June 30, 2014
It’s the last day of the first half of 2014. So far has been so good for stock prices, in spite of all those dire predictions of a “correction” being just around the corner. The S&P 500 Index is, including dividends, more than 7 percent higher since the beginning of the year, so if the second verse is same as the first, we could be looking at another double-digit year for stock gains.
Whether we’ll see any gains this week or not, they’ll have to come quickly. With the Fourth of July falling of Friday, trading will pretty much wrap up for the week by mid-day Thursday.
Shares of drug maker MannKind are looking to open more than 11 percent higher this morning, after the FDA cleared MannKind’s inhaled insulin drug Afrezza. That’s a big hurdle for that drug, although Phase 4 testing still lies ahead.
The June Chicago PMI comes at 9:45 and is expected to be a little lower at a reading of 62. The Pending Home Sales Index for May comes at 10 o’clock.
Japanese stocks finished the month with a more than 3½ percent gain, for its best month in six. Most of Asia was a little higher overnight. European markets are mixed, but on average a lower. Our futures are a little lower, but have been on the rise over the past 15 minutes. At this point, adjusted for fair value, the S&P 500 futures are lower by about 2 points, the Dow futures are down 22, and the NASDAQ futures are about 2½ points below fair value.June 27, 2014
While our current Government has been criticized for not knowing anything about how to run a business, they certainly seem to be adept at recognizing revenue raising opportunities. In the old days, the Government took the opportunity to put whole international accounting firms out of business because of some allegedly shredded some documents. Now, companies accused of what seem to be far more serious indiscretions are given the opportunity to pay a boatload of money and continue on. The latest to make a big contribution toward reducing the deficit will apparently be BNP Paribas. Word is that the big bank BNP Paribas will slash their dividend and possibly sell some bonds and agree to pay up to 9 billion dollars to the Treasury for violating U.S. sanctions. The official announcement is expected on Monday.
Just before 10 this morning, the University of Michigan will render its final verdict on June Consumer Sentiment. Expect a reading of 82, which would be a bit of an upgrade from the mid-month report, which was a bit softer than expected at 81.2.
Arts and crafts retailer Michael’s comes public today, priced at the bottom of its expected 17 to 19 dollar per share range. Yesterday, GoPro’s IPO was quite the hit, which the stock rising more than 30 percent by the end of the day.
Markets overseas look a lot like we did at the close yesterday. That is, a little lower but not much changed. We should head a little lower at 9:30.
At this point, adjusted for fair value, the S&P futures are lower by about 4 points, the Dow futures are down 21, and the NASDAQ futures are about 4 points below fair value.
Stock prices staged a small retreat yesterday for the first trading day in seven, and it looks like we’ll get off to another slightly lower start this morning.
One stock that will head decidedly in the opposite direction is Vertex Pharmaceuticals. Vertex is relying on the successful development of a cystic fibrosis drug to bring it to profitability. Reports of a statistically successful late-stage test for that drug has shares of Vertex higher by more than 50 percent pre-market.
Earlier this morning, the ICSC Goldman Store Sales Report reflected a 2 percent sales increase for the last week and a better than 4 percent year over year performance.
At 10 this morning, the May New Home Sales Report is due, along with the Case-Shiller Survey of Home Prices. Expect that nationwide, real estate prices have risen more than 11 percent from a year ago.
The Conference Board’s Consumer Confidence Reading at 10 is expected to creep higher to 83.7 from last month’s 83.
Asia was higher overnight, but Europe is lower. Our futures are lower, but in much better shape than the were a couple of hours ago. At this point, adjusted for fair value, the S&P 500 futures are lower by more than 3 points, the Dow futures are down 25, but the NASDAQ futures, helped by the news on Vertex, are now less than a point below fair value.
June 23, 2014
It’s Monday, and the merger news once again dominates. Wisconsin Energy is buying another Midwestern utility Integrys for $71.47 per share. That’s about a 17 percent premium to Friday’s closing price for Integrys shares.
Oracle announced yesterday that they were nearing a deal to by Micros Systems. That deal was confirmed this morning, In Europe, Bank Santander is buying General Electric’s Consumer Finance unit.
Honda, Nissan and Mazda are recalling about 3 million vehicles for potential airbag problems. You may recall (pun intended) that Toyota did the same for over 2 million vehicles a couple of weeks ago.
Drug market Abbvie raised earnings guidance this morning and their shares are about 2½ percent higher in response.
