May 29, 2015
Three significant economic reports are on today’s agenda, headlined by the 8:30 release of the Government’s second guess at the output of the economy in the first quarter of the year. The first guess a month ago was an increase of just two-tenths of a percent. However, the second guess is actually expected to reflect a one percent contraction in Gross Domestic Product. The long-resolved west-coast port strike will get the blame. Still, economic contraction is not exactly supportive of an increasing interest rate policy by the Fed.
At 9:45, the Chicago Purchasing Managers Index is expected to improve a bit to 53.1 and then at 10, the University of Michigan will issue its final report on May Consumer Sentiment.
Gamestop shares are on the move higher by about 7 percent pre-market as quarterly earnings came in at 68 cents per share, versus the expected 58 cents. Shares of Altera are almost 6 percent higher on news of a possible offer from Intel.
Chinese stocks calmed down a bit after yesterday’s big downdraft. Europe is mostly lower. Our futures have pretty much climbed out of an early hole. At this point, adjusted for fair value, the S&P 500 futures are down less than a point, Dow futures are down a point, and the NASDAQ futures are about 3½ points below fair value.
May 28, 2015
There was a lesson to be learned about momentum stocks yesterday. They have been the biggest force driving the markets higher during the past few years. One of the darlings of the run was retailer Michael Kors. Yesterday we mentioned disappointing earnings report for Kors, which was already down 20 percent on the year. Before yesterday was over, Kors shares shed another 24 percent of their value. Careful out there folks. When the momentum shifts, things can get ugly in a hurry.
One of the great stories of the past few years, built on a great business model is retailer Costco. Costco reported $1.17 in profit for last quarter, which was 2 cents better than expected, although sales were a little light, hurt by declining oil prices and a strong dollar. Excluding those factors, same store sales rose 6 percent worldwide and 5 percent in the U.S.
At 8:30, Jobless claims are expected to come in at 270,000 for the week gone by. At 10 o’clock the pending home sales index, which has been very strong lately, is expected to rise eight tenths of a percent.
General Motors and Chipotle get broker upgrades this morning. Brocade shares were up over 20% on a buyout by Avago Technologies.
Chinese stocks sank over 6 percent this morning. Europe is mostly lower. At this point, adjusted for fair value, the S&P 500 futures are lower by 4½ points, Dow futures are down 47, and the NASDAQ futures are almost 10 points below fair value.
May 27, 2015
We have a tale of two retailers whose stock prices are headed in decidedly different directions, at least for today.
Jewelry vendor Tiffany is seeing an almost 7 percent rise in stock price pre-market after reporting 81 cents in quarterly profit. That was much better than the 70 cent estimate on better than expected sales.
On the famous other hand, shares of Michael Kors are on sale this morning. Kors shares, which were very hot for a couple of years, had been down almost 20 percent this year. Tack another 11 percent decline on top of that this morning as profit of 90 cents per share missed by a penny. Sales were also short of estimates and Kors lowered their full-year guidance.
Mortgage applications for home purchases rose about 1 percent last week, but weakness in refis pulled the overall mortgage application total down by 1.6 percent.
Hormel is buying closely held Applegate Farms LLC for about 775 million dollars.
Asian markets were mixed overnight, but European markets are trading higher. At this point, adjusted for fair value, the S&P 500 futures are higher by 7 points, Dow futures are up 67, and the NASDAQ futures are about 16 points above fair value.
May 26, 2015
It’s would be a Merger Monday with two capital M’s this morning for the cable and pay-TV industries, if it were Monday, that is. Of course it’s not Monday, thank goodness. Anyway, once upon a time, Charter Communications tried to buy Time Warner Cable for $132 per share, but lost on that bid to Comcast’s $168 per share offer. The Comcast deal was blown up by regulators, and today, Charter announced that they’ll pay $195.71 per share for Time Warner Cable. That’s a 14 percent premium to Friday’s closing price and, in case you don’t have a calculator handy, a nearly 50% premium to Charter’s original bid. Bright House Communications will also merge in as part of the deal.
