May 31, 2012
The economic data train picks up some speed today as we head into tomorrow’s big Monthly Employment Report. There are a couple of jobs-related surveys this morning. Earlier, the outplacement firm Challenger Gray & Christmas reported that layoff announcements in May rose 53% from April with 62,000 job cuts announced, mostly in the computer industry. That brings the total year-to-date layoff announcement total to almost a quarter million jobs.
Switching from jobs going away to jobs coming on board, the ADP Employment Report was released just 3 minutes ago and was expected to show that about 154,000 new private sector jobs were added in May. The actual number was only 133,000. The April number, which was a very disappointing 119,000, was actually revised even lower.
At 8:30, the first revision to first quarter Gross Domestic Product is not expected to be good news. The advance number of 2.2 percent is expected to be cut to 1.9 percent. At 9:45, the Chicago PMI is expected to rise just a touch to 56.9.
Monthly numbers are coming from the big retailers today. So far, TJX and Target were better than expected. GAP, not so much.
Asia mostly lower overnight, but Europe is mostly a bit higher, as are our futures, but just by a bit, and the ADP jobs news isn’t helping. Right now, the adjusted S&P futures are higher by about a point, the Dow futures are up 18, and the NASDAQ futures are just a touch more than a point above fair value.
Stock prices around the globe continue to gyrate with every little headline out of Europe.
This morning, the yield on 10 year Spanish bond broke over 6.6 percent and appears headed higher. You may remember that 7 percent was the panic point for Italian bonds not too many months ago. However, as traders were backpedaling on that news this morning, the European Commission released a statement calling for a unified European bank, a direct bailout of European commercial banks, and consideration of the creation of Euro bonds. That, of course, may be the key to fixing economic problems short term and setting the stage for some really big problems down the road, as the currency printing presses run full steam.
Apparently running out of steam is Research in Motion. RIMM shares dipped below 10 bucks last night after RIMM announced that they expect a quarterly loss and are pursuing “strategic options.” That’s high-falutin’ financial talk that means “HELP – get me out of here!”
BuddyMedia is out of here. They are selling out to Salesforce.com for 800 million bucks. And Apple’s CEO hinted that a closer relationship with Facebook may be in the cards.
The vast majority of markets overseas are lower. European markets are generally off about one percent. At this point, adjusted for fair value, the S&P futures are down about 9 points, the Dow futures are down 84, and the NASDAQ futures are almost 19 points below fair value.
You would suspect that facing a three-day weekend, a lot of traders might take a step back from any potential bad news that may come from the European Union between now and Tuesday. We shall, see, as they say.
Verifone shares will take a step back this morning. Earnings beat, but guidance for the full year was lowered. HJ Heinz might also be under pressure in the >
There was a report out of Germany this morning that consumer sentiment is still holding up, and we’ll get the University of Michigan’s final word on May consumer sentiment here in the U.S. just before 10 o’clock. Expect that the mid-May reading of 77.8 will hold. That would be a 1.4 point improvement from the April reading.
Asian markets were mixed overnight, but mostly lower. European markets, which were higher earlier, have slipped back to about a break even on the day.
Our futures don’t look great on their >
There’s a mixed bag of corporate news this morning. But, perhaps more importantly for the overall stock market, there are no depth charges going off across the Atlantic, and the rally that brought us out of a deep hole yesterday (after European trading closed) should evolve into a slightly positive open this morning.
Hewlett Packard shares are indicated 9 percent higher pre-market, and yes, they reported 98 cents in profit last night. That was 7 cents more than expected. But Hewlett lowered their forecast for the full year and they also will lower the boom on 27,000 employees, as the evidence continues to point to a secular shift from personal computers to tablets.
NetApp issued a disappointing report last night and NetApp shares are looking to open about 17% lower. And, apparently all is not well with the often-reviled “1 percenters.”
Tiffany’s 64 cents missed the mark by a nickel per share, Tiffany lowered guidance, and traders are lowering the stock by about 9 percent pre-market.
At 8:30 April Durable Goods are expected to have risen one-half of one percent, and seven-tenths ex-autos. Weekly Jobless claims are expected to be stuck at 370,000.
Asia was mixed overnight. Europe is higher by about one percent. Our futures have been backtracking over the past hour and are currently just north of break even. Right now, adjusted for fair value, the S&P futures are higher by about 2 points, the Dow futures are up 12, and the NASDAQ futures are just about even with fair value.
There’s no joy in Mudville, or Dell-ville, or Europe-ville this morning. But let’s not talk about the Tigers.
