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Daily Reports @ WJR

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WJR January 2007 Reports

January 31, 2007
 
You can usually count of Google for a good earnings report.  They’ve only missed estimates once since coming public.  Google will report 4th quarter results after the close of trading today.  Expect operating earnings of at least $2.90 per share.
 
In front of that, today’s big non-announcement will come at 2:15 as the Federal Reserve Open Market Committee will again hold interest rates steady.  The only market-moving potential will be literary, not economic in nature, as traders will dissect every word of the Fed’s accompanying statement for hints of which way the Fed will lean in the future.
 
At 8:30, the first guess, also know as the “advance” number on 4th quarter Gross Domestic Product.  The official estimate is 3 percent.  However, some analysts have predicted that weakness in the automotive sector will drag GDP closer to 2 percent or even below.
 
Boeing is out with a spectacular earnings report this morning Lilly also beat estimates.  Time Warner was in line, but Alcan missed per 2 cents per share.
 
At this point, adjusted for fair value, the S&P futures are down more than 3 points, the Dow futures are down about 15, and the NASDAQ futures are about 5 ½ points below fair value.
 
January 30, 2007
 
At 10 o’clock this morning, we’ll get the January reading on Consumer Confidence from the Conference Board.  It’s expected to rise to a reading of 110 from December’s 109.
 
But in front of that, it’s all about the earnings this morning, and on the whole, the earnings are well, just okay.  The good news of the morning came from almost-always-reliable Procter & Gamble.  P&G beat estimates by a penny, and gave us a decent earnings forecast. That put an immediate bump in the Dow and S&P futures and should get those indexes off to a good start this morning.
 
Earnings misses and/or disappointing guidance this morning came from 3M, Wyeth, Merck, UPS and a big miss from Lexmark.
 
Oil’s up almost a half dollar per barrel on a report that the Saudi’s will be cutting production to prop up prices.
 
Stocks in Great Britain are flat, but just about all other major overseas markets are higher, and that’s where we’re likely to start,  At this point, adjusted for fair value, the S&P futures are up 3 points, the Dow futures are up 30, but the NASDAQ futures are about a point and a half above fair value.
 
January 29, 2007
 
There’ll be big doings at the electronics retailers tonight.  A lot of them will be open at midnight, just in case you can’t wait until morning to own a new PC with the Vista operating system.  Perhaps they’ll be selling Star Wars paraphernalia as well, because you have to be some sort of super-geek to lose sleep over this one.
 
We’re well into earnings season and at this point, about 60 percent of companies exceeded forecasts, with 24 percent falling short.  While those numbers aren’t bad, they are clearly not as good as we’ve seen during the past year or so and that’s why we saw a little pullback in stock prices last week.
 
Earnings this morning are from Verizon, beating estimates by a penny per share, and Schering Plough, which was right in line.
 
There are a couple of minor buyouts this morning, with Citigroup buying a British online bank, Merrill Lynch is buying First Republic Bank and software provider Symantec buying software provider Altiris.   A much bigger deal may be in the works as Sanofi-Aventis and Bristol Myers have reportedly signed a pre-merger agreement.
 
Most major overseas markets are a little higher, although Hong Kong lost about a quarter percent overnight. Our futures have rallied out of a bit of a hole and are just about back to even, although there’s still some weakness in technology.  At this point, adjusted for fair value, the S&P futures are down a fraction, the Dow futures are down 3, but the NASDAQ futures are about 5 points below fair value.
 
January 22, 2007
 
Pfizer is the big earnings report of the morning.  As a matter of fact, Pfizer will have a few announcements today.  Quarterly earnings of 43 cents beat estimates by a penny.  That news has had little or no impact on the stock price in the pre-market.  Later today, Pfizer will hold an analyst meeting, and just before they do, they are expected to announce a cost reduction program which could have thousands of Pfizer employees updating their resumes.
 
American Express reports in during the trading day, Texas Instruments will report after the close.  Expect 76 cents and 38 cents per share, respectively.
 
There’s not much in the way of economic reports on the docket this week.
 
Oil is flat this morning, holding at 52 bucks per barrel.
 
All major overseas markets are higher.  Hong Kong was up over 2 percent overnight.
 
