March 31, 2014
It’s the last day of the first quarter of 2014. The S&P 500 Index has behaved pretty much like the proverbial duck in a pond; a lot of activity underneath the sur>
This morning should start a little higher, although the way we start and the way we finish the day haven’t had a lot of correlation lately.
Restoration Hardware shares are looking a little higher this morning after gaining almost 13 percent on Friday after a good earnings report. Keep an eye on Facebook shares, which lost over 10 percent last week, as well as the biotech sector, which continued its recent illness.
And don’t forget, today is the deadline to sign up for Obamacare, unless you start thinking about it now and do it later, because you’ll reportedly get more time if you need it. If only that rule applied to the basketball tournament, Michigan and Michigan State would still be in it. By the way, the Obamacare website is down this morning, reportedly for a system upgrade.
Earnings are on the way from Gencorp and Joseph A. Bank today, and the March Chicago PMI at 9:45 is expected to read an even 60.
Most markets overseas are higher, and we should head in that direction as well. At this point, adjusted for fair value, the S&P futures are up about 8 points, which by the way, is about equal to its cumulative gain over the past three months. The Dow futures are up 64 and the NASDAQ futures are just about 19 points above fair value.March 28, 2014
Two trading days left now in a first quarter that’s been up and down and all around, but in the end has gone pretty much nowhere.
Speaking of historically going pretty much nowhere, cell phone maker Blackberry reported an operating loss of only eight cents per share this morning, which was 47 cents less of a loss than expected. Blackberry says is expected to be operating at a breakeven cash flow by the end of the year. Blackberry shares are about 7 percent higher pre-market.
In a speech late last night, the President of the Chicago Fed said that short term interest rates will have to stay at rock bottom levels until “late 2015.” Now, Charles Evans is generally recognized as being dovish on interest rates. However, so has the overall Fed-head Janet Yellen, who inferred last week that we might be headed for an interest rate hike as soon as a year from now. So, Evans’ remark might give traders some comfort our interest rate never-never land might go on a bit longer than feared.
February personal income expected to rise two-tenths of a percent, spending expected to be up three-tenths. We’ll find out in just 15 minutes. Expect the University of Michigan’s final reading on March consumer confidence to read 80.5 just before 10 this morning.
Overseas markets are mixed, but generally mildly positive. At this point, adjusted for fair value, the S&P futures are up about 5 points, the Dow futures are up 36 and the NASDAQ futures are just about 15 points above fair value.
March 27, 2014
In case you haven’t noticed, we’ve had a big surge in initial public stock offerings this year as private companies seem to be falling all over themselves to sell a piece of the action to the public. Yesterday, of course, King Digital Entertaiment came out at $22.50 per share to the well-connected. But by the end of the day, the well-connected were disconnected from about 15% of their investment. It was the worst first day performance of any 2014 IPO, and may be a reflection of the recent “risk-off” trend in momentum stocks.
And, speaking of “momentum” stocks, Lululemon reported 75 cents of operating profit for last quarter, which was 3 cents better than expected on better than expected sales. However, same store sales were off 2 percent and forward guidance wasn’t exactly encouraging. As a result, Lulu is looking about one percent lower pre-market.
Citigroup is lower by almost 6 percent after failing a Government “stress test.”
The Government’s final reading on Gross Domestic Product, in other words, the economy’s scorecard for the fourth quarter of 2013 will be announced at 8:30. The consensus estimate is for 2.7 percent growth.
Japanese stocks rose one percent overnight, but many overseas markets followed us lower overnight. Our futures have been fading fast over the past hour, but are still very modestly higher. Right now, adjusted for fair value, the S&P futures are down a fraction, the Dow futures are up 15 and the NASDAQ futures are just about a point above fair value.
March 26, 2014
Today is the day that King Digital goes public. If you’ve never heard of “King Digital” maybe you’ve heard of “Candy Crush.” If you have WAY too much time of your hands, and are getting tired of playing that “2048 game” online, Candy Crush is a very colorful way to waste your day.
