November 30, 2001The biggest scheduled news for the markets today is the release of an economic number that at this point - only an economist could love. Actually, it would probably take a pretty lonely economist at that. The third quarter Gross Domestic Product is expected to be revised to a decline of nine-tenths of a percent versus the originally announced decline of 4 tenths of a percent. What difference? This is the number a lot of people used to look at to define whether the economy was in a recession of not. But at this point, with unemployment streaking up and manufacturing still in the doldrums, nobody's really arguing semantics anymore. The important information is, when will the economy start to turn. We get information on that front at 10 o'clock with the Chicago Purchasing Manager Index.
Outside of those releases, there's not much on the agenda today. Japan was up slightly, Europe is mixed.
Our futures have been pretty darn boring overnight. On the sur>
November 29, 2001The meltdown of former energy trading powerhouse Enron accelerated yesterday. Enron, which was an 80 dollar stock on Valentine's Day, traded yesterday for about 60 cents. So if you don't have any Enron, be happy - but pay attention. There will be a lot of moaning and groaning and litigation from Enron employees who may be losing their jobs at the same time they've lost a significant part of their retirement savings because they had tons of Enron stock inside their 401(k) plans. Make sure to pay attention to just how much of YOUR investment portfolio is tried up in shares of any one stock. Many 401(k)'s restrict your ability to sell company stock that was bought with company matching funds. But as a general rule, try to make sure that no ONE stock makes up more than 10 to 15% of your total portfolio.
The October Durable Goods report comes our in 10 minutes, and we're expecting about a 2% increase, following a very weak September report.
Our futures have been sliding downward since 5 this morning, but were still looking at slightly positive numbers at this point. Adjusted for fair value, S&P futures are up 3, Dow futures are up 25 and Nasdaq futures are 9 points above fair value.
November 28, 2001T he Conference Board's Consumer Confidence Index threw a bucket of ice water on the Dow Jones yesterday. The index, which was expected to come in at 86.5 actually fell to 82.2. That's the fifth straight month that the index has declined. The other major Confidence survey, the one from the University of Michigan has been rising lately. Why the difference? The Conference Board survey focuses more heavily of employment questions, and evidently, we're getting to the point where a lot of people can find jobs, but almost everybody knows somebody who can't. On the positive side, the Conference Board's index of consumer expectations for the future, say six months out, rose from last month's level.
Texas Instruments has reaffirmed its outlook for the current quarter. Earnings reports are due today from Brocade Communications and H&R Block. Overseas, the Japanese market took a 3% hit, most European markets are off 1 to 2%.
Our futures have been sliding downward since 4 this morning and at this point are pretty close to the same levels we saw at this time yesterday. Adjusted for fair value, S&P futures are down 6, Dow futures are down 46 and Nasdaq futures are 13 points below fair value.
November 27, 2001In case you've been feeling a little out of sorts - maybe your investments are down, maybe your business is hurting, maybe you've lost your job - well, now you know why. Yesterday the National Bureau of Economic Research declared that the U.S. economy is officially in recession and has been since March. And here you thought it was just you having some sort of mid-life crisis. Interestingly, the last time we had a recession, it was so shallow that it was over by the time it was officially announced. Not many people believe that the current recession is over, but the stock market sure seems confident that upturn is less than six months away.
We'll see how confident the rest of us are at 10 o'clock this morning with the release of the Consumer Confidence index. A level of 86.5 is expected. Anything significantly higher than that should spark another rally. Kmart announced a quarterly loss of 25 cents. That's a little better than expected, although same store sales were down 1.5% from last year. Gross margins were up slightly.
The futures are a bit ugly right now, but lookout for the numbers coming out at 10 o'clock. Adjusted for fair value, S&P futures are down 7, Dow futures are down 45 and Nasdaq futures are 13 points below fair value.
November 26, 2001Not a lot of big news on the docket today. We'll get rolling again tomorrow with existing home sales and Consumer Confidence numbers. Consumer Confidence came shining through at Wal-Mart over the weekend. On Friday alone, Wal-Mart sold one and a quarter billion - that's billion with a "b" --- dollars worth of stuff. Evidently, not everybody is out of work yet, or if they are, they still intend to buy Christmas gifts.
Most indicators of traffic at the shopping malls shows a slight decline from last year, but the statistics we've seen so far are somewhat contradictory, and when you consider the strength of last year's Christmas season, things look not half bad, given what we've been through since September 11th.
Lucent stock is going through something not so good in pre-market trading after rating downgrades from a couple big brokerage firms.
In Tokyo, the Nikkei stock index finished above 11,000 for the first time in three months.
