January 31, 2013
It’s the last day of the month, and it’s been a pretty good one if you’re long stocks. The S&P 500 has returned about 5½ percent, including dividends, which is about one percent more than last January, and, if we finish today that way, it will be only the 12thtime since 1950 that we’ve seen more than 5 % gains in January. While past is not necessarily prologue, remember that last year the S&P 500 returned 16 percent.
There are lots of earnings AND economic reports to sift through today. Among companies reporting better than expected earnings were Colgate Palmolive, Duncan Brands, Whirlpool and Aetna. Falling short were UPS, Hershey and Dow Chemical. Facebook beat the 15 cent estimate by 2 cents, but profit was more than 70% lower than last year on heavy investment in mobile. Facebook stock looks about 5 percent lower pre-market.
The weekly jobless claims number comes at 8:30. Expect 350,000 new claims. Of course the monthly data, which comes tomorrow, may have a bigger impact. At 9:45, the Chicago Purchasing Managers Index is expected to reflect a mid-western economy just barely above stall-speed at a reading of 50.5.
The futures are floating a bit lower as we await more news. Adjusted for fair value, the S&P futures are down 3, the Dow futures are down 18, and the NASDAQ futures are about 2 points below fair value.January 30, 2013
It’s Federal Reserve Open Market Committee decision day. Historically, stock prices may go up or down, but are often close to unchanged by the time Bernanke starts to speak at 2:15 in the afternoon. We’ll see if that hold true today, although it looks like prices will go a little higher in the early going.
Chrysler reported 378 million dollars of profit in the last quarter, well north of the 225 million earned in the comparable quarter a year ago. Northrop Grumman and Boeing both beat earnings estimates rather handily this morning and the stock look to be headed higher.
Amazon announced its performance after the close last night. They only earned 21 cents per share, versus the expected 28 cents. Revenue came up short as well. However, traders are evidently focused on the 24 percent gross margin and Amazon stock is about 8 percent higher pre-market.
Chesapeake Energy is more than 10 percent higher pre-market on word that the CEO will be leaving on April 1st.
Japanese stocks were 2 percent higher in a rising Asian markets. Italy is about 2 percent lower in a weaker Eurozone. Our futures are a little higher, but have lost altitude over the past half-hour.
Adjusted for fair value, the S&P futures are up a point, the Dow futures are up 16, and the NASDAQ futures are about 7 points above fair value.
January 29, 2013
The big economic event of the week starts today, but won’t hit us until tomorrow afternoon. That, of course is the Federal Reserve’s two-day Open Market Committee meeting.
In the meantime we’ll have to concentrate on earnings reports, and this morning, the news is better-than-expected almost across the board. Yahoo beat the 28 estimate by 4 cents. Their shares are 3% higher pre-market. Pfizer also looks higher. They earned 47 cents, which was a 3 cent beat. Ford Motor Company beat the 25 cent estimate by 6 cents, and said good things about 2013. However, the stock is looking a bit lower pre-market after the big recent pre-auto-show run-up.
BMC Software disappointed last night and the shares look about 7% lower and Seagate Technology earned more than expected last quarter, but guidance was weak and the shares are about 5% lower.
The Conference Board’s Consumer Confidence number comes at 10, but is expected to be stuck at last month’s level of 65.1.
Most of Asia was higher overnight. Most of Europe is lower and we’re a bit on the weak side as well, but we seem to be slowly working our way back to even. Adjusted for fair value, the S&P futures are down less than 2 points, the Dow futures are down 8, and the NASDAQ futures are about 5 points below fair value.
January 28, 2013
The Standard and Poor’s 500 Index closed the week over the 1500 level for the first time in over 5 years, and with the Dow Jones Industrial Average up 11 of the past 12 days, this is thus far the best stock-market January in 24 years.
Not that everybody is happy. Shares of Apple lost another 12 percent last week, following in the infamous footsteps of oil in the 70’s, internet stocks in the 90’s, real estate in the “oughts” and other investment manias that supposedly only go up and never go down.
Caterpillar is up by about 2 percent pre-market, after reporting a profit of $1.91 ex-items versus the expected $1.69. CAT’s 2013 guidance was pretty vague however, predicting 7 to 9 dollars in profit. Wall Street had been estimating $8.65.
