Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank any of the sponsors of our daily WJR reports
July 29, 2005
“Sell in May and go away.”
It’s just another example of “conventional wisdom” being very conventional, but not very wise. Defying that well-worn axiom of stock trading folklore, the summer rally continued yesterday as earnings reports continue to come in better than analysts expected. On average, it looks like about a 13% profit increase for the quarter, and profit projections for the third quarter are being raised as well.
Your favorite hamburger may be a single, a double or a triple, but it looks like Wendy’s stock will hit a biggie home run this morning. Earnings for the quarter were good, they are raising the dividend, buying back stock and they’re musing about a spin off of a portion of their Tim Horton’s chain. Shares are indicated up about 10 percent in the pre-market.
Volkswagen shares are up in Europe, on a good earnings report. Net profits were a little light, but sales and operating profits were better than expected.
AT 8:30, we’ll get the advance number on 2nd quarter Gross Domestic Product. It’s expected to have slumped to 3.4%. A larger number than that should give us a larger gain at 9:30, but as of now it looks like we’ll start modestly in the green.
Adjusted for fair value, S&P futures are up 2 points, the Dow futures are up 14, and the NASDAQ futures are about 3 points above fair value.
July 28, 2005
It’s heads up for shares of DaimlerChrysler in Europe. For the quarter gone by, unit sales were up 4%, revenue was up 4%, profits were up 28% and that was significantly better than expected. Taking the opportunity to say “goodnight” on a positive note, Jeurgen Schrempp will exit stage right at the end of the year. Dieter Zetsche will plop into the driver’s seat January 1st. Add it all up, and Daimler shares are up about 10% in Europe this morning.
If you’re one of those people who lately have been spending more on gasoline than food, you’re probably losing weight, and you’re probably not surprised that Marathon Oil made $2.16 per share versus $1.52 estimate and ExxonMobil checked in with a profit of more than $7.6 billion for the past three months. That’s $1.24 per share, which is in line with estimates.
The only significant economic news scheduled for today is the weekly jobless claims report at 8:30. Expect claims to have fallen by 34,000 to 320,000.
Asian markets were fairly flat overnight, but European markets are up again. We should head a little higher at 9:30. Adjusted for fair value, the S&P futures are up a little more than a point, the Dow futures are up 14, and the NASDAQ futures are about a half point above fair value.
July 27, 2005
Oil prices could get interesting today. At 10:30 this morning, we’ll get the Energy Information Administration’s weekly report on domestic oil inventories. Maybe they should call it the Energy Mis-information Administration. There’s a lot of confusion on year-to-year comparisons. It’s suspected that last year’s demand numbers were understated. That means that THIS year’s oil demand isn’t increasing that much after all. Throw some hurricanes into the mix and it’s hard to tell just what’s really going on. In any event, most analysts expect a build of a million barrels or more in crude inventories, but estimates on distillates are all over the place.
Two very positive earnings reports should lead the market a little higher at the open. Amazon’s sales rose 26 percent last quarter. They made 12 cents per share, versus an expected dime. Their controversial two-day free shipping program looks to have really delivered. Boeing was expected to make 61 cents per share last quarter. They came in at 70 cents, and raised their guidance for the year by about 25 cents per share.
Stocks in Hong Kong were up three-quarters of a percent overnight. Other markets are just about all positive by a half percent or less. Our futures were fairly listless this morning, but the Dow & S& P futures picked up noticeably after the Boeing announcement. At this point, adjusted for fair value, S&P futures are up almost 2 points, the Dow futures are up 17, but the NASDAQ futures are actually a half-point below fair value.
July 26, 2005
Hundreds of companies report earnings today, and among the majors this morning, the results are running well ahead of forecasts. Last night, Texas Instruments kicked things off by beating estimates by more than 10 percent on a 42% jump in profit. They raised their dividend, raised guidance and announced a new stock buyback program.
This morning Lockheed Martin blew away estimates. L-3 Communications, the big defense firm also beat estimates. British Petroleum, which never met a higher oil price it didn’t like, said profit was up 29% in the quarter. They will also buy back more of their own stock.
At 10 o’clock this morning, the Conference Board will let us know how confident we are about our economic future. Estimates range from 101 to 107, but the consensus calls for a reading of 106.5.
The stock futures are a ways off their highs of the morning, but they are still fairly positive as we head toward 9:30. At this point, adjusted for fair value, S&P futures are up close to 3 points, the Dow futures are up 18, and the NASDAQ futures are more than 4 points above fair value.
July 25, 2005
Many more earnings reports are on tap this week. Almost 30 percent of the S&P 500 companies will report. Perhaps the most interesting of the reports will be from oil and oil-service companies. We’ll see how much their profits are gushing after the recent run up in oil prices. Speaking of which, Smith International beat estimates by 2 cents this morning and raised earnings guidance for the remainder of the year.
One potential merger won’t happen, but it looks another will. Forget about that dream of a cola-flavored yogurt. Pepsi will NOT be buying Danone. However, Teva Pharmaceuticals will again become the largest generic drug maker in the world. They are buying IVAX at about a 14% premium to Fridays closing price.
This one seems like a photocopy. Once again this quarter, Xerox missed their earnings number and warned that the next quarter will be uglier than expected.
Stocks in Japan were up about a half-percent overnight. Most other markets overseas are positive at this hour, but positive by only very slim margins. If our market were to open right now, well, you might not notice. Adjusted for fair value, S&P futures are down about a quarter of a point, the Dow futures are down about 7 points, and the NASDAQ futures are just a fraction above fair value.
July 22, 2005
So I said to my horse, “Why the long >
Google and Microsoft both beat earnings estimates last night, but their stocks are under pressure this morning. What’s not to like here? Microsoft warned that next quarter’s earnings might not be as strong. Of course, I can’t remember a quarter when Microsoft didn’t temper expectations. As for Google, it appears to be concerns about gross margins. Yes, margins came down in the past quarter as Google hired more employees to service their rapid growth. But again, hiring more people to support growth seems to me to be a better sign than cutting jobs due to shrinking business. Nevertheless, Google was off 30 bucks per share in after-hours trade, although it appears to have recovered more than half of that loss this morning.
Other positive earnings news this morning from Halliburton, Schlumberger, Scientific Atlanta, Fortune Brands and Kimberly-Clark. No big disappointments so far.
Stocks in Hong Kong were up over one percent overnight. European markets are off about a quarter percent after the subway shooting in London this morning. Our futures have been creeping up during the past couple of hours, but are still pointing toward a slightly lower open. Adjusted for fair value, S&P futures are now almost flat, the Dow futures are down only 4 points, and the NASDAQ futures are about 5 points below fair value.
July 21, 2005
Big news out of China broke about 80 minutes ago sent stock futures soaring. They have since retreated quite a bit. China announced that they will break their currency’s peg to the dollar. Now, before you get too excited about this, know that they are only revaluing the yuan by about 2 percent, and in the future, will peg the yuan to a basket of currencies, and they’ll keep it within a band of 3 tenths of a percent. In short, economically this is not a big deal immediately. It’s not like they’re letting the yuan float in a free market.
However, if you remember the Congressional hearings that were held four weeks ago today, you’ll remember all the protectionist bluster that spewed from some members of Congress. You may also remember that the Dow Jones Industrial average fell 166 points that day. Hopefully, today’s announcement will seal the loose lips that could trigger an ugly trade war.
Earnings continue to roll. The miss of the morning came from Nokia. They also lowered guidance and said that they will stop giving quarterly guidance in the future. Ebay, Allstate, Caterpillar and Coca-Cola are out with excellent earnings reports. Google and Microsoft will report later today.
Stocks across the sea are up across the board. We’ll should head north at the open as well, but not by much. Adjusted for fair value, S&P futures are actually down a point, the Dow futures are up just 2 points, and the NASDAQ futures are up about a point above fair value.
July 20, 2005
General Motors reported earnings 20 minutes ago, and unlike Ford’s report yesterday, which was and ugly report with a pretty veneer, this report is just plain ugly. GM lost 51 cents per share on an operating basis in the quarter. They were expected to make 3 cents. GM says that they are not yet making progress on the cost cutting side. I would imagine that they may have already emailed this report over to UAW headquarters.
This is the biggest day of the quarter for earnings reports, with 6 of the Dow Jones 30 Industrials companies reporting. On the whole, the reports are pretty much in line with analyst estimates. Unfortunately, a couple of high profile reports that didn’t exceed expectations will drag the market lower this morning.
Yahoo reported last night that earnings for the quarter met expectations, but certain types of ad revenue were up less than expected. Intel actually beat estimates, but profit margins weren’t quite up to snuff. This morning, Pfizer, Honeywell and United Technologies all beat estimates. Amgen had a great quarter. Altria and Eastman Kodak both missed their numbers this morning.
Mr. Greenspan goes to Washington later today, but ahead of that, we’ll head lower at the open. Adjusted for fair value, S&P futures are down 5, the Dow futures are down 38, and the NASDAQ futures are about 12 ½ points below fair value.
July 19, 2005
Just like in golf, where every shot makes somebody happy, earnings reports can be a peach or a pit, depending on your perspective. This morning Ford Motor announced 47 cents per share in earnings for the quarter gone by. The good news is that auto sales volume was up 5.4 percent worldwide and that analysts were expecting only 33 cents of profit. Under the sur>
IBM checked in with a great earnings report last night on a healthy increase in services contracts. IBM made $1.12, which was nine cents per share more than expected.
The warning of the morning comes from Avon Products, which missed and warned.
Oil is down a touch as we await damage reports from Hurricane Emily. Stocks are down a fraction in London, but most European markets are up a bit. We will go up more than a bit at 9:30. Adjusted for fair value, S&P futures are up 5 ½ , the Dow futures are up 75, and the NASDAQ futures are about 10 points above fair value.
July 18, 2005
Brace yourself for earnings reports – and lots of them. Half of the Dow Jones 30 Industrials report this week. So far this morning, we’ve seen one major disappointment. Citigroup was expected to make $1.02 per share last quarter. Turns out that they fell a nickel short. Citigroup is looking to open about a dollar per share lower.
On the infamous “other hand,” Bank of America checked in with $1.08 of profit, compared to an expected $1.01. Mixed results from the toy business, as Hasbro beat estimates handily, while Mattel fell short. IBM and 3M report later today. Locally, Eaton Corporation beat estimates by a nickel per share and raised their full year outlook.
Surprisingly, this morning’s price of oil is down 42 cents per barrel, in spite of Hurricane Emily stirring things up with Mexican production. The reason is a new report out of OPEC forecasting slower growth in economies worldwide.
Markets in Europe are fairly flat. We’re looking to open a little lower at 9:30. At this point, adjusted for fair value, S&P futures are down 2 ½ , the Dow futures are down 27, and the NASDAQ futures are about 4 ½ points below fair value.
July 14, 2005
We have a little whirlwind of good news this morning, starting with that big whirlwind in the Carribbean. It now looks like Hurricane Emily will head for the Yucatan Peninsula rather than the Panhandle of Florida. Accordingly, the fear of a major hurricane disrupting oil production in the Gulf of Mexico is fading fast. Disrupting scuba diving in Cozumel is not nearly as big of an economic issue.
Put that on top of yesterday’s news of a big buildup in distillate inventories in the U.S. and you now have light sweet crude below 60 dollars per barrel.
Put THAT on top of great earnings reports from Apple and Advanced Micro devices and what we have is a nice rally in stock prices around the globe. Apple is up more than 5% in the pre-market. Hong Kong stocks are up over 1 percent for the second day running.
The June Consumer Price Index is expected to be up 2 tenths of one percent at 8:30 this morning, but absent any ugly surprise there, we’ll be off and running again at 9:30.
At this point, adjusted for fair value, S&P futures are up 4, the Dow futures are up 34, and the NASDAQ futures are almost 9 points above fair value.
July 13, 2005
$57 billion. That’s the expected Trade Deficit figure for May that will be announced at 8:30. That would be flat with April, and is one of the two big economic numbers of the morning. The other, of course, is the weekly report on oil and oil distillate inventories in the U.S. It’s expected that crude inventories fell, but estimates are all over the place as to the supply of oil distillates.
Light sweet crude is up to $60.75 this morning on continuing worries about soon-to-be-Hurricane Emily.
Harley Davidson, after issuing a warning a few months ago, beat estimates handily and now says that earnings per share will grow between 10 and 13 percent this year due in part to a share buyback program. The SEC is reportedly looking into that prior warning, to make sure that it didn’t mislead investors, perhaps allowing those shares to be bought back on the cheap.
Gannett met estimates for the quarter, Abbott Labs issued a warning this morning.
The Hang Seng Index in Hong Kong was up more than one percent overnight. European markets are up across the board at this hour, mostly between a quarter and a half percent. Our futures have been relatively flat all morning, although they just took a turn to the upside about a half hour ago. At this point, adjusted for fair value, S&P futures are up a half point, the Dow futures are up 5, and the NASDAQ futures are about a quarter-point above fair value.
July 12, 2005
Another nice day for stocks yesterday, as a decline in oil prices greased the skids. Oil’s up a little today, as we start to worry about the next potential hurricane – this one’s called Emily. If it continues on its projected path, Emily would enter the Gulf of Mexico, where it could cause oil production problems, early next week.
Corporate earnings reports have started to roll. Pepsi beat estimates by three cents per share this morning on a 9 percent increase in revenue. Genentech had a blowout quarter. On a 35 percent revenue increase, they made 30 cents per share. Analysts had been expecting a 26 cent profit.
Shareholders of Procter & Gamble and Gillette vote on their proposed merger today. Of course, the companies still need regulatory approval both in the U.S. and Europe before they can combine. One new merger this morning, in a cash and stock deal, Hudson United Bank is being bought by TD Banknorth at a 14% premium.
Overseas markets are just slightly lower at this hour. At this point, our futures are about as flat as flat can be. Adjusted for fair value, S&P futures are down a fraction of a point, the Dow futures are down 4, but the NASDAQ futures are about a half point above fair value.
July 11, 2005
It strikes me that hurricanes are a lot like my golf game. The best you can hope for is that it’s not a huge disaster and nobody gets hurt. That’s pretty much the story with Hurricane Dennis. Over the weekend, Dennis blew through the Gulf of Mexico without any significant disruption of oil drilling operations. That has the price of light sweet crude below 59 bucks this morning, and has the stock futures in pretty good shape.
Second quarter earnings reports rev up this week, although today will be a fairly quiet day as far as scheduled news is concerned.
At 11 o’clock this morning, GMAC, otherwise known as the money-making division of General Motors, will be giving us an update on how business is going. At 5:15 tonight Genentech will hold an investor conference call as well.
Dreamworks is out with yet another earnings warning this morning. Evidently, it’s not just the movie business that’s slumping – it could be the DVD business as well.
