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WJR March 2013 Reports

   

March 29, 2013 - The stock market is closed today in observance of Good Friday.  Have a great Easter weekend!  Ron will be back on Monday.

March 28, 2013

It’s the last trading day of the 1stcalendar quarter, and you can sum it up by saying that the first quarter has been a pretty good year for stock prices with the S&P 500 is higher by about 10 percent. The big question is whether the rest of the year will resemble, refute or just maintain.

This morning’s roller coaster ride has been the shares of Canadian smartphone maker Blackberry. They reported a surprising profit of 22 Canadian cents per share this morning, which was well ahead of the expected 29 cent loss. However, revenue was lower than expected and three million subscribers were lost. And although they’ve shipped a million new Blackberry Z10s – this are shipments not necessarily sales. Right after the announcement, Blackberry shares rose 3 percent. Trading was then halted. The stock re-opened at 7:30, shot up another 6 percent, but then fell sharply and is now about two percent lower.

The final revision to fourth quarter Gross Domestic Product comes at 8:30. The advance number of minus one-tenth of a percent gave way to the preliminary number of plus one-tenth. Expect another upward revision to six-tenths of a percent.  Weekly Jobless Claims and the Chicago PMI are also on the way, with no big surprises expected.

Japan down one percent overnight. China was off 3 percent, probably on fears of a Cypriot bank run. However, things are calm in Cyprus, most of Europe is higher and our futures turned slightly positive a couple of hours ago. At this point, adjusted for fair value, futures on the S&P are higher by about 2 points, the Dow futures are up 24, and the NASDAQ futures are about 5 points above fair value.

March 27, 2013

All is quiet on the earnings front this morning, as well as the merger front, the IPO front and there’s only one minor economic report on the schedule. At 10 o’clock, the February Pending Home Sales Report is expected to slump by seven-tenths of a percent, after a 4½ increase in January.

With everything else quiet, all that traders have to wring their collective hands about is tomorrow’s promised opening of the banks in Cyprus. Expect a bunch of withdrawal and capital restrictions to be announced today. Yes, Cyprus is tiny, and yes the way their banking system was capitalized was far inferior to ours. However, nobody likes to see scores of people in line at the bank. We’ll see what happens tomorrow.

By the way, speaking of the U.S. banking system, 92 federally insured banks failed in 2011. That number dropped to 51 failures last year, and if the rate from the first two months of this year continues, expect only a dozen or so to go under in 2013.

Four Fed Governors are out on the rubber-chicken circuit today, but absent any big surprises, we’ll be giving up most of yesterday’s gains at 9:30.

At this point, adjusted for fair value, futures on the S&P are down about 8 points, the Dow futures are down 69, and the NASDAQ futures are 13 points below fair value.

March 26, 2013

Yesterday’s roller coaster market let us off on the downslope, but it looks like some of what was lost will be regained early on in trading today. There are only three trading days left in the first quarter. The overall volume of earnings warning has picked up. However, there just aren’t enough of them so far to presage an earnings disaster when reports start to roll in a couple of weeks.

Today and Thursday are the big days for economic reports this week. At 8:30 the February Durable Goods Orders are expected to spike upward by 3.5 percent. A lot of that is expected to be car, trucks, trains and planes. Excepting transportation, expect seven-tenths of a percent increase.

February New Home Sales are expected to check in at the 425,000 unit level. That would be down a little from January, and still only about level with the pace of September 2008, which if you’ll remember, was not exactly the best of times.

The Conference Board will announce their Consumer Confidence Index at 10 o’clock. That number will gain added attention after recent weakness in the University of Michigan’s Consumer Sentiment Report.

Overseas markets are mixed, our futures are higher, but well off their best levels of the morning. At this point, adjusted for fair value, futures on the S&P are higher by 4½ points, the Dow futures are up 36, and the NASDAQ futures are 10 points above fair value.

March 25, 2013

Late last week, the Russian oligarchs missed their chance to somehow convince the Russian Government to come riding to their rescue, and the high interest rate they were getting on their Cyprus bank accounts doesn’t look so good now. The European Union has approved a bailout plan for Cyprus that will result in the seizure of somewhere between 30 and 70 percent of accounts that are greater than the insured limit of 100,000 euros. That 30 to 70 percent confiscation is a lot higher than the 9.9 percent in the original proposal. However, insured depositors will maintain their full accounts. 

