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WJR March 2016 Reports

March 31, 2016

It’s the last trading day of what’s been a remarkably good month for stock prices. The S&P 500 Index (not even counting dividends) is almost 7 percent higher for the month and closed yesterday at its high point of 2016.

It should be a good morning for shares of MetLife. MetLife went to court, arguing that they’re not really as systemically important to the financial system as the Government had claimed. The judge agreed that they aren’t too big to fail and shouldn’t be subject to so much Government oversight. Expect that a number of other big insurers will be sending their lawyers to court, also hoping to be declared systemically insignificant.

Weekly Jobless Claims came in at 276,000 for last week. That’s a bit higher than expected, but perhaps more importantly at 9:45 the March Chicago Purchasing Managers Index is expected to recover to a positive reading above 50 from February’s disappointing 47.6.

The Presidents of the Chicago and New York Federal Reserve Banks are unfortunately out giving speeches today to see how much further they can confuse the short term interest rate outlook.

Asian markets were mixed overnight. European markets are lower, generally by one-half percent to a percent and a half.

Adjusted for fair value, the S&P 500 futures are flat, the Dow Jones Industrials futures are up 13, and the NASDAQ futures are just about even with fair value. 

March 24, 2016

After six pretty good weeks, it looks like stock prices may be in for a little re-set at least in the early going this morning, which is the last trading day of a short trading week.

A couple of companies reported better than expected earnings this morning. KB Homes is one and they are optimistic about the near term future. PVH Corporation (those initials come from the old Phillips VanHeusen name) also beat estimates, but warned that they might be fighting some headwinds in the year to come. Shares of both PVH and KB Homes are higher pre-market.

In other corporate news, Raytheon has announced and increased dividend.

In just a couple of minutes, St. Louis Federal Reserve Bank President Bullard will begin a speech in New York. His recent flip-flopping on the likely future of interest rates has a lot of people scratching their heads and wishing that perhaps he would just “stifle” as that famous economist Archie Bunker used to say.

At 8:30, the February Durable Goods report is expected to report a 3 percent decline.

Europe is lower by about one to two percent. Adjusted for fair value, the S&P 500 futures are lower by about 10 points, the Dow Jones Industrials futures are down 67 and the NASDAQ futures are about 21 points below fair value. 

March 23, 2016

Markets took the horrible events in Belgium pretty much in stride yesterday, although the Dow Jones Industrials did see its seven day winning streak come to an end. It looks like we’ll get off to get off to a muted start this morning as we await a report on February New Home Sales. The consensus estimate calls for an annual run rate of 510 million units. We’ll find out at 10 o’clock. We do know that last week mortgage application for home purchases slipped by one percent, while refis dipped about 5 percent.

There were plenty of companies reporting earnings last night, but if you’re looking for some good news, you’ll have to keep looking. Due to either lowered guidance or sales that fell short of expectations shares of five different companies are indicated lower in the pre-market. General Mills shares are off about 2 percent, Red Hat down 3½ percent, Nike down about 5 percent. Five Below (very appropriately) down 5 percent and Krispy Crème share are at a 9 percent discount this morning.

Overseas markets are mixed, although Europe is, on average, a little higher. Our futures haven’t budged over the past hour. Adjusted for fair value, the S&P 500 futures are higher by about 3 points, the Dow Jones Industrials futures are up 26 and the NASDAQ futures are almost 10 points above fair value. 

March 22, 2016

The Dow Jones Industrial Average is chugging along on a seven day winning streak, but will >

Not helping matters yesterday were the confounding statements out of Federal Reserve officials. After the Open Market Committee gave us clearly dovish signals last week, the prospect of an April rate hike may be back on the table if you pay attention to yesterday’s comments. That, in spite of an absolutely awful Existing Home Sales number.  Oh, by the way, two more Fed Presidents are giving speeches today, perhaps trying to confuse things even more.

At 9:45, the PMI Manufacturing Flash Report is expected to perk up to a reading of 52.4. And at 10, the March Richmond Manufacturing Index is also expected to improve from the February reading of minus 4.

After the close of trading today, Red Hat, Krispy Kreme and Nike will each report quarterly earnings. 

