March 26, 2010
The Dow almost rose all the way up to 11,000 yesterday until more worries about European sovereign debt knocked the stuffing out of a pretty good rally.
It’s not like there won’t be any new news today, but the only major data points on the agenda are revisions to “old news” from earlier in the month.
At 8:30 this morning, the federal government will release the final final on 4thquarter Gross Domestic Product. The preliminary number was an increase of 5.9% and there doesn’t seem to be any reason to expect that number to move very much.
Just before 10 o’clock the University of Michigan’s final final on March Consumer Confidence is expected to crawl up to a reading of 73, from the preliminary reading of 72.5. That would still be a lower level than February, as higher gasoline prices and stubbornly high unemployment rates are keeping folks in a relatively lousy mood.
Major Asian markets were a sea of green overnight, but Europe is, on the main, a bit lower. We should get off to a higher start at 9:30, as the futures are on the rise. Right now, adjusted for fair value, the S&P 500 futures are higher by more than 6 points, Dow futures up 51, and the NASDAQ futures are 9 points above fair value.
Ben Bernanke will sit down for a little chat with the House Financial Services Committee this morning and will no doubt >
At 8:30, we’ll get the bubbled-up weekly jobless claims numbers. Although weekly claims have been falling for most of the past year, it’s still estimated that 450,000 folks lined up at the unemployment window for the first time last week.
Oracle will check in with their earnings report today. Already out this morning was the 4thquarter report from Best Buy, earning $1.82, which was three cents better than expected. Sales were up 7% on the quarter, revenue was better than expected, and they raised their earnings estimates for fiscal 2011. It should be a good morning for Best Buy shares.
Australia and China were lower overnight, but most other markets overseas a higher. The dollar is a bit lower and that’s helping our futures a bit.
At this point, pending the jobless claims at 8:30, we’re looking for to make up yesterday’s losses right off the bat this morning. Adjusted for fair value, the S&P 500 futures are higher by about 6 points, Dow futures up 49, and the NASDAQ futures are almost 10 points above fair value.
After trading higher 14 out of the last 18 sessions the S&P 500 sits at its highest level since September 2008. In case you’ve forgotten, that’s when Lehman Brothers was still around. The S&P is more than 6.3 percent higher this month alone.
Whether or not that momentum continues may well depend on this morning’s report on Durable Goods Orders. It’s expected that orders were up only one-half of one percent, after last month’s 2.6% increase. Then at 10 o’clock, the February New Home Sales are expected to hit an annual run rate of 315,000. That would be up from January’s 309,000.
Speaking of home sales, Home builder Lennar turned in a much better financial report than had been expected. Lennar lost only 4 cents per share last quarter. Analysts expected a loss of 30 cents.
Asian markets were mostly higher overnight, but Europe is mostly lower after rating agency Fitch downgraded the debt of Portugal this morning. That has the dollar index spiking almost one percent higher, and that, in turn, is not helping our stock futures.
They’re off their lowest levels of the morning, and there’s no denying that the recent mood up the market has been to “melt-up” given the least little reason. We’ll see if we can find that reason. But at this point, adjusted for fair value, the S&P 500 futures are down about 2½ points, Dow futures down almost 17, and the NASDAQ futures are 5½ points below fair value.
At 10 o’clock, we’ll find out whether or not anyone who owns a house was able to sell it in February. Sales are actually expected to have risen to the 5.15 million annualized rate, thanks in great part to the homebuyer tax credit.
Walgreens just posted results for last quarter, and they’re not bad, but they’re not the greatest, either. Sales were on the light side of expectations and earnings of 70 cents per share were a penny shy.
Sprint Nextel is expected to unveil its first WiMax compatible phone a little later on.
Asian markets are mixed, but European markets are mostly higher. The dollar index is on the rise, up four-tenths of a percent, and that’s not helping our futures.
They have slipped a little during the past couple of hours, and at this point have us expecting little or no movement in prices when. At this point, adjusted for fair value, the S&P 500 futures are flat, Dow futures up 6, and the NASDAQ futures are 2 points above fair value.
It’s the last full week of the year’s first quarter but there are still a few earnings reports to talk about.
There is apparently a lot of demand for little blue boxes. Tiffany reported $1.10 of earnings, versus the expected 73 cents. Tiffany sees 2010 worldwide sales up 11 percent.