The futures have been slip sliding away for the past hour or so. They're still positive, but not by much. Adjusted for fair value, S&P futures are up 2, Dow futures are up 6 and Nasdaq futures are also 5 points above fair value, after being up a fair bit earlier this morning.
November 21, 2001The past few months, it seems that whenever we expect a nice quiet day in the market, something dramatic happens in the real world. So it as at the risk of tempting fate to deliver a big surprise today --- it sure looks like a nice quiet day is on tap. A lot of traders will make it a short workday today, and earnings season it all but wrapped up. The only particularly interesting number due out will come from the University of Michigan. The monthly Consumer Sentiment index will be announced at 10 o'clock. Even that news is expected to be unchanged from last month. The weekly jobless number will be released in about ten minutes, that's a day early, as the number filing first time unemployment claims is again expected to rise.
After the close last night, the world's largest biotechnology company, Amgen, told analysts that next year's earnings may well grow by 20% versus the 12% growth that is expected this year. Amgen's up over 5% in premarket trading.
The futures are negative this morning, and they've been slipping steadily since 5 o'clock this morning. Adjusted for fair value, S&P futures are down 3, Dow futures are down 24 and the Nasdaq futures are about 9 points below fair value.
November 20, 2001Remember the great bull market? Well, at least technically --- it's baaaaack. The classic definition of a bear market is a 20% decline in stock prices. Conversely, a new bull market is signaled by a 20% rise in stock prices. Yesterday the Dow Jones Industrial Average closed more than 20% above its September 21 level. Not to beat an old drum, but those investors who stuck by their long-term strategies and did not dump out of stocks in the wake of September 11th have seen their portfolios come back and then some, in only eight weeks.
Interesting comments from the President of the Federal Reserve Bank of San Francisco yesterday. He predicted that the economy, and real estate values, may continue to slip this quarter and next, with things not getting better until the second quarter of 2002. Whether he's right or not, it gives hopes to those looking for another interest rate cut in December.
The futures are negative this morning, but they've been rallying for the past two hours. Right now, adjusted for fair value, S&P futures are only down 3 ½ , Dow futures are down 36 and the Nasdaq futures are about 5 points below fair value.
November 19, 2001Oil prices are again in free fall. Brent Sea Crude was under 17 bucks a barrel for a time this morning. Look for cheaper gas at a station near you. A big merger was announced yesterday, with Phillips Petroleum buying Conoco for about 15 billion dollars. Don't get too excited if you own Conoco - there's no premium to Conoco's closing price on Friday.
Lowe's earned a little more than expected last quarter, and they project pretty significant future growth. Same store sales were up 4%. Analysts expected only a 2% increase.
It's no secret that the housing market was shaken in September. Now we'll see just how much of that shake up has continued, as the October housing start number comes out in ten minutes.
Japan was up about three quarters of one percent overnight, European markets are generally up between 1 and 2 percent.
Fair value for the futures is pretty much equal to the cash market this morning, so what you see is what you get. And if nothing changes in the next hour, what we're gonna get is a rally at 9:30. S&P futures are up 6, Dow futures are up 60 and the Nasdaq futures are 17 points above fair value.
November 16, 2001Certain things in life go hand in hand. Some businesses complement other businesses. So it should be no surprise that yesterday, in one day, we saw better than expected earnings from Krispy Kreme - AND a successful initial public offering for Weight Watchers. As long as one prospers, the other should do pretty well.
We actually had a rash of good earnings reports yesterday. The bean counters at Starbucks met estimates and say that 2002 will perk up from here. Dell Computer beat the consensus estimate by a penny and confirmed their guidance for the current quarter. Dell made less money than last year because of declining computer prices, but they continue to gain market share.
Nobody's really worried about inflation anymore, but just out of habit, the government will release the October Consumer Price Index in about ten minutes. The overall rate is actually expected to DECLINE by 2 tenths of a percent, with the core rate expected to be up about a tenth of a percent.
In front of that number, it looks like another good market at the get go. Adjusted for fair value, S&P futures are up 6, Dow futures are up 39 but the Nasdaq futures are 8 points above fair value.
November 15, 2001One of the more surprising developments of the past two months has been in the oil market. Brent crude oil is trading at $18.45 this morning. That's down by almost half over the past year and down almost 15% from just last Friday. OPEC is trying to raise that level by cutting production, but non-OPEC players, like Russia, continue to tell OPEC to stock it in their collective ear. It sure is good news for the U.S. consumer and the U.S. economy at a time we can use all the good news we can get.
A few more retailers and Dell Computer report earnings today. We'll get another publicity splash from Microsoft today as they release X-Box, their new video-game system.
We've been losing steam in the futures all morning, and if that slide continues, we may get off to a soft start this morning. At this point, adjusted for fair value, S&P futures are up 2, Dow futures are up 13 but the Nasdaq futures are 7 points below fair value.
