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WJR October 2003 Reports


October 31, 2003

Happy Halloween everybody. Halloween is usually a happy day if you own stocks. First of all, October is over. October is 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. The November through January period is usually the best time of the year for stock prices – so bring it on.

Lots of economic data on tap today. The Chicago Purchasing Managers Index, September reports on personal income and consumption. But, the centerpiece of the day, the final University of Michigan Consumer Sentiment Index for October rolls at 9:45. Expect a reading of 89.5. That indicates a bit more confidence than last month. If there WAS a Michigan State Sentiment Index, it would no doubt reflect a bit more fear than last month (just kidding).

Right now, adjusted for fair value, S&P futures are up than a point, Dow futures are up 7, the Nasdaq futures are 2 points above fair value.

October 30, 2003

Today’s the last big day of earnings releases this week. So far this morning, AutoNation, Aetna, Constellation Energy, Bauch & Lomb and Starwood Hotels all beat estimates, although Starwood guided lower for the current quarter.

Lots of big economic numbers roll out at 8:30 this morning. The Advance Gross Domestic Product number may well be in excess of 6 percent. That could be the strongest GDP number we’ll see for years to come. It’s Thursday – that means the weekly unemployment claims number. It’s expected to have dropped by 1,000, which would be good news.

Now that Putnam has been charged, it looks like the Strong Funds are next in line to get in trouble with New York Attorney General Eliot Spitzer over the mutual fund timing scandal. The investigation there reportedly goes all the way up to the chairman of Strong Management and his family.

Forget the futures this morning. The direction of the market at the open will be determined in about 10 minutes with the release of the advance GDP and unemployment numbers. Right now, adjusted for fair value, S&P futures are up 1 ½ , Dow futures are up 7, and the Nasdaq futures are 3 points above fair value.

October 29, 2003

Alan Greenspan’s got a great job. Where else can you go to work, republish the same memo you’ve issued for three months in a row, and get a standing ovation.

The Fed, as expected, gave us every reason to believe yesterday that we’ll be seeing déjà vu all over again when their statements are issued every six weeks or so for the foreseeable future. They did say that the job market is "stabilizing", but they continue to beat the deflationary drum. Apparently they are reading tea leaves that very few others can see at all.

Good earnings news from defense contractors this morning. Halliburton, the Vice Presidents old company beat estimates by a nickel per share on an operating basis this morning. Northrop Grumman beat a one dollar estimate by 21 cents per share. In the drug store business, CVS reported right in line with estimates.

The futures have been weak all morning, but it looks like technology shares will hold up best at the open of regular trading. Right now, adjusted for fair value, S&P futures are down about 3 points, Dow futures are down 36, but the Nasdaq futures are only about 3 points below value.

October 28, 2003

Contrary to the old saying, sometimes what you say IS more important than what you do. The Federal Reserve Open Market Committee meets today and at 2:15 this afternoon they will almost certainly announce no change in short-term interest rates. After their last two meetings, the Committee stated, in so many words, that deflation was more of a threat than inflation. We’ll see if they reiterate that belief today, in spite of an apparent lack of supporting evidence.

A big merger in the tobacco business this morning as RJR will buy the assets of Brown & Williamson. Word is that the SEC will bring its first civil charges soon in the recent mutual fund timing scandal. They are reportedly set to file charges against Putnam Investments.

At 10 o’clock the October Consumer Confidence number is expected to come in at 79.3. That would be up nicely from the September reading.

There was a big rally overnight in Hong Hong on the back of some rosy projections for semiconductor sales. Japan was up overnight, and European markets are up nicely at this hour. Right now, adjusted for fair value, S&P futures are up about 4½  points, Dow futures are up 29, and the Nasdaq futures are also about 5½ points above value.

October 27, 2003

We have a new "biggest bank in the country" this morning, so you can cross that one off your Christmas wish list. Bank of America, fresh off a scandal regarding improper trading of their mutual funds, is buying FleetBoston Financial. It’s a 47 billion dollar deal and will result in the nations largest bank.

There are a couple other big mergers this morning. These are in health care benefits business. Anthem is buying WellPoint and United Health Care is buying Mid Atlantic Medical.

