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November 30, 2005
The results for Cyber Monday are in, and they serve to prove that this whole computer and internet thing is really just a fad that will just fade away. Right.
Visa spending on the internet was reportedly up 26 percent this Cyber Monday over last. Ebay ruled the roost with the most distinct visitors. Walmart.com and Target.com also drew a lot of traffic.
Traffic in shares of Google may have finally come to a “stop” sign. Google is back down to 400 bucks from 435 on a couple analyst downgrades. Yahoo took its second downgrade this week this morning as well.
Lots of data points on the way today. It’s Oil Inventory day. The Chicago Purchasing Manager’s Index comes out at 10, and later today, the Fed’s Beige Book will be released. The last time out that was a significant market mover.
The government’s second estimate of 3rd quarter Gross Domestic Product at 8:30 could set the early tone. It’s expected to be revised upward to 4.1% from the advance number of 3.8%. Too much of an upward revision could actually be a market drag, as traders continue to focus on future interest rate hikes.
November 29, 2005
Yesterday the stock market’s winning streak ran into a disappointing home sales number like it was a brick wall. It’s not news around these parts, but now it seems that nationally there are plenty of used homes on the market. The thinking is that a slowdown in housing sales will likely trigger a slowdown in related consumer sales as well.
Today it could be déjà vu all over again. The futures are up strongly at this hour, but at 10 o’clock we’ll get the October New Home Sales. Early forecasts put the number at an annualized 1.2 million units, but given the used home data yesterday, we could fall well short of that.
Durable Goods Orders are expected to have risen 1.5 percent in October. We’ll get that report in about 10 minutes.
Gold broke over the $500 dollar an ounce level over night, although it’s pulled back some at this point. The last time gold spent any significant time above 500 bucks was about 22 years ago.
November 28, 2005
There may be heavy pockets on area freeways, but there were evidently lighter pockets leaving area malls over the weekend. According to the National Retail Federation, the average shopper spent more than $302 over the weekend, as Thanksgiving Holiday retail sales were up 22 percent over last year. That number is questionable to some, and it may be an unbelievable number to a lot of autoworkers who are expecting tougher times ahead. But, whether the figure is completely accurate or not, it’s a reminder that nationally at least, the consumer is feeling just fine, thank you.
Automakers aren’t the only manufacturers about to do some restructuring. Drug-maker Merck will eliminate 7,000 jobs by 2008 and will close 5 of their 31 manufacturing facilities.
This week will be loaded with economic data. Today, the October existing home sales number comes at 10 o’clock. Sales are expected to have declined just a bit to an annualized rate of 7.2 million units.
The Wednesday before and the Friday and Monday after Thanksgiving are traditionally good days for the market, and it looks like 2005 will be no exception.
November 23, 2005
The futures are indicating a pretty flat open for stocks, but take heart – the Wednesday before and the Friday after Thanksgiving are traditionally pretty good days for the market.
We got a little Holiday gift yesterday when the minutes of the Federal Reserve Open Market Committee’s most recent meeting were released. The minutes showed that the Committee members DID actually talk about the economy during their meeting, presumably because golf season was just about over. Some Fed members expressed concern that they not go too far in raising interest rates. That gave stocks an immediate shot in the arm, adding day number 5 to the current market rally.
At 9:45, the U of M’s Consumer Confidence number for November is expected to come in at 81, as investor depression over tropical depressions wears off.
Oil, gasoline, and distillate inventories are all expected to have risen in the past week. We’ll find out at 10:30, and we’re also expecting a rise in natural gas inventories. That’s fairly unusual for this time of year. That data is coming out a day early due to the Thanksgiving Holiday.
November 22, 2005
Xbox 360 hit the market at midnight. Microsoft calls the new machine a critical component of its future strategy, so it’s an important product to watch. Some analyst estimates that Microsoft will sell 2 million of them this year, but estimates vary widely as to how many will be available during the next few weeks. Hey, maybe we can start building them at some of those auto plants we don’t need anymore.
For the market in general, the Dow Jones 30 Industrials Index finally closed in positive territory for the year yesterday. The Nasdaq and the S&P 500 are at 4 ½ year highs. But there are some uncomfortable little details rearing their ugly little heads. Gold is just a smidgen below the $500 dollar an ounce level, as rising fast. The Treasury Bond yield curve is about as flat as flat can be and will very likely invert before the end of the year. An inverted yield curve is an almost certain indicator of an upcoming recession. Finally, light sweet crude is up almost a buck today at $58.61 per barrel.
