May 30, 2014
We’ll wrap up trading for the month of May today with a little flurry of economic data. At 8:30 the Report on April Personal Income and Spending will be released. As strange as it sounds for it to happen in America, personal income is expected to have outstripped spending, four-tenths of a percent to two-tenths of a percent.
At 9:45, the May Chicago Purchasing Managers Index is expected to fall a bit to 61 from April’s 63. And then to wrap up reports for the month, the University of Michigan will refine its results of survey on Consumer Sentiment. The first estimate was 81.8. Expect that to rise a bit, to maybe 82½.
The good retailer report of the morning came from Big Lots. Operating profit of 50 cents beat estimates by a nickel. Big Lots also raised full year guidance. On the famous other hand, shares of Express and Annie’s are both off about 13 percent pre-market on earnings misses.
Asian markets were mostly lower, but Europe is a mixed picture. Our futures are in the red, but not by a lot.
At this point, adjusted for fair value, the S&P 500 futures are lower by about a point and a half, the Dow futures are down 17 and NASDAQ futures are about a point below fair value.
May 29, 2014
The summed total of all the goods and services produced in a country is known as the Gross Domestic Product. Every month, our Government pulls out a really big calculator and tries to estimate what GDP for the prior quarter. That gives them three chances to get it right. Cue up try number two for the first quarter of 2014 at 8:30 this morning. For the first time in three years, our GDP is expected to decline from the prior quarter. Although the first guess a month ago was a one percent increase, most economists figure that by now, the Government has discovered that it snowed a lot in the first quarter, and that the current guess will be closer to a negative six-tenths of a percent.
The bond market sure seems to be expecting a lousy number. Of course, there are other factors involved, like Government bond buying and foreign purchases, but the yield on the 10 year Treasury Bond this morning is about 2.425 percent. Someday, we will look back at that rate in amazement. In the meantime it’s making a mockery of all the prognosticators that said the interest rates had nowhere to go but “up.”
Costco missed profit estimates by a penny or two on rising costs, but Costco share are indicated about a half-percent lower. Abercrombie & Fitch shares are more than 8 percent higher pre-market on a surprisingly good report.
Overseas markets are mixed, but pretty much unchanged. We should recover yesterday’s losses in the early going this morning. Right now, adjusted for fair value, the S&P 500 futures are higher by about 3 points, the Dow futures are up 31 and NASDAQ futures are about 8 points above fair value.
May 28, 2014
If you’re in the market for a new home, the good news is that, according to the Mortgage Bankers Association, the average interest rate on a 30 year mortgage fell to 4.31 percent last week. That’s the lowest average rate we’ve seen in almost a year. The bad news is that apparently you may not be able to qualify for a mortgage or get a favorable appraisal. Mortgage applications fell last week by more than one percent.
Shares of shoe retailer are falling by much more than one percent this morning. Try closer to 14 percent. DSW missed the 48 cent quarterly profit estimate by 6 cents and lowered guidance this morning.
Two stocks on the upswing this morning are retailer Michael Kors and home builder Toll Brothers. Kors beat the 68 cent estimate by a dime, with same store sales up 26 percent year over year. Toll Brothers share are more than 3 percent higher after posting 35 cents per share in profit versus the 27 cent estimate.
Asian markets were solidly higher overnight. Europe is more of a mixed picture, but on average is a little higher. That looks like it may be our story at the open as well. Right now, adjusted for fair value, the S&P 500 futures are higher by about 3 points, the Dow futures are up 22 and NASDAQ futures are about 3 points above fair value.
May 27, 2014
There are a lot of economic reports due this week (even if it were to be a five-day week.) So, traders’ heads will be spinning today with at least a half-dozen data points to consider.
But before we get to that, there’s a new offer is on the table to gobble up Hillshire Foods. A couple of weeks ago, Hillshire proposed to acquire Pinnacle Foods. This morning, Pilgrim’s Pride offered almost 6½ billion dollars for Hillshire, which is about a 24% premium for Hillshire’s closing price last Friday.