Overseas, the stars of the overnight were Hong Kong, up almost 1 ½ percent, and Germany, up over 1 percent. We’ll get the week off to a good start at 9:30. At this point, adjusted for fair value, the S&P futures are up 2 ½ points, the Dow futures are up 30 and the NASDAQ futures are about 8 points above fair value.
July 8, 2005
Stocks in London are up more than 1 percent this morning. That just about wipes out the losses of yesterday. So, just as our stock market turned around midday yesterday, it appears that yesterday’s events, as tragic as they were, will not shake stock prices in the least.
What could shake us up a bit is an unexpected number from the June Jobs Report. It’s expected that somewhere between 180,000 and 200,000 new jobs were created in June and that the unemployment rate held steady at 5.1 percent. We’ll find out in less than ten minutes.
Alcoa kicked off second quarter earnings season last night by beating estimates by a penny per share. There are a small handful of companies are scheduled to report today, but none are major companies. If we get any market moving earnings announcements today, they will be unexpected warnings rather than scheduled reports. One warning is in so far – from Siebel Systems.
Oil is back above 61 bucks due to Hurricane Dennis, but if the stock market opened right now, it would open higher. Adjusted for fair value, the S&P futures are up 4 ½ points, the Dow futures are up 40, and the NASDAQ futures are about 7 points above fair value.
July 7, 2005
This morning we were supposed to be talking about things like U.S. Jobless Claims, the beginning of earnings season, retail sales reports and the like. Yes, all that information will be coming in today, but the terrorist attacks in London will be the big driver for stock and bond prices this morning.
European markets continue to trade. While they were down 3 to 4 percent earlier, they have recovered somewhat, and are down on average about 2 to
2½ percent. Bond and gold prices and are up somewhat in a flight to quality. Perhaps the most interesting action of the morning has been in the price of oil. Early this morning, light sweet crude touched 62 dollars per barrel. As word of the bombing spread, oil prices plummeted to under 58 dollars. Worries about curtailed consumer travel plans and a related economic slowdown overshadowed worries about the approach on Hurricane Dennis in the Gulf of Mexico.
Alcoa and Pepsi Bottling will pop the top on 2nd quarter earnings season later today, but stock prices will head significantly lower at 9:30.
Adjusted for fair value, the S&P futures are down about 15 points, the Dow futures, which had been down well over 200 points earlier this morning, are down “only” 139, and the NASDAQ futures are about 21 points below fair value.
July 6, 2005
It should be another day of relative calm before next week’s storm of earnings. But it’s a couple of storms in the Gulf of Mexico that could get oil prices bubbling up again in the next couple of days. Tropical storm Cindy shut down some oil production yesterday as it headed toward land. But now, Tropical Storm Dennis is posing a potentially greater threat. Light sweet crude is again up over 60 dollars per barrel this morning as the speculators bet on how much production will actually be constrained when Dennis head up through the Gulf this weekend.
On the economic front, the ISM index of activity in the services industry, if there is such a thing, is expected to have slipped to 57 in June, versus May’s reading of 58.5. We’ll also get the job cut report from outplacement firm Challenger, Grey and Christmas. Through May, layoffs are running about 4.6% higher that in the first five months of 2004.
Absent any earth shattering news between now and 9:30, we are headed toward an absolutely flat open for stocks. Adjusted for fair value, the S&P futures are down a fraction of a point, the Dow futures are up 2, and the NASDAQ futures are about a half point below fair value.
July 5, 2005
Beginning tomorrow, you can pretend that you are a DaimlerChrysler employee if you’re looking to buy a Dodge, Jeep or Chrysler product. Just like General Motors, Daimler Chrysler is extending its employee discount to anyone who walks in the door. I love getting auto company benefits. I don’t need a car right now, but I really would like it if they picked up my health insurance and gave me a big pension.
It looks like we’ll start this short week with some weaker stock prices. A barrel of light sweet crude oil is going for more than 59 bucks once again and that has overseas markets seeing red as well.
Walmart saw green, and lots of it, in June. Same store sales were up 4 ½ percent. That’s better than the 2 to 4 percent forecast, and when you consider the >
Second quarter earnings don’t start rolling in earnest until next week, but watch out for earnings warnings this week. So far, second quarter warnings have been fairly non-existent.
As we head toward 9:30, adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down 18, and the NASDAQ futures are 6 ½ points below fair value.
July 1, 2005
More of the same yesterday from the Federal Reserve Open Market Committee. Same quarter-point interest rate hike, same language in the memo, same witty one-liners from Alan Greenspan. Well, okay, there weren’t any jokes. The bottom line is that the upward pressure on short term interest rates will continue for at least one more bump, and maybe even a few more, as stock investors look anxiously for any sign of the end of rate-hike road.
Lots of cars hitting the road. June auto sales will be announced today. General Motors is expected to report a sharp increase in sales due to their “everyone’s an employee” discount.
The mood is upbeat in Japan this morning as the Tankan business survey was positive overnight. At 9:45 the University of Michigan will let us know how confident U.S. consumers were during June. Expect a reading of 94.6.
Stocks did not trade in Hong Kong overnight. Japanese stocks and European markets are solidly positive. We’ll have a little snap-back at 9:30 from yesterday’s sell-off. Adjusted for fair value, the S&P futures are up more than 4 points, the Dow futures are up 34, and the NASDAQ futures are 4 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
August 31, 2005
Stock index futures were pointing toward a lower open an hour and a half ago. Then word came that the government would tap the Strategic Petroleum Reserve to alleviate oil supply problems in the wake of Hurricane Katrina. The futures turned on a dime. That’s the way it’s been of late and likely will be for the foreseeable future as stock prices and oil prices continue their little tango.
The worsening news out of New Orleans is giving rise to speculation about a possible hurricane-induced recession nationwide. Although hurricanes usually lead to a long-term increase in economic activity due to rebuilding, this one is causing enough disruption to oil and other material supplies that the short term impact is becoming particularly worrisome.
The preliminary 2nd quarter GDP number is due in ten minutes, and at 10 o’clock, the NAPM – Chicago Index is expected in at a reading of 61, versus 63 ½ last month. That’s a survey of business activity, but the only survey that’s likely to mean anything today is the survey of damage to the oil facilities and port on the Gulf of Mexico.
European markets are solidly higher this morning, and we should start a little higher as well. At this point, adjusted for fair value, S&P futures are up about 2 points, the Dow futures are up 11, and the NASDAQ futures are more than 5 points above fair value.
August 30, 2005
Damage reports in the wake of Hurricane Katrina will dominate trading today. Oil prices are up a buck this morning, and natural gas prices continue at record levels. Those natural gas prices may be a big problem during the next six months, especially for those of us who are thinking of heating our homes this winter. Natural gas prices are almost double the year-ago levels.
At 10 o’clock, the Conference Board will release the results of their August survey of Consumer Confidence. Expect a reading of 100 versus last month’s reading of 103.2, as consumers are catching on to the connection between these high energy prices and the lack of any spending cash left in their wallets.
At 2 o’clock, the minutes from the latest Federal Reserve Open Market Committee meeting will be released. We’ll be checking for any hint that the Fed might be getting ready to apply the brakes to the interest rate train. But, don’t hold your breath.
Overseas, we’re up across the board, after yesterday’s declines. Asian markets were up about one percent overnight. At 9:30, however, we’ll be giving back yesterday’s gains. At this point, adjusted for fair value, S&P futures are down a little less than 2 points, the Dow futures are down 30, and the NASDAQ futures are more than 3 points below fair value.
August 29, 2005
There aren’t any economic reports on the docket for today, and it’s just as well. There’s only one real story today, and it promises to push stocks around like so many grains of sand on an Alabama beach.
Hurricane Katrina has shut down over 40 percent of domestic oil production and 20 percent of natural gas production. Of course, the Port of New Orleans, which is a major U.S. port, is shut down. How quickly things can get up and running again is problematical in a city which may well be significantly underwater for a while.
Insurance stocks, gambling stocks, travel-and–vacation oriented stocks and of course, the oil stocks will all get whipped around today. Estimates of insured damages are running as high as 30 billion dollars this morning. Which, of course is pure speculation at this point – but no matter the final number – it’ll be a big number.
Natural gas futures were more than 20 percent higher earlier, at an all time high this morning. Light sweet crude broke the 70 dollar level earlier, although we’re down to $69.25 at this point.
Asian stocks were off about one percent on those higher prices. Europe is down about half that much. We will start the morning decidedly lower. At this point, adjusted for fair value, S&P futures are down about 7 points, the Dow futures are down 57, and the NASDAQ futures are about 9 points below fair value.
August 19, 2005
Raise that tray table and fasten your seat belts. The intrigue is building around Northwest Airlines this morning. Word is that if Northwest doesn’t reach a contract agreement with its mechanics by midnight, a bankruptcy filing is right around the corner.
We’ll start the last day of a pretty lousy week to the upside this morning. However, today is the poster child for quiet trading days. There are no economic reports scheduled, there are no major earnings announcements coming, there are only five significant companies holding conference calls today and there’s a hot August afternoon on the way. Trading could get pretty light. Keep an eye on oil. Light sweet crude is up a buck after the declines of the last couple of sessions.
A lot of trendy retailers have given us very un-trendy sales reports this week. The Gap beat earnings estimates but warned that their jeans are not selling well. They lowered forecasts for the rest of the year. Sharper Image also with a disappointing report last night.
Asian markets were down, but Europe is up this
morning. We should edge slightly higher at 9:30. Adjusted for fair value, S&P futures are up about 2 points, the Dow futures are up 14, and the NASDAQ futures are about 2 points above fair value.
August 18, 2005
The major earnings reports are in the book for the second quarter, and while it was a good quarter for profits, it’s a mixed bag as far as business outlook for the current quarter. In the meantime, all we’re left to stew about is the outlook for oil prices and inflation. None of that data is particularly good.
Year-over-year inflation is running at 4.6%, that’s the highest in over ten years. Even the core rate of 2.8% is starting to pick up speed, as higher energy prices and lower productivity levels filter through. Although oil prices are down about 4 bucks since last week, stock markets are not convinced that the worst is over.
Several economic numbers roll today including the weekly jobless claims at 8:30 and the Leading Economic Indicators at 10 o’clock. Perhaps the most interesting will be the Philadelphia Fed Survey at noon. That’s a survey of manufacturing activity. Expect a reading of 12, up from 9.6 last month.
If you’re looking to own a piece of Google, there’s more supply on the way. Google’s IPO was a year ago. To celebrate, it’s issuing up to 14 million shares of Class A common stock. At yesterday’s price, that would raise about $4 billion dollars, and Google says it may consider some acquisitions. To give you some perspective of that 4 billion dollar number, the entire market cap of General Motors is 19 billion dollars.
The Hang Seng in Hong Kong is hung over this morning. It was down 2% overnight as big Chinese oil and telecom companies took a hit. We’ll likely open lower this morning as well. Adjusted for fair value, S&P futures are down 3, the Dow futures are down 30, and the NASDAQ futures are about 7 points below fair value.
August 17, 2005
A big surprise, and a good one from Hewlett-Packard last night. In spite of price pressures in the computer business, HP reported a 20% increase in storage and server sales and an 8.5% rise in PC sales. Operating profits beat estimates by 5 cents per share. Hewlett also repatriated over 14 billion dollars of overseas profit at a very low tax rate thanks to last year’s “American Jobs Creation Act of 2004.” Of course, HP is in the midst of cutting payrolls by almost 15,000 jobs. Those guys in Washington really know how to create jobs.
Abercrombie & Fitch shares will get smacked around a bit today. Earnings for last quarter missed estimates by about 6 cents per share, and they lowered their outlook for the year.
At 8:30 this morning, we’ll find out how much the big spike in energy prices has boosted Producer Prices. And a little later this morning, the weekly report on energy inventories is expected to show that oil and distillate stocks have risen by about 1.2 million barrels each, while gasoline stocks may have fallen by about that much.
Most European markets are off about a half-percent
after our big decline yesterday. But unless the PPI at 8:30 is especially ugly, we’ll go higher at 9:30. Adjusted for fair value, S&P futures are up more than a point, the Dow futures are up 21, and the NASDAQ futures are about 5 points above fair value.
August 16, 2005
It’s “big retailer” day on Wall Street, and the reports so far are pretty good for the quarter gone by. Forecasts for next quarter are a mixed bag. The biggest of the big, Walmart beat a 65 cents per share estimate, reporting 67 cents of profit. Sales were a little light and the third quarter forecast isn’t quite up to analyst estimates. Walmart’s revenue was up almost 11% from last year, but the stock will trade lower this morning.
JC Penney likewise beat profit estimates on worse than expected revenue. Home Depot beat estimates by 3 cents and raised their guidance. American Eagle Outfitters also beat estimates.
Most bulls are interested in most cows. But the bulls are running scared from the Gateway cow this morning after a disappointing report last night. The discounting that hurt Dell’s profits is really pressuring Gateway, and it will be a big surprise if Hewlett-Packard, which reports later today, has particularly good news on PC profits.
Japan’s Nikkei index was up a about a half percent overnight. Most European markets are also up, although London is down ever so slightly. That’s how we’re looking to start off as well. Adjusted for fair value, S&P futures are down a point, the Dow futures are down about 6, and the NASDAQ futures are about 2 points below fair value.
August 15, 2005
There’s a fair bit of economic and inflation news coming later in the week, but for today, there’s only one economic number that most people are thinking about – that’s the price of their next fill-up. The Lundberg survey says that the average price of a gallon of unleaded regular nationwide was $2.50 was week. Quite frankly, if you’re running low and you can FIND gas for $2.50 a gallon today you’re doing well.
Gateway and Agilent report earnings today. Agilent is reportedly ready to sell their chip division to a couple of private equity firms for over 2 billion dollars.
There is a report out this morning that Lear Corporation may be looking into acquiring the bankrupt Collins & Aikman.
It’s one of those funny mornings when the futures may look positive at first glance, but they are actually pointing toward lower stock prices at 9:30. At this point, after adjust for fair value, S&P futures are down a point, the Dow futures are down 12, and the NASDAQ futures are a just a little more than 3 points below fair value.
August 12, 2005
If you consider yourself a reasonably intelligent, reasonably rational human being, and have trouble understanding the stock market, here’s an example of why you feel that way:
Dell Computer makes almost 1 out of every 5 PCs sold on the planet. Their profit for the quarter was up 28% and matched analyst expectations. Their revenues were up 15 percent at 13.43 billion for the quarter. So, what’s not to like? Dell stock was down about 8 percent in the evening session last night. They forecast only 14.1 to 14.5 billion of sales for next quarter, versus the expected 14.6. They say profits will be 39 to 41 cents versus the projected 41. This, folks, is not horrible news. However, Dell stock will be under pressure early on today.