Let’s start with Dell. Consumer revenue was down 12% as Dell wallows along peddling PCs as the world buys ipads. Coincidently, traders are responding in kind, pushing Dell shares down about 12 percent this morning. Yes, Dell will come out with a tablet based on the Windows 8 operating system, when it comes out. But until then, traders will keep entering their sell orders on their ipads.
European leaders are holding an informal meeting today, which sure beats working for a living. The markets will be looking for any signs that the Germans might warm to the idea of issuing Eurobonds, which is looking more and more like the short-term escape hatch for those who want to keep Greece in the club. Never underestimate politicians’ willingness to print money when >
At 10 o’clock, New Home Sales are expected to check in at an annualized rate of 335,000, which would be a slight improvement for a report that has been drifting lower for over four years.
There’s nothing but red numbers overseas this morning, and if the futures are any indication, and they usually are, we’ll have a bit of a mess on our hands at 9:30. Right now, adjusted for fair value, the S&P futures are down about 8 points, the Dow futures are down 85, and the NASDAQ futures are about 19 points below fair value.
No matter how much you might be dreading the day to come, be happy that you’re not the CEO of the NASDAQ stock exchange. It’s annual meeting day for NASDAQ, and it’s possible that shareholders might have some pointed questions about the mishandling of the Facebook IPO last Friday. The lawsuits are just beginning to fly regarding that mess. And speaking of messes, they might consider changing the name of Facebook to Faceplant after its shares took an 11 percent swan dive yesterday. Facebook shares are indicated lower by almost another two percent pre-market.
Heading higher this morning should be shares of Best Buy. The electronics retailer, which it in the process of readjusting its >
Medtronic beat estimates by a penny on better than expected sales. AutoZone also beat the earnings bogey, although sales fell a little short.
At 10 o’clock April sales of existing homes are expected to have improved to an annualized rate of 4.66 million from March’s 4.48 million.
Other than in Portugal, stocks are pretty much higher across the board overseas, and we’ll look for day two in our market recovery early on. Right now, adjusted for fair value, the S&P futures are higher by almost 6 points, the Dow futures are up 31, and the NASDAQ futures are about 9 points above fair value.
No bad news out of Europe this morning, as the leaders of the G8 met over the weekend in the belief that talking among themselves will somehow help Greece grow its economy and pay off debt. Of course, we’re coming off the worst week of the year for stock prices, due mainly to distress in the Eurozone.
Speaking of distress, Facebook, which came public to the clamoring masses at 38 bucks per share Friday, is looking to open around $37.32 dollars pre-market.
Home improvement retailer Lowe’s is evidently expecting a late-year fade. Lowe’s reported 44 cents in quarterly profit this morning, which was two cents better than expected, but they guided lower for the full year. Campbell Soup reported 56 cents in quarterly profit, versus the 52 cent estimate.
Yahoo will have a little more cash in the till soon. Yahoo has agreed to sell its interest in Chinese firm Alibaba. They’ll get over 7 billion dollars now and will sell the rest of their shares later. Yahoo has authorized a 5 billion dollar share buy-back. Look for Yahoo shares to benefit by about 5 percent at the open after gaining almost 4 percent on Friday.
Asian markets were mixed overnight. Major European markets are a little higher, although Italy and Spain are lower on the order of one percent or so. The Canadian market is closed today.
Right now, adjusted for fair value, the S&P futures are higher by 3 points, the Dow futures are up 38, and the NASDAQ futures are about 3 points above fair value.
The top story of the day is pretty easy to spot. That giant “sucking sound” you hear are all the retail dollars chasing the initial public offering of Facebook shares. The IPO price, if you are able to get an allocation of IPO shares, will be $38 per share. Facebook shares will begin trading on the NASDAQ at 11 o’clock this morning, and we’ll see where all the hype will carry it. More importantly, we’ll see where it winds up after all the “flippers,” looking for a quick trading profit, stop “flipping.” But only time will tell.
Of course, it hasn’t been news about Facebook that’s driven stocks down 11 of the last 12 sessions, it’s been news about Europe. Late yesterday, Moody’s downgraded more than a dozen Spanish banks, and that didn’t help markets in Asia overnight. China was lower by a percent and a half. Japanese shares fell 3 percent. However, European markets are a much more mixed picture this morning. Greek stocks, in particular, are up actually about 3 percent.
And in case you missed it, the price of a barrel of light sweet crude oil is under 93 bucks this morning, that’s down about 12 percent this month alone. Maybe someday gas prices will follow.