After a positive start last night, Asian markets finished mixed. Europe is also mixed, but mostly a little lower at this hour.
Our futures are once again indicating that we should see very little price movement at the open of trading at 9:30, but the futures have weakened a bit in the past half hour. At this point, adjusted for fair value, the S&P 500 futures are down a point and a half, the Dow futures are down 21, and the NASDAQ futures are nearly 4 points below fair value.
June 19, 2014
If you close your eyes and just listen to Janet Yellen, she sounds a lot like Ruth Buzzi. But yesterday, instead of whacking the stock market over the head with her purse, Yellen assured everyone that she’s in no particular hurry to raise short term interest rates. Yes, if the economy really heats up, she’ll move. But that seems as far away as The Tiger’s next 10 game winning streak. For its part, the S&P 500 closed at its 20threcord high of the year.
Today, we’ll get the Weekly Jobless Claims at 8:30. Then at 10 o’clock the May Leading Indicators are expected to improve to six tenths of a percent from the April level of four tenths of a percent. However, the June Philly Fed Survey is expected in at 13.9 which would be a point and a half weaker than the May reading.
Blackberry, the phone maker that just won’t die, reported a loss of only 11 cents per share this morning. That was less than half the expected loss and Blackberry shares are up 10 percent. Red Hat is also higher on positive guidance.
Pier One, on the famous other hand, is down more than 20 percent pre-market. Sixteen cents per share of profit fell four cents short on pricing pressure which is unlikely to lessen anytime soon.
Oracle and Kroger report in later today. China and India were lower overnight, but most other markets overseas followed our rally higher.
So far this morning, our futures keep hitting the snooze button. Adjusted for fair value, the S&P 500 futures are up a little more than a point, the Dow futures are up 2½, and the NASDAQ futures are about 3 points above fair value.
June 18, 2014
It may be a day dominated by press-conferences more so than anything else. The Fed’s Open Market Committee winds up another two-day meeting with a statement and a press conference during the 2 o’clock hour today. Expect another 10 billion per month reduction in their stimulus program, as they keep on pace to end the bond buying before the year is out.
Also a little later on, Amazon.com will hold a presser and the speculation is that they may become Amazon.telecom by announcing an Amazon-branded 3D smartphone. It’s hard for many to see just why Amazon needs to be in the phone business, but then again, this is a company that has confounded its doubters by pulling off a lot of bold moves in the past.
Lazy Boy shares are more than 10 percent lower after a lousy earnings report last night. On the famous other hand, Abode shares are higher by 9 percent, on an apparently successful transition from a packaged software model to a subscription based cloud business model.
FedEx shares are also higher on an earnings and revenue beat this morning. But it could be a typical Fed-announcement day of little movement prior to 2 o’clock.
It’s a mixed picture overseas. Our futures have been essentially flat all morning. Adjusted for fair value, the S&P 500 futures are flat, the Dow futures are up 5, and NASDAQ futures are also about 5 points above fair value.
June 17, 2014
In just about 8 minutes or so, we’ll find out what the Government thinks we paid for all the consumer-type stuff that we need. The estimate, believe it or not, is that the Consumer Price Index rose only two-tenths of a percent in May, after rising only three tenths of a percent in April. We’ll also get the May Housing starts number at 8:30. Expect an annualized rate of just over a million units in May, down just a sliver from April.
Earlier this morning, financial information provider Factset Research matched the estimate for operating earnings of $1.25 per share, as revenue rose 8 percent from a year ago. Earnings are on the way from Lazy Boy, Bob Evens and Adobe a little later on today.
The Federal Reserve Open Market Committee starts another two-day meeting today, with no big surprises expected in their statements tomorrow.
Oil prices are a little lower this morning on the lack of more bad news out of Iraq. Of course, that could always change in a hurry and have a big market impact.
But at this point, adjusted for fair value, the S&P 500 futures are higher by about 2 points, the Dow futures are higher by 23 points, and NASDAQ futures are about 8 points above fair value.
June 16, 2014
As we head into the last two weeks of the quarter, be on the lookout for earnings warnings. But in the meantime, it’s Monday, and that means mergers.
Medtronic will spend over 42 billion dollars in cash and stock to buy Covidien, and then change its tax home to Ireland, as we lose another corporate headquarters to a tax inversion brought on by our illustrious corporate tax policy. Covidien shares are about 35 percent higher pre-market.
