October 30, 2009
The torrent of earnings reports will slow a bit today. However, there’s a fair amount of economic news on the way before 10 o’clock.
At 8:30, reports on September Personal Income and Consumption are expected to paint a less than wonderful picture of the state of Main Street. Personal income is expected to be unchanged from August, while consumption, operating without the artificial sugar-high of cash-for-clunkers, is expected to have declined a half percent, after rising 1.3 percent in August.
The Chicago PMI at 9:45 should read 48.7, reflecting an improving, yet still contracting manufacturing sector and the University of Michigan’s final reading on October Consumer Sentiment is expected to inch up to 70.
Better than expected results this morning from Sony, Intel, Constellation Energy, Dominion Resources, IT&T and Duke Energy. The disappointing report came from Aon, but it wasn’t much of a miss, earnings 65 cents, which was a penny short.
Texas Instruments received a broker upgrade this morning, and although Asian markets rose overnight, Europe is mixed and our futures are in give-back mode right now.
At this point, adjusted for fair value the S&P futures are down about 5 points, the Dow futures are down 43, and the NASDAQ futures are about 6½ points below fair value.
October 29, 2009
The country’s economic growth, as represented by the quarterly Gross Domestic Product report, has declined 5 out of the last 6 quarters. In about 11 minutes, we’ll get the government’s first estimate of third quarter ’09 GDP, and it will be interesting. The consensus estimate is a 3.2 percent increase in GDP. However, yesterday, Goldman Sachs lowered their estimate to 2.7%.
Some people think the Goldman folks are pretty good at these estimates, other people think that Goldman actually TELLS the government what the number is, and of course, some people think Goldman actually RUNS the government. Those suspicions will be stoked again if we do get a number close to 2.7%.
No matter if GDP is positive or negative, Costco’s decision to begin accepting food stamps speaks volumes regarding the state of the real economy.
Of the earnings reports this morning, the big disappointments are from Exxon Mobil, Kodak and Sprint-Nextel. Better than expected numbers are out from Procter & Gamble, AFLAC, Aetna, Kellogg, Colgate Palmolive, Waste Management, AutoNation and Motorola. Motorola also raised guidance for the rest of the year.
Overseas stock markets are all lower, and although our futures have slipped a bit over the past couple of hours, they’re still a bit in the green as we await the GDP number at 8:30.
At this point, adjusted for fair value the S&P futures are up about 2 points, the Dow futures are up 16, and the NASDAQ futures are a bit more than a point above fair value.
October 28, 2009
In just under ten minutes, we’ll get the September Durable Goods Report. It’s expected that orders for big ticket stuff rose one percent in September, which would be a big improvement from the nearly 2½ percent decline in August. Then, at 10 o’clock, the September New Home Sales Report is expected to have risen to the 440,000 level, which would be a slight in crease from the August Report. However, this morning the Mortgage Bankers Association reported that mortgage applications fell over 12 percent last week, in spite of a slight decline in interest rates.
Earnings reports continue to spew out and it’s becoming almost laughable. At least ten major companies have reported this morning, and every single one that I’ve seen reported better-than-expected numbers. Standouts among them were Hess, which reported $1.05 , which nearly doubled expectations and International Paper, which reported 37 cents versus the expected 22 cents.
Chinese stocks were pretty much unchanged, but other overseas markets are pretty much all lower. In spite of the good earnings, some strength in the dollar may well send us lower at 9:30.
At this point, adjusted for fair value the S&P futures are down 4 points, the Dow futures are down 38, but the NASDAQ futures are about 5½ points below fair value.
October 27, 2009
The earnings parade continues this morning, although it’s pretty clear that the direction of stock prices is still directly dependent on the direction of the dollar. The inverse correlation was striking yesterday as a slumping dollar early in the day sparked a rally, but as soon as the dollar turned positive, stock and gold prices sank.