Williams-Sonoma also with a good report, earning 86 cents, which beat estimates by 13 cents. Kimberly Clark sees 2010 earnings a little higher than prior guidance and Pepsico reaffirmed their 2010 estimates.
Now that Congress is pretty much done making their “health reform” sausage, the Senate Banking Committee starts marking up the financial reform proposal today. If you liked the health reform process, you’ll likely love what comes next.
Chinese stocks rose just a bit overnight, Japanese stocks did not trade, but just about every other major overseas market is lower this morning.
Weighed down by a quarter-point interest rate hike in India, strength in the dollar index and, of course, disappointment over the new investment income taxes in the health care bill, our futures have been solidly lower all morning. At this point, adjusted for fair value, the S&P 500 futures are lower by 6½ points, Dow futures are down 48, and the NASDAQ futures are 9 points below fair value.
The Dow Jones 30 Industrials Index has now floated higher 8 trading sessions in a row, although “floated” is the appropriate term, in that there hasn’t been a lot of conviction in the buying.
There is, however, some conviction of purpose in the selling of Palm shares this morning. Last night, Palm announced a loss of 61 cents per share, which was about 50 percent worse than expected. Their forecast was pretty soft as well, and the stock is looking to open between 15 and 20 percent lower. One brokerage firm has announced a target price for Palm shares of zero. That’s not good.
Best Buy, on the famous other hand, received an upgrade to buy from Goldman Sachs this morning, and the shares are looking to open almost 3 percent higher.
There’s absolutely no economic news on the agenda today, as the world is apparently pre-occupied getting itself ready for the all-important meat-out day tomorrow.
Malaysia was lower overnight. Spain’s also a bit lower. But all other major markets overseas are modestly higher.
There could be some stock price weirdness this afternoon. It is a quadruple-witching Friday, as stock options, index options, stock futures and index futures all expire at the very same time.
Speaking of futures, ours are trying to fight off the effect of a dollar index that’s higher by about a third of one percent. At this point, for the second morning in a row, the S&P 500, Dow 30 and NASDAQ futures are all just about even with fair value.
The S&P 500 Index has now risen 12 out of the last 14 sessions, as the market melt-up continues. By the way, we’re now back to the level we held at the end of September, 2008, when the last big meltdown was just gettin’ warmed up.
If yesterday’s Producer Price Index Report is any guide, you can expect the February Consumer Inflation report to show an overall decrease of two-tenths of a percent. That supposedly means that consumers are enjoying lower prices for the things they buy. Whether you regard this report as fiction or non-fiction, it is what it is. It is curious, don’t you think, that inflation has been so well contained ever since Congress linked Social Security Benefit levels to the Consumer Price Index.
About a half hour ago, FedEx delivered earnings of 76 cents per share. That’s beat estimates by four cents on higher than expected revenue. They did not, however, raise their guidance for the year, and that has FedEx stock looking to open lower by 3 dollars or so.
At 10 o’clock, the February Leading Economic Indicators is expected to be up only a tenth of a percent, after last month’s three-tenths of a percent increase and we’ll also get an idea of how business is faring out East with the results of the Philly Fed survey.
Overseas markets are narrowly mixed.
Our futures have risen a little over the past hour, but they’ve really just crawled back to even. At this point, the S&P, Dow and NASDAQ futures are all just about even with fair value.
At 2:15 this afternoon we’ll get the latest version of the Federal Reserve’s view of our economic future when the Open Market Committee releases their statement. Traders will again focus on the Fed’s statement rather than the Fed’s interest rate policy. That is, of course, unless the Fed surprises everybody and changes policy. Absent any policy change, look for any changes in the Fed’s intent to keep interest rates exceptionally low “for an extended period.”
Senator Dodd proposed his “financial reform” bill yesterday. With unfortunate predictability, Dodd caved to pressure, whether it came from Republicans or the big-money lobbyists, and deleted imposition of a fiduciary standard for stock brokers and insurance agents. And in true Washington fashion, rather than correcting the original sin of repealing Glass-Steagall, which was arguably a root cause of the financial meltdown, Dodd’s bill creates another large Washington bureaucracy to gently place wallpaper over the creeping mold.
At 8:30 the February Housing Starts report is expected to reflect a slight decline to the annualized level of 570,000.