Level 3 Communications will pay almost 41 dollars per share for TW Telecom. That’s more than a 12 percent premium to Friday’s closing price.
Before trading starts at 9:30, we’ll get the results of a couple of industrial production surveys. The Empire Manufacturing Index comes in just over 10 minutes, and at 9:15 the Fed’s Industrial Production report for May is expected to perk up a half-percent, after slipping six-tenths of a percent in April.
Oil prices are pretty stable, pending any more bad news out of Iraq. West Texas Intermediate still above 107 dollars per barrel.
Asian markets were mixed, although the Nikkei Index in Japan fell by more than one percent. Europe is mostly lower and we’ll likely head lower at the open as well. At this point, adjusted for fair value, the S&P 500 futures are down about 5 points, the Dow futures are lower by 42, and NASDAQ futures are about 8 points below fair value.
June 13, 2014
For the superstitious, watch your step, today. Not only is it Friday the 13th, but there’s a full moon today. The next time that will happen is 35 years from now, and the last time it happened was October of 2000. If you remember the stock market of October, 2000 – well – you have a better memory that you probably wish you had.
One crazy thing happened last night after the close of trading. Everybody KNOWS that smartphones and tablets are taking over the world and nobody will ever buy a personal computer again, right? Last night, Intel raised their second quarter and full year earnings estimates on higher-than-expected demand for personal computers. Go figure. Intel shares are almost 6 percent higher pre-market.
Here’s another “I wish I would have thought of that” story. Opentable, the online restaurant reservation service is being bought by Priceline for $103 per share in cash. That’s 2.6 billion dollars and a 46% premium to Opentable’s closing price.
Oil prices continue to rise this morning, West Texas Intermediate now over 107 bucks per barrel.
There’s a big fair value adjustment this morning, and it means that the futures aren’t nearly as bad as they first appear. In fact, they’re pointing toward a higher open. At this point, adjusted for fair value, the S&P 500 futures are flat, the Dow futures are higher by10, and NASDAQ futures are about 11 points above fair value.
June 12, 2014
Fill up that tank while you can for less than 4 bucks a gallon. With the latest violence in Iraq and the prospect for the overthrow of that Government, crude oil prices are on the move higher. West Texas Intermediate crude is over 106 dollars per barrel, Brent crude is over $111 and neither are likely to go lower as tensions escalate.
Also heading higher this morning are the shares of Restoration Hardware. A good earnings report last night is giving the shares about a 15 percent boost pre-market. What is likely to go lower by almost 15 percent, at least at the open, are shares of Lululemon. Last quarter’s earnings weren’t horrible, but the outlook was lowered and in order to support the stock Lululemon unveiled a stock buyback program, paying for it be repatriating some foreign earnings and taking a >
Smallcap pharmaceutical stock Geron could rise by a third this morning, as the FDA lifted a block on their blood cancer drug.
At 8:30, Weekly Jobless Claim are expected to check in at the 309,000 level, we’ll also get the May Retail Sales Report, which is expected to show an increase of six-tenths of a percent, five tenths if you exclude auto sales.
Asian markets were lower overnight, with the exception of India and New Zealand. But outside of Belgium and Switzerland, Europe is higher this morning, as are our futures. At this point, adjusted for fair value, the S&P 500 futures are higher by a little more than 2 points, the Dow futures are up 25 and NASDAQ futures are about a point above fair value.
June 11, 2014
There’s a little company called Skybox Imaging that takes pictures of things from way, way up above. The company’s first business plan was drawn up during a graduate entrepreneurship program at Stanford University. That was about 5 years ago. Yesterday, Google bought the company for 500 million dollars. So, what have you been doing for the past five years?
Perhaps you’ve been waiting to buy a home, and then finally applied for a mortgage last week. The Mortgage Bankers Association says that after slumping for a few weeks, loan demand surged last week. Apps for new home purchases jumped 9 percent and refis were up 11 percent, as the housing market continues to gather strength.
Shares of Rambus are strengthening by about 8 percent this morning, on upgraded earnings guidance. Ulta Salon and Cosmetics 11 percent higher on good earnings. Restoration Hardware and H&R Block will report earnings a little later today.
Shares of Tyson Foods are lower pre-market, as Standard & Poor’s is reviewing Tyson’s debt in light of their deal to buy Hillshire Brands.
Asian markets were mixed overnight, but Europe is a bit of a mess this morning.
We’re likely to get off to a lower start. At this point, adjusted for fair value, the S&P 500 futures are lower by about 8 points, the Dow futures are down 63 and NASDAQ futures are about 15 points below fair value.
