January 31, 2014
There’s a storm a’comin’, and I’m not talking about snow. The big gains we saw yesterday in stock prices may well evaporate before the coffee gets cold this morning.
Last night, after the close Amazon’s earnings report did not deliver, much like that Christmas present you ordered online. Amazon’s 51 cents of profit missed the 66 cents estimate. Guidance for the current year was less than inspiring and Amazon shares are indicated about 7 percent lower pre-market.
The other big kid on the tech block, Google also missed their number last night, earning $12.01, versus the $12.22 target. Revenue was, however, better than expected, and Google is 3 percent higher pre-market.
Zynga shares are rallying about 17 percent pre-market after announcing an acquisition of the business and the future departure of 15% of their employees. Chipotle is also higher on a good earnings report. Just minutes ago, Walmart lowered their earnings guidance below the low end of the prior estimate.
The January Chicago PMI comes at 9:45, and is expected to read 59.5 and ten minutes later we’ll get the final read on consumer sentiment from U of M.
But no matter how consumers are feeling, traders are feeling a selling sensation at this hour. Adjusted for fair value, the S&P futures are lower by about 24 points, the Dow futures are down 217, and the NASDAQ futures are now about 39 points below fair value.January 30, 2014
The Federal Reserve followed their own script yesterday, trimming their asset purchase program by another 10 billion dollars, and the thought that interest rates should eventually rise SOMEday, and that investment in several emerging market countries could fall ANY day, sent stocks lower again yesterday. The January selloff in the S&P 500 now stands at about 4 percent, with two trading days left.
Nevertheless, the corporate earnings reports continue, on the whole, to be pretty good. Whether it’s a case of making more profit, or having fewer shares outstanding because of buyback programs, earnings per share for last quarter are again exceeding expectations.
This morning, companies beating estimates include Time Warner Cable, Facebook, Blackstone, VISA, UnderArmour and Pulte Homes. Eli Lilly matched the 74 cent estimate, 3M matched the $1.62 estimate. The notable misses were ExxonMobil, which only missed the $1.92 estimate by a penny and Whirlpool, earning $2.97 cents, six cent shy of expectations.
Weekly Jobless Claims come at 8:30 along with the Commerce Department’s first guess at 4thquarter Gross Domestic Product. Expect a reading of 3.3 percent.
Overseas markets are mixed, which is kind of a surprise after our downdraft yesterday, but our futures are pointing higher. At this point, adjusted for fair value, the S&P futures are higher by a bit more than 7 points, the Dow futures are up 66, and the NASDAQ futures are now about 26 points above fair value.
January 29, 2014
The last report from the Fed with Ben Bernanke at the head of the table comes this afternoon. Most observers expect the Fed to continue tapering its bond-buying program at the 10 billion dollar per month rate, going from 75 billion to 65 billion. You might say that the Turkish Central Bank tightened policy a little bit overnight. They raised short term interest rates to 12 percent, all the way from 7.75 percent. The Turkish lira has lost about 14 percent of its value over the past couple of months, and they’re hoping that this move stems the tide. Hard to imagine that it will help grow the Turkish economy, however.
Companies beating their earnings estimates this morning include Boeing, Southern Company and EMC. Absolutely blowing away the estimate was Dow Chemical, announcing operating earnings of 65 cents, which was 22 cents better than expected. Dow also raised their dividend by 15 percent and increased their buyback program. Dow Chemical stock is more than 3 percent higher pre-market.
Fiat is changing its name to “Fiat Chrysler Automobiles” and shares will trade in Italy and on the New York Stock Exchange.
Tupperware missed estimates, Yahoo had a lousy report last night and Boeing issued some very conservative guidance. None of that is helping the futures this morning, which had been higher early on.
Asia was higher, Europe is mostly lower. At this point, adjusted for fair value, the S&P futures are lower by more than 4 points, the Dow futures are down 46, and the NASDAQ futures are now about 8 points below fair value.