Asian markets were mixed overnight, but Europe is generally a little higher. Here we go again - the dollar index is a little lower, and our futures are a little higher.
At this point, adjusted for fair value the S&P 500 futures are up more than 2 points, the Dow futures are up 7, and NASDAQ futures are just a little less than 3 points above fair value.
It will be a week packed with economic news, but most of it will be packed into the middle of the week, including a Federal Reserve Open Market Committee meeting tomorrow. Comparatively speaking, today’s announcements are sort of ho-hum.
At 9:15 this morning, the February statistics on Industrial Production and Capacity Utilization are each expected to be a bit weaker. Weather will likely get the blame here, with production expected to be flat and capacity unitization is expected to decline slightly to 72½ percent.
Good news for shareholders of Pepsico this morning. Your dividend is going up 7 percent to $1.92 per share per year. Pepsico’s Board also authorized a share buyback of up to 15 billion dollars.
In spite of Ethos week, Senator Dodd will reveal his financial reform bill today, which may well be the best thing all the lobbyists could buy. Let’s hope the word “fiduciary” is included, and is actually designed to mean something.
Not a lot of movement overseas overnight, but most equity markets traded a little lower, and that’s the way we’re looking to kick off the week at 9:30.
At this point, adjusted for fair value the S&P 500 futures are lower by about 2 points, the, Dow futures are down 11, and NASDAQ futures are just a little more than 3 points below fair value.
The S&P 500 Index has finished higher nine of the last ten trading sessions, and on that day, it finished down less than a quarter point. Granted, the gains haven’t been huge, but slow and steady may soon start coaxing a lot of one-burned equity investors off the sideline. Excluding dividends, the S&P 500 is now 3 percent higher for 2010 and just about 60 percent higher than a year ago.
At 8:30 we’re expecting the February Retail Sales numbers, and we’re not expecting much. Overall, sales are expected to have fallen two-tenths of a percent, and excluding automobiles, retail sales are expected to be flat. Lousy weather will no doubt get the blame.
Sales at a couple of companies are evidently pretty good. Ann Taylor reported earnings of a nickel per share this morning, versus an expected loss of a penny. And things are evidently good in the fertilizer business. Potash raised its guidance for the current quarter significantly this morning, their shares and shares of all fertilizer companies are in pre-market rally mode.
Just before 10 o’clock, the University of Michigan’s first read on March Consumer Sentiment is expected to climb just a bit to a reading of 74.
The dollar index is down almost three quarters of a percent at this hour, and that is no doubt helping our futures.
Asia was mixed overnight, but Europe is solidly higher. At this point, adjusted for fair value the S&P 500 futures are higher by nearly 3 points, Dow futures are up 21, and NASDAQ futures are about 2½ points above fair value.
The stock market has been an unusually placid place lately, with the major averages hovering around the break-even point for much of each trading day. That’s also what we’re looking at this morning, at least until the 8:30 release of the weekly jobless claims data. The consensus estimate is that new claims fell just a bit to the 460,000 level which would be an improvement in a still pretty horrible level.
Inflation fighters in China are on alert. Chinese producer prices and consumer prices both came in a little higher than expected overnight, although the CPI increase was still only 2.7 percent. Speaking of rising rates, one number we haven’t mentioned lately is the 3 month LIBOR interest rate. After falling from more than 4 percent to less than a quarter of one percent, the three month LIBOR is nearing 26 basis points. Granted, a one basis point increase isn’t the end of the world, but for those looking for the proverbial canary in the coal mine, the rate is starting to move higher.
A Congressional Oversight Committee reported this morning that the Treasury’s bailout of GMAC may cost taxpayers over 6 billion dollars and that the bailout plan is “one of the more baffling decisions that Treasury has made.” And that, of course is saying something.
Hershey and Dr. Pepper/Snapple received upgrades this morning, while Bed Bath and Beyond was taken down a notch my a major broker.
Stock futures are showing a whole lot of nothing going on, but what is going on is likely to go a little lower. At this point, adjusted for fair value the S&P 500 futures are down 2 points, Dow futures are down 8½, and NASDAQ futures are about 2 points below fair value.
March 10, 2010
A stronger dollar held back a potential rally in stocks yesterday, with only the financial stocks showing a lot of relative strength. Perhaps the reason for that was a story in the Financial Times yesterday saying that Barclays may be on the hunt to acquire a big U.S. bank. The article cited a few potential targets, all of whom required U.S. government bailouts, including SunTrust, U.S. Bancorp and PNC.
