July 30, 2010
The big Kahuna of economic reports (at least for this week) comes to us at exactly 8:30 this morning. The Government’s first estimate of the nation’s Gross Domestic Product is expected to come in around 2½ percent. Not exactly stellar growth, but comfortably higher than the widely feared double-dip recession.
A little more than an hour later, at 9:45, the Chicago PMI will give us some indication of how business is going in the Midwest region. Expect a slower rate of growth, but growth nevertheless. Anything over 50 indicates growth, and we’re looking for a reading of 56. Last month’s PMI was 59.1.
Then, just before 10 o’clock, the University of Michigan’s final July survey of consumer confidence is expected to be revised up slightly to 67.
This morning, the big conglomerate Fortune Brands reported earnings of 98 cents per share, easily beating the 76 cent estimate on better than expected sales. They also guided higher for the full year. Drug maker Merck beat the 83 cent earnings estimate by 3 cents, but sales were a little light and Merck stock is bid a little lower pre-market.
The major markets overseas are all a bit lower this morning, but not generally by less than one percent. Our futures are pointing lower as well, but that GDP number in about 15 minutes should move us one way or the other. At this point, adjusted for fair value, the S&P 500 futures are down about 6½ points, the Dow futures are down 50, and the NASDAQ futures are about 7½ points below fair value.
The Dow’s four-day winning streak hit a bump in the road yesterday after a weak durable goods report. But today, as they say, is another day and it looks like a bounce-back is in the offing.
The earnings reports continue to dazzle. Matching expected operating earnings this morning were Waste Management and ADP. Leading the better-than-expected parade is ExxonMobil, earning $1.60, which is 14 cents better than expected, although revenue seems to be a bit light. Also beating par were VISA, Beckton Dickenson, Goodrich, Southwest Airlines and Moody’s. Interestingly, Moody’s also said that the worst of the European debt crisis is behind us, but warned that the United States had better start paying some attention to its out-of-control deficits.
Microsoft holds an analyst meeting later on.
Our next order of business will be the weekly jobless claims report at 8:30. Expect another number pretty much in line with the trend of 465,000 new claims for unemployment benefits.
Overseas markets are generally higher, but mostly by less than one percent. Absent a horrible weekly jobless claims number at 8:30, we should recover most of yesterday’s losses shortly after 9:30. At this point, adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 41, and the NASDAQ futures are about 5 points above fair value.
Apparently, the better-than-expected corporate earnings news has become so commonplace that it’s not moving stock prices much. The flood continued this morning, with good reports from Norfolk-Southern, Comcast, Sprint, Wellpoint, Boeing, General Dynamics and Wyndham Worldwide. Of those, Boeing and General Dynamics were a little light on revenue, but earnings still came through better than expected.
Missing the Street estimates this morning were Newmont Mining, earning 77 cents versus the expected 84 and CVS Caremark, with an operating profit of 65 cents, which was a three-cent miss. CVS did, however, ink a 12 year deal with Aetna to administer Aetna’s Pharmacy Benefit Program.
BP will again be in the news today, as people have figured out that even though the Administration negotiated a 20 billion dollar oil spill restoration fund, they evidently forgot to talk about whether or not it would be tax deductible. BP yesterday announced a 5 billion dollar operating profit for the last three months, and estimated that after its oil spill tax-writeoff, U.S. taxpayers will be picking up 10 billion dollars of the tab.
At 8:30, expect the June Durable Goods Report to reflect an increase of one percent. The May number declined six-tenths of a percent.
The Chinese and Japanese markets rose more than 2 percent overnight. Our futures have been drifting slowly north during the past hour. Adjusted for fair value, the S&P 500 futures are higher by almost 2 points, the Dow futures are up 11, although the NASDAQ futures are about 2½ points below fair value.
It was just a month or two ago that BPs CEO Tony Hayward said that he “wanted his life back.” Well, it looks like he’ll get it back, although it’ll be “back in the U.S.S.R.” Mr. Hayward will be exiled to a BP-Russian joint venture and American Bob Dudley will grab the mop and pail back at BP headquarters.
Stocks continued to ride a big wave of better-than-expected earnings news yesterday and there’s likely more where that came from as about a third of the S&P 500 will report this week. Thus far this morning, Dupont reported $1.17 of operating earnings versus the expected 94 cents. They raised future guidance as did Lexmark, after reporting $1.23 per share, crushing the 93 cent estimate.