At 10 o’clock this morning, we’ll get the word on how home sales held up in September. It’s expected that they were down slightly form August.

About three hours ago, the futures were pretty much flat, but they’ve come alive on all that merger news. At this point, we’re looking for a strong market at the open. Adjusted for fair value, S&P futures are up about 5 points, Dow futures are up 52, and the Nasdaq futures are also about 7 points above value.

October 24, 2003

Always remember that with the stock market, it’s not "what have you done for me lately". It’s "what are you going to do for me next"? It’s that kind of thinking that is taking Microsoft down in price in the pre-market today.

Last night Microsoft bettered earnings estimates by a penny per share. That was the good news. The interesting number though was a big drop in deferred revenue, from about 9 billion bucks to 8.2 billion. What that means in English, is that new software license sales to businesses aren’t keeping pace with the expiration of old licenses. What it means in stock-marketese, it that Microsoft is down about 5 percent and it’s going to take the major indexes along with it.

The major earnings and economic reports are over for the week. Alan Greenspan gives a speech later today, but nothing earth-shattering is expected.

Overseas, stock markets are generally a bit lower. Our futures look better than they did yesterday at this hour, but after you adjust for fair value – they are just as ugly as they were 24 hours ago. At this point, adjusted for fair value, S&P futures are down about 7 points, Dow futures are down 54, and the Nasdaq futures are also about 18 points below fair value.

October 23, 2003

Japanese stocks dropped about 5 percent overnight. That’s the worst day since the 9/11 terrorist attacks. European stocks are only off a little over one percent at his hour, but it looks like we’ll start trading at 9:30 with more sell orders than buys.

A soft profit report from Merck got us off on the wrong foot yesterday. But if you look back at significant stock sell-offs over the years, you can often trace the problem to Washington, D.C. Chalk up another one for the trial lawyers. Yesterday, after the Senate refused to consider a bill that would limit class action lawsuits, the selling accelerated into the close.

This morning dozens of companies are reporting earnings. A majority are beating estimates. But if we’re going to break out of yesterday’s funk, we’ll need some help from the jobless claims number at 8:30. Expect an increase of 6,000 to a level of 390,000, but if you own stocks, hope the number comes in lower than that.

Microsoft reports later today, but right now, Adjusted for fair value, S&P futures are down more than 6 points, Dow futures are down 59, and the Nasdaq futures are also about 18 points below fair value.

October 22, 2003 -- No report.

October 21, 2003

It’s another day, and another bunch of better than expected earnings reports.

Probably the most dramatic of the bunch was last night’s announcement that Texas Instruments doubled net income from last year on a 12 percent increase in revenue. They also guided higher for the fourth quarter. In the after hours trading last night, Texas Instruments was up about 10% from the 4 o’clock closing price.

AT&T beat estimates by 4 cents pre share on an operating basis. However, revenues continue to slip, falling another 8 percent in the last year. Blockbuster with a mixed report as well, 2 cents per share better than expected on the earnings, although revenues slipped a bit.

The downer of the morning may be DaimlerChrysler. Although the Chrysler unit swung to a profit due to cost cutting, the entire company made about 3 ½ percent less than expected for the third quarter on a 5% drop in sales.

The futures have been slipping for the past couple hours, but we’re still slightly positive as we head toward 9:30. Adjusted for fair value, S&P futures are up more than 3 points, Dow futures are up 8, and the Nasdaq futures are also about 8 points above fair value.

October 20, 2003

A couple of wake-up calls this morning to anyone who has been waiting around for interest rates to drop again. In an interview with the Times of London, U.S. Treasury Secretary John Snow indicated that interest rates may be on the way up. He reportedly said that he would be "frustrated and concerned" if there wasn’t some upward movement in rates, given the recent strength in the economy. Evidently he’s not in the market to buy a house.

In case you’re thinking, "No problem – that’s just talk", how about this – for the week ended October 6th, the broadest measure of the money supply FELL by 39 billion dollars, and is at the lowest level since June. So, it appears that the Fed’s pump priming may be over.