Our futures have been mildly positive all morning long, and they continue to indicate slightly higher prices at 9:30. Adjusted for fair value, the S&P futures are up a little less than a point, the Dow futures just went flat, and the NASDAQ futures are a little less than 3 points above fair value.
 
January 19, 2007
 
It will be a busy day capping off a busy week.  However, the indexes will be under some early pressure, due to a couple of big tech names, namely Motorola and IBM.
 
Motorola sold a lot of phones last quarter, but they weren’t very expensive phones.  That left them with what you might call them Razor-thin profit margins.  Earnings missed estimates of 24 cents per share by three cents.
 
Last night, IBM announced earnings that beat estimates by seven cents, due to strong demand for its services.  However, hardware sales were weaker than expected, and IBM is looking to open about 6 percent lower.  General Electric’s number came in almost exactly as expected.
 
The preliminary January reading on University of Michigan’s Consumer Sentiment Index rolls later this morning..  Expect a reading of 92.4, which would be up from December’s 91.7.
 
Hong Kong was up a bit overnight, but all other major overseas markets are lower.  That’s the way we’ll start off as well. Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 42, and the NASDAQ futures are 5 points below fair value.
 
January 18, 2007
 
The big buzz of last evening was the quarterly report from Apple.  Apple sold 21 million Ipods last quarter.  That’s more than anyone expected.  Earnings of a billion bucks divides out to $1.21 per share.  That blew past the estimate of 78 cents.  However, Apple was characteristically conservative about prospects for the current quarter, and that will have the stock trading about 3 percent lower this morning.
 
A hot number from the headline Producer Price Index was a body blow to stock prices yesterday.  We’ll see if the Consumer Price Index gives us another nasty surprise at 8:30.  Expect 4 tenths of a percent for the headline number and 2 tenths of a percent on core December inflation.
 
Merrill Lynch made $2.41 cents per share last quarter versus the expected $1.92.  Harley Davidson also had better than expected earnings.  The disappointment of the morning was Briggs and Stratton.
 
Later today, Ben Bernanke testifies before the Senate Budget Committee later this morning and we’ll also get the December Housing starts at 8:30.
 
Overseas stocks are up, we’re waiting on the CPI at 8:30 to decide on a direction.  Adjusted for fair value, the S&P futures are up a half point, the Dow futures are up 10, but the NASDAQ futures, on the conservative guidance from Apple,  are about 3 ½ points below fair value.
 
January 17, 2007
 
Some days you get a little bit of everything.  Today we get a LOT of everything.  Fed speeches, earnings reports, earnings warnings, inflation data, even an erupting controversy about an IRS notice.
 
Let’s make note of the last item first, which is very worth noting if you are about to inherit in IRA from someone other than your spouse.  Last year, Congress did taxpayers a favor by apparently allowing “universal” IRA rollovers in the Pension Protection Act.  However, the in Notice 2007-7 IRS has apparently not gotten the message, is just trying to write its own rules.  So, until this all gets sorted out, be careful if you are trying to rollover an inherited IRA.
 
Back to the markets at hand, at 8:30 the December Producer Price Index is expected to be up just a half-percent after a 2 percent rise last month.
 
Earnings reports are coming by the bushel. JP Morgan made $1.28 per share versus the expected 95 cents. Parker Hannifin and McDonald’s both out with good news.  Those stocks will open higher.  Later today we’ll hear from Apple and Southwest Airlines, among others.
 
Light sweet crude is at $50.39 per barrel. That’s a 16% drop in 17 days.
 
At this point, we’re looking a a fairly flat start for stock prices.  Adjusted for fair value, the S&P futures are down a fraction of a point, the Dow futures are up 2 ½, but the NASDAQ futures, on a tepid outlook from Intel are about 4 points below fair value.
 
January 16, 2007
 
It should be a happy post-holiday start to trading this morning as the futures have been pretty much in a good mood all morning long.  The big economic announcements of the week don’t rev up until tomorrow, but earnings season is slipping into gear.
 
Intel is set to report earnings after the close today.  In the early going, there are a few names to watch.  TD Ameritrade reported better than expected revenue and earnings for their first quarter, earning 26 cents versus the expected 22. Forest Labs is also out with better than expected results.
 
FedEx is the beneficiary of a broker upgrade.  On the other side of the street, homebuilder Centex warned that their 3rd quarter will be a mess, with sales off 24% and earnings missing estimates.
 
