January 31, 2012
It’s becoming a familiar pattern. Seemingly every day we get rally in stock prices that starts shortly after the European markets close for the day. Yesterday’s downdraft was pretty much erased by the end of the day, and that momentum continued overseas overnight and has our stock index futures nicely higher.
There are a couple of other “helping hands” this morning. The Greek Prime Minister said that he expects an agreement with creditors will be reached by week’s end. And, we have a little torrent of earnings news this morning, with just a majority beating estimates. Among those with better than expected profits are Pfizer, ExxonMobil, McGraw Hill, Eli Lilly and Biogen Idec. UPS beat on earnings, but missed on sales. The miss of the morning looks to be Archer Daniels Midland, earning 51 cents, which was 26 cents shy of the estimate. Yesterday, Wolverine Worldwide guided lower and Radio Shack guided WAY lower for the full year. Amazon and Tyco report later today.
At 9:45 the Chicago PMI is expected to read 63 and at 10, the Conference Board’s Consumer Confidence Reading is expected to rise to 68 from December’s 64.5.
Europe is higher on the order of one percent, and we’ll open higher as well. Adjusted for fair value, the S&P futures are higher by 5½ points, Dow futures are up 53, and the NASDAQ futures are about 10 points above fair value.
We’ll get a lot of new economic data points this week that should be helpful in figuring out just what kind of corporate recovery we’re having in this country. But today, we’ll find out about how individuals are doing. At 8:30 the December Consumer Income Report is expected to reflect a four-tenths of a percent increase, while spending is expected to have risen just one-tenth of a percent. In November, both of those indexes were up one-tenth of a percent.
There are two deals this morning regarding “parts” companies. ABB is buying electrical parts maker Thomas & Betts at a 24% premium to Friday’s closing price. Another potential 24% premium is on the table for shareholders of auto-parts distributor Pep Boys. The Gores Group is the buyer there.
Wendy’s announced a 4 cent operating profit, which was right in line with expectations on slightly higher than expected sales. Gannett just reported 72 cents in operating profit. That’s a 4 cent beat.
There’s still no “grand bargain” in Greece, although we keep hearing that it’s right around the corner. One bit of good news from Europe; Italy held a debt auction today and the interest rate on their ten year bonds, although north of six percent, is comfortably lower than the critical 7 percent level.
Overseas markets are lower, and we should start the day in the red as well. Our futures haven’t moved much all morning long. At this point, adjusted for fair value, the S&P futures are down about 9 points, Dow futures are down 70, and the NASDAQ futures are 18 points below fair value.
We’re setting up to start the day with some potentially good news and the promise of more to come. There’s a report out of Europe this morning that the Greek Government is extremely close to, if they haven’t already reached, substantial agreement with creditors to alleviate complete (as opposed to technical) default on their debt.
We’re also expecting a 4thquarter GDP estimate of 3.1 percent. That comes less than 3 minutes from now and will be the “advance” estimate, which means that the Government will have two more chances later in this quarter to get last quarter’s number right. The final GDP for the third quarter, by the way, was only 1.8 percent. Then, just before 10 o’clock, the University of Michigan’s first look at January Consumer Sentiment is expected to rise to 74 from December’s 69.9.
Honeywell reported earnings that narrowly beat estimates, but fell short on revenue. Procter & Gamble earned $1.10, which was two cents ahead. Around these parts, the big announcement came from Ford Motor. The good news? Profit sharing checks of $6,200 go to each employee, revenue easily beat estimates and the profit was the highest in a dozen years. Unfortunately, rising commodity costs took a big bite out of profit margins which are only about half of the long term target of 10 percent. Net earnings of 20 cents missed estimates by a nickel and Ford stock, as a result, is looking to open about 4½ percent lower. General Motors stock is lower about 3 percent pre-market, in sympathy.
