October 31, 2011
Scared into bankruptcy may be MF Global, the high profile investment firm. It’s just a reminder to everyone that even the “smartest guys in the room” can lose when they play at the craps table.
Couple that with second thoughts about the adequacy of the European bailout program, as well as Japanese Central Bank intervention to weaken the yen, and we’re looking at a stronger dollar this morning. That’s usually a bad sign for our stocks, and gold and oil
Good signs for earnings are up at Humana this morning. $2.67 per share of operating profit beat the $2.02 estimate rather handily. Earnings from Anadarko Petroleum are on the way a little later. And at 9:45, the October Chicago PMI is expected to slip to a reading of 59 from September’s 60.4.
Most Asian markets were lower overnight. All European markets are lower on the order of one to two percent. At this point, adjusted for fair value, the S&P futures are down about 12½ points, the Dow futures are down 105, and the NASDAQ futures are almost 21 points below fair value.
It should be a nice day in Rome, Italy today. Partly cloudy, high of 76. If you’re going to see the sites, you’ll also be looking at yield of over 6 percent on 10 year Italian sovereign. That’s a record high. It’s also indicative. Even though stock markets worldwide LOVED the European bailout plan yesterday, bondholders are still demanding a pound of flesh to invest in Italian bonds. Want that in English? The European financial problems are a long way from over, and we’ll likely be seeing that movie again.
5,000 jobs will soon be over at Whirlpool, including about 1,000 jobs at the Fort Smith Arkansas plant, which will be closing. Whirlpool lower their earnings forecast on slower than projected sales. Whirlpool stock is indicated about 14 percent lower pre-market.
Interpublic almost doubled estimated operating earnings of a dime by earnings 19 cents last quarter. Goodyear Tire made 72 cents versus the expected 23 cents. Drug maker Merck beat estimates by 3 cents. Cigna raised their full year guidance but fell 3 cents short last quarter, earnings $1.20 per share.
With two days of trading to go, the S&P 500 is on track for its second best month EVER, but we’ll give back a little at the open.
Our futures have been lower most of the morning, generally in step with European markets. At this point, adjusted for fair value, the S&P futures are down about 5, the Dow futures are down 36 points, and the NASDAQ futures are about 13 points below fair value.
Make no mistake. What happened in Europe yesterday is not a solution. But it’s something. For a stock market that feared for nothing, we’ll get a fairly significant relief rally this morning.
Among other steps, the European Finance Ministers agreed to a $1.4 trillion dollar backstop to their sovereign debt problems yesterday. Private sector holders of Greek national debt agreed to write down half of its nominal value. So far, so good. Problem is, the long-run solution is going to require economic growth in Greece, Italy, Spain and the like. We’ll see about that in the years to come. However, as far as today goes, German stocks are up almost 5 percent. The CAC40 in France is higher by more than 5½ percent.
On this side of the Atlantic, we’ll get the Government’s first estimate of third quarter Gross Domestic Product at 8:30 this morning. Expect a rise in GDP to 2.5 percent. Also at 8:30, the Weekly Jobless Claims number is expected to hold steady at just over the 400,000 once again
Altria and Procter & Gamble matched earnings expectations this morning. Colgate- Palmolive and ExxonMobil each beat by a penny, DuPont with a big earnings beat, but United Continental Airlines missed by a little bit and Nintendo is now forecasting its first loss in 30 years on slowing Wii sales.
No matter, we’ll be in rally mode at 9:30. At this point, adjusted for fair value, the S&P futures are higher by almost 31, the Dow futures are up 216 points, and the NASDAQ futures are about 49 points above fair value.
We’re not likely to hear any big headlines out of the European Union Summit early on today, although it looks like Greek sovereign debt holders will get half of their money back, at best. And so, until more details roll out, we’ll get to pay some attention to little details like our economy, corporate earnings and small stuff like that.
So far this morning, that small stuff has been good stuff, locally led by Ford Motor Company. Ford reported operating profit of 46 cents, two cents better than expected on sales that were about 10 percent higher than expected. Ford also said goodbye to about 1.3 billion dollars in debt.