At 8:30, the Durable Goods Report is expected to show a 1.6 percent increase.
China was 2 percent higher overnight. Japan, which had started one percent higher actually lost one percent on the day. Our futures have recovered from lower levels, but are about as flat as flat can be.
Right now, adjusted for fair value, the S&P futures are down just a fraction of a point, the Dow futures are down only a point, but the NASDAQ futures are about a point above fair value.
January 25, 2013
If the futures are any indication, it looks like we’re finally getting some traction out of the continuing flow of better-than-expected earnings reports.
This morning’s earnings highlights include Procter & Gamble and Kimberly Clark. Both beat estimates and affirmed guidance and shares of both are up about a percent and a half pre-market. Starbucks and Microsoft beat their numbers last night. Starbucks is looking about 2 percent higher, although Microsoft is down a bit.
The big winner of the morning looks to be Tempur-Pedic. They earned 60 cents per share, a 5 cent beat, and the shares are indicated about 16 percent higher.
And there’s horrible news out of Morgan Stanley. After a year of falling profits, the CEO of Morgan Stanley took a tremendous pay cut in 2012. He was paid only 6 million dollars. Cue the violins, please.
A positive German business confidence survey and a prediction from Mario Draghi that the Euro-economy would improve in the second half of the year has everybody across the pond in a good mood.
Watch the New Home Sales Report at 10 o’clock, but in front of that, we should see green arrows at the open. Right now, adjusted for fair value, the S&P futures are higher by about 7 points, the Dow futures are up 52, and the NASDAQ futures are almost 13 points above fair value.
January 24, 2013
Yesterday’s action provided a lesson for those among us who refer to the Dow Jones Industrial Average as “the Market.” The Dow only measures the share prices of 30 companies, NOT the many thousands of companies out there. Not only that, the 30 companies are not given equal weighting in the index. Yesterday, the Dow Index rose 67 points. However, if you exclude IBM’s 4½ percent rise, the Dow Index would have closed only one point higher.
The same effect, except in reverse, will be suffered by the NASDAQ 100 today. Apple is the gorilla in the room as far as the NASDAQ weighting is concerned. And this morning, the gorilla is losing weight. After a disappointing sales report and downward sales estimates for 2013, Apple is lower by about 9 percent pre-market. Remember just four months ago, when Apple traded for more than 700 dollars? Premarket, the shares are going for about 467 dollars.
3M is trading at a new high this morning, after meeting the profit estimate.
Weekly Jobless Claims at 8:30 are expected to jump to 360,000 from last week’s surprisingly good 335,000. At 10 o’clock the December Leading Economic Indicators are expected to improve by four-tenths of a percent, after November’s two-tenths decline.
Overseas markets are once again a mixed bag, as are our futures.
Right now, adjusted for fair value, the S&P futures are lower by 2½ points, and while the Dow futures are up 10, but the NASDAQ futures, due to a likely 45 dollar per share downdraft in shares of Apple, are about 33 points below fair value.
January 23, 2013
We’re moving into the heart of earnings reporting season, and this morning the earnings were hearing about are a lot stronger than many had expected.
We’re looking at better than expected earnings results from Google, IBM, Intuitive Surgical, CSX, United Technologies and McDonalds. The star of the morning appears to be Cree, which is higher by about 14 percent, although giants Google and IBM are higher by 5 and 4 percent respectively.
The loser of the day appears to be former market darling Coach. Coach missed the $1.28 estimate by a nickel, on lower than expected sales and the stock looks about 12 percent lower pre-market. Put together with week results from Tiffany, we might be seeing evidence that the high-end consumer is getting ready for the big tax hit that’s coming in 2013.
Overseas markets are narrowly mixed, with the standout being Japan, where stocks fell 2 percent.
It’s one of those funny mornings when the futures require with a big fair value adjustment, and it’s also a morning where strength in the stocks of companies that heavily influence the Dow, like IBM and the NASDAQ, like Google will push those indexes much higher, compared with the overall market.