Japanese stocks were almost 2 percent higher overnight. European markets fell significantly on the Brussels attacks, but have recovered a bit, and are generally lower by less than one percent.

Adjusted for fair value, the S&P 500 futures are lower by about 8½ points, the Dow Jones Industrials futures are down 52 and the NASDAQ futures are about 21 points below fair value. 

March 21, 2016

It’s been a while since we’ve had a bona fide Merger Monday, but it looks like we have one cooking today. If you own shares of paint-maker Valspar, you’re waking up to a $113 per share offer from Sherwin Williams. That’s a nearly 9 billion dollar offer and gives Valspar shareholders a 35 percent premium to Friday’s closing price.

It also looks like the possible sale of Starwood Hotels may turn into a full-fledged bidding war. This morning, Starwood agreed to an amended offer from Marriott that values Starwood at $85.36 per share. That betters an offer from Chinese insurer Anbang. That is, until we hear from them again.

IHS and Markit are joining in a merger of equals. 

The Housing sector has been a bit of a disappointment so far this year, and at 10 o’clock, we’ll find out about the rate of sale for existing homes in February. Expect an annualized run rate of about 5.3 million homes, which would be markedly lower than January’s 5.47 million rate,

Two more Federal Reserve head honchos are out on the rubber chicken circuit today.

Overseas markets are mixed, and there’s a whole lot of very little going on with our stock index futures as we start this short week of trading. Adjusted for fair value, the S&P 500 futures are lower by about a point and a half, the Dow Jones Industrials futures are up 9 and the NASDAQ futures are about 2 points below fair value. 

March 18, 2016

It took them a day to pack their bags after Wednesday’s interest rate announcement and another day to travel, but here we go – three regional Federal Reserve Presidents are giving speeches around the globe today. It shouldn’t take long for them to take a newly clarified interest rate policy and muddy it up again in traders’ eyes.

But in the meantime, stock prices are rising for the sixth week in a row. This could wind up being the biggest intra-quarter recovery in stock prices in over 80 years. After a more than 11 percent downfall, the S&P 500 is almost all the way back, and the Dow Industrials are now positive for the year. Oh by the way, oil futures are now above 41 bucks, after dipping below 30 not long ago.

Tiffany reported $1.46 per share in profit last quarter, which was 6 cents better than expected, although profits were well below last year’s. Tiffany shares are looking about a percent and a half lower this morning. The famous other hand belongs to Abode shares, which are up about 7 percent pre-market on good earnings.

At 10 o’clock the first look at March Consumer Sentiment from the University of Michigan is expected to improve from February’s level to a reading of 92.2. 

Most markets overseas are higher, but generally by one percent or less.

At this point, adjusted for fair value, the S&P 500 futures are higher by 3 points, the Dow Jones Industrials futures are up 39 and the NASDAQ futures about 8 points above fair value. 

March 16, 2016

Every six or seven weeks, the Federal Reserve Open Market Committee gets together for a day or two to clarify where they would like short-term interest rates be, presumably to help job growth and control inflation. The committee members then spend the next six or seven weeks running around giving speeches that often do little more than confuse the issue. But, after all – that’s what economists do.

Anyway, at 2 o’clock this afternoon we’ll get the latest verdict on interest rates and at 2:30 Chair Yellen will offer an explanation.

A lot of Valeant shareholders are looking for an explanation after shares of the embattled drug seller fell more than 50 percent yesterday and are lower by another 3½ percent this morning. The famous other hand belongs to Oracle, whose shares are 4 percent higher pre-market on a good earnings report.

At 8:30, the February Housing Start data is expected to improve following January’s 4 percent drop. We’ll also get the February Consumer Inflation data at 8:30.

In many prior instances, stock prices hit two o’clock on Federal Reserve decision days relatively unchanged from the previous day. It looks like we’ll start this Fed decision day the same way.  At this point, the S&P, the Dow and the NASDAQ futures are all within a few points of fair value. 

March 15, 2016

Beware the Ides of March! That’s especially true if you own shares of political punching bag Valeant Pharmaceuticals.  Valeant finally took a stab at reporting earnings this morning, and while the report was far from a death blow, Valeant shares are definitely wounded this morning. Reported earnings of $2.50 per share missed the average estimate by 11 cents. Revenues were okay, but the earnings outlook left a lot to be desired and Valeant shares are looking to open about 16 percent lower. Shoe retailer DSW shares are almost 9 percent higher on a solid earnings report.

