On Sunday, Italy and Spain will meet to decide the Euro 2012 Soccer Championship. I don’t know who is favored, but it’s my understanding that if one country falls behind in the match, they’ll be allowed to stop running and just apply for a bailout.
Markets overseas and our stock futures took off like a bottle rocket this morning. A marathon session of European leaders has supposedly led to an agreement that will allow the European Stability Mechanism to bailout European banks directly, and set the stage for what may become the European equivalent of the Federal Reserve Bank. Notice that I didn’t say anything there an austerity requirement in the profligate countries. Notice also that I used the word “supposedly.” The devil is always in the details and we HAVE NO details. However, someone should check Angela Merkel’s pulse. Less than a week ago, she declared that Germany wouldn’t agree to something like this “while she was still alive.”
Anyway, back to facts and not rumors. Ford Motor said last night that the U. S. business is fine, but European losses will take a toll for the rest of the year. Ford stock has rebounded a bit from overnight losses, but is still indicated about one percent lower this morning. And Blackberry maker Research in Motion shares are indicated about 16 percent lower after announcing another delay in their next generation phone.Chicago PMI at 9:45 and the University of Michigan’s final read on June Sentiment at 9:55. Little change is expected in each, but it’s risk-on as we head toward 9:30. At this point, adjusted for fair value, the S&P futures are higher by 19 points, the Dow futures are up 138, and the NASDAQ futures are about 36 points above fair value.
June 28, 2012
Don’t look now, but we have only two trading days left in the second quarter of the year, and although we’ve heard a couple of cautionary projections about full year earnings, warnings season has once again passed without a lot of concern. That’s good for corporate earnings. Of course, on a daily basis, those things don’t really matter – it’s all about Europe once again.
Another meeting of EU leaders gets going today, with Germany again reiterating that they won’t be the lender of last resort, at least not until the current leaders get re-elected.
If you’re sick of not earning anything on your certificates of deposit, perhaps a trip to Rome is in order. Italian 6 month debt auctioned at an interest rate of 2.96% today. That’s about equal to the rate on 10 year debt in the Czech Republic and is more than a quarter point higher than 30 year debt in the U.S.
Weekly jobless claims and the final reading on first quarter GDP are coming at 8:30. Little change expected in either. News Corp will split into two companies soon and the Supreme Court may split Obamacare into legal and illegal sections this morning at 10:15.
In the meantime, stocks will open lower. Our futures are just about at their lows of the morning. At this point, adjusted for fair value, the S&P futures are pointing lower by about 8 points, the Dow futures are down 83, and the NASDAQ futures are about 15 points below fair value.
June 27, 2012
Home builder stocks will be interesting to watch this morning. They had a great day yesterday on a couple of bits of news. First of all, word is that the Chinese Development Bank is looking to put 1.7 billion or so into building homes in the U.S. through home builder Lennar. Also, the Case-Shiller home price index released yesterday reflected Increasing home process is 19 of 20 American cities. That 20thcity is, of course, Detroit, where prices declined 3.6 percent, but we won’t mention that.
Lennar, for its own part, reported 21 cents of quarterly earnings this morning, which was 4 cents better than estimates. Monsanto also beat estimates for the quarter, but guided slightly lower for the year.
In just about 15 minutes, we’ll get the May Durable Goods Report. Expect one-half of one percent increase overall, and a full one percent increase ex-transportation. That would be a nice improvement from April’s flat performance.
Mainland Chinese stocks were a little lower overnight, but most other markets overseas are a little higher. Our futures have been improving slowly over the past couple of hours. At this point, adjusted for fair value, the S&P futures are higher by about 5 points, the Dow futures are up 38, and the NASDAQ futures are about 9 points above fair value.
June 26, 2012
As has become the norm at this hour of the day, we’re looking to Europe for some early direction. Earlier this morning, European markets rose nicely on the news of a surprisingly strong survey on German Consumer Sentiment. However, a lot of that early enthusiasm has faded, both in European markets and in our futures.
It was the July GfK survey in Germany that rose to 5.8 versus the June reading of 5.7. It had been expected to decline.
We’ll get our own look at Consumer Sentiment from the Conference Board at 10 o’clock. Expect the June survey to check in at 63.5, which would be a slight decline from April’s 64.9.
Coca Cola sees something it likes in India. Coke will invest 3 billion dollars to gain share in the non-alcoholic drink market in India over the next 8 years. At Deutsche Bank sees something it likes in AutoZone. They’ve upgraded the stock from a hold to a buy.
Overseas markets are a mixed picture and are really not much changed from the prior day’s close. At this point, adjusted for fair value, the S&P futures are up less than a point, the Dow futures are up 16 and the NASDAQ futures are about 4 points above fair value.