Better results from Nvidia last night; 41 cents of profit versus 34 cents.
In an hour and a half, the preliminary number on August Consumer Sentiment comes from the University of Michigan and is expected in at 96.5, matching the July number.
Asian stocks were flat overnight, but Europe is down on some weak GDP numbers, especially in France where their GDP for the quarter was up a staggering 0.1%. Oh, they’re working hard over there.
We’ll give back some of yesterday’s gains at 9:30. At this point, adjusted for fair value, S&P futures are down 3 ½ points, the Dow futures are down 20, and the NASDAQ futures are a just a little more than 13 points below fair value.
August 11, 2005
We had a nice start for stocks yesterday just about totally washed out by spiking oil prices. Light sweet crude hit a record of 65.30 per barrel intraday. It’s pulled back a little bit this morning at 65.21. So, we’ll try another rally in stocks at the open and see how long it lasts.
Earnings season winds down today with reports from Dell Computer, Nvidia and a handful of retailers. For the quarter, it looks like earnings increased by an average of about 11 percent. Analysts had been expecting about 7, and explains why the market has held up as well as it has against the surge in resource prices.
July Retail sales are expected to have shot up about 2.4% overall, and 8 tenths of one percent if you strip out car sales. We’ll find out about that and the weekly jobless claims in ten minutes.
Asian stocks shot up again overnight. Europe, however is in a bit of a funk. We should open higher, pending any big surprises at 8:30 or another quick spike in oil. At this point, adjusted for fair value, S&P futures are up 2 ½ points, the Dow futures are up 35, and the NASDAQ futures are a just a little more than 3 points above fair value.
August 10, 2005
Things are cooking overseas this morning, and it looks like that will carry over to domestic stocks when trading starts today. The Hang Seng Index in Hong Kong was up about 2 percent overnight, the Nikkei in Japan was higher by more than a percent and a half and European markets are up across the board this morning.
The caboose of the train of big earnings reports is now arriving at the station. Last night, there was good news from Disney, which beat estimates by 3 cents and AIG, which beat estimates by six cents per share. Counter-balancing those, Cisco Systems met estimates, but their revenue guidance for next quarter was a little light. Cisco shares could suffer a bit this morning, although management did put to bed the recurring rumor about the possible acquisition of Nokia.
Oil prices are perking up again this morning after sliding yesterday. Look for more movement at 10:30 when the weekly inventory report is released by the Energy Information Agency.
The futures have weakened a bit during the past hour, but were still looking at significantly higher open at this point. Adjusted for fair value, S&P futures are up 5 ½ points, the Dow futures are up 50, and the NASDAQ futures are about 3 ½ points above fair value.
August 9, 2005
Get ready for another step higher in short term interest rates. At 2:15 this afternoon, for the tenth time in a row, the Federal Reserve Open Market Committee will hike rates by a quarter of a percent, and will most likely give us no indication that they are in any mood to stop there.
The Wall Street Journal is reporting today that as many as 1 in every 4 members of the sales and marketing team at Ford Motor may be busy marketing their own services to prospective employers soon, as the automotive cost cutting continues.
Light sweet crude at one point this morning was over 64 dollars per barrel. It's pulled back to 63.66 at this point. Such a deal.
Disney and Cisco Systems report earnings after the close of trading today.
The Nikkei Index in Japan was up over a hundred points overnight. European markets are up just a little bit.
We should get off to a good start this morning. Of course, we did that yesterday to no avail. At this point, adjusted for fair value, the S&P futures are up about 4 points, the Dow futures are up 28 and the Nasdaq futures are about 5 1/2 points above fair value.
August 4, 2005
The Bank of England issued their first interest rate cut in quite a while this morning. Short term rates will drop in the U.K. from 4 ¾ to 4 ½ percent. The British economy has been pretty sluggish and consumer spending there has been dropping, so this rate cut was widely expected.
A lot of retailers report sales and earnings numbers this morning. Costco same-store sales were a little better than expected. Walmart sales were up 4.4 percent in July and they are projecting a 3 to 5 percent increase in August, as well. The perennial basket case of the retailers, every pun intended, Pier One, fell well short of expectations yet again. They moved a lot of inventory, but evidently did so at fire-sale prices.
Sara Lee beat earnings estimates by a nickel but warned that 2006 will not be a pretty sight due to rising costs. A good report, though, from EDS. They made 9 cents per share last quarter. EDS was expected to lose 3 cents.
About 60 percent of the companies reporting earnings this quarter have beaten estimates, and that’s a reason stocks have done well over the past few weeks. However, this morning’s futures are about as ugly as we’ve seen them for quite a little while.
So, absent a big positive surprise with the weekly jobless claims number at 8:30 this morning, we’ll see lower stock prices at 9:30. Adjusted for fair value, S&P futures are down 3 points, the Dow futures are down 28, and the NASDAQ futures are almost 8 points below fair value.
August 3, 2005
Oil is jumping again this morning. We’re at $62.30 per barrel for light sweet crude. That’s in front of the weekly inventory data that will be announced at 10:30 this morning. It’s expected that oil inventories have been drawn down by about 1 ½ million barrels, although distillate inventories are expected to have risen.
If you play soccer, you know the name Adidas. Adidas has Reebok shareholders jumping for joy this morning. Adidas will buy Reebok at a 30% premium to last night’s closing price. Stocks of both companies are indicated higher this morning.
On the earnings front, Time Warner missed by a penny but finally settled a shareholder lawsuit over their disastrous acquisition of AOL. The big miss of the morning comes from Duke Power. They made 30 cents per share versus an expected 38. However, it may be timing. Duke is sticking to their earnings guidance for the entire year.
Mortgage activity slowed last week, after interest rates took their biggest jump since March. CIBC, the Canadian Imperial Bank of Commerce, is the latest to settle in the Enron case. They’ll pony up 2.4 billion bucks.
Overseas markets are off a little on the higher oil prices. We should head lower at 9:30 as well. Adjusted for fair value, S&P futures are down more than 2 points, the Dow futures are down 18, and the NASDAQ futures are about 6 points below fair value.
August 2, 2005
July sales numbers are due out of the Big Three today. It’s expected that those “everybody gets the employee price” sent sales volume up between 17 and 19 percent. Profits may be another matter, but we won’t worry about that right now.
Profits ARE the topic at a bunch of companies this morning. TRW beat estimates on earnings and revenues. Comcast made 19 cents per share versus an expected 15. Coach beat estimates by a penny and raised guidance for the year. Masco and Tyco each beat estimates by a penny, but both companies warned that the rest of the year won’t be as good as expected. Tyco shares are down 10% in the pre-market.
One big energy deal in the works this morning, as U.S. based Kinder Morgan is buying the big Canadian oil company Terasen. That’s a 5.6 billion dollar deal. It looks like the Chinese owned oil company CNOOC may withdraw from the bidding for Unocal, bowing to the bluster of the U.S. Congress. You know, many times, for every action there is a reaction. Let’s hope that the Chinese don’t respond with corresponding protectionist measures.
It looks like July’s stock market momentum will continue, at least at the open today. Adjusted for fair value, S&P futures are up 2 points, the Dow futures are up 17, and the NASDAQ futures are about a point and a half above fair value.
August 1, 2005
It was hot. It was humid. But July was a wonderful month if you were invested in stocks. The S&P 500 and the Dow Jones Industrials were up over 3 percent and the Nasdaq was up more than 6 percent. So, while we’re roughly even on the year to date, July healed a lot of old wounds.
One more big week of earnings news is on tap. So far, so good this morning. Humana matched estimates and raised their guidance. Procter & Gamble beat estimates by a penny and Walmart reported July same store sales up about 4.4 percent.
At 11 o’clock today, General Motors is expected to roll out the details of their 2006 model year pricing. Expect some permanent price cuts to take the place of the merry-go-round of incentives we’ve seen over the past few years.
Oil is up above 61 bucks this morning, on news of a refinery fire, an oil rig fire and the death of King Fahd in Saudi Arabia, but stock markets are shrugging off the rise.
Australian stocks were off a bit overnight, but all other major overseas markets are positive. We should start the month heading up as well. Adjusted for fair value, S&P futures are up 3 points, the Dow futures are up 29, and the NASDAQ futures are about 4 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
September 30, 2005
It’s the last day of the week, the month and the quarter and all have been pretty good if you have been long in energy stocks. Crude oil has been wavering around the flat line this morning, currently down 14 cents at $66.65 per barrel.
In addition to the price of oil, traders will have a lot of new data to chew this morning. August personal income is projected to have risen about 3 tenths of one percent, while spending is expected to have declined by two-tenths. Perhaps more importantly, the NAPM-Chicago Business Survey, which plummeted to a reading of 49 in August, is expected to have risen only a bit to 51. Either way, it’s indicating a pretty flat business climate in the months to come.
The University of Michigan will put the final touches on the September Consumer Sentiment Index at 9:45. The preliminary number at mid month sunk like a stone as consumers responded to Hurricane Katrina. Expect a little recovery to a reading of 78 or so.
Stock futures have been creeping back toward fair value during the past hour. But at this point, we’re still looking for a slightly weaker start. Adjusted for fair value, the S&P futures are down just about a point, the Dow futures are down 13, and the NASDAQ futures are about a point below fair value.
September 29, 2005
Don’t look now, but the Japanese stock market, as measured by the Nikkei Index, which was up over 180 points overnight, is up almost 10% for the month of September. Stocks in Hong Kong also did well overnight, up more than one percent.
Shares of Pepsico ought to do pretty well this morning as well. Pepsi reported better than expected earnings for the quarter and boosted their guidance for the rest of the year. The shares are indicated up about 7 percent.
There’s more consolidation in the discount brokerage industry. E-Trade is buying BrownCo from JP Morgan Chase. The market seems to like the deal, as stocks of both JP Morgan and E-Trade are looking to open higher.
At 8:30 this morning, we’ll get the final revision to 2nd quarter Gross Domestic Product as well as the Weekly Jobless Claims data. But, absent any big surprises, stock prices should continue their pattern of the week – which means – they’re going nowhere fast.
Adjusted for fair value, the S&P futures are down less than a point, the Dow futures are up less than 4 points, and the NASDAQ futures are about 2 ½ points below fair value.
September 28, 2005
It’s Wednesday. That means that the weekly report on oil, gasoline and oil distillate inventories is due from the Energy Information Agency. All three are expected to show draw-downs from last week. But the developing story that will hit us all squarely in the pocketbook this coming winter is the price of natural gas, which has doubled in the past three months.
Because of hurricane damage, the NYMEX has declared a “Force Majeure” for the October natural gas contract. That means that the commodity traders who are obligated to deliver the gas at the expiration of the October contract, which is today, will not be held to the delivery date.
So, one more warning – save for college, save for retirement, and start saving now for your natural gas bills this winter. It won’t be pretty.
DaimlerChrysler shares are up in Europe on a newspaper report that Daimler will be cutting 8,000 jobs, mainly in Germany.
They may or may not be premium wines, but Constellation Brands is offering an almost 40% premium to buy Canadian winemaker Vincor. Vincor’s Board is holding out for a higher price.
Australian stocks were flat but all other major foreign markets are higher, especially Germany, on the strength in Daimler. We should climb at 9:30 as well. Adjusted for fair value, the S&P futures are up more than 3 points, the Dow futures are up 27, and the NASDAQ futures are about 4 points above fair value.
September 23, 2005
Alcoa is one of the first companies to report earnings each quarter. So it’s only appropriate that Alcoa today became one of the first to warn that hurricanes and energy prices are going to put a big squeeze on third quarter earnings. Expect a parade of earnings warnings during the next three weeks from just about everyone except, of course the oil and oil service companies.
Don’t be too gleeful if you own stock in one of those big oil companies. Methinks one big windfall profits tax is right around the corner when the weather calms down.
Goodyear will scale back operations and try to cut costs by up to a billion bucks by 2008. They’ll take about $200 million in charges to restructure things.
There’s nothing much on the economic calendar today, so fill up your gas tank and get ready for higher gas prices and another weekend full of damage reports.
Asian markets were mostly lower overnight, Europe is mainly positive, but there’s not a lot of movement is either direction. As the price of oil has dropped this morning (it’s currently down about 77 cents per barrel) our stock futures have improved, but if the market were to open right now, we’d open with slightly lower
prices. Adjusted for fair value, the S&P futures are down a fraction, the Dow futures are down 7, and the Nasdaq futures are about 3 points below fair value.
September 21, 2005
For some reason, traders held on to hope that the Federal Reserve Open Market Committee would give us a break from rising short term interest rates. When that hope disappeared at 2:15 yesterday, so did our little market rally, as prices spiraled downward into the close. We did see a little crack in the armor – for the first time in recent memory, the Committee’s vote wasn’t unanimous – there was one dissenting vote out of ten. However, the probability of the short term rate going from its current 3 ¾ to over 4 percent by the end of the year has definitely gone up.
But today’s another day. Unfortunately, speaking of the number 4, Rita is now another Category 4 hurricane, and it may become a Category 5 before it makes landfall. Current projections have it landing early Saturday morning near Houston, which is home to about 16% of domestic oil production. On that less-than-pleasant thought, light sweet crude is up $1.60 to $67.80 per barrel, and that will pressure stock prices at the open.
Earnings estimates going are up for home builder Lennar and Federal Express this morning.
Japanese stocks rose about a third of a percent overnight, but all other major foreign markets are flat or down at this hour. Adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down 14 ½, and the Nasdaq futures are about 6 points below fair value.
September 20, 2005
Yesterday was an ugly day for most stocks. Yet, it taught us yet another lesson in the benefits of diversification. A lot of market sectors did very well, and if you were invested in them, you made some dough. For instance, the price of oil rose more yesterday than any previous day in history, up $4.39 per barrel as traders went nuts in anticipation of another big hurricane. Hand in hand with that, Exxon stock rose almost a dollar per share, and the market capitalization of Exxon is now over $400 billion.
Japanese stocks hit a four-year high overnight, the Hang Seng in Hong Kong was up 260 points, that’s close to 2 percent, and the price of gold is at an 18 year high. So, while we can’t do much about hurricanes, we can make sure our portfolios are diversified well enough to handle their effects.
Hurricane Greenspan and his band of troublemakers will likely announce another hike in short term interest rates at 2:15 this afternoon. Expect them to thumb their collective nose at Katrina’s impact and issue the same memo for the eleventh consecutive time.
Oil is down about a buck this morning, and outside of Sweden, overseas markets are up across the board. Stock futures are almost exactly as far up today as they were down yesterday. Adjusted for fair value, the S&P futures are up 3 ½ points, the Dow futures are up 33, and the Nasdaq futures are almost 6 ½ points above fair value.
