June 28, 2013
It’s the last trading day of the quarter, which has been a very good quarter, and the last trading day of the month, which has been a particularly interesting month. Almost every trading day this month has seen a triple digit move in the Dow Jones Industrial Average. Yet, when all is said and done, more was said than done. The Dow is lower by only six-tenths of a percent for the month. The S&P 500 is down only 1 percent, booth well within reach of one day’s results.
One stock that will likely NOT end the day one percent higher is cell-phone maker Blackberry. Its first quarterly report including sales of the Blackberry 10 showed a surprising loss of 13 cents per share contrasts with an expected 6 cent profit. Blackberry shares with a black eye pre-market, down nearly 20 percent.
Accenture shares sharing the lack of love this morning, down about 9 percent. Last night, Accenture reported earnings a penny ahead of estimates, but revenue was light and Accenture lowered guidance.
The June PMI comes at 8:30 and the University of Michigan’s final say on June Consumer Sentiment at 9:55 is expected to be revised up to a reading of 83. And there are no fewer than FOUR Fed governors and presidents out giving speeches to day, trying to convince traders that what Ben Bernanke said last week was much different than what they heard.
Our stock futures which have been positive all morning, but lost most of their mojo over the past fifteen minutes or so. Adjusted for fair value, the S&P futures are higher by just a point, the Dow futures are down 5 points, and the NASDAQ futures are now even with fair value.June 27, 2013
Once you master the concept of “opposite day,” you MAY begin to understand how the stock market works. Yesterday, an absolutely miserable revision to the first quarter Gross Domestic Product report lit an additional fire under what was already a pretty hot stock market.
The nation’s first quarter output, which had been estimated to be 2.4 percent, was revised downward to a measly 1.8 percent yesterday. Still, an economy that’s not so strong means a Federal Reserve that’s not so eager to cut back on its prescribed dosage of monetary steroids. And let’s >
At 8:30 this morning, we’ll check the length of the line at the Unemployment Claims window. We’ll also get the May personal income and consumption figures expect increases of two-tenths and three-tenths of a percent, respectively.
If you’re thinking of bringing your company public, perhaps you may consider a short delay. Two companies coming public, CDW and HD Supply, both priced last night, both well below their expected offering prices.
Asia was higher overnight, with Japan up about 3 percent. Europe is more of a mixed picture, but our futures are pointing north once again. Adjusted for fair value, the S&P futures are higher by almost 7 points, the Dow futures are up 51, and the NASDAQ futures are now nearly 11 points above fair value.
June 26, 2013
As officials of the Federal Reserve and the Bank of China continue to “clarify” recent statements, markets around the world are starting to recover, or at least find some footing. Overnight, the Chinese Government assured that it would provide cash to lending institutions that “need it.” That should allay fears of a giant credit crunch in China.
This morning, the Minneapolis Fed President went on a business cable channel to assure everyone that recent Fed statements do not constitute the beginning of a campaign of raising interest rates.
In response, our futures are higher and gold prices are taking another beating. Gold is more than 3 percent lower, at under $1,230 per ounce. Within the past year, you know, gold was near $1,800.
Monsanto and Bed Bath & Beyond will report earnings later on. Yesterday, gun maker Smith and Wesson raised earnings guidance.
Stocks in Hong Kong were more than 2 percent higher. We also have a 2 percent pop in France and our futures are have been rising most of the morning. Adjusted for fair value, the S&P futures are higher by about 9½ points, the Dow futures are up 75, and the NASDAQ futures are now nearly 20 points above fair value.
June 25, 2013
Three out of every four trading days this month have resulted in triple digit moves for the Dow Jones Industrials. While a triple digit move at 15,000 isn’t as big a deal as a triple digit move at 12,000, they hurt nonetheless when those movements are downward day after day after day. However, as they say – “today is another day,” and the futures are foretelling a little bounce back in the early going. At least it looks like we’ll recover what we lost in the last half hour of trading yesterday.
Helping that recovery is home builder Lennar. Lennar reported 43 cents per share of operating earnings for last quarter on a 53% revenue gain. The 43 cents was 10 cents better than expected and Lennar shares are about 3 percent higher pre-market. Speaking of housing, the May New Home Sales report comes at 10 this morning. Expect an annualized run rate of 462,000, up 8,000 from the April number.Also at 10, the Conference Board’s June Consumer Confidence Index is expected to dip a point to 75.2. We’ll also get the Durable Goods Report for May at 8:30.
Most Asian markets were lower overnight, but most of Europe is higher by one percent or more, and we should start the day in the green, as well. Adjusted for fair value, the S&P futures are higher by about 12 points, the Dow futures are up 97, and the NASDAQ futures are now about 26 points above fair value.