June 25, 2012
We’re looking for the financial equivalent of Justin Verlander. We need a stopper. Unfortunately, there’s no joy in Europeville so far this morning. Yes, the leaders of the Euro nations will be meeting AGAIN this week to attempt to form some sort of economic union. Unfortunately, word is that Greece’s Prime Minister and Finance Minister will not attend the meeting due to illness of some sort. Perhaps they’re just sick of their own financial situation, but that’s just a layman’s diagnosis.
Closer to home, it is the last week of the first half of the year. So be on the lookout for those nasty little earnings warnings. We haven’t seen many of those in recent quarters, but ant uptick may be a proverbial canary in the coal mine of corporate earnings growth
At 10 o’clock we’ll get the May New Home Sales number. Expect a 3,000 unit increase to April’s annualized rate of 343,000. And of course, medical stocks will >
Except for a minimal gain in New Zealand, we have red arrows across the board in international markets, and we’ll take a dip in the red sea as well at 9:30. At this point, adjusted for fair value, the S&P futures are down about 12 points, the Dow futures are down about 79, and the NASDAQ futures are about 20 points below fair value.
The good news this morning is that the rumor mill’s bad news yesterday turned out to be not as bad as expected. Stock prices spiraled downward yesterday, in part due to a rumor that Moody’s would downgrade some big banks by as much as three notches. Well, they did downgrade 15 big banks, but the worst off of the bunch, Morgan Stanley, only suffering a two-notch downgrade. That is giving us a little relief rally this morning – but not very much.
Also this morning, Darden Restaurants announced a 16% dividend increase to 50 cents per share. Philip Morris and Ryder Systems evidently see smoke on the road ahead. Both lowered earnings guidance for the 2012 year. On the famous other hand, ConAgra raised full year guidance slightly.
Electronic Arts suffered a downgrade this morning. But Monster Beverage shares should energize next week as Monster will join the S&P 500
Stock markets in Italy, Spain and Lithuania are higher at this hour, but everybody else overseas is swimming in a sea of red. We should buck that trend at 9:30.
At this point, adjusted for fair value, the S&P futures are up 3½ points, the Dow futures are up about 39, but the NASDAQ futures are about 4½ points above fair value.
Yesterday the Federal Reserve Open Market Committee decided to Twist again, like they did last summer. QE3 it’s not, but the Fed will continue the “Operation Twist” program through the end of the year in its effort to keep long-term interest rates unrealistically low. Of course, if low interest rates alone could ignite economic growth, we’d be flying high already, as would Japan.
The shares of Red Hat have been red hot this year. This morning, not so much. Although Red Hat turned in a better than expected earnings report last night, operating expenses were up 23 percent and that has traders spooked this morning, as the shares of Red Hat are indicated about 11 percent lower. Bed Bath & Beyond also beat estimates last night but guided lower for the rest of the year. Those shares are indicated about 10 percent lower.
ConAgra, Rite Aid and CarMax report in today, as will the Labor Department with weekly Jobless Claims. First time claims are expected to hold steady at last week’s very disappointing level of about 385,000.
The price of gold and the price of oil are taking it on the nose this morning on strength in the dollar. Asian markets were lower overnight, but Europe is a mixed picture. At this point, adjusted for fair value, the S&P futures are higher by about 2 points, Dow futures are up 23 and the NASDAQ futures are just about even with fair value.
The Federal Reserve’s Open Market committee has been meeting since yesterday, and a little later today, we’ll find out where Ben Bernanke and the bunch will take our country’s monetary policy. Last year’s Operation Twist is scheduled to expire, and many expect the Fed to extend the policy of buying long term debt and selling short term debt. Some expect more dramatic stimulus and some expect nothing but lip service. No matter what is announced, expect stock prices to react positively if we get more stimulus. Whether that’s rational or not is as debatable as it is predictable. The Committee’s statement will be released at 12:30. Bernanke’s press Conference will come at 2:15.
In case you’re keeping track, a 10 year Treasury Bond bought today will pay you about 1.6 percent. Twenty years ago, that interest rate was 7.28 percent.
Procter & Gamble and Pepsico are predicting an earnings slowdown for the rest of the year. They each lowered earnings guidance this morning, based in part by currency fluctuations.
Chinese stocks were off by about a third of a percent overnight, but most other overseas markets are a little higher. Our futures, which are usually pretty flat at this hour on a Fed decision day, took a mild turn to the upside about an hour ago on a rumor that a coalition government had been formed (or is about to be formed) in Greece.