Shares of Pfizer are looking higher after dropping their bid for AstraZeneca. AutoZone shares looking 2 percent higher on profits that matched estimates and rose 16 percent year over year.
At 8:30 the April Durable Goods report is expected to show an eight tenths of percent decline. The Case-Shiller Home Price index at 9 o’clock is expected to show that home prices in the 20 city survey are about 12 percent higher than last year.
Consumer Confidence results come at 10, and later on, a couple of regional manufacturing surveys are due. But in the meantime, we’re looking to open at another record high for the S&P 500, even though overseas markets are mixed. Adjusted for fair value, the S&P 500 futures are higher by about 5½ points, the Dow futures are up 56 and NASDAQ futures are about 14 points above fair value.
May 22, 2014
We’ll get a nice mix of economic and earnings news today. Traders should be pretty active today, in that a number of them may mistake tomorrow for Saturday and stretch the three day weekend into four.
April Leading Economic Indicators come from the Conference Board.
The economic news out of China was good overnight, at least if you’re a factory worker in China. Factory activity there was the best in five months, although it’s still suffering a slight contraction
At 8:30 the Weekly Jobless Claims should today 319,000. Then at 10 o’clock, we’ll see if the April Existing Home Sales continue to climb. Expect that the annualized rate climbed to 4.68 million units, which would be up from the March rate of 4.59. Also at 10, the Expect a positive four tenths of a percent reading, down from the March reading of eight tenths of a percent.
Best Buy reported 33 cents of operating earnings this morning, which was well ahead of the 20 cent estimate. Sears Holding is out with a much wider than expected loss, $2.24 per share versus the expected $1.97. Also on the way today are reports from Hewlett Packard, Dollar Tree and Gap.
Asian markets rose on the Chinese PMI data. Europe is a little lower. There’s really not a lot of direction from the futures at this hour. The S&P, Dow and NASDAQ futures are all within a point or two of fair value.
After yesterday’s lousy earnings news from a number of retailers, home improvement retailer Lowe’s reported 61 cents of operating profit this morning, which was a penny ahead of the average estimate. Lowe’s also raised full year guidance slightly, and the shares are indicated slightly higher.
Bad weather apparently didn’t stop diamond buyers from getting to the mall. Tiffany earned 97 cents per share which sparkled compared to the 77 cent estimate. Tiffany raised guidance and traders are raising the price of Tiffany shares by almost 7 percent this morning.
Target, which you might say has had a rather forgettable year, might be seeing a turn. Although last quarter’s earnings were a little short, same store sales declined, but not as much as expected. Even though full-year guidance was lowered, the shares are actually a fraction higher pre-market.
The most recent Fed minutes will be open to the public at 2 o’clock this afternoon. Prior to that, at 11:30, Janet Yellen will deliver the commencement address at New York University, although it’s unlikely she’ll be discussing the future of interest rates. Perhaps she’ll give the graduates some advice on paying down their massive student loans while at the same time looking for a job.
Not a lot of movement overseas, but European markets are mostly higher. At this point, adjusted for fair value, the S&P 500 futures are higher by about 2 points, the Dow futures are up 31 and NASDAQ futures are about 6 points above fair value.
May 20, 2014
Absent any significant economic reports this morning, we have a few retailers reporting earnings, and the news is not exactly encouraging if you’re invested in that sector. In order of disappointing magnitude, let’s review.
Home Depot reported operating earnings of 96 cents per share. That was 3 cents below estimates on lower than expected sales. However, they did not lower guidance for the rest of the year. As a result, Home Depot shares are only off about a percent and a half pre-market.
Staples is next on the list. Their shares are indicated almost 11 percent lower pre-market. Staples will be closing 225 stores be the end of next year, are taking a bunch of restructuring charges and are suffering slower sales as online purchases of office goods continue to eat into their business. They are not the lone ranger in that regard, as Office Depot is reportedly in the process of closing over 400 stores.