And so, with what seems to be a bailout deal that will keep the European Union together for now and will presumably keep everyone except Russian oligarchs from rioting, stock prices are on the rise this morning.

Dell and Apollo Group will be two of those stocks.  Dell is about three percent higher as there are now three competing bids for control of the company.   For-profit educator Apollo shares are 5 percent higher pre-market, after reporting 34 cents per share versus the expected 18 cents.

Regional economic reports from the Chicago Fed and the Dallas Fed come later this morning. China, India and Italy are slightly lower, but other markets overseas are in the green, and we’re headed there as well.

At this point, adjusted for fair value, futures on the S&P are higher by 8 points, the Dow futures are up 61, and the NASDAQ futures are 14 points above fair value.

March 22, 2013

Sometime later this morning we should hear about yet ANOTHER plan to bail out the banking system in Cyprus. Hopefully at that point international markets can stop obsessing about that tiny country and its financial system (if you can call it that.)

Meanwhile, in the U.S., Blackberry’s share of the smartphone market has dropped to around 8 percent. But, if you’re one of the diehard “8 percenters,” you will be able to upgrade to the new Blackberry Z10 today, if you’re an AT&T customer. No word yet on an upgrade for that slide-rule you’re still using.

We could all use some good earnings news, and there are three to see this morning. Tiffany beat the $1.35 estimate by a nickel and predicted a 6 to 9 percent increase in income for the year. Darden Restaurants barely beat their recently lowered guidance and yesterday, Nike reported 73 cents, versus the expected 67 cents on rising profit margins. Next week, of course, is the last week of the first calendar quarter of the year, so be on the lookout for earnings warnings, which have admittedly been on the rise of late.

The economic docket is absolutely empty today, which is okay, because everyone will be watching college basketball games, anyway. 

Overseas markets are mixed. Our futures were fairly flat until about an hour and a half ago, when they started to march northward. They’ve cooled off just a bit, but at this point, adjusted for fair value, futures on the S&P are higher by 3½ points, the Dow futures are up 37, and the NASDAQ futures are 9 points above fair value.

March 21, 2013

There are a half-dozen economic reports on the way by 10 o’clock this morning, kicking off with the weekly Jobless Claims data at 8:30. Expect about 340,000 new claims, a slight rise from an unexpectedly low number last week.

At 10 o’clock, existing home sales are expected to improve and finally crack the annualized rate of 5 million units. We’ll also get the Philly Fed Index and the February Index of Leading Market Indicators, which is expected to creep up to four-tenths of a percent versus the January reading of two-tenths of a percent.

The big downer of the morning is likely to be Oracle. Last night, Oracle announced disappointing software and server numbers. They missed the earnings estimate by a penny, but Oracle is one of those companies that seldom disappoints, and so far, the sellers are paying attention. Oracle shares are off about 8 percent pre-market.

Hewlett-Packard directors all survived a potential shareholder mutiny yesterday, and responded by raising HP’s dividend by 10 percent.

And, in case you’re still keeping track – the days of Cyprus belonging to the European Union may be dwindling down. The EU says that any future monetary support will end unless the Cypriots agree to terms by Monday.

Japanese stocks were up over one percent overnight, but most other major markets overseas are lower. Our futures are trying to claw out of an early hole. At this point, adjusted for fair value, futures on the S&P are down about 3 points, the Dow futures are down 15, and the NASDAQ futures, reflecting the weakness in Oracle, are almost 16 points below fair value.

March 20, 2013

The Fed’s Open Market Committee winds up their two-day meeting today. Used to be we’d get the Fed’s report at 2:15. Then they decided to move up the statement to 12:30 and hold a press conference at 2:15. Well, henceforth, Mr. Bernanke and Company will report their statement and hold their press conference at 2 o’clock sharp. With summer approaching, Bernanke has obviously figured out that if they get rid of the press by three, there will still be enough time to squeeze in 18 holes before dark.

They’re back to the drawing board in Cyprus. Yesterday, the Parliament in Cyprus turned down the proposed bailout package that would have made a mockery of the concept of deposit insurance. Hopefully, either the Europeans or the Russians can craft a bailout based less on politics and more on intelligence. But this may well boil down to how much Vladimir Putin can be incentivized into protecting a bunch of Russian oligarchs and their offshore deposits. I’ll bet they’ll figure out a way to convince him. Banks in Cyprus are supposed to reopen tomorrow. Don’t bet on it.

