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WJR June 2009 Reports

WJR June 2009 Reports

 

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June 30, 2009
 
Looking forward to a great halftime show tonight, as today marks the end of the second quarter. It’s been a pretty good one for those who didn’t panic out of the stock market in March.  Going into today, the Dow Jones 30 Industrials are up 12% for the quarter, the S&P 500 is up 16% and the NASDAQ and the Russell 5000 are 20% higher.
 
Johnson & Johnson is booking a nearly 1.7 billion dollar receivable this morning.  Abbott Labs has been ordered to cut that check due to a patent violation on an arthritis drug.
 
We have upgrades this morning for FedEx, Amazon and Marathon.  Downgrades are in for Southern, Sunoco and Tesoro.
 
AT 10 o’clock, May Construction Spending and the June ISM Index will arrive.  Look for the ISM to rise to 44.5 from 42.8.  That’s still south of the breakeven rate of 50.  However, it would reflect a slower rate of economic contraction.
 
With no big economic reports on the docket prior to 9:30, were looking at no significant movement in stock prices at the open. While the futures look higher on the sur>. 
 
June 29, 2009
 
It’s a short week of trading on the way and we’ll kick it off with “Ponzi-scheme” Monday.  It’s sentencing day for 71 year old Bernie Madoff, who will be getting somewhere between 12 and a million years in prison.  And in the arrested, but not yet convicted category, Allen Stanford will find out if he in line for a get-out-of-jail-for-now card pending his trial on charges of financial fraud.
 
It’s also the last day of the current term of the Supreme Court.  We’ll find out if New York authorities are allowed to investigate mortgage lending activities at national banks.
 
Speaking of activities at big banks, a Swiss media report this morning claims that the U.S. government may be ready to settle a suit against UBS that may cost UBS as much as 4.6 billion dollars.  That’s on top of the 780 million that UBS has already agreed to pay with regard to clients who have been a little more secretive about their Swiss accounts than the law allows.
 
Employment consultants Towers Perrin and Watson Wyatt announced a merger yesterday.  The companies are, of course, citing “synergies.” Employees call “synergies” by a different name – that being “jobs cut.” Wonder if they’ll have to hire another employment consultant to help them with that.
We should get the short week off to a slightly higher start. At this point, adjusted for fair value, the S&P 500 futures are up about almost 3 points, the Dow futures are up 25, and the NASDAQ futures are about 5 points above fair value. 
 
June 26, 2009
 
It looks as if we may have a relatively quiet day shaping up, although we will see some early excitement stemming from the earnings report from Palm last night.  It’s not that Palm is making money – it’s just losing less than everybody thought.  On an operating basis, Palm lost 40 cents per share versus the expected 62 cents. More importantly, Palm made positive comments about demand for the new Pre smartphone, which was launched after the reporting quarter ended.  Palm shares are about 14% higher pre-market.
 
May Personal Income and Consumption data are due out at 8:30.  Both are expected to have risen three-tenths of a percent. Later this morning the University of Michigan’s first read on June Consumer Sentiment is expected to match May’s reading of 69.
 
Dallas fed President Fisher is out on the stump today talking about the economy.  Outside of that, we may see some traders heading for the shore a bit early this afternoon.
 
At this point, adjusted for fair value, the S&P 500 futures are down a little less than 2 points, the Dow futures are down 23, and the NASDAQ futures are a little less than 7 points below fair value. 
 
June 25, 2009
 
The weekly jobless claims report will likely set the early tone for trading today.  That report comes in about 10 minutes.
 
Some good news for taxpayers, not that this will lead to lower taxes, mind you.  AIG has received approval to spin off two international insurance divisions.  If all goes as planned, the Government will receive about 25 billion of the proceeds from those stock offerings.
 
This morning, Hertz changed earnings guidance for the current year.  Analysts had been projecting a loss for the company.  However, car rentals have firmed, summer reservations are on the rise and Hertz now projects an annual profit. Hertz shares are about 10 percent higher in the pre-market.
 
On the famous other hand, Nike’s earnings beat earnings estimates last night.  Unfortunately, the outlook wasn’t much of a slam dunk and Nike shares may be slipping a bit at 9:30.
 
General Motors goes to court today for permission to draw down on the Government-provided bankruptcy financing and big daddy Ben Bernanke will testify about the role he might have played in last fall’s shotgun wedding of Merrill Lynch and Bank of America.
 