However, pending an unpleasant surprise in the GDP report, the overall market should open a little higher. At this point, adjusted for fair value, the S&P futures are higher by about a point and a half, Dow futures are up 12, and the NASDAQ futures are 7 points above fair value.
You know, he wasn’t smiling, but he did seem to take some pleasure in it. Yesterday, Federal Reserve Chairman Ben Bernanke announced that your savings and money market accounts are pretty much guaranteed to return less than the rate of inflation (even BEFORE taxes) for at least the next three years or so. Okay, he didn’t say it exactly that way, but that’s what he meant. Those that were listening immediately started bidding up stock prices, and that, bolstered by some pretty good earnings news, continues this morning.
Caterpillar shares are plowing higher pre-market after Cat announced $2.32 in net profit for last quarter. That’s 59 cents better than expected. Netflix is looking to rise almost 20% on a pickup in subscriber growth. Of course, that will still leave the stock about one-third the price it was before its disastrous pricing adjustment last summer.
AT&T lost $1.12 on a GAAP basis, but after getting rid of all those nasty little “non-operating” charges, a profit of 42 cents still fell a penny short. AT&T shares are looking about 2 percent lower. 3M and AutoNation beat estimates. Bristol Myers fell two cents short.
Durable Goods at 8:30 and Leading indicators at 10. And, of course, weekly jobless claims at 8:30 are expected to come in at 370,000.
Japan a little lower. Just about everybody else overseas is higher. At this point, adjusted for fair value, the S&P futures are higher by 3 points, Dow futures are up 38, and the NASDAQ futures are 3½ points above fair value.
It’s hard to tell if last night’s State of the Union address is really influencing stock prices this morning, but if there is any influence, let’s just say that it’s a good thing we got the “State of the Apple” address yesterday afternoon.
Apple had a quarter that absolutely destroyed expectations. 37 million iphones were sold during the quarter gone by. 15 million ipads were sold. Revenue was up 73% and profits doubled at $13.87 per share. Apple istock are looking to iopen more than 32 idollars higher this morning, which is nearly an 8 percent rise. That should make Apple the largest large cap stock in the world.
Outside of the Apple report, the big winner for last quarter appears to be Boeing. $1.84 of net profit beat the $1.01 estimate. Guidance for full year 2012 was not raised, however, and Boeing shares are looking just a bit lower pre-market.
Conoco pleasantly surprised. United Technologies just barely beat estimates, but revenue was light. Yahoo and Corning hit their bogeys, and St. Jude Medical’s 51 cents missed the mark by 11 cents per share.
The Fed wraps up its latest meeting today with a statement at 12:30 and Ben Bernanke photo op at 2:15.
Asia mostly higher overnight, Europe is mostly lower. At this point, adjusted for fair value, the S&P futures are lower by about 3 points, Dow futures are down 38, but the NASDAQ futures, on the Apple news, are 22 points above fair value.
It’s a busy, busy day. The Federal Reserve Open Market Committee starts a two day meeting on fiscal policy. State of the Union Address tonight will hopefully offer some ideas on how to stimulate business activity rather than strangle it. And in the meantime, a little tsunami of earnings reports is rolling in, and it’s very much a mixed picture this morning – or at least much more of a mixed picture than we’ve seen in recent quarters.
Among the companies reporting better than expected earnings for last quarter are Johnson & Johnson, McDonald’s, DuPont, Coach, VMware and Harley Davidson. Coming up short of expectations were Verizon, Kimberly-Clark, Western Digital and Travelers. Noteworthy in their reports, Johnson & Johnson guided lower for the full year, Kimberly Clark announced a 1.1 billion dollar stock buyback and Texas Instruments, which had better than expected revenue and called the bottom of the semiconductor chip slump. Texas Instruments is looking about 3 percent higher pre-market.
More snags were reported in the Greek debt negotiations this morning. That has European markets sagging and our futures under water as well.