Overnight, the Indian Central Bank held their short term lending rate at 4¾ percent. That has the dollar on the defensive again, and the stock futures looking positive.
Back to the earnings parade for a moment – I have yet to see a disappointing report this morning. Among the companies reporting better-than-expected earnings are Celanese, Interactive Corp, Under Armour, TD Ameritrade, BP, Honda, L3 Communications and Johnson Controls. Even US Steel, which lost money during the quarter, lost much less than expected.
That October Consumer Confidence number that I told you was due yesterday, is actually due out at 10 o’clock this morning. My bad on that one. Expect a reading of 53½.
Asian stocks had a rough night and Europe is a bit of a mixed bag. Our futures were positive all morning but started skidding back toward even just about 10 minutes ago.
At this point, adjusted for fair value the S&P futures are still up 3 points, the Dow futures are up 28, but the NASDAQ futures are about a point below fair value.
October 26, 2009
We’re officially in the heart of the third quarter earnings reporting season. Almost 30 percent of the Standard and Poor’s 500 companies will report this week. This morning, glass-maker Corning reported operating earnings of 42 cents per share, which beat estimates by 3 cents as flat screen TVs continue to sell very well. Verizon earned a penny more than expected and McGraw Hill beat by two cents per share.
Radio Shack is our only miss of the morning, earnings 30 cents versus the expected 31 cents, although shares were indicated a bit higher in the pre-market.
At 10 o’clock this morning, the Conference boards reading of October Consumer Confidence is expected to come in at 53.5. That would be just slightly better than the September number of 53.1.
Overseas markets are a bit of a mixed bag, and a number of markets, including Hong Kong were closed for a holiday, although Europe is mainly a bit higher. Our futures are off their earlier highs and a pointing to a very slightly positive open for stocks.
At this point, adjusted for fair value the S&P futures are up a point and a half, the Dow futures are up 17, and NASDAQ futures are about a half point above fair value.
October 23, 2009
It’s been a long hard road for the value of the U.S. dollar. This morning, however, there’s a currency that’s in even more trouble. The British pound is getting pounded this morning, down a percent and a half against the dollar. Gross Domestic Product in the U.K. fell four tenths of a percent last quarter, which is the sixth straight quarterly decline. Expectations were for a tenth of a percent increase.
The earnings news of the morning is better than expected across the board, with Ingersoll Rand, Honeywell, Amazon, Whirlpool, Schlumberger and American Express among the companies that beat estimates. Microsoft will report quarterly results in about 15 minutes.
Ben Bernanke will chat it up at the Boston Fed conference at 8:30.
Word is that the Administration’s pay czar has approved bonuses for three AIG executives in the amounts of 4 million, 5 million and 7 million dollars, while cutting the pay package of many others. It certainly pays to have friends in high places.
Overseas markets are pretty much higher across the globe and absent an ugly number from Microsoft this morning, we should float a little higher at 9:30. At this point, adjusted for fair value the S&P futures are up 2½ , the Dow futures are up 12, and NASDAQ futures are 4½ points above fair value.
October 22, 2009
We had a pretty good day working yesterday until some negative analyst comments about the banks sent stock prices south in the last hour of trading. Also not helping was word that the Government will be getting into the business of setting executive pay levels. There’s no word yet on whether there will also be limits on bathroom breaks.
Earnings reports are pouring out this morning and it feels a bit like Lake Wobegon, where all of our children are over-average. Rolling out better than expected earnings this morning are McDonald’s, PNC Financial, Merck, AT&T, 3M, Travelers, Raytheon, United Parcel Service, Black and Decker, Union Pacific, Legg Mason, Hershey, Delta and others. Among the few that tested poorly are Fifth Third Bank, Kimberly Clark and NCR.
Microsoft’s new operating system will be released to the public today. The important thing here is that many expect Windows 7 to spark a whole new personal computer upgrade cycle. A lot of corporate PC’s are five or six years old now, as many firms sidestepped the Vista operating experience altogether.
