising long term interest rates. Added together, it made for a pretty ugly day.
After the market closed, biotech firm Genentech reported earnings last night. Although the report easily beat estimates, Genentech stock, which is pretty much priced for perfection, may be under pressure this morning. Genentech made 46 cents per share in the quarter versus the expected 41 cents.
Circuit City beat estimates this morning by 3 cents and confirmed break-even guidance for the current quarter. Harley Davidson matched estimates with their report.
Overseas markets all fell overnight. Japan was off about 1 ½ percent.
Our stock futures turned positive right around 8 o’clock this morning, but they’re not positive by much. At this point, adjusted for fair value, the S&P futures are now up a point, the Dow futures are now up 11, and Nasdaq futures are about 2 points above fair value.
April 11, 2006
It’s sort of like finding a 20 dollar bill in the pocket of a pair of old pants; not enough to solve your financial problems, but a pleasant surprise nonetheless. General Motors has gone deep into the pants pocket and pulled out its stake in Isuzu. Back in 2002, GM wrote down the value of its 7.9 percent ownership stake to zero. But now, surprise, surprise, surprise. GM is selling its interest to its strategic partners for 300 million dollars. As recently as 1998, GM owned almost half of Isuzu’s stock.
Alcoa got earnings season off to a great start last night, reporting earnings of 70 cents per share, which was about twenty cents higher than expected. Alcoa shares will trade higher this morning.
We’ll take a little breather today, with no major companies slated to report until tomorrow. No major economic reports on the calendar either.
Oil is up another 54 cents to $69.28 this morning. That has overseas markets under pressure.
A handful of Southeast Asian markets were closed overnight in observance of the Prophet Muhammad’s birthday.
The futures have been negative all morning, but just turned slightly positive five minutes ago. At this point, adjusted for fair value, the S&P futures are now up a tiny fraction, the Dow futures are now up 7, and Nasdaq futures are now 2 points above fair value.
April 10, 2006
After the market closes this afternoon, earnings season “officially” kicks off with the report from Alcoa. Expect them to check in with earnings of about 50 cents per share for the quarter gone by.
Very, very few companies have warned about earnings shortfalls this time around, and continued earnings growth is important for stock prices at this point. The S&P 500 companies currently trade at a price to earnings ratio of about 18 if you look at current earnings, but only about 15 if you base it on expected earnings. With interest rates rising, it’s not likely that the investors will be in any mood to increase those multiples. That means if stock prices are going to continue to score, companies better keep hitting home runs with their earnings.
The yield on the 10 year Treasury is hanging just barely below the 5% level. Light sweet crude is up to up to $68.10.
There’s every indication that stock prices will sit in neutral when the starting bell rings this morning. At this point, adjusted for fair value, the S&P futures are up nearly 2 points, the Dow futures are up 8 ½ , and Nasdaq futures are about a point above fair value.
April 7, 2006
Stock traders here an in Europe are in serious wait-and-see mode this morning. What they’re waiting on is the March Unemployment data which will be announced in just about ten minutes.
Expect that 187,000 new non-farm jobs were created in March. That would be down from 243,000 in February, but would be enough to hold the unemployment rate at 4.8 percent. A closely watched number will be the percentage increase in hourly wages. Three-tenths of a percent is the expectation. Anything higher might raise inflation fears, which may lead traders to fear that many more interest rate hikes are on the way.
Starbucks is looking to open higher once again this morning. Same store sales rose 10 percent versus the expected 7.6 percent.
Hong Kong and Japan traded higher overnight. We’ll get out early direction at 8:30 from the jobs report. At this point, adjusted for fair value, the S&P futures are just about even, the Dow futures are up 3 ½ , and Nasdaq futures are just a tenth of a point below fair value.
April 6, 2006
It’s interest rate decision day for the EU and for the Bank of England. Both are expected to hold rate steady. Mr. Bernanke, are you listening?
Retail sales reports are pouring out this morning. Walmart’s March same store sales were up 1.4 percent versus an expected 1.2. The late Easter made March unusually weak. Walmart is expecting April to be up somewhere around 4 to 6 percent. Costco rang up a 7 percent rise in sales in March and is also raising their membership fee by 5 bucks in May. Those fees, of course, find their way very directly to the bottom line.
Shares of Merck will be under pressure this morning after losing another Vioxx lawsuit last night. That’s three trials down, and at least 5,000 more to go.
3M raised their first quarter guidance this morning. Napster raised its revenue guidance. Although Sharper Image reported a 29% drop in sales, there’s been a notable absence of bad earnings news out there this week.
Light sweet crude is up near 68 bucks per barrel this morning.
Asian markets were up sharply overnight. European markets are mixed in front of the interest rate decision. At this point, adjusted for fair value, the S&P futures are down a little more than 2, the Dow futures are down 17, and Nasdaq futures are 2 ½ points below fair value.
April 5, 2006
Panera Bread keeps selling more and more and more. Why? They knead the dough. Sorry.
Panera’s same store sales were up 9.3 percent in March. They say sales were actually helped by this year’s late Easter. April sales, by the same token, may slump a bit on a comparative basis.
Earnings are on the way today from Bed Bath & Beyond, Monsanto and a few smaller companies. But in general, it’s quiet time. No big economic reports are on the docket, and 1st quarter earnings won’t start to roll until next week. Yes, we’ll get the weekly energy inventory data, which is expected to reflect a draw down of a couple million barrels of gasoline. However, outside of that, close your eyes, rest you head on your desk, and relax.
That’s exactly what the stocks overseas and our futures have been doing all morning long.
Overseas markets are very narrowly mixed. Most are up, but not by a lot. At this point, the S&P, Dow and Nasdaq futures are all virtually even with fair value.
April 4, 2006
Another big company is about to up for grabs this morning. Computer Sciences says that it is evaluating alternatives. They’re getting some help in that evaluation from Goldman Sachs, whom they’ve hired as adviser to the potential sale of the company. Computer Sciences will cut 5,000 jobs over the next two years, which is certainly consistent with a company that’s ready to start dating. Most of those job losses will be in Europe. Look for CSC, which was up over 3% yesterday, to move up 5% or more at the open.
It’s the fourth of the month and the second trading day of the quarter. One week until earnings reports start pouring out. Be on the lookout for pre-announcement that warn of earnings shortfalls. So far this quarter, it’s been pretty quiet.
The ISM manufacturing index a little later is expected to moderate to a reading of 58, still indicating expansion in U.. manufacturing.