However, the stock disaster du jour comes courtesy of Dick’s Sporting Goods. On a disappointing profit report and lowered estimates for the rest of the year, Dick’s shares are off almost 15 percent pre-market.
China and Japan were higher overnight. European markets are narrowly mixed.
At this point, adjusted for fair value, the S&P 500, Dow and NASDAQ futures are all within a point or so of fair value.
May 19, 2014
Very little in the way of economic data is on the way in the early part of the week. Really, nothing much outside of Fed-head speeches is scheduled until the latest Federal Reserve minutes are released on Wednesday.
Fortunately, it’s Monday, so there is merger news to muse. Over the weekend, Pfizer hiked its offer to acquire AstraZeneca to about 120 billion dollars, with 45 percent of that in cash. AstraZeneca directors once again said “thanks, but please go away,” and so it appears that the deal that nobody seems to like (except for somebody over at Pfizer) is dead (or at least on life support.) IN response, AstraZeneca shares are lower by more than 10 percent and Pfizer shares are looking to rise by more than 2 percent.
One deal that is very much alive will bring Direct TV and AT&T together. Direct TV shareholders will get $95 in value for their stock, with 30% of that in cash. We’ll see what the regulators have to say, as it’s pretty clear that consumers are facing the loss of another video carrier.
Overseas markets are narrowly mixed. Our futures had been improving steadily over the past couple of hours, well, until the last 10 minutes or so. If the market opened right now, it would open a little lower. At this point, adjusted for fair value, the S&P 500 futures are lower by 3 points, but the Dow futures are down 27, and the NASDAQ futures are about 8 points below fair value.
May 16, 2014
A comment that a well-known hedge fund manager made on earlier this week continued to send shivers through stock prices yesterday. David Tepper, who called the big price surge last year, said earlier this week that he was “nervous” and was only about 60 percent long stocks, versus 100 percent or more last year. So, if you’re into timing stock prices, you pay attention to traders’ comments. If you’re into long term allocation, it’s a lot like reality TV; interesting but pretty much meaningless in the long run.
Running higher this morning are shares of JC Penney and Nordstrom. After upbeat earnings news last night, Nordstrom shares are more than 11 percent higher pre-market, and Penney shares are indicated about 18 percent higher.
Stocks in India are higher by one percent, adding to their recent surge, after a new pro-business government was elected yesterday. Who knows? Maybe that idea will spread. There’s always hope.
Darden Restaurants has sold the Red Lobster chain to Golden Gate Capital for a little more than 2 billion dollars.
At 8:30, expect the April Housing start to be announced at an annual rate of 984,000 units. That would compare to 946,000 in March. And a little later in the morning, we’ll get the University of Michigan’s first look at May Consumer Sentiment. Expect a reading there of 84½.
European stocks are mostly a bit lower. Our futures have improved a bit, but are still pointing a bit lower. At this point, adjusted for fair value, the S&P 500 futures are lower by about 3½ points, the Dow futures are down 15, and the NASDAQ futures are about 5½ points below fair value.May 15, 2014
We might see a little more life in the NASDAQ today, helped along by Cicso Systems’ earnings report from last night. Cisco reported lower sales and profits than a year ago, but the 51 cents of operating profit beat estimates by 3 cents. Higher than expected sales and a positive outlook for some new products have the shares about 3 percent higher pre-market.
Not such great news from a couple of big retailers. Kohl’s earned 60 cents on the quarter, which was a couple cents below estimates. And industry giant Walmart’s $1.10 in earnings missed by a nickel, as comp store sales declined and revenue missed. Walmart blamed Congress for raising Social Security and Health care taxes, blamed the IRS for not processing tax refunds on time and, of course, blamed the weather. Walmart also guided lower for the current quarter. Apparently John McMurray has told them that more bad weather is coming.