At 10 o’clock the September Leading Economic Indicators Index is expected to rise nine-tenths of a percent.
Overseas markets are lower. Our futures had been going absolutely nowhere all morning long, but perked up a bit fifteen minutes ago when McDonald’s reported. At this point, adjusted for fair value the S&P futures are up a half-point, the Dow futures are up 25, but NASDAQ futures are still a half-point below fair value.
October 21, 2009
We wound up giving up a portion of Monday’s gains yesterday and much of the rest may fly out the window this morning, even though earnings reports for the most part continue to impress.
Last night, Yahoo announced 13 cents per share of operating earnings. That was almost twice as much as expected, as the decline in online ads was not as severe as anticipated. This morning, Altria beat estimates by 2 cents, Continental Airlines made a 2 cent profit, while the consensus was a six cent loss. Wells Fargo reported 56 cents versus 37 and is indicated higher. Morgan Stanley also beat, and drug-maker Lilly made $1.20 which was an 18 cent beat on a significant rise in Cialis sales. Perhaps a lot of people don’t have enough money to leave the house.
Our downer of the morning is Dow component Boeing, home to the often-delayed Dreamliner, reported a loss of $2.23 cents for the quarter, which was 11 cents worse than expected, although they still say that the 787 will fly by the end of this year.
Overseas markets are all lower, but not by a lot. Our futures are in better shape than they were in a half hour ago, but are still indicating a lower open. At this point, adjusted for fair value the S&P futures are down almost 3½ points, the Dow futures are down 34 and NASDAQ futures are about 3½ points below fair value.
October 19, 2009
It was 22 years ago today that a whole new generation of stock investors was introduced to the term “market risk” as stocks dropped over 20 percent in a single day. While certain of today’s economic conditions are similar to then, the most direct similarity is the calendar, which is seldom a reliable indicator. In fact, stocks in Europe are enjoying a nice rally today – higher on the order of a percent and a half, on strong earnings reports.
Speaking of strong earnings reports, Eaton Corporation reported operating earnings of $1.21 this morning. That’s 29 cents better than expected. Eaton also raised their estimate of future earnings. Toy-maker Hasbro made 99 cents, which was 7 cents better than expected. Gannett beat estimates by 3 cents.
After the close of trading this afternoon, we’ll hear from Apple and Texas Instruments as we kick off an extremely busy week for earnings reports. Almost 30% of the S&P 500 will report. The official estimate for Apple is $1.42, although the “whisper number” is about $1.60.
Over the weekend, Barron’s magazine called for the Fed to start raising interest rates, in order to bolster the strength of the U.S. dollar. Eventually, that’s exactly what the Fed will do. In the meantime, stocks, bonds, oil and other commodities continue to rise as money flows out of those low-to-no yielding money markets and CDs.
That rise should continue for stocks at 9:30, although the futures have been losing some ground over the past half hour. At this point, adjusted for fair value the S&P futures are up 2½ points, the Dow futures are up 19 and NASDAQ futures are about 2 points above fair value.
October 16, 2009
We’ll see if the market can pull off another mid-day revival today. All week, our stock market has shrugged off every bit of bad news and partied on. Unfortunately, there are several rather stinko earnings reports out this morning, which will again put stocks under pressure in the early going.
Last night, Google announced quarterly earnings of $5.13, which was 29 cents short of expectations, even though revenue was strong. General Electric told the opposite story this morning, earning 27 cents per share versus the expected 20 cents. Unfortunately, revenue was down 20% from last year and was weaker than expected. Bank of America then piled on the bad news, losing 26 cents per share, which was a nickel worse than expected. Bank of America stock is indicated about 4 percent lower pre-market.
IBM did have a solid report last night, but that’s about the only solidly good earnings report to consider this morning.