Asian market rose nicely overnight.   Europe is a bit lower.  We’ll wait on the jobless claims for direction.  At this point, adjusted for fair value, the S&P 500 futures are up less than a point, the Dow futures are up 8, and the NASDAQ futures, after a big NASDAQ rally yesterday, are now about 4 points above fair value. 
 
June 24, 2009
 
Stock prices may well tread water until the Fed Open Market Committee announcement at 2:15 this afternoon.  No one expects much change in Fed Policy, which features close to zero percent short term interest rates and plenty of dollars for beleaguered financial institutions.
The long-term worry, of course, is hyper-inflation.  But for hyper-inflation, you first need hyper-demand – and that seems to be a long way off.
 
At least we’re finding out what some of those beleaguered financial institutions are doing with their money, instead of paying those large bonuses that many say led to many of their problems.  Word this morning is that Citigroup may be raising employee salaries by as much as 50 percent and issuing millions of shares of stock options to those employees, who may lose their bonus, but may not be losing any income.
 
At 8:30, May Durable Goods are expected to have declined eight-tenths of one percent.  We’ll also hear about May New Home sales, but traders will still be most interested in what happens at 2:15.
 
Lots of small green arrows overseas, and we should start a little to the upside as well.  At this point, adjusted for fair value, the S&P 500 futures are up 4 points, the Dow futures are up 27, and the NASDAQ futures are now a little more than 5 points above fair value. 
 
June 23, 2009
 
The Fed’s Open Market Committee starts a two-day meeting today which should feature a whole lot of talking and absolutely no action.  Everybody understands that the Government can’t run the dollar printing press 24/7/365 forever without risking serious inflation.  However, that inflation threat still seems a long way off given the severity of the economic slump.
 
The May data on existing home sales is due out at 10 o’clock.  Expect a rise to an annualized rate of 4.82 million from April’s 4.68 million.
 
Broker upgrades are out this morning for Motorola and FedEx.  However, UBS downgraded the entire U.S. airline sector.
 
Kroger is due to report earnings today and after the close of trading Oracle reports.  Oracle, which actually started paying a dividend this quarter (they are apparently running out of acquisition targets) is expected to report a 44 cent per share operating profit.
 
Yesterday was the worst day for stock prices in a couple of months, but the futures have been bubbling higher over the past half hour, and we’re looking for some reasonable gains at 9:30.
 
Adjusted for fair value, the S&P 500 futures are up 4½ points, the Dow futures are up 37, and the NASDAQ futures are now about 6 points above fair value. 
 
June 22, 2009
 
We’re heading into the last full week of the calendar quarter.  That’s normally would put us on watch for earnings warnings from companies that aren’t going to hit their targets for the quarter.  However, with fewer companies offering quarterly guidance, and those that are floating numbers floating easily beatable numbers, we may not be hearing much.
 
We will hear from Mary Shapiro, the head of the SEC, who will testify to the Senate Banking Committee regarding derivatives this morning.
 
Apple shares will be interesting to watch today.  Word is out the Steve Jobs received a liver transplant a couple of months ago and is on track to return to Apple within the next week or two.
 
Asian markets rose overnight, but Europe is seeing red at this point, and we’re likely to lose more ground at 9:30.
 
Adjusted for fair value, the S&P 500 futures are down 9½ points, the Dow futures are down 71, and the NASDAQ futures are particularly weak, perhaps on the Steve Jobs story, now about 19½ points below fair value. 
 
June 19, 2009
 
It’s quadruple witching Friday as options, futures, options on futures – all kinds of wonderful stuff - expires.  Many times in the past, that has contributed to volatility in stock prices. However, we may have seen a lot of that volatility earlier this week.
 
Research in Motion, the Blackberry maker, reported better than expected earnings.  However, the stock is indicated slightly lower on worries that new competition for the latest iphone and the Palm Pre may be a future hang-up.
 
Microsoft and Kroger were both upgraded at Goldman Sachs this morning.  E-Trade announced that they will sell up to 500,000,000 shares at $1.10  each to help shore up the balance sheet.
 
Light sweet crude is again bumping up to the top of its recent range, right around $72.15 per barrel.
 
Overseas market showed a little life overnight after our gains from yesterday.  Our futures have been positive all morning, but have been a bit more volatile than normal.
 
Adjusted for fair value, the S&P 500 futures are up almost a point, the Dow futures are up 41, and the NASDAQ futures are about 8 points above fair value. 
 