January 28, 2014
The State of the Union, the start of another Fed meeting, and earnings galore are all in the news today. On top of all that, we have some M&A action. Martin Marietta is reportedly buying Texas Industries for just over 2.1 billion dollars.
On the earnings front, Ford Motor reported record North American profits, and a lower loss in Europe. Adjusted earnings checked in at 31 cents, three cents better than expected. Drug maker Pfizer earned 56 cents per share, which was a four cent beat. DuPont also four cents better than expected at 59 cents. DuPont also announced a $5 billion dollar share buyback program.
The only report that comes close to disappointing this morning is Comcast. They reported 66 cents of profit, which was two cents short. However, their tax rate was higher than analysts had expected. Comcast is raising their dividend by 15 percent and the shares are pushing 3 percent higher pre-market.
There was one troubling report last night, and that came from Apple. Yes, Apple earned more than expected last quarter. But guidance was weak and iphone sales disappointed. Apple share are indicated almost 8 percent lower pre-market and are taking the NASDAQ Index with them.
Overseas markets are mixed. Right now, adjusted for fair value, the S&P futures are higher by almost 6 points, the Dow futures are up 71, but the NASDAQ futures, due to the weakness in Apple shares, are now about 12½ points below fair value.
January 27, 2014
It should be a very interesting week, especially following the big sell-off of last Friday.
The Federal Reserve Open Market committee has its retirement lunch for Ben Bernanke later in the week, and the big earnings report of the week comes after four o’clock this afternoon from Apple.
In the meantime, it looks like we’ll get a little help from our friends at Caterpillar.
Quarterly earnings of $1.54 beat the lowered estimate of $1.28 by 26 cents. Now, a bunch of that looks like some inventory accounting hocus pocus. But, no matter, Caterpillar is higher by almost 7 percent pre-market.
At 10 o’clock, we’ll get the December New Home Sales Report. Expect an annualized rate of 457,000 units. Of course, we’ll get the State of the Union Address tonight, which probably won’t draw nearly the ratings of Monday Night Football, which is why they only let the President do it once per year.
Overseas markets are lower after our late-week swoon, but Europe not as much as Asia. Our futures broke into the green about two hours ago and have been slowly rising since then. The Dow Jones futures, in particular, are being boosted by the rise in Caterpillar shares. Right now, adjusted for fair value, the S&P futures are higher by 5½ points, the Dow futures are up nearly 58, and the NASDAQ futures are now about 6 points above fair value.
January 24, 2014
The pretty lousy Chinese PMI number got us off on the wrong foot yesterday and a lot of feet headed for the door by 4 o’clock as the S&P 500 lost almost a percent and a half. Don’t look now, but those feet are headed in the same direction this morning.
Five big company earnings reports are out, with four pretty much meeting expectations and one positive surprise. Procter & Gamble, Kimberly Clark, Starbucks and Honeywell offered generally positive reports, but with no major surprises. The much better than expected numbers belonged to Microsoft when they reported last night.
Microsoft’s 78 cents of operating profit was a full 10 cents better than expected, and Microsoft shares are indicted about 3 percent higher pre-market.
Of more concern this morning is a bit of deja vu in the currency market. You may remember the Thai baht problems back in, I believe, 1997. Well the Argentine peso and the Turkish lira are in turmoil this morning, and have sent emerging market stocks lower overnight. Is it an international currency crisis in the making? Probably not, but possibly a good excuse to take profits in the meantime. In fact, outside of China, all foreign markets are lower and if we’re going to fight that trend, we’ll be fighting our way of a pretty significant hole.
Our futures were in much worse shape earlier, but they’re still not pretty. Right now, adjusted for fair value, the S&P futures are down about 9½ points, the Dow futures are down 71, and the NASDAQ futures are now 14 points below fair value.