June 10, 2014
This morning, the National Federation of Small Business survey for May gave us its highest reading in almost 7 years. Small business folks are apparently becoming more optimistic about the prospects for growth. Either that, or they’re just happy that it’s finally warm enough to play a little golf, and it does feel like it’s been about 7 years since that happened.
Radio Shack is a company that hasn’t experienced a lot of optimism over the past seven years and this morning is no exception. A quarterly loss of 97 cents per share compares with a loss of 28 cents a year ago and missed the estimated loss of 52 cents by a country mile. Radio Shack shares are lower by about 14 percent premarket. The CEO says that the company is making progress on a turnaround strategy. Could be. But when a large candy bar costs more than a share of your stock, things ain’t so sweet.
Go Daddy is the latest internet related company to cash in on the IPO gravy train. Go Daddy has filed for a 100 million dollar public offering.
Japanese stocks were lower, but most of the rest of Asia was higher overnight. Europe is a mixed picture.
Our winning streak will be in jeopardy, at least in the early going today. At this point, adjusted for fair value, the S&P 500 futures are lower by 4 points, the Dow futures are down 22 and NASDAQ futures are about 8½ points below fair value.
June 9, 2014
Nothing much on the economic docket today, but not to worry – corporate mergers are taking center stage.
Dollar General shares are about 6 percent higher pre-market. On Friday, Carl Icahn disclosed a 9.4% position in Dollar General. And it looks like Tyson Foods will be the winner in the bidding for Hillshire Brands. Tyson’s 63 dollar per share bid bested competition from Pilgrims Pride.
Shares of Hittite Microwave are nearly 30 percent higher this morning, as Analog Devices will swallow them in exchange for 2 billion dollars. But the big winners of the morning appear to be shareholders of Idenix Pharmacueticals. Their research into combating hepatitis C looked so good to Merck that the drug giant will pay $24.50 cash for each share of Idenix, which closed on Friday at just over 7 dollars per share. In the pre-market, Idenix shares are higher by about 235 percent.
Three Federal Reserve officials are out on the rubber chicken circuit today. The first of those speeches comes about 20 minutes before the market opens.
Asian markets were mixed, although Japan was higher on a surprisingly strong GDP report, as GDP rose 6.7 percent in the first quarter versus the same quarter of 2013.
Germany, France and the U.K. are trading today, but much of the rest of Europe is closed for Whit Monday. There’s no meaningful movement in our futures thus far. At this point, adjusted for fair value, the S&P 500 futures are down less than a point, the Dow futures are up 4 and NASDAQ futures are about a point and a half above fair value.
June 6, 2014
Yesterday’s actions by the European Central Bank, essentially going negative on interest rates, sparked yet another rally in stock prices. While it’s obvious that interest rates can’t go a lot lower, zero is apparently not the limit. That kind of policy has been adopted before in some European countries, but not on this kind of scale.
Interest rates in this country are evidently not going higher anytime soon. The Fed is on track to end their asset purchase program by the fall of this year. But this morning, speaking in London, Fed Governor Jerome Powell predicted that short term rates won’t be hiked anytime soon, and certainly not for another year at the earliest.
The last big data point of the week comes in just 15 minutes with the monthly Employment Report. Expect that 210,000 new non-farm jobs were created in May, with the Unemployment Rate ticking up a bit to 6.4 percent.
Hertz shares are more than one percent lower pre-market. Their accounting procedures were reportedly so screwed up of late that they will have to re-state 2011, 2012 and 2013 financial statements. Rest assured, there is a new CFO in the driver’s seat.
Asian markets finished mixed overnight, after a strong start. European markets are higher, even in Greece, which announced a nearly one percent contraction in their economy.
Our futures are off their earlier highs, but are still pointing toward new record highs. At this point, adjusted for fair value, the S&P 500 futures are higher by less than a point, the Dow futures are up 13 and NASDAQ futures are about 2 points above fair value.
June 5, 2014
Just about a half hour ago, the European Central Bank acted pretty much as expected, by cutting their refi rate from a quarter percent to 15 basis points (meaning 15 one-hundredths of a percent.) Perhaps more importantly, they took the extremely rare stance with the overnight lending rate. It is now a negative ten basis points. That means that banks that keep funds on deposit with the ECB will actually pay for the privilege. Hint, hint….start lending that money out to boost the economy and raise inflation.