One possible positive spark rolls out just before 10 o’clock in the form of the University of Michigan’s preliminary reading on October Consumer Sentiment. Expect a reading of 73, which would be just slightly lower than the September reading.
Asian markets were mixed overnight, but most major European markets are lower.
At this point, adjusted for fair value the S&P futures are down 9 points, the Dow futures are down 89 and NASDAQ futures are about almost 8 points below fair value.
October 15, 2009
Okay. The Dow Jones Industrial Average broke the 10,000 level yesterday. Keep in mind, however, that it is the 26th time the Dow has broken 10,000, and it’s probably not the last time. So – been there, done that, let’s move on to something with a bit more meaning.
Goldman Sachs issued a meaningful earnings report this morning. Goldman, depending on your point of view is either the best bank in the world – or a bunch of very wealthy conspirators who run the U.S. economy, made a profit of $5.25 per share last quarter. The consensus estimate was more than a dollar lower than that. Revenue was more than 10 percent higher than expected. However, the whisper number on Wall Street was even higher, and the stock index futures pulled back after Goldman’s announcement.
Beleaguered Citigroup just reported an operating loss of 27 cents per share and that’s better than the 38 cent loss that was expected. But, it’s still a 27 cent loss for a 5 dollar per share stock as the turmoil at Citi continues. Southwest Airlines reported a 3 cent profit, that’s a penny better than expected.
In just about 15 minutes, we’ll get the weekly jobless claims number as well as the September Consumer Price Index, which is expected to come in at an increase of two tenths of one percent.
Asian markets were generally higher overnight, with the Nikkei Index is Japan almost 2 percent higher. Europe has turn just a bit lower, and absent a pleasant jobless claims surprise at 8:30, we may well start a little lower as well.
At this point, adjusted for fair value the S&P futures are down 8 points, the Dow futures are down 55 and NASDAQ futures are more than 13 points below fair value.
October 14, 2009
For those who attribute some importance to Dow 10,000, pay attention in the early going this morning. The Dow closed 127 points away from that level last night and this morning, futures are indicating that the Dow may open about 100 points higher.
The reason for that is a bunch of very impressive earnings reports. Last night, Intel reported 33 cents of profit, an improving gross profit margin and they raised earnings guidance for the rest of the year. CSX beat estimates by 3 cents, and although revenue was 23% lower than a year ago, it was roughly in line with expectations. This morning JP Morgan Chase pretty much knocked the ball out of the park. Revenue was much better than expected, and earnings of 82 cents per share were a full 30 cents better than consensus estimates. Abbott Labs beat estimates and guided higher as well.
The official September Retail Sales Report will be released at 8:30. Overall, sales are expected to have fallen 2.1 percent, absent the sugar-high of the August cash-for-clunkers program. Later today, the Federal Reserve will release the minutes of the Open Market Committee’s September meeting, which could make for some interesting reading.
Japanese shares were flat overnight, but all other major markets overseas are higher, with the standouts Germany and Russia both up over 2 percent.
At this point, adjusted for fair value the S&P futures are up 13, the Dow futures are up 94 and NASDAQ futures are 20 points above fair value.
October 13, 2009
After a couple of down weeks, the S&P 500 Index has now risen for the six straight session, and that’s the longest winning streak we’ve seen in over two years.
Transportation is one of the industries that many traders watch carefully, specifically the railroads, which are often a canary in the coal mine regarding the overall economy. CSX is expected to report earnings of 71 cents per share. That number will come out after the close today, as will the profit report from technology bellwether Intel.
Johnson & Johnson reported $1.20 in earnings, which was 7 cents better than expected, although revenue is down about 5 percent from a year ago and was just a bit less than expected. We’ll also get an investor conference call today from Procter & Gamble.
Don’t look now, but the price of gold is up another 10 bucks or so at $1,067 as money continues to flow out of zero-percent money market fund and is buying just about anything that gets in the way. Not surprisingly, the dollar index is at a 14 month low this morning.