General Dynamics, Sprint-Nextel, SAP and Lockheed Martin all reported better than expected results, but the big surprise this morning was Boeing. $1.46 in profit was way above the $1.10 estimate. Although revenue was a little light, Boeing raised earnings guidance for the year as a whole
At 8:30 the September Durable Goods number has a good chance to be better than expected, because expectations are pretty punk. Anything less than a one percent decrease would be good news.
Gold is holding above 1,700 dollars per ounce after a big surge yesterday. Overseas markets are mixed, but we should head higher early on. At this point, adjusted for fair value, the S&P futures are higher by 7½ points, the Dow futures are up 82 points, and the NASDAQ futures are about 3 points above fair value.
Although traders clearly have one eye on this week’s promised European debt solution, the other eye is watching third quarter corporate earnings news. Until this morning, earnings reports have been nothing but eye candy.
We did hit a little pause in the profit parade this morning. Although revenue was better than expected, Delta Airlines missed the 93 cent profit estimate by two cents. With a bigger impact, 3M missed on revenue and earned only $1.52 per share last quarter. That was a nine cent miss and 3M lowered their forecast, blaming policy uncertainty in Europe and the U.S. 3M stock is indicated about 4 percent lower pre-market.
DuPont, on the famous other hand, beat a 56 cent estimate by a whopping 13 cents. UPS made just a penny more than the expected $1.05.
At 10 o’clock, the Conference Board’s reading on October Consumer Sentiment is expected to improve just a bit, to about 46 from 45.4.
Overseas markets are mixed. Our futures are off earlier highs and are pointing to a pretty flat open for the overall market. At this point, adjusted for fair value, the S&P futures are down about 3 points, the Dow futures, on the 3M news, are down 43 points, although the NASDAQ futures are still only about 4 points below fair value.
October 24, 2011
A lot of people equate the “stock market” to the Dow Jones Industrial Average, which can be pretty misleading, as it will be this morning. “The Dow” is an index composed of only 30 stocks, and those stocks are dollar-weighted. So, a stock like IBM, at 180 dollars per share has a lot more influence than say, Alcoa at 10 bucks per share. This morning, the Dow Index will look a lot better than the overall stock market. Caterpillar, an 87 dollar stock on Friday, will likely open above 91 dollars per share after reporting $1.71 in earnings. Analysts had expected $1.54. Cat also raised guidance for the year.
VF Corp also beat estimates this morning. Kimberly-Clark matched the expected earnings number at $1.26 per share.
The HSBC preliminary Chinese PMI number released overnight reflects a return to economic expansion in China. In response to that and our rally last Friday, Asian markets rose overnight. The Hang Seng in Hong Kong rose more than 4 percent. European markets have just turned a bit higher as we all await Wednesday’s promised European “Grand Bargain” on the debt crisis
The big economic reports are all scheduled mid-week, with nothing much on the agenda today. Cigna is buying Healthspring. Mattel is buying HIT Entertainment. Oracle is buying a company called Rightnow Technology. I guess they couldn’t wait.
Anyway, adjusted for fair value, the S&P futures are up just about a point, but the Dow futures, fueled by Caterpillar, are up 31 points, and the NASDAQ futures are about 7 points above fair value.
The Germans and the French continue to argue about the European bailout plan, but the good news this morning is that they promise that no conclusions will be reached over the weekend. Next Wednesday is the new target date, and that should, at least in theory, give us a chance to focus on corporate earnings early in the day. That news, this morning, is good
General Electric and Microsoft both matched analyst’s estimated operating earnings. Verizon’s 56 cents beat the bogey by a penny. McDonald’s checked in two cents ahead of expectations at $1.45 per share. Global same store sales were up 5% for the quarter.
The winner of the morning appears to be Honeywell, where earnings rose 44 percent from a year ago. $1.10 per share beat the estimate by 14 cents. Honeywell also raised guidance for the full year
Asian markets were mixed overnight, but Europe is pretty solidly higher. We’ll head north at the open as well, although it wouldn’t be surprising to see traders pull back a bit going into the European summit this weekend.
So far, adjusted for fair value, the S&P futures are up 12 points, the Dow futures are up about 100 points, and the NASDAQ futures are almost 23 points above fair value.