Stocks in Hong Kong were up about a quarter of one percent overnight. Most every other overseas market is trading lower this morning. Our futures appear to be saying, “Hey, not so fast.” At this point, adjusted for fair value the S&P futures are up almost 2, the Dow futures are up 36, and the Nasdaq futures are 2 points above fair value.
April 3, 2006
Merger Monday is a term we’ve used more and more during the past year, and we have a Merger Monday of some significance this morning.
General Motors has finally found a home for a 51% stake in their money-making operation GMAC. Private equity firm Cerberus is the buyer. GM will get 10 billion down and another 4 billion over the next few years. Apparently they didn’t even have to offer 0% financing.
Later today, we’ll get word on sales at GM’s non-money making operation, that’s selling cars. Analysts expect that GM and Ford will both report an 8% year-over-year decline in sales. However, GM shares are up about 3 ½ percent in the pre-market on the GMAC news.
Constellation Brands will acquire winemaker Vincor. The Lucent – Alcatel deal is official, and there are also a couple of smaller deals. Ameristar Casinos is buying Aztar and Service Corp is buying Alderwoods
At 10 o’clock, the March ISM index is expected to decline slightly to a reading of 57.5. But in front of that, stock prices will head higher.
Overseas markets are higher across the board. At this point, adjusted for fair value the S&P futures are up about 6 ½ points, the Dow futures are up 58, and the Nasdaq futures are more than 9 points above fair value.
April 29, 2011
It’s good that the Royal Wedding is pretty much wrapped up at this point. How else could we possibly focus on the day’s earnings and economic reports? Focus, people, focus.
Last night, Microsoft announced better-than-expected earnings. However, there may be a canary in the coal mine here as Windows sales were lower than expected. Perhaps ipads and netbooks are spelling the beginning of the end for PC sales growth.
The clear hit of the morning is Caterpillar. $1.84 of profit beat the $1.31 estimate by about a mile and a half. Caterpillar also raised its full year 6 dollar estimate by about 50 cents.
Merck earned 92 cents, which was an 8 cent beat. However, last night Research in Motion shares were halted after-hours and eventually dropped about 11 percent on disappointing Blackberry sales.
Personal Income numbers, the Chicago PMI and the final reading from the Reuters/University of Michigan on Consumer Sentiment. All of that rolls out before 10 o’clock.
The British stock market was closed today for some reason or other. India and Australia had a rough go overnight, but China was up over one percent. Other markets are not showing any real significant movement.
Our futures have been on a slow steady rise out of the red this morning, although Microsoft and RIMM are weighing on the NASDAQ. Right now, adjusted for fair value, the S&P futures are up almost a point, Dow futures are up 25, but NASDAQ futures are still almost 3 points below fair value.
April 28, 2011
There was a valuable lesson to be learned from Ben Bernanke’s first-ever media gabfest yesterday. Everyone expected the Fed Chairman to predict the future and he kept saying the equivalent of “we’ll just have to wait and see.” That’s disappointing if you were looking for a flashy headline. But you have to ask yourself, if Bernanke can’t predict the economic future, how can you, or how can the guy you hear on a commercial who claims that ability? Fortune tellers should be for entertainment purposes only.
Now, if your favorite fortune teller predicted more good corporate earnings, he or she would have guessed correctly this morning. Pepsico beat the Street by a penny per share, Dow Chemical made 82 cents, and that was a 15 cent beat. ExxonMobil earned $2.14. That’s 7 cents above. Aflac earned $1.63 versus the expected $1.52 and Aetna blew the doors off, making $1.43 versus the expected 97 cents.
The major misses this morning were Proctor and Gamble, missing the 97 cent estimate by a penny and Waste Management, missing the 39 cent estimate by 2 cents.
At 8:30 this morning we’ll get the first estimate of first quarter Gross Domestic Product. Expect it to come in at 2 percent, versus the fourth quarter final of 3.1 percent. Jobless claims for the week are expected to total 390,000.
Japan was a percent and a half higher, China almost 2 percent lower and Europe is a mixed picture.
Right now, adjusted for fair value, the S&P futures are down about 2 points, Dow futures are down 9 points, and NASDAQ futures are about 5½ points below fair value.
April 27, 2011
It’s show-time for reporters today. We’ve seen Ben Bernanke in action before, and he’s a pretty smooth character under the pressure of Congressional questioning, although that often requires more patience than eloquence. Well anyway, early this afternoon, the Federal Reserve Chairman will hold the first of what are to become quarterly press conferences. You have to believe that all reporters in the room are trying to come up with a stumper of a question. Maybe not a “Dan Rather – Richard Nixon” moment – but something that you’ll see replayed on CNN for the next couple of days.
As we wait for Uncle Ben to take the stage, earnings reports continue to roll. Last night, it was like old times for Amazon. They rang up an incredible 38% increase in sales last quarter. Unfortunately, the bottom line was left on hold, as Amazon earned 44 cents per share, which was 17 cents short of estimates. They also guided significantly lower profits for the remainder of the year.
There’s a similar margin-challenged story at glass-maker Corning. Sales were up 24 percent, although profit dropped by 9 percent from a year ago. However, Corning’s 47 cent profit was 3 cents better than expected.
Boeing and Hess reported both beat their numbers. BP fell 6 percent short, but announced a 7 cent per share dividend.
Add it all up, and the futures are still pointing a bit higher, although I wouldn’t be surprised to see things pretty flat by the time the Fed speak at 12:30. Right now, adjusted for fair value, the S&P futures are higher by almost 2 points, Dow futures are almost 9, and NASDAQ futures, in spite of the Amazon report, are about 4½ points above fair value.
April 26, 2011
So far, so good with corporate earnings reports this quarter. About 75 percent of the S&P 500 companies that have reported so far have trumped analyst estimates, which means that either the economy is improving or analysts have been sandbagged again, or both.
In any event, there are only a few disappointments this morning. Coca-Cola missed the 87 cent estimate by a penny, which is probably explained by weakness in Japan after the earthquake. Printer maker Lexmark eared a dollar fourteen versus the expected $1.25. Office Depot missed the two cent per share estimate by two cents.
But outside of that, we have a bunch of better than expected news, starting with Ford Motor. 62 cents of operating profit was 12 cents better than expected on surprisingly good operating margins as fewer rebates were needed to move the metal. Ford shares are indicated right around 16 dollars pre-market. Also reporting positive surprises were UPS, Humana and 3M, which raised guidance for the full year.
At 10 o’clock, the Conference Board’s reading on Consumer Confidence is expected to rebound to 65, from last month’s disappointing 63.4. Confidence numbers usually reflect gasoline prices inversely, and that certainly was the case in March. We’ll see if consumers are becoming accustomed to the paid of 4 dollars at the pump.