Anyway, King Digital, the maker of the online video game will offer shares to the public today, priced at $22.50 per share. That would value the company at about 7 billion dollars. However, early indications this morning are that the shares could open to the hoi polloi at about $28.50 per share, pushing the theoretical market cap King to more than 9 billion dollars. And here you thought that you had to invent something USEFUL to make money.
Anyway, Mortgage Applications were down 3½ percent last week with refinancings down by 8 percent. New home purchase apps were higher by 3 percent, but way down from the 17 percent rise a year ago, as interest rates have come off of those rock-bottom levels.
The Durable Goods Report at 8:30 is expected to rise by one percent, but in front of that, it looks like yesterday’s rally will continue to 9:30.
At this point, adjusted for fair value, the S&P futures are higher by about 9 ½ points, the Dow futures are up 86 and the NASDAQ futures are about 23 points above fair value.
March 25, 2014
An early rally turned into a mid-day fade yesterday, as the momentum and biotech stocks that have been the market darlings for the past year or so got beat upside the head once again. And although the minor losses we saw in the S&P and the Dow stocks should be recovered right at the open this morning, the NASDAQ futures where many of those go-go stocks live, will have a lot of ground to make up.
Walgreens reported adjusted earnings of 91 cents for last quarter which was a nickel short of expectations. They announced that 76 existing locations will close by year end, although overall store count will rise. Same store sales were up 4.3 percent in the second quarter of their fiscal year. Carnival Cruise earnings pull into port later today.
A half hour before the market opens, we’ll get the Case-Shiller Home Price Index and then at 10, the February New Home Sales Report. Also at 10, the Conference Board’s survey of consumers will produce a sentiment index that is expected to rise just a bit to 78.8 from the February reading of 78.1.
Asian markets were mixed, but little move overnight, but Europe is solidly in the green. Our futures have been positive all morning and have gained some steam within the past 90 minutes or so. At this point, adjusted for fair value, the S&P futures are higher by about almost 6½ points, the Dow futures are up 69 and the NASDAQ futures are about 15 points above fair value.
March 24, 2014
We’re entering the last full week of the first quarter. One of the bearish arguments out there regarding stocks is that corporate earnings don’t justify current prices. Although many companies have quietly lowered earnings guidance for the quarter, keep an ear out for the last minute warnings that may pop up this week.
Predicting a sharp increase in sales helped First Solar shares rise 36 percent last week, and those shares are looking another 4 percent higher this morning. Also performing well last week were shares of Hewlett-Packard, up almost 10 percent after announcing its future plans to enter the 3-D printing business.
Apple and Comcast may get some action this morning. Reportedly they are in talks to develop a system that would stream Apple content to your television.
At 9:45 the flash PMI is expected to read 56.9, which would reflect a very modest improvement in the private sector businesses in the U.S. Overnight the Chinese flash PMI was disappointing.
In spite of that, Asian markets were pretty much higher across the board overnight. European markets are pretty much lower across the board. Our futures are slightly higher, but are off their levels of earlier this morning, and continue to fade a bit.
Adjusted for fair value, the S&P futures are higher by about a point and a half, the Dow futures are up 16 and the NASDAQ futures are about 4 points above fair value.
March 21, 2014
There’s nothing big on the agenda as far as economic reports go today. However, we will have at least three Federal Reserve Bank officials running around the country giving speeches. Only one of those speeches will happen before the market close at 4 o’clock. But when James Bullard, the St. Louis Fed head speaks in Washington around noontime, he should expect some questions regarding the timing of possible increase in short-term interest rates.
Nike has some questions this morning - - like, why is our stock down almost 4 percent? After all, earnings and sales both beat estimates last quarter. But, comments about how the strength of the U.S. dollar will hurt this year’s results is catching traders’ attention.