January 23, 2014
The deal we talked about a couple of days ago is now for real. Chinese PC maker Lenovo, which measured by units shipped is now the biggest personal computer maker in the world, is buying the low-end server business of IBM for 2.3 billion dollars in cash and stock. The deal allows Lenovo to diversify its product mix, as is has become the biggest fish in the rapidly draining personal computer pond. IBM says that 7,500 workers will be offered positions with Lenovo.
Nokia, which recently announced the sale of its phone handset business to Microsoft, reported earnings that were about 30% better than expected. Johnson controls’ quarterly profit was in-line with estimates, but revenue was better than expected and up almost 5 percent year over year.
Last night, Netflix blew away profit expectations, and announced four million new subscribers worldwide last quarter. Netflix stock price, which has been on the express elevator up during the past year, are about 17 percent higher in the pre-market from yesterday’s 4 o’clock close.
December Existing Home Sales and Leading Economic Indicators come at 10 o’clock. Expect only a two-tenths of a percent increase in the indicators.
Some weak economic numbers in China overnight dragged shares there lower. Other markets overseas paint a mixed picture. We should head a bit lower at 9:30.
Right now, adjusted for fair value, the S&P futures are down about 5½ points, the Dow futures are down 47, and the NASDAQ futures are now 3 points below fair value.
January 22, 2014
The earnings reports continue to flow this morning, and one in particular is not going to help the Dow Jones Industrial Average in the early going. IBM, which is the second most highly-priced stock in the price-weighted Dow Index reported $6.13 of adjusted earnings last night, which was 14 cents better than expected. The problem was the top line, as sales fell short of estimates for the fourth consecutive quarter. Weakness in the Chinese server and storage market got the blame, but IBM shares are taking their medicine this morning, lower by more than 3 percent pre-market.
Speaking of acronym-named companies, AMD, the old Advanced Micro is seeing its shares down almost 10 percent pre-market on a lowered revenue and profit forecast. Texas Instruments met the earnings estimate last night, but the shares are indicated one percent lower this morning. Coach shares are down nearly 7 percent on disappointing sales as more and more shoppers stock to cell phones rather than stores.
Technology firms CREE and CA are both looking about 3 percent higher on upbeat reports and UTX is up a fraction of a percent after beating the $1.53 estimate by a nickel, even though the top line was a little light.
Asia mostly higher, Europe mostly lower. Right now, adjusted for fair value, the S&P futures are down about a point, the Dow futures are down 31, reflecting the weakness in IBM, and the NASDAQ futures are now just about even with fair value.
January 21, 2014
With the holiday behind us and almost no economic reports on tap the rest of the week, the focus will turn to corporate earnings, and there are plenty of those on the way.
So far this morning, five of the big guys have reported, and all five checked in with better than expected results.
Johnson & Johnson reported $1.24 of operating earnings. That was 4 cents better than expected. Delta Airlines took your extra baggage fees right to the bottom line, beating the 63 cent estimate by 2 cents.
Baker Hughes and Verizon beat their bogeys by a penny per share and the big beat of the morning came from The Travelers. Crediting higher insurance premiums and better retention of existing customers, Travelers earned $2.68 last quarter, which was 52 cents ahead of the $2.16 estimate.
IBM, the company that sold off its personal computer business to Lenovo some years ago is now reportedly in talks to unload its low-end server business to Lenovo.
Outside of Spain, which is a bit lower at this hour, overseas markets are higher and we’ll start the short trading week in the green as well. Right now, adjusted for fair value, the S&P futures are higher by about 7½ points, the Dow futures are up 74 points, and the NASDAQ futures are about 20 points above fair value.
January 17, 2014
Housing starts, Industrial Production and Capacity Reports and the University of Michigan’s first look at Consumer Sentiment all come before 10 this morning.
That, and a bevy of earnings reports are making this morning’s market a little more interesting that your average bull.
Morgan Stanley, on the strength of their investment banking unit, reported fifty cents of adjusted earnings. That was a nickel better than expected. Oil services firm Schlumberger also out with good numbers, beating the $1.32 estimate by 3 cents. Schlumberger is also raising their dividend by 28 percent.