The Empire State Manufacturing Index is expected to come in at 19.7 versus a reading of more than 23 last month, as East Coast manufacturing activity slows.
 
Overseas stocks showed little movement overnight, but se should get off on the right foot at 9:30.Right now, adjusted for fair value, the S&P futures are up almost 3 points, the Dow futures are up 26, and the NASDAQ futures are about 3 points above fair value.
 
January 12, 2007
 
Don’t be surprised to see a little pullback at the open of trading today.  Yesterday’s turn-around rally took the Dow Jones Industrials to an all-time high and the Nasdaq to a six-year high.  Crude oil is off almost 15% in less than two weeks, although oil prices are up a bit this morning.
 
The loser of the morning will likely be Advanced Micro Devices.  Intel is putting the squeeze on AMD with some severe price competition.  As a result, AMD warned this morning that fourth quarter income will fall “substantially” below analyst estimates.  AMD stock will open 5 top 10 percent lower on the news.
 
At 8:30, the December Retail Sales report is expected to show a six-tenths of a percent increase, below the one percent November number, but an increase nonetheless.  Loads of earning reports are on the way next week, so we could get some more warnings before the end of the day.
 
Right now, adjusted for fair value, the S&P futures are down almost 3 points, the Dow futures are down 20, and the Nasdaq futures are about 2 points below fair value.
 
January 11, 2007
 
It’s been a pretty flat, but pretty nervous week of trading so far, but it looks like we’ll get a pretty quiet open for stock trading this morning.
 
RBC Capital Markets Alternative Assets group tracks hedge fund performance, and they reported this morning than on average, hedge funds gained 13 to 14 percent last year.  Compare that to almost 16 percent for the S&P 500 index, including dividends.  That makes the fourth year in a row that hedge funds trailed the S&P.  But, after all they are very fashionable.
 
Genentech posted better than expected earnings last night.  Light sweet crude oil is down another one percent this morning.  And in a surprise move, the Bank of England raised interest rates a quarter percent to 5 ¼ percent.  That has British stocks in the red this morning. The European Central Bank left their rates unchanged, and most Continental European markets are high by about a half percent.
 
Our futures are showing little direction at this point. Adjusted for fair value, the S&P futures are down 2 points, but the Dow futures are up 4, and the Nasdaq futures are also about 4 points above fair value.
 
January 10, 2007
 
So far, so good on the earnings front.  Alcoa reported a better than expected score card last night.  Sears Holdings this morning raised their fourth quarter earnings estimates rather substantially.  Genentech reports after the close of trading today. However, the first real surge on 4th quarter reports starts next week, and in the meantime, stocks will >
 
Japanese stocks fell over 1 ½ percent last night, and Europe is substantially lower as well.  A theory going around is that the dramatic drop in oil prices during the past week has some hedge funds selling some winning positions to cover losses.  Although oil is higher than it was 24 hours ago, light sweet crude is down 61 cents from the overnight price at just about 55 bucks per barrel,
 
At 10:30 this morning, the weekly reading on U.S. oil, gasoline and distillate reserves is expected to show a build-up in inventories due to the ongoing unseasonably warm weather in the Midwest and Northeast.
 
Apple shares should rise this morning on the excitement over yesterday’s unveiling of the I-Phone, but it won’t be enough to offset the overall trend. 
 
Right now, adjusted for fair value, the S&P futures are down almost 6 points, the Dow futures are down 45, and the Nasdaq futures are about 10 points below fair value.
 
January 9, 2007
 
Once again, this quarter, there have been very few companies warning that quarterly earnings will not be up to snuff.  That’s potentially very good news if you are long stocks, and the rubber starts to hit the road later today as Alcoa unofficially kicks off the 4th quarter reporting season.  Alcoa is expected to report profits of 66 cents per share, which would be an 88% increase on the strength of rising aluminum prices.
 
Speaking of prices heading lower, and dramatically so, at an 18 month low, light sweet crude oil is at $54.02 per barrel, which is a drop of over 2 dollars.  Don’t think stock prices around the world haven’t noticed.  Although Hong Kong lost value overnight, Japan was up almost one percent, Most major European markets are higher and we’ll head higher at 9:30 as well.
 