Darden Restaurants met estimates. That’s the good news. The bad news is the estimates they met are the ones they lowered just a couple of weeks ago. And Tiffany reported that although same store sales are rising, revenues did not match expectations and the $1.47 they earned last quarter fell a nickel short.
In Tokyo, markets were closed today, and although it’s not universal, most overseas markets are higher, and our recovery from Janet Yellen’s “six-month remark” should continue this morning. Adjusted for fair value, the S&P futures are higher by about 5½ points, the Dow futures are up 38 and the NASDAQ futures are more than 16 points above fair value.
March 20, 2014
It was a little like watching your kid the first time you take the training wheels off the bike. She did pretty well, but you had to expect a skinned knee or two. Janet Yellen held her first post-Fed-meeting presser yesterday. The Fed’s statement got rid of the tie to a 6½ percent unemployment rate and asserted a lot of other dovish tones regarding interest rates. But when pressed about WHEN the Fed short term rates might rise, Yellen indicated that it MIGHT be six months after the end of quantitative easing. That would presumably put it at sometime early next year.
Well, the computers that control our daily stock prices went into full retreat. Now, we all know that rates will rise someday, and conceptually, it will be because business is improving, which is a good thing. Just DON’T give the computers a deadline and expect them to keep quiet.
Hewlett-Packard stock won’t be quiet this morning. They’re raising their dividend 10 percent to 16 cents per share. Home Builder Lennar earned 35 cents per share, 7 cents better than expected on revenue that was up 38 percent.
Jobless Claims, Philly Fed, Existing Home Sales and Leading Economic Indicators all come by 10 this morning.
There’s pretty much nothing but red arrows overseas after our late day selloff yesterday. Our futures are in much better shape than earlier this morning, but if the market were to open right now, it would feature lower stock prices. Adjusted for fair value, the S&P futures are down about 3½ points, the Dow futures are down 35 and the NASDAQ futures are about 7 points below fair value.
March 19, 2014
We’ll get our first exposure to the Janet Yellen-led Fed this afternoon as the Open Market Committee wraps up a two-day meeting. Expect another 10 billion dollars of taper in the Fed’s bond-buying program. Perhaps most interesting will be the Fed’s guidance as to their future plans for short term rates. The tie to a 6½ percent Unemployment Rate may get loosened or untied completely, now that the Labor Department’s stated rate is getting very close to that target.
There are several earnings reports of note this morning, and it’s a case of the good, the bad and the ugly. The good news comes from Abode Systems, with operating earnings of 30 cents per share, which was a nickel better than expected. The bad news came last night from Oracle with 56 cents, 14 cents short of estimates. Oracle shares are about 3 percent lower pre-market. The ugly weather led to ugly numbers at FedEx, although the shares are only lower by about a percent and a half pre-market.
If you are one of those hot-shots driving a Porsche 911 GT3, don’t drive it this morning, or you could get hotter than you think. Porsche will be replacing all engines in the GT3’s due to a risk of external, rather than internal combustion.
Overseas markets are mixed, but we should head higher again at 9:30. Adjusted for fair value, the S&P futures are up about 2 points, the Dow futures are up almost 22 points and the NASDAQ futures are more than 3 points above fair value.
March 18, 2014
The focus of the morning has had nothing to do with earnings or interest rates. All eyes and ears have been pointed toward Russia.
Our equity futures had been slowly sinking much of the morning, after yesterday’s sizable rally, presumably on worries about Russia’s intentions regarding the Ukraine. Clearly, the West is powerless to stop Russia from annexing Crimea. The fear is that Russia intends to grab more, if not all of Ukraine for itself.
Those futures turned around and are now significantly higher after Vladimir Putin spoke this morning. He said that Russia has no desire to invade any more of the Ukraine than they already have. However, it’s clear that he will thumb his nose at the wrist-slap sanctions the West has imposed, and will annex Crimea as part of Russia. This is good news for today. We’ll see what Putin does in the future, regardless of what he said today.