Right now, adjusted for fair value, the S&P futures are higher by 4½ points, the Dow futures are up 34, and the NASDAQ futures are about 6 points above fair value.
Like it or not (and nobody does) traders are on edge regarding every headline out of Europe regarding the Greeks, the European Union and the overall concept of repaying your debts. That will change someday. Unfortunately, that day appears to be at least a couple of months away.
In the meantime, the euro continues to slip in value, the U.S. dollar continues to strengthen (through no fault of its own) and the stock market has taken it on the chin nine out of the last ten days.
This morning, retailer Target released a very nice earnings report. First quarter same store sales were 5.5 percent high, earnings of $1.11 per share beat the $1.01 estimate on higher than expected sales. Target also guided higher for the full year. Deere & Company’s $2.61 beat the bogey by 8 cents. Also, Abercrombie and Fitch beat the two cent estimate by a penny, but sales came is significantly short of estimates.
The Facebook IPO feeding frenzy acquired a another 80 million shares of chum this morning, as a bunch of early investors have decided that it’s a good time to sell their shares to people who just can’t wait to throw money at the new “hot thing.” That means that 421 million shares will be offered to the clamoring masses.
Overseas markets are all lower, but we’ll buck the trend, at least in the early going. Right now, adjusted for fair value, the S&P futures are higher by 5½ points, the Dow futures are up 49, and the NASDAQ futures are about 10 points above fair value.
Yeah, his compensation is north of 20 million dollars, but so what? It will stink to be Jamie Dimon today. Its shareholder meeting today for holders of JP Morgan Chase shares and they may have some polite questions to ask Mr. Dimon about the recent 2 billion dollar hedge gone bad. That IS JP Morgan, by the way. I think I mistakenly referred to Bank of America yesterday. Sorry about that. Don’t know how I could have confused the two.
Avon Products shareholders may have some questions for their Board of Directors today. Avon shares were up almost 4 percent yesterday when the Board said they would “consider” Coty’s buyout offer. This morning, Coty said “time’s up!” and pulled the offer off the table. Avon shares are looking 15% lower premarket.
On the famous other hand, Groupon shares are looking almost 25% higher as they reported their first-ever profit.
Home Depot matched estimates on lower than expected sales. Dick’s Sporting Goods and Artic Cat revealed better than expected results.
Economic data on the way at this morning includes the Consumer Price Index, Retail Sales Index and the Empire Manufacturing Index.
Overseas markets are mixed, but our futures, which were lower several hours ago have turned. Right now, adjusted for fair value, the S&P futures are higher by almost 7 points, the Dow futures are up 53, and the NASDAQ futures are about 17 points above fair value.
Last week handed stocks their worst week of the year, although on Friday, 30 points of the Dow’s 34 point loss were caused solely by the decline in JP Morgan Chase shares.
Earnings season is pretty much wrapped up. There’s nothing on the economic report calendar today. Given that, traders will be stuck thinking about JP Morgan Chase problems, which stem from hedging bet that went wrong, and European problem, which stem from economic system apparently gone wrong. The failure to form a coalition government in Greece over the weekend will likely lead to new elections, which will likely be won by the far left, which will likely disavow the European-required austerity steps in Greece, which will likely lead to Greece exiting the Euro. Which is where a lot of people saw this going over a year ago.
Yahoo shares are indicated almost 3 percent higher this morning, after the CEO’s resignation yesterday. Broker downgrades for Symantec and Nokia this morning. An upgrade for St. Jude, and share of Avon Products are bid higher as their board has said they will consider Coty’s buy-out offer.
Italy is lower by 3 percent, Greek stocks down about 4 percent. Other markets in Europe are down about 2 percent.
Over here, adjusted for fair value, the S&P futures are down almost 12 points, the Dow futures are down 86, and the NASDAQ futures are about 21 points below fair value.
The big story of the morning is a carry-over from last night’s announcement that JP Morgan Chase will have to mark-to-market a 2 billion dollar trading loss. Chairman Jamie Dimon, to his credit, didn’t make excuses, calling the bank’s actions “stupid.” However, this kind of derivative loss, whether caused by a hedging (as appears to be the case here) or by a rogue trader, bolsters the case of those who say that banks should be banks, in the traditional sense. Congress, of course, could put Humpty Dumpty back together again by reinstituting the Glass-Steagall rule which was legislated during the Depression. As a half-step, we do have the Volker Rule, which should make this kind of event more of a rarity than a recurring event in the future.