June 24, 2013
It’s not really hard to figure out what drives the markets. The markets are driven by fear. It’s either fear of losing your money or fear that someone else is making more profit on their money than you are making. And nothing drives “fear,” especially after 2007, than the threat of a good old-fashioned credit crunch.
Over the weekend, the cover story of Barron’s magazine trumpeted “China’s Looming Credit Crisis.” This morning, the cable business news channels were buzzing with talk of Chinese asset bubbles, slowing manufacturing and government corruption. See? They have it there, too. In any event, our stock futures are a mess and have been worsening most of the morning in response.
No worsening in the price of Vanguard Health Systems this morning. Tenet Health is buying Vanguard for 1.63 billion dollars. Vanguard Health shares are about 66 percent higher pre-market.
The Chinese Shanghai Composite Index fell more than 5 percent overnight. All other major markets overseas are lower. Japan only fell about 1 percent, but stocks in Greece are lower by 6 percent. By the way, the yield on the 10 year Treasury Bond is up another 10 basis points, to 2.64%. That’s about one full percent higher the just weeks ago.
Adjusted for fair value, the S&P futures are lower by about 16 points, the Dow futures are down 134, and the NASDAQ futures are now about 24 points below fair value.
June 21, 2013
Well, for those who have been waiting for the great stock market rally to take a time out, all players went to the sidelines yesterday. Stocks, bonds, metals and other commodities all sold off with a vengeance. The big question is whether this IS just a time out, or perhaps the halftime intermission, or perhaps the end of the game. Whatever, the Dow is lower by about 560 points over the past two days.
We talked about the rise in the 10 year Treasury yield yesterday, when it was 2.32 percent. It added another 10 basis points last night, to 2.42 percent. So someday, if this keeps up, you may again be able to get a reasonable yield buying a long-term bond. In the meantime, the value of the bonds you hold is taking a beating.
Oracle shares are taking a 6 percent beating this morning. Last night, Oracle reported a 10% increase in profits, which met expectations, doubled its dividend, and announced a 12 billion dollar stock buyback program. All good news, right? Well software sales slumped, especially in China and Brazil, and that has the stock under pressure. Darden Restaurants reported $1.01 in earnings this morning. That was a three cent miss. Darden also projected that 2014 profits will fall 3 to 5%, due to the implementation of Obamacare, among other factors.
Japan and India were higher overnight, but the rest of Asia was lower. Europe is mixed, but mostly higher. Our futures have slumped a bit, but are still indicating a bounce back from yesterday’s rout. Adjusted for fair value, the S&P futures are higher by about 10½ points, the Dow futures are up 78, but the NASDAQ futures are now about 10½ points above fair value.
June 20, 2013
Ben Bernanke spoke yesterday and gave investors the truth about how the Fed intends to normalize interest rates. Clearly, investors couldn’t handle the truth.
Bernanke indicated that the Fed could start backing off on fiscal stimulus as soon as later this year.
The yield on the 10 year Treasury Bond spiked up to 2.31% yesterday on the news. That may not sound like much. But keep in mind that less than 2 months ago, the 10 year was at 1.66%. Even that might not sound like much – but that is almost a 40 percent increase in the 10 year rate in just 8 weeks. It’s been said that everyone who needed to refinance a mortgage has already done so. Let’s hope so, because mortgages and most all kinds of borrowing are about to get more expensive.
The silver lining in all of this is that the Fed foresees continuing improvement in the economy. In the long run, that’s good for the stock market. In the short run, it’s bound to be a bit bumpy. And bumpy is what we saw yesterday, with the Dow lower by 206 points, as well as in overseas markets overnight.
A trio of economic reports comes at 10 o’clock, including May Existing Home Sales, the May Leading Indicators and the June Philly Fed Survey.
The futures are in a lot better shape than a couple of hours ago, but we will start the morning in the red. Adjusted for fair value, the S&P futures are down 10½ points, the Dow futures are down 78, but the NASDAQ futures are now about 21 points below fair value.
June 19, 2013
We’ve known all week that the “big event” would be this afternoon’s Federal Reserve interest rate announcement at 2 o’clock and Ben Bernanke’s press conference at 2:30. Even though everyone agrees that short term interest rates are not to be moved and the Fed’s massive bond buying program will not be reduced just yet, every comment from Bernanke will be analyzed within an inch of its life for clues about future policy.
You can also bet that Bernanke will be questioned about his vacation plans come February, after President Obama verbally patted him on the back with the right hand and sucker punched him from the left in that Charlie Rose interview the other night.
FedEx reported better than expected earnings this morning. $2.13 easily beat the $1.96 estimate. Revenues were just a bit light and the stock is fractionally higher pre-market.
Japanese stocks followed our rally higher overnight, but most other major markets overseas are lower. Our futures started the morning higher, but have slipped back steadily from there. Still, I would be surprised to see too much movement either way in front of the 2 o’clock announcement from the Fed. At this point, no movement is exactly what we’re getting. Adjusted for fair value, the S&P futures are flat, Dow futures are down 2, but the NASDAQ futures are now about 3 points above fair value.