American Eagle Outfitters look to open higher this morning on word that they will close 28 stores. Sam Adams may be the flip side, however, after missing their earnings target and lowering earnings projections.
There’s an interesting analysis out from a firm called CardHub.com. They’ve analyzed government data on consumer credit cards. The amount of consumer credit card debt outstanding decreased by 93 billion dollars last year, which many have assumed resulted from consumers paying off debt and restraining purchases. Turns out that 90% of that decrease was the result of charge-offs by the banks after people either went bankrupt or fell more that 180 days delinquent.
Allergan stock looks good this morning on word that you’ll soon be able to use Botox on your elbows, wrists and fingers. Pretty soon you may be able to anesthetize your entire body in hopes of getting a date.
Chinese stocks were lower by almost one percent overnight, but there’s just not a lot of movement elsewhere overseas, nor is there a lot of movement in our futures. At this point, adjusted for fair value the S&P 500 futures are up a point, Dow futures are up 15, and NASDAQ futures are about 3 points above fair value.
Happy anniversary, if today is yours. Speaking of anniversaries, it is exactly one year ago that the S&P 500 hit its intra-day low of 666. Since then, large cap stocks have risen nearly 70 percent, midcaps are up 80 percent and smallcaps are up about 90 percent. Of course, if you bailed out of stocks a year ago and have been hiding in money market funds since then, your portfolio is higher by – oh – about zero percent. Just another lesson in consistent asset allocation.
Tomorrow, by the way, is the tenth anniversary of the top of the technology stock bubble as those who loaded up on NASDAQ stocks were about to get crushed. Just another lesson in diversification. You really don’t have to go to school to learn lessons – just pay attention. History can be a great, if sometimes expensive, teacher.
Come 11 o’clock this morning we may get a lesson in how fundamental technologies can change. Cisco Systems promises an announcement that will “forever change the internet” and the way we communicate.
Texas Instruments raised the low end of their earnings guidance last night, but indicated that chip demand is so strong that supply of materials may be a problem.
Asian markets were mixed, but Europe is lower. The dollar index is up almost 40 basis points, and that looks to contribute to lower stock prices at 9:30, although the futures have recovered from earlier lows. Adjusted for fair value the S&P 500 futures are down 4 points, Dow futures are down 22, and NASDAQ futures are about 6½ points below fair value.
McDonald’s reported February same store sales about twenty two minutes ago. Although the American and European numbers were a little shy of estimates, the Asian sales were up over 10 percent to pull the global number up 4.8 percent. That beat estimates by almost a full percentage point and has McDonald’s stock bid about 60 cents per share higher in the pre-market.
FDIC head Sheila Bair, who has been a voice of reason and intelligence throughout the entire banking crisis is speaking, as we speak, to the National Association of Business Economists.
We’ll also get a sales update from Texas Instruments.
Cisco Systems, Research in Motion and Macy’s all received broker upgrades this morning, while the downgrades go to Firth Third Bank and Palm.
Don’t look now, but futures on a barrel of light sweet crude oil are up about 35 cents per barrel, just shy of 82 bucks.
Asian markets were up across the board, with Hong Kong and Japan about 2 percent higher.
Futures on our major stock indexes are not showing a lot of direction, but they are higher than they were a couple of hours ago. At this point, adjusted for fair value the S&P 500 futures are flat, Dow futures are up 6, but NASDAQ futures are about a point below fair value.
In Washington, it continues to be all about the health care. However, for those of us who pay the taxes, rather than spend them, it continues to be all about the jobs. Although tomorrow’s Employment Report may be difficult to interpret because of all the February snowstorms, it looks like stocks may tread a bit of water until the report is issued.
Many employment-related firms, like ADP and Challenger have developed monthly surveys and statistical reports to reflect what’s happening with the job market. Online job firm Monster has developed their own report, and this morning, Monster reports that they are seeing a pickup in online job listings from last month and a year ago. In fact, it’s the first time their index has reflected long-term job growth in over two years.
The Labor Department’s report on weekly jobless claims is due out in just about 15 minutes. Initial claims are expected to have dropped by 23,000 to 473,000, but continuing claims are expected to be up a bit.