At 8:30 this morning we’ll get readings on February Retail Sales and the February Producer Price Index, both of which are expected to have declined by one-tenth of one percent.

The Bank of Japan sat on its hands overnight, refusing to pump out any increased monetary stimulus. After the close of trading at 4 o’clock, we’ll get the quarterly numbers from Oracle.

Chinese stocks were a little higher overnight, but most other markets overseas are about one percent lower. Oil futures are lower by more than two percent.

Adjusted for fair value, the S&P 500 futures are now lower by about 12 points, the Dow futures are down 73, and the NASDAQ futures are about 13 points below fair value.

March 14, 2016

You may have stayed at the Waldorf-Astoria in New York. But you probably didn’t know that it’s owned by a Chinese company called the Anbang Insurance Group. That company may soon own many of the hotels you visit in the future.

This morning, they’ve disclosed an offer to buy the Starwood Hotel Group, which we thought was being bought by Marriott, and Strategic Hotels and Resorts, which owns some of the Four Seasons and Ritz properties. Put together, they’ve offered almost 20 billion dollars combined.

Stock prices are suddenly riding a four-week winning streak as we head into a week headlined by a two day Federal Reserve Open Market Committee meeting that starts tomorrow. In spite of all their huffing and puffing last December, it’s unlikely that they’ll drive stock prices down with another rate increase, at least not yet.

One more deal this morning, as Fresh Market will be sold to the Apollo Group at a 24 percent premium to Friday’s closing price but a 53 percent premium to Thursday’s closing price. Amazing how some people had a “lucky hunch on Friday, don’t you think?

Oil futures are now down almost 3 percent and that has our futures slip sliding away as well. Adjusted for fair value, the S&P 500 futures are now lower by almost 8 points, the Dow futures are down 47, and the NASDAQ futures are about 18 points below fair value.

March 11, 2016

If you’re listening for economic reports, you’ll get nothing but crickets today, outside of the Baker-Higher Oil Rig count at 1 this afternoon.

But in the meantime, traders are having a wonderful time trying to figure out how to react to the European central Bank’s new monetary program.

Yesterday stock prices started strongly on news of additional European stimulus, then weakened badly when Mario Draghi indicated that this might be the end of the stimulate road. However, by 4 o’clock, stock prices rallied back to about even. 

This morning, our futures are once again indicating a very strong open, perhaps helped by a more than 2 percent rise in oil futures, as the International Energy Agency suggests that oil prices may have seen their worst.

Looking very well groomed this morning are shares of Ulta Salon. $1.69 of quarterly profit was 15 cents better than expected and 34 cents better than a year ago. Ulta shares, which are more than 15 percent higher over the past year are another 13 percent higher in the pre-market this morning.

Asian markets were higher, but generally by less than one percent. Most European markets are 1 to 3 percent higher.

Adjusted for fair value, the S&P 500 futures are now higher by about 18 points, the Dow futures are up 154, and the NASDAQ futures are about 47 points above fair value.

March 10, 2016

The big announcements impacting stock prices aren’t coming from New York this morning, but from Europe. The European Central Bank announced its new interest rate policy less than a half hour ago, lowering their deposit rate from a negative three-tenths of a percent to a negative four-tenths and expanding their bond-buying program. At 8:30, EBC President Draghi will hold a press conference to give the color commentary.

Lower interest rates tend to be good for stock prices. However, countries with NEGATIVE interest rates have generally suffered stock price declines since rates went south. That’s because negative rates are pretty much the economic equivalent of pulling the fire alarm. It’s not normal and it depresses the local currency. However, further weakness in the euro may put another stumbling block in the way of our Federal Reserve’s efforts to raise our interest rates.

Dollar General shares are about 4 percent higher after they reported better than expected earnings, sales and raised their dividend.

China was lower overnight, Japan was higher. European stocks are higher by anywhere between 2 and slightly more than 4 percent. The ECB’s interest rate move also gave our stock futures a big boost. Adjusted for fair value, the S&P 500 futures are now higher by about 17 points, the Dow futures are up 142, and the NASDAQ futures are about 44 points above fair value.