Two big earnings reports are out this morning. There’s a good one from home-builder Lennar and a not-so-good one from FedEx on weakness in international shipments. FedEx is about 3 percent lower pre-market.

Mainland Chinese stocks rose about 3 percent overnight. Europe is mostly higher. At this point adjusted for fair value, futures on the S&P are higher by about 9 points, the Dow futures are up 81, and the NASDAQ futures are almost 20 points above fair value.

March 19, 2013

If you are one of those market timers waiting and waiting for stock prices to drop, so that you could buy in – well, hope you didn’t blink. Yesterday may have been your chance.

Yesterday’s pseudo-crisis in Cyprus is at least partially in the rear view mirror today. The Parliament in Cyprus is expected to vote against the confiscation of deposit accounts in that country today. That’s all well and good. However, let’s pretend that you’re a Russian oligarch with a spare billion or so in a Cyprus bank. When the banks there open on Thursday, will you be making a deposit or a withdrawal? This misguided plan is toothpaste on the floor that’s going to be very difficult to get back in the tube.

The February Housing starts will be announced at 8:30. Expect an increase of 1.6 percent to an annualized run rate of 919,000 units.

The CEO of Electronic Arts fell on his sword last night. EA warned that earnings for the quarter and the year will not match forecasts. The CEO reported that he was “wholly accountable” for the shortcoming, and resigned.

Stocks in Japan rose 2 percent overnight. Most Asian markets were a bit higher while most of Europe is lower. Our futures started the morning in the red and have been slowing marching forward ever since. At this point adjusted for fair value, futures on the S&P are actually higher by about 4½ points, the Dow futures are up 35, and the NASDAQ futures are about 10 points above fair value.

March 18, 2013

No matter how smoothly things are going, you can always count on politicians - or regulators – at the behest of politicians - to do something to upset the proverbial apple cart. And here we go again.

Cyprus is a country with an economy the >

Yes, Cyprus is tiny, and unless you are a Russian oligarch, you probably don’t have a great deal on deposit in a Cypriot bank. However, when you confiscate on Monday that which was “insured” or “guaranteed” on Friday, you violate the rule of law, and you send ripples through the financial markets. The Parliament in Cyprus was scheduled to vote on the plan this morning, but has now postponed that vote. Suffice it to say that if you work at a bank in Cyprus, you have the day off – and maybe the rest of the week as well.

There’s nothing of great import on our economic calendar for today. We’ll get housing starts tomorrow and the big event of the week will be the Federal Reserve Open Market Committee meeting.

Overseas markets are a mess on the Cyprus pseudo-crisis. Our futures are off their lows, but they’re still not pretty. Adjusted for fair value, futures on the S&P are down about 12½ points, the Dow futures are lower by 77, and the NASDAQ futures are about 22 points below fair value.

March 15, 2013 - No report today -- Ron's at the St. Patrick's Day Party!

March 14, 2013

Last week’s monthly Job Report was surprisingly strong. We’ll see if we get any follow up in the Weekly number at 8:30 this morning. Most expect that we’ll actually see a rise in claims to 350,000. However, the level of continuing claims, expected to be about 3.1 million, would be at a low for the current economic recovery.

Also at 8:30, the Producer Price Index, which is a measure of inflation at the wholesale level, is expected to rise about 6 tenths of a percent, which would normally be a cause for inflationary concern. The core rate, however, excluding food and energy, is expected to rise only two-tenths of a percent.

And as if we don’t have enough economic surveys as it is, there’s also a report coming call the “Bloomberg Consumer Comfort” index, which presumably measures how comfortable people will be without single servings of 17 ounces of soda.

Citadel, the private equity firm (not Citadel, the broadcasting company) is selling of its stake in E-Trade. And later today, the new Samsung smartphone will be unveiled, giving Apple one more thing to worry about.

Asian markets were mostly higher overnight, but Europe is solidly higher this morning. Adjusted for fair value, futures on the S&P are higher by 6 points, the Dow futures are up 36, and the NASDAQ futures are a little more than 13 points above fair value.

March 13, 2013

We’re one trading day away from possibly seeing the Dow Jones Industrials rise for 9 straight sessions, which is something that hasn’t happened since back in the 20thcentury.

Although the futures are pointing a little lower at this point, we may get white smoke out the February Retail Sales Report at 8:30. Expect a one-half-of-one-percent increase, and six-tenths of a percent if you exclude car sales. The January number of one-tenth of one percent was a big dip from prior months. We’ll see if the consumer got its collective mojo back in February.