September 19, 2005
Looking at the stock market this week is a little like watching your teenaged daughter leave the house on her first date. All you can seem to think about are the bad things that could happen.
Today, it’s political uncertainty in Germany after the Christian Democratic Union won a razor-thin victory yesterday, but far less than they needed to put together an effective ruling coalition.
Tomorrow, short term interest rates will likely be raised another quarter, and maybe even a half percent, to head off what the Federal Reserve perceives as a budding inflation threat.
Later in the week, soon-to-be Hurricane Rita will begin churning through the Gulf of Mexico. Current projections have it heading due west to the Texas-Mexico border. However, any unexpected turn to the north – well, let’s not even talk about it.
Put those happy thoughts on top of a miserable Consumer Confidence number out of U of M last Friday, crude oil prices up a buck and a quarter per barrel and a rare brokerage house downgrade of Ebay this morning, and we’ll be heading lower at 9:30.
Adjusted for fair value, the S&P futures are down 3 ½ points, the Dow futures are down 32, and the Nasdaq futures are almost 5 points below fair value.
September 16, 2005
A major investment bank and broker, who shall within this report go unnamed, is out with one of those timely pieces of investment advice that makes you glad you paid the big bucks. They are now saying that you should underweight Northwest Airlines stock in your portfolio. As of yesterday, they had Northwest as an OVERweight. Of course if you do sell your Northwest stock this morning, you’ll get something in the area of 88 cents per share. The stock was around 11 dollars per share at the beginning of this year.
BP and ExxonMobil both getting upgrades from a different broker this morning.
At 9:45 the University of Michigan will release the preliminary reading on September Consumer Confidence. Expect the index to slump to a reading of 85, as reaction Hurricane Katrina starts to sink into the American psyche. That would be down from 89.1 in August.
Stocks in Europe are up at this hour. The DAX index in Germany is up almost a percent and a half on hopes that a new reform-oriented Chancellor will be elected there Sunday.
The futures aren’t as strong as they appear at first blush, but we’re still looking at a opening rally. Even after you adjust for fair value, the S&P futures are up 4 points, the Dow futures are up 33, and the Nasdaq futures are about 3 points above fair value.
September 15, 2005
As of this morning, four of the seven major U.S. Airlines are flying under the clouds of bankruptcy protection, after Northwest and Delta chose that flight path yesterday. Northwest says, “Don’t worry about your frequent flyer miles.” They will evidently be honored. Of course if you are a pilot about to retire to a handsome pension – well, let’s hope you have been getting frequent flyer miles at work.
This morning’s report on weekly jobless claims will be very interesting, but not very meaningful. We know that Hurricane Katrina put somewhere around 400,000 people out of work. Just how many of those people reported in to their local unemployment office, that’s assuming that there still WAS a local unemployment office, that’s the big unknown. So the number, which will be announced at 8:30 will be somewhere between 300,000 and 800,000. We’ll also get the pre-hurricane CPI number for August. Expect a half percent overall and a 2 tenths of a percent increase in the core rate.
The Nikkei in Japan was up more than one percent overnight. European markets are mixed. We should head a little higher at the open. Adjusted for fair value, the S&P futures are 2 ½ points, the Dow futures are up 22, but the Nasdaq futures are 2 ½ points above fair value.
September 14, 2005
Yesterday must have been Chapter 10, because the rumor is that today may be Chapter 11 for Delta Airlines, and possibly even Northwest, although that is considered less likely. Whether today is the day or not, you can bet that our future will feature fewer of the legacy airlines, and possibly higher airfares for all of us.
Retail sales are expected to have dipped 1.4 percent in August. But, if you exclude auto, a half-percent rise is expected. We’ll find out in ten minutes.
Once again, it is a day to watch the price of oil. The weekly inventory data is due at 10:30 and is expected to show significant drawdowns in crude oil, gas and distillates. In front of that data, light sweet crude in up nearly a half-buck per barrel and that rising price of oil has had the futures in retreat all morning long. Fortunately, we had been looking for a big rally earlier, so at this point, the market open doesn’t look too bad.
European markets are mixed. Adjusted for fair value, the S&P futures are up a point, the Dow futures are up 15, but the Nasdaq futures are a little more than a point below fair value.
September 13, 2005
Last week’s bidding war turned into this week’s sale. Ford will unload its Hertz rental car business, which incidentally made almost a half-billion dollars in 2004, in order to focus its energies on how to make money by actually selling cars. Ford will net about 5 ½ billion dollars out of the deal, while moving 10 billion of debt off the balance sheet.
Nokia is evidently selling a lot more phones at a lot higher price points than expected. They raised their revenue estimate for the quarter and now say that their profit will be about 20 percent higher than their previous forecast. Nokia is looking to open about 4 percent higher.
It will be an ugly morning for the shares of Best Buy, which missed their sales and earnings numbers and guided lower for the third quarter.
In a week, Alan Greenspan’s bunch gets together again, and looking forward to that, we could use some good inflation news from the Producer Price Index this morning at 8:30. Expect the top line number to come in at 8 tenths of a percent, due to the spike in energy prices. The core number is expected only to have risen about one tenth of one percent.
European markets are lower at this hour, most notably in Germany, where the DAX is off about 1 ½ percent. Hopefully we’ll get some help from that PPI number, because at this point, adjusted for fair value, the S&P futures are down almost 5, the Dow futures are down 40 and the Nasdaq futures are 6 points below fair value.
September 12, 2005
If you use your car for business purposes, and claim your expenses for tax purposes using the cent-per-mile method, there’s a little good news this morning. Recognizing that flying to work may soon become cheaper than driving, the IRS has adjusted the amount per mile that you can claim for tax purposes. This amount rarely gets adjusted mid-year. However, your business miles driven from September 1 through the end of the year will now be allowed at 48 ½ cents per mile. The old rate was 40 ½ cents.
A couple of big mergers this morning. One makes obvious sense, and the other is really intriguing. Oracle is buying Seibel Systems for almost 6 billion, or about 3 ½ billion if you adjust for the cash Seibel has piled up. The more interesting deal is Ebay buying the internet-phone company Skype.
Skype was started less than 3 years ago. Ebay is buying it for at least 2.6 billion and maybe up to 4.1 billion including performance bonuses. The idea is that buyers and sellers can talk to each other when they negotiate. Now, why didn’t we think of THAT 2 ½ years ago?
Japanese stocks rallied on the Prime Minister’s re-election. Our futures have improved during the past hour, and we’re looking at a pretty flat open. At this point, adjusted for fair value, the S&P futures are down a point and a half, the Dow futures are down a point and the Nasdaq futures are actually a fraction above fair value.
September 9, 2005
It will be a quiet end to a short week for economic news. There was plenty of news out of computer semiconductor companies late yesterday, and the news was pretty good. Texas Instruments raised their sales and earnings guidance for the 3rd quarter. Strong Asian demand should push total quarterly revenue to over 3 ½ billion and earnings to 37 cents per share. Gross margins are also expected to improve to about 47%. Intel also raised its revenue forecast on strong laptop sales. Texas Instuments is indicated up 1.7% in the pre-market. Intel is looking to lose about 19 cents per share.
For all the devastation in New Orleans, Katrina did a lot of damage offshore as well. Oil production in the Gulf of Mexico is now just about 1/3 of what it averaged during the first half of the year. British Petroleum’s massive Mars platform is now not expected to be back online before 2006.
GM will end its current “everybody’s an employee” discount program at the end of September, no doubt to be replaced with another incentive program deftly designed to move the industry away from incentive programs. If dividends are an incentive to you, don’t look to Delphi. That 1.3% yield has now been eliminated.
Overseas markets are generally up by a little bit this morning, and we should go higher at 9:30 as well. At this point, adjusted for fair value, the S&P futures are up a little less than 2 points, the Dow futures are up 15 and Nasdaq futures are about a point above fair value.
September 8, 2005
Ford is reportedly close to ridding itself of about 10 billion dollars of debt along with its Hertz rental car unit. Ford could also get up to 6 billion dollars in much needed cash.
Another big deal could be cooking this morning. Ebay is reportedly about to go after Skype, the voice-over-the-internet company. Estimates of the price tag there range from 2 to 5 billion dollars.
A little later this morning, we’ll find out just how much Hurricane Katrina has impacted gasoline and crude oil inventories in the U.S. A big drawdown of both is expected and the price of light sweet crude, which has dropped about 6 bucks in the past few days, is up about half a dollar this morning at just under 65 dollars.
In a speech yesterday, Chicago Federal Reserve President Michael Moskow threw a big bucket of cold water on hopes that the Fed will stop hiking rates due to the hurricane. He said that the impact of Katrina may in fact be IN-flationary.
Reacting to that view of reality and the impending news on oil inventories, the futures have been slipping all morning. At this point, adjusted for fair value, the S&P futures are down 5 points, the Dow futures are down 43 and Nasdaq futures are about 7 points below fair value.
September 7, 2005
It’s a week now since the full impact of Hurricane Katrina started to become apparent in New Orleans. Since then, the stock market is up and price of crude oil is down. So why are we paying exactly $2.99 or more for unleaded? The same reason everyone else may be paying 20 percent more for steel soon. According to the Wall Street Journal, disruption in the supply of raw materials necessary for the production of steel will push price up until the shipping lanes can re-open. Unfortunately for the auto companies, the steel companies don’t have an “everyone-gets-the-employee-price” program.
And just in case you were thinking that GM and Ford were just having too easy of a go of it, Standard & Poors is talking about another debt downgrade this morning, saying that they are “nervous” about their prospects.
Albertson’s is out with a disappointing earnings report this morning and they are making noises about “unlocking the value” of their real estate assets. That kind of talk, if you remember, was last heard out of Kmart.
Stocks markets overseas are pretty much all in the green this morning. Our futures are indicating a slightly lower start after yesterday’s big rally. Adjusted for fair value, the S&P futures are down less than a point, the Dow futures are down only 3 and Nasdaq futures are also about 3 points below fair value.
September 6, 2005
The Wall Street data mill will ease back in for a short trading week. The only economic indicator due out today will be the results of the ISM non-manufacturing survey. It’s expected that the services industries expanded in August, but at a slower rate that in July. Expect a reading of 59 ½ .
But if you’re looking for news that will move stock prices, well, once again, it’s all about the oil. This morning, the news is good. Japan will be releasing oil from their strategic reserve. Valero and Marathon each have a refinery that was put offline by Hurricane Katrina. Word is that both will be back online by mid-week. So, although natural gas prices are up again this morning, the price of light sweet crude oil is below 67 bucks and the unleaded gasoline futures are down as well. Those factors have the stock index futures dancing this morning.
Watch out, though for the airlines. As the price of jet fuel rises, Chapter 11 is creeping closer and closer to the weaker carriers.
Asia was down overnight , but Europe is up. Adjusted for fair value, it looks like the S&P could rise about 6 points, the Dow more than 50 and Nasdaq futures by over 9 points.
September 2, 2005
It’s the Friday before a summer holiday weekend and it will be a nice day in New York, so trading should tail off a good bit this afternoon.
In front of that, of course, debate will continue about the long-term impact of Hurricane Katrina. Light sweet crude is down 30 cents, but is still over 69 dollars a barrel. Unleaded gasoline prices are down about 6 cents at this hour, but are still indicating that the retail price should continue well above the 3 dollar level. The LOOP, the Louisiana Offshore Oil Platform is again open this morning and unloading crude oil, but is operating at far from full capacity.
In ten minutes we’ll get the only major economic news on the docket for today. That would be the August Jobs Report. Expect an increase of 190,000 new non-farm jobs, which would be down a bit from last month. The unemployment rate is expected to hold steady at 5 percent, and workers’ average hourly earnings are expected to have risen two-tenths of one percent.
The futures are close enough to fair value that it looks like the Jobs Report at 8:30 will tell us which way the markets will open. At this point, S&P and Nasdaq futures are both within a point of fair value, and the Dow futures are up about 13 points.
September 1, 2005
The good news this morning is that crude oil prices are stable. The bad news, if you happen to own a car, is that unleaded gas futures are up another 5 ½ percent or so. You can buy all the oil you want, but until the refining capacity is back up to speed, the price of the stuff you put in your tank will likely keep rising.
Sales at Costco keep rising. Same store sales were up 9 percent in August. Walmart was up 3.3 percent. Limited Brands sales were down 3 percent.
Lots of economic data is on the way today including the weekly jobless claims number, personal income and expenditure numbers and the July car sales reports. The most interesting report may be the ISM Manufacturing Index at 10 o’clock. Yesterday, the NAPM Chicago Index fell dramatically and unexpectedly. While the two surveys are far from identical, it will be interesting to see if the ISM reflects a significant weakening in the manufacturing sector’s recent expansion. The consensus estimate is 57, with anything above 50 reflecting expansion. Yesterday’s NAPM came in at 49 versus an expected 62.
Overseas markets are up across the board this morning, with the Hang Seng Index in Hong Kong up over 1.6 percent. Out futures have improved, and are indicating a slightly higher open at this point. Adjusted for fair value, S&P futures are up a point, the Dow futures are up 4, and the NASDAQ futures are almost 2 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
October 31, 2005
Happy Halloween! At 8:30, we’ll find out how scared consumers were to spend last month. Expect that personal spending was up about a half percent, while personal income was up only about 3 tenths of a percent. Of course, if you do the math on that one, it probably means that consumers are still unafraid to borrow, even at interest rates starting to look a little spooky. At some point, my little witches and warlocks, that could get really scary.
There are three big mergers this morning. Novartis is buying the 58 % of Chiron that they don’t already own at about 45 bucks per share. Spain’s Telefonica is buying British mobile phone operator O2 for 31 billion and in a much smaller deal, Susquehanna, the biggest privately held radio station owner in the U.S. is selling out to Cumulus Media, some private equity firms and Comcast for about 2 billion dollars.
Walmart is projecting that October same-store sales came in above the high end of estimates. We’ll find out for sure on Thursday.
Crude oil is down 62 cents per barrel.
Put it all together with big gains in the overseas markets and we should get off to a good start this morning. Adjusted for fair value, the S&P futures are up about 3 points, the Dow futures are up 14, and the NASDAQ futures are about 5 points above fair value.
October 28, 2005
A couple of big economic reports are due this morning that could move the market. At 8:30 we’ll get the “advanced” number on 3rd quarter Gross Domestic Product. It’s expected to come in at 3.6 percent. The second quarter GDP was 3.3 percent. Then fifteen minutes after the market opens, the University of Michigan is expected to revise their October Consumer Sentiment number up to 76. Positive consumer sentiment has been in pretty short supply during the past few months.