No official word on that yet, and that little rally is fading. At this point, adjusted for fair value, the S&P futures are up a point, Dow futures are higher by 12 and the NASDAQ futures are all about 3½ points above fair value.
Perhaps, just perhaps, today will be a day to focus on corporate news, rather than what latest crisis the Eurozone has cooked up. If that’s the case, it looks like a good case so far.
Walgreens announced this morning a dividend increase from 22 ½ cents per quarter to 27 ½ cents per quarter. By the way, that makes it 37 consecutive years that Walgreens has raised their dividend. Rather than shelling out more cash in dividend payments, Autodesk is raising the limit on their share repurchase program to 30 million shares, worth 1.4 billion dollars. And on the earnings front, FedEx earned an adjusted $1.99 per share, which beat estimates by $1.92. However, FedEx expects the first fiscal quarter somewhere between flat and up only 10 percent. That has the stock looking a little lower pre-market.
At 8:30, the May Housing Starts report is expected to rise just a bit to the 720,000 level from April’s rate of 717,000. And JP Morgan’s Jamie Dimon will appear before a Congressional Committee today, just like he did last week and maybe this time he’ll be asked at least ONE tough question. But don’t bet on it
Asia was lower overnight, but European markets are on the rise, as are our futures.
At this point, adjusted for fair value, the S&P futures are up 6½ points, Dow futures are higher by 49 and the NASDAQ futures are all about 11 points above fair value.
June 18, 2012
The nice thing about Europe is that there a SO many little countries that you can get incredibly worried about a new economic problem in a different country every single day.
The best that you can say about this day, so far, is that it could have been a lot worse. Yesterday, the socialists won in France, and the Greek election was won by the New Democracy Party. That’s the pro-bailout party. The party that wants to keep Greece in the euro. However, the margin of victory was very slim, and that game is probably only in about the third inning.
Meanwhile, the rain in Spain falls mainly on the 10 year bond. The yield on the Spanish 10 year is over 7.1 percent this morning. Seven percent is generally recognized as the level of unsustainability. Compare that to the U.S. 10 year rate of about 1½ percent. Hopefully, things settle down in Europe before we run smack into our own financial cliff at the end of this year.
While all that is going on the leaders of the G-20 countries will be sipping margaritas in Los Cabos starting today. Perhaps a grand plan will emerge for kicking the European can further down the road.
Earnings are on the way from La-Z-Boy and Adobe Systems today as we enter the second quarter’s “earnings warning” season with two weeks to go in the quarter.
Most markets overseas are higher, but we’ll give back some of Friday’s rally at the open. After you adjust for fair value, the S&P futures are down almost 4 points, Dow futures are down 33, and the NASDAQ futures are about 5 points below fair value.
Of course, Father’s Day is Sunday. A great day for Dad to take the day off, sink into an easy chair, turn on the TV, and watch the results of the latest round of Greek elections. Okay, I suppose more dads will probably be watching some silly golf tournament, but where stock prices go on Monday will hinge on the Greek vote Sunday, and worldwide reaction to the results.
Late yesterday afternoon, the Dow Industrials rose about 100 points in a matter of seconds on a Reuters report that Central Banks around the world are planning to flood markets with liquidity, should the anti-bailout, anti-Eurozone, and anti-capitalism forces carry the day on Sunday.
Today, in matters more mundane, we’re expecting reports on May industrial production and Capacity Utilization, which are expected to be unchanged from April. At 9:55, however, we’ll get the preliminary report from the University of Michigan on June Consumer Sentiment, and the dobbers are expected to be down, as Bob Ufer used to say, dropping to an expected 77.5 from May’s 79.3.
Greeceand South Korea have lost about a half percent on the day, most all significant markets overseas are higher, and that should be our early direction as well, although the futures are well off their highs. At this point, adjusted for fair value, the S&P futures are higher by 6 points, the Dow futures are up about 59, and the NASDAQ futures are about 8 points above fair value.
Asian markets followed us higher overnight, although the rally was tempered a bit by an announcement from a Chinese official that their GDP may slip below a 7 percent rate this quarter. Still, mainland China rose more than one percent overnight.
Our economic calendar is a bit crowded today. At 8:30, the May Retail Sales report is expected to reflect a two-tenths of a percent decrease due to lower car sales. Also at 8:30, the May Producer Price Index should show a reduction of six tenths of a percent in wholesale prices, after the drop of two-tenths of a percent in April. We’ll also get domestic oil inventory report, as light sweet crude tries to hold on to the 83 dollar level, as a lot of analysts think we’re headed for decidedly lower oil prices.