General Electric met estimates for earnings and revenue. However, GE shares are about one percent lower pre-market. Last night, Intel, missed the earnings mark by a penny, and gave a pretty tepid outlook for current-quarter sales.
Asian markets were mostly lower overnight, but Europe is mostly in the green.
There’s a big fair value adjustment this morning when you compare the futures to the cash market, which is not unusual when a bunch of high-profile companies report earnings just after 4 o’clock the prior day. As a result, the futures LOOK higher on their >
January 16, 2014
As mentioned earlier in the week, sales and earnings reports from the retailers will be pretty interesting this quarter as internet sales appear to have really reached critical mass. This morning, shares of Best Buy are a critical mess because of it. Best Buy announced this morning that their same store internet sales were 23 percent higher over the Holidays. Unfortunately, Best Buy is primarily a bricks and mortar retailer, and due to price cutting to compete with internet retailers, same store sales there were almost one percent lower. Profits will get hit, and Best Buy shares are almost 28 percent lower in the pre-market.
Add that to the news that JC Penney will close 33 stores and shed 2,000 jobs and it’s apparent that the online tide is rising.
Also rising are shares of Blackrock. The big investment firm reported earnings that were 24 percent higher than a year ago. Blackrock is raising their dividend by 15% and the shares are tacking on almost 5 percent pre-market.
United Health and Goldman Sachs also beat estimates and the parent of Chuck Cheese is being bought by private equity group Apollo.
Citigroup appears to be the earnings miss of the morning, earning 82 cents, which is a 13 cent miss on lower than expected revenue. Shares are down 3 percent.
December consumer prices at 8:30 expected to have risen three tenths of a percent.
European markets are generally a little lower and so are our futures. Adjusted for fair value, the S&P futures are lower by 5 points, the Dow futures are down 32, and the NASDAQ futures are about 7 points below fair value.
January 15, 2014
It looks as if we’ll get some follow-on to yesterday’s rally in the early going.
Bank of America shares are more than 3 percent higher this morning, at the highest level they’ve seen since the days of the rescue Merrill Lynch. With mortgage credit quality improving, reserves for non-performing assets are down and per share profit at Bank of America was 29 cents per share last quarter. That’s three cents better than expected.
More good things from General Motors this morning; first it was Mary Barra, a “car person” rising to CEO, then the Car and Truck of the Year awards at the Auto Show. Now GM has gone from zero to thirty in one announcement. For the first time since the crisis days of 2008, GM will pay a dividend. It will be 30 cents per quarter, and give GM shares about a 3 percent yield right out of the box.
Fastenal and CSX will also report earnings today, and this afternoon, the Fed will release their latest “Beige Book.” That a survey of regional economic conditions across the country. At 8:30, the Producer Price Index is expected to reflect a four tenths of a percent increase.
Mainland Chinese stocks were down a very slight bit overnight, but everybody else overseas is in the green, and so it shall start over here at 9:30. At this point, adjusted for fair value, the S&P futures are higher by 3 points, the Dow futures are up 29, and with the NASDAQ starting the day at another 13 year high, the NASDAQ futures are almost 13 points above fair value.
January 14, 2014
After a positive start, stocks skidded downhill most of the day yesterday, with the S&P 500 chalking up a loss of about 1¼ percent. Not helping was a report from a Goldman Sachs analyst, describing stocks as “over-valued.”
But, today is another day and we’ll start the day with some earnings news from a couple of big banks.
JP Morgan Chase reported $1.30 of GAAP earnings, and $1.40 if you consider a couple of adjustments. The average estimate was $1.35. Revenue was higher than expected, and JP Morgan shares are down less than a half percent pre-market. Wells Fargo reported one dollar of adjusted earnings, which was 2 cents better than expected. Well shares are lower by almost a percent and a half.