Cummins, UBS, Lockheed Martin, Dominos Pizza and L3 Communications are all out with better than expected results.
Even the miss of the morning doesn’t appear to be any big deal as Occidental Petroleum earned $1.31, which missed the mark by only 2 cents.
The Reserve Bank of India hiked lending rates by a quarter of a percent to 5¾ percent and lending rates by a half point overnight to percent. That’s the fourth rate hike this year and is designed to cool off rising prices, which have been running at a 10 percent annual increase for five month running.
Chinawas lower overnight, Japan was flat, Europe is higher and we’re heading higher again at 9:30. Adjusted for fair value, the S&P 500 futures are higher by about 4 points, the Dow futures are up 35, and the NASDAQ futures are almost 6 points above fair value.
European markets had their first chance to react to the results of their own “financial stress-test” this morning and it looks like they couldn’t care less. Major markets in Europe have been vacillating in a narrow range around the flat line most of the morning, and our futures have been dancing to the same song.
There are lots of earnings and lots of economic reports on the way this week. Perhaps most interesting economic report will be Friday’s first estimate of 2ndquarter Gross Domestic Product. But for today, there aren’t any major earnings releases on the docket, so the spotlight will shine on the 10 o’clock release of the June New Home Sales Report. Expect 313,000 new sales. That would be a slight increase over last month, when sales fell 33 percent after the expiration of the homebuyer tax credit.
The 3-month LIBOR interest rate has begun to fall once again and is once again below one-half of one percent. That’s good news if you have a LIBOR-indexed Mortgage or loan.
Most Asian markets were higher overnight, Europe has edged a little bit lower.
Adjusted for fair value, the S&P 500 futures are down a point and a half, the Dow futures are down 16, and the NASDAQ futures are 3½ points below fair value.
July 23, 2010
The Europeans will take a page out of the American bank bailout book at noon local time today. The results of a “stress test” on European Banks will be announced. Expect a few banks to fall short. That way regulators won’t be criticized for designing only enough “stress” into the “test” so as to meet the level of “distress” that everybody knows is there. However, many view the test as a way, rightly or wrongly, to assure investors that the system is not threatened with collapse from over-leverage.
The earnings continue to roar this morning, and the reports are good, if not excellent. First and foremost, Ford Motor absolutely crushed expectations, earning and adjusted 68 cents versus the expected 40 cents. That means that profit was an incredible 2.6 billion, which was a cool billion higher than forecast.
Honeywell is also out with a great report. Earnings of 78 cent per share beat the 57 cent estimate.
Verizon shares are also bid higher this morning, on 58 cents per share of profit, which was a two-cent beat. McDonald’s beat by a penny, although McDonald’s shares are looking just about one percent weaker in the pre-market.
Overseas markets are generally higher. We are looking to open just a shade to the upside.
Adjusted for fair value, the S&P 500 futures are up almost a point, the Dow futures are 14 points higher, but the NASDAQ futures are less than a point above fair value.
July 22, 2010
Our old buddy Ben Bernanke came up with a new phrase in his Senate testimony yesterday that sent the stock market due south. In what was a rare moment of candor from an economist, Bernanke described the economic outlook as “unusually uncertain.” That, supposedly contrasts with the “usual uncertainty” or perhaps “unusual certainty” or as any stockbroker would have you believe, the “usual certainty” in predicting the economy. Whatever, the Dow Jones Industrials certainly dropped over 100 points on those remarks, although it looks like we’ll get a good bit of that back this morning.
Earnings reports are out all over the place this morning, and outside of Travelers, which reported weaker than expected results due to an unusual number of hailstorms in the Midwest, the reports are just about all better than expected.
Eli Lilly, 3M, Caterpillar, AT&T, Autonation, Qualcomm and UPS all beat estimates, most on better than expected sales.
Weekly Jobless Claims are due in 15 minutes. Expect 450,000 new claims. Ben Bernanke is in the House, of Representatives, that is, starting at 9:30.
Asia was mixed overnight, but Europe, on a 3.8% rise in May industrial orders is higher. We’re headed in that direction, as well.
Adjusted for fair value, the S&P 500 futures are up almost 9 points, the Dow futures are 65 points higher, the NASDAQ futures are about 16 points above fair value.
Stock prices took an impressive U-turn late in the day yesterday as traders decided that even though corporate earnings weren’t absolutely blowing the doors off, they were not pointing toward Armageddon, either.