The Fed starts a two day meeting today. Of course, traders will focus on tomorrow’s first ever post-meeting press conference with a Federal Reserve Chairman. It’s only scheduled to run 45 minutes, but in that it’s the first of its kind, people will pay attention.
Overseas markets are mixed, but Europe and our futures have turned higher. At this point, adjusted for fair value, the S&P futures are higher by 4½ points, Dow futures are up 41, and NASDAQ futures are about 5 points above fair value.
April 25, 2011
If you’re on the lookout for corporate earnings and economic news, some weeks are pretty quiet. This is not one of those weeks.
We’ll get performance reports from more than a third of the S&P 500 companies by the close of trading Friday. Perhaps more interestingly, Wednesday will bring us the first scheduled news conference by a Federal reserve Chairman to follow an Open Market Committee meeting. In years gone by, the Fed would control monetary policy is near-secrecy; not issuing statements, not commenting on future rates, and certainly not holding press conferences. So, Wednesday’s scheduled press conference is either a change is protocol or perhaps a reason to believe that some major change in Fed policy is in the offing.
Worries about further monetary tightening by the Chinese Central Bank sent Chinese stocks lower overnight. A host of markets overseas are closed today for Easter Monday.
At 10 o’clock this morning, the March New Home Sales number is expected to bounce back to the annualized rate of 280,000. That would be a bounce back, but only from the February reading of 250,000, which was a record low for a report that stretches back almost 50 years.
Earning reports from Johnson Controls and International Game Technology beat estimated earnings numbers this morning. Radio Shack matched estimates but guided a little bit lower.
At this point, adjusted for fair value, the S&P futures are higher by a point, Dow futures are up 9, and NASDAQ futures are about 5½ points above fair value.
April 21, 2011
It’ll be a busy, busy day as we pack all the late week news into one day. Stocks will not trade tomorrow, of course, on Good Friday.
The earnings continue to roll out, it a continuing story of higher profits than expected. A company that’s no stranger to that kind of performance, Apple, reported $6.40 of earnings last night. That beat estimates by more than a dollar. Even though Apple guided lower for next quarter, the stock is still bid higher this morning. They say that the ipad2 is so popular, Apple just can’t make them fast enough.
Other blue chips reporting better than expected results today include General Electric, Morgan Stanley, Verizon, DuPont, Travelers and Blackrock. Southwest Airlines matched estimates and Marriott missed by a penny. But overall, it’s pretty clear that business conditions continue to improve at an increasing pace.
Jobless Claims at 8:30 are expected to drop to 390,000 from last week’s surprisingly high 412,000. At 10 o’clock, the Philly Fed Index and the Leading Indicators are both expected to be weaker than last month, but the stock futures couldn’t care less.
Overseas markets, outside of Malaysia and Norway are higher, and that’s where we’re headed as well.
At this point, adjusted for fair value, the S&P futures are higher by 9 points, Dow futures are up 53, and NASDAQ futures are 24 points above fair value.
April 20, 2011
Corporate earnings reports were pretty much at stall speed last week. Well, someone lit the fuse on that rocket last night and this morning we have a host of much better reports, as well as raised guidance for the rest of the year. Stock futures have put it in overdrive as we head toward 9:30.
Among the long, long list of companies that reported better than expected earnings since the close of trading yesterday, IBM, Yahoo, Intel, CSX, UTX, Abbott Labs, Eaton, St. Jude Medical, NASDAQ OMX, Freeport-McMoran, AT&T and Altria. Outside of Altria, just about everyone is reporting rising sales. Sales at Intel, in fact, were up 25 percent. Apple reports tonight.
The big-data day for economic reports is tomorrow, but at 10 o’clock this morning, we’ll find out about last month’s sales of existing homes. Yesterday, New Home Starts came in better than expected. Expect an annualized rate of 5 million units for sales of existing homes.
Most markets overseas are higher. Japanese stocks were up nearly 2 percent overnight. The German market is higher by nearly 3 percent. Our futures have been supercharged all morning on the strong earnings news, and they show no sign of backing off. At this point, adjusted for fair value, the S&P futures are higher by 18 points, Dow futures are up 161, and NASDAQ futures are 36 points above fair value.
April 19, 2011
Yesterday, Standard & Poor’s gave the Bickersons in Washington D.C. a bit of a mackerel to the >
Corporations are saying more and more about first quarter earnings. Last night, Texas Instruments missed the earnings estimate and warned that the Japanese earthquake is constraining component supply and will adversely impact future quarters.
This morning, Harley Davidson beat estimates but guided lower for the remainder of the year. Johnson and Johnson was a pleasant surprise, earning $1.35, which was 9 cents better than expected. They raised their full year outlook by a dime. And Goldman Sachs reported about fifteen minutes ago, making almost twice the 82 cent estimate. Goldman reported a net of $1.52.
IBM and Intel report after the close of regular trading at 4 o’clock.
Asia mostly lower, Europe mostly higher. Our futures have been modestly on the rise over the past 90 minutes. At this point, adjusted for fair value, the S&P futures are higher by almost 2 points, Dow futures are up 24, and NASDAQ futures are 4 points above fair value.
April 18, 2011
Welcome to tax day, at least if you’re a member of the half of the population that actually PAYS income taxes. Anyway, you have until midnight to hit the “send” button, or visit the post office, if you’re one of the shrinking pool of paper filers. If you’re not quite ready, Form 4868 gets you another 6 months of time to procrastinate. Just make sure that you’ve paid what you owe by today, or at least 90 percent of it.
Earnings season got off to a flying stop last week, with disappointing results from more than the normal percentage of big firms. The latest of which was Google, whose stock was punished accordingly on Friday. So far this morning, the news is a little more encouraging on the earnings front. Eli Lilly reported $1.24 of operating earnings, which was 7 cents better than expected and Keycorp checked in with 21 cents, versus the expected 16. Citigroup just reported 20 cents, that’s a penny ahead. Revenue, however, fell almost a billion short of expectations.
The National Association of Home Builders will release the results of a survey at 10 o’clock that is designed to measure the current and near-future prospects for the housing market. But that’s pretty much it for economic reports as we start this 4-day trading week.
Asian markets were pretty quiet overnight, but things in Europe are not so good, with major markets lower by one to two percent. Our futures have improved a little, but are still not a pretty picture.
At this point, adjusted for fair value, the S&P futures are down about 6 points, Dow futures are down 48, and NASDAQ futures are almost 7 points below fair value.
