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WJR November 2003 Reports

 

November 27-30, 2003  Thanks for all our blessings.  Have a great Holiday.  We'll be back Monday.

November 26, 2003

It’s a good morning to make some hot chocolate, grab your favorite economist and snuggle up in front of a warm computer terminal. Eight, count ‘em eight, big economic reports roll out between now and 10 o’clock. Those numbers include the weekly unemployment claims, which are expected to be up by a couple thousand, and the final reading on November Consumer Sentiment from the University of Michigan.

New York Attorney General Eliot Spitzer, bless his heart, and the SEC continue to poke around in the darker corners of the mutual fund industry. Yesterday, the SEC ordered that Security Trust Company be shut down, which is a little more severe than a slap on the wrist. This morning, word is that all is not well at Citigroup. The SEC is reportedly looking into some less than savory arrangements from which Citi reportedly made about 16 million bucks.

Thanksgiving is all about tradition. And the days before and after Thanksgiving are traditionally pretty good days for stock prices. So here we go, have a great Holiday and I’ll be back Monday.

Overseas markets gained ground overnight. Adjusted for fair value, S&P futures are up 4, Dow futures are up 33 and the Nasdaq futures are about 12 points above fair value.

November 25, 2003

There’s been a lot of speculation about further consolidation in the banking business. We have a little more this morning. A subsidiary of Citigroup is picking up the consumer lending arm of Washington Mutual for one and a quarter billion bucks. Expect more of the same in the months ahead.

The market went through all the gears as rolled down the road yesterday. But the futures have been stuck in neutral all morning and probably will be until 8:30 this morning. At that point the revised number on third quarter Gross Domestic Product rolls out. The preliminary GDP number shocked a lot of people a few weeks ago at a reading over 7%. It’s actually expected to be revised UP from there to 7.6, some saying even 8% this morning.

Perhaps even more important to stock prices today will be the November Consumer Confidence number at 10 o’clock. Expect a reading of 85, that’s up from 81.1 last month.The Nikkei in Japan is back over the 10,000 level, although it didn't close there. European stocks are up a bit at this hour. Our futures have been climbing, but are still pretty flat in front of the GDP announcement. Adjusted for fair value, S&P futures are up less than a point, Dow futures are up 7 and the Nasdaq futures are about 2 points above fair value.

November 24, 2003

There was substantial doubt in the market that it would happen. Now we know it won’t. ArvinMeritor dropped its bid to buy Dana after Dana’s Board of Directors refused to play along. The offer was at 18 bucks per share. Dana closed Friday at 15. Before all this takeover business started in July, the stock traded right around 12.

This is traditionally a pretty good week for stock prices, although trading volume can be a little light. Historically, the Wednesday and Friday that border Thanksgiving are the strongest. The futures at this point are indicating that Monday might not be half-bad either.

The Japanese stock market was closed overnight for a holiday. Most major European markets are up about 1 to 2 percent.Our futures have been climbing all morning. At this point, adjusted for fair value, S&P futures are up 6, Dow futures are up 51 and the Nasdaq futures are 13 points above fair value.

November 21, 2003

We’ve now had 7 down sessions for stocks out of the last 9.  Although smaller cap stocks have held up a little better than the overall market, we could use a little good news today.

The good earnings news of the morning is last night’s report from Disney.  We were expecting earnings of 15 cents per share.  We got earnings of 20 cents per share.  That included three cents from a tax settlement.  So call it two cents better than expected.  Earnings were reportedly up on the strength of Pirates of the Caribbean and the Paul W. Smith show.

Overseas markets were fairly tame overnight.  The futures have been slipping during the past hour, but it looks like we may still get off to a decent start this morning.  At this point, adjusted for fair value, S&P futures are up 2, Dow futures are up 10 and the Nasdaq futures are about 4 points above fair value.

November 20, 2003

The good news last night from Hewlett-Packard will be overshadowed as trading opens this morning with reaction to the overnight bombings in Turkey.

Nevertheless, Hewlett-Packard put up some impressive numbers after the market closed yesterday. They beat earnings estimates by a penny, and reported that all major lines of their business are operating at a profit. Hewlett raised their sales projections for the current quarter, but did not raise their profit estimates. Sounds like they’re expecting a lot of sales during the Holiday season, but perhaps at very aggressive pricing.