Last night Microsoft, like so many companies, reported a pretty good third quarter, but downplayed expectations for the rest of the year. Microsoft is known to be conservative with its guidance, but a weak second quarter would a big surprise to a lot of observers, who are expecting good things for Microsoft due to the unveiling of Xbox 360 next month. So expect a little selling pressure on Microsoft at 9:30.
The FTSE Index in London is up a bit, but all other major overseas markets are down at this hour, but we may well buck the trend at 9:30. At this point, adjusted for fair value, the S&P futures are up 3 points, the Dow futures are up 31, and the NASDAQ futures are almost 4 points above fair value.
October 27, 2005
When I used to work at the Renaissance Center, I remember putting in some pretty late nights. But I don’t remember ever having to issue a press release at 1:30 in the morning. Unfortunately, that’s what General Motors had to do this morning, to counter rumors of an impending bankruptcy filing. Never mind that GM probably wouldn’t even be eligible for protection at this point. The SEC is investigating GM’s accounting for its pension obligations and supplier business arrangements, especially those with Delphi. That investigation sparked bankruptcy rumors that roiled debt markets overnight.
In ten minutes, the September Durable Goods report is expected to reflect a decline of about 1.2 percent. At 10 o’clock, the September New Home Sales report is expected to show a very slight increase.
Earnings reports this morning are almost universally good, but fourth quarter estimates are a mixed bag. That’s part of the reason we’re likely to see a weaker market at the open.
At this point, adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down about 21, and the NASDAQ futures are more than 4 points below fair value.
October 26, 2005
Boeing checked in with their quarterly report within the hour. It’s a tough one to figure out due to a bunch of special one-time charges and credits. However, it appears that Boeing sales came up short, and even though they boosted guidance for next year, it may not be enough to avoid a little selling pressure this morning.
You might say that the selling pressure will be flowing down the Amazon this morning. The internet retailer reported lower margins than expected last night, and they also guided lower for the upcoming Holiday season. They’re still making lots of sales, but sooner or later, investors would like to see a little detail called profits. Look for Amazon shares to open about 9 percent lower this morning.
The price of light sweet crude has backed off about a quarter of a dollar after a 2-dollar-plus increase yesterday. Overseas markets are pretty much all positive, and by pretty healthy margins.
We should get mixed results at 9:#0. At this point, adjusted for fair value, the S&P futures are down a fraction, the Dow futures are up 21, but the NASDAQ futures, reflecting the impending decline of Amazon, are more than 3 points below fair value.
October 25, 2005
The market’s been looking for an excuse to rally for a week or two now and finally found it yesterday. The nomination of Ben Bernanke as the reincarnation of Alan Greenspan gave the Dow Industrial average its best day since April.
Today, as they say, is another day. We’ll get a little profit taking at the open, although it’s hard to find a disappointing profit report out there. Dominos Pizza just checked in, beating estimates by 3 cents per share. Other companies meeting or beating estimates include DuPont, Lockheed Martin. Southern, Legg Mason and Texas Instruments. However, TI said that demand is so strong, they may not have all of the inventory they need next quarter. That will hurt the stock this morning.
Japanese stock rose sharply on the heels of our rally, but most European markets are slightly lower at this hour. We’ll get at latest Consumer Confidence Index from the Conference Board at 10 o’clock. Expect a rise to 88, from 86.6 last month.
But in front of that news, we will open lower this morning. Adjusted for fair value, the S&P futures are down 4 points, Dow futures are down 33, and the NASDAQ futures are about 6 points below fair value.
October 24, 2005
We have about another week before the Fed raises interest rates once again. Later this week, we’ll get a lot of economic data that could influence their decision. That is, if their collective mind wasn’t already made up – which it is.
Today will be pretty quiet for economic news. But, we’ll still have a good list of corporate earnings reports to keep us entertained. Johnson Controls beat estimates by a penny on lower than expected revenue. Drug maker ScheringPlough earned 2 cents per share more than expected. Merck beat estimates by 3 cents, but revenue there came up short due to the Vioxx withdrawal.
Kimberly Clark had a good quarter, but warned that the fourth quarter will fall short due to increasing energy costs. Speaking of which, crude oil is off more than a dollar per barrel this morning, as it is now clear that Hurricane Wilma has missed the already damaged oil facilities in the Gulf of Mexico.
European markets are doing well, and it looks like a good start for us as well. At this point, adjusted for fair value, the S&P futures are up more than 3 points, Dow futures are up 33 points, and the NASDAQ futures are 4 points above fair value.
October 20, 2005
Yesterday was, of course, the 18th anniversary of the stock market crash of 1987. While yesterday never looked quite THAT bad, it was pretty ugly until the middle of the afternoon, when a powerful rally kicked in. Maybe it’s just a bear market rally, maybe the bottom is now in. It doesn’t look like the open this morning will give us any substantial indication.
Earnings reports continue to pour in, and in contrast to yesterday morning, this morning they’re not so great. Yes, Coca-Cola beat estimates on rising revenue. Look for Coke to rise about 4% at the open. However, Ford Motor lost a penny more on an operating basis than expected. They indicated that full year results would come in at the low end of their one dollar to buck and a quarter estimate.
Pfizer beat earnings estimates, but sales were off, on shall we say, soft Viagra sales. Pfizer guided lower for the rest of the year and withdrew their 2006 and 2007 guidance. Pfizer is look to open down about 4 percent. Ebay also lowered guidance and Amgen’s sales were disappointing. McDonald’s matched expectations.
Sum it all up, and it looks like a market that wants to rally, but can’t find a good reason. At this point, adjusted for fair value, the S&P futures are down less than 2 points, Dow futures are down only 2, and the NASDAQ futures are a point and a half below fair value.
October 19, 2005
We’ll get earnings reports from at least 30 of the S&P 500 companies today. Here’s the frustration of the day – earnings are coming through in fine shape, but it looks like stock prices are going to take it on the nose again this morning.
The Producer Price Index pop to 1.9% yesterday and its future interest rate ramifications sent stocks lower overnight worldwide. Stocks are down on the order of 2 percent on just about all markets overseas.
Meanwhile, back at the ranch, earnings are on the whole, pretty good.
Beating estimates or raising guidance this morning, Motorola, JP Morgan Chase, Honeywell, EMC, Altria, Bank of America, Roche -- and how about this one – Continental Airlines.
The misses of the morning are Intel, Kraft and Michaels Stores.
Finally, we have a warning from the Chairman of the FDIC about the number of people who are buying way too much house by using what he terms as “risky”mortgages. He says that there is rising risk not only to the borrowers, but to the lenders as well. We get data on September Housing starts at 8:30.
Hang on to your hats at the open this morning. At this point, adjusted for fair value, the S&P futures are down 6, Dow futures are down 53, and the NASDAQ futures are 10 ½ points below fair value.
October 18, 2005
Hopefully your stock portfolio is doing well, but even if it’s not, rest assured that your broker is probably doing well. Merrill Lynch reported a 38% increase in their 3rd quarter revenue and a 51% increase in income. They have added 1,800 employees and beat earnings estimates by a whopping 22 cents per share.
IBM’s quarterly report was a pretty good one last night, beating estimates. Although they did it by cutting costs rather than growing revenue, IBM is looking to open a couple percent higher this morning. United Technologies, Wells Fargo, Johnson & Johnson and 3M all with better than expected reports. Motorola and Yahoo report tonight.
At 8:30 this morning we’ll find out how much rising energy prices goosed the Producer Price index in September. Expect 1.4% in the overall rate, but only 2 tenths of a percent in the core rate, which applies to producers who don’t eat or use energy.
Overseas markets are mixed this morning, and pending a big surprise out of the PPI number, we should go slightly higher at 9:30. Adjusted for fair value, the S&P futures are up only a quarter of a point, Dow futures are up 18, and the NASDAQ futures are pretty much even with fair value.
October 17, 2005
About a quarter of the companies in the S&P 500 will report earnings this week. General Motors is on the schedule to announce their quarterly loss today. However, as we all know by now, at 8:30 this morning Rick Waggoner will be addressing GM employees. As we all heard minutes ago on WJR, GM and the UAW have reached an agreement to cut health care costs. No dollar amount is available, and of course, that’s where Wall Street will focus, but presumably we’ll learn that at 8:30.
Citigroup posted earnings this morning that were right about at expectations. Whether they beat or missed depends on whether you regard Hurricane Katrina as a recurring event, or just part of normal operations.
Later today, IBM and Wachovia, among others, will report.
Oil prices are up over a dollar per barrel as Tropical storm Wilma begins getting her act together, nearing the Cayman Islands and potentially threatening the Gulf of Mexico. Current models have it posing the greatest threat to southwestern coast of Florida, and then possibly crossing over for a trip up the Atlantic coast next week.
Overseas markets are fairly flat. We’ll likely head south at the open on news of those higher oil prices. Adjusted for fair value, the S&P futures are down 1 ½, Dow futures are down 27, and the NASDAQ futures are only about a point below fair value.
October 14, 2005
There’s more economic data coming today than you can throw a short stack at. First and foremost will be the September Consumer Price Index. If you are already collecting Social Security checks, you should have more than a passing interest this month. It’s expected that the CPI rose nine tenths of one percent in September. That would give us a year-over-year inflation rate of 4.4%. That would be the highest in 14 years. And, since next year’s Social Security benefits are adjusted for annual inflation at the end of each September, the average Social Security check could be in for a big boost in January. Not as big a boost as your home heating bill, mind you, but, a boost nonetheless.
Retail sales numbers, industrial capacity and utilization numbers, all come out before the market opens, and at 9:45 we’ll get the University of Michigan’s preliminary Consumer Confidence Index for October is expected to recover to a level of 80.
Don’t look now, but the yield on the 10 year Treasury Bond, that’s the one an awful lot of mortgages are based on, is up to 4.47%. That’s up a full half percent in the past six weeks.
The futures have been rallying during the past couple of hours, and although they are positive, they are still struggling to get back to fair value. Adjusted for that ever-lovin’ fair value, the S&P futures are up almost a half point, the Dow futures are down 8, and the NASDAQ futures have just gone to a point and change above fair value.
October 13, 2005
McDonald’s is serving up a happy meal for shareholders this morning. Same store sales are up and it looks like Mickey D’s will make 2 cents more per share on the quarter than expected.
The weekly jobless claims number at 8:30 will be pretty hard to interpret as the post Rita-Katrina job picture remains foggy at best. Of a little more import will be the weekly report on oil and distillate inventories. That report was delayed a day by the Columbus Day holiday, but when it rolls out this morning, it is expected to show a build up in crude oil, but another decline in gasoline and heating oil inventories.
Freddie Mac will report on weekly mortgage rates today. Expect the average rate on a 30 year loan to have gone above 6 percent for the first time in well over a year, and this time in may not be turning back.
Trading volume should be on the light side today due to the Yom Kippur holiday. It’s one of those curious mornings when the futures are positive, but are still indicating a lower open for most stock prices, because after you adjusted for fair value, the S&P futures are down 3 ½ points and the Dow futures are down 24, and the NASDAQ futures are about a point below fair value.
October 12, 2005
There will be about 650 new homes built in North Carolina through the collaboration of KB Home and Martha Stewart. There is no truth to the rumor that these homes will be marketed under the name “The Big House.”
Shares, or slices, if you will, of Apple Computer have risen about 400 percent over the past two years, and were pretty much priced for perfection. Well, last night’s earnings report was good, but it wasn’t perfection, and Apple shares will be under pressure this morning. Earnings beat estimates by a penny, but iPod sales were short of estimates, as was overall revenue. Apple should be unveiling its long-awaited video-iPod later today, so that may mitigate the losses, but the pre-market indicates Apple shares down about 8 percent.
In about 15 minutes, Alan Greenspan will be giving a speech that will give traders something to chew on before 9:30. Yesterday the minutes of the latest Fed meeting were released and gave us absolutely no hope the interest rate hikes would end anytime soon.
Hong Kong stocks were off over 2 percent overnight. Most all overseas markets are lower at this hour, and we should start the day weaker as well. Adjusted for fair value, the S&P futures are down almost 4 points, the Dow futures are down 27, and the NASDAQ futures are almost 9 points below fair value.
October 11, 2005
The Dow Jones 30 Industrials lost over 50 points yesterday. Almost about a third of that was directly thanks to General Motors, which dropped 10%. Of course, that looked like a winner compared to a 34% decline in Dana and a more than 70% loss in Delphi shares. Delphi shares closed last night at 33 cents per share, as they make their way down their eventual value of zero.
3rd quarter earnings season got off to a pretty good start last night, with Alcoa and Genentech beating earnings estimates. Shares of Genentech, which have cooled considerably after more than doubling during a six-month hot streak, are looking to open a few bucks higher this morning. Publisher Gannett met estimates this morning, and Johnson Controls raised their earnings guidance.
At 2 o’clock we’ll get a peak at what was said behind closed doors at the latest Federal Reserve Open Market Committee Meeting.
And there’s a big merger in Canada this morning, as metals company Inco will get control of metals company Falconbridge at a 10% premium to yesterday’s closing price.
Japanese stocks, which didn’t trade yesterday opened the week with a bang, rising about 2 ½ percent. Outside of Australia, all other major foreign markets are in the green. We’ll see if our markets can hold on to early gains for a change. At this point, adjusted for fair value, the S&P futures are up a little more than 2 points, the Dow futures are up 27, and the NASDAQ futures are 3 ½ points above fair value.
October 10, 2005
It’s a whole new ballgame for Detroit this morning after Delphi’s Chapter 11 filing. For some suppliers there will be ripple effects, for others a tsunami that will likely roll through the Detroit economy for years to come. Dana has just withdrawn its 2005 earnings guidance, reportedly due to accounting issues. There’s an analyst at Bank of America this morning, who estimates that the likelihood of a General Motors bankruptcy has gone up to 30 percent.
Delphi will be spending its last day as a member of the S&P 500 today. They will be replaced by Paterson Dental tomorrow.
Stocks will trade today, but the bond market is closed for Columbus Day.
There’s one big merger this morning. In about a 7 billion dollar deal as Lincoln National will but insurance company Jefferson-Pilot at about an 11% premium to Friday’s closing price.
There’s a lot of economic data on tap later in the week, but there’s nothing cooking today due to the holiday.
Japanese stocks did not trade overnight, but most all other overseas markets are up a half percent or more at this hour. Adjusted for fair value, the S&P futures are up 2 ½ points, the Dow futures are up 32 and the NASDAQ futures are almost 3 points above fair value.
October 7, 2005
Wouldn’t you just love it if you had the power to move the stock market whenever you’d like? The President of the Dallas Federal Reserve Bank must be lovin’ his job. A few months ago, Richard Fisher blurted out a comment that the Fed “was in the eighth inning” of hiking interest rates. The market took off in a powerful rally. This week, Fisher has been spouting off about the big inflation threat and how the Fed has to keep raising rates. The stock market has of course, tanked.