We’ll have to fit five pounds of economic reports into a four pound bag due to the shortened trading week. Today alone we’ll get not only nine separate economic reports, but speeches from two Federal Reserve officials. Headlining will be the April Durable Good Report at 8:30 and the Conference Board’s May Consumer Confidence Index at 10. Expect that Durables fell six-tenths of a percent in April on weak transportation orders. Consumer Confidence is expected to have slipped a bit as well.
Chinese stocks rose another 2 percent or so overnight. Pricing in other markets overseas are mixed.
Our futures have been busy rising out of an early hole this morning, and they’re almost there. Right now, adjusted for fair value, the S&P 500 futures are lower by 2½ points, Dow futures are flat, and the NASDAQ futures are about 3½ points below fair value.
May 22, 2015
Trading should tail off late in the day today as Wall Street empties out a bit early for the long weekend. Some may hang around at least until 1:30 or so if for no other reason than to hear what Janet Yellen has to say. She’ll be in Rhode Island and at 1 o’clock will speak about the country’s (if not the world’s) economic outlook.
In just over 15 minutes we’ll get the April Consumer Price Index, which is expected to show little or no increase in consumer prices. Expect one-tenth of a percent increase on the core and overall rates of inflation.
Campbell Soup, Foot Locker, Deere and Fresh Market each reported better than expected profit this morning, although Fresh Market lowered guidance for the rest of the year and Deere’s sales were a bit below par. Brocade may be the disappointment of the morning. Earnings for last quarter were fine, but sour guidance has the shares of Brocade about 3 percent lower pre-market.
Most Asian markets rose overnight. Europe is more of a mixed picture. Our futures have been perking up a bit. Right now, adjusted for fair value, the S&P 500 futures are higher by a point, Dow futures are up 16, and NASDAQ futures are about 5½ points above fair value.
May 21, 2015
Used to be that all the big merger announcements came on Monday. Lately, everyday seems like a Monday, sometimes in more ways than one. This morning, CVS announced that they will be getting into the assisted living business. CVS will buy Omnicare for 98 bucks per share. That’s only a 3.6 percent premium to yesterday’s close, but remember that Omnicare shares started the year at about 72 dollars apiece.
Best Buy shares would have lived up to the company name if you bought them yesterday. Better-than-expected sales, earnings and same store sales have Best Buy shares up more than 10 percent pre-market.
On the ever-popular other hand, shares of Dollar Tree are more than 3 percent lower this morning after missing on all three of those measures.
Nine separate economic reports will be unveiled between now and 11 o’clock this morning, so traders will have a lot of opportunity to change direction, but in the early going, that direction is likely to be a little lower.
Overseas markets are mixed. At this point, adjusted for fair value, the S&P 500 futures are lower by almost 3 points, Dow futures are down 19, and NASDAQ futures are about 8½ points below fair value.
May 20, 2015
Good news for all professional procrastinators: The IRS has announced that the deadline for filing your 2015 individual income tax returns will be April 18thof next year in most of the country. It will be April 19thin Maine and Massachusetts. I fear mentioning that, because some people I know might move East just to get the extra day.
Anyway, this day will be a not-so-great day for shareholders of home improvement retailer Lowe’s. Although same store sales rose over 5 percent, earnings of 70 missed estimates by 4 cents. Even though Lowe’s reaffirmed full-year guidance, shares are more than 6 percent lower pre-market.
And if you were just beside yourself for not being on the friends and family list when internet marketplace Etsy went public last month, you’re second chance is here. The shares were originally priced at 16 bucks, and became available to the public at almost 36 dollars. Well, after a lousy earnings report last night, Etsy shares are about 17 percent lower than yesterday’s close, down at about 17.50 apiece.
This afternoon we’ll get the skinny on what was said at the last Federal Reserve Open Market Committee meeting. Most of the interesting economic reports come later this week.