Our futures are off their earlier highs, but are still in pretty good shape.  At his point, adjusted for fair value, the S&P futures are up 2 points, the Dow futures are up 32, but the Nasdaq futures are almost 5 points above fair value.
 
January 8, 2007
 
Two big product shows will draw a lot of attention today.  One is the big Consumer Electronics Show in Las Vegas.  The other, of course, is the North American International Auto Show downtown.  Although, sometimes it’s hard to tell the difference.  Ford, for instance, is displaying its new alliance with Microsoft.  The result is a voice-command communications and entertainment system called the Sync.   Just as the 8-track gave way to the cassette and the cassette to the CD, you can see that the CD’s days are numbered as advanced electronics and internet capability become an integral part of the passenger cabin.
 
The Vice Chairman of the Fed will speak about the economy later today, but there are no major economic reports due till much later in the week.
 
Upgrades for IBM and EMC this morning and a downgrade for Walmart.
 
Japanese stocks took the day off for “coming of age” day.  Other Asian markets were lower.  European markets are mostly higher.
 
Our futures have rallied out of a decent >
 
January 5, 2007
 
Stocks prices have been under some significant pressure both trading days thus far this year, only to bounce back late in the day.  We’ll see if we can make it three in a row today.  Absent a big surprise from the December Employment Report 15 minutes from now, prices will start the morning lower once again.
 
Speaking of that report, expect the unemployment rate to hold steady at 4 ½ percent, with the addition of 115,000 new jobs. 
 
Motorola will be the stock to watch this morning, and it’s not likely to be a pretty sight.  Motorola cut its cell phone sales forecast this morning, three major brokers jumped on board by downgrading the stock, and Motorola looks to open about 9 percent lower. 
 
ExxonMobil also suffered a downgrade as oil prices are weaker again this morning.  Light sweet crude is UNDER 55 bucks for the first time in a while.
 
Best Buy’s December same store sales were up 7 percent versus an expected 4.7 percent.
 

Japanese stocks lost a percent and a half overnight, Europe is lower at this hour, and our futures have been sliding all morning.  At this point, adjusted for fair value, the S&P futures are down 7 ½  points, the Dow futures are down 52 and the Nasdaq futures are 11 points below fair value.

January 4, 2007

The minutes from the December Fed meeting took all the steam out of a pretty good rally yesterday and the hangover continues in Europe this morning.
 
The last big economic report of the week will be tomorrow’s unemployment report, but at least in the early going today, traders will focus on retailers’ December sales reports.
 
Here’s a couple of retailers you don’t usually think of in the same thought: Costco and Nordstrom.  Perhaps they have more in common than you thought.  Costco and Nordstrom both reported same store sales increases of 9 percent this morning, which are both way above expectations.  The biggest retail disappointment is a paltry 4 percent increase at Limited and, or course, a worse-than-expected 12 percent drop at Pier One.  Walmart confirmed their earlier estimate of a 1.6 percent same store sales increase.
 

Japanese stocks rose overnight, but all other major markets are lower.  We’re start on the weak side as well. Adjusted for fair value, the S&P futures are down 5 points, the Dow futures are down 41 and the Nasdaq futures are almost 4 points below fair value.

January 3, 2007

Stocks haven’t traded since Friday, overseas markets were strong again overnight, and we’ll start off 2007 in rally mode.
 
December domestic sales numbers roll out of the big automobile makers today.  Ford is expected to have suffered a big drop-off, leaving them in third place to GM and Toyota for the third time in 2006.
 
The first economic numbers of the week will be the December ISM Index, which is expected to reflect a standstill in manufacturing.  That’s a reading of 50.  Also at 10 o’clock, November Construction Spending is expected to be down about a half-percent, after a one percent drop in October.
 
Another potential market mover will be the release of the minutes of the Fed’s December meeting.  Traders will be looking for any hint of sentiment toward an interest rate cut.
 
Home Depot is in pre-market rally mode this morning, up over 5 percent on word that head honcho Robert Nardelli is out the door, effective yesterday. The Analysts upgrades this morning for Merck and Google, downgrades for General Motors and Ebay.
 
It looks like we’ll be off to the races at 9:30.  At this point, adjusted for fair value, the S&P futures are up 6 points, the Dow futures are up 79 and the Nasdaq futures are about 14 points above fair value.
            
WJR February 2007 Reports
WJR December 2006 Reports

Daily Reports @ WJR

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