At this point, adjusted for fair value, the S&P futures are lower by about 7½ points, Dow futures are down 54, and the NASDAQ futures are about 9 points below fair value.
We could see a lot of action this week. We’ll get a lot of high-profile earnings reports. We’ll get a two-day Fed meeting. The State of the Union address is tomorrow and the first look at 4thquarter Gross Domestic Product comes Friday.
Despite that whirlwind of information, we should get the week off to a pretty mild start this morning. Although there was no grand agreement to resolve the Grecian debt situation over the weekend, but there was no massive breakdown either, and word is that some sort of agreement with creditors may be about a week away. As talks continue, the euro is higher by one percent and European markets are moderately higher.
Halliburton reported a dollar of operating profit this morning. That was a penny ahead of estimates on better than expected revenue. Texas Instruments chimes in later today
Research in Motion has a new CEO this morning, and RIM’s struggling stock is looking to open about 4 percent higher.
Most Asian markets did not trade overnight. If our market were to open right now, it would open just a bit higher, and I mean JUST a bit. Right now, adjusted for fair value, the S&P futures are higher by a little less than a point, Dow futures are up 2, and the NASDAQ futures are about 4½ points above fair value.
January 20, 2012
Stock prices enjoyed another mildly positive day yesterday. That’s been the theme so far this year. 2011 gave us a lot of wild swings, yet no change in value in the S&P 500 from beginning to end. This year, thus far hasn’t seen any bold moves, but is for the most part, has been enjoying afternoon rallies every day that have pushed prices nicely higher.
The big banks were first out of the gate with earnings this week. The big tech names took over yesterday, and on the whole, the news was good. IBM, Microsoft and Intel all beat expectations and raised guidance for 2012. Granted, Intel beat a substantially lowered estimate, but to have all three of the big tech names guide higher is encouraging.
This morning, the famous other hand belongs to Google. Google shares are looking to open 8 percent or so lower. Google missed the mark as more and more people turned to mobile devices rather than desktops, where Google’s ad revenues are strongest.
General Electric beat the earnings estimate by a penny, but revenue missed and GE is looking about 2½ percent lower pre-market.
Chinese stock rose overnight, Europe is a little lower. Right now, adjusted for fair value, the S&P futures are down by about 3, Dow futures are up 2, but on the Google news, the NASDAQ futures are about 12 points below fair value.
January 18, 2012
The World Bank woke up this morning and suddenly discovered the there are some problems in Europe that might drag the world-wide economy into another 2008->
Officials in Greece are chatting with creditors again this morning, as they attempt to get the bondholders to stop by for a haircut that takes a significant share of scalp with it.
It appears that lousy earnings reports out of the big banks are not confined to Citigroup. This morning, BNY Mellon reported 42 cents. That was a 12 cent miss. PNC Financial reported operating earnings of $1.39, which missed the estimate of $1.44.
However, US Bancorp beat the 63 cent estimate by 6 cents, and Goldman Sachs earned $1.84, which was about 50% higher than the severely lowered $1.24 estimate.
Mortgage applications soared last week as interest rates continued to decline. Purchase mortgage apps were 10 percent higher, and refi’s were up 26 percent.
Mainland China gave back about a percent and a half of yesterday’s gains. European markets are narrowly mixed. Our futures are off their earlier levels, but are still pointing toward a slightly higher open for stocks. At this point, adjusted for fair value, the S&P futures are higher by about 3 points, Dow futures are up 22, and the NASDAQ futures are about 9½ points above fair value.
You can almost hear the earnings reporting engine is revving up this morning. In recent quarters, only about one out of five big companies have reported lower than expected earnings. This quarter, as many as one out of three to miss the mark. But, if my math is correct here, that means that two out of three will still satisfy or positively surprise.
So far this morning, TD Ameritrade reported 27 cents of profit. That beat the 26 cent estimate and was 2 cents per share higher than a year ago. Wells Fargo reported 73 cents, which was a penny ahead of consensus, but a couple of cents lower than the whisper number.