Right now, adjusted for fair value, the S&P futures are lower by a fraction of a point, while the Dow futures are up 41, and the NASDAQ futures are about 12½ points above fair value.
January 22, 2013
We came back from the long weekend to a host of big company earnings reports this morning, and they’ve been a mixed bag.
Travelers Insurance reported a 72 cent profit for last quarter, way above the 14 cent estimate. DuPont beat the 7 cent estimate by 4 cents and raised guidance, and Johnson & Johnson earned two cents more than the $1.17 estimate, but guided lower for 2013.
Looking weaker this morning is Verizon, which reported 38 cents versus the 50 cent target, and Caterpillar, which announced a write-down due to some alleged accounting fraud at an acquired subsidiary.
More empty Blockbuster stores are on the horizon. Dish Network, the company that runs Blockbuster, will close 300 of the remaining 800 locations and send 10% of Blockbuster employees to the unemployment line.
Sales of existing homes are 14½ percent higher than a year ago. We’ll find out about December sales at 10 o’clock. Expect an increase to an annualized rate of 5.1 million units.
Overseas markets are mixed, but mainly lower. Our futures took a dip about 15 minutes ago. Right now, adjusted for fair value, the S&P futures are down about 4 points, Dow futures are down 30, and the NASDAQ futures are about 3½ points below fair value.
January 18, 2013
There’s only one economic report on the calendar today, but it will be watched closely. The University of Michigan’s survey of Consumer Sentiment took a big dive in December, as people pondered the impact of the November election and the then-upcoming fiscal cliff. The November number of 82.7 dipped to 72.9 in December. The January number comes at 9:55 this morning and is expected to take a half-step out of the basement, perhaps up to 75. The higher that number climbs the higher stock prices should go.
One stock’s price that will not head higher that the open is that of Intel. The big chip maker beat earnings estimates, but announced a HUGE cap ex program for 2013. Traders are leery that all that extra capacity in a downwardly-mobile personal computer market could weaken Intel’s margins quite a bit.
China reported an increase in 4thquarter GDP overnight of 7.9%. That’s higher than expected and is the first increase in the Chinese economic growth rate in about 2 years. GE and Morgan Stanley both out with good reports this morning.
Our futures aren’t showing much direction in front of the U of M Consumer Sentiment number. Right now, adjusted for fair value, the S&P futures are up a point, Dow futures are up 17, but the NASDAQ futures, reflecting the weakness in Intel, are 6 points below fair value.
January 17, 2013
The buyers and the sellers have apparently reached agreement that there’s nothing to get excited about as we head toward 9:30 this morning.
So far, we’ve had the earnings announcement from Bank of America. Once you sift through the myriad legal expenses and expensive settlements for (alleged) past mis-deeds, Bank of America’s accountants were still able to eke out a 3 cent per share gain, a penny better than expected.
Citigroup reported a similar pile of legal expenses, settlement and such, reporting 69 cents in profit, well short of the 96 cent estimate.
Interestingly, Richard Fisher, head of the Federal Reserve in Dallas has called for the break-up of a dozen big banks to avoid another too-big-to-fail problem. Seems like common sense, but this is the kind of thing that keeps well-paid lobbyists fully employed in Washington.
Weekly Jobless claims in 15 minutes are expected to hit 371,000.
Asia was mixed overnight, but Europe has turned a little higher. Our futures are as sleepy as can be.
Adjusted for fair value, the S&P futures are flat, Dow futures are down 7, perhaps on more bad news for Boeing, but the NASDAQ futures are 4 points above fair value.
January 16, 2013
The pattern of late for stock prices has been early weakness, followed by an afternoon rally back to even or a little better. If that pattern is to continue, this afternoon has its work cut out for it, as falling prices overseas have us headed lower, even in the >
Eleven of S&P 500 report earnings today, including eBay and a lot of big banks. So far, JP Morgan Chase reported quarterly earnings of $1.46 versus the expected $1.16, and Goldman Sachs beat the $3.78 estimate by almost 2 full dollars.
Boeing stock looks to descend almost 4 percent lower this morning as more problems with the 787 Dreamliner have grounded all 787 flights in Japan.