Meanwhile, on the aforementioned earnings front, better than expected results are out from Boston Scientific, Phillip Morris International, Southwest Airlines and Eli Lilly. AT&T reported earnings right in line with expectations. McGraw Hill, at $1.21 of earnings, missed estimates by 2 cents.
At 10 o’clock, a troika of economic data rolls out. The September Existing Home Sales are expected at an annualized rate of 4.93 million units. The September Leading Indicators are expected to have dipped to 0.2 from 0.3 percent in August. Finally, the Philly Fed Survey is expected to improve from an awful August number, but only to a level of minus 9.6.
Markets overseas are pretty much all lower, but we’re still looking to open a bit higher, if the futures are any indication – and they usually are.
Right now, adjusted for fair value, the S&P futures are up almost 8 points, the Dow futures are up about 58, and the NASDAQ futures are about 15 points above fair value.
We’ll have another morning of following European rumors, and so far, there’s not much to help stock prices. Moody’s warned last night that France might be on its way to a debt downgrade, pending the degree of its obligation to the thus-far-mythological Greek bailout.
Meanwhile, earnings reports are flooding this country this morning. Better than expected earnings are out from Coca-Cola, Johnson and Johnson, EMC, Harley Davidson and Bank of America. Most of those stocks are relatively unchanged, with the exception of Band of America, which is about 3% lower.
The disaster de jour will likely be Crocs. Last night, Crocs warned that earnings may fall 20% short of estimates. Crocs shares are indicated almost 35% lower this morning.
Goldman Sachs – remember that money printing machine? They lost 84 cents per share for the quarter, versus the estimated loss of 16 cents. Shares are indicated about 2 percent lower.
IBM raised guidance. Intel and Apple report later today. Chinese GDP rose 9.1% last quarter, cooling a bit from 9.5% in the second quarter. Industrial production in China rose 13.8 percent.
So far, it looks like a “risk off” morning. Gold is lower by 32 dollars. Oil’s off 75 cents. At this point, adjusted for fair value, the S&P futures are down 6, the Dow futures are down about 79, and the NASDAQ futures are about 6½ points below fair value.
We have lots of news in the energy business this morning. The top two pipeline companies in the U.S. are getting together. Kinder Morgan, assuming they clear an anti-trust review, will buy El Paso Energy. That will put about 80,000 miles of natural gas and oil pipeline under one corporate roof. It’s a 21 billion dollar deal, and values El Paso shares at a 37% premium to Friday’s close.
Elsewhere in the energy world, Anadarko Petroleum and BP have settled counterclaims due to the Deepwater Horizon blowout. Anadarko will pay BP 4 billion dollars and fork over a chunk of assets to BP. The settlement will cost Anadarko about 5 dollars per share after tax, but that and more was already in the stock price, as both Anadarko and BP shares are indicated several percent higher pre-market.
At 8:30 the Empire State Manufacturing Survey, which measures manufacturing activity in the state of New York is expected to come in at a minus three and a quarter. That’s would be bad, but not nearly as bad as last month’s minus 8.82.
Citigroup just reported much better than expected earnings. However, the market’s focus will remain on Europe, where they seem to be telling the world that they’ll definitely solve the debt crisis, but they definitely don’t know how.
Asia mainly higher, Europe is mixed. At this point, adjusted for fair value, the S&P futures are down 4, the Dow futures are down about 32, and the NASDAQ futures are about 6 points below fair value.
In a world that goes between risk-on and risk-off just about every day, it looks like we’ll have a risk-on morning.
Google got things started on the upward path last night. Google reported a 28 percent increase in paid clicks and a 29 percent increase in profits. The adjusted earnings of $9.72 per share easily beat the consensus estimate of $8.74. Google shares are indicated about 7 percent higher in pre-market trade.
We’ll also hear from Mattel this morning. Expect adjusted earnings of 86 cents per share.
At 8:30 the September Retail sales report is expected to show a healthy seven tenths of a percent increase, on the back of strong car sales. That index was flat in August. We’ll also get the first estimate of October Consumer Confidence from the University of Michigan at 9:45. Expect an increase of one point from last month’s reading of 59.4
Gold is higher. Oil is higher. And although Asian markets were on the main, a bit lower, Europe is higher and so are our stock futures.