On the famous other hand, about 15 minutes ago, CitiGroup reported 38 cents per share of profit, way short of the 49 cent estimate. Citi shares are looking about 3 percent lower pre-market.
Fourth quarter Gross Domestic Product is China was reported overnight at 8.9 percent, which was a happy number in two ways. Firstly, it was better than the 8.7 percent estimate. Secondly, it rounded off the year-over-year increase of 9.2 percent. That’s a nice cool-down, but not a hard-landing, from last year’s overheated 10.4 percent. Mainland Chinese stocks rose about 5% on the news. Europe is higher, after a successful Spanish bond auction and we’re heading that way as well.
At this point, adjusted for fair value, the S&P futures are higher by 15½ points, Dow futures are up 131, and the NASDAQ futures are about 27 points above fair value.
The Standard and Poor’s 500 Index is on a four-day winning streak and has risen 7 out of the last 8 trading days. The trend has been flat to lower movement in the early part of the day, but prices have been prone to rally in the late afternoon. We’ll see what happens on this Friday, the 13th.
This morning, there’s a little news from the banking sector. JP Morgan announced 90 cents of quarterly operating profit. That was pretty much in line with expectations. However, revenue was a little light and JPM looks about 2½ percent lower pre-market. Bank of America is also reportedly mulling a plan to cut back domestic operations if their operating results don’t improve.
Novartis is planning to cut back domestic employment by about 2,000 heads as they plan for a couple big drugs to lose patent exclusivity.
Results of the University of Michigan’s first January survey of 500 households will be announced at 9:55. Expect an improvement from 69.9 to 71.5.
Mainland Chinese stocks fell two percent overnight. The rest of Asia was mixed. European markets are mostly higher. Our futures took a turn for the worse about a half hour ago, but not all that badly.
At this point, adjusted for fair value, the S&P futures are down about 3½ points, Dow futures are down 20, and the NASDAQ futures are about a point below fair value.
The Bank of England and the European Central Bank both held short term interest rates steady this morning. That, and a couple of successful debt auctions, one in Italy and one in Spain, should get our stock prices off to a decent start this morning. The ECB had cut its rate the last couple times around.
At 8:30 this morning, the December Retail Sales Report is expected to reflect a three-tenths of a percent increase, which would be up a tenth from the November increase. Weekly Jobless Claims also roll at 8:30. Expect 375,000 new claims for unemployment benefits.
The beat-down of the morning could be shares of Sears Holdings. Sears stock gained 8 percent yesterday, but is more than 9 percent lower pre-market on a report that CIT Group will no longer offer factor financing related to Sears business. Target just announced a $5 billion dollar share buy-back program.
Interestingly, gold continues to recover from its recent swan dive, tacking on almost another 15 bucks an ounce this morning, back over $1,650 per ounce.
Asian markets were mainly lower overnight, but Europe has turned nicely higher. Italian stocks, in fact are higher by more than 3 percent. Although our futures are well off their best levels of the morning, we’re looking at green arrows in the futures.
At this point, adjusted for fair value, the S&P futures are higher by about 6 points, Dow futures are up 52, and the NASDAQ futures are almost 9 points above fair value.
It should be the calm before the earnings storm today, unless Europe drops some sort of bombshell announcement.
The highlight of the day looks like this afternoon’s release of the Federal Reserve’s Beige Book, which is the Fed’s survey of economic activity in various regions of the country. During the past week, a variety of Fed Governors have been out on the speaking circuit with fairly divergent views on what the Fed will do next with interest rate policy. Three more of them have speeches scheduled today.
While we await earnings news regarding last quarter, a bunch of firms were out with guidance for the current quarter yesterday. Among the companies raising earnings estimates were Borg Warner, Lululemon and DSW. Crocs reaffirmed, but guided higher on revenue. Dana lowered expectations for 2011 results, but said that 2012 earnings will be about 6% higher than expected.