No mojo for mortgage applications last week. Overall apps dropped 4.3% thanks mainly to a 5.2 percent drop in refinancing as interest rates crept higher.

Spectrum Pharmaceuticals looks like the loser of the morning. Spectrum projected lower earnings due to generic competition, and the stock is indicated 35 percent lower pre-market. Dole Foods is 8 percent lower on a lousy profit report. Oracle and Walgreen could both benefit from broker upgrades this morning.

Overseas markets are generally lower. Our pattern this week has been lower in the morning, and better later on. So far, we’re true to form. Adjusted for fair value, futures on the S&P are down almost 2½ points, the Dow futures are down 16, and the NASDAQ futures are a little more than 2 points below fair value.

March 11, 2013

Last Friday’s Employment Report bested economists’ estimates by, oh, about a country mile. Which, of course, is longer than a statute mile or a nautical mile. Word of 236,000 new non-farm jobs in February pushed stock prices up once again, in the second best weekly rise this year. In fact, they rose every day last week, which is the first time we’ve seen that in about a year and a half. 

The stock of Dick’s Sporting Goods is looking to open about 6 percent lower this morning. Dick’s reported earnings of $1.03 for last quarter. That was 3 cents below expectations. Revenue was also a little light.

News out of China is giving some pause to the inflation police, as year-over-year inflation spiked up to 3.2 percent. However, it’s not that unusual get an artificial boost during a period that includes the Lunar New Year.

There’s absolutely nothing of interest on the economic calendar today.
 
Japanese stocks rose again overnight, but overseas markets overall paint a mixed picture.

Most Mondays have started with red arrows this year, and today might well keep that trend intact. However, the futures are only suggesting a modest pullback in prices, and have improved a bit over the past couple of hours.  Adjusted for fair value, futures on the S&P are down less than 2, points the Dow futures are down 6, and the NASDAQ futures are about 5 points below fair value.

March 8, 2013

The Labor Department’s Report on February Unemployment rolls out in just about 16 minutes and it’s expected to be somewhat encouraging. You know, if you took all the economists in the world and laid them end to end, they still wouldn’t reach a conclusion. But, the consensus estimate among economists is that 160,000 new non-farm jobs were created in February, and the unemployment rate dropped from 7.9 percent to 7.8 percent.

Pandora issued a better-than-expected earnings report last night. But surprisingly, Pandora’s CEO announced that he’s leaving after none years of the job.

We talked about Smithfield Foods positive earnings report yesterday. This morning that stock is spiking 10 percent higher on word of a possible breakup of the company into three pieces.

McDonald’s February same store sales dropped 3.3 percent in the U.S., but that was a lower drop than expected.

Mainland China was a little lower overnight, but just about everybody else overseas is higher as the rally rolls on. Our futures are even better than they look on the sur>

March 7, 2013

Tomorrow’s monthly Jobs Report will be the data point of the week, and based on yesterday’s ADP Employment Report (which isn’t always a good indicator) we may get some good news for job seekers and the economy. This morning’s Challenger layoff announcement report wasn’t so hot, as the survey reported over 55,000 layoff announcements in February. In the meantime, we’ll have to muse about three economic reports that will be released at 8:30.

The Weekly Jobless Claims are expected to check in at the 355,000 level. Also at 8:30, the quarterly productivity report (or maybe we should say LACK of productivity report is expected to reflect a decrease of 1.6% with unit Labor costs climbing 4.4 percent. We’ll also get some international trade statistics.

Costco says same store sales rose six percent in February. That was almost a full percent higher than expected. And Smithfield Foods reported 58 cents per share of quarterly operating profit, which was 8 cents better than expected.

Overseas markets are mixed. Our futures were mildly higher earlier this morning, but the clutch went in and we shifted into neutral about a half hour ago. At this point, adjusted for fair value, futures on the S&P are flat, the Dow futures are up 3, but the NASDAQ futures are about a point below fair value.

March 6, 2013

Well the Dow scored new intra-day and closing highs yesterday. But you know how what they say – “What goes up, must -- go up some more.” Until it doesn’t. Our futures are again pointing higher at this hour, but we’ll get to that in a minute.

Staples reported earnings this morning that were a penny per share better than expected.  Staples also raised its dividend by a penny. That’s the good news. On the famous other hand, sales were below estimates and guidance wasn’t so hot. Staples shares are losing about 5 percent plus pre-market.