At this point, adjusted for fair value, the S&P futures are up about 10 points, the Dow futures are up 73, and the NASDAQ futures, powered by Google, are about 21 points above fair value.
October 13, 2011
Yesterday’s strong rally faded late in the day, and that slippage will likely continue in the early going today.
Of course, we can always hope for some good news out of the weekly Jobless Claims number. Unfortunately, reality will likely smack us with another 405,000 new unemployment claims, which is a level we’ve basically been stuck with for over a year now.
JP Morgan has a reputation for delivering better than expected results and their third quarter report was no exception this morning. Operating profit of $1.02 per share easily beat the 91 cent estimate. We’ll hear from Winnebago, Safeway and transport company J.B. Hunt a little later on. Google reports after the market closes.
Research in Motion shares lost over a dollar from their mid-day high yesterday as outages spread to the U.S. Subscribers are reportedly getting their Blackberry service back this morning, along with an apology from RIM’s CEO.
For the most part, Asian market rose overnight, with Hong Kong leading the way with a 2 percent gain. European markets, however, are mostly lower. It looks like a big part of yesterday’s gains may go bye-bye in the early going. At this point, adjusted for fair value, the S&P futures are down about 10½ points, the Dow futures are down 82, and the NASDAQ futures are about 11½ points below fair value.
October 10, 2011
Our stock market has been dropping for about 5 months now, even though interest rates and earnings have been just about as favorable as could be. The problem, in large part, has been worry about mountains of debt, both here and in Europe.
Yesterday, the leaders in Germany and France told the world that they’ll have the European solution all figured out by the end of this month. Stocks in Europe immediately rose and our stock futures are higher. It’s kind of like getting really excited when your teenager says that he’ll have all his homework done by the end of the semester. But, it is what it is and European markets are up to one percent higher this hour.
There’s not much on the economic calendar until Friday. However, third quarter earnings announcements will officially kick off with Alcoa’s report after the close of trading tomorrow. It’s not so much last quarter’s earnings, but projections for the fourth quarter that will attract traders’ attention.
Oil and gold are both higher by about 2 percent.
Happy Thanksgiving Day to our Canadian friends. Japan and Taiwan were closed overnight. Chile, Argentina and Uruguay join our banks today in taking the day off for Columbus Day, but our stock market will open at 9:30 and will open higher.
Adjusted for fair value, the S&P futures are higher by almost 19 points, the Dow futures are up 152, and the NASDAQ futures are about 32 points above fair value.
October 7, 2011
Before the day is done, we’ll have a report on Consumer Credit. We’ll also have a report on Wholesale Trade Inventories. We’ll also hear a speech from a Fed Governor.
Never mind all that. It’s the first Friday of the month, and that means in exactly 9 minutes we’ll get the September Jobs Report. Estimates on the number of new private-sector jobs created last month range from 30,000 to 115,000, with the so-called consensus number at about 60,000. Some good news on job growth might go a long way to take the focus away from the European debt dance for at least a few hours. The Unemployment Rate is expected to tick up to 9.2% and the average wage is expected to have risen two-tenths of a percent month-over-month.
The focus may shift to corporate earnings, but not until next week. In the meantime, Constellation Brands raised guidance yesterday morning. But last on the famous other hand, Kohl’s, J.C. Penney, Express Scripts and Illumina all lowered earnings guidance.
Hong Kong stocks rose 3 percent overnight. European markets are mixed, and not much changed this morning.
We’re look toward a lower open right now, but anything could happen when the Jobs numbers come at 8:30. Adjusted for fair value, the S&P futures are down about 4½ points, the Dow futures are down 35, and the NASDAQ futures are about 13 points below fair value.
October 6, 2011
There was quite a little rally going on in Europe until just about a half-hour ago. Speculation was that the European Central Bank would react to all the European fiscal turmoil by erasing at least one of the quarter interest rate hikes imposed this year. However, ever true to the mandate of keeping inflation under control no matter what, the ECB announced a half-hour ago that they would hold interest rates steady at 1½ percent. A new ECB President takes over next month, so we may see a change then. But for now, the only change is that the 2 percent European rally we saw early this morning has been pared quite a bit. The Bank of England also left interest rates unchanged.