There no rest for the mortgage brokers. According to the American Bankers Association, mortgage apps rose 18% last week. Yes, it was an easy comp due to the shortened prior week. Nevertheless, purchase applications rose 13% and refinancing applications rose 19%. The average rate on a conventional 30 year mortgage is all the way down to 3.88 percent.
Dell announced this morning that it will begin to pay an 8 cent quarterly dividend.
Spain and Greece, the bailout twins, are about the only European markets in the green this morning.
Our stock futures look lower at first glance. But in fact they are, at this point, indicating a flat open for stocks. After you adjust for fair value, the S&P, Dow and the NASDAQ futures are all within a point or two of fair value.
June 11, 2012
It’s a new week, but we will once again open trade hanging on every word out of Europe. The difference is that THIS morning they are happy words, at least if a $125 billion dollar Spanish bank bailout makes you happy. Of course, in Spain they say it’s not a “bailout.” Of course it’s not. Maybe it’s just the mother of all ATM fees. In any event, the European Union will keep Spanish banks afloat as they continue to chase the can they keep kicking down the proverbial road.
On this side of the Atlantic, the Supreme Court decision that could possibly eviscerate Obamacare is expected soon. Getting out in front of that decision are some brokerage firm analysts who this morning upgraded shares of Vanguard Health Systems, Tenet Healthcare and Universal Health Systems. In the energy space, Duke Energy received an upgrade, while Southern Company was downgraded.
There’s nothing big on the economic agenda today. Look out for Apple’s CEO speaking at 10 o’clock this morning as he kicks off Apple’s Worldwide Developers Conference. It looks as though a new operating system for Apple devices and maybe some news on Apple TV is on the way.
Our futures are higher, but only about half as strong as they were last night. Right now, adjusted for fair value, the S&P futures are up 9 points, the Dow futures are higher by 88, and the NASDAQ futures are about 16 points above fair value.
It’s a light data day as far as scheduled reports are concerned, and it is, after all, a summertime Friday, so trading may tail off a bit early as well. With a full weekend of European rumors ahead, we’ll see if traders want to leave any risk on the table over that weekend.
Yesterday, the lack of any specific promise from Ben Bernanke regarding additional stimulus from the Fed took the air out of a pretty good rally. Today’s Fed speak will happen close to home as the head of the Minneapolis Fed will be speaking at the Ross School of Business at the University of Michigan.
Molina Healthcare is the hot ticket of the morning. The stock is indicated almost 30% higher on word last night that Molina will get a contract as managed care provider for the state of Ohio in 2013.
McDonald’s stock may see a little pressure early on. Same store sales in the U.S. were up only 4.4 percent in May versus the estimate of 5.6 percent. Worldwide, sales were up 3.3 percent, which was well below the 4.9 percent estimate.
Starting at 8:30 will get some International and Wholesale trade data. Most overseas markets are lower, and our futures are in the red, although are in much better shape than they were an hour or two ago. At this point, the adjusted S&P futures are lower by less than a point, the Dow futures are down only 12, and the NASDAQ futures are about 3½ points below fair value.
A pretty good Beige Book report yesterday afternoon put a very nice rally into overdrive. The positive spin continues this morning, but it is news out of China that gets credit. The Chinese Central Bank cut their benchmark interest rate by a quarter percent to 3.25 percent. Although the Bank of England held their rates steady this morning, they’re already down to one-half of one percent, as central banks around the world continue to boost up their economies on the backs of savers. Even our Fed’s number two, Janet Yellen, indicated yesterday that more quantitative easing is not off the table here. We’ll find out more from Ben Bernanke when he chats with the Joint Economic Committee of Congress at 10 o’clock.
Lowered earnings guidance is out for Navistar, Lululemon and Smuckers this morning. Navistar shares are looking about 15% lower, and Lululemon is off about 12% premarket. So far, Smucker seems to be sticking around pretty much unchanged.
Jobless Claims at 8:30 are expected to once again reflect about 380,000 new claims.
Markets in Europe and our futures took quite a jump on the news of the Chinese interest rate cut this morning. The Greek market is actually higher by almost 3½ percent. At this point, the adjusted S&P futures are higher by 13 points, the Dow futures are up 90, and the NASDAQ futures are about 21 points above fair value.
The futures are indicating a continuing change of pace in the markets this morning, as it looks like stocks will be rockin’ and the open.
While there may be some rockin’ traders will be knocking down shares of Tempur-Pedic at the open. It wasn’t too many weeks ago that a major financial magazine proclaimed that Americans were choosing “sleep over sex” as indicated by strong sales of the oh-so-cushy Tempur-Pedic matresses. Well, maybe not everyone is sleeping so soundly. Tempur-Pedic revised their full year earnings guidance down to $2.70 per share from $3.93 and the stock is bid more than 30% lower pre-market.
