March 30, 2007
Shares of drug maker Dendreon were halted most of the day yesterday pending an FDA advisory committee announcement about the company’s experimental prostate cancer drug. The announcement came after the close of trading yesterday. It was positive and as a result Dendreon, which yesterday was a 5 dollar stock should open north of 18 bucks this morning.
Trading lower will be shares of Dell. Dell will delay their 10-K filing while they continue to sort out past accounting issues, which according to the company include not only errors, but “misconduct.” Look for Dell to slump about 2 percent at the open.
Lot’s of numbers on the way today. Personal income and consumption data, the Chicago PMI and the final reading out of U of M regarding March Consumer Sentiment will al be on the table by 10 o’clock.
Oil is once again a big headwind for stocks this morning, as light sweet crude has been on the rise all morning, and is now at $66.30 per barrel. That’s up about a quarter cents from yesterday’s price and it has stock markets overseas turning in a mixed performance.
March 29, 2007
Tensions have eased a little bit with Iran. That has oil prices flat at about 64 bucks this morning, and should give us a bit of a bounce at the open after yesterday’s losses.
Fed Chairman Bernanke’s testimony before Congress yesterday pretty much put to bed any hope that the Fed is leaning toward an interest rate cut in the very near future. Sooner or later, the market may start to accept the notion that interest rates may remain unchanged for quite some time to come.
The company that owns Bell Canada may join the growing list of privatized companies soon. Kohlberg Kravis Roberts is reportedly readying an offer that could be worth 30 billion Canadian dollars.
With two days left in the 1st quarter, we’ll get the final reading on 4th quarter GDP at 8:30. Expect an unrevised 2.2 percent.
ATMI warned that quarterly results will fall short of expectations. However, earnings warnings for the quarter have been few and far between.
March 28, 2007
We’re heading for some rough waters at 9:30, and there’s a simple reason – it’s the oil in the water. Specifically, it’s the price of that oil. Light sweet crude oil is up a dollar seventy-five per barrel this morning, at $64.68 on fears that the Iranian arrest of those British soldiers a couple of days ago will escalate to something far more serious. Gold, of course is higher on those worries, and if you’re superstitious beware – gold is at $666 per ounce.
At 8:30 the February Durable Goods number could give us some relief. It’s expected that orders for big-ticket items rose 3.5 percent in February, after a sharp decrease in January. Another big drop would not be good.
Speaking of sharp decreases, look no further than shares of Beazer Homes. Beazer’s business practices are being investigated by the FBI, the IRS, HUD and just about every other organization known by a three-letter acronym. Beazer shares are looking to open about 20 percent lower than yesterday’s closing price.
March 27, 2007
There’s some good news in the state of Michigan. The MESP, the very popular Michigan College Savings Program, which was already one of the most economical 529 programs in the country, just got better. The State has negotiated a new 3 year contract with the program manager that lowers the already low six-tenths of a percent management fee by 25 percent, starting April 1st. For Michiganders who need to save for college, this program is becoming a no-brainer.
The big economic report of the day comes at 10 o’clock this morning, with the Conference Board’s reading on March Consumer Confidence. Expect a dip to 108.4 from last month’s 112.5. Higher gas prices and the late February stock market dip get the blame.
Keep an eye on the House Financial Services Committee today. They will hold hearings on the sub-prime mortgage mess and how Congress might ride to the rescue. There’s lots of potential danger there.
Asian markets were predominantly lower overnight. Europe is moderately higher, but it looks like we’ll be climbing out of a bit of a hole at 9:30.
March 26, 2007
The S&P, the Dow and the NASDAQ all tacked on over three percent last week. It’s amazing how quickly the mood can change on Wall Street. Remember that the big 400 point Dow dive, and all the gloom and doom talk about the market came less than a month ago. Take it as another lesson, as if you need another one, that trying to time the unpredictable can be very expensive.
Speaking of expensive, it will reportedly cost Citigroup a one billion dollar hit to say bye-bye to 15,000 of their employees. The full cutback plan is expected to be announced in April.
Tiffany is out with earnings that beat estimates by 2 cents per share on better than expected revenue. Walgreen also beat estimates. Dell Computer and United Technologies each received broker upgrades this morning.
Asian markets rose overnight. Europe is mixed as oil is again heading higher. Light sweet crude is just a hair under 63 dollars per barrel.
March 23, 2007
The rally continued, at least for the Dow Jones Industrials yesterday. One of the more interesting events of the day was the Congressional hearing about the sub-prime mortgage mess. The big fear is that Congressional over-reaction will choke off credit to the housing market altogether. Yesterday political grandstanding was kept to a relative minimum, as our elected leaders seem to recognize that clamping down too much may be the last thing we need. That’s good news.