Urban Outfitters shares are getting undressed pre-market on an executive resignation. Lennar reported 15 cents of quarterly profit, which was a penny lower than expected.
Asia mixed, Europe lower. We should give back a little at 9:30, as well.
At this point, adjusted for fair value, the S&P futures are down about 4½ points, Dow futures are down 37, and the NASDAQ futures are almost 6 points below fair value.
As they say, it’s not whether you win or lose, it’s what you say about next quarter. Yesterday afternoon, Alcoa reported an operating loss of 3 cents per share. That matched revised expectations. Now, nobody likes loss. However, sales rose 6%, and that was better than expected. Moreover, Alcoa foresees a 7% rise in global aluminum demand and that prognostication has Alcoa stock up a couple percent pre-market.
Although Alcoa’s report is the symbolic start of the quarterly earnings season, they really won’t start to roll in volume until next week. This morning, Tiffany cut its guidance for the current quarter, but high-flyer Lululemon raised their estimate for 4thquarter operating profit to 48 cents from 42 cents.
According to the ICSC-Goldman Retail Survey, retail sales fell off a cliff last week, falling 5.4 percent. That’s the biggest drop since the survey started in 1989. Blame is falling of the unseasonable warm weather. I guess people passed on shopping to lay out on the beach, or occupy Wall Street, or something
Word this morning is that Hostess, the maker of Wonder Bread and Twinkees, may be making a return trip to bankruptcy court soon.
Outside of New Zealand, overseas markets are higher, and we’re headed in that direction as well. At this point, adjusted for fair value, the S&P futures are higher by 13½ points, Dow futures are up 122, and the NASDAQ futures are about 21 points above fair value.
After a couple of relatively quiet weeks, the economic information engine gets in gear just in time for the Auto Show this week.
Fourth quarter earnings season unofficially kicks off today, with Alcoa’s report. It’s been tough times in the aluminum business and if Alcoa does much better than break even on operations it will be a surprise. Overall earnings for the S&P 500 companies are expected to increase about 8% year over year. That would be slower than we’ve seen recently, but pretty healthy, nonetheless.
The yield Italian 10 year bonds is back above 7 percent this morning. That’s the red-zone as far as sustainability is concerned. The yield of Spanish bonds is higher as well, but only up to 5.6%. Short-term German bonds, on the other hand, auctioned at a NEGATIVE yield this morning for the first time ever. France’s Sarkozy and Germany’s Merkel are meeting again today to put the fine touches on a new proposal to bring some fiscal responsibility to all euro-counties
Bristol Myers is buying Inhibitex at a 163% premium. Inhibitex makes a drug to fight hepatitis-C. Costco and Merck suffering broker downgrades this morning, Apple upgraded by Goldman Sachs.
Markets overseas are mixed. Our futures have been slightly higher all morning long. At this point, adjusted for fair value, the S&P futures are up 3 points, Dow futures are up 39, and the NASDAQ futures are about 8½ points above fair value.
Throw the fish in the fryer – it’s once again the first Friday of the month. Outside of another delicious meal at your local Knights of Columbus Hall, it means that we have the monthly Jobs Report dead ahead. In about 7 minutes, expect that we’ll find out that 150,000 new non-farm jobs were created in December. That, at least, was the early estimate. After a very strong ADP report yesterday, some are expecting a higher number than that, perhaps as high as 300,000. In any event, the Unemployment Rate is expected to tick up to 8.7%.
The euro touched another fresh 16 month low against the dollar this morning, now at about $1.28 per euro. Oil is bouncing back a bit after a selloff yesterday, as tensions remain over Iran’s military exercises and treats to close off strategic shipping lanes. One wrong move there and we might be longing for today’s price of $102 per barrel.
One Federal Reserve Bank President is out on the speaking circuit today, but there’s really nothing much else on the economic docket.