AstraZeneca raised their earnings guidance this morning, and shares are about 3 percent higher. Time Warner Cable is almost 2 percent higher after rejecting Charter Communications’ takeover bid.
At 8:30, the closely watched December Retail Sales Report is expected to reflect a two-tenths of a percent increase, even after a heavily price-discounted Holiday season. It may be more interesting to see if retailers made any money over the Holiday. The big boys of retail will report earnings next month.
Chinese stock rose for the first time in a while, but most other major markets overseas are lower. We should see an early bounce-back from yesterday’s drubbing. At this point, adjusted for fair value, the S&P futures are higher by 5 points, the Dow futures are up 48, and the NASDAQ futures are about 10 points above fair value.
January 13, 2014
If you stayed up too late last night sipping some Jim Beam, here’s hoping you could hold your liquor. However, it may have been more profitable to hold some shares. Shares of Beam are almost 25% higher this morning on a 16 billion dollar takeover bid by Japan’s Suntory Holdings.
This will be a big week for earnings reports, especially for the big financial institutions. Charles Schwab reports in a little later. Expect 21 cents of operating earnings, which would be a 40 percent improvement from last year.
This morning Wendy’s guided analysts’ earnings estimates higher. Wendy’s now sees 34 to 36 cents of 2014 profit. The expectation had averaged 29 cents. Wendy’s will start a share buy-back program and the shares are about 9 percent higher pre-market. Now THAT’S better.
Also getting better are shares of General Motors pre-market after announcement of a clean sweep of the car and trucks of the year awards.
It’s Coming of Age Day in Japan, so the Tokyo Exchange was closed overnight. China and Australia were off a little, but most other major markets overseas are a little higher.
Our futures have almost completely climbed out of an early hole. Almost –but not quite. At this point, adjusted for fair value, the S&P futures are lower by about 2½ points, the Dow futures are down 3 points, and the NASDAQ futures are about 2 points below fair value.
January 10, 2014
It’s not the first Friday of the month, but it might as well be, as far as 8:30 this morning is concerned. That’s when we get a Labor Department’s report on Job creation and the level of unemployment in December. Most expect the unemployment rate to remain at 7 percent and that about 200,000 new non-farm jobs were created in December. Given some other recent reports, that new-jobs number could well run somewhat higher. However, now that the Fed has announced their game plan, any signs of an accelerating economy should help boost stock prices.
Alcoa finally reported earnings last night, officially kicking off the 4thquarter reporting season, if there is such a thing as an “official” kickoff. Anyway, operating profit of 4 cents per share was 2 cents short of estimates and Alcoa stock is indicated about 7 percent short of where it closed last night.
Also on the down escalator are shares of Sears Holdings. After reporting absolutely lousy Holiday sales, Sears shares are off more than 12 percent this morning. And, once again proving that if you lower the bar low enough, you can always manage to jump over it, Abercromie & Fitch now says that they’ll earn about $1.60 this year. Analysts had previously lowered their estimate to $1.47. Accordingly, ANF is almost 16 percent higher pre-market.
Asian markets were mixed overnight, but Europe is solidly higher, and absent an ugly number at 8:30, that will be our direction at 9:30. At this point, adjusted for fair value, the S&P futures are higher by 9 points, the Dow futures are up 76, and the NASDAQ futures are about 24 points above fair value.
January 9, 2014
So far, no big surprises this week. Yesterday’s release of the Fed minutes revealed nothing of great import, and this morning, the Bank of England held short term interest rates steady and made no changes in their program of quantitative easing.
There are changes on the way at Macy’s, especially if you’re one of the 2,500 Macy’s employees about to get the old heave-ho. Shedding those 2,500 jobs will reportedly help boost Macy’s earnings, at least up to a level that most analysts expected, and Macy’s stock if looking to open about 7 percent higher this morning.