The markets may get some help later this morning. At 10 o’clock the October Leading Economic Indicators are expected to tick up 2 tenths of one percent. At noon, the Philadelphia Fed Survey is expected to score a 25, down from 28 last month.

So hope for the best, but prepare for reality. We’ll be looking at red arrows at 9:30. At this point, adjusted for fair value, S&P futures are down 5 ½ points, Dow futures are down 59, and the Nasdaq futures are down 12 points below fair value.

November 19, 2003

Well, here we go again. The FBI raided a New York office building last night (this had nothing to do with Michael Jackson) and hauled away at least 47 people on a variety of charges, one of which reportedly involved calling individual investors and selling them a sure-fire foreign currency investment that wasn’t quite on the up-and-up. So - individual investors – let’s go over this again – if someone you don’t know calls you on the phone, or maybe offers you a free meal to talk about investments, wake up, hang up, keep your hand firmly on your wallet and don’t let go.

Gymboree beat earnings estimates by a penny per share. A couple of big technology companies will report earnings later today, those being Hewlett-Packard and Intuit.

AT&T Wireless is reportedly set to shed 3,000 jobs. That’s 10% of their workforce.Asian stocks were in the dumps overnight. European markets are down on the order of one percent or less. We’re looking at a mildly positive market at 9:30. Adjusted for fair value, S&P futures are up 2 points, Dow futures are up 18, and the Nasdaq futures are now a point above fair value.

November 18, 2003

We had a nice last-hour rally that pulled stocks back from some pretty ugly levels. It looks like we’ll get a little carryover of that rally this morning.

Home Depot reported earnings this morning that beat estimates by 4 cents per share. Home Depot also raised their earnings guidance for the full year. Good news out of Staples as well, beating estimates by a penny.

The core and overall Consumer Inflation Rates are expected to have risen just one tenth of one percent in October. If you are a consumer, you may find it hard to believe that the prices you pay for the stuff of life are not going up faster than that. No matter, the Federal Reserve still obsessed with the threat of deflation. We’ll see if there’s any evidence of that threat at 8:30 this morning.Overseas markets are generally up at this hour. Stock futures turned positive about two hours ago when the Home Depot numbers were announced. So, we’re looking for slightly higher prices this morning. Adjusted for fair value, S&P futures are up a little more than a point, Dow futures are up 15 and Nasdaq futures are about 5 points above fair value.

November 17, 2003

Start with a weak close in the U.S. market Friday, stir in a reported threat to Japan from al-Qaeda, mix with a weaker dollar and Boom! It’s a recipe form lower stock prices in Japan. The Nikkei average fell below 10,000 for the first time in three months. It was down almost 4% over night. That index was over 11,000 about one month ago. That’s pulling down European markets as well.

A couple big corporate insurers are merging this morning. St. Paul Companies, even though much smaller, is acquiring Travelers. If you’re a Travelers shareholder, you’ll get a little less than a half-share of St. Paul for every Travelers share you own.

Lowe’s beat estimates for the quarter by three cents per share. We’ll hear from Toys R Us later today. In ten minutes we’ll find out whether Business Inventories changed in September. No change is expected. But stock prices will be changing in a downward direction at he open. Adjusted for fair value, S&P futures are down 7, Dow futures are down 62 and Nasdaq futures are about 9 points below fair value.

November 14, 2003

They seem to be the five most-often heard words in the financial services industry: "without admitting or denying wrongdoing." We’re hearing them again this morning from Putnam Investments. Putnam cut a deal with the SEC yesterday, saying that they don’t admit that they did anything wrong, but promise that they’ll never do it again. They’ll reimburse some shareholders, shake up their Board of Directors and undergo an "ethics reform" program. Is it just me, or was there a day when you didn’t need to "reform" ethics? Either 'ya got 'em or you don't. It seems like so long ago that Arthur Andersen was put out of business for shredding an email.

Big data day today. In ten minutes, we’ll get the October Producer Price Index and Retail Sales reports. At 9:15, the Industrial Production and Capacity Utilization number and then at 9:45 the preliminary November Consumer Sentiment Index from the University of Michigan. Expect a reading of 91. That’s up a point or two from October.

Adjusted for fair value, S&P futures are flat, Dow futures are up 2 and Nasdaq futures are a little more than a point below fair value.