Chinese and Indian markets rose overnight, while most of the rest of Asia declined. European markets are mostly higher. Our markets open at 9:30, but in the meantime, the futures are refusing to move in any meaningful way in front of the Jobs Report at 8:30. At this point, adjusted for fair value, the S&P futures are down a half-point, Dow futures are up 7, and the NASDAQ futures are just a smidgen (that’s a technical term) below fair value.
We’re in that wonderful “calm before the storm” period as we await next week’s start of fourth quarter corporate earnings reports. In the meantime, traders are still fussing and fretting over any news out of Europe and this morning, the news is less than wonderful.
Retail sales in Germany are down almost one percent. In Italy, a share sale of Unicredit did not go well. A Spanish regulator warned of higher reserve requirements and although a French bond sale went well, fears of a French credit downgrade has the Euro lower against the dollar by nearly one percent this morning.
SodaStream and Kraft announced a big co-branding deal this morning for Kraft-owned beverages. Evidently, you’ll be able to roll your own Crystal Light and Countrytime Lemonade.
Same store sales reports will be coming out all morning from the major retailers. Thus far, Limited reported sales up 7 percent. That was more than a percent higher than expected. On the famous “other hand” Target’s sales rose only 2.6 percent, which was a half-percent lower than expected.
A very strong ADP employment report was released about 5 minutes ago and gave our stock futures quite a lift, bit that little rally has pretty much worn off.
At this point, adjusted for fair value, the S&P futures are lower by about 4 points, Dow futures are down 27, and the NASDAQ futures are about 1½ points below fair value.
Yesterday was just one sweetheart of a day. From a sweet one and a half percent gain in stock prices to a sweet 3 point win in the Sugar Bowl. As for today, well catch up on your sleep early on, if you stayed up to watch football, as the futures are indicating that stock prices will give back a bit early on.
December Car Sales reports will be rolling out as the day unfolds, and are expected to hold steady at November’s annualized rate of 13.6 million units. 10.5 million of that is expected to represent sales of domestic models.
Last week was a little unusual due to the Holidays, but like it or not, Mortgage applications fell 9.7 percent for purchase mortgages and almost 2 percent for refinancings.
On the rise this morning may be shares of Dunkin Donuts and Cabot Oil and Gas. Dunkin announced expansion plans and was granted a broker upgrade. Cabot will hike their dividend 33% and split their shares 2 for 1.
At 10 o’clock the November Factory Orders Report is expected to reflect a 2 percent improvement.
Our futures have been lower all morning, but are not dramatically lower, especially in light of yesterday’s big rally. At this point, adjusted for fair value, the S&P futures are lower by 4½ points, Dow futures are down 33, and the NASDAQ futures are almost 7 points below fair value.
It’s a brand new calendar year of trading – and maybe the last calendar year of trading, if you’re reading the Mayan calendar. But in any event, what we’re looking at is a trading week that will feature 5 pounds of economic data in a 4 pound bag.
The headline economic number out of Europe today comes in the form of the U.K.’s ISM index. This morning’s reading of 49.6, which indicates only a very slight contraction in manufacturing activity. It’s much better than the November reading of 47.7 and much better than many expected.
Our own December ISM rolls out at 10 o’clock. Expect a reading of 53.4, which would be a step up from November’s 52.7. A report on construction spending also comes out at 10, and a little later the Federal Reserve will release the minutes from their December 13thmeeting.
We’ll have to wait until tomorrow for the December Auto sales reports. Also, keep an eye out for any earnings warnings that may be slipping out this week in advance of the start of fourth quarter earnings season next week.
Most overseas markets are moderately higher, and although the futures are well off their highs of the morning, we should get off to a strong start, at least in the first half-hour of the 2012 trading year. At this point, adjusted for fair value, the S&P futures are higher by about 19 points, Dow futures are up 181, and the NASDAQ futures are about 35 points above fair value.
Daily Reports @ WJR
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