November 14, 2001Yesterday, no big earnings disappointments, no bad news out of the Greenspan speech, and the Taliban continuing to use the West Coast offense. It was all good news for stocks, and we had a strong day across the board.
Although earnings season is pretty much over, Hewlett-Packard reported earnings about an hour ago, a day ahead of schedule. And at first blush, the numbers were better than expected. Hewlett reported earnings of 18 cents per share, versus an expectation of 8 cents. That's down from 41 cents last year, but beating expectations by that much are giving stock futures a boost. Another surprise this morning, as Tiffany, a retailer you might expect to be hit hard by economic uncertainty, beat estimates by 3 cents. They also expect the fourth quarter to be about flat with last year.
Unless we get an unpleasant surprise from the October Retail Sales report at 8:30, we'll be heading up at 9:30. Adjusted for fair value, S&P futures are up 7, Dow futures are up 43 and the Nasdaq futures are particularly strong, 26 points above fair value.
November 13, 2001The possibility that terrorist action took down that Airbus A300 in New York yesterday sent the stock market spiraling downward at the open yesterday. At one point the Dow was off almost 200 points. But as people became more confident that the crash was an accident, stocks bounced back and finished mixed on the day. The only sector that really took a beating, was, of course, the airline sector. AMR, the parent of American Airlines, was down about 9% after being down over 22% at one point yesterday.
Hopefully today we'll get back to more mundane market news, like earnings reports and an Alan Greenspan speech. We have plenty to choose from. Greenspan will speak at Rice University. BEA Systems, one of the bull market darlings reports earnings today along with a batch of retailers. WalMart and Home Depot each estimated 33 cents per shares profit for the quarter. Each made 33 cents per share for the quarter. WalMart sales were up 15% on the year. J.C. Penney also met estimates.
On the positive news from Afganistan, the futures have been strong all morning. It looks like we'll have a very strong market at 9:30. Adjusted for fair value, S&P futures are up 9, the Dow futures are up about 77, and the Nasdaq futures are about 24 points above fair value.
November 12, 2001In many obvious ways, war hurts stock prices. In some less obvious ways, war can help stock prices. But if you look back over the history of wars this century, it seems that U.S. stocks go pretty much as the war goes. If the war goes well, so go stocks. And, with the war appearing to go rather well last week, we had a good week for stocks. Maybe coincidence, but maybe not. The Dow and the S&P rose 3%, while the Nasdaq went up almost 5%.
Not much on the agenda today. No big economic reports are due until Wednesday, and not a lot of earnings reports due out today.
The bond market is closed today, but stocks will trade.
Overseas markets are off 1 to 2% this morning. Our futures have been improving slightly over the past couple of hours. Adjusted for fair value, S&P futures are flat, the Dow futures are down about 15, and the Nasdaq futures are about 5 points below fair value. It looks like a boring open to what may well be a pretty quiet market today.
November 9, 2001Another spike in oil prices this morning. Brent Sea crude is up 6% to 21 bucks and change. Word is that Russia will back the proposed OPEC production cutbacks. That's a big change in policy and not particularly welcome news for any of us.
The Dow and the S&P gained a little bit yesterday. We had a pretty significant rally cooking, until the Federal Reserve Open Market Committee released the minutes from their October 2nd meeting. While the Fed recognized likely short-term economic weakness, they were thinking that the downturn will be relatively short, and hinted that by early next year, they may have to start RAISING interest rates. Don't those guys understand the wonders of zero percent financing?
The October Producer Price Index rolls out in nine minutes. It's estimated that prices actually declined three tenths of a percent last month.
The futures are up a little, but are not showing any real direction in advance of that PPI number. Adjusted for fair value, S&P futures are up 2, Dow futures are flat and the Nasdaq futures are 4 points above fair value.
November 8, 2001European interest rates finally coming down. The Bank of England and the European Central Bank, finally recognizing that things around the world are slowing down a bit, both cut rates this morning by ½ of 1 percent.
There has been talk for a while that OPEC is planning to cut oil production by a million barrels a day. Overnight Saudi Arabia said that the cut might have to be 1½ million barrels. That report shot prices up to around 20 bucks a barrel. Of course, in order to make a cutback stick, OPEC will have to get non-OPEC countries, like Russia, to restrict their output, and get their own members to stop cheating on their production quotas, which has always been an issue.
Wal-Mart with a big 6.7% jump in same store sales for October. Last year's increase was about half of that. Costco same store sales were up 6%.
We've got a rally coming at 9:30. Adjusted for fair value, S&P futures are up 9, Dow futures are up 51, and the Nasdaq futures are 22 points above fair value.