June 18, 2013
Twenty four hours ago, it looked like the Dow Jones Industrials might go higher by a hundred points or so. And, we finished the day up about a hundred points. But how we got from start to finish yesterday was very interesting. After rising nearly 200 points in the morning, a story from a reporter at the Financial Times made those gains disappear. His “big news” was that Ben Bernanke was ready to start tapering financial stimulus right away. Then, late in the trading day, the reporter tweeted that his guess as to what the Fed will do is really no better than anyone else’s. That’s was gave rise to the 109 point daily gain. But again, if you’re trying to trade in and out of stocks in this tweet-filled day and age, you’d better be quick – and lucky.
With any luck, at 8:30 we’ll see May Housing Starts rise to 975,000 or so. That would be a 14 percent increase from April. Also at 8:30, the May Consumer Price Index is expected to read two-tenths of a percent.
Abode Systems and Lazy-Boy report earnings later on today. Used to be that Lazy Boy would announce earnings on the same day a Krispy Kreme, which I thought was great irony.
And, of course, the Fed starts another two-day meeting today. They’ve been holding a LOT of two day meetings lately, rather than just one day. Could be they have the IRS event planner working for them now, but your guess is as good as mine.
Overseas markets are mixed. Our futures are lower than earlier this morning, but are still indicating rising prices at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 3 points, Dow futures are up 36, and the NASDAQ futures are now about 4½ points above fair value.
June 17, 2013
As we enter the last two trading weeks of the second quarter, it’s once again time to be on the lookout for pre-emptive earnings warnings from important companies. However, this week, it’s all about the Fed.
The Federal Reserve Open Market Committee will issue their latest guidance regarding fiscal stimulus on Wednesday, and the feeling is that Ben Bernanke will try to calm the market jitters regarding the Fed’s future plans to cut back on its bond-buying program.
The G-8 countries hold a summit in Northern Ireland today to listen to each other talk (not that many of them hadn’t already been listening on the sly.)
One of Smithfield Foods shareholders is calling the recent Chinese takeover bid “inadequate.” They purport that Smithfield is worth 10 to 20 dollars more per share. Of course, if I were a major shareholder, I’d probably say the same thing.
China was a little lower overnight, but all other major markets overseas that are trading are trading higher. Over the past couple of weeks, we’ve seen plenty of our early-day rallies turn tail into late-day declines. And, although the futures are quite a bit lower than they were a couple of hours ago, we’re looking for sharply higher stock prices at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 10, Dow futures are up 97 points, and the NASDAQ futures are now about 23 points above fair value.
Yesterday was another lesson in how quickly markets can turn. After a solid open to the day, stock prices slumped, with the Dow Jones Industrials off for the third day in a row for the first time this year. Our sell-off gave rise to a rout in Asian markets, with the Nikkei in Japan down almost 7 percent. Stock prices are a bit lower in Europe, and although our futures are down, they are far better than a couple of hours ago.
Shares that will not be lower today are those of television broadcaster Belo. Gannett will buy that company of 20 television stations for 13.75 per share. That’s a 2.2 billion dollar price tag and amounts to a 28% premium to last night’s closing price.
Jobless claims are on the way in about 15 minutes. Expect 350,000 new claims. Perhaps more importantly, the May Retail Sales Report is expected to reflect a one-half of one percent rise overall, and four-tenths of a percent excluding car sales.
Our futures continue to slowly improve, but we’re still looking at lower prices at this point. Adjusted for fair value, the S&P futures are down about 5 points, Dow futures are down 35, and the NASDAQ futures are now about 12 points below fair value.
June 12, 2013
Normally, a sales decline of 19 percent would be cause for panic. That is, unless everybody expected a 19 percent drop in sales. That’s what happened to May sales for Yum Brands in China, as fears of a bird-flu outbreak has limited cravings for KFC chicken (not that there’s any real reason to fear.)
It should be fairly a quiet day for financial news. There’s nothing on the economic docket of great import. Earnings are due from Men’s Wearhouse, H & R Block and Korn/Ferry and a handful of others. But outside of that, traders will have to satisfy themselves with the interest rate watch that has kick-started our recent volatility.
Apollo Tyres is buying Cooper Tires for 2 ½ billion dollars in cash. Cooper Tire shares are up more than 40 percent pre-market.
The Asian markets that did trade overnight were mostly lower after our late-day selloff yesterday, but Europe has turned higher and our stock prices may gain back almost all of yesterday’s loss right at the open, as a “buy the dip” mentality continues.
At this point, adjusted for fair value, the S&P futures are higher by about 10 points, Dow futures are up about 92 points, and the NASDAQ futures are now about 17 points above fair value.