March 9, 2016

Seven years ago, the great recession in stock prices ended. To refresh your memory the S&P 500 dipped as low as 666. Last night it closed close to triple that figure, at 1,979.

We did have a recent market session or two where stock prices did not move in lockstep with oil prices. Well, so much for that. Oil and stock prices dove late in the session yesterday and this morning, futures of both are solidly higher.

Solidly lower, by about 2½ percent, are shares of Chipotle. They’ve had to close and sanitize a store in suburban Boston after some employees fell ill from a reported norovirus infection. Apparently it’s not food related – no customers were sickened - but traders appear to be shooting first and asking for their burrito bowl later.

In the next step in developing a way to deliver everything you might or might not need as quickly as possible, Amazon has made a deal with Air Transport Services to develop an air cargo network in the United States. 

Asian markets were mixed.  Europe is mostly higher by one to two percent.

Adjusted for fair value, the S&P 500 futures are now higher by about 12 points, the Dow futures are up 107, and the NASDAQ futures are about 27 points above fair value.

March 8, 2016

Some rather shocking import and export numbers out of China had overseas markets in a minor tailspin overnight, although things seem to be moderating a bit. Chinese exports fell 25 percent on the year and imports fell 14 percent. However, those declines are only 20 percent and 8 percent in local currency AND the figures are bit skewed because of the timing of the Chinese New Year in 2015 and 2016. So things are probably not as dramatic as they seemed at first glance.

Things may be as bad as first appeared at Dick’s Sporting Goods. $1.13 of quarterly profit fell 17 cents short of the consensus estimate. Same store sales were off 2 ½ percent and Dick’s shares are off more than 6½ percent pre-market.

Shake Shack shares are 9 percent lower pre-market on weak forward guidance.

Management of United Airlines might be hitting an air pocket. Two large activist shareholders have nominated 6 potential members of the United Board. We’ll see what shareholders have to say, at least those that bother to vote their proxies.

Oil futures have reversed and are now higher by one percent. Overseas markets are mostly lower, but not by a great amount.

Our stock index futures have recovered quite a bit from earlier lows and are hovering around the same levels they held 24 hours ago. Adjusted for fair value, the S&P 500 futures are now lower by about 9 points, the Dow futures are down 64, and the NASDAQ futures are about 22 points below fair value.

March 7, 2016

Fort three weeks in a row now, stock prices have been on the long road back from January’s losses, helped by higher oil prices and some recovery in Chinese stocks.

This morning, there may be a bump in that road. Oil futures and Chinese shares are higher, but it’s not helping stock futures, as the focus for this week may be turning to economic policy in Europe. Manufacturing orders declined by a tenth of a percent in Germany in January, and the European Central Bank is expected to announce their latest policy initiative on Thursday. The prospect of negative interest rates isn’t giving anybody a warm and fuzzy feeling. Many are suggesting that this collective race to the bottom and beyond with respect to interest rates is not particularly productive and may lead to bigger problems later on. 

Earnings season is pretty much kaput, although Shake Shack will release quarterly numbers later this afternoon.

European markets are about one percent lower right now. Although our futures are modestly off their earlier lows, we’re still looking for lower prices at 9:30.

Adjusted for fair value, the S&P 500 futures are now lower by about11 points, the Dow futures are down 65, and the NASDAQ futures are about 23 points below fair value.

March 4, 2016

Like it or not, the First Friday of the month has rolled around once again, and with it comes the Labor Department’s Employment Report. Most expect that January’s rather weak number of 151,000 new non-farm jobs will ramp up to 190,000 in February. The Unemployment Rate is expected to hold at 4.9 percent, but perhaps the more interesting number will be the average hourly earnings. January’s one-half of one percent increase was much hotter than expected. Another hot number might raise inflation fears, and in turn give the Federal Reserve hawks some ammunition in shooting interest rates higher.

Stop me if you’ve heard this one before – a company reported better than expected earnings on weaker than expected sales, and announce a dividend increase and a stock buyback. That well-worn story came from Big Lots this morning, and their shares are very slightly higher. Staples shares are about one percent lower after missing on estimated sales and profits.