Asia mostly higher overnight, but prices in Europe are pretty much unchanged.
At this point, adjusted for fair value, the S&P 500 futures are up a half-point, Dow futures are up 18, and NASDAQ futures are about 3½ points above fair value.
May 19, 2015
If you participate in a 401(k) plan that has investment options that are more expensive than they should be, you have received some potential help from the Supreme Court. The case of Tibble vs. Edison will put plan Trustees on notice that they’d better be paying attention.
Two big retailers are out with earnings news this morning. On the positive side, Home Depot reported domestic same store sales up 7.1 percent, earnings of $1.16 per share, which was a penny ahead of estimates. They also raised full-year earnings guidance.
With a not-so-good, but not-so-bad report (if you adjust for foreign exchange pressure) was Walmart. $1.03 of profit was a penny per share light, but Walmart said that the strength of the U.S. dollar shaved 3 cents of that number. Walmart shares are lower by more than 2 percent pre-market.
Yesterday’s report on the mood of the National Home Builders Association yesterday reflected a bit of caution. At 8:30 we’ll find out if Housing Starts in April continued to rebound from their February downdraft. Expect the annualized rate of New Home Starts to exceed one million units for the first time since January.
Chinese stocks rose by more than 3 percent this morning, that’s the biggest rise in four months. I’m not sure what has the Norwegians in a bad mood, but their market is the only European market that’s lower at this hour. With the Dow and the S&P opening at record levels, we should head still higher in the early going as well.
At this point, adjusted for fair value, the S&P 500 futures are higher by 6 points, Dow futures are up 53, and NASDAQ futures are about 16 points above fair value.
May 18, 2015
Last week gave us a lot of pretty uninspiring economic news, as the economy continues to muddle along in a year when most were expecting better.
The National Association of Home Builders will give us their outlook at 10 o’clock. It’s expected to tick a little higher. However, the housing market’s performance hasn’t come close to matching their optimism so far this year. And of course, stock prices don’t seem to care how many houses are going up, as long as interest rates don’t.
Bigger is apparently better when it comes to pharmaceutical companies – at least to the Board of Directors at Endo Pharmaceuticals. Endo will buy Par Pharmaceuticals from a private equity firm for about 8 billion dollars.
Shares of retailer Ann are 20 percent higher on a reported buyout.
Urban Outfitters will report in today. Expect 30 cents of operating earnings. We’ll also hear from Agilent Technologies. Walmart and Target report later this week.
A lot of Asian markets were closed today, although China was lower and Japan higher. The British market is pretty much unchanged, but the rest of Europe has turned red. At this point, adjusted for fair value, the S&P 500 futures are lower by 3½ points, Dow futures are down 21, and NASDAQ futures are about 14 points below fair value.
May 15, 2015
We’re at the midpoint of the second quarter and don’t look now, but yesterday’s surge higher has the S&P 500 Index higher by more than 2½ percent since the end of March.
Earnings reports are a bit of a mixed bag this morning. Applied Materials is trending about 3 percent higher after beating estimates. Nordstrom missed the 71 cent estimate by a nickel per share, but same store sales were stronger than expected and Nordstrom shares are fractionally higher pre-market.
One of the big disappointments of the morning is the recently-IPO’ed El Pollo Loco. A slowdown in revenue growth is sinking the stock by about 14 percent. King Digital also getting crushed this morning on a weak outlook, even though earnings came in better than expected.
The Empire Manufacturing Index comes at 8:30, but is expected to show just a little growth in manufacturing in the New York region. A little later, the University of Michigan’s first look at May Consumer Sentiment is expected to be pretty much unchanged at 95.8.
Overseas markets are mixed, but overall, Europe is slightly positive. At this point, adjusted for fair value, the S&P 500 futures are higher by 4 points, Dow futures are up 25, and NASDAQ futures are about 13 points above fair value.