Overseas markets were a mixed bag, although the Indian stock market rose over two percent.
Our futures have been wavering right around even all morning. At this point, the S&P, Dow and NASDAQ futures are all essentially even with fair value.
October 12, 2009
No banks, no bonds, no snail mail. Happy Columbus Day, everyone. But stocks will trade in the United States and at least in the early going, they’ll be trading higher.
The first full week of quarterly earnings reports lies ahead. Among other companies, many of the country’s largest banks will report results and that could make things very interesting. There’s a good deal of speculation that the financial situation of the country’s bank, especially the big regionals with a lot of real estate exposure, is not getting any better and may be a lot worse than has been let on. We may get a better take on that by the end of the week.
There’s one deal in the bio-tech space this morning. Proteolix is a company that has a drug in late-stage trials that is hoped to fight multiple myeloma. Onyx Pharmaceuticals is buying Proteolix for $276 million down and as much as an additional $515 million over time, depending on the results of those trials.
As for today, the docket is fairly quiet. Treasury Secretary Geithner will give a speech, but most of the major earnings reports come later in the week.
Japanese stocks did not trade overnight. Also closed for a holiday are markets in Canada, Brazil and Chile. European markets are open and are nicely higher.
At this point, adjusted for fair value, S&P futures are up more than 7 points, the Dow futures are up 49, and the NASDAQ futures are about 9 points above fair value.
October 9, 2009
Traders will have to digest some relatively unique news this morning – the U.S. dollar is actually a bit higher in world currency markets. Yesterday, Ben Bernanke made the seemingly self-evident comment that interest rate targets will be raised when the economy regains sufficient strength. That bit of non-news was enough to prop up the dollar overnight and will be a bit of a headwind for stocks this morning.
It’s Friday. That means in just about 8 hours we’ll find out how many banks have failed THIS week. We’ve been averaging about two per week lately, with some analysts suggesting that we have another 500 to 1,000 banks to go.
Marriott shares were upgraded by a major broker this morning. The broker’s price target for the stock yesterday was 21. But now that the stock is trading at 27, they’ve changed their target to 31, so take that timely upgrade for what its worth.
The Shanghai market in China soared about 5% overnight. They’re playing some catch-up after being closed for over a week due to the National Day holiday. Japan was up 2 percent, but Europe is just slightly lower.
The bond market closes at 2 o’clock in advance of the Columbus Day holiday Monday.
Oil is about 40 cents per barrel lower after a 3% upward gusher yesterday. Our futures are suffering under that stronger-dollar headwind, but not by much, although they have weakened over the past ten minutes or so.
At this point, adjusted for fair value, S&P futures are down 2 points Dow futures are down 16, and the NASDAQ futures are 8 points below fair value.
October 8, 2009
The third quarter earnings season kicked off yesterday. Although earnings reports come and go, this quarter may be more important that the average bull. Stocks have risen on the order of 60 percent since March. But, some attribute a lot of that to weakness in the dollar. However, if earnings surprise to the upside, the market may have a lot further to sun.
Last night, Alcoa got us off to a great start. Alcoa was expected to lose 10 cents per share. They actually made 8 cents and had positive comments regarding future demand. Alcoa stock, which rose more than 2 percent yesterday, looks to open another 5% or so higher this morning.
Marriott reported 15 cents per share this morning, which beat estimates by 2 cents and Pepsico’s $1.09 was six cents better than expected.
In spite of the Australian Central Bank’s surprise hike in interest rates yesterday, the European central Bank held rates steady this morning. As the day goes along, we’ll get September results from major retailers. TJX just reported sales up 7%, versus the expected 4 percent increase.
Most markets overseas were on the rise overnight, and we should jump a little at 9:30 as well. At this point, adjusted for fair value, S&P futures are up 8, Dow futures are up 64, and the NASDAQ futures are 11 points above fair value.