Worries about pent-up inflation have been giving active bond investors the willies for a while now. Well, the latest Government Report on the level of Producer Prices rolls out in about 9 minutes. Expect the overall level of the PPI to have risen one percent last month, with the “core” rate, excluding food and energy, up only two tenths of a percent.
In case you’re keeping score at home, over the past year, the PPI has risen 5.6 percent, versus a consumer price index that’s up only 2.1 percent. Why? Well, the CPI is designed to include more “services,” where prices have been rising more slowly. And, of course, the Government has changed the composition of the CPI quite a bit since Social Security Benefits were first indexed to the CPI. Strangely, reported consumer inflation has slowed quite a bit since then. Funny how that works. Nevertheless a hot PPI number this morning will not help stock prices one bit.
Harbro reported this morning that sales are absolutely flat with a year ago, but they only wish that profits were. Net earnings were 12 cents per share versus 40 cents a year ago. Google reports earnings after the close of trading this afternoon
Asian markets were mixed overnight, but Europe is lower.
After a first quarter when the markets seemed to rise almost every day, we’re on more of a one-step-forward, one-step-back kind of mode this week. Our futures aren’t horrible, but absent an unexpectedly pleasant surprise in the Producer Price number at 8:30, prices will head lower at 9:30. At this point, adjusted for fair value, the S&P futures are down about 7 points, Dow futures are down 52, and NASDAQ futures are about 18 points below fair value.
April 13, 2011
The S&P 500 Index has dropped four days in a row and yesterday significantly so. So, not unlike yesterday’s Detroit Tigers, it’s in need of a little rally. Stepping in the batter’s box with the bases loaded this morning was JP Morgan Chase. They didn’t hit a home run, but their earnings report was a hit this morning, with earnings of $1.28, against an average analyst estimate of $1.16. Now, the accountants played a role, as 29 cents of those earnings came from a reduction in loss reserves, which are down 80 percent from a year ago. Nevertheless, it’s a good report and helped push the futures, which were already in bounce-back mode a little higher.
We’ll get the Retail Sales report at 8:30 and the Fed’s Beige Book at 2 o’clock this afternoon. However, the market mover of the day may be President Obama’s speech this afternoon regarding his plan for tax increases and deficit reduction.
Overseas, we have the mirror-image of yesterday. Today, the only markets that aren’t higher are the ones that aren’t trading. The Shanghai Index in China is higher by about a percent and a quarter. Major markets in Europe are also higher by more than one percent.
And speaking of mirror images, our futures are higher by almost exactly the same amount by which they were lower 24 hours ago. At this point, adjusted for fair value, the S&P futures are up almost 7 points, Dow futures are up 62, and NASDAQ futures are about 14 points above fair value.
April 12, 2011
When major corporations reported their fourth quarter results back in January, more than 70 percent of them reported higher earnings than the average stock analyst expected. Of course, low-balling the average analyst is not a new game. However, as we move ahead, year-over-year comparisons are getting tougher as the economic expansion continues. The first quarter earnings season kicked off last night with Alcoa’s report, and so far we’re one-for-one. But that’s not necessarily good news for Alcoa stock or the market in general.
Alcoa reported earnings that beat estimates by a penny, but on slightly lower-than-expected sales. That revenue miss, and perhaps some worry about the rising cost of aluminum and other materials has Alcoa stock looking about three percent lower pre-market and our overall stock futures in a fairly significant hole.
Of course, it’s not just Alcoa. Japan’s nuclear disaster has been upgraded to a level 7, on a par with the Chernobyl meltdown 25 years ago. And Ford Motor warned this morning that part shortages from Japanese suppliers might slow production and hence sales and hence profits later this year.
The only overseas markets that weren’t lower overnight were the markets that were closed. Japan was lower by more than a percent and a half. We’re looking for discount pricing at 9:30 as well, although our futures have improved slightly during the past half-hour.
At this point, adjusted for fair value, the S&P futures are now down almost 7½ points, Dow futures are down 53, and NASDAQ futures are about 14½ points below fair value.
April 11, 2011
The first quarter earnings season officially kicks off today when Alcoa reports after the close of the regular trading session.
Corporate earnings are almost 40 percent higher over the past year, supporting a nice rise in equity prices. Of course, with stock prices, it’s not what you’ve done for me lately, it’s what are you going to do for me next. Traders will focus on corporate earnings guidance for the remainder of the year, as rising commodity prices threaten to pressure profit margins. The almost total lack of warnings last week is fueling hope of good news on the horizon.
Biogen Idec reported some good news this morning, announcing promising results for a multiple sclerosis drug in stage three tests.
Mercedes shares are lower in Europe on a broker downgrade.
Oil prices have been all over the map this morning. At one point, slight sweet crude futures broke the 113 dollar level. Now however, they’re back under 112 dollars on reports that Colonel Gaddafi has accepted an African Union peace proposal. There’s no word yet on whether Mr. Gaddafi will be returning Aretha’s hat.
Most overseas markets are lower. Our futures were looking good until about a half-hour ago, but have been on the slide, and are now just slightly positive. Adjusted for fair value, the S&P futures are now up just a fraction of a point, Dow futures are up 15, and NASDAQ futures are about 4 points above fair value.
April 8, 2011
It’s quiet. Maybe too quiet. No earthquakes, no mergers, no major earnings reports. The only thing that’s breaking the silence this morning is the sound of a sliding U.S. dollar. This morning, the dollar’s decline is being blamed on the threat of a temporary Government shutdown. Perhaps it would do better if we were expecting a permanent Government shutdown.
No matter, the sinking dollar has gold higher, silver at another record and the stock futures in rally mode once again after yesterday’s hiatus. Not to ruin your breakfast, but light sweet crude oil is again higher by more than a dollar, at 111 dollars per barrel.
The only economic report on tap is the rather minor report on Wholesale trade at 10 o’clock.
Expedia shares are looking to open about 14 percent higher this morning on word that they will spin of their Trip Advisor business.
Even Japanese stocks moved higher overnight by almost 2 percent, as the fear over yesterday’s 7.1 earthquake has settled out.
Clorox shares suffered a downgrade from a major broker this morning.
Major overseas markets are higher, and our leading indicators are leading us to greener pastures in the early going. At this point, adjusted for fair value, the S&P futures are higher by about 6 points, Dow futures are up 52, and NASDAQ futures are almost 8 points above fair value.