Asian markets are once again solidly higher, with Chinese stocks rising 4 percent. European markets are mixed, but are generally a bit higher.

Oil futures are up a bit and stock futures have been on a slow rise much of the morning. Stocks have turned in three straight days of gains, and at this point, adjusted for fair value, the S&P 500 futures are now higher by about 3 points, the Dow futures are up 29, and the NASDAQ futures are about 12 points above fair value.

March 3, 2016

It’s not the critical indicator of economic strength is was a couple of years ago, but the Labor Department’s Monthly Jobs Report still draws a lot of attention from stock traders. That report comes tomorrow. But in just about 20 minutes, the Weekly Claims Report might give us a hint of what’s to come. Expect that 270,000 New Claims were filed for the week ended February 27th.  

A couple of interesting corporate reports are out. Retailer Costco blamed a slow month in January and a strong currency for earnings that fell 4 cents short of estimates at $1.24 per share. Still, same store sales were up one percent, and if you strip out the impact of the strong dollar and falling gasoline prices, same store sales actually rose about 5 percent.

American Eagle Outfitters upgraded their forward guidance, after seeing a 4 percent increase in same store sales. Shares of Luggage maker Tumi are almost 25% higher pre-market on word of a possible buyout by Samsonite.

By 10 o’clock, we’ll get a couple of readings on the health of the services sector of the domestic economy as well as the January Factory Orders Report.

Asian markets were high across the board overnight. Europe is more of a mixed picture at this hour.

Our stock futures took a turn for the worse about 40 minutes ago, although they’re not terribly negative.  Adjusted for fair value, the S&P 500 futures are now lower by 2 points, the Dow futures are down 21, and the NASDAQ futures are about 2½ points below fair value.

March 2, 2016

We’ll see if yesterday’s surge in stock prices has any staying power today as the market tries to recover from a couple of rough months.

Although Abercrombie, Bob Evans Farms and Tribune will report earnings today, this will be a day to watch economic reports and, of course, oil prices as directional indicators. West Texas Intermediate is about 1½ percent lower right now.

The ADP employment report at 8:15 is expected to estimate that 185,000 new jobs came into being in February. Of course, the Labor Department’s official number comes out of Friday.

Mortgage applications fell about 7 percent last week, although according to the Mortgage Bankers Association, the average interest rate on a conforming home loan is all the way down to 3.83 percent.

At two o’clock this afternoon, the Federal Reserve’s Beige Book will be an interesting read, as we try to figure out whether the economy is moving forward at all, and if so, by how much.

American Water Works shares are more than 4 percent higher pre-market on word that they will soon become a component of the S&P 500 Index.

Asian markets were solidly higher after our big rally yesterday. Chinese stocks rose more than 4 percent. Most European markets are higher as well.

Adjusted for fair value, the S&P 500 futures are now lower by 2 points, the Dow futures are down 32, although the NASDAQ futures are just about even with fair value.

March 1, 2016

They stuck an extra trading day on the calendar yesterday, which wasn’t a bad thing. It just lasted a couple of hours longer then a lot of people would have liked, as early gains turned into late losses, with the Dow down 123 points. However, if you’re trying to trade this market – best of luck, as it looks like yesterday’s losses could be recovered shortly after the open this morning.

We’ll find out how February automobile sales went as the day rolls on. FCA America sales were up 12 percent. Industry watchers expect that the biggest sales increase is expected to come from Ford Motor Company.

Not increasing at all is the manufacturing segment of China’s economy. For the seventh consecutive month, China’s PMI declined – this time well below estimates to a reading of just 49. Anything below 50 indicates actual contraction as China continues to shift away from a manufacturing to a more services-oriented economy. Our PMI Manufacturing index comes at 9:45 this morning and is expected to reflect mild expansion at 51.3.

New York Fed head Bill Dudley spoke in China this morning and sounded very dovish about future interest rate hikes in the U.S. That, along with a more than two percent rise in oil futures is helping the stock futures.

Adjusted for fair value, the S&P 500 futures are now higher by almost 15 points, the Dow futures are up 117, and the NASDAQ futures are almost 32 points above fair value.

WJR April 2016 Reports
WJR February 2016 Reports

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