November 7, 2001It's been easy to second-guess Alan Greenspan and his buddies on the Open Market Committee over the past couple of years. But yesterday, it appears that they looked at the jobs data, the manufacturing data, and they voted unanimously for the only action that made any sense. They cut short-term rates by another half percent to 2%. Although the market had been down most of the day fearing the worst, it turned positive on the news and we finished with another strong day.
However, after the market closed, we got some less than wonderful news from Qualcomm. They missed their quarterly earnings by 2 cents, and estimated next quarter's revenue growth at only 5 to 10%. That's knocked about 9% off Qualcomm's price in pre-market trading.
Third quarter productivity figures come out in six minutes. The estimate is for a slight decrease in productivity from the second quarter.
A little profit taking coming at the open this morning. Adjusted for fair value, S&P futures are down 5, Dow futures are down 52, and the Nasdaq futures are 12 points below fair value.
November 6, 2001Now granted, expectations were low. And granted, when you look at total results, Cisco Systems did report a quarterly loss last night. However, excluding special charges, the pro-forma numbers from Cisco showed a four-cent profit - that's two cents better than expected. Revenues actually increased from last quarter, and the book to bill ratio, an indication of future revenues, is positive. Now that doesn't mean that all is well again with networking stocks. However, things could have been worse, and if we get a few more major players to regain their footing, well people won't be parking cash in 2% money market funds for long.
Speaking of two percent money market rates - that may be generous rate by next week depending on Mr. Greenspan's mood at 2:15 this afternoon. The Federal Reserve Open Market Committee will cut short term rates for the tenth time this year today. It will be at least a quarter point move, and if the Fed is paying any attention to the manufacturing and jobs data, it will be a half percent cut. The fed fund futures are pricing in a 65% chance of a half point cut.
The futures are slightly positive this morning. Adjusted for fair value, S&P futures are up 1½ , Dow futures are up 12, and the Nasdaq futures are 5 points above fair value.
November 5, 2001An interesting statistic from the month of October. Among S&P 500, the four stocks with greatest gains in market capitalization during the month of October: Microsoft, Cisco Systems, IBM and Intel. Sounds a little like the good old days of 1999? One of those companies, Cisco Systems, reports earnings after the market closes today.
Disney will also report earnings this week, and they got some good news from over the weekend. Monsters, Inc. set an opening weekend box office record for an animated film. The sold 63½ million dollars in tickets. Monsters is a product of a Pixar-Disney partnership.
This will be a big week for interest rate decisions. The Fed meets tomorrow, of course, and is expected to cut short term rates by as much as another half-percent. On Thursday, the Bank of England and the European Central Bank are both expected to cut interest rates.
Japan was up overnight. Europe is good shape this morning, and our futures reflect that. Adjusted for fair value, S&P futures are up 9, Dow futures are up 62, and the Nasdaq futures are 23 points above fair value.
November 2, 2001The news of potential settlement in the Government's case against Microsoft sparked a rally yesterday morning that just kept going and going and going. Auto sales are sure going and going and going. General Motors sales for October were up over 31%, Ford was up over 34%. The big rush, of course, is to take advantage of 0% financing. The big question is whether or not there will be anybody left to buy cars next year, when using other people's money will presumably cost something again.
Outside of cars, manufacturing activity contracted big-time in October. The National Association of Purchasing Managers index fell yesterday to its lowest level in 10 years. That could be a precursor of today's jobs report. Eight minutes from now the October unemployment rate will be released. Look for the loss of 300,000 jobs, many of which will be manufacturing jobs, and an unemployment rate north of 5%.
Don't look now, but Brent Crude Oil is trading below 20 bucks a barrel this morning.
Foreign markets are up slightly. Adjusted for fair value, S&P futures are down 7, Dow futures down 45, and the Nasdaq futures are 12 points below fair value.
November 1, 2001The federal government has evidently decided to reverse course and spend more resources in the years to come trying to break up al-Qaida rather than trying to break up Microsoft. We don't know the details, but there is reportedly an agreement between the Justice Department and Microsoft that will put and end to the federal Government's part of the case. There is no indication that the 18 states Attorneys General, who still view Microsoft as an evil-doer, or at least a very deep pocket, will go along with the settlement.
Yesterday's first estimate of third quarter Gross Domestic Product was a negative 4 tenths of a percent, but not as negative as the minus 1 percent that was expected. As a result, the Dow was down, the Nasdaq was up, and the S&P was virtually unchanged.
Standard and Poors cut DaimlerChrysler's credit rating a notch yesterday to BBB+ from A-.
Foreign markets are down slightly. Adjusted for fair value, S&P futures and Dow futures are again today within a couple points of fair value, and the Nasdaq futures are 13 points above fair value.
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