Citigroup reported earnings of $4.69 billion in the third quarter, that kind of puts the $400 million dollar fine they paid to the SEC in perspective. They made that money back in just over a week. Lexmark and 3M both beat estimates and raised 4th quarter guidance this morning.

We’re looking to go up just a little at 9:30. Adjusted for fair value, S&P futures are up a point, Dow futures are up 20, but the Nasdaq futures are about even with fair value.

October 17, 2003

Imagine if one of our automobile manufacturers could say that car sales were up 84% from last year and that sales are expected to grow by another 40% last year.  Think their stock would sell off?  What a difference an industry makes.  Of course, that’s not the story for car markers – but it is the story for Ebay.  Ebay matched earnings estimates last night, but they were a little more cautious than expected on 2004.  Result?  The stock was down about 5% in the pre-market this morning.  But remember, Ebay’s third quarter report last year sounded very similar to this year’s and the morning-after reaction was pretty much the same.  But by the end of the day a year ago, the stock was up.


Housing starts will be announced at 8:30.  They’re expected to be up just a bit from last month.  At 9:45, the University of Michigan gives its preliminary reading of October Consumer Sentiment.  That’s expected to come in at 88.2 after a reading of 87.7 in September.

Overseas, markets mainly positive overnight, but not by a lot.  We’re looking to open very slightly lower at this point.  Adjusted for fair value, S&P futures are down 2 points, Dow futures are down 10, and the Nasdaq futures are about 4 points below fair value.


October 16, 2003


We’re getting a little spoiled by the third quarter earnings reports.  As of yesterday, we had only seen about 6 percent of companies report lower than expected earnings.  That much lower than the usual 15 percent or so.


Last night IBM met estimated earnings of a dollar two cents per share.  However, revenues were a bit lower than expected.  IBM says that better times are ahead – and they’re looking to hire 10,000 people in the next year.  Nevertheless, the stock is selling off in the pre-market.  It’s down about 4 percent.


There are dozens of companies reporting this morning.  No major bombshells at this point, as the vast majority are beating estimates b a bit.  In Japan, the Nikkei broke through the 11,000 level for the first time in quite a while overnight.  Before the market opens today we’ll get news on Business Inventories, the September inflation rate, as well as industrial production and capacity utilization.  But at this point, stocks are looking pretty listless.


Adjusted for fair value, S&P futures are down a point or so, Dow futures are down 13, and the Nasdaq futures are about 7 points below fair value.

October 15, 2003


As you heard on the 8 o’clock news, GM crushed estimates this morning, earning 79 cents versus an expected 63 cents per share.  But once again, it was the financial side of the business, not the car side of the business, that performed extremely well.  General Dynamics beat estimates by 8 cents per share.  The news was not so good at Comerica.  They made 89 cents last quarter versus an expected 90 cents. IBM reports today along with a bunch of other big companies.


After the market closed yesterday, Intel reported earnings that beat estimates by two cents per share.  More importantly, revenue was up over 20% and gross margins were 58% and could climb back over 60% this quarter.  That’s one strong report from Intel.  Look for the market, especially the Nasdaq to get off to a good start this morning.  Intel shares are up more than 5% in Europe.


You may think it’s early, but if you filed for an extension of time to file your 2002 income tax return, the hour is late.  Today is the end of that road for calendar year taxpayers.  Better get that 1040 in the mail today. 


Major European markets are up more than one percent.  We’re heading north again at 9:30.  Adjusted for fair value, S&P futures are up more than 4 points, Dow futures are up 26, and the Nasdaq futures are about 15 points above fair value.

October 14, 2003

The folks at Motorola just couldn’t keep the good news to themselves yesterday morning. They doubled estimated earnings for the quarter and raised guidance for the fourth quarter. That reinforced the tone for stocks yesterday. Trading volume was pretty light, but stock prices rose again across the board.

In case you haven’t been paying attention, the Dow and the S&P 500 are back to their levels of summer 2002. The Nasdaq hasn’t been at its current level in nearly two years.

This morning, Bank of America reported a dollar ninety-two of profit versus the dollar sixty-nine estimate. Delta Airlines lost a little less than expected. Eaton beat estimates by 7 cents.  Merrill Lynch beat by almost 20% and Fifth Third Bank met estimates. Later today, Intel and Johnson and Johnson headline the earnings news.