At 8:30, ECB President Draghi holds a press conference to fill in the details, such as the expected duration of that highly unusual policy. For their part, the Bank of England held rates AND their quantitative easing policy steady.
Shares of networking firm Ciena are about 12 percent higher after announcing adjusted earnings of 17 cents versus the expected 13 cents and also raising full-year guidance.
It’s a big day for Mary Barra and GM, as they release the results of their internal investigation regarding the ignition switch debacle. GM shares have been trending higher of late, up more than 10 percent from a couple of weeks ago.
Costco’s May same store sales were up 6 percent, which is much better than expected. Overseas markets are higher, especially in Europe, as are our futures. At this point, adjusted for fair value, the S&P 500 futures are higher by 2 points, the Dow futures are up 26 and NASDAQ futures are about 6 points above fair value.
June 4, 2014
It’s a bit of the calm before the possible storm on this Hump Day. The Monthly Employment Report is due on Friday, and perhaps more importantly, the European Central Bank will announce their interest rate policy tomorrow.
Thus far today, we learned that Mortgage applications dropped again last week, in spite of another drop in the average interest rate. The rate on a conforming 30 year loan fell five basis points to 4.26 percent. However, applications for home purchase mortgages fell 4 percent and applications for refinancings fell by 3 percent.
The ADP Employment Report was just released and reported that 179,000 new non-farm jobs were created in May. That was well below the April number and 31,000 lower than expected. 150,000 of those jobs were in service sectors of the economy.
Shares of UnitedHealth are moving about one and a half percent higher this morning. United Health is raising their dividend by 34 percent and the Board also approved a big dollar share buyback plan. Protective Life shares are up another 18 percent, announcing that they will be acquired by Japan’s Dai-Ichi.
Tokyo was fractionally higher overnight, but most markets overseas are lower. Our futures took a turn lower after the ADP Report five minutes ago. At this point, adjusted for fair value, the S&P 500 futures are lower by about 5 points, the Dow futures are down 25 and NASDAQ futures are about 8 points below fair value.
June 3, 2014
The broad market has been higher in 7 of the last eight sessions, but that may change to 7 of 9 if early indications hold through the day.
The bidding for Hillshire Brands intensified this morning, as Pilgrim’s Pride raised their offer to 55 bucks per share, topping Tyson Foods’ 50 dollar offer. Problem is that Pilgrim’s Pride wants Hillshire to give up on their bid to swallow Pinnacle Foods. Hillshire says they can’t do that. Eyes now turn to Tyson for the next move on the checkerboard.
Car Sales Reports will filter in as the day unfolds. The big gainer in May is expected to be Chrysler. Which just reported a 17 percent increase.
Krispy Kreme shares are about 11 percent lower this morning after a disappointing earnings report last night. Dollar General also missed the mark this morning. Those shares are a little lower pre-market. On the famous other hand, AT&T share are on the rise after raising full-year revenue guidance this morning.
Eurozone inflation dropped to a four year low last month, increasing the odds that the ECB will pump out some stimulus the day after tomorrow.
Asian markets were mixed overnight, but Europe is in the red. Our futures have been sliding for most of the morning, but seem to have stabilized. At this point, adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down 39 and NASDAQ futures are about 16 points below fair value.
June 2, 2014
The big potential market mover comes later this week, with Thursday’s announcement from the European Central Bank. Many expect that a new round of monetary, if not economic, stimulus is on the way.
Shares of Apple have been stimulated quite a bit recently. Today, Apple is expected to unveil a new software platform billed as “smart home technology.” This platform would reportedly allow you to control light, appliances and home security systems, as well as ensuring that your teenagers get their homework done on time and excel on their ACTs. Okay, just kidding about that last part, but Apple is probably working on it.
Broadcom shares are more than 11 percent higher pre-market, after they announced that their cellular baseband business may be up for sale.
It’s another Merger Monday, with ARC Healthcare going to Ventas in a 2.6 billion dollar deal. Protective Life is being acquired for 5 billion by a Chinese firm.
The May PMI and ISM Manufacturing Surveys will be reported by 10 this morning. Both are expected to improve a bit over the April numbers.
Most overseas markets are higher, with India and Japan both up about 2 percent. At this point, adjusted for fair value, the S&P 500 futures are higher by about a point, the Dow futures are up 18 and NASDAQ futures are a point and a half above fair value.
Daily Reports @ WJR
For an explanation of "fair value" please click here.