In just over 15 minutes, the most recent Consumer Price Index, which no one is paying attention to YET, is expected to show an increase of one-tenth of one percent for December in the core rate, but no change overall.
The Japanese market took a 2½ percent dive on profit-taking overnight, Europe is mostly lower and we’ll likely start with a foot in the bucket as well.
Adjusted for fair value, the S&P futures are down 5½, Dow futures are down 67 although the NASDAQ futures are just a fraction of a point below fair value.
January 15, 2013
So far there’s good news and bad regarding the former. Home builder Lennar gave us a little more evidence that a housing recovery is underway. Lennar earned 56 cents per share, which was 12 cents better than expected. Forest Labs, on the famous other hand, lost 21 cents per share last quarter, which was 10 cents worse than expected.
The star stock of yesterday was Dell, which soared almost 13 percent on some pretty substantial rumors that the company might go private. This morning, Dell is up an additional 4 percent.
The December Retail Sales Report rolls at 8:30. Expect a four-tenths of a percent increase, which would be a tenth of a percent higher than November. We’ll also get the stats on manufacturing in the New York region at 8:30.
There’s a lot of action around Facebook today. They are holding a special media event, although no network cameras are invited. Go figure. Could be a big new Facebook feature, or it could be a big new publicity stunt.
Asian mostly higher, Europe mostly lower. We’ll need some help to get going in the green.
At this point, adjusted for fair value, the S&P futures are down 7, Dow futures are down 61 and the NASDAQ futures are about 10½ points below fair value.
January 14, 2013
The good news over the weekend came with word that Wonder Bread will survive the bankruptcy of Wonder Brands. Six of the bankrupt firm’s brands, including Wonder Bread, have been sold to a competitor, which will try to build strong earnings 12 ways, no doubt with lower-wage help.
Perhaps emboldened by that good news, the Chinese Government announced overnight that foreigners will, for the first time, be allowed direct ownership in Chinese stocks, bonds and other financial assets. That sent the Chinese stock market soaring about 4 percent.
Oil driller Transocean’s shares are more than 3 percent higher this morning on word that Carl Icahn is accumulating shares. But the big downer of the morning has to be Apple. Apple shares have been sliced between 3 and 4 percent lower pre-market, and are hovering right around the 500 dollar mark. Word is that Apple has cut iphone 5 component orders due to softer-than-expected demand.
Ben Bernanke will speak at The University of Michigan today, but not until after the market close at 4 o’clock. Speaking of the market OPEN, however, our futures were higher until about an hour ago.
At this point, adjusted for fair value, the S&P futures are down a point and a half, Dow futures are down 10 and the NASDAQ futures, thanks to Apple’s latest swoon are about 15 points below fair value.
January 11, 2013
Stock prices rose most of the afternoon yesterday, finishing about three-quarters of a percent higher, adding on to Wednesday’s gains. However, it looks like we’ll get off to a standing start today.
One stock on the rise pre-market is Ford Motor. Standard and Poor’s is out with word that Ford’s credit rating will not be adversely impacted by yesterday’s decision to double its dividend. Separately, Ford announced that it will add 2,200 white collar jobs this year.
Perhaps they’ll get some applications from American Express workers. Amex announced that 5,400 of its workers will join the ranks of the unemployed this year.
Well Fargo just announced earnings that beat the 89 cent estimate by two cents, although the stock is about one percent lower pre-market. And Best Buy says that domestic Holiday same store sales dropped 1.4 percent, with international sales dropping 6.4 percent.
The Japanese Cabinet approved 227 billion dollars of more pump-priming overnight, setting a 2 percent inflation target. That has the yen lower and the Japanese stock market 1.4 percent higher. A different story in China, where stocks were 2 percent lower on a troubling inflation report.
We’re still waiting for some definitive sense of direction for Wall Street. Adjusted for fair value, the S&P futures are essentially flat, Dow futures are down 11 and the NASDAQ futures are about 2 points below fair value.
January 10, 2013
In case you own shares of Ford Motor, get ready for a boost in your income. Ford announced this morning that their dividend will double – going from 20 cents per share to 40 cents.