April 7, 2011
The hinted that they would, they warned that they would, and I’ll be darned – they did it. A little more than a half hour ago the European Central Bank raised short term interest rates. Granted, it’s only a quarter of a percent, from one percent to a percent and a quarter, but it’s the first rise in their interest rate in almost 3 years. It could be a sign of things to come as the EU is starting to worry more about inflation than using artificially low rates to prop up their economy. That worry is old news in China and India. We’ll see if our own Federal Reserve starts worrying any time soon.
By the way, Portugal has finally given up the ghost and asked the EU for a bailout that could be as much as 130 billion dollars.
Due in part to the late Easter this year, Target reported same store sales that dropped 5½ percent last month. That’s the bad news. The good news is that they were expected to drop about 6½ percent. Macy’s reported slightly higher same store sales, about 3 percent better than expected.
In just a few minutes minutes the Weekly Jobless Claims report is expected to continue its two year trend of creeping improvement. Expect 385,000 new claims, which would be a bit better than last week’s 388,000.
European markets have actually been on the rise since the ECB announcement and our futures, which had been negative until 20 minute ago, have now turned green, although it’s a light shade of green. At this point, adjusted for fair value, the S&P futures are higher by a fraction of a point, Dow futures are up 9, and NASDAQ futures are just about a point above fair value.
April 6, 2011
After all was said and done yesterday, a lot more was said than was done, whether you’re talking about the federal budget or domestic stock prices.
However, we have one report this morning is helping the futures get off and running. Atlanta Federal Reserve Bank President Lockhart is quoted this morning as saying that it is too early for the Fed to end its quantitative easing program. In his opinion, the economy is regaining its balance, but still too wobbly to remove the training wheels. Lockhart gives another speech at noon today. We’ll see if he expands on those remarks.
As that quantitative easing helps to weaken the dollar, metals prices continue to rise. Gold is nearly $1,460 per ounce, and silver is nearing 40 dollars. In the past year, the big GLD Exchange Traded Fund that owns gold is up almost 30 percent. Meanwhile, the SLV, its silver- based sister has more than doubled, up over 120 percent.
The Mortgage Bankers Association reported a two percent decrease in mortgage applications last week, but the devil is in the details here. Applications for mortgages to purchase homes rose almost 7 percent, perhaps goosed by a scheduled April 1stincrease in FHA insurance premiums. Re-financings, however, dropped again, this time by six percent as the number of people with the incentive (and the ability) to refinance appears to be on the wane.
European stocks are pretty solidly higher, and we’re heading in that direction as well. At this point, adjusted for fair value, the S&P futures are up 8 points, Dow futures are up 69, and NASDAQ futures are almost 18 points above fair value.
April 5, 2011
There they go again. As we wake up this morning, we’re learning that the Chinese Central Bank raised interest rates again overnight. Although our Fed cannot seem to perceive any creeping inflation, the Chinese have the creep’s picture hanging in the Post Office. The one-year lending rate in China now stands at 6.31%. The one-year deposit rate is 3.25 percent. Remember when our one-year savings earned 3¼ percent? By the way, it’s widely expected that the European Central Bank will get on the rate hike train on Thursday.
Texas Instruments shares will be under pressure this morning, on last night’s announcement that TI will buy National Semiconductor in a 6 ½ billion dollar deal. The $25 price is a 78% premium, but Texas Instruments claims that the deal will be accretive to earnings in very short order.
At 10 o’clock, we’ll get the Institute for Supply Management’s read on the services sector of the U.S. economy in March. This is a survey of 400 firms across the country. Anything over 50 indicates expansion, and the March number is expected to match the February reading of 59.7.
Chinese stocks rose overnight, even in the >
We should give back some of yesterday’s gains in the early going. At this point, adjusted for fair value, the S&P futures are down about 3 points, Dow futures are down 18, and NASDAQ futures are about 6½ points below fair value.
April 4, 2011
If macro-economic reports really float your boat, this would be a good week to put in in dry-dock, as the galley cupboard is fairly bare.
Take today, for instance. Speeches by the Atlanta Fed head at 9 o’clock and another by Ben Bernanke this evening are pretty much all we see on the calendar.
It’s probably better to again be on the lookout for corporate earnings warnings. First quarter earnings reports will start coming out by week’s end, and companies that know they’ll be coming up to the microphone with disappointing numbers often like to leak the word early. Last week we had a couple of major companies warn, but certainly not enough to indicate that there is trouble afoot.
Pfizer announced this morning that they’ll be buying back even more stock than the 5 billion dollars of buybacks already planned.
Ford Motor stock is up 20 percent over the past twelve months. This morning, Credit Suisse upgraded Ford stock to “neutral” from “underperform.” Evidently, they now see something that at least makes them noncommittal on Ford stock.
Chinese and Indian stock indexes rose about a percent and a half overnight, but most other overseas markets are pretty sleepy at this hour.
Oil futures are up over $108 dollars per barrel. Our stock futures are modestly higher as well. At this point, adjusted for fair value, the S&P futures are up almost 3 points, Dow futures are up 21, and NASDAQ futures are about 7 points above fair value.
April 1, 2011
It’s April Fools’ Day, and there is a lot going on. And, no, I’m not fooling.
Front and center, ten minutes from now is the March Unemployment Report from the Labor Department. Expect the Jobs picture, which has been slowly but steadily improving since August of 2009 to improve a little bit more. Estimates are than 195,000 new non-farm jobs were created in March, with the Unemployment Rate holding steady at 8.9 percent. The average work week and average wage are both expected to edge higher.
Then at 10 o’clock, the ISM Manufacturing Index, which has been more or less steadily improving since December of 2008, is expected to back off just a bit to 61.2 from the last report of 61.4.
The battle over the NYSE/Euronext stock exchange rages on. NASDAQ and the Intercontinental Exchange offered $42.50 per share this morning, which is 19% higher that the offer from Deutsche Boerse. Stock of NYSE/Euronext is only indicated higher, but only to about 39 dollars this morning, evidently on doubt that the deal might not get an anti-trust blessing.
So NASDAQ is buying, but General Motors is selling. GM will offload its remaining stake in Delphi for 3.8 billion, booking a 1.6 billion dollar gain on the sale. By the way, March car sales numbers, which are expected to be on the whole about 16 percent higher, will be announced from the various car companies as the day goes on.
It’s fairly common for the futures to be pretty flat in front of the monthly Unemployment Report, but the futures aren’t waiting this morning and they are indicating higher stock prices at 9:30. At this point, adjusted for fair value, the S&P futures are up 6 points, Dow futures are up 55, and NASDAQ futures are almost 12 points above fair value.
May 31, 2006
It’s been almost two years since we had a day in which all 30 of the Dow Industrials declined in value. But, that’s what yesterday was all about as the market jitters that started a couple of weeks ago continued.