May 14, 2015
Our early rally faded fast yesterday on a pretty disappointing retail sales number, and we finished the day with mild declines. However, we’ll evidently give it another go this morning, as stock futures are even a little stronger than they were 24 hours ago.
Not so strong is this morning’s demand for shares of retailer Kohl’s. Kohl’s reported 63 cents of operating profit for last quarter, which was 8 cents better than expected. Unfortunately, the increase in same-store sales was weaker than expected, and Kohl’s stock, which was more than 20 percent higher since December, is bid almost 11 percent lower pre-market.
At 8:30, the Weekly Jobless Claims report is expected to hit 276,000 new claims, which would be a bit higher than the prior week. Also at 8:30 the April Produced Price Index for Final Demand should only reflect about a two-tenths of a percent increase in prices, or one-tenths of a percent if you ignore food and energy.
The stock exchanges in Scandinavia, Austria and a couple of other European countries are closed for Ascension Day today, but the European markets that are open are ascending without any help from the calendar.
We should head higher in the early going as well. At this point, adjusted for fair value, the S&P 500 futures are higher by 13 points, Dow futures are up 112, and NASDAQ futures are about 32 points above fair value.
May 13, 2015
We shook off the European bond jitters yesterday and finished the day with minor losses on the major averages, and if the futures are any indication (and they usually are) we’ll get back those losses and then some right off the get-go this morning.
Let’s pretend that you have an extra 6 billion dollars lying around and you just don’t know what to do with it. If you’re Delta Airlines, you might decide to share it with shareholders. Starting in the 3rdquarter of this year, Delta will raise their dividend by 50 percent. They’re also going to be buying back 5 billion in company stock.
Also raising its dividend and buying back stock will be Macy’s, but that comes along with Macy’s reported 56 cents of quarterly profit. That was six-cents short of estimates and Macy’s stock is indicated almost 3 percent lower pre-market.
At 8:30, we’ll learn about April Retail Sales. Expect only a two-tenths of a percent increase overall, due to anticipated weakness in auto sales. Excluding car sales and gasoline, retail sales are expected to have risen four-tenths of a percent.
William Partners Limited Partnership is the hot issue of the morning, higher almost 20% on a buyout deal.
Although Chinese stocks were off a bit overnight, just about everybody else overseas is in the green, as are our futures. At this point, adjusted for fair value, the S&P 500 futures are higher by 8½ points, Dow futures are up 75, and NASDAQ futures are almost 26 points above fair value.
May 12, 2015
We all know that prevailing interest rates have a lot to do with equity values. While Central Bank monetary policy controls short term rates, long-term rates are a lot less controllable and are at the mercy of investors’ appetite for bonds. This morning, bond buyers are suffering a little reflux, especially regarding European bonds. You’ve hear of “greasing the skids?” This may be a case of “skidding on Greece.” In any event, the selloff is spreading to this side of the Atlantic as well, with our 30 year Treasury now yielding more 3 percent. It was as low as 2.2 percent back in February.
The steeper yield curve could be forecasting higher inflation. If that’s going to be caused by strong economic growth, it’s okay for stock prices. If not, well, not so much.
If you hold shares of AOL, you’re a happy camper this morning. Verizon is buying the internet age-icon for 50 bucks per share. That’s about a 17 percent premium to last night’s price.
Cloud company Rackspace is getting racked this morning to the tune of about a 14 percent decline on an earnings miss.
China was up again over night, but Europe is a mess on the increase in bond yields. At this point, adjusted for fair value, the S&P 500 futures are lower by 16 points, Dow futures are lower by 136, and NASDAQ futures are 37 points below fair value.
May 11, 2015
This morning we’re facing a new week, with some of the same old worries. Greece is facing an interest payment deadline and is chatting with its good neighbors to the north in hopes of some sort of long-term accommodation. Stop me if you’ve heard that one before.
Over here, earnings reports have slowed considerably, although we’re hear from Dean Foods later today. This morning auction house Sotheby’s reported 11 cents per share in profit. They were expected to only break even. DISH network doubled their profit from a year ago, which is the good news. The darker side is that they lost another 134,000 Pay-TV subscribers last quarter.