Seattle’s Best Coffee and Coinstar announced that they will roll out a thousand new self-serve coffee kiosks. Not sure what the synergy is here, but perhaps now you can pay a lot for a cup of coffee and the machine will automatically keep the change.
The ECB will not change their one percent benchmark interest rate, but UnitedHealth is raising their quarterly dividend by a nickel to more than 21 cents.
China was flat overnight, but most other markets overseas are higher. Our future are off their early highs, but are still pointing due north.
Right now, the adjusted S&P futures are higher by about 11 points, the Dow futures are up 92, and the NASDAQ futures are almost 24 points above fair value.
We’ll start with the only thing that seems to matter nowadays – and that, of course would be Europe. There will be a G-7 conference call today to discuss whether or not you can climb out of a hole and keep digging at the same time. Expect the United States to advise here. We’re experts.
In front of that news overnight, Australia’s Central Bank evidently sees trouble on the way. They lowered their benchmark interest rate a quarter point to 3½ percent. That’s still a long way from our “zero percent,” but they’re catching up.
Good news and bad if you’re a Dollar General shareholder this morning. Earnings of 63 cents beat the 60 cent estimate. However, the stock looks to open 4 percent lower, as Dollar General will be coming to market with a basket full of new stock to sell.
FedEx raised their dividend to 14 cents per share from 13 cents and it looks like CBS may be shopping their outdoor advertising unit.
We’ll get the ISM services index at 10. Expect no change from last month’s 53.5.
Nothing doing in England this morning – it’s the Queen’s Diamond Jubilee, don’t you know. Other overseas markets are mixed.
Our futures are lower, but have recovered somewhat from their levels of a couple of hours ago. Right now, the adjusted S&P futures are down about 4, the Dow futures are down 16, and the NASDAQ futures are about 6½ points below fair value.
There’s no denying that it’s best to go shopping when stuff is on sale. And stuff gets put on sale at times when no one seems to want it. The trick with stock prices is to figure out when the “on sale” sign goes up. A couple of signs that the worst may be yet to come arose Friday.
After an absolutely lousy Employment Report, stocks sold off sharply into the close and broke below their 200 day moving average. Last time that happened, stocks lost more than 10 percent over the next 5 days. Moreover, gold prices, which had been correlated with stock prices since last summer, rose sharply as stock prices fell. That could mean that the big money is giving up hope. We shall see.
If you’re looking for silver linings, one will go into your gas tank soon. Light sweet crude oil is down another 82 cents this morning, just above 82 dollars per barrel. And if you’re looking to refinance a mortgage, rates continue to drop. The 10 year Treasury Bond, which often moves in the same direction as mortgage rates, dropped below 1½ percent on Friday.
Asian markets were a couple percent lower overnight, but European markets are mixed. The Dow futures were down triple digits overnight, but as this point, are indicating a flat open for stocks. Right now, the adjusted S&P futures are down just a fraction, the Dow futures are down 4, although the NASDAQ futures are about 2 points above fair value.
There are more economic reports on the way today than you can shake an economist at, but it may not matter, given reports from overseas.
Overnight, the May Chinese Purchasing Managers Index fell to 50.4 versus the estimated 52.2. It read 53.3 in April, and indicates that the Chinese economy may be very close to stall speed and may begin to contract as soon as this month. Falling below the stall-speed level of 50 this morning was the Eurozone Manufacturing Index. That one fell to 45.1 from April’s 45.9, as recession in Europe deepens. It’s not dramatic, but it’s pretty indisputable.
At 8:30, our May Employment Report is expected to reflect 150,000 new non-farm jobs, and a continuing unemployment rate of 8.1 percent, at least among those who are interested in finding work
Sara Lee shares are catching some love this morning, up almost 7 percent after announcing a spin-off of their international coffee and tea business, a $3 special dividend and a 1 for 5 reverse stock split.
May Auto Sales, the ISM Manufacturing Index, PMI Manufacturing numbers and a report on Construction spending lie ahead this morning. But traders are selling first and will ask questions later.
Any ray of sunshine this morning? Oil is down another $2.50 at 84 bucks per barrel. Just in time for summer driving season.
Right now, the adjusted S&P futures are down 16 points, the Dow futures are down 111, and the NASDAQ futures are about 27 points below fair value.
Daily Reports @ WJR
WJR June 2012 Reports
What You Need
Daily Reports @ WJR
Watch The Video
Starfire Investment Advisers on Analyzing The Risk Of Stocks After The 6.9% Drop