November 13, 2003

 

We didn’t see many companies miss their earnings estimates in the most recent quarter.  But, we’ve got one this morning.  Although it wasn’t a very big miss, it is a very big company.  Wal-Mart made 46 cents for the quarter gone by.  That missed estimates by a penny per share. Sales, by the way, were up over 13 percent.

 

Although that news pushed the Dow futures lower when it was announced a couple hours ago, there is some good news for technology stocks.  Applied Materials was up 3 percent after hours last night after saying that the see signs of a “turning point” in tech spending.  Orders are up 21%.  IBM also saying that corporate IT spending is picking up. That’s the tune the stock market bulls have been humming for the past 8 months.  If the band starts playing out loudly, we might be looking down from above at Dow 10,000 and Nasdaq 2,000 before very much longer.

 

The weekly jobless claims report comes out in less than 10 minutes.  Dell reports earnings later today.

Adjusted for fair value, S&P futures are flat, Dow futures are down 4 and Nasdaq futures are less than a point above fair value.

November 12, 2003

The big economic reports for the week all roll out on Friday. So today, we’re probably in for more of the stock market "drift" that we saw on Monday and Tuesday.

Talk about bad timing. One big brokerage firm raised its rating on drug maker Merck this morning, in part because of a new anti-depression drug that Merck was developing. Unfortunately, Merck announced this morning that they are stopping phase three testing of the new drug, because it just doesn’t work. Merck is down about a buck in the pre-market and someone at the brokerage firm is probably looking for an alternative treatment for depression.

Overseas stock markets are mixed at this hour. We should get earnings reports from Applied Materials and Federated today, but in front of those reports, the futures are drifting just a bit higher.

Adjusted for fair value, S&P futures are up a little more than a point, Dow futures are up 9 and Nasdaq futures are about 2 points above fair value.

November 11, 2003

The bond market is closed today for Veteran’s Day, the Canadian stock market is also closed today. Owners of Japanese stock WISH that their market had been closed today. The Nikkei was down almost 3 percent overnight. That’s more spillover from their elections, the outlook for coming reform proposals and continuing weakness in the dollar, which hurts Japanese exports.

UBS, that’s the parent of what you used to know as Paine Webber reported earnings that beat estimates this morning. UBS also announced that the bear market is now over. Which is certainly helpful advice at this point. Kind of like when someone tells you that it’s time to take your golf clubs out of storage – in the middle of August.

Microsoft and Cisco Systems both hold shareholder meetings today. We’ll see if any interesting forecasts emerge from those meetings.

But for now, whatcha see is watcha get with the futures. And whatcha see isn’t particularly encouraging. Almost no adjustment for fair value this morning. S&P futures are down 2 ½ , Dow futures are down 23 and Nasdaq futures are down about 4.

November 10, 2003

Japanese stocks had a tough time last week in anticipation of yesterday’s elections. They’re having a tough time this week in the wake of those elections. The ruling party’s power was diminished somewhat, but they still rule. Nevertheless, the Nikkei was down more than 1 percent overnight.

We should plod through a relatively quiet day today. A few earnings reports, a merger in the printing business and a broker upgrade on Intel. That’s about it. It may be a good today to telephone all your mutual fund companies.

For all the mutual funds you own in taxable accounts, ask the fund companies for their estimate of how much their year-end distributions will be and what date they plan to make them. You may save yourself a lot of tax dollars, especially if you have carryover capital losses by readjusting your fund holdings before those distributions are made. Don’t complain about paying taxes in April, if you can plan around them right now.

European markets down just a bit. Our futures have been improving during the past hour. Adjusted for fair value, the S&P, Dow and Nasdaq futures are all just about even with fair value.

November 7, 2003

Another one of those late-day rallies turned a mixed market into a happy market by the close last night. But not all is happy in investment-land.

The bleeding continues at Putnam Investments, according to AMG data services. Individual investors have reportedly pulled over 4 billion bucks from Putnam funds in the past week. Add that to the 5 billion or so that institutional investors have pulled, and you know, it’s starting to add up to real money. Putnam, of course, has denied the wrongdoing that the SEC and Massachusetts regulators alleged on October 28th.

We’re done with major earnings announcements for the week. The tone of today’s stock market will be set at 8:30 this morning when the Labor Department reports on October payroll levels. It’s widely expected that the unemployment rate will hold at 6.1%. However, it’s estimated that 55,000 new non-farm jobs were created. In light of the good weekly numbers that came out yesterday, some analysts are predicting 100,000 or more new jobs, and that has the futures in a perky mood this morning.