After the close of trading yesterday, Apple released their iresults, and they made a lot of imoney. On the strength of iphones and ipads and, well, they should just start calling them iMacintoshes, Apple earned $3.51 last quarter, absolutely crushing the iestimate of $3.11.
In fact, every major company reporting earnings this morning has reported better than expected results. That group includes United Technologies, Stanley Black & Decker, US Bancorp, Coca-Cola, Wells Fargo, Morgan Stanley and Blackrock.
This afternoon Ben Bernanke will start his Humphrey-Hawkins visit to Capitol Hill with an appearance before the Senate Banking Committee. Given all the angst about a potential double-dip recession, expect a lot of questions about what, if any tools the Fed has left to continue to sugar-coat things.
Japan was a little lower overnight, but other major overseas markets are higher. We should tack on some additional gains at 9:30 as well.
Adjusted for fair value, the S&P 500 futures are up almost 5 points, the Dow futures are 26 points higher, and on the strength of the Apple results, the NASDAQ futures are about 16 points above fair value.
It’s going to be rough going early on for stocks today, although the major averages will likely be hurt much more than the average stock in your portfolio. The downdraft started with IBM’s earnings report yesterday afternoon, which was kind of like getting an A minus on your report card, when your parents were expecting nothing less than an a plus. IBM beat on earnings and raised estimates. However, revenue fell short of estimates, mainly due to foreign exchange. No matter, IBM, which makes up almost 10 percent of the Dow Jones Industrial Average, will get hit this morning.
Other major earnings reports have either met or exceeded estimates this morning, but it looks like traders wanted even more. Johnson & Johnson matched estimates as did State Street Bank.
Texas Instruments, United Airlines, Pepsico, Harley-Davidson, Goldman Sachs and Biogen IDEC all reported higher profits than expected.
Japan lost about one percent overnight, but other Asian markets rose overnight. Europe is lower, as we will be shortly.
Unfortunately, our futures are even worse than they appear at first glance and they’re at just about their worst levels of the morning. After you adjust for fair value, the S&P 500 futures are down 16 points and Dow futures are down 147, and the NASDAQ futures are about 29 points below fair value.
July 19, 2010
There will be no shortage of numbers flying around this week as about a quarter of the S&P 500 companies will report earnings for the quarter gone by. So far, 75 percent of the companies reporting have beaten estimates. However, revenue growth has been a bit anemic, which may not portend well for the future.
So far this morning, Halliburton reported earnings of 52 cents per share, which is significantly higher than the 37 cent estimate. Halliburton stock is bid about 2 percent higher pre-market.
Motorola shares are bid about 5 percent higher this morning as they reportedly near a deal to sell their wireless network assets.
IBM reports 2ndquarter numbers after 4 o’clock today. Expect $2.58 cents in operating earnings, which would be about 11 percent higher than a year ago.
Japanese stocks did not trade overnight. Other Asian markets turned in mixed results, although the Chinese market closed higher. Europe is very modestly higher at this hour, and we might get some of Friday’s losses back at 9:30, although our futures are a good bit lower than their best levels of the morning and have fallen quite a bit just during the past fifteen minutes.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 4 points and Dow futures are up 34, and the NASDAQ futures are a little less than 2 points above fair value.
A late rally saved the markets from a big downer yesterday. Word of Goldman Sachs’ settlement with the SEC and the apparent success of BP’s oil leak cap brought us all the way back to even from near triple digit losses on the Dow.
This morning, the oil well may be capped, but earnings reports continue to flow. General Electric reported earnings of 30 cents per share, versus the expected 27 cents and Bank of America beat a 22 cents estimate by a nickel. BOA shares are indicated more than 4 percent lower as revenue was a little light. Of course, with all the bank earnings reports, the devil is in the details.
Speaking of which, it looks like we have a financial reform bill for President Obama to sign. It calls for regulators to write more than 300 new regulations. So, if you’re a lobbyist, you may have to cancel your summer vacation. Plenty of business out there. Estimates are that the new bill may cost the big banks somewhere between 5 to 10 percent of their return on equity. Of course, you know who will be paying that cost over time. Get ready for a host of new banking fees and costs.
At 8:30 the June Consumer Price Index is expected to decrease a tenth of a percent. Perhaps more importantly, just before 10 o’clock, the University of Michigan will release their first read on July Consumer Sentiment. Expect a two-point decline to a reading of 74.