The last two hours of trading will be the ones to watch today. At 2 o’clock the minutes of the latest meeting of the Federal Reserve Open Market Committee will be released. They will then be read, examined, studied, parsed, broken down, dissected, dismembered, ground up and virtually pulverized as traders look for any hint that the Fed might stop hiking short-term rates any time soon.
Any evidence of strong sentiment within the Committee for a pause should give stocks prices a boost.
Costco’s earnings rose 12% last quarter, with worldwide same-store sales up 10%. Unfortunately, revenue was a little lighter that expected and earnings were a penny shy of estimates. As a result, Costco shares will be on sale at 9:30.
At 10 this morning, the Chicago Purchasing Managers Index is expected to slide to 56, from 57.2 last month.
In front of that, we’ll get a little bounce off of last night’s lows. Adjusted for fair value, the S&P futures are up almost 3 points, Dow futures are up 33 and the Nasdaq futures are about 2 ½ points above fair value.
May 30, 2006
General Motors shares had a great week last week after a couple of broker upgrades. Well, not so fast. One of those brokers has changed its mind and has now downgraded GM, saying that the price run-up has now over-priced the shares. GM is off about 2 ½ percent in Europe as Wall Street continues to agree to disagree about prospects for GM.
Disappointing news from Walmart yesterday. They estimate that May sales will be up only 2.3 percent. That’s at the low end of expectations. They also pointed out that their sales are spiking near the 1st and 15th of the month. Presumably, more consumers are living paycheck to paycheck, and while that’s no surprise to most financial planners out there, it’s not very encouraging to have Walmart confirming it.
The management of oil services firm Kinder Morgan has offered to take the firm private at an 18% premium to Friday’s closing price. We’ll see if that attracts some other bidders.
At 10 o’clock this morning The Conference Board will tell us how confident all we consumers have been this month. Expect a reading of only 100 after April’s 109.6.
Asian market off a half-percent, European markets are down about one percent on news of 72 dollar oil. Our futures are a whole lot better off than they were a couple of hours ago, but are still indicating a lower open. Adjusted for fair value, the S&P futures are down 5, Dow futures are down 40 and the Nasdaq futures are 10 points below fair value.
May 26, 2006
There’s a little more good news for General Motors shareholders this morning as GM received its second broker upgrade in a week. Also upgraded by various brokers this morning were – well – other brokers Merrill Lynch, Charles Schwab and Goldman Sachs.
It’s a split decision for the week’s big IPOs. Mastercard came public yesterday at 39 bucks and closed the day at 46, for a seven dollar gain. But, for those who were lucky enough to get shares of Vonage on Wednesday at 17 bucks per share have lost about 25% of their money in just two days.
Some much-watched inflation data will be out this morning. At 8:30 the April personal income and consumption data is expected to show wages up seven tenths of a percent and spending up six tenths. And at 9:45, the University of Michigan’s final Consumer Sentiment number for May is expected in at 79.
It’s the day before a long holiday weekend, so trading volume will likely dry up as the day wears on, and given the skittishness of the market lately, you might expect a little profit-taking after yesterday’s rally.
Overseas markets are up, but we’ll start in a holding pattern Adjusted for fair value, the S&P, Dow and Nasdaq futures are just about even with fair value.
May 24, 2006
Nike and Apple held a news conference yesterday. They will now be offering a sensor in Nike running shoes that can transmit data about your workout, like duration and calories burned, directly to you through the earphones of your ipod. Personally, I’m waiting for a sensor they can implant in the cushion of my couch. Anyway, Nike and Apple shares could get a little action this morning.
In case you were worried that traders weren’t paying attention to the bid flu threat, put your mind at ease. European markets are down 1 ½ to 2 percent this morning on word of a possible human to human transmission of the avian flu in Indonesia. That will hit our stocks at the open as well.
Medtronic came in with a good earnings report last night, and raised their guidance for the rest of the year.
General Motors shares are up about 4 percent in the pre-market on an upgrade from a major broker.
It’s one of those mornings when the futures look positive on their >
May 23, 2006
It looks like we’ll have a little bounce back in equities this morning. Asian markets were mixed, but there’s a solid rally taking hold in Europe.
One stock may have a hard time rallying this morning and the reason hits very close to home. Luxury home builder Toll Brothers earned $1.06 last quarter versus the expected $1.03, but warned that the next quarter won’t be as good as expected. The problem? Rising costs and inventory write downs. Writedowns in Vegas? No. In Florida? No. In California? No. Toll Brothers specifically blamed writedowns caused by declining real estate prices in the metropolitan Detroit for its downbeat outlook.
Medtronic, the big medical device maker will report earnings after the close of trading tonight. Also, shares of the internet phone service Vonage will price tonight and begin trading tomorrow.
Light sweet crude is back over 70 bucks per barrel at $70.77, and stock prices should rise at 9:30 as well. At this point, adjusted for fair value, the S&P futures are up 5 ½ points, the Dow futures are up 24 and the Nasdaq futures are about 8 points above fair value.
May 22, 2006
Stocks, oil, gold, many commodities, it doesn’t matter. We’re looking at a long line of red arrows this morning.
Oil is down about a dollar per barrel, gold, which traded at $720 an ounce a week or so ago is around $645 an ounce this morning. Stocks in India dropped the limit of 10 percent overnight, forcing a halt in trading. When the Indian exchange reopened, stocks recovered somewhat, to close off about 4 percent. Hong Kong was off 3 percent and Japan was 2 percent lower.
Lowe’s shares will, on the famous other hand, will be moving higher at 9:30. Lowe’s reported $1.06 in quarterly earnings on a 20% increase in revenue. That beat estimates by 12 cents per share. They did not, however, raise guidance for the upcoming quarter.
There’s nothing on the economic calendar until Wednesday. While the futures have improved a bit during the past hour, we’re still in a pretty deep hole headed toward the open. At this point, adjusted for fair value, the S&P futures are down almost 5 points, the Dow futures are down 48 and the Nasdaq futures are about 11 ½ points below fair value.
May 19, 2006
Yesterday, once again, we just couldn’t get those Chatty Cathys from the Federal Reserve to shut up. Ben Bernanke gave a speech. Alan Greenspan gave a speech. A handful of other Fed governors were running around on the rubber chicken circuit.
Just before noon, one of them said that the recent inflation data would “make it harder” for the Fed to stop raising rates. The bond market immediately raised that odds of a June rate hike from 42% to 62% and the stock market gave up the ghost on a comeback rally to close lower once again.