Adjusted for fair value, S&P futures are up 3 ½ , Dow futures are up 47, and the Nasdaq futures are about 10 points above fair value.

November 6, 2003

Shares of Cisco Systems spiked up over 5% in after-hours trade last night following a report in which they beat estimates and raised next quarter’s guidance. Cisco shares haven’t been this high since early 2001 and are trading around 30 times next year’s estimated earnings.

A very interesting number comes out in about 10 minutes. Productivity in the 3rd quarter is expected to have increased by 8.5 to 9%. We know that the economy is rebounding, but the lack of job growth is a concern. One of the reasons job growth could continue to lag is a big-time rise in productivity. Nine percent would be a big-time number. So while a big increase may be a great thing for profits, if you’re looking for a job, it may not be the best of news.

Wal-Mart continues to sell stuff at the rate of about a billion dollars a day. That’s a 4 ½ % rise in same store sales so far in November.

Train wreck in Tokyo overnight. The Nikkei was down almost 3% on concerns over this coming Sunday’s Japanese elections. European markets have turned higher this morning during the past hour. Tech stocks should be the stars of a very dull show when we open at 9:30. Adjusted for fair value, S&P futures are are flat, Dow futures are down 8, but the Nasdaq futures, on the strength of those Cisco numbers, are about 7 points above fair value.

November 5, 2003

Worries about a sharp spike up in job cuts cut off a rally at the knees yesterday afternoon as the market’s six day winning streak came to an end.  That should raise interest and anxiety levels over Friday’s unemployment data.

 

But in the meantime, we’ll get another reading on the health of the manufacturing sector at 10 o’clock this morning, with the report on September Factory Orders.  They are expected to have gone up about six tenths of one percent, after falling in August.

 

The big earnings news of the day comes after the market closes when Cisco Systems reports.  The expected profit for Cisco’s first quarter is 15 cents per share, but Cisco’s outlook for corporate technology spending over the next year will likely set the tone for tomorrows open.

Asian markets were flat overnight.  European markets are down a little less than one percent at this hour.  It looks like we’ll be staring lower prices in the >

November 4, 2003

The Dow, S&P and Nasdaq all closed at their highest level of the year yesterday after a strong ISM manufacturing number. We won’t have any big economic reports today, but one data point to watch may be the latest job-cut survey from outplacement firm Challenger, Gray and Christmas.

Earnings reports are on the way from a variety of companies today. In the medical supply business, Henry Schein earned 12% more than analysts expected. Tyco beat estimates, but lowered its 4th quarter forecast. Gillette beat estimates by a nickel. Aon and Clear Channel Communications both missed estimates by a penny per share.

Reportedly heading to court today, former head of HealthSouth, Richard Scrushy will likely be charged by the feds. Separately, six former Prudential brokers may be facing charges from Massachusetts regulators. The Wall Street Journal reports that Prudential received 25,000 warning letters in the past year from mutual fund companies that some of their brokers may have been up to no good.

The futures haven’t moved very much this morning, but this is one of those mornings the futures can be tricky to read. As opposed to what you might think at first glance, the futures are actually pointing to a lower open for stocks at 9:30. After you adjust for fair value, S&P futures are down 3, Dow futures are down 8, and the Nasdaq futures are looking to open down about 6 points.

November 3, 2003

First of all, October is over. October is usually a volatile month for stocks. It’s a last month of the fiscal year for most mutual funds –they tend to sell off their losers by today to limit tax distributions to their shareholders. On the other hand, the November through January period is usually the best time of the year for stock prices – so bring it on.

The October report on manufacturing comes from the Institute of Supply Management at 10 o’clock this morning. There’s a lot of optimism about this report. The consensus estimate is 55.8, up from 53.7 last month. Anything over 50 reflects expansion in manufacturing activity.

The head honchos at Strong mutual funds and Putnam Investments have resigned. The investigation into the unseemly practices of certain less-than-shareholder-friendly mutual funds is long overdue and is likely to get bigger before it goes away.

European markets are generally up between1 and 2 percent at this hour. Our futures have been good and getting better since 5 o’clock this morning. Right now, adjusted for fair value, S&P futures are up 4, Dow futures are up 38, the Nasdaq futures are more than 10 points above fair value.

WJR December 2003 Reports
WJR October 2003 Reports

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