We could use some good news for sales of existing homes. At 8:30 we’ll find out how February turned out. Expect an annualized sale rate of 6.3 million units.
There’s one week to go in the quarter, and a late Friday afternoon is a great time for a company to quietly warn that maybe the quarterly results aren’t quite up to snuff. Watch out for that as the day goes on.
March 22, 2007
The Fed gave the stock market a reason to rally yesterday. However, be careful what you ask for. While saying that inflation pressures are a potential problem, the Fed dropped their “bias” toward raising interest rates. One the one hand, that means that the odds of a future rate cut went up. On the famous other hand, it means that the Fed sees economic trouble ahead, and although they didn’t say it, look no further than declining housing prices and the sub-prime mortgage mess.
Motorola will be the stock mess of the morning. They fired their CFO last night, because you should always blame your top accountant when your business stinks. Anyway, their projected profit for this quarter will not happen. Sales are going to be more than 10 percent lower than expected. The Chief Operating Officer is going bye-bye as well. The CEO, however, gets to keep his paycheck. Motorola will open 4 to 5 percent lower this morning.
ConAgra, General Mills and Williams-Sonoma all beat estimates this morning.
March 21, 2007
The Federal Reserve Open Market Committee will once again hold interest rates unchanged at 2:15 this afternoon. If the stock market holds true to form, it will add suspense to this rather obvious outcome by trading in a narrow range, close to the flat-line, until the official announcement is made.
However, given the earnings news that is out this morning, the market may have trouble containing its enthusiasm, especially on the NASDAQ.
Over on the NASDAQ, Oracle and Adobe were both out with excellent earnings reports last night. Oracle beat estimates by three cents per share and that should be worth about 6 percent in stock appreciation this morning. Morgan Stanley, like many Wall Street firms, beat their estimate handily this morning. They reported $2.40 cents per share versus the expected $1.88.
FedEx made 2 cents per share more than expected. However, revenue was a little light. That shortfall was blamed – of course – on the weather. They also warned about fiscal ’08 and so FedEx is looking to open a bit lower.
Japanese stocks did not trade overnight – first day of spring, you know. Gotta love those Japanese. Any excuse for a party.
Hong Kong was up. Europe is higher. We’re pretty much on hold in front of the Fed announcement. At this point, adjusted for fair value, the S&P and Dow futures are flat, but the NASDAQ futures are a full 8 points above fair value.
March 20, 2007
For many, many years the Federal Reserve Open Market Committee, which meets eight times a year, ran two of those meetings for day days. Last year they went to three two-day meetings and this year fully half of their meetings will be two-days in length, including the meeting that begins today. On the one hand, you’ve got to believe that this trend is costing the American taxpayer more in coffee and doughnuts, which is a bad thing. One the other hand, as an economist would say, it’s one less day that all those Fed governors are running around the country giving speeches, which is terrific.
Anyway, the latest non-decision-decision on interest rates wil come at 2:15 tomorrow afternoon.
In the meantime, at 8:30 this morning, the report on February Housing starts is actually expected to reflect an increase to an annualized rate of 1.45 million units from 1.41 million in January.
Palm stock may be on the move this morning. Word has it that Palm may be taken over by Nokia, or, if management has its way, a private equity group.
March 19, 2007
There are two weeks left in a quarter when corporate earnings are expected to have slowed down. So, keep your ears peeled for any late-quarter warnings for companies that may be having more problems than expected.
In the meantime, it’s Monday, so private equity firms have their wallets open once again. Servicemaster is first on the list, going out at a 16% premium to Friday’s closing price. There’s also a rival bid rumored to be coming to compete with the current bid for Texas utility TXU.
There’s nothing much on today’s agenda. The Federal Reserve Open Market Committee gets together tomorrow. This time it will take them two days to decide to do nothing about interest rates.
Overseas, Barclays Bank may be interested in buying underperforming Dutch Bank ABN-Amro. ABN-Amro is about 10% higher in Europe. Overall, Europe is higher by a half to oine percent. Asia was up about 1 ½ percent overnight, and we wil start the day in the green as well.
At this point, adjusted for fair value, the S&P futures are up about 6 ½ , the Dow futures are up 56, and the NASDAQ futures are more than 9 points above fair value.