At 8:15, the ADP Employment Report is expected to report 175,000 new non-farm jobs created in February. 

Eight times a year, about two weeks before each Open Market Committee meeting, the Federal Reserve releases it’s “Beige Book” survey of economic conditions across the country. The latest release in that series comes at two o’clock this afternoon.

Asian markets rose overnight. China has now just about made up its severe losses of Monday. Outside of Russia and Ireland, things on the East side of the Atlantic are in the green as well. At this point, adjusted for fair value, futures on the S&P are higher by more than 4 points, the Dow Jones futures are up 47, and the NASDAQ futures are about 4½ points above fair value.

March 5, 2013

There will be a lot of chatter about a possible new all-time high in the Dow Jones Industrial Average today. In fact, if the Dow closes where the futures are indicating it will start the day, we’ll be right about at that record closing level, if not a little higher. Okay, now that we’ve mentioned it, let’s not waste any more time on it. All-time highs make headlines, but really don’t matter to anyone’s investment strategy.

What might make some difference (although not much of a difference) will be the results of the February ISM services index. At 8:30 this morning, expect a reading of 55. That’s would indicate modest growth in the non-manufacturing sectors of the economy, but at a slightly slower rate than in January.

Home Depot’s supply unit, which had been taken private by some private equity firms, is making plans to go public again. And Qualcomm must have a little extra cash on their hands. Qualcomm announced a 5 billion dollar stock buyback program this morning and raised their dividend by 40 percent.

The Shanghai Index in China rise more than 2 percent overnight after losing more than 3 percent yesterday after the Chinese Government announced a stimulus plan designed to ensure 7 ½ percent economic growth. 

Europe is more than one percent higher. At this point, adjusted for fair value, futures on the S&P are higher by about 6 points, the Dow Jones futures are up 39, and the NASDAQ futures are about 13 points above fair value.

March 4, 2013
 
Mondays have not been particularly kind to stock prices this year, and it looks like we’ll get off to a slightly lower start, although the futures look a lot better than they did a couple of hours ago.

The trouble started in China last Friday. The Chinese Government has decided that the price of real estate in certain markets was getting out of hand. Accordingly, they announced that future real estate purchases in China will require a larger down payment, interest rates on mortgages will be higher, and there will be a 20 percent capital gains tax on sales of existing homes. Not exactly music to the ears of Chinese stock investors. Depending on what index you follow, mainland Chinese stocks were 3½ to 5 percent lower overnight.

Shares of the big bank HSBC should start the morning lower as well, after a disappointing profit report.

Federal Reserve Vice Chair Janet Yellen will address a meeting of the National Association of Business Economists today. The NABE released a member survey this morning, and reported that 70 percent of its members think that the sequestration cuts on discretionary spending are a dumb idea, given that the real problem is with mandatory (read: entitlement) spending. But then again, those economists don’t have to run for reelection in a year and a half.

As I mentioned, our stock futures have improved, but are still pointing a bit lower. At this point, adjusted for fair value, futures on the S&P are lower by about 3 points, the Dow Jones futures are down 25, and the NASDAQ futures are about 6 points below fair value.

March 1, 2013

We came within 16 points of a record high on the Dow Jones Industrials yesterday. That was, until the last ten minutes or so of trading. The down elevator was a quick one and it continues this morning. Anemic growth rates overseas aren’t helping this morning, but more importantly, the euro dropped below the dollar thirty level. That appreciation in the dollar (deserved or not) has stock prices slumping as we head toward the open.

President Obama and Congressional representatives meet later today in a giant finger pointing exercise regarding the so-called “sequestration.” But when all is said and done, there’ll be more said than done. It will be interesting to see exactly which fingers they’ll be pointing by the end of the meeting.

The possibility of Best Buy being taken private by its founder is apparently over, as those talks have reportedly broken down. Best Buy did report higher earnings than expected this morning, which has boosted the shares from earlier losses. Groupon shares, which suffered yesterday, are about 4 percent higher the morning after the CEO was shown the door yesterday afternoon.

Even though it’s the first Friday of the month, we’ll have to give the Labor Department until next week to figure out the monthly Employment Report. 

Asian markets that were trading were mixed overnight. Most of Europe is lower. Italy is down about 2 percent. There’s not much of a fair value adjustment to the futures this morning. The S&P are lower by almost 10 points, the Dow Jones futures are down 63, and the NASDAQ futures are 14 points below fair value.

WJR April 2013 Reports
WJR February 2013 Reports

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