Say what you’d like about the new tax law, there’s no doubt that high-income earners are taking an out->
Today’s first article of evidence – stock of Tiffany is lower by about 10 percent pre-market. Tiffany, like most retailers, has a January 31styear-end and Tiffany is saying this morning that earnings will come in at the low end of earlier guidance, and will likely be below Street estimates.
Of course, not all the bad news is at the high end. Ruby Tuesday, which arguably caters more to the hoi polloi missed their estimated number last night and lowered guidance for the current year.
Weekly jobless claims at 8:30 are expected to fall just a bit to 365,000. Oil prices are higher again, and are right around 94 bucks per barrel.
Overseas stocks are mainly higher after a surprisingly strong trade report from China. Chinese exports rose over 14 percent in December, after rising less than 3 percent in November.
Absent some awful news at 8:30, we should head higher once again to 9:30. Adjusted for fair value, the S&P futures are up almost 6 points, Dow futures are higher by right around 38 points and the NASDAQ futures are about 13½ points above fair value.
January 9, 2013
Well, earnings season has arrived, and although the flood gates really don’t open until next week, so far we’ve heard more positive news than not.
Monsanto jumped ahead of Alcoa yesterday in their rush to announce better than expected numbers. Alcoa also had a positive report, perhaps not so much related to last quarter’s earnings, but Alcoa projected a 2013 rise of 7% in aluminum demand. That has the stock looking about 2 percent higher this morning.
Seagate raised its revenue estimate but lowered its estimated margins – so that could wind up being good OR bad news. On the decidedly bad news side, Apollo Group shares are about 8½ percent lower this morning on a drop in student headcount and some sour guidance.
Later today we’ll hear from Ruby Tuesday and Constellation Brands. WD-40 just reported earnings that beat estimates rather handily.
Asian markets were mixed overnight, but Europe is slightly higher.
Our futures were pretty close to the flat line a couple of hours ago, but have been slowly creeping higher ever since. Adjusted for fair value, the S&P futures are up almost 3 points, Dow futures are higher by 31 and the NASDAQ futures are about 3 points above fair value.
January 8, 2013
Rising tax rates, fiscal cliffs, unsustainable government debt, they’re all potentially problematic for stocks. But in the long run, it all boils down to interest rates and earnings. Interest rates are about as good as they can get, and we’ll start to find out about fourth quarter earnings after 4 o’clock this afternoon.
Alcoa is expected to report a fourth quarter profit of seven cents per share, versus last year’s loss of 3 cents. Apollo Group and Monsanto will also report in.
This morning, the National Federation of Independent Businesses released their December survey of small-business confidence. The survey rose a puny half-point to 88 from the November decline of about 5½ points. The half point rise, as anemic as it is, is right in line with expectations.
There’s an upgrade for Southwest Airlines this morning and a downgrade for JetBlue.
Asian shares were mixed, but mainly lower overnight. European shares have overcome some pretty weak retail sales and unemployment data to move a little higher. Eurozone unemployment increased to a new record high of 11.8 percent, and German Factory Orders were lower by 1.8 percent.
Our futures have weakened over the past hour or two, but a still only modestly lower at this point. Adjusted for fair value, the S&P futures are down 2½ points, Dow futures are down 23 and the NASDAQ futures are about 3½ points below fair value.
January 7, 2013
This will be the first full week of trading since Santa was still loading up the sleigh, but while the fiscal cliff came since then, it really didn’t go. This time around, Washington didn’t kick the can down the road by two years, as they did in 2010. They just kind of shanked the punt. So, unfortunately, that’s a little lump of coal for the stock market that will keep on giving over the next 8 weeks or so.
Over the weekend, Senate Minority leader McConnell drew the first line in the sand, stating that tax increases are now off the table, and that spending must be cut. Of course the other side of the aisle just smiled. They’ve often heard that kind of talk before.
According to the New York Times, 14 major U.S. banks -- you know, the JP Morgans, the Citigroups, the Bank of Americas and the like will reportedly get off the federal hook for mortgage abuse by paying a 10 billion dollar fine – probably without admitting or denying that they did anything wrong. Big bank stocks are generally higher premarket, as many were expecting a more significant penalty.