Janet Yellen sits at the head of the big table for the first time as the Federal Reserve Open Market committee starts a two-day meeting today.
February Housing Starts are expected to come in at the 910,000 annualized rate and the February Consumer Price Index at 0.1 percent. Both reports come to us at 8:30.
The big turnaround in the futures has started to fade a bit, but if the market opened right now, it would open higher. Adjusted for fair value, the S&P futures are up about 6 points, the Dow futures are up 51 and the NASDAQ futures are more than 8 points above fair value.
March 14, 2014
Stocks traders clearly weren’t as impressed with some positive domestic economic reports as they were with dangers in China and Germany and Crimea yesterday.
Overnight, those concerns spilled over to Japan, with the Nikkei Index losing almost 500 points, which is about 3.3 percent.
Also not helping yesterday were companies lowering sales or earnings guidance. Among those were Dollar General, Sea Word and Plug Power.
More than 14 percent is the amount of the discount on shares of Aeropostale this morning. The retailer reported a quarterly operating loss of 35 cents. That was 4 cent worse than expected.
At 8:30 this morning, February Producer Prices are expected to have once again risen two tenths of one percent. And just before 10, we’ll get the University of Michigan’s preliminary reading on March Consumer Confidence.
Outside of India, which was a fraction higher, overseas markets are all in the red. Our futures were nicely higher earlier this morning, but those green arrows are just about gone. At this point, adjusted for fair value, the S&P futures are up less than a point, the Dow futures are up 3 and the NASDAQ futures are a little more than 3 points above fair value.
March 13, 2014
Truth be told, we’re in a quiet time for pre-market news. Earnings season is pretty much over, although we will get reports from a few retailers this morning. Not much on the economic calendar, although we will get a couple of reports in about 7 minutes.
But, other than that and complaining about the snow, there’s just not a lot to discuss. So, let’s talk about fuel cell stocks one more time. Plug Power reported this morning that they lost 28 cents per share on a GAAP basis last quarter, versus a 22 cent loss a year ago. Adjusted losses were only 8 cents per share, in line with the only analyst estimate out there. But sales were higher than expected, so the bungee cord tightens again and Plug Power shares are 12 percent higher pre-market.
At 8:30, the Retail Sales Report should show a two-tenths of a percent increase, but in case of a shortfall you can bet that weather will get the blame. Unemployment Claims are expected to tick back up to the 330,000 level.
After a lot of speculation, Amazon is raising the price of the very popular Amazon Prime from $79 to $99.
Overnight, Chinese officials stuck to their target of a 7½ percent growth rate for their economy. However, they admitted it’s not a hard-and-fast target.
Overseas markets are mixed. We should head modestly higher, barring any unpleasant news at 8:30. At this point, adjusted for fair value, the S&P futures are up about 3 points, the Dow futures are up 22 and the NASDAQ futures are more than 9 points above fair value.
March 12, 2014
Cedar Point’s roller coasters may be closed for the season. But, it’s okay. Watching fuel cell stocks this week is about as much of a white-knuckle thrill ride as anyone can take.
Last week’s darling market darling was Plug Power, with its shares up 77 percent on the week. On Monday, shares rose another 25 percent. Yesterday, shares were up another 13 percent to $11.72. Then, a well-known short seller commented that in his opinion, Plug Power shares were worth about 50 cents apiece. That little comment cut the share price in half, with Plug Power closing just above 6 bucks per share. This morning, it’s lower by another 3 percent. Lesson to be learned: Speculation and investing are two different things.
And if you like roller coasters on their way higher, shares of biotech company Oxigene are about 140 percent higher this morning and promising results from their ovarian center drug. Locally, General Motors shares took a five percent haircut yesterday as Government investigations of the ignition switch recall intensified.
Mortgage Applications fell a little more than 2 percent last week, on slightly higher interest rates. Year over year, however, applications for home purchase mortgages are down 17 percent, as more and more home purchases are cash deals.