Overseas markets are mixed, but our futures have turned lower.
At this point, adjusted for fair value, the S&P 500 futures are down 3½ points, the Dow futures are down 33, and the NASDAQ futures are about 3½ points below fair value.
The “Courtney Effect” continued yesterday, as the Dow Industrials rose for the seventh consecutive trading session, and it looks like a solid report from JP Morgan Chase will give prices another little boost this morning.
Income of $1.09 per share amounted to a 76 percent increase from last year and the stock looks to open about one percent higher.
Here in Michigan, Wolverine Worldwide reported 39 cents per share in earnings. That was 6 cents above estimates. In the suddenly-hot technology space, Fairchild Semiconductor almost doubled profit estimates, earning 34 cents versus the expected 18 cents.
There’s one private equity deal this morning – and we haven’t seen many of these lately. Carlyle Group is buying NBTY – that’s a maker of food supplements, for 55 dollars per share in cash. That’s a 57 percent premium to yesterday’s closing price.
Asian markets were lower overnight, with China actually off about 2 percent after a report was released that indicated further slowing in the rate of Chinese economic growth. European markets, however, are now slightly positive after treading water most of the morning. Our futures ticked higher after J.P. Morgan’s report earlier this morning.
At this point, adjusted for fair value, the S&P 500 futures are higher by more than 5 points and Dow futures are up 33, and the NASDAQ futures, as we look forward to Google’s report later today, are about 7 points above fair value.
Yesterday gave us another strong advance as stock prices on optimism about second-quarter earnings reports. After the close of trading yesterday, Intel held up its part of the bargain on that score, reporting operating income of 51 cents. That was a full 8 cents per share above estimates on strong profit margins. Intel also raised guidance for the remainder of the year. They are looking to continue a 67 percent gross margin, and the stock looks to rise over a dollar per share this morning.
Today will be a little bit of a calm before an earnings storm later this week. We will hear from Marriott and a handful of other firms.
At 8:30 this morning, the June Retail sales report is expected to reflect a three-tenths of a percent decline. At 2 o’clock this afternoon, the Fed will release the minute from the last Open Market Committee meeting, which could be – but are not likely to be very interesting.
Asian markets were mainly higher overnight after our rally, but Europe is more of a mixed picture this morning.
Although our futures look pretty good on their >
At this point, after you adjust for fair value, S&P 500 and Dow futures are pretty much flat, but the NASDAQ futures, on the strength of the Intel results, are about 11 points above fair value.
July 13, 2010
Much of May’s stock market swoon seems a distant memory as the market starts this morning riding a five day winning streak. The second quarter earnings season kicked off yesterday in fine >
Alcoa reported 13 cents per share of operating earnings, which beat estimates by 2 cents per share, and projected higher aluminum demand.
CSX’s revenue is up 22 percent from 2009, and net income last quarter was 10% higher than expected. Railroad traffic can be a pretty good harbinger of overall economic activity, so that report is particularly good news. Weyerhauser stock is indicated about 10 percent higher this morning, on upbeat housing projections.
BMW shares are 6 percent higher in Germany this morning, as they expect 2010 sales to be about 8 percent higher than expected.
On the downside this morning, the National federation of Independent Businesses Index of small-business sentiment was down 3 percent. Seventy percent of that decline is reportedly due to small-business owners’ pessimism about demand for the remainder of the year.
Intel’s results come just after the close at 4 o’clock today. Asia was mixed overnight, but mostly lower. Europe is one to two percent higher, and that’ll be our direction at 9:30.
At this point, adjusted S&P 500 futures are up 11 points and the Dow futures are up about 85, and the NASDAQ futures are almost 16 points above fair value.
This is probably the quietest week of the year for economic reports. But at 8:30 this morning, the weekly jobless claims report could have some market impact. The consensus estimate is that 465,000 new jobless claims were filed last week. That’s almost exactly the same as the four week trailing average.
Big retailers are reporting same store sales this morning. The star of the show so far appears to be Limited Brands, with sales up 6 percent versus the expected 3.2. Abercrombie and Macy’s were also a better than expected. American Eagle, Target and Gap checked in with lower than expected June numbers.
The European Central Bank held short-term interest rates steady at 1 percent this morning.
Overseas markets rose on the heels of our 3 percent rally yesterday.