Big money will be made this morning in shares of Arena Pharmaceuticals. Good regulatory news on their obesity drug should just about double Arena’s price as soon as the market opens.
Bed, Bath and Beyond and Verizon were upgraded this morning by JP Morgan Chase. Hopefully they weren’t hedged against them. A downgrade out of Credit Suisse on Best Buy.
The University of Michigan’s first look at May Consumer Confidence at 9:55 is expected to read 76.2, down two-tenths from April.
Gold and oil are both about one percent lower once again this morning.
Overseas markets are lower, and at this point, adjusted for fair value, the S&P futures are down about 5 points, the Dow futures are down 49, and the NASDAQ futures are about 2½ points below fair value.
The six-day long reset in stock prices may have run its course, as we have no surprising headlines out of Europe this morning, and we’re seeing small green shoots sprouting from the stock futures.
Of course, we may be entering this fight by leading with our collective chin. At 8:30, the Government will tell us how many new claims for Unemployment Benefits they received last week. Given the miserable monthly Jobs Report released last Friday, this could get ugly. Expect that 378,000 people applied for support from the taxpayers last week. Anything that gets us a lot closer to the 400,000 level would not be a great help.
Cisco Systems quarterly profit report was not a great help last night. Yes, Cisco made a little more than expected last quarter, but guidance for the current quarter was disappointing, as Cisco expects softening demand especially in – let’s say it all together – Europe. Similarly, Kohl’s beat their first quarter number this morning, but guided lower for Q2.
The Bank of England held interest rates steady this morning and more interestingly, added no additional monetary stimulus. Uncle Ben Bernanke will spout off about matters economic at the Chicago Fed Conference later today.
Our futures, which had been in the red most of the morning, went green within the past hour, and nicely so. At this point, adjusted for fair value, the S&P futures are up 8 points, the Dow futures are up 47, and the NASDAQ futures are just about 11 points above fair value.
Correction (Day 6) kicks off in just over an hour as traders continue to obsess about the ramifications of recent elections in Europe. Evidently it’s a big surprise that the electorate in some countries are not really interested in doing things like paying down debt, restraining spending, paying taxes, and well, working. How long the Germans continue to appease that behavior is the linchpin question. Soon we’ll find out if “nein” really means “nein.” In the meantime, stock prices will stay in the blender.
Not that it matters in this environment, but Disney reported 58 cents in quarterly profit last night, which was 3 cents better than expected. SodaStream, 55 cents was a 7 cent beat and AOL earned 22 cents, which pretty much made the 7 cent estimate look silly on better than expected sales. SodaStream is bid almost 20 percent higher pre-market.
Looking for a silver lining? The 10 year Treasury Bond is yielding about 1.8 percent this morning. If you’re thinking about refinancing that mortgage again, that might be good thinking.
Cisco Systems, Priceline, Dean Foods and Macy’s report a little later on, but in the meantime, it’s all-Europe all the time with Italy down almost 2 percent, Spain down 3 percent, and our futures showing the strain.
At this point, adjusted for fair value, the S&P futures are down about 13 points, the Dow futures are down 105, and the NASDAQ futures are just about 27 points below fair value.
Overseas, it’s back to the future this morning. Putin has been reinstalled as President in Russia, resulting from what was rumored to be a popular vote. In France, the populace did decide that the Socialists might treat them nicer for the next few years. The Greek election left leadership there in quite a fractured mess. Stock prices, which are voted upon by capitalists every day, are dealing with the repercussions.
First quarter earnings reports are in for the majority of big companies, but this week will still feature a number of interesting announcements.
Food service giant Sysco reports today, and the networking equipment maker Cisco reports on Wednesday. So far today, DISH Network reported 80 cents in profit, which appears to be a bit better than expected. Avis-Budget checked in with 12 cents of operating profit. They had been expected to lose 6 cents. Meanwhile there’s a one-cent miss from Frontier Communications on earnings of a nickel per share.
Broker upgrades are out for Disney and Lear, and the roadshow for the much ballyhooed Facebook IPO kicks off today.
Reflecting Europe’s electoral turn to the left, our futures are turning red as well. At this point, adjusted for fair value, the S&P futures are down about 8 points, the Dow futures are down 71, and the NASDAQ futures are just about 18 points below fair value.
Jobs, jobs, jobs. You may gear those words oh, maybe two or three million times between now and election day, and that assumes you’ll be spending a few months on Mars.