In Japan, the Nikkei rose almost 1.7% overnight. Stocks in Europe are down just a tiny bit at this hour, held down by a cautious outlook from electronics maker Philips. We’re looking for little change in domestic stocks at 9:30. Adjusted for fair value, S&P futures are up 2 points, Dow futures are up 7, and the Nasdaq futures are about a point above fair value.

October 13, 2003

Happy Columbus Day, Happy Thanksgiving and happy futures at this point, as we’re looking for another solid market this morning.

It that time of the season when earnings reports fall like birch leaves. Almost a third of the Dow Jones stocks report this week, about a quarter of the S&P. The parade wasn’t scheduled to get going until tomorrow, but………

Sometime before 9:30 this morning, Motorola will report 3rd quarter earnings. They weren’t scheduled to report until tomorrow. However, on Friday Moody’s cut its rating on Motorola’s debt. So, expect some good news from Motorola sometime in the next hour or so. If it wasn’t good news, I’m sure it could have kept until tomorrow.

In fifteen minutes we’ll get the report on September Retail sales. They are expected to come in just slightly below the August level.

European markets are up about 1 to 2 percent. Adjusted for fair value, S&P futures are up more than 5 points, Dow futures are up 68, and the Nasdaq futures are almost 6 points above fair value.

October 10, 2003

According to an analyst at a major brokerage firm, things could be looking up at General Motors. GM reports earnings next Wednesday and word is that cost cuts and a profitable product mix will bring 3rd quarter and full year earnings in 10 to 15 cents higher than earlier estimates.

General Electric reported all kinds of news this morning. They hit their earnings number for the quarter, on a 2% increase in revenue. They warned that the rest of the year may be a tiny bit softer than expected, and they announced a 9.5 billion dollar acquisition of a British medical imaging firm Amersham.

The September Producer Price Index is expected to be up only a tenth of one percent. The August number was 4 tenths of one percent. That number comes out at 8:30 this morning.

European markets are about as flat as can be this morning. Our futures have slipped during the past hour, but are still positive. Adjusted for fair value, S&P futures are up about 3 points, Dow futures are up 24, but the Nasdaq futures are about 5 points above fair value.

October 9, 2003

In case you’re feeling badly about the U.S. economy – how about this: The German government this morning revised their 2003 Gross Domestic Product forecast down from ¾ of a percent to perhaps zero to ¼ of a percent. The reduced their 2004 estimate to 1 ¾ percent.

Surprisingly, unemployment in Germany fell to "only" 10 ½ percent. As dismal as those numbers are compared to the U.S. economy, they were better than expected and German stock prices are up about 1 percent this morning. You know investing can be a lot like dating – the secret to success is sufficiently low expectations.

Yahoo again beat high expectations last night, on a 43% increase in revenue as profits more than doubled. Abbott Labs, Accenture and Marriott met earnings estimates this morning. Marriott is predicting that revenue per available room will rise 3 to 4 percent in 2004.

We could make up most of yesterday’s losses within the first fifteen minutes of trading today. Adjusted for fair value, S&P futures are up 4, Dow futures are up 34, but the Nasdaq futures are more than 5 points above fair value.

October 8, 2003

Alcoa is always the first of the Dow components to report earnings each quarter. Last night, what Alcoa reported may be a template for what we’ll see from a lot of companies for the third quarter. A small increase in sales, leading to a big increase in profits, in part because costs have been cut and cut and cut. Alcoa’s sales rose 3% from a year ago. Their profit rose more than 40%, beating estimates by 3 cents per share.

You might start calling these the "salad days" at McDonald’s. Mickie D’s September same store sales were up 10%. That’s a lot of lovin’ it going on.

Costco beat estimates by 4 cents per share, although profits were down from last year. Genentech and Yahoo report later today.

Tokyo stocks sank along with the dollar overnight. The dollar now getting less than 110 yen. European stocks are in rally mode at this hour.