March 15, 2007
Beware the Ides of March. Better yet, beware the February Producer Price Index. That’s about the only thing that stands between the stock market and a pretty good open this morning. The best guessers out there are guessing that prices for goods at the wholesale level rose a half-percent in February. The core rate is expected to have risen 2 tenths of a percent. The lower those numbers are, the better stocks will open.
Yesterday’s market action was a true roller coaster ride, with the Dow Jones Industrials swinging back and forth a number of times between the red and the green before finally recouping almost half of Tuesday’s losses.
Alan Greenspan is out on the rubber chocken circuit again today and a little later we’ll also get readings on the manufacturing sector in the New York and Philadelphia regions.
Bear Stearns was barely beat estimates this morning.
March 14, 2007
General Motors finally reported fourth quarter earnings this morning, GM reported earnings of a dollar sixty-eight per share versus last year’s loss of $11.63. Now before you get too excited about that, North American operations were still in the red for the year. However, $6.8 billion dollars of structural costs were eliminated, that’s higher than the $6 billion target and that’s a big step in the right direction.
The report from the Mortgage Bankers Association yesterday did nothing to calm fears about the unfolding meltdown in the junk mortgage market. Delinquencies among sub-prime ARMs rose to over 14% in the 4th quarter. Foreclosure numbers are, as you would expect, also higher.
Last night after the close, H&R Block, which over the years has become less about taxes and more about selling loans and financial products, warned that their exposure to subprime loans will clip earnings. They are delaying their 10Q filing, and Block shares are looking to open 10 to 15% lower. In case you missed it in last week’s annual report, Warren Buffett disclosed that Berkshire Hathaway has sold 60 percent of it’s H&R block position.
Japanese stocks fell almost 3 percent overnight after our bloodbath yesterday. Europe is just under 2 percent lower.
March 13, 2007
At 8:30 this morning, we’ll get the Government’s report on February Retail Sales. January was flat. February is expected to rise about three-tenths of one percent overall and two-tenths of a percent excluding autos.
This report is becoming more closely watched every month. With overdue restrictions in the sub-prime mortgage market becoming a reality, many are worried that the entire mortgage market will do the “tighten-up.” That means fewer and fewer people will be using their homes as ATM machines, which will presumably result in a big drop in retail sales.
Accredited Home, another sub-prime lender, is looking to open over 50% lower and says it is exploring “strategic alternatives,” which is the financial market term for “somebody, please throw me a rope.”
One retailer that is doing just fine, thank you, is Dick’s Sporting Goods. They beat estimates and raised guidance this morning.
March 12, 2007
It’s Monday, so you expect merger news to lead the way. And, here we go again. Dollar General will be going private. KKR will buy them at 22 bucks per share. That’s about a 30% premium to Friday’s close.
Schering-Plough is buying a Dutch pharmaceutical firm by the name of Organon Biosciences. That’s a 14 billion dollar deal.
The fallout continues in the sub-prime mortgage business. New Century Financial is quickly losing its funding sources, and a sub-prime lender without its funding sources is well – it’s not long for this world. New Century closed Friday at $3.21. It’s looking to open another 50% lower this morning.
Another big lender, Countrywide Financial is downgraded this morning to under-perform by a major brokerage firm.
Oil is down below 60 bucks per barrel. Actually light sweet crude is off almost 75 cents per barrel.
March 9, 2007
Stock prices survived a mid-afternoon scare yesterday to post a solid gain. The scare was generated by news of more trouble at New Century Financial the sub-prime lender whose financing sources are apparently drying up. Trouble is far from over in the sub-prime mortgage sector. However, this morning, it’s all about jobs.
In about ten minutes the Labor Department is expected to announce three big statistics. Expect an unchanged unemployment rate of 4.6%, an increase in the average wage of 3 tenths of a percent, and the addition of 100,000 new non farm jobs. That would be the weakest job growth in a couple of years. Given all the recent chatter about a possible recession late this year or next, it would seem that the higher that new jobs number, the better. However, too big a jump in the average wage could spark inflation fears.
Procter & Gamble reaffirmed earnings estimates at the lower end of expectations. P&G should trade a little lower at the open. Texas Instruments should open a little high on a broker upgrade.
March 8, 2006
As expected, the European Central Bank raised interest rates by a quarter of a percent this morning, while the Bank of England held their lending rates steady.
On the less-than-expected side of the ledger, both Walmart and Costco reported February same-store sales that were below expectations. Costco sales rose 4 percent and Walmart was only up 9 tenths of a percent. JC Penney actually saw same-store sales fall. High end retailers like Nordstrom and Saks did much better than expected.