Jobs is certainly the word of the day on Wall Street. In less than twelve minutes, the Labor Department will release the April Employment Report. The consensus estimate is that 168,000 new non-farm jobs came about in April, and that the Unemployment Rate stays at a relatively ugly 8.2 percent. If you include discouraged workers it’s probably closer to 15 percent. The apparent surge in new jobs in January and February now appears more the result of the weather than the economy. We’ll know more at 8:30.
Shares of LinkedIn are on the rise after a strong earnings report last night. And Facebook gave us some details on their upcoming IPO. They’ll try to raise a little over 10 billion dollars, and if the target price holds, it will value Facebook somewhere between 77 and 96 billion dollars.
The ISM service sector index in China rose to a 6 month high overnight, but in spite of any news, expect our futures to hover close to the flat line until the 8:30 Labor Department Report.
At this point, adjusted for fair value, the S&P futures are down about a point, the Dow futures are down 4, and the NASDAQ futures are just about 6 points below fair value.
The big local news is, of course, the General Motors earnings report, which is a mix of good news and bad – but mainly good. Operating earnings of 93 cents were lower than last year, but beat Wall Street expectations by 8 cents per share. South America was profitable, the U.S. was very profitable. Europe continues to be a drag, and that’s not likely to get better soon. GM’s profit margin of 5.8 percent was better, but still well short of their stated goal of 9 or 10 percent.
Viacom and Lear joined the parade this morning, both reporting better than expected profits.
At 8:30, the Weekly Jobless claims will be closely watched, given the recent softness in Job growth. Expect 378,000 people to have applied for jobless benefits. The Challenger Layoff Report this morning reported 40,500 announced job cuts in April. That’s 7 percent higher than March and 11 percent higher than a year ago. Tomorrow morning, of course we get the Labor Department’s April Employment Report.
Asian markets were mixed overnight, but Europe is mostly higher, and our futures, which were comfortably higher earlier, have been sliding back toward the flat line over the past 15 minutes.
At this point, adjusted for fair value, the S&P futures are up just about a point, the Dow futures are up 6, and the NASDAQ futures are just about 2 points above fair value.
The steady stream of economic reports continues today as we build up to the Monthly Jobless Claims number that comes Friday. Overnight, the Chinese Purchasing Managers Index reported its sixth monthly decline in a row. At a level of 49.3, it doesn’t indicate a lot of economic contraction, but anything south of 50 is not so good.
Stateside, payroll firm ADP released their April report just 2 minutes ago and it’s not so good. 119,000 new private sector jobs fell WAY short of the 182,000 estimate. The March Factory Orders Report comes at 10. The Factory Orders Report includes not only durable, but also non-durable goods, has been pretty volatile of late, and is expected to have declined by 1.6%.
Garmin, CVS Caremark and Comcast are all out with higher profits than expected. Swiss Banking Giant UBS missed their profit mark by 25% this morning. However, the U.S. wealth management business continues to rake it in, with its biggest profit ever, as earnings rose 30 percent.
Asia was higher overnight. Europe is mixed. We had a pretty good->
At this point, adjusted for fair value, the S&P futures are down 8 points, the Dow futures are down 58, and the NASDAQ futures are about 16 points below fair value.
It’s May Day. It’s a day when many markets around the world take a day off, and the Occupy Wall Street folks get back to the hard work of demonstrating why they don’t have jobs. Did I word that correctly? Well, in the meantime, Australia’s Central Bank cut its benchmark interest rate by a higher than expected one-half of one percent overnight to 3.75 percent.
We’ll be getting the April Car Sales Reports all day long, with the consensus estimate on total car sales running at an annualized rate of 14.4 million units, 11 million of those coming from the domestic car makers.
Pfizer is out with 58 cents per share in quarterly profit. That was 2 cents better than expected. However Pfizer guided a little lower for the year on the whole. Avon Products appears to be the disaster du-jour. Avon earned only 10 cents per share versus the 28 cent estimate and they’re taking step to cut costs, as is Bank of America. B of A will reportedly cut another 400 jobs.
P.F. Chang is going private at a 40 percent premium to last night’s closing price in a one billion dollar deal.
At 10 o’clock the ISM Manufacturing Index is expected to slump a bit to a reading of 53.
Lots of markets overseas are closed, but we should start May with little green arrows. At this point, adjusted for fair value, the S&P futures are higher by a point, the Dow futures are up 13, and the NASDAQ futures are about 2 points above fair value.
Daily Reports @ WJR
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