June 10, 2013
The Apple Developer’s Conference starts this afternoon, with announcements expected about a new Mac operating system and perhaps an internet streaming music service. However, it remains to be seen if any new breakthrough products are about to break through.
McDonald’s broke through with better than expected world-wide sales in May, up 2.6 percent, which was almost a full percent higher than expected.
And locally, another old family business is cashing in. Colorado based HIS is buying R.L. Polk for 1.4 billion dollars in cash and stock.
Earnings reports are on the way from Pep Boys and Diamond Foods.
Mainland China issued a flurry of disappointing economic reports overnight. Stocks there were lower by about a percent and a half overnight. In Japan, Prime Minister Abe promised some dramatic corporate tax cuts in the form of investment credits. Sounds like a page out of John F. Kennedy’s playbook. In response, Japanese stock rose almost 5 percent overnight.
Our futures look pretty good at first glance, but after you adjust for fair value, well, maybe not so much. At this point, adjusted for fair value, the S&P futures are higher by about a point, Dow futures are up 7, and the NASDAQ futures are now 2 points below fair value.
June 6, 2013
As they say, you can learn something new every day. Especially if you start dumb enough. Earlier this morning, some amateur traders were taken to school.
This morning an Israeli newspaper reported that Pepsico was about to buy Sodastream for about 95 dollars per share. Sodastream finished trading last night at less than 70 dollars per share. Well, this morning, Sodastream shares shot up to 91 bucks, no doubt by folks who mistake newspaper headlines for research. Pepsico has since dismissed the report, and Sodasteam shares are now trading down in the low 70’s. Lesson to be learned – whoever was buying at 91 this morning was buying from SOMEONE who was selling at 91. The seller probably had more reliable sources than the morning newspaper.
Costco says that May same store sales rose “only” 5 percent. Analysts were expecting a 5½ percent increase. The Bank of England and the European Central Bank held interest rates steady this morning.
Weekly Jobless Claims come at 8:30, but the big number of the week will be tomorrow’s monthly Employment Report.
Asia was lower overnight, but Europe is turning around and our futures are indicating a bounce-back from yesterday’s drubbing. At this point, adjusted for fair value, the S&P futures are higher by about 7½ points, Dow futures are up 56, and the NASDAQ futures are about 12 points above fair value.
June 5, 2013
In case you’re in the market for some General Motors stock, there’ll be round about 50 million shares coming to market tomorrow. The U.S. Government will sell 30 million shares, which is about one-eighth of its holding, and the UAW retiree benefit Trust will sell 20 million shares. Of course, at the close of trading on Thursday, General Motors will rejoin the S&P 500 Index. GM is replacing Heinz, which is being acquired by Berkshire Hathaway.
The May ADP employment report is out. It was expected to tell us about 171,000 new jobs created in May. Unfortunately, only 135,000 actually happened. The Fed’s Beige Book will be released this afternoon, and of course, the Labor Department’s Unemployment Report comes tomorrow. The tricky part will be interpreting the news. A big pick-up in Jobs would presumably mean a stronger economy, which might lead the Fed to and early end to its bond-buying program. So good news, might really be bad news for stock prices. But, before we get ahead of ourselves, let’s see if we get good news first.
Speaking of those wacky Fed Governors, there are no fewer than three of them giving speeches today, which sure beats working for a living.
Overseas markets followed us lower overnight, and we’re not looking so hot at this hour either. At this point, adjusted for fair value, the S&P futures are lower by about 6 points, Dow futures are down 37, and the NASDAQ futures are about 10 points below fair value.
June 3, 2013
With major earnings reports pretty much in the rear-view mirror this quarter, we’ll turn to economic reports this week for market-moving cues. And, of course, anything that comes out of the mouth of Ben Bernanke or any of the Federal Reserve Governors.
Mr. Bernanke gave the commencement speech at Princeton yesterday. While he didn’t give us any cues on interest rates or tapering of the stimulus, he did crack a couple of jokes, and there is nothing that sends a crowd into stiches like an economist cracking jokes. Word is that Bernanke may be headlining for a convention of CPAs in the near future.
The May auto sales numbers will be rolling out all day long. General Motors sales are expected to be almost 2 percent higher year-over-year and Ford expected to be about 13 percent higher. Chrysler reported an 11 percent increase versus the expected 9 percent.
The ISM Manufacturing Index for May comes at 10 this morning and it’s expected to be just a fraction north of the no-growth level of 50.
Japanese stocks were down again – this time almost 4 percent. Europe has turned higher and our futures have been rising much of the morning. At this point, adjusted for fair value, the S&P futures are higher by about 6 points, Dow futures are up 76, and the NASDAQ futures are about 10 points above fair value.
Daily Reports @ WJR
For an explanation of "fair value" please click here.