November 21, 2005
There was a day when General Motors could rally it stock by announcing some new models with big sales potential. Last Friday, GM shares rallied 17 percent from their intra-day low, just because Rick Waggoner said “we’re not going bankrupt.”
In about 10 minutes, GM’s head honcho will have more to say. At an 8:30 press conference, Mr. Waggoner is expected to announce some plant closings and possibly some other cost cutting measures that could help him keep last Friday’s promise.
Usually the mother names the child. Today, the child will actually assume its mother’s name. SBC will start using the AT&T name, assume the ticker symbol ‘T’ and will make a lot of sign makers and stationery suppliers very, very happy.
Cold weather is about to spread across the Midwest and Northeast, and surprise, surprise, oil and natural gas prices are again on the rise. Light sweet crude is up 75 cents to just shy of 58 bucks per barrel. That could weigh down the sleigh of the little Santa Claus rally we’ve been enjoying.
November 18, 2005
There’s not much on the economic report calendar today, so it will likely be a deals, earnings and oil kind of day.
Let’s take them in reverse order. Light sweet crude is down 3 cents after a steep slide yesterday afternoon. Yesterday’s drop gave a nice boost to overseas markets overnight. Most of Europe is up about one percent at this hour. Overnight, the Nikkei 225 in Japan was up almost a percent and a half.
Earnings reports are a mixed bag. We’re looking at better than expected reports from Hewlett-Packard and Starbucks. However, there are less than wonderful profits and/or forecasts from Gap, H&R Block and Disney.
A couple more big deals as companies continue to find ways to sop up all that darn cash lying around. SwissRe is buying General Electric’s insurance business and Cisco Systems is buying Scientific Atlanta. Both of those deals are in the 7 to 9 billion dollar range. GE is also raising their dividend by 14%.
November 17, 2005
The story stock of the day nationwide has to be General Motors, and the story is not a comedy. GM lost almost 6 percent of its value yesterday, and another 17 cents in the after-hours market. Closing in on 21 bucks a share, you have to go back to the Crash of 1987 to remember GM trading much below that level. The stock has lost almost 40 percent of its value over the past three months.
How about some happier stories? It you’re long gold, it’s been a great year. Gold is at 483 dollars an ounce mark this morning. That’s an 18 year high.
Today is the last big data day of the week. Weekly jobless claims are expected to have fallen by just 2,000. October housing starts are expected to be down 2.8 percent. Industrial production, on the other hand, is expected to show a one percent pickup as we recover from the hurricanes. Finally, at noon, the Philly Fed survey will be closely watched. Expect a decline of 3 tenths of a percent in that forecast.
Two broker downgrades this morning – one for Altria and one for ConocoPhillips. Hewlett-Packard will report earnings later today.
November 16, 2005
There’s been a lot of discussion and speculation about the health of the housing market lately. Rising interest rates, the theory goes, have to start biting into sales soon, and may even cause people who can’t handle their suddenly-expensive ARM loans into an unexpected move.
The jury on this one is apparently still out. A few days ago, home builder Toll Brothers gave investors disappointing guidance for 2006. However, this morning, D. H. Horton beat estimates for their fourth quarter by 14 cents, and guided toward the high end of expectations for next year. So, all may not be so horrible in house building land. However, Horton did guide slightly lower for next quarter.
Tyco is also being cautious for next quarter, although last quarter’s earnings were pretty good.
It’s all about the CPI for traders this morning. In 15 minutes the October Consumer Price Index is expected to come in unchanged. The core rate, which excludes food and energy prices, is expected to have risen 2 tenths of a percent.
November 11, 2005
A big drop in oil prices didn’t help energy stocks yesterday, but it sure gave the rest of the market a shot in the arm. This morning, light sweet crude is down another 16 cents per barrel in the mid-57’s, and that has European stock markets in a very good mood.
Bond traders in the U.S. should be in a good mood – they have the day off for Veteran’s Day.
If you hold shares in Dell…well…..maybe you won’t be in such a good mood. Dell warned that earnings were going to disappoint. So, their earnings number last night was no big surprise. However, the revenue number for last quarter was also on the light side, and the outlook for next quarter was disappointing. So, after gaining 19 cents in yesterday’s market, Dell lost 35 cents in the after-market and should open lower this morning.
Don’t look now, but after yesterday’s plunge in the stock price, the dividend yield on General Motors is over 8 ½ percent this morning. Assuming, of course, that you believe the payout rate is sustainable.