Mr. Fisher, in case you’re listening this morning, here are two words of advice usually reserved for my children: “Shut up!”
Delphi shares are off about 15% in the pre-market on the story in the Detroit News reporting that a Chapter 11 filing may come as early as today.
In ten minutes, the first post-Katrina monthly jobs report is expected to reflect a loss of 175,000 jobs, although that number could be a lot better or a lot worse. Nobody has a real firm estimate on that one.
Most overseas markets are flat to down a half percent or so. However, we’re looking for a firmer open. At this point, adjusted for fair value, the S&P futures are up a little more than 2 points, the Dow futures are up 18, and the NASDAQ futures are almost 2 points above fair value.
October 6, 2005
Just as in baseball, the stock market is looking for a stopper this morning. The good news is that we have finally gotten something to break the market’s fear of rising oil prices. The bad news is it has been replaced by a fear of future inflation, which is an enemy that is best defeated before it ever shows up to fight. The last time the Federal Reserve decided to shadow-box with inflation was 1999. Inflation never did show up, but the Fed wound up sucker punching the economy instead.
The big retailers are reporting in this morning. Although Walmart says that hurricanes will trim a penny per share from profits this year, same store sales were up 3.8 percent in September. Walmart pumps a lot of gasoline, but even if gas prices had not gone up, sales would have been up 3.2 percent. Costco beat earnings estimates for the quarter by 2 cents per share and plans to buy back a billion dollars worth of its own stock.
Marriott International also beat estimates and raised their earnings guidance this morning.
Asian markets were generally down 2 percent or more overnight. European markets are down 1 to 2 percent.
Our stock futures have rallied a good bit just during the last 15 minutes after starting the morning in a little hole. Adjusted for fair value, the S&P futures are up a point and a half, the Dow futures are down 11, and the NASDAQ futures are now just a fraction below fair value.
October 5, 2005
It’s not a parade yet, but a little line of companies warning about quarterly earnings is starting to form on Wall Street. Locally, Lazy-Boy says that their quarterly earnings will significantly miss estimates, and they are lowering guidance for the year. They’re blaming rising prices and lack of supply of certain chemicals and resins that are used to make upholstery. That shortage, of course, is due to the Rita-Katrina storms. For much the same reason this morning, a major broker is downgrading its rating on Lear Corporation.
On the flip side, we have better than expected reports and heightened guidance for the year from Yum Brands (you know them and Pizza Hut, KFC and Taco Bell) as well as Wolverine World Wide.
The weekly oil inventory data rolls out at 10:30 this morning.
Comments out of no less than three of the Federal Reserve Bank Presidents sent stocks prices south yesterday, as they made it pretty clear that short term interest rates will continue to rise for the foreseeable future. On the heels of that, markets around the world are lower this morning.
Stock futures have been rallying a bit during the past half hour, but they’ve been down all morning and at this point are still indicating a lower open. Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 11, and the NASDAQ futures are about 1 ½ points below fair value.
October 4, 2005
It seems like summer outside, and it seems like we’ve seen this kind of stock market action for the past four months as well – oil prices up, stocks down – oil prices down, stocks up. This morning, crude oil is down under 65 bucks per barrel, although the price of natural gas, excuse the pun, continues to explode.
At 10 o’clock this morning, the August report on factory orders is expected to show an increase of 2.2 percent. Yesterday, a much larger than expected increase in the ISM Manufacturing Index got traders worried about additional interest rate increases. If we come in a lot larger than 2.2 percent on factory orders, we’ll probably see more of the same today. The July factory orders were actually down from the June level.
Natural gas is hot, and Chesapeake Energy knows it. They are going to use 2.2 billion of accumulated pocket change to buy Columbia Natural Resources. That will make them the third largest natural gas produced in the country.
There are a couple of earnings warnings out this morning. The most significant is from printer company Lexmark. They will likely make less than half of what analysts expected in the third quarter and they warned for the fourth quarter as well. Lexmark is indicated down almost 15% in the pre-market.
Stock futures were in negative territory a couple of hours ago, but have rallied as the price of oil has declined. Right now, it looks like we’ll edge slightly higher at 9:30. Adjusted for fair value, the S&P futures are up about a half point, the Dow futures are up 9, and the NASDAQ futures are just about even with fair value.
October 3, 2005
It’s a new quarter, and during the past couple weeks, earnings warnings have been few and far between. That’s surprised a lot of people who expected that hurricane-related business interruptions would knock a lot of earnings projections out of whack. Of course, it could just be that companies are still trying to assess the damage. Whatever, it looks like Walmart is going to come through in good shape. Same store sales in September were up 3.8 percent. That’s at the high end of expectations.
The New York Times reported this morning that the federal government has calculated the termination value of General Motors pension plan. That is, what kind of shape would the plan be in IF the plan terminated today. On that basis, the plan’s assets would come up short by about 31 billion dollars. Of course, the plan ISN’T going to terminate today, and on an ongoing basis, GM estimates that the plan is actually OVERfunded by a couple billion. However, there’s some pressure building in Congress to make companies report pensions on a termination basis – so, it’s an interesting number to keep an eye on.
Asian markets were off just a little after a slight miss in the Japanese Tankan business index. European markets are up nicely, and it looks like we’ll tick upwards just a bit at 9:30.
Adjusted for fair value, the S&P futures are up about a half point, the Dow futures are up 13, and the NASDAQ futures are about 2 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
November 30, 2005
The results for Cyber Monday are in, and they serve to prove that this whole computer and internet thing is really just a fad that will just fade away. Right.
Visa spending on the internet was reportedly up 26 percent this Cyber Monday over last. Ebay ruled the roost with the most distinct visitors. Walmart.com and Target.com also drew a lot of traffic.
Traffic in shares of Google may have finally come to a “stop” sign. Google is back down to 400 bucks from 435 on a couple analyst downgrades. Yahoo took its second downgrade this week this morning as well.
Lots of data points on the way today. It’s Oil Inventory day. The Chicago Purchasing Manager’s Index comes out at 10, and later today, the Fed’s Beige Book will be released. The last time out that was a significant market mover.
The government’s second estimate of 3rd quarter Gross Domestic Product at 8:30 could set the early tone. It’s expected to be revised upward to 4.1% from the advance number of 3.8%. Too much of an upward revision could actually be a market drag, as traders continue to focus on future interest rate hikes.
Overseas markets are down at this hour. In front of the GDP data, our futures are pretty much in wait-and-see mode. S&P, Dow and NASDAQ futures are all just about even with fair value.
November 29, 2005
Yesterday the stock market’s winning streak ran into a disappointing home sales number like it was a brick wall. It’s not news around these parts, but now it seems that nationally there are plenty of used homes on the market. The thinking is that a slowdown in housing sales will likely trigger a slowdown in related consumer sales as well.
Today it could be déjà vu all over again. The futures are up strongly at this hour, but at 10 o’clock we’ll get the October New Home Sales. Early forecasts put the number at an annualized 1.2 million units, but given the used home data yesterday, we could fall well short of that.
Durable Goods Orders are expected to have risen 1.5 percent in October. We’ll get that report in about 10 minutes.
Gold broke over the $500 dollar an ounce level over night, although it’s pulled back some at this point. The last time gold spent any significant time above 500 bucks was about 22 years ago.
In front of that durable goods number, the futures are looking pretty good. Adjusted for fair value, the S&P futures are up more than 6 points, the Dow futures are up 40, and the NASDAQ futures are more than 9 points above fair value.
November 28, 2005
There may be heavy pockets on area freeways, but there were evidently lighter pockets leaving area malls over the weekend. According to the National Retail Federation, the average shopper spent more than $302 over the weekend, as Thanksgiving Holiday retail sales were up 22 percent over last year. That number is questionable to some, and it may be an unbelievable number to a lot of autoworkers who are expecting tougher times ahead. But, whether the figure is completely accurate or not, it’s a reminder that nationally at least, the consumer is feeling just fine, thank you.
Automakers aren’t the only manufacturers about to do some restructuring. Drug-maker Merck will eliminate 7,000 jobs by 2008 and will close 5 of their 31 manufacturing facilities.
This week will be loaded with economic data. Today, the October existing home sales number comes at 10 o’clock. Sales are expected to have declined just a bit to an annualized rate of 7.2 million units.
The Wednesday before and the Friday and Monday after Thanksgiving are traditionally good days for the market, and it looks like 2005 will be no exception.
Overseas markets are in rally mode, as we will be at 9:30. Adjusted for fair value, the S&P futures are up almost 2 points, the Dow futures are up 32, and the NASDAQ futures are about 3 points above fair value.
November 23, 2005
The futures are indicating a pretty flat open for stocks, but take heart – the Wednesday before and the Friday after Thanksgiving are traditionally pretty good days for the market.
We got a little Holiday gift yesterday when the minutes of the Federal Reserve Open Market Committee’s most recent meeting were released. The minutes showed that the Committee members DID actually talk about the economy during their meeting, presumably because golf season was just about over. Some Fed members expressed concern that they not go too far in raising interest rates. That gave stocks an immediate shot in the arm, adding day number 5 to the current market rally.
At 9:45, the U of M’s Consumer Confidence number for November is expected to come in at 81, as investor depression over tropical depressions wears off.
Oil, gasoline, and distillate inventories are all expected to have risen in the past week. We’ll find out at 10:30, and we’re also expecting a rise in natural gas inventories. That’s fairly unusual for this time of year. That data is coming out a day early due to the Thanksgiving Holiday.
Japanese markets were closed today, but outside of Belgium, where they must have bitten into some sour chocolate, overseas markets are up. Adjusted for fair value, the S&P futures are down about a half point, the Dow futures are down 8 ½, and the NASDAQ futures are just about even with fair value. Happy Thanksgiving, everybody!
November 22, 2005
Xbox 360 hit the market at midnight. Microsoft calls the new machine a critical component of its future strategy, so it’s an important product to watch. Some analyst estimates that Microsoft will sell 2 million of them this year, but estimates vary widely as to how many will be available during the next few weeks. Hey, maybe we can start building them at some of those auto plants we don’t need anymore.
For the market in general, the Dow Jones 30 Industrials Index finally closed in positive territory for the year yesterday. The Nasdaq and the S&P 500 are at 4 ½ year highs. But there are some uncomfortable little details rearing their ugly little heads. Gold is just a smidgen below the $500 dollar an ounce level, as rising fast. The Treasury Bond yield curve is about as flat as flat can be and will very likely invert before the end of the year. An inverted yield curve is an almost certain indicator of an upcoming recession. Finally, light sweet crude is up almost a buck today at $58.61 per barrel.
Markets around the world are little changed at this hour, but in light of all those ugly little details, we’ll see lower stock prices at 9:30. Adjusted for fair value, the S&P futures are down almost 3, Dow futures are down 17 and the NASDAQ futures are about 5 points below fair value.
November 21, 2005
There was a day when General Motors could rally it stock by announcing some new models with big sales potential. Last Friday, GM shares rallied 17 percent from their intra-day low, just because Rick Waggoner said “we’re not going bankrupt.”
In about 10 minutes, GM’s head honcho will have more to say. At an 8:30 press conference, Mr. Waggoner is expected to announce some plant closings and possibly some other cost cutting measures that could help him keep last Friday’s promise.
Usually the mother names the child. Today, the child will actually assume its mother’s name. SBC will start using the AT&T name, assume the ticker symbol ‘T’ and will make a lot of sign makers and stationery suppliers very, very happy.
Cold weather is about to spread across the Midwest and Northeast, and surprise, surprise, oil and natural gas prices are again on the rise. Light sweet crude is up 75 cents to just shy of 58 bucks per barrel. That could weigh down the sleigh of the little Santa Claus rally we’ve been enjoying.
Asian markets were positive again overnight. Mainland Europe is in the green, but London’s FSTE Index is down just a touch. Our stock futures have been trying to climb back to even all morning, and they’re just about there. So, at this point, it looks like a pretty quiet open is on the way. Adjusted for fair value, the S&P and Dow futures are flat but the NASDAQ futures are about 2 points below fair value.
November 18, 2005
There’s not much on the economic report calendar today, so it will likely be a deals, earnings and oil kind of day.
Let’s take them in reverse order. Light sweet crude is down 3 cents after a steep slide yesterday afternoon. Yesterday’s drop gave a nice boost to overseas markets overnight. Most of Europe is up about one percent at this hour. Overnight, the Nikkei 225 in Japan was up almost a percent and a half.
Earnings reports are a mixed bag. We’re looking at better than expected reports from Hewlett-Packard and Starbucks. However, there are less than wonderful profits and/or forecasts from Gap, H&R Block and Disney.
A couple more big deals as companies continue to find ways to sop up all that darn cash lying around. SwissRe is buying General Electric’s insurance business and Cisco Systems is buying Scientific Atlanta. Both of those deals are in the 7 to 9 billion dollar range. GE is also raising their dividend by 14%.
Stock futures have been positive all morning and have been quietly creeping even higher. Adjusted for fair value, S&P futures are up about 3 points, Dow futures are up 17 and the Nasdaq futures are about 6 points above fair value.
November 17, 2005
The story stock of the day nationwide has to be General Motors, and the story is not a comedy. GM lost almost 6 percent of its value yesterday, and another 17 cents in the after-hours market. Closing in on 21 bucks a share, you have to go back to the Crash of 1987 to remember GM trading much below that level. The stock has lost almost 40 percent of its value over the past three months.
How about some happier stories? It you’re long gold, it’s been a great year. Gold is at 483 dollars an ounce mark this morning. That’s an 18 year high.
Today is the last big data day of the week. Weekly jobless claims are expected to have fallen by just 2,000. October housing starts are expected to be down 2.8 percent. Industrial production, on the other hand, is expected to show a one percent pickup as we recover from the hurricanes. Finally, at noon, the Philly Fed survey will be closely watched. Expect a decline of 3 tenths of a percent in that forecast.
Two broker downgrades this morning – one for Altria and one for ConocoPhillips. Hewlett-Packard will report earnings later today.
It’s a great day to be invested overseas. Hong Kong and European markets are up almost one percent, Japan closed up 1.7 percent. We should get off on the right side of the sod as well. Adjusted for fair value, S&P futures are up 4 ½ , Dow futures are up 28 and the Nasdaq futures are about 9 ½ points above fair value.
November 16, 2005
There’s been a lot of discussion and speculation about the health of the housing market lately. Rising interest rates, the theory goes, have to start biting into sales soon, and may even cause people who can’t handle their suddenly-expensive ARM loans into an unexpected move.