And while this morning’s stock futures look a little lower on their >
By the way, to follow up on our discussion on a week ago regarding the initial public offering of the shares of Tesla Motors – You may remember that the IPO was expected to price between 14 and 16 bucks. It went to the friends and family at 17. The first public trade was at 19. It briefly touched 30 bucks per share last week. It closed last night at just over 16 dollars. In other words, more than a 15% loss from its first public price from last Thursday. Careful with those IPOs, people.
Regardless of what the federal government is up to, the consumer apparently continues to deleverage. Delinquencies on credit card balances fell to an 8 year low last month.
Family Dollar Stores issued earnings this morning of 77 cents per share. That was a penny better than expected.
ConocoPhillips with a broker upgrade this morning, Google suffering a downgrade. There is a report out that Microsoft may be planning a small number of layoffs.
Overseas markets are mainly lower this morning.
Our futures have improved over the past couple hours, but are still indicating slightly lower prices at 9:30. Right now, adjusted for fair value, the S&P 500 futures are down almost 4 points, the Dow futures are down 37, and NASDAQ futures are 2½ points below fair value.
It will be a short week for stock trading and an extremely light week for economic and earnings news. That will all change with the start of second quarter earnings season next week. But for now, we’ll enjoy a little peace and quiet.
Overnight the Central Bank of Australia decided that they’ve down enough to restrain inflation for now. They held Australian short term interest rates steady at 4½ percent. Remember 4½ short term rates? That was about 4½ percent ago around these parts.
Stock of BP will hold some interest today. Since last Thursday’s close, BP stock is 14 percent higher in London, on speculation that BP may soon attract some middle-Eastern investment cash or perhaps a full-blown takeover bid. This morning, Royal Bank of Scotland upgraded their rating on BP shares to “buy” from “hold.”
The ISM index of the state of the services sector in June is expected to report a slight decline in the rate of its recovery.
Overseas stock markets were all in the green overnight and this morning. We’ll start on the upside as well. For now, adjusted for fair value, the S&P 500 futures are higher by almost 7 points, the Dow futures are up about 75, and NASDAQ futures 21 points above fair value.
July 2, 2010
The big news of the morning, the week and possibly the month will be the Labor Department’s May Employment Report. The good news may be that no one is expecting any particularly good news.
In April, almost all of the 431,000 new jobs added were temporary census jobs. Estimates for June for overall employment level range from no new jobs to a decline of 200,000. The consensus is an overall loss of 110,000 jobs, but included in that number could be an increase of about 100,000 in the private-sector. Those private sector jobs, after all, are the jobs that really count. Unless, of course, we can all just work for the government. So it could be that even a lousy report could be well received. That being said, the futures are still reflecting a lack of buyers ahead of the report and a long holiday weekend.
The report, as always, is due at 8:30. The overall Unemployment Rate is expected to tick up to 9.8 percent.
Gold is down another 2 bucks after getting whacked yesterday.
Overseas markets are a little bit higher, but only a little bit as everyone appears to be looking to the Jobs Report for some insight as to the future of our economy.
Our stock futures will be in wait-and-see mode for the next 8 minutes. Then, we shall see. For now, the S&P, Dow and NASDAQ futures are all within a point or so of fair value.
There are no fewer than seven economic reports of one type or another coming our way today, ranging from the June Car Sales numbers, to June Construction Spending, to the weekly Jobless Claims, to the June ISM Index.
The most interesting float thus far in that parade was the Challenger survey of Job Cut announcements. Announced job cuts were below 40,000 for the third month in a row, down 47% from a year ago. In fact for the first six months, layoff announcements were the lowest in a decade. Of course, some might observe that there’s no one left to get rid of. But, we’ll take any good news we can get.
France and Spain both held debt auctions this morning, and they went relatively well, in spite of a downgrade from Moody’s of 5 different Spanish regions.
Tim Geithner speaks before the Senate Foreign Relations Committee starting at 10 o’clock. Former Federal Reserve Chairman Greenspan spoke for a full hour on cable television this morning, and was surprisingly understandable. Interestingly, the longer he spoke, the lower our futures drifted.
It’s the first day of the third quarter. Following the market’s 10 percent loss in the second quarter, at this point, we might slip a little further at 9:30. Adjusted for fair value, the S&P 500 futures are down about 4 points, the Dow futures are down 30, and the NASDAQ futures are more than 8 points below fair value.
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