On the famous other hand of retailing is family Dollar Stores. Family Dollar was a market darling when consumers scaled back after the Great Repression. But that was then and this is now. Family Dollar reported 68 cents of operating profit. That was a penny short. Guidance was pretty stinky and Family Dollar shares are going at about a 7 percent discount pre-market.
Ford Motor is raising their dividend by 25 percent, to 12 ½ cents per share. That has Ford share looking to tack on almost one percent.
Most of Asia is lower. Most of Europe is higher. We should see green arrows at 9:30, although the futures have weakened decidedly over the past half-hour. At this point, adjusted for fair value, the S&P futures are higher by about 4½ points, the Dow futures are up 51, and the NASDAQ futures are about 7½ points above fair value.
January 8, 2014
Traders will focus on the 2 o’clock release of the Federal Reserve Open Market Committee minutes from their last meeting. That, of course, was the “change in course” meeting as the Fed announced a tapering of their bond-buying program.
In front of that, there’s a lot of other interesting news, especially if you’re looking for an economic recovery in Europe. November Retail Sales in the Eurozone rose at the fastest rate in 12 years, rising 1.4 percent in the month of November alone.
Mortgage applications rose 2.6 percent last week, but all of that rising was refinancing, rather than new purchases.
Micron Technology will be a stock on the move this morning. Last night, Micron reported 77 cents of quarterly operating profit. Compare than with the 44 cent estimate. Micron share look almost 10% higher pre-market. Moving decidedly in the other direction, after their first post-IPO earnings report, Container Store is indicated almost 13 percent lower pre-market.
Ford Motor shares are continuing their ascent, up about 1 ½ percent on Alan Mulally’s announcement that he’ll be sticking around at least through 2014.
No definitive movement in overseas markets overnight. The markets that are open aren’t moving by much. At this point, adjusted for fair value, the S&P futures are down about 2½ points, the Dow futures are down 21, and the NASDAQ futures are about 2½ points below fair value.
January 7, 2014
There’s some cautionary news this morning from South Korea. Samsumg, whose smart phones have been an unquestioned hit, reported that last quarter’s operating profit fell almost 4 percent to 8.4 percent. This is the same company that reported 26 percent profit growth in the prior quarter. Welcome to margin compression in the smart phone business. Samsung also >
Earnings reports are on the way from Micron Technology and Apollo Education Group. And Ford Motor hopes to raise some eyebrows at the Consumer Electronics Show unveiling a hybrid car featuring a solar panel in the roof.
Asian markets were mixed overnight, but Europe is mostly higher. We’ll see if we can sustain a stronger start this morning, which is something the market failed to do yesterday.
At this point, adjusted for fair value, the S&P futures are higher by almost 7 points, the Dow futures are up about 82, and the NASDAQ futures are about 14½ points above fair value.
January 6, 2014
With the Holidays pretty much in the rear-view mirror, we’re looking at the start of 4thquarter earnings reporting season. Although Alcoa traditionally leads the pack out of the gate, Alcoa isn’t scheduled to report this time around until Thursday, and a pretty good handful of companies will report ahead of them.
This morning’s headline reports will be economic. At 10 o’clock, the December ISM non-manufacturing Index is expected to read 54.5, which would indicate continued expansion in the services sector of the economy. The November reading was 53.9.
Also at 10, the November Factory Orders Report is expected to rise 1.7 percent, following up a revised October reading of minus one half of one percent.
The ongoing cat-fight between The Men’s Wearhouse and Joseph A. Bank continues this morning, with Men’s Wearhouse now offering 57.50 in cash for all of Joseph A. Bank. That’s a 5.7 percent premium to Friday’s closing price and the deadline is one day before the deadline for the Joseph A. bank offer to buy The Men’s Wearhouse.
Asian markets fell overnight, but Europe is mostly higher and our futures are in pretty good shape. Right now, adjusted for fair value, the S&P futures are higher by 3 points, the Dow futures are up about 39, and the NASDAQ futures are 3 points above fair value.
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