The jury on this one is apparently still out. A few days ago, home builder Toll Brothers gave investors disappointing guidance for 2006. However, this morning, D. H. Horton beat estimates for their fourth quarter by 14 cents, and guided toward the high end of expectations for next year. So, all may not be so horrible in house building land. However, Horton did guide slightly lower for next quarter.
Tyco is also being cautious for next quarter, although last quarter’s earnings were pretty good.
It’s all about the CPI for traders this morning. In 15 minutes the October Consumer Price Index is expected to come in unchanged. The core rate, which excludes food and energy prices, is expected to have risen 2 tenths of a percent.
Asians markets were up a little overnight, European markets are down about ¾ of a percent. Our direction will be taken from the CPI announcement at 8:30. Right now S&P, Dow and Nasdaq futures are all within a point or two of fair value.
November 11, 2005
A big drop in oil prices didn’t help energy stocks yesterday, but it sure gave the rest of the market a shot in the arm. This morning, light sweet crude is down another 16 cents per barrel in the mid-57’s, and that has European stock markets in a very good mood.
Bond traders in the U.S. should be in a good mood – they have the day off for Veteran’s Day.
If you hold shares in Dell…well…..maybe you won’t be in such a good mood. Dell warned that earnings were going to disappoint. So, their earnings number last night was no big surprise. However, the revenue number for last quarter was also on the light side, and the outlook for next quarter was disappointing. So, after gaining 19 cents in yesterday’s market, Dell lost 35 cents in the after-market and should open lower this morning.
Don’t look now, but after yesterday’s plunge in the stock price, the dividend yield on General Motors is over 8 ½ percent this morning. Assuming, of course, that you believe the payout rate is sustainable.
It’s pretty much whatcha see is whatcha get with the futures, and at this point, watcha gonna get is a slightly positive open for stocks. S&P futures are up a tiny fraction of a point, the Dow futures are up 2 and Nasdaq futures are now about 3 ½ points above fair value.
November 9, 2005
There will be a lot of hot oil-related news in the market today. First hot data from the Energy Information Institute, then a lot of hot air from Capitol Hill.
At 10:30, the Energy Information industry will issue its weekly report on fuel inventories. Crude oil, gasoline and distillate inventories are all expected to rise. Perhaps most importantly, distillate inventories are expected to rise by about 600,000 barrels after a week of very mild weather in the Northeast, where a lot of residential heating oil is used.
If you are the head honcho of a big oil company, you will be tied to the whipping post in Washington today. Members of the Senate will hold a hearing to find out just how in the world the oil companies have collected so much money from everybody without actually having the power to raise taxes.
Big insurer AIG will be restating earnings again, as they seem to be having some trouble shaking their accounting problems. Home Depot gets a brokerage firm upgrade this morning after losing over 2 percent of its value yesterday.
Stock futures were solidly positive earlier this morning, but have been on the slide for a while. At this point, adjusted for fair value, they are indicating a very slightly positive open for the market. S&P futures are up a almost a point, the Dow futures are still up 4 and Nasdaq futures are now about 2 ½ points above fair value.
November 4, 2005
This morning, it’s all about the October Jobs Report. The consensus estimate calls for job growth of 124,000. The employment picture is still a moving target given the thousands of jobs that were washed away by the hurricanes. Of course, that’s probably offset by the millions of attorneys who have put themselves to work suing Merck over Vioxx.
Round 2 in the Vioxx war went to Merck yesterday as a New Jersey jury found Merck not guilty of evil doing. Merck stock popped up a bit midday, but gave up the bulk to that gain by 4 o’clock. That’s two lawsuits done and about 6,400 to go. That is, if no new suits are filed.
Apple Computer took a downgrade from a major brokerage house this morning. The analyst is arguing that it’s time to harvest some of Apple’s tremendous price appreciation.
The Japanese Nikkei Index shot up another 1.3 percent overnight, but markets elsewhere are decidedly undecided.
We will find out which way the U.S. market will decide to move this morning in about 10 minutes with the release of the October Unemployment Report. At this point, after you adjust for fair value, there is absolutely nothing going on. S&P, Dow and Nasdaq futures are all within a couple points of fair value.
November 3, 2005
Lots of stuff going on today. Retailers are reporting their October numbers this morning and generally, it looks like consumers continue to party like its 1999. Walmart confirmed their earlier guidance that October same store sales were up 4.3%. They see 3 to 5 percent growth in November as well. Costco same store sales were up 10 percent. Granted, without the big run-up in gasoline prices it would have only been 8 percent. But that’s still a big number.
Comcast revenues for the quarter gone by came in as expected, but profits missed estimates by about 40%. Comcast is also guiding lower for 2006.
At 10 o’clock, Alan Greenspan will be forced to sit through another visit with the Congressional Joint Economic Committee. Say what you will about him, the man knows how to have a good time.
Also at 10 o’clock, the Durable Goods Report is expected to show a 1 percent decline. And lookout – light sweet crude is up above 60 bucks again at $60.48.
Asian markets were up slightly overnight. European markets are up on the order of a half to one percent. We should get off to a quietly positive start as long as the unemployment claims don’t throw us a curve. At this point, adjusted for fair value, the S&P futures are up a fraction, the Dow futures are up a point, and the NASDAQ futures are about 3 points above fair value.
November 2, 2005
Yesterday, the Federal Reserve Open Market Committee said rising energy costs and recent hurricanes have depressed economic growth and job growth. Not to be outdone by those freaks of nature, the Fed raised short term rates another quarter percent, which should of course, depress economic growth and job growth even more. The good news is that hurricane season is almost over. Alan Greenspan will be around until February.
October auto sales numbers were released yesterday and were scarier than anything you might have seen the night before. DaimlerChrysler sales were off 3 percent, General Motors off 23 percent and Ford off 26 percent. The annual combined car sales rate fell to 14.7 million units. A year ago, it was nearly 17 million. Speaking of industries that are changing, Deutsche Telecom will cut 32,000 jobs over the next three years due to changes in the German communications industry.
This morning Time Warner beat earnings estimates and raised their share buyback program. EDS also beat estimates as that turnaround continues. Oil distillate inventory data later this morning is expected to show a drawdown. That’s a potential market mover. But so far today – not much is moving anywhere.
Overseas markets are mixed. Our futures started off the morning in good shape, but that was then and this is now. Adjusted for fair value, the S&P futures are now down 2 points, the Dow futures are down 5, and the NASDAQ futures are about 5 ½ points below fair value.
November 1, 2005
Later today, Treasury Secretary John Snow will finally receive a couple of proposals, developed by a special commission, on how to reform the income tax system in the U.S. There’s a striking similarity of this exercise to the proposed Social Security reforms. Two big wealth re-distribution systems, both horribly flawed. And both will go “unreformed” for the foreseeable future. Not that these new tax system proposals are bad – they’re actually very good. Unfortunately, people don’t evaluate these things based on “right or wrong.” They make up their mind based on “how will it effect me.” That will likely render this proposal, like the badly needed Social Security reform, dead on arrival at Congress.
Short-term interest rates will head north by another quarter of a percent at 2:15 this afternoon. That makes it 12 increases in a row, with at least one or two more to go.
The big earnings news of the morning is a big warning from Dell computer. Sales and earnings for the quarter will come in at the low end of expectations and Dell shares, and by implication the NASDAQ, will be under some pressure.
Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 11, and the NASDAQ futures are almost 8 points below fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
December 30, 2005
It looks like Santa Claus had a vacation planned, because he took off right after his day job was done last weekend. We started out the week with visions of Dow 11,000. If this morning’s futures are any indication, it looks like 2005 may go in the books as a DOWN year for the Dow Jones Industrials. The Dow closed last night up only 1 point for the year, and we’ll almost certainly open well below that this morning.
A lot of overseas markets are closed already. The UK and Germany closed early, and all major foreign markets are down at this hour. France is down over one percent.
One data point is on the way. At 10 o’clock the November Chicago Purchasing Manager’s Index is expected to slip a little to a level of 60.
Lock in those capital losses today, if you need them. Remember the bond market closes early. They’ll be done at 2 o’clock. But the best thing to do for your financial health may be to use the weekend to review where your investments stand. Make sure that your investments are diversified, make sure that you are spending within your means, and make sure that you a saving enough for your future goals.
As we head toward the final session of the year, adjusted for fair value, the S&P futures are down about 4, Dow futures are down 30 and the Nasdaq futures are about 5 points below fair value. Happy New Year!
December 29, 2005
It should be a quiet day of trading as we wind down toward the end of the year. Just remember, it’s today and tomorrow if you need to realize some tax losses before the end of the year.
The weekly jobless claims number should, once again, be roundly ignored at 8:30. The big number of the day will be the report of just how many used homes were sold nationwide in November. We’re expecting a slowdown of only 4 percent, which would still mean home sales are at a very high level. That seems realistic. Unless, of course you’re trying to sell your house around here nowadays.
Oil prices are backing off a bit this morning after a big run-up yesterday on fears that OPEC will start cutting production next year. Light sweet crude is going for $59.64 per barrel.
European markets have a modest rally in progress. They’re up about a quarter of a percent. Our futures must have had a late night, as they are still sound asleep at this hour. The S&P, Dow and Nasdaq futures are all within a point or two of fair value.
December 28, 2005
Japan is all done for the year. Tomorrow and Friday are year end holidays, so the Nikkei Index closed out the year overnight at 16,194. For the year 2005, the Nikkei rose more than 31 percent. That’s a five-year high.
There are a lot of well respected warning signs on Wall Street. One of them is called “the inverted yield curve.” The “yield curve” is simply a line graph that depicts the current interest rate you receive by investing in Treasury bonds of different durations. Normally, you’d expect that the longer-term the bond you buy, the higher the interest rate you receive. So the line graph normally slopes up from bottom left to top right. An INVERTED yield curve slopes the other way, meaning that short term yields are higher than long-term. Just about all recessions are preceded by inverted curves. However, not all inverted curves precede a recession. No matter – yesterday the yield curve inverted ever so slightly several times through the trading day and it threw the market for a low-volume loop. A lot of market watchers think an inverted curve is no big deal this time around, because of the generally low level of interest rates. However, the three four most dangerous words in investing are “It’s different this time.”
Nothing remarkable in the overseas markets outside of the big rise in Japan. We’ll get off the December Consumer Confidence number at 10 o’clock, but in front of that, we should get off on the right foot.
Right now, adjusted for fair value, S&P futures are up 3 points the Dow futures are up 31, and the Nasdaq futures are almost 4 points above fair value.
December 27, 2005
The week between Christmas and New Year’s Day is usually an interesting one. Trading volumes are light, and a little good news can go a long way. We’ll see if the Dow takes a run at the 11,000 mark by the end of the week.
Bristol-Myers Squibb got a little something in their stocking on Friday. The Food and Drug Administration has approved Orencia, which is an intravenous drug for the treatment of rheumatoid arthritis. Orencia has been effective for patients who haven’t responded to conventional treatments. Bristol-Myers stock is responding very well so far, up almost 5% in the pre-market.
Depending on what survey you believe, it looks like Holiday season sales were up somewhere between 7 and 9 percent, although some retailers definitely took the lion’s share of the gains.
A lot of overseas markets are closed in observance of Boxing Day. Japan was down overnight, but it looks like we will start to the upside at 9:30. Right now, adjusted for fair value, S&P futures are up 3 points the Dow futures are up 29, and the Nasdaq futures are about 7 points above fair value.
December 23, 2005
The bond market closes at 2 o’clock this afternoon. Japanese stocks did not trade at all overnight, and if there wasn’t a rule against keeping our financial markets closed for four days in a row, our stock market might just as well take the day off today as well.
If anything raises eyebrows today it may be the report on November New Home sales. It’s expected to drop to an annualized rate of 1.31 million units. That would be down from a rate of 1.42 million last month and set the tongue to wagging again about just how soft housing might get in 2006.
We’ll also get the December Durable Goods number in about 15 minutes and the University of Michigan’s final reading on Consumer Sentiment at 9:45.
Ford shares were 4 cents higher in the after-hours yesterday on word that the UAW rank and file did approve those health care concessions, albeit by a 51 to 49 majority.
The futures are barely awake at this hour. Right now, adjusted for fair value, the S&P futures are up just a fraction, the Dow futures are up 2 and Nasdaq futures are just about even with fair value.
December 22, 2005
It’s a good day to finish up your Holiday shopping, or in my case, start it. Not only that, it’s still a long walk to work if you work at the New York Stock Exchange. Add it all up, and we’re probably in for a light day of stock trading today.
There’s somefinancial data coming out this morning, as well as the weekly oil, gasoline and distillate inventory numbers, but outside of that there’s just not a lot shaking.
“Four-tenths” appears to be the number of the day. At 8:30, we should hear that personal income rose about 4 tenths of a percent in November, personal spending should rise 4 tenths of a percent. At 10 o’clock the Conference Board is expected to tell us that the Leading Economic Indicators are up – you guessed it – about 4 tenths of a percent.
Asian markets were down just a bit overnight – I’d like to say “4 tenths of a percent” -- but it’s not that much. European markets are narrowly mixed at this hour. Right now, adjusted for fair value, S&P futures are up about ¾ of a point, the Dow futures are up 7, but the Nasdaq futures are about 2 ½ points below fair value.
December 21, 2005
Oh Boy. Now even Kirk Kirkorian is selling shares of General Motors. Mr. Kirkorian, who not long ago, raised his stake to General Motors to 9.9%, mostly at a price of 31 bucks per share, has reportedly sold shares, which are now below 20 dollars to bring his stake to under 8 percent. Not exactly one of those deft investment moves on which Mr. K built his reputation.
A bunch of deals this morning. IBM is buying MicroMuse. It’s a cash deal at a 38 percent premium. How about a 60% premium? Shareholders of Maxtor will be getting that in a buyout by Seagate Technology. Allergan is also paying 3 billion to acquire Inamed.
Federal Express delivered its quarterly report about a half hour ago, and the quarter was a good one. Earnings of $1.53 per share beat the dollar-forty estimate handily. FedEx also reaffirmed guidance for their third quarter.
The final reading on 3rd quarter GDP is expected to come in unrevised at 4.3 percent. We’ll find out at 8:30.
At 9:30, we should be seeing little green arrows. Right now, adjusted for fair value, S&P futures are up almost 4 points, the Dow futures are up 30, and the Nasdaq futures are about 4 ½ points above fair value.
December 20, 2005
New York is an exciting place to be this time of year. Wouldn’t you be excited if you had to walk to work this morning? It will be interesting to see how smoothly the trading goes in light of the big transit strike in the City. However, sales at New York City coffee shops will no doubt be up this morning.
Also going up is the price of shares of Morgan Stanley after a good earnings report this morning. What may not be going up is the Producer Price Index. We’ll find out just how prices are doing at the wholesale level in about 10 minutes. Due to a big drop in energy prices, it’s expected that the overall rate dropped about a half percent in November.