June 18, 2009
 
There are a couple of economic reports coming at 10 o’clock this morning that could give us some direction.  Both are expected to show some improvement, but not exactly what you might term as “economic strength.”
 
The May Leading Economic Indicators are expected to have risen about one percent.  The June Philadelphia Fed Index, which is a measure of regional economic activity, is expected to improve for a negative 22.6 to a negative 17.4.
 
Earnings are coming from Research in Motion, Discover Financial and Smucker.  And a little later on, Treasury Secretary Geithner will testify in Washington about regulatory reform.  Yesterday’s reform proposals from the Administration were received about as well as could be expected.  Everyone knows that more regulation is coming, the hope being that the changes are effective, without being overly restrictive.
 
Chinese stocks rose overnight, but most overseas markets are a bit lower. Our futures have bounced around a lot this morning, swinging form a little bit lower to a little bit higher and back again.  Right now, we’re looking for a little bit lower open. Adjusted for fair value, the S&P 500 futures are down about 2 points, the Dow futures are down 12, although the NASDAQ futures are about 8 points below fair value. 
 
June 17, 2009
 
The futures were picking up steam throughout the morning.  That was, until FedEx announced earnings at 7:30.  Last quarter, FedEx beat estimates for operating profit, making 64 cents per share versus the expected 51 cents.  However you can credit downsizing and other cost cutting for that, as revenue missed estimates by about 6 percent.  Things may get worse before they get better.  FedEx now projects this quarter’s profit at 37 cents, versus analyst estimates of 68 cents.
 
The 8:30 we’ll get the other side of the inflation story.  Yesterday’s tame Producer Price Index was good news.  We’ll find out in ten minutes how much inflation crept into consumer prices in May.  Expect a three-tenths of a percent increase.
 
The White House will officially propose wide-ranging changes to financial regulation today, which will give everybody in Washington something to argue about for the rest of the summer, as if health-care reform wasn’t enough.
 
Ben Bernanke and Sheila Bair speak this morning.  Morgan Stanley reports earnings later on. 
 
In the meantime, the FedEx warning has the blue-chip futures on the slide. At this point, adjusted for fair value, the S&P 500 futures are down almost 3 points, the Dow futures are down 20, although the NASDAQ futures are about 2 points above fair value. 
 
June 16, 2009
 
A little stream earnings news and a flood of economic reports should set the early direction of stock prices after a pretty miserable day yesterday.
 
Best Buy reported 42 cents of operating earnings, which is 8 cents above estimates. However, same store sales declined in the first quarter and they are not raising their full-year guidance, even after the strong 1st quarter.  That has the stock off more than 4 percent in the pre-market.  Adobe Systems will report earnings just after 4 pm.
 
Amgen and IBM both on the receiving end of broker upgrades this morning.
 
At 8:30, we’ll find out about May Housing Starts.  Expect an annualized rate of 485,000, which would be an improvement from April’s 458,000.  Also on the way is the May Producer Price Index, and if you’re concerned about inflation, put your worry cap on.  Expect a six-tenths of a percent increase, which would double the April number.
 
Asian markets were lower overnight, but Europe has turned slightly higher and pending the 8:30 economic news, we should start slightly higher as well.
 
At this point, adjusted for fair value, the S&P 500 futures are up almost 2 points, the Dow futures are up 24, and the NASDAQ futures are about 4½ points above fair value. 
 
June 15, 2009
 
Stock prices have now risen twelve out of the last fourteen weeks. But, we’ll take a little back-step at the open today.
 
The Wall Street Journal online reports this morning that the Obama Administration is about to float a plan to overhaul the entire financial regulatory system, including how to break up the problem children that become “too big too fail,” and how to regulate financial derivatives.
 
The dollar is doing better this morning, after some positive comments from G-8 finance ministers over the weekend.  That, in turn has oil down about a buck per barrel.
 
Lazy Boy, Goldman Sachs and Cintas all report earnings today. However, the most important economic reports will come mid-week.
 
Walmart stock looks a little lower after a broker downgrade.
 
Major overseas markets are all lower, generally on the order of 1 to 2 percent.
 
At this point, adjusted for fair value, the S&P 500 futures are down 12½ points, the Dow futures down about 95, and the NASDAQ futures are more than 17 points below fair value. 
 