Earnings season kicks off tomorrow with Alcoa’s report, and there’s nothing significant on the earnings or economic calendar today.
Overseas markets are mixed but trending lower. At this point we’re following suit. At this point, adjusted for fair value, the S&P futures are down 4, Dow futures are down 31 and the NASDAQ futures are about 7 points below fair value.
January 4, 2013
We’ve arrived at the first Friday of the month. When I was growing up, that meant that my future included a fried fish dinner at the local K of C hall. This morning, however, it means that in just about 16 minutes, we’ll be hearing the Labor Department’s December Employment statistics. Expect that 160,000 new non-farm jobs were created in December, and that the supposed unemployment rate will hold at 7.7 percent.
It’s the time of year when lots of supposed “experts” are making lots of supposed “predictions” as if they had any idea of what they were supposedly talking about. But if you’re trying to predict future asset prices in dollars, Federal Reserve Policy is what it’s all about.
That’s why yesterday’s big market event turned out to be the release of the minutes from the last Federal Reserve Open Market Committee meeting, and it is highly worth noting. In the minutes, several Committee members voiced the opinion that they will ease up on or stop the Fed’s. Quantitative easing programs sometime this year. Right on cue, stocks took a downward turn, bond prices did even worse and this morning, oil is off by one percent, gold is lower by more than 2 percent, silver is off almost 5 percent.
Eli Lilly raised 2013 earnings guidance this morning. Overseas markets are mixed. Our futures are in neutral as we await the Employment Report at 8:30. At this point, adjusted for fair value, the S&P futures are flat, Dow futures are down 8 but the NASDAQ futures are about 4 points above fair value.
January 3, 2013
Big news if you’re planning your snack foods for the Super Bowl. Word this morning is that Unilever’s Hormel division is buying Skippy peanut butter. It’s a 700 million dollar deal, but more importantly, we may all be able to look forward to enjoying some delectable “spam and peanut butter” sandwiches for the big game. Maybe some peanut butter chili. You know, sometimes these big mergers just don’t make sense to me.
Anyway, now that we’ve taken the fiscal cliff and moved it two months down the road, it’s time to get back to focus on mundane stuff like whether people have jobs. The news from this morning’s Challenger Layoff Report is promising. December layoff announcements fell to just over 32,000. That’s down 47 percent from November and the lowest reading in 13 years.
The ADP Private Payrolls Report comes one minute from now and the weekly Jobless Claims are expected to come in at 363,000 at 8:30 this morning. Of course, we’ll have to wait until tomorrow for the monthly Jobs Report.
Cisco Systems gets and upgrade this morning and Biogen Idec is 6 percent lower pre-market after some disappointing test result for an ALS drug.
The very few Asian markets that were open overnight were higher, but Europe is a mixed picture. Yesterday’s monster rally here might be followed by a little profit taking at the open this morning. At this point, adjusted for fair value, the S&P futures are down about 4 points, Dow futures are off 41 and the NASDAQ futures are about 8 points below fair value.
January 2, 2013
It’s really a surprising morning, as we awake to news that our President and our Congress finally got something done. Of course, remember that the goal here was to raise a lot of revenue and cut a lot of spending. Well, they managed to not raise much revenue and not cut any net spending, taking an embarrassment of an Internal Revenue Code and making it even worse.
But, no matter, traders recognize this morning that the coast is clear for the next month or so, and stocks are in rally mode across the globe. Unfortunately, this recent budget battle is likely to be the undercard to the main event, which will be the debt ceiling debate. The “dismal cliff” for that comes in about two months, with the potential result being a Government debt default.
The December ISM Manufacturing Index comes at 10 this morning, and is expected to break into “growth” mode at 50.5 versus the November reading of 49.5. We’ll also get the November Construction spending report.
And shareholders of Zipcar are seeing their shares zip about 50 to 100 percent higher this morning, on a buyout offer from Avis.
The Japanese and Korean markets are closed, but overseas markets that are open are generally 2 to 3 percent higher. At this point, adjusted for fair value, the S&P futures are higher by 25 points, the Dow futures are up 188, and the NASDAQ futures are 52 points above fair value.
Daily Reports @ WJR
For an explanation of "fair value" please click here.