There’s word of a pending real estate purchase in central Tokyo. AIG is said to be negotiating to buy a little spot for about 3.5 billion dollars. That news set off a little real estate rally in Japan that took the Nikkei index up over a percent and a half overnight.
Most of the rest of the overseas markets and our futures look just downright uninteresting at this point. Adjusted for fair value, S&P futures are up a point, the Dow futures are up 6, and the Nasdaq futures are just a touch more than a point above fair value.
December 19, 2005
The deal between FPL and Constellation Energy that we talked about last week is done. It will be an 11 billion dollar merger with energy assets in about half of the states in the country.
If there are shareholders, outside of the auto industry shareholders, could use some good news, it’s the owners of big pharmaceutical companies. And just in time for Christmas, a U.S. judge has issued a ruling that will protect Pfizer’s patent on Lipitor until 2011. Pfizer shares, which were at $20.60 just over a week ago, should open north of 25 bucks per share this morning. In fact, all the big pharmaceutical stocks should rally this morning.
Circuit City beat estimates of 4 cents by making 6 cents in the quarter gone by. Circuit City shares are looking to open up a buck or two as well.
Pepsi Bottling reaffirmed their guidance this morning.
Asian markets rallied strongly overnight, but Europe is kind of a mixed bag at this hour. Adjusted for fair value, S&P futures are up more than 2 points, the Dow futures are up 23, and the Nasdaq futures are now about 5 points above fair value.
December 16, 2005
It seems odd this week to not have a big merger to talk about. However, one is getting close. Albertson’s is reportedly close to unloading its drug stores to CVS and selling off everything else to a consortium of buyers that includes Supervalu stores. It will be close to a 10 billion dollar deal.
Rick Waggoner with some optimistic words about GM’s 2006 prospects last night at a holiday party. Waggoner says that the rollout of a new line of big SUVs will help revenue early in the year. Let’s hope he’s right, and wasn’t just spending a little too much time next to the egg nog.
It’s a quadruple witching Friday as options, futures and options on futures will expire. That used to mean be volatility in prices, although things have quieted down a lot in recent months. Things might even be quieter in New York as traders use a pending transit strike as a good excuse to get in a little Holiday shopping this afternoon.
The only economic report of the day will be the Current Account Deficit figure, and if you can get excited about that one, you really need a little vacation.
European markets are firmly in the green at this hour, and we should head higher at 9:30 as well. Adjusted for fair value, S&P futures are up almost 3, the Dow futures are up 31, and the Nasdaq futures are now about 2 ½ points above fair value.
December 15, 2005
Another day, another big merger this morning, and whether you own the acquirer or the acquiree, your stock price is on the rise. Biotech companies Amgen and Abgenics are getting together. Abgenics stock was up 55% in the after hours on news of the deal, and Amgen, after a one percent sell-off late in the regular session, came rallying back more than 3 percent last night.
Everybody knows that the air is leaking out of the housing bubble, but it’s not yet obvious to home builder Lennar. They reported $3.54 in earnings this morning versus an estimated $3.34 and the reiterated their 2006 guidance.
The big number of the day and the week will come in about 10 minutes with the release of the November Consumer Price Index. Due to a big drop in gas prices, it’s expected that the headline number fell 4 tenths of a percent, which would be the biggest drop in almost 20 years. The core rate is expected to rise 2 tenths of a percent.
The S&P 500 will start the day at a 4 ½ year high this morning. Hong Kong was up a half percent, but most other overseas markets are down a bit. Ahead of that important CPI data at 8:30 our futures are at a standstill. Adjusted for fair value, S&P futures are up a half point, the Dow futures are down 7, and the Nasdaq futures are now about 2 ½ points above fair value.
December 14, 2005
In you know anyone who does due diligence work for a mergers and acquisitions practice, don’t expect them spend a lot of time shopping for your Holiday gift. Word is that there are a lot of deals in the hopper as companies try to figure out what to do with all the cash that’s been piling up on their balance sheets.
Two new deals are in the spotlight this morning. General Dynamics is buying Anteon for $55.50 per share in cash, which is a 36 percent premium to yesterday’s closing price. Also FPL, the old Florida Power and Light is thinking of linking up with Constellation Energy, which is the old Baltimore power company. That would be an 11 billion dollar deal.
Short term rates moved up again yesterday, but the market loved the Federal Reserve’s statement yesterday. Of course, truth be told, nobody really knows what it meant. For the first time in memory, the Committee did not describe its monetary policy as “accommodative.” Unfortunately, they didn’t promise that their policy wouldn’t get “un-accommodative.” Nevertheless, Wall Street loves an excuse to rally and that’s what we got.
Tokyo was hit with a 2 percent decline on a disappointing Tankan survey of business conditions. European markets are off a quarter-percent or so at this hour. We should see a little profit taking at 9:30 as well.
Adjusted for fair value, S&P futures are down a point and a half, the Dow futures are down 6, and the Nasdaq futures are now about 3 points below fair value.
December 13, 2005
At 2:15 this afternoon, the Fed will announce yet another hike in short term interest rates. Odds are it will be another quarter point, and odds are that the Fed’s statement will be changed very little, if at all from last month. However, any hint in that statement that the Fed is near the end of the road for rate hikes would likely give stock prices a big boost. This is the second-to-last meeting for Chairman Greenspan. He may not want to wait for his finale to shift gears in that statement.
The potential ConocoPhillips acquisition of Burlington Resources is potential no more. The 36 billion dollar deal is done and will create another mega-company in oil and natural gas.
Lehman Brothers announced earnings that beat estimates by 12 cents per share this morning. Best Buy with a miss and a warning this morning.
S&P doing General Motors no favors yesterday as they dropped GM’s credit rating 2 notches and said that a GM bankruptcy isn’t farfetched.
With those less-than-kind words, GM shares will open lower at 9:30, but the market should move a bit higher. At this point, adjusted for fair value, S&P futures are up a fraction, Dow futures are up 20, and the Nasdaq futures are now about a point above fair value.
December 12, 2005
If you spend a lot of time on the road working for a big company, today’s announcement from Hewlett-Packard could mean that you’ll soon get to see what your spouse and your kids look like again. Hewlett has partnered up with a Hollywood animation company, most probably Dreamworks, a soon-to-be division of Paramount Pictures, and will unveil a new high-end video conferencing system that is reportedly unlike anything else. It will be somewhat short of “Beam-Me-Up, Scottie,” but is said to be so good, that the high-end corporate customer may be able to vaporize its corporate travel budget.
The two big economic events this week will be tomorrow’s meeting of the Federal Reserve Open Market Committee and Thursday’s release of the Consumer Price Index for November. Although the CPI probably fell last month due to declining oil prices, short-term interest rates will no doubt be rising by another quarter percent tomorrow. We’ll all be watching for any hint of a change in the wording of their Statement at 2:15 tomorrow.
There’s a potential 30 billion dollar deal cooking in the oil and natural gas sector. ConocoPhillips is reportedly looking to buy Burlington Resources.
Japanese stocks were up over 2 percent once again overnight, and we’re looking to open with higher prices as well. Adjusted for fair value, S&P futures are up 4, Dow futures are up almost 35, and the Nasdaq futures are now about 6 points above fair value.
December 9, 2005
The University of Michigan goes center stage at 9:45 with their preliminary reading on December Consumer Sentiment. As the impact of the hurricanes fades, it’s expected that that reading will come in around 85, which would be a nice jump from last month’s 81.6.
Intel’s mid-quarter update wasn’t exactly the shot in the arm we were hoping for. Intel narrowed its sales forecast with the midpoint falling a tad lower than analysts had hoped. Gross margins are still in good shape at 63% and year-over year earnings growth is over 9%. But, Intel shares are lower in Europe by 2 percent or so.
IBM was hit with a broker downgrade this morning, based on valuation. And Merck will also be under pressure this morning after an article in the New England Journal of Medicine accused Merck scientists of playing fast and loose with the facts regarding Vioxx. Not exactly great PR when you have 700 lawsuits pending against you.
Stock futures, which were in pretty good shape early this morning, have been on the slide ever since. If the market were to open right now, well, you probably wouldn’t notice. Adjusted for fair value, S&P futures are up a point, Dow futures are flat, and the Nasdaq futures are now about a point and a half below fair value.
December 8, 2005
11,000 should be just another number on the Dow Jones Industrial Average. Nothing special -- no big deal. But every time prices threaten that 11,000 level, the bears seem to take over and push the Dow down into that 10,200 to 10,800 trading range that it seems we’ve been in for about a million years now.
Expect the day to start with another step backward on the heels of some pretty ugly results overseas. The red-hot Japanese market, for instance, took a cold shower to the tune of about 2 percent overnight.
Yes, last quarter was great, but luxury home builder Toll Brothers is now uncertain about fiscal 2007 profits and admits that the real estate market is softening. They beat last quarter’s estimates handily, but said that for 2007 they might “beat or miss” estimates. How’s that for uncertainty?
Texas Instruments and Xilinx with great mid-quarter guidance last night in computer chip-land. Intel will release its mid-quarter report card later today.
The futures are a little improved over the past half hour, but we’re still looking for little red arrows at 9:30. At this point, adjusted for fair value, S&P futures are down 3, Dow futures are down 30, and the Nasdaq futures are now a little less than a point below fair value.
December 7, 2005
There’ll be a new resident at the Renaissance Center next month, or should I say a return resident, as Fritz Henderson will assume the CFO and Vice-Charman positions at General Motors. Henderson has been the head of just about every other big GM unit worldwide over the years, most recently GM-Europe. It’s a return to the Ren Cen because Fritz worked there years ago when he was with Price Waterhouse. Actually he and I worked there together and I can tell you, he’s one sharp individual.
Texas Instruments stock is up almost 65% since January, and after the market closes today they’ll give us a mid-quarter update. We’ll also get the weekly oil inventory numbers at 10:30 this morning. But in the meantime, oil is again floating above 60 bucks per barrel. Light sweet crude has been over 60 bucks every day this week, but hasn’t closed above 60. Should it clear 60, we may see a little more bad news in short order.
Gold is at $516 an ounce this morning. Outside of a slight downtick in the German DAX Index, all major overseas markets are in the green. We’ll likely start off in the yellow this morning. At this point, S&P, Dow and Nasdaq futures are all within a point or so of fair value.
December 6, 2005
For stock traders, it’s all about oil prices and interest rates. Oil prices are down a little this morning, on the news that the East Coast escaped a big winter storm, and a hint as to future interest rates is on the way at 8:30.
Presumably, the Fed will stop raising interest rates when they perceive no threat of inflation. The biggest component of inflation pressure is rising wages. The most beneficial way to avoid inflation yet provide good wages is to increase productivity. The Government’s final reading on third quarter productivity is expected to be revised upward to 4.6 percent. Unit labor costs are expected to have fallen by almost one percent. Anything higher on productivity or lower on unit costs will be good news.
Apple Computer gets a broker upgrade this morning and is likely to open higher.
It’s a split decision overseas, with Asian markets down and European markets up on the order of a half-percent or so. As long as the productivity report behaves itself, we should get off to a stronger start as well. At this point, adjusted for fair value, S&P futures are up about 2, the Dow futures are up 20 and the NASDAQ futures are 4 points above fair value.
December 5, 2005
We’ll see if this is the week that the Dow Jones Industrial Average revisits the 11,000 level. It teased us back in March before falling back. The Dow starts this morning at 10,877.
Just when Johnson & Johnson thought that it had successfully renegotiated the price of Guidant, Boston Scientific is saying, “not so fast.” Boston Scientific is offering 72 bucks in cash and stock for Guidant this morning. That is 14% more than the J&J offer and 16 % higher than Guidant’s Friday close.
The ISM non-manufacturing index is the only scheduled data point of the morning. It’s expected that the services industry expanded at a slower rate in November, but this time of year, that index is pretty volatile and hard to take too seriously. The number that the market will be watching is the final revision to the 3rd quarter productivity numbers. That report comes out tomorrow.
Wal-Mart continues to rack up some serious Holiday sales. They reaffirmed their estimate of this morning for 2 to 4 percent same store sales growth in December.
Japan was up almost another one percent overnight. Most other overseas markets are a little lower as they and our futures have been following oil prices around. Light sweet crude is up over 60 bucks once again, and that has the stock futures pointing a little lower. At this point, adjusted for fair value, S&P futures are down about a point, the Dow futures are down 10 ½ but the NASDAQ futures are a half point above fair value.
December 2, 2005
Like those five dollar coffees? Starbucks’ November same store sales were up another 7 percent, as we just can’t seem to get caffeinated enough.
It’s all about the jobs report this morning. At 8:30 we’ll get the report, and the expectation is that the U.S. economy added 223,000 new non-farm jobs. It’s expected that the unemployment rate held steady at 5 percent. Perhaps more eagerly watched will be the average hourly wage. Last month it spiked up by a half percent. Analysts expect an increase of a far more moderate 2 tenths of a percent in November.
You may not be able to afford a meal at Morton’s, but you will soon be able to buy a share or two of their stock and chew on that. Morton’s, which has 69 restaurants nationwide, announced this morning that they will soon have an IPO on the menu.
Overseas, the screens are all green this morning. We’re up another 2 percent in Japan over night, another one percent in Hong Kong, another half percent or so in European markets. Although our futures have been positive all morning, they were below fair value until an hour or so ago. But in front of the jobs report at 8:30, things are about as flat as flat can be. Adjusted for fair value, S&P futures are down a quarter-point, the Dow futures are flat and the NASDAQ futures are a point and a half below fair value.
December 1, 2005
Retailers and the car companies are reporting November sales today and there’s another wave of economic data coming as well, we could get some twists and turns as the day unfolds. But at least the open should be a turn to the positive after the big blue chips took a tumble yesterday.
The early retail numbers are a mixed bag. Costco reported a 6 percent increase in same store sales. That’s great. Unfortunately, analysts were expecting more like 7.2 percent. American Eagle Outfitters also missed their same store sales target by a bunch. That’s the bad news. The worse news is that there is widespread suspicion that the retailers that hit their sales targets did so by slashing prices. So sales may be great, but profits may be hard to come by.
Speaking of which, car sales in November, spurred by incentives that supposedly weren’t needed anymore, are expected to have gone back up to an annualized rate of 15.7 million units from October’s 14.7.
Personal income and spending data at 8:30 and the November ISM index at 10 may influence the market a bit more than all that. The ISM is expected to decline to a reading of 58.
The Nikkei in Japan closed above 15,000 for the first time in 5 years. Europe is also positive at this hour. Adjusted for fair value, S&P futures are up 5 1/2, the Dow futures are up 57 and the NASDAQ futures are 9 points above fair value.