The Indian market was up a bit overnight, but everybody else overseas is lower. There’s some economic data due in China tonight, and many traders expecting less than wonderful news.
Our futures are off earlier lows but are still pointing south. At this point, adjusted for fair value, the S&P are down almost 6 points, the Dow futures are down 40 and the NASDAQ futures are about 11½ points below fair value.
March 11, 2014
There are a couple of survey results to consider this morning, although neither is likely to move markets by much. Within the past hour, the National Federation of Independent Businesses February survey, which measures optimism among small business people in the U.S., checked in at 91.4. That’s way below expectations and well below the January reading of 94.1.
At 10 o’clock, the Government releases its JOLTS report, which is the acronym for Job Opportunities and Labor Turnover Report. That’s probably of more interest to job seekers than investors, but expect it to report that as of the end of January, about 4 million Job opening in this country remain unfilled.
The fuel cell stocks we talked about yesterday are indicated sharply higher again pre-market.
And in case you just can’t get enough Greek yogurt, Chobani is reportedly looking to sell a 20 percent minority interest.
Outside of India, Asia was higher overnight. Europe is more of a mixed picture. Our futures have been mildly lower most of the morning, but have pretty much dug themselves out. At this point, adjusted for fair value, futures on the S&P 500 and Dow Jones Industrials are flat but the NASDAQ futures are now about 3 points above fair value.
March 10, 2014
The current bull market in stocks turns five years old today, totally ignoring headlines predicting its imminent death, but don’t expect those headlines to abate. As we all know, fear sells papers and the world has an unending supply soothsayers. Especially those whose sooth is designed to sell something.
It will be called ChiquitaFyffes. While that doesn’t roll off the tongue as easily as say “Dole,” it will be one big fruit company nevertheless. Chiquita and Great Britain’s Fyffes are merging in a one billion dollar stock for stock deal. Fyffees stock is almost 30 percent higher this morning.
Oil companies are trading higher in Europe this morning on the increasing angst over the Crimean situation, even though oil prices are down a bit today. The big winners of the morning appear to be alternative-fuel providers, especially fuel cell makers. Plug Power is indicated up almost 12 percent pre-market at $9.15 per share. Those shares could have been had for as little as 15 cents less than a year ago.
China reported a surprising trade deficit overnight, and Japan lowered its GDP estimate. Nothing much on our economic calendar today, and out futures appear to have overslept a bit, and are rolling out on the wrong side of the bed.
At this point, adjusted for fair value, futures on the S&P 500 are lower by about 2½ points, the Dow futures are down 24 and the NASDAQ futures are now about a half-point below fair value.
March 7, 2014
No matter how you feel about your stock portfolio today, odds are you felt a LOT worse about it 5 years ago today. Unless you’ve developed selective amnesia regarding unpleasant events, you’ll recall that the bottom of the last bear market came exactly five years ago this coming Sunday.
Not surprisingly, you probably haven’t seen many advertisements for mutual funds touting their “5-year performance” lately. Although buying a fund based on past performance numbers alone is generally a horrible way to invest, look for some of those ads start to pop up next month, as the last bear market conveniently falls off the radar.
Things are pretty quiet this morning as we await the Monthly Employment Report from the Labor Department. Expect the creation of about 150,000 non-farm jobs with the Unemployment Rate falling to 6.5 percent.
Cerberus Capital (you may remember that name from its former investment in Chrysler) is buying grocery store chain Safeway for about 9½ billion dollars, by merging Safeway with Albertson’s. Put together, it will be a pretty extensive grocery chain, only a bit smaller than Kroger. Safeway stock is about 2 percent lower on the news.
Overseas markets are mixed, but unless we get some bad news at 8:30, we should head higher again at 9:30. At this point, adjusted for fair value, futures on the S&P 500 are higher by about 2 points, the Dow futures are up 19 and the NASDAQ futures are now almost 2½ points above fair value.