Japan’s GDP rose a very strong 5.9 percent last quarter. That gave the yen a big boost, but sent Japanese stocks almost one percent lower overnight.
Lots of economic data coming today, including the April Consumer Price Index, expected to rise to three tenths of a percent.
In front of all that, our futures look a lot like they did 24 hours ago, which is not very good, but not all that bad. At this point, adjusted for fair value, the S&P 500 futures are lower by about 3 points, the Dow futures are down 16, but the NASDAQ futures, with some help from Cisco Systems are about 2 points above fair value.
May 14, 2014
Another day, another record for the Dow and the S&P 500, although continuing weakness in tech stocks continues to be a drag on the NASDAQ.
Also struggling this morning are shares of Deere & Company. Profits fell almost 10 percent from a year ago, and although the $2.65 cent per share operating profit beat estimates by 18 cents, shares of Deere are almost one percent lower pre-market.
Not to be outdone, shares of Plug Power are off more than 7 percent after announcing a quarterly loss.
In case you’re in the market for a bunch of slightly used retail outlets that might stand a little sprucing up, word has it this morning that Sears is looking to unload its interest in Sears Canada. Total value may be close to 2 billion dollars. However, Sears Canada continues to lose share to growth of Walmart and Target and others.
Speaking of retailers, Macy’s reported 60 cents of profit, which was a penny ahead to estimates, although same store sales slipped and revenue disappointed. However, Macy’s is increasing their dividend by 25 percent, and that has the stock up a half-cent before.
Unemployment in the U.K. is down to 6.8 percent, which is a 5 year low.
Most European markets are a little bit lower as are our futures, but not significantly. Right now, adjusted for fair value, the S&P 500 futures are lower by about 3 points, the Dow futures are down 11, and the NASDAQ futures are about 7 points below fair value.
May 13, 2014
Shares of Direct TV are tuned in to about a 4 percent gain pre-market and a story that suggests a $50 billion offer from AT&T may only be a week or two away. Remember when AT&T used to be a monopoly? Isn’t that what happens when you eliminate all the competition? Well, I digress.
The National Federation of Small Businesses issued the results of its monthly survey this morning, and we are beginning to see a little optimism among small business folk. A reading of 95.2 is at the high end of expectations and the best reading in 6½ years. It’s certainly a lot better that the recession time norm of about 91, but still less than the long term average of 100.
Coca Cola is raising their ownership stake in Keurig Green Mountain from 10 percent to 16 percent. That has Green Mountain higher by almost 5 percent in the pre-market.
Retail sales and industrial production news out of China overnight wasn’t so hot. At 8:30, look for April Retail Sales to have risen only about four-tenths of a percent. Personal Income data is also on the way.
Overseas, many markets are a little higher after yesterday’s rally over here. But, there are a good number of markets running slightly in the red as well. Our futures don’t seem to care, as we will likely open at new record levels for the Dow and the S&P 500. Right now, adjusted for fair value, the S&P 500 futures are higher by almost 4 points, the Dow futures are up 43, and the NASDAQ futures are about 9½ points above fair value.
May 12, 2014
With earnings season pretty much wrapped up and no big economic data on the docket, we’re looking for a fairly quiet Monday – Ukraine or no Ukraine.
Of course that doesn’t stop companies from talking about future earnings. The word on that is not so hot this morning from Nissan. The automaker guided analysts to lower their estimate of profit and margins for the current quarter.
If it’s Monday, there must be some merger news out there. It looks like Jimmy Dean and Mrs. Paul’s are going to get hitched. Hillshire Brands is buying Pinnacle Foods for a combination of cash and stock totaling 6.6 billion dollars. Pinnacle share are higher by more than 21 percent pre-market, even though the deal is only an 18 percent premium to Friday’s closing price. Hillshire Brands shares are also a bit higher this morning.
Twitter shares are being bid about 3 percent higher this morning, which may signal the end to the three-month long pounding that has cut the stock’s price in half.