The Fed’s report on Labor market conditions comes at 10 o’clock this morning, but that’s about it as far as economic reports for the day.
The Bank of England held short term interest rates steady at one-half of one percent this morning. Overseas markets are painting a mixed picture, with the standout being Greece, which is lower by almost 3 percent.
Our futures have been lower this morning, but have been creeping back toward break even during the past couple of hours, and they’ve almost gotten there. At this point, adjusted for fair value, S&P 500, Dow 30 and NASDAQ 100 futures are all within a point or two of fair value.
May 8, 2015
Is it just me? Or does the First Friday of the month seem to come around a lot faster than it used to? Whatever. Here we go again. At 8:30 the Labor Department will give us the word on job creation during the month of April. The expectation is that 228,000 new non-farm jobs came into being and that the Unemployment Rate dropped to 5.4 percent. However, this is one of those data points where bad news often is good for stock prices. Weaker-than-expected job creation could indicate slower-than-expected economic growth, which may lead the Federal Reserve to keep interest rates at rock-bottom for longer than they otherwise might.
The secret to life may be comfortable footwear, as Cliff Claven once said. But not selling enough comfortable footwear won’t help your stock price. Crocs reported an 8 cent per share loss this morning, which was 4 times the expected operating loss. Crocs shares are stepping back by about 2 percent pre-market.
AOL is out with a better than expected report and shares of Salesforce, which ran up on speculation on a bid from Microsoft are about 3½ percent lower this morning on word that Mister Softie is not all that interested.
Overseas markets are generally higher, as are our futures, although we’re off our highs of the morning.
At this point, adjusted for fair value the S&P 500 futures higher by about 5 points, the Dow futures are up 55, and the NASDAQ futures are about 13 points above fair value.
May 7, 2015
In any given week, there are a number of Federal Reserve officials out giving speeches, presumably for lack of something better to do. Most of their comments are digested by the markets without need for medication. Yesterday, however, top-dog Janet Yellen commented that equity valuations appear quite high. That little comment sent stock prices reeling, even though, her very next words were that maybe those valuations weren’t so high compared with bonds in this zero-interest rate environment. No matter. Damage done and we’ll deal with the aftermath in the early going today.
Dealing with the aftermath of announcing that they will start opening lower-cost stores, shares of Whole Foods are about 13 percent lower pre-market. Shares of Priceline are also a little lower. They beat earnings estimates for last quarter, but current quarter guidance was weak.
Alibaba and MolsonCoors are looking higher after good earnings and Ann, the parent of AnnTaylor is about 7 percent higher on buyout speculation.
Overseas markets are lower across the board after yesterday’s Yellen comments. Out futures are well off their lows, but if trading were to start now, prices would be lower.
At this point, adjusted for fair value the S&P 500 futures lower by about 1½ points, the Dow futures are down 24, and the NASDAQ futures are about 1½ points below fair value.
May 6, 2015
Biotech stocks have been one of the hottest sectors of the stock market for the past two or three years. Relatively small companies, with mainly unproven technologies for battling very rare diseases that few people have. Doesn’t sound like a particularly safe place for your money, but this morning we have another example of the potential payoff.
Alexion Pharmaceuticals as buying Synageva BioPharma in a stock and cash deal that values Synageva at 230 dollars per share. Last night, Synageva closed at about 96 dollars per share. I’ll do the arithmetic for you – that’s about a 140 percent premium to yesterday’s close.
Mortgage applications slipped more than 4 percent last week on an 8 percent decline in refinancing loans. The big economic report for the week will be the Labor Department’s Jobs Report on Friday. But in front of that the ADP Employment report rolls out in about 5 minutes and is expected to report creation of 205,000 new private sector jobs in April.
Asian markets that were open for trade all traded lower overnight after our swoon yesterday. But things are on the move higher in Europe as are our futures.