March 6, 2014
It’s no big secret that brick and mortar retailers >
Speaking of which, Staples announced today that it will be closing 225 stores by the end of next year as part of a 500 million dollar cost cutting program. Fourth quarter profit at Staples was 33 cents per share versus 46 cents a year ago and versus the expected 38 cents. Staples also warned that sales will fall in the first quarter versus a year ago. Staples shares are about 9 percent lower pre-market.
Even the best of the bunch in retail struggled. Costco reported $1.05 of profit, which was 12 cent below estimates. Price competition and weaker overseas results get the blame. Costco does say that the first quarter is making up for the fourth. Same store sales are higher by 4 percent here and 5 percent among international stores. Costco shares are indicated lower, but only by about 2 percent.
Earlier, the Challenger Job Cut Report at 42,000 announced layoff was the best February Report since 2000. Weekly Jobless Claims at 8:30 are expected to total 338,000.
Australian stocks were flat overnight, but everybody else overseas is higher. At this point, adjusted for fair value, futures on the S&P 500 are higher by about 3 points, the Dow futures are up 35 and the NASDAQ futures are now almost 6 points above fair value.
March 5, 2014
Well, it looks like stock traders prefer that the world not go to war, after all. Stock prices had their best day in almost 3 months yesterday as tensions in the Ukraine eased a little bit. Hopefully diplomatic progress can make Monday’s stock swoon look like a great buying opportunity in retrospect.
Brown Forman’s retrospective on last quarter revealed 82 cents of operating profit which was 6 cents better than expected and nine cents better than a year ago. They also raised full-year earnings guidance. PetSmart and home-builder Hovnanian will also report earnings today.
The ADP private sector Jobs Report comes at 8:15 this morning. Most expect creation of about 160,000 new jobs. The ISM Services survey comes at 10 this morning and there could be some late afternoon movement in the markets after 2 o’clock when the Federal Reserve releases its latest Beige Book of regional economic conditions.
Another bite out of the bitcoin this morning as a bit coin bank was reportedly robbed of almost a thousand of the cute, but invisible little coins. While that’s a fraction of the loss suffered at the now-defunct Mt. Gox exchange, it’s not exactly good news for the virtual currency.
Overseas markets are mixed, even after our big rally yesterday. Our futures broke into positive territory about 45 minutes ago and were steadily climbing but just took a bit of a hot on the ADP number. At this point, adjusted for fair value, futures on the S&P 500 are higher by about a point, the Dow futures are up 10 and the NASDAQ futures are now about a point above fair value.
March 3, 2014
We’ll be hearing about February New Car Sales as the day rolls on. So far this morning, Nissan sales were up, and Chinese-owned Volvo announced that their sales worldwide rose 4.6 percent in February, on strength in Sweden and China, even though U.S. sales declined by 18 percent.
Overall, February U.S. car sales are expected to be higher, but by less than one percent, because it’s hard to find a new car to buy when it’s covered in snow. And unless you’ve visited one of the recent auto shows to scope out a new vehicle, it’s been a tough time to go shopping.
At 10 o’clock, the ISM Manufacturing Index is expected to reflect a tiny bit of growth in the manufacturing sector, at a reading of 51.9. Construction spending numbers also come at 10 o’clock, and are expected to show a two-tenths of a percent decline.
As we head toward the market open, everything’s behaving just as you would expect in light of a potential war-with-Russia scenario. Oil is up 2 to 3 bucks per barrel, gold is higher by about 24 dollars per ounce. Treasury Bonds are rallying and stocks are under pressure, although the futures are well off their lows of the morning. Russian stocks, which were already selling at rock-bottom multiples are getting slammed again. Europe is lower by about 2½ percent.
At this point, adjusted for fair value, futures on the S&P 500 are lower by 16 points, the Dow futures are down 122 and the NASDAQ Indexes are 32 points below fair value.
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