There’s a fresh batch of earnings news this morning, and hopefully, no new speaking engagements on the agenda.
Dell matched their lowered estimates and gave Advanced Micro Devices shares an after-hours boost by announcing that the insides of Dell servers will be Intel-exclusive no more. GAP, Nordstrom and Ann Taylor are all out with better than expected numbers this morning and the overall market should start that way as well.
Adjusted for fair value, the S&P futures are up almost 3 points, the Dow futures are up 26, but the Nasdaq futures are 9 points above fair value.
May 18, 2006
It’s been a week now since the last Open Market Committee meeting, and on the whole it’s been a week we could have done without. The Dow had its worst daily point loss in over three years yesterday, although it was down less than 2 percent. The NASDAQ is now negative for the year, which is pretty remarkable after the strong first quarter.
Data on the way today include the weekly job claims number at 8:30, but perhaps more importantly, the April Leading Economic Indicators, which are expected to rise by a tenth of a percent, and at noon, the Philly Fed Survey. That survey of regional economic conditions is expected to have dropped to a level of 12.5 from last month’s 13.2.
Asian markets took a bit of a pounding overnight. European markets are moderately lower at this hour. Our futures were pointing to a nice rally a couple of hours ago. But now – well, it’s still a positive outlook – just not quite as positive.
Adjusted for fair value, the S&P futures are up a little more than 3 points, the Dow futures are up 23, and the Nasdaq futures, which had dropped into negative territory earlier this hour, are now a little more than a point above fair value.
May 17, 2006
Dow component Hewlett-Packard gave us a five cent per share surprise last night and they raised their earnings guidance for the remainder of the year. That should get the Dow and the Nasdaq off to a positive start today – pending, of course -- what happens at 8:30.
That’s when the April Consumer Price Index is expected to come in at an overall rate of 6 tenths of one percent. The core rate is expected to have risen by 2 tenths of a percent. Yesterday’s one-tenth of a percent rise in the core Producer Price Index helped stocks battle the current correction to a standoff. Once again, lower CPI numbers at 8:30 would lead to higher stock prices an hour later.
Compuware beat estimates this morning by 2 cents per share. ADP received a broker upgrade.
Asian markets were generally positive overnight, but European markets are mixed. At this point, our futures are pointing a little higher. Adjusted for fair value, the S&P futures are up a little more than a point, the Dow futures are up 14, and the Nasdaq futures are about 5 ½ points above fair value.
May 16, 2006
In just about 12 minutes we’ll get the most highly anticipated data point of the day. Stock prices have been buffeted by inflation expectations during the past couple of weeks. At 8:30 will find out how much inflation has impacted producer prices in April. A big rise in energy prices is expected to have pushed the PPI up 8 tenths of a percent. Absent food and energy, it’s expected that price rose only 2 tenths of a percent. Obviously, the lower the numbers the better for stocks.
A little flurry of better than expected earnings reports are meeting with that old military hero, General Indifference this morning. Home Depot, Walmart and Staples all beat estimates by two or three cents per share. However, revenues, especially at Walmart were really not up to expectations (although Walmart’s sales were up 12%) and guidance for the current quarter was somewhat uninspiring.
Stocks in Japan were down sharply again overnight. Europe is a bit higher at this hour. However, absent a pleasant surprise at 8:30, we’ll start the morning with little red arrows. Adjusted for fair value, the S&P futures are down about a point and a half, the Dow futures are down 8, and the Nasdaq futures are about 6 points below fair value.
May 15, 2006
We’re looking for a little stability after a couple of pretty ugly days last Thursday and Friday. Unfortunately, we’re not getting a lot of help from overseas. Hong Kong was off almost 2 ½ percent overnight. European markets are down anywhere between 1 and 2 ½ percent lower.
Inflation is the big bugaboo that has stocks in a bit of a tizzy, and later this week we’ll get the April readings on producer and consumer prices.
Inflation worries have been driving the price of gold skyward this year. Not so this morning. An ounce of gold that went for almost 730 dollars last Friday is going out at about 690 dollars this morning. Light sweet crude is also down more than 2 dollars at less than 70 bucks per barrel.
Target and Agilent headline the earnings reports today, but no matter, we’ll start the day with lower stock prices once again.
The futures started the morning in a big hole, then rallied about an hour ago. But, they’ve fallen back once again. Adjusted for fair value, the S&P futures are down about 4 points, the Dow futures are down 14, and the Nasdaq futures are almost 9 points below fair value.
May 12, 2006
During the bull run of the past 3 ½ years, we’ve seen plenty of me-too rallies. Well, overseas markets are having a me-too decline today. Yesterday, of course, the U.S. stock market had its worst day since January, with the major averages falling on the order of a percent and a half. Although some southeast Asian markets were closed overnight for a Buddhist holiday, most other overseas markets – surprise, surprise – are down on the order of 1 ½ percent.
Expedia will be taking a trip south this morning. At 15 cents per share of earnings, they missed their earnings number by 7 cents pre share and guided lower for the remainder of the year. Look for a 15 to 20% haircut on Expedia shares this morning.
At 9:45, the University of Michigan’s preliminary number for May Consumer Sentiment is expected to come in at 86.5, which would be slightly lower than last month.
Just in case you were thinking about your mom a nice basket of stocks for Mother’s Day, you’ll be able to go shopping at discounted prices after 9:30. Not quite a clearance sale, but lower prices are on the way nevertheless. Adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down 20, and the Nasdaq futures are about 11 points below fair value.
May 10, 2006
Yesterday the Dow Jones Industrials rode a 9 ½ percent rise in General Motors shares yesterday to a half-percent overall gain. But, the broader indexes went absolutely nowhere, and that’s exactly where they are likely to sit until 2:15 this afternoon.
At 2:15, we’ll get another quarter point increase in short-term interest rates. But more importantly, we’ll get the Open Market Committee’s statement. Any indication that this is the end of the road for rate increases could give stocks and bonds a boost. However, most analysts believe that there is still one more rate hike coming in late June.
Good news on the income tax front. A joint Congressional Committee agreed to extend the beneficial rates on dividend and capital gain income tax rates yesterday and patch the alternative minimum tax problem for another year. The agreement still needs approval by both the Senate and the House and a signature from the President. But all of that is expected to happen.
Disney shares will head higher that morning on a good earnings report and earlier this morning DaimlerChrysler, like GM yesterday, received a broker upgrade.
European markets are, just like our futures, standing still in front of the Fed meeting. Adjusted for fair value, the S&P futures are down less than a point, the Dow futures are down 2, and the Nasdaq futures are about 2 points below fair value.