June 4, 2009
 
The big economic report of the week comes tomorrow morning, with the May Unemployment data, but the weekly numbers on new claims will be announced at 8:30 this morning, and are expected to be pretty close to last week’s 623,000.  Of course, recent goings-on in the automotive industry will not help lower that level any time soon.
 
Costco reported that same store sales fell 7 percent last month, which is a little bit worse that the expected 6.4 percent.  Meanwhile, the 800 pound gorilla keeps eating.  Walmart announced that they will open 125 new or expanded stores this year and hire 22,000 people to staff them.  They did not issue May sales data, however, as they now report that data only once per quarter.
 
As expected, the Bank of England and the European Central Banks left short term interest rates unchanged this morning.
 
Asian markets were lower overnight.  Europe is mixed.  Our futures took a turn for the worse during the past half hour, as an early rally evaporated.  It looks like at new claims report at 8:30 will give us our direction at 9:30. At this point, adjusted for fair value, the S&P 500 futures are up a point and a half, the Dow futures up 14, and the NASDAQ futures are only about a point above fair value. 
 
June 3, 2009
 
The recent 40% run-up in stock prices has been a breath of fresh air for investors, but the air may be getting a little stale, as interest rates continue to rise.
 
The impact of those rising rates is front and center in the latest weekly data released by the Mortgage Bankers Association.  Mortgage applications fell 16 percent last week, as homeowners’ rush to refinance came to a flying stop.  Home purchase applications were up about 4 percent, with foreclosure sales helping out there.
 
Fed Chairman Bernanke testifies to Congress a little later on and at 10 o’clock the April Factory Order Report is expected to rise eight-tenths of a percent, after a nine-tenths of a percent decline in March.
 
The ADP Employment Report was released about 30 seconds ago and estimates that 532,000 jobs were lost in May.  The official Labor Department figures will be announced on Friday.
 
Asian market rose overnight, but Europe is lower.  Our futures are a little better than they were earlier this morning, but we’re still looking at lower prices at the open.  At this point, adjusted for fair value, the S&P 500 futures are down 6, the Dow futures down 46, and the NASDAQ futures are about 4½ points below fair value. 
 
June 2, 2009
 
It’s been flying a little under the radar, given all the bankruptcy news of the past few weeks, but very quietly, the price of oil is up about 12 percent over that last six trading sessions.  We’ll find out tomorrow if inventories have dropped again.  If so, we could see 70 bucks by the end of the week.  Oil is down to 67.79 after hitting 68.58 earlier this morning.
 
American Express, JP Morgan Chase and Morgan Stanley are all taking steps to repay TARP funds.  Chase is offering 5 billion in new stock, Morgan Stanley 2.2 billion, and Amex 500 million of new shares.
 
In Great Britain, shares of Barclay’s bank were down about 13 percent earlier today as Abu Dhabi’s International Petroleum Investment Company will sell 7 billion dollars worth of convertible notes that it bought to help Barclay’s avoid a government bailout.  That sale should realize about a 50 percent profit.
 
There’s nothing big on the schedule for economic or earnings reports today. Stocks in Hong Kong were lower overnight, European markets are mixed.
 
It’s another one of those funny mornings when the futures have looked higher, but adjusted for fair value, they’ve been slightly lower all morning. At this point, adjusted for fair value, the S&P 500 futures are 3, the Dow futures down 40, and the NASDAQ futures are about 7 points below fair value. 
 
June 1, 2009
 
We’ve known for a while that this day was coming, as GM headed into Bankruptcy Court protection this morning.  That means of course, that the stock market has already digested the bad news and will likely move higher at 9:30.
 
Chrysler, on the other hand, may exit Chapter 11 as early as today. Judge Gonzales dismissed the remaining protests last night, clearing the way for Fiat to buy Chrysler assets.  The sooner they can get Chrysler plants up and running, the better.
 
At 8:30 we’ll get reports on April Personal Income and Expenditures, which are both expected to decline about two tenths of a percent.  That’s comparable to the March decline.  At 10 o’clock, April Construction spending and May ISM Index are due.  That ISM number, which is a measure of business activity, is expected to improve to 42, which would be a slower rate of contraction than we saw in April.
 
Hong Kong stocks up 4 percent overnight.  Major European markets are higher on the order of 1 to 2 percent.  Our futures have been solidly higher all morning.
 
At this point, adjusted for fair value, the S&P 500 futures are up almost 14 points, the Dow futures up 90, and the NASDAQ futures are about 12 points above fair value. 

WJR July 2009 Reports
WJR May 2009 Reports

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