We started in the hole this morning, but the futures have rallied during the past couple hours, and we’re looking for a fairly flat market at 9:30. Right now, adjusted for fair value, S&P futures are down a fraction, Dow futures are down 6, but the Nasdaq futures are about 2 points below fair value.

October 7, 2003

The saying is "buy on the rumor, sell on the news". Stocks are bought based on expectations, not current conditions. We’ve had a lot of buying on rumors about how good third-quarter earnings were going to be. Analysts are looking for a 15 to 19% increase in profits compared to the 3rd quarter of 2002.

Now for the companies that pre-announced earnings for the quarter, 1½ lowered estimates for every company that raised estimates. That’s a lot better than the 3 to 1 ratio that we’ve seen over the past three years.

Well today, the news starts to arrive. The key for stock prices will not be the third quarter news. It will be in the rumors they start about what the fourth quarter will look like. This morning Pepsi met estimates, earning 62 cents per share last quarter. They say the fourth quarter will come in at the "high end" of current estimates. Alcoa and Yum Brands report in later today.

The futures have been slipping this hour, and we’re still in for some selling at 9:30. Right now, adjusted for fair value, S&P futures are down 4, Dow futures are down 30, but the Nasdaq futures are about 7 points below fair value.

October 6, 2003

We’re expecting a pretty quiet day for financial news. If you own stocks, the quieter the better. Earnings announcements start tomorrow when Alcoa reports, and that means that earnings warning season is wrapping up. So far this quarter, there have been far fewer warnings than we’ve heard in a long, long time.

In fact, this morning, the only major pre-announcements have been positive. PeopleSoft and Knight Trading are both indicating that business has been better than expected for the third quarter.

After spitting out their CEO a couple of weeks ago, Motorola saying today that they will be spinning of their chip operations in an initial public offering. Chip sales amount to about 20% of Motorola’s sales.

Most Asian markets were up overnight. European stocks are fairly flat.

It looks like we may see slightly higher prices at the open this morning. Right now, adjusted for fair value, S&P futures are up more than 2 points, Dow futures are up 16, and the Nasdaq futures are about 5 points above fair value.

October 3, 2003 -- no report

October 2, 2003

Only one of the Dow Jones 30 Industrial stocks was down yesterday. Unfortunately, for the home team, that stock was General Motors. Look for more pressure on DaimlerChrysler stock today, after yesterday’s disappointing sales report.

Asian markets took a cue from yesterday’s big rally. In Japan, the Nikkei gained over 2 percent overnight. The Hong Kong market gained over 3%. There’s a more muted response in Europe where stocks are up, but generally on the order of 1% or less.

The schedule is pretty light today, and quite frankly, the less we hear for the rest of the week, the better. We’ve gotten very few warnings of significant earnings shortfalls this week, and that’s definitely a case of no news being good news.

The weekly jobless claims report will no doubt draw way more attention than it should at 8:30 this morning. Hopefully the new claims number stays below 400,000. The August Factory Orders number will be announced at 10 o’clock. Expect a negative number, maybe a half percent or so.

In front of the jobless claims number, we’re looking at a mixed picture for stocks at the open. Right now, adjusted for fair value, S&P futures are down less than a point, Dow futures are down 17, but the Nasdaq futures are about a point above fair value.

October 1, 2003

We expected the PMI and Consumer Confidence numbers to be weak yesterday, but they were just awful. And that’s pretty much all she wrote for stock prices the rest of the day. So we finished September with a one percent loss of the S&P 500. The quarter was still a good one, up over 2%, for the S&P 9% for the Russell 2000 and 10% for the Nasdaq. That’s the second strong quarter in a row for stocks.

Now we >

This morning, Wolverine World Wide earned a record 40 cents per share. That’s exactly what was expected. We’ll find out about September auto sales and August Construction spending later this morning. Also, the ISM manufacturing index is expected to rise to 55 from August’s level of 54.7.

It looks like we’ll put some points up on the board to start the fourth quarter. The futures have been rising all morning. Right now, adjusted for fair value, S&P futures are up almost 5, Dow futures are up about 44 points and Nasdaq futures are 8 points above fair value.

WJR November 2003 Reports
WJR September 2003 Reports

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