The September Sales Reports from our nation’s retailers will be rolling out today, and are expected to be fairly good. The National Retail Sales Federation forecasts that this year’s Holiday Season should generate a 2.8% rise in retail sales. Last year’s increase was 5 percent.
Thus far, Target and Macy’s have announced sales that beat expectations. There was a Gap at GAP, with sales down 4 percent, which was a little worse than expected.
Our futures aren’t as good as they appear on their >
Adjusted for fair value, the S&P futures are up 1, the Dow futures are up 29, and the NASDAQ futures are about a point above fair value.
October 5, 2011
It was a pretty depressing day for stock prices until the last hour of the day. A furious rally brought the S&P 500 up 4 percent in less than a half hour as hopes were raised that European leaders were “considering” further action to re-capitalize European banks.
If anyone is trying to day-trade this market, it’s only become they’ve become bored with less risky games like Russian Roulette. Recently, every headline out of Europe seems to set prices off in a different direction, and often violently so.
According to outplacement firm Challenger Gray and Christmas, the direction of layoff announcements is not headed in the right direction. 115,000 new job cuts were announced in September, according to the Challenger survey. That’s double the August rate and the worst results in two years. However, unlike two years ago, the layoffs are not mainly autoworkers and other manufacturers. This time, announcements from Bank of America, the Postal Service and the military get most of the blame.
KFC owner Yum! Brands released better than expected results last night.
Asian markets that traded overnight were mixed. Europe is mostly higher. Our futures have given up earlier gains, then they gained back earlier losses, and are now essentially flat.
Adjusted for fair value, the S&P futures are up 2, the Dow futures are flat, and the NASDAQ futures are 2 points below fair value.
October 4, 2011
It’s shaping up to be a red October. Today the European finance ministers announced that their latest decision regarding how far to kick the Greek can down the road will – well – the decision will get kicked a little further down the road. It will come later in October than originally thought. That, of course, followed the announcement yesterday that the new Greek austerity plan will fall short of the demands of the EU ministers.
Also falling short will be sales and profits at Vitesse Semiconductor and Deutsche Bank.
Deutsche Bank will take a write down of 250 million euros relating to Greek sovereign debt.
Perhaps some encouraging words will come from Ben Bernanke today to settle our stock market. Bernanke speaks to a Congressional Committee starting at 10 o’clock, and we’ll also get the August Factory Orders at that time.
However, in the meantime, a late selloff took the S&P 500 below 1100 at the close last night, and that’s a level of support that a lot of technicians were worried about, and perhaps well-worried, in that we’ll open well below that level this morning.
Japan was off only about one percent overnight, but a lot of other market overseas saw 2 to 4 percent declines. Right now, adjusted for fair value, the S&P futures are lower by about 18 points, the Dow futures are down 163, and the NASDAQ futures are almost 33 points below fair value.
October 3, 2011
We’re saying “hello” to the first trading day of the fourth calendar quarter, as we say “good riddance” to a rather miserable third quarter. It was miserable, of course, because of the European debt crisis, but also because of worries that our economy might be headed for recession, rendering corporate earnings forecasts too optimistic. We’ll start hearing from the big boys next week with regard to the third quarter earnings and the fourth quarter outlook.
We will hear from the auto makers today with respect to September car sales. Expect an increase to an annualized rate of 12½ million units from August’s 12.1 million
Perhaps of even more interest to the general market will be the release of the September ISM Index. That comes along at 10 o’clock and is expected to have declined again, but is still indicating a little bit of business expansion. The August number was 50.6. Expect a new reading of 50.3.
Oracle announces new software products today, and the iphone 5 may be coming from Apple tomorrow, which may help the NASDAQ. But as of now the NASDAQ futures are off more than a half-percent.
Overseas markets were pretty much a mess overnight, especially in Asia, and our stock futures have fluctuated at moderately lower levels all morning. At this point, adjusted for fair value, the S&P futures are lower by about 4½ points, the Dow futures are down 43, and the NASDAQ futures are almost 16 points below fair value.