Japan and Korea were lower overnight, but most major markets are a little higher. With the Dow Jones Industrial at an all-time record, we will float yet higher at the open.
Right now, adjusted for fair value, the S&P 500 futures are higher by about 5½ points, the Dow futures are up 40, and the NASDAQ futures are about 16 points above fair value.
May 8, 2014
Janet Yellen’s Congressional testimony had stock prices swinging all over the place yesterday. Get ready for round two today as Ms. Yellen chats with the Senate Budget Committee.
Meanwhile, it will be an extremely busy day for earnings reports. Shares of Wendy’s, Priceline and Zillow are all indicated nicely higher this morning after positive earnings reports. Tesla shares have shifted into reverse by almost 8 percent pre-market. Last night, Tesla beat earnings estimates for last quarter, but forecast surprisingly lower sales for the current quarter.
Toyota reported a 90 percent jump in full-year net profit. Reports from CBS Toshiba are coming later today. And of course, the Weekly Jobless Claim Report is expected in at 327,000 at 8:30 this morning.
The Bank of England and the European Central Bank held their respective interest rates steady, as expected today. The German market is closed today, but most other major markets overseas are trading a little higher.
We could get off to a slightly off-start, however. Right now, adjusted for fair value, the S&P 500 futures are down about 2 points, the Dow futures are flat, and it could be another rough day for the NASDAQ, where the futures are about 8 points below fair value.
May 7, 2014
Make no mistake, stock traders around the world are keeping at least one eye on the situation in the Ukraine, and as the violence flares the markets will scare. However, this morning, the other eye has to be one corporate earnings, and for the most part, the news is pretty good.
Last night, Disney crushed the 96 cent estimate by 15 cents on better than expected revenue. Shares of Mondelez are higher pre-market on better than expected results, as are game makers Activision Blizzard and Electronic Arts.
Trip Advisor missed estimates but shares are still looking higher this morning on a positive outlook. AOL earned 34 cents, which was an 11 cent miss, but revenue beat estimates, and shares are a little higher. Groupon shares about 9 percent lower pre-market, after their second quarter outlook came up short on the consensus estimate.
The big miss of the morning was last night’s announcement from Whole Foods. They missed estimates, cut their forecast due to more competition in the organic food space. Whole Foods shares are about 17 percent lower pre-market.
The Mortgage Bankers Association reported a more than 5 percent increase in mortgage applications last week. Both refis and new home purchase applications perked up as interest rates crept lower. New home purchase applications actually exceeded the number of refinancings last week for the first time since 2009.
Asia lower, Europe higher. At this point, adjusted for fair value, the S&P 500 futures are higher by 9½ points, the Dow futures are up 95 and NASDAQ futures are about 17 points above fair value.
May 6, 2014
The big pharmaceutical companies continue to wheel and deal. This morning, word is the German firm Bayer is looking to be the buyer of the consumer products business of drug maker Merck. It’s reportedly a 14.2 billion dollar deal. Claratin, Coppertone and a bunch of other items in your closet may soon be coming from the other side of the Atlantic. Merck shares are a little less than one percent higher pre-market.
In the latest piece of the government’s budget balancing process, Credit Suisse is reportedly in talks to pay 1.6 billion dollars to the Fed due to their prior alleged efforts to help U. S. taxpayers, let’s say, not pay so much tax, by hiding funds overseas.
Tenet Healthcare just reported a quarterly loss of 12 cents which was 2 cents less of a loss than expected.
Earnings are on the way from Allstate, Disney, Whole Foods and Marathon Oil a little later.
Overseas markets are pretty calm, but mostly a little lower.
At first glance, the futures seem to be pointing higher, and they have improved over the past hour. But, adjusted for fair value, they are actually pointing toward a slightly lower open at 9:30. At this point, adjusted for fair value, the S&P 500 futures are lower by 3 points, the Dow futures are down 15 and NASDAQ futures are about 5 points below fair value.