May 9, 2006
Not a lot of movement in U.S. stock prices yesterday, and it’s likely to be more if the same today in front of the Fed meeting tomorrow.
There was an unusual, and some would say long overdue, amount of finger pointing yesterday involving the financial services industry.
The Securities and Exchange Commission added some brochures to its website and initiated a campaign to inform elder investors about the dangers of many of those “free lunch” and “free dinner” investment seminars offered by so-called “senior specialists.” The SEC says that while only 15% of investors are seniors, seniors are victims of 30% of the investment fraud perpetrated.
Then we had Warren Buffett and Charlie Munger of Berkshire Hathaway likening what they called the “ridiculous credit” extended in the U.S. housing market to an epidemic that isn’t apparent until it’s too late.
Finally, Eliot Spitzer was at it again, extending his complaint against H&R Block for allegedly pressuring their tax preparers to sell fee-laden and money losing IRA’s to small investors.
Be careful out there, people!
A major broker upgraded General Motors from a “sell” to a “hold” this morning, and GM shares are looking to open about 3% higher. Dell, after a warning last night, won’t be so lucky. McDonald’s April same store sales were up 6.2% versus an expected 4 percent.
Overseas markets are mixed and we’ll be going nowhere fast at 9:30. Adjusted for fair value, the S&P futures are down about a 2 points, the Dow futures are down 6, and the Nasdaq futures are almost 4 points below fair value.
May 8, 2006
It’s back to work in China as “Golden Week” is over. You see, last week everyone in the country HAD to take vacation, unless, of course, you work in the vacation industry. So, Shanghai stock market, which was closed during the rest of the world’s big rally last week, had a lot of catching up to do. Which of course, it did overnight rising by about 4 percent.
We’ll have a Federal Reserve meeting later in the week. But for now, it’s a Merger Monday in full swing. Wachovia is buying Golden West Financial. That’s a 26 billion dollar deal. Fisher Scientific will be mo more. It’s being bought by Thermo Electron for 10 billion worth of stock. And Emmis Broadcasting, a stock that’s been pretty much cut in half over the past nine months may be going private on an offer of a 13 percent premium from the company’s CEO.
Light sweet crude is down below 70 bucks at $69.40, and European markets are flat to slightly higher on that news.
Our markets are looking to open flat to slightly lower at this point. Adjusted for fair value, the S&P futures are down a little less than a point, the Dow futures are down 5, and the Nasdaq futures are a little more than 2 points below fair value.
May 5, 2006
More trouble is luxury housing land. Toll Brothers lowered their estimates for new home sales for the remainder of the year, saying that they are now in the ninth month of declining demand. Signed contracts are down 29 percent from a year ago. Speculators have quit the house-flipping game and other buyers are being a lot more cautious in the >
Which leads us to the biggest economic report of the week. At 8:30, the Labor Department will release the April Jobs Report. Expect about 200,000 new non-farm jobs, an unemployment rate of 4.7 percent and an increase of 3 tenths of a percent in average hourly earnings.
On the one hand, fewer jobs and small hourly earnings increases may lead the Federal Reserve to stop raising interest rates. However, on the ever-popular other hand, more jobs and higher wages will be needed to prop up the slumping housing market. The best we can hope for are numbers that come in pretty much as expected.
European markets are up another half percent or so, and assuming that we get a Goldilocks report at 8:30, our market will head higher as well. Adjusted for fair value, the S&P futures are up 2 ½ , the Dow futures are up 19, and the Nasdaq futures are 2 points above fair value.
May 4, 2006
The big earnings reports for the quarter are pretty much wrapped up, and on average, a good first quarter it has been. Of course, there have been big disappointments, ala Microsoft. However, generally the numbers have been better than expected.
Today’s a day for the April retail sales reports. Once again, on the whole, things look pretty good. Costco and Walmart lead the parade with 7 percent and 6.8 percent same store sales increases respectively. Both are better than earlier expectations and both were helped by an Easter that fell in April this year.
The Limited sales rose 9 percent versus an expected 5.2 percent. The big sales declines are no surprises – namely Pier One and Sharper Image. Kodak also reported disappointing sales.
Oil prices are down over a buck this morning, so the economic focus may turn again to interest rates. On that score, watch the preliminary 1st quarter Productivity report at 8:30. Expect a 2.8 percent increase, after last quarter’s decline of a half-percent. The higher the productivity increase, that better the prospects for continued low inflation.
European stocks are higher, but only by a half-percent or less. We should head modestly higher at the open as well. Adjusted for fair value, the S&P futures are up 1 ½, the Dow futures are up 12, and the Nasdaq futures are almost 2 points above fair value.
May 3, 2006
Beauty, as they say, is in the eye of the beholder. A beautiful earnings report, however, is all in the eye of the analyst. Procter & Gamble reported earnings that on the sur>
Oil inventory data is due out at 10:30. But most of the big economic data will be released tomorrow and Friday, including the April Jobs data of Friday. However, a new report, called the ADP National Employment Report, debuted about 3 minutes ago. We’ll see if Friday’s report correlates. However, according to ADP, the private sector generated 178,000 new jobs in April.
Hong Kong was up about 1 percent overnight. Europe is slightly lower. Our futures started the morning in a significant hole, but have been marching steadily upward for the past couple of hours. At this point, it looks like a mixed market open is on the way. Adjusted for fair value, the S&P futures are down a point and a half, the Dow futures are down 18, and the Nasdaq futures are actually fraction above fair value.
May 2, 2006
It sure was frustrating when Alan Greenspan was head of the Fed. No one really could read his mind, or for that matter, listen to him speak, and be able to tell exactly what he was thinking. So, analysts generally welcomed Ben Bernanke. Widely regarded as much more plain-spoken and policy-transparent, everybody figured we’d get a better read on the Fed’s thinking.
No such luck. A CNBC reporter disclosed an over-the-weekend comment from Bernanke late yesterday afternoon, the market turned on a dime from rally to sell-off. Bernanke said that the public is wrong to conclude that the Fed is almost done raising rates. Conclude only that they will be more “flexible” in the future. Which of course means that anything can happen. I’m sure that Mr. Greenspan is grinning.
April auto sales reports will happen later today, and it’s not expected to be particularly good news. Expect an annualized rate of 16.6 million units, down from 17.2 last year.
Asian stocks did well overnight, as are stocks in Europe at this hour. At this point, our futures are just about in the same place they were 24 hours ago. Adjusted for fair value, the S&P futures are up almost 3 points, the Dow futures are up about 20, and the Nasdaq futures are about 3 points above fair value.