Ford Motor was upgraded by a major broker this morning, who raised its target price for Ford sahres all the way up to 8 dollars from 7. Ford closed last night at 7.62.
Hong Kong and Tokyo were up well over one percent overnight. European markets are up almost one percent, and unless was get a ridiculous number out the the weekly jobless claims at 8:30, we'll be in the gren at 9:30. Adjusted for fair value, &&P futures are up about 10, the Dow futures are up 80 and the NASDAQ futures are about 20 points above fair value.
March 7, 2007
Yesterday turned out to be the best day of the year by far for stocks prices. Now we’ll see if there’s any gas left in the tank, as we wait for the big Jobs Report on Friday.
The big economic event of the day will be the release of the Fed’s ever-fashionable beige book. It’s their survey of regional economic conditions throughout the country. Although the economic health of this particular region is pretty well known, traders will be looking for clues as to the direction of the nation as a whole.
There’s a somewhat disappointing report from American Eagle Outfitters. February same store sales were up 6 percent, versus 8 percent last year. First quarter earnings will be at the lower end of expectations.
Broker upgrades this morning for Google, Deere, Kellogg and Chubb. Campbell Soup was downgraded by Goldman Sachs.
March 6, 2007
You’ll probably hear this term sometime today, so let’s get it over with, the term being “dead-cat bounce.” Markets around the globe are bouncing back this morning which will either 1.) mark the end of the week-long “correction,” 2.) prove to be a “dead-cat bounce” which will only give way to more selling, or 3.) totally evaporate by mid-day in the U.S. If this is the end of the correction, it will prove to be a very shallow correction, given the 4 ½ year run we’ve had. But all that being said, we should get off to a strong start this morning.
Novartis will get off to a strong start. Novartis shares are trading about 4 percent higher in Europe, after the FDA approved a new drug to treat high blood pressure.
One tiny deal was announced this morning as Spring Training is in full swing. Topps, the baseball card company, is being taken private for 385 million dollars. That’s about a 9 percent premium.
At 8:30, we’ll get the revised 4th quarter productivity number and at 10 o’clock, January Factory Orders are expected to be down about 4 ½ percent.
Alan Greenspan is talking about recession again, but Treasury Secretary Paulson talked up the economy in Japan overnight. Ben Bernanke will give a speech later on today. Those comments could move the markets.
March 5, 2007
Last week, the S&P 500 had its biggest weekly point drop in almost 5 years. Yet the front cover of his week’s Barron’s magazine proclaims “Stick with the Bull.” That stickiness will get another test in the early going today. Japanese stocks sold off over 3 percent overnight. That led all other overseas markets lower and will take us down a chunk at 9:30. The yen, by the way, is all the way up to 115 to the dollar.
Ford may be ready to unload its Aston Martin division. The rumored price tag is 870 million dollars.
St. Louis Fed President William Poole is speaking in Chile today about inflation and the economy. Traders may find something in his remarks to hang some “buy” tickets on, but in the meantime we’ll head lower.
March 2, 2007
Dell Computer released another disappointing earnings report last night and didn’t offer much hope that things would turn around any time soon. Earnings missed by 2 cents per share. Look for Dell stock to open about 3 percent lower.
On the famous other hand, insurer AIG reported a dollar fifty five versus the expected dollar fifty, as party of a generally positive report.
Later this morning, the University of Michigan’s final reading on consumer sentiment is expected to come is at 93.5. But that’s about it for economic data for the week.
It’s déjà vu all over again with volatility in the futures this morning. We were holding out hope for a pretty flat open until about 7 o’clock this morning, when the futures rolled over and fell somewhat out of bed. Some of that may have been triggered by comment from a Federal Reserve governor.
March 1, 2007
Domestic stocks bounced back a little yesterday, but yesterday’s gains will likely vanish at 9:30 as we’re looking at a fresh wave of selling pressure this morning.
Auto sales numbers for February will be rolling in as the day rolls on. At 8:30 we’ll also get the January readings on personal income and consumption. Both are expected to be down from the December numbers. Expect a three-tenths of a percent increase in income and a four-tenths of a percent increase in consumption.
At 10 o’clock, we’ll get the February ISM Index, which is expected to show an absolutely neutral reading of 50.
All that being said, it’s hard to imagine that any of those announcements will overcome a little tsunami of selling sentiment that’s building.
Stock index futures were positive earlier, but ran into some significant trouble just about an hour ago and have been sinking ever since. At this point, we’re looking for lower prices at 9:30. Adjusted for fair value, the S&P futures are down 13 points, the Dow futures are down 97, and the NASDAQ futures are about 22 points below fair value.
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