May 5, 2014
Hard to tell what to make of last Friday’s dramatic drop in the Unemployment Rate, all the way down to 6.3 percent. The theory that the Fed’s monetary stimulus was supposed to help create jobs. But wait – they’ve been scaling back that program. Yes, 288,000 new non-farm Jobs suddenly came into being in April, so that helped. But you just have to wonder what would have happened if Unemployment Benefits had been extended again earlier this year. Suddenly, a lot of people are either getting jobs or giving up the supposed search. Of course, last month the Senate has already passed another extension. We’ll see if the House goes along.
If YOU’RE looking for a new job, here’s a new listing: Target is looking for a new CEO, as the current CEO is out the door effective immediately.
Pfizer took up the matter of their quarterly earnings this morning. Although the operating profit of 57 cents was two cents per share better than expected, sales came up short and the shares are almost one percent lower pre-market.
Occidental Petroleum shares could rise a little in the early going after reporting $1.75 in profit, which was a nickel ahead of estimates.
Tokyo, Seoul and London markets are closed today. I don’t think that’s a Cinco deMayo thing, just some other excuse for a day off. Anyway, our markets will trade and they will start the day trading lower, after an overnight Chinese manufacturing survey indicated a fourth straight month of contraction. At this point, the S&P 500 futures are lower by 8½ points, the Dow futures are down 58 and NASDAQ futures are about 15 points below fair value.
May 2, 2014
The Kentucky Derby will be run Saturday, but 8:30 this morning will be post time for the Labor Department’s April Jobs Report. And it appears that traders are waiting for the gate to open before deciding which way to run today.
The Unemployment Rate is expected to drop to 6.6 percent and new non-farm Jobs are expected to total about 215,000. At 10 this morning, the March Factory Orders report is expected to slip to 1.4 percent from the February number of 1.6.
Earlier today, the Eurozone Purchasing Managers Index continued its recent improvement.
On the earnings front, the big winners of the morning appear to be Wynn Resorts, on surging profits from Macau and Akamai Technologies, whose servers are getting a workout from surging demand for streaming video. Estee Lauder also beat estimates, as did Newell Rubbermaid, although sales there fell a little short.
Pfizer as raised its bid for AstraZeneca to a value $106 billion, but the Astra Zeneca Board is still saying that they’re not interested.
Overseas markets are mixed, and there’s not much movement in the futures right now, but that might change at 8:30 when the Employment Report is released. But right now, the S&P 500 futures are higher by a point, the Dow futures are higher by 6 and NASDAQ futures are about 2 points above fair value.
May 1, 2014
It’s May Day, once again. Which means a couple of things; a lot of overseas markets are closed, and with the Dow at an all-time high, some wisenheimer will start chirping the old saw “Sell in May and Go Away.” The theory is that being totally out of stocks during the next six months and totally in from November through April leads to better overall returns. While the summer of 2011 was certainly ugly, if you look back 10 or 20 years, the theory pretty much falls apart, especially compared with a boring old rebalanced asset allocation approach. Sorry, folks. No silver bullet there.
Of the earnings reports from this morning and last night, online review service Yelp reported a loss of 4 cents which was 2 cents less of a loss than expected. They issued positive guidance and traders are bidding the stock higher by almost 10 percent this morning. ExxonMobil beat the $1.88 estimate by 22 cents.
A couple of big misses came this morning from Textron, with a 31 cent profit that missed estimates by 8 cents and Avon Products, whose 12 cent profit was a nine cent miss.
Auto sales reports will roll out as the day rolls on.
At 8:30 the Weekly Jobless Claims are expected to drop to 320,000. We’ll also get the PMI and ISM Manufacturing survey results later this morning.
But right now, adjusted for fair value, the S&P futures are up by a fraction, the Dow futures are down 3 points, but with some help from Yelp, the NASDAQ futures are about 8 points above fair value.
Daily Reports @ WJR
For an explanation of "fair value" please click here.