The big retailers will be reporting February same-store sales all day long. Limited Brands kicked things off this morning, reporting a 10 percent increase in same-store sales, which was a little bit better than expected. Macy’s reported a 3.7% increase versus the 1.4 percent estimate. GAP and American Eagle also reported much stronger sales than expected.
Asian markets were lower overnight, and although Europe is more of a mixed bag, the major European markets are just a bit lower.
Our futures are waiting to see what the Labor Department serves up at 8:30. At this point, adjusted for fair value the S&P 500 futures up less than a point, Dow futures are up 9, but NASDAQ futures are about a point below fair value.
The big data point of the week will be Friday’s Unemployment Report as everyone continues to look for signs that the job market is on the mend. This morning’s version of the monthly report that comes from outplacement firm Challenger Gray and Christmas is a sign of hope. The Challenger survey concerns corporate layoff announcements. They report that February layoff announcements totaled only 42,000. That’s the lowest number of job cuts in almost four years and a 73 percent decline from February last year when everyone who wasn’t physically handcuffed to their worksite was being let go. We’ll see if Friday’s number confirms that potentially good news.
Good news that’s not quite good enough is the story from Costco this morning. Nominal same store sales were up 5% in the U.S. and 26% overseas. That works out to 9 percent overall. Stripping out the impact of higher gasoline prices and currency conversion, sales were still up 3 percent. Revenue up 11 percent, profit was up 27 percent. BUT, earnings per share hit only 70 cents versus the 71 cent estimate and Costco stock is looking to open about 4 percent lower this morning.
The big loser of the morning is biotech firm Medivation. A potential Alzheimer’s drug failed stage 3 testing. Medivation is bid 70% lower, and their partner Pfizer may shed 2 percent at the open.
Asian markets were mixed overnight, but on the main a bit higher. European markets are mixed at this hour, but on the main a bit lower. Our futures have been pretty anemic much of the morning. At this point, adjusted for fair value the S&P 500 futures down about a point, Dow futures are down 4, and NASDAQ futures are 3 points below fair value.
It’s a mixed bag of news this morning, but early indications have yesterday’s nice rally continuing in the early going as we await all the January auto sales numbers.
On the earnings front, Staples reported earnings that were a penny per share lower than expected and guided slightly lower for the current quarter profits. On the famous other hand, AutoZone reported operating earnings of $2.46 for the quarter gone by which beat expectations by 12 cents per share. Last night, Qualcomm announced a 12 percent dividend hike and authorized a 3 billion dollar share buyback.
AT&T and Kimberly Clark both received downgrades from different brokerage houses this morning.
The Reserve Bank of Australia raised interest rates another quarter percent overnight. It’s now at 4 percent down under. Compare that with our continuing zero-percent rate policy.
While the dollar is higher again against the British pound, it’s down against most other currencies and our futures are pointing decidedly higher.
And if the futures are any indication, it looks like our major indexes will actually open trading in positive territory for the year 2010. At this point, adjusted for fair value the S&P 500 futures are up 5½ points, Dow futures are up 41, and NASDAQ futures are 4½ points above fair value.
There’ll be lots of economic news to pour over this week. Today we’ll get the word on Personal Income and Consumption at 8:30. Both are expected to have risen four-tenths of a percent. At 10 o’clock the January Construction Spending and the January ISM Index will be reported. The ISM is expected to come in at 58, which would indicate a slightly slower rate of manufacturing sector expansion from December.
Two big deals this morning. Germany’s Merck is buying the U.S. company Millipore. That has Millipore stock indicated about 11 percent higher this morning. Britain’s Prudential PLC will buy AIG’s Asian life insurance operations for more than 35 billion dollars. 20 billion of that will be in cash and may help to pay back the 185 billion the U.S. Government has poured into AIG.
Concerns over the upcoming British election and concerns about the Prudential/AIG deal have the British pound getting pounded this morning. It’s down about 2½ percent and below the $1.50 mark for the first time in 10 months.
Stocks in Hong Kong rose more than 2 percent overnight. In fact all Asian markets rose and most of Europe is higher as well.
Our futures have been battling against a stronger dollar all morning, and although they’re lower than before, they are still indicting a higher open at 9:30. At this point, adjusted for fair value the S&P 500 futures are up about 3 points, Dow futures are up 29, and NASDAQ futures are almost 6 points above fair value.
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