At this point, adjusted for fair value the S&P 500 futures higher by about 6½ points, the Dow futures are up 76, and futures on the NASDAQ, which took a 78 point pounding yesterday, are about 11 points above fair value.
May 5, 2015
We’ll get a nice mix of earnings and economic news today, with a couple more Fed-head speeches on the way before the day is over as well.
Just minutes ago, Disney reported $1.23 of quarterly profit, which was 12 cents better than expected. Disney shares are more than 2 percent higher pre-market. Revenue was also better than expected. Earlier today Archer Daniels Midland also beat estimates, although revenue was a little light. Tenet Healthcare’s 67 cents in profit more than doubled that 31 cent estimate. Kellogg just reported 98 cents, which was 7 cents better than expected.
A little later, News Corp is expected to report 8 cents per share, Groupon is expected to earn a penny per share and Sprint is expected to have lost six cents per share.
If you don’t make stuff, but instead serve stuff for a living, times are good. By 10 this morning, we’ll find out how good things were last month. The PMI Services index is expected to read 57.7 and the ISM Non-Manufacturing Index is expected in at 56.5. That would put both well ahead on the stall-speed level of 50.
Mainland China retreated by 4 percent overnight. Other markets overseas are mixed. Our futures have almost dug out of an early hole. At this point, adjusted for fair value the S&P 500 futures lower by a point, the Dow futures are down less than a point, but the NASDAQ futures are still about 9 points below fair value.
May 4, 2015
American stock prices have been pretty sleepy so far this year. But, it seems that there’s always a hot market somewhere. So far this year, that somewhere has been in the Far East. The Shanghai Composite in mainland China is up almost 40 percent since December, while in Hong Kong the Hang Seng is up almost 20 percent. Over the past year, the Shanghai Index is higher by over 120 percent.
Overnight, the “official” April Chinese Purchasing manager’s index was announced at 50.1. A reading above 50 indicates expansion, but 50.1 indicates not much expansion. However, the PMI computed by HSBC was reported at only 48.9, down from 49.6 in March. So whether you believe the official numbers or not, Chinese economic expansion is at stall speed. While Chinese stock prices fell on the news, they more than recovered late in the day, on hopes that more economic stimulus could be on the way from the Chinese powers that be.
Comcast, Cablevision and Tyson Foods all reported better than expected earnings this morning.
Two Regional Fed-heads are out on the rubber-chicken circuit today, but outside of that and a Factory Orders report at 10, it should be a fairly quiet day.
Traders in Tokyo and London have the day off today. Other overseas markets are higher. At this point, adjusted for fair value the S&P 500 futures higher by about 6 points, the Dow futures are up 58, and the NASDAQ futures are about 10 points above fair value.
May 1, 2015
We’ll get four fairly important economic reports within the next 2 hours that could well influence stock prices. But in the meantime in looks like we’ll get a little bounce back from yesterday’s declines on the hope that a Greek bailout package is in the offing. The Greek Prime Minister evidently thinks it is, anyway. We’ll see what the Germans have to say about that.
No matter, the ISM and PMI manufacturing survey results are on the way, along with a report of Construction spending and the University of Michigan’s final verdict on Consumer Confidence.
There’s not a lot of confidence in the shares of LinkedIn this morning. After severely lowering earnings guidance last night, LinkedIn shares are looking to open more than 50 dollars per share lower this morning, at around 200 dollars per share.
VISA shares have apparently lost their charge this morning as well, off about a percent and a half. VISA’s 63 cents per share of profit was the same as last year, and although a penny ahead of estimates, the shares are bid a bit lower. CVS shares are a bit higher, after reporting $1.14 in profit, 6 cents ahead of estimates.
Overseas markets are mixed, but our futures are pointing decidedly higher. At this point, adjusted for fair value the S&P 500 futures higher by almost 7 points, the Dow futures are up 81, and the NASDAQ futures are about 13½ points above fair value.