November 9, 2005
There will be a lot of hot oil-related news in the market today. First hot data from the Energy Information Institute, then a lot of hot air from Capitol Hill.
At 10:30, the Energy Information industry will issue its weekly report on fuel inventories. Crude oil, gasoline and distillate inventories are all expected to rise. Perhaps most importantly, distillate inventories are expected to rise by about 600,000 barrels after a week of very mild weather in the Northeast, where a lot of residential heating oil is used.
If you are the head honcho of a big oil company, you will be tied to the whipping post in Washington today. Members of the Senate will hold a hearing to find out just how in the world the oil companies have collected so much money from everybody without actually having the power to raise taxes.
Big insurer AIG will be restating earnings again, as they seem to be having some trouble shaking their accounting problems. Home Depot gets a brokerage firm upgrade this morning after losing over 2 percent of its value yesterday.
November 4, 2005
This morning, it’s all about the October Jobs Report. The consensus estimate calls for job growth of 124,000. The employment picture is still a moving target given the thousands of jobs that were washed away by the hurricanes. Of course, that’s probably offset by the millions of attorneys who have put themselves to work suing Merck over Vioxx.
Round 2 in the Vioxx war went to Merck yesterday as a New Jersey jury found Merck not guilty of evil doing. Merck stock popped up a bit midday, but gave up the bulk to that gain by 4 o’clock. That’s two lawsuits done and about 6,400 to go. That is, if no new suits are filed.
Apple Computer took a downgrade from a major brokerage house this morning. The analyst is arguing that it’s time to harvest some of Apple’s tremendous price appreciation.
The Japanese Nikkei Index shot up another 1.3 percent overnight, but markets elsewhere are decidedly undecided.
November 3, 2005
Lots of stuff going on today. Retailers are reporting their October numbers this morning and generally, it looks like consumers continue to party like its 1999. Walmart confirmed their earlier guidance that October same store sales were up 4.3%. They see 3 to 5 percent growth in November as well. Costco same store sales were up 10 percent. Granted, without the big run-up in gasoline prices it would have only been 8 percent. But that’s still a big number.
Comcast revenues for the quarter gone by came in as expected, but profits missed estimates by about 40%. Comcast is also guiding lower for 2006.
At 10 o’clock, Alan Greenspan will be forced to sit through another visit with the Congressional Joint Economic Committee. Say what you will about him, the man knows how to have a good time.
Also at 10 o’clock, the Durable Goods Report is expected to show a 1 percent decline. And lookout – light sweet crude is up above 60 bucks again at $60.48.
November 2, 2005
Yesterday, the Federal Reserve Open Market Committee said rising energy costs and recent hurricanes have depressed economic growth and job growth. Not to be outdone by those freaks of nature, the Fed raised short term rates another quarter percent, which should of course, depress economic growth and job growth even more. The good news is that hurricane season is almost over. Alan Greenspan will be around until February.
October auto sales numbers were released yesterday and were scarier than anything you might have seen the night before. DaimlerChrysler sales were off 3 percent, General Motors off 23 percent and Ford off 26 percent. The annual combined car sales rate fell to 14.7 million units. A year ago, it was nearly 17 million. Speaking of industries that are changing, Deutsche Telecom will cut 32,000 jobs over the next three years due to changes in the German communications industry.
This morning Time Warner beat earnings estimates and raised their share buyback program. EDS also beat estimates as that turnaround continues. Oil distillate inventory data later this morning is expected to show a drawdown. That’s a potential market mover. But so far today – not much is moving anywhere.
November 1, 2005
Later today, Treasury Secretary John Snow will finally receive a couple of proposals, developed by a special commission, on how to reform the income tax system in the U.S. There’s a striking similarity of this exercise to the proposed Social Security reforms. Two big wealth re-distribution systems, both horribly flawed. And both will go “unreformed” for the foreseeable future. Not that these new tax system proposals are bad – they’re actually very good. Unfortunately, people don’t evaluate these things based on “right or wrong.” They make up their mind based on “how will it effect me.” That will likely render this proposal, like the badly needed Social Security reform, dead on arrival at Congress.
Short-term interest rates will head north by another quarter of a percent at 2:15 this afternoon. That makes it 12 increases in a row, with at least one or two more to go.
The big earnings news of the morning is a big warning from Dell computer. Sales and earnings for the quarter will come in at the low end of expectations and Dell shares, and by implication the NASDAQ, will be under some pressure.
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