October 31, 2013
Happy Halloween to all the little stock goblins out there. Those who may have expected a treat yesterday from the Fed’s Policy decision would up getting tricked, as the time-tested principle of buy-the-rumor, sell–the-news held true. The Fed, as widely expected, made no changes in their free-money policy. Their reasoning is pretty evident, as is the problem. The domestic economy is still stuck in neutral and going nowhere fast. Until it starts to recover in a meaningful way, expect the pump-priming to continue.
Earnings reports, however, continue to roll out fast and furious. Insurer Cigna reported $1.89 of profit, a full 26 cents ahead of estimates. Marriott, Time Warner Cable, Exxon Mobil, Facebook and Starbucks all beat estimates for last quarter. But Starbucks warned that 2014 isn’t looking so perky.
The miss of the morning belongs to Avon Products. Their 14 cents of operating profit missed the mark by a nickel per share. Avon Products shares are on the discount rack pre-market, down more than 9 percent.
At 9:45 the Chicago Purchasing Managers Index is expected to drop back to a still-respectable level of 55.
Japan and China were sharply lower overnight. Europe is mixed, but starting to trend a little higher. We’re in wait-and-see mode. At this point, adjusted for fair value, the S&P futures are flat, the Dow futures are down 9 points, and the NASDAQ futures are now about 2 points above fair value.October 30, 2013
General Motors reported third quarter earnings within the past hour. Operating earnings of 96 cents came in 2 cents better than expected. Revenue was a little on the light side, but not by much. GM’s profit margin in North American was up to 9.3 percent and perhaps just as important, European losses were cut to 200 million, from a half-billion dollars.
Chrysler’s profit was also better than expected, up 22 percent from a year ago.
Overall, earnings reports for the quarter have not disappointed, and many more are on the way today. But make no mistake, the October melt-up in stock prices has more to do with monetary policy than anything else.
At 2 o’clock this afternoon, we’ll likely find out the Federal Reserve interest rate policy will remain very accommodative. The Fed has told us that they will not change policy until the economic data improves, and due to the impact of the recent Government shutdown, the numbers upon which the Fed relies will really not be particularly reliable regarding the direction of the economy until at least the next Fed meeting which starts December 17th.
Overseas, stocks aren’t waiting for the Fed, they’re higher, and that will be our direction at 9:30 as well. At this point, adjusted for fair value, the S&P futures are higher by almost 4 points, the Dow futures are up 38, and the NASDAQ futures are now about 14 points above fair value.
October 29, 2013
The big earnings report from Apple last night was a mixed picture, but not a bad one. Earnings beat expectations, but were lower than last year. Revenue was higher year-over-year, but margins were weaker due to a variety of factors. Bottom line is that even though Apple shares dropped 15 bucks or so after the announcement, they’ve pretty much recovered and then some this morning.
Aetna checked in with $1.50 of operating earnings. That missed the average estimate by 3 cents. However, Aetna reaffirmed the full year outlook and the shares are only off by about one percent premarket. Nokia share are looking 5 percent higher after reporting a surprise profit this morning.
Pfizer beat the 56 cent estimated earnings by two cents per share, even though sales dropped from a year ago. Retailer Michael Kors Holdings is looking almost 3 percent higher this morning. Kors will be joining the S&P 500 Index after the close of trading on Friday.
At 8:30 we’ll get September Wholesale inflation data as well as September Retail Sales, which are expected to rise one-tenth of a percent. The October Consumer Confidence reading from the Conference Board comes at 10 o’clock. Expect a drop to 75 from almost 80 due in part to uncertainty over the Government shutdown.
Asian markets were mixed overnight, but Europe is higher and so are our futures. At this point, adjusted for fair value, the S&P futures are higher by 4 points, the Dow futures are up 36, and the NASDAQ futures are now more than 11 points above fair value.
October 28, 2013
We’ll get a Fed meeting, the delayed September inflation readings and the September car sales numbers this week, along with another big bunch of big-company earnings reports.
The most closely watched earnings report of today won’t come until after 4 o’clock when Apple reports. Expect $7.92 in per-share operating earnings. That would be down from last year’s $8.67.
This morning, drug maker Merck reported 92 cents, which beat estimates by 4 cents per share. They also reaffirmed fourth quarter guidance, which effectively raises the full-year outlook slightly. Roper Industries is out with the miss of the morning, with $1.42 versus the expected $1.45. Roper also cut their full-year outlook.
Japanese stocks rose more than 2 percent overnight, Hong Kong is higher, but mainland China is flat. European markets are generally lower.
Our futures are have lost their higher levels of earlier this morning, so we’ll have to wait and see if the October market melt-up continues. At this point, adjusted for fair value, the S&P futures are down almost a point, the Dow futures are down 16, and the NASDAQ futures are now just about even with fair value.
October 25, 2013
The earnings reports continue to flow and for the most part, earnings are once again better than expected. Procter & Gamble matched the $1.05 estimate and reaffirmed guidance for the year. United Parcel Service beat the $1.15 estimate by a penny and last night, Microsoft announced a 62 cent quarterly profit. That was well ahead of the 54 cent estimate and Microsoft stock is looking to open about 6 percent higher.
Even the companies reporting losses are perking higher this morning. Amazon lost 9 cents per share, but sales were higher than expected and the quarterly loss a year ago was 23 cents. Amazon shares are more than 7 percent higher pre-market. And even Zynga shares are surging about 10 percent premarket after reporting less of a loss than expected last night.
At 8:30, the September Durable Goods report is expected to improve to 1.8 percent from the flat reading in August. And then just before 10, the University of Michigan’s final read on October Consumer Sentiment is expected to back off just a bit to a reading of 75.
China and Japan were significantly lower overnight. Europe is narrowly mixed. Our futures have been pointing slightly higher this morning. At this point, adjusted for fair value, the S&P futures are higher by about 2 points, the Dow futures are up about 12, and the NASDAQ futures are particularly strong, at about 26 points above fair value.
October 23, 2013
We finally got the long-delayed Unemployment Report yesterday, and if you we hoping for an improving job market, it certainly was NOT worth waiting for. 148,000 new non-farm jobs fell way short of expectations. But, if you’re looking for higher stock prices, the punk job numbers were a big shot in the arm, giving hope that the Fed won’t do anything to tighten monetary policy until sometime in 2014.
Mortgage applications dropped a bit more than a half percent last week, mainly due to a slowdown in refi activity.
About a third of all the largecap companies are reporting earnings this week. This morning, Boeing reported $1.80 of quarterly operating profit. That was 25 cents better than expected. They also raised full-year guidance. Eli Lilly’s $1.11 profit beat by 7 cents. The miss of the morning goes to Caterpillar. The $1.45 of operating profit missed by 21 cents as their mining business continues to decline. Caterpillar stock is looking about 3½ percent lower pre-market.
And the IRS says that they might not start accepting tax returns until the beginning of February next year, blaming the recent Government shutdown. You will, however, still have to pay up and file by April 15th, whether or not YOU shutdown in the meantime.
Asian stocks pulled back on a stronger yen overnight, and it looks like we’ll follow them in the early going. Adjusted for fair value and the S&P futures are down 8 points, the Dow futures are down 62, and the NASDAQ futures are about 20 points below fair value.
October 22, 2013
We’ve all been late for work at some point. This morning, the Labor Department will finally punch in with the September Jobs Report, which was due out almost 3 weeks ago. Expect that 180,000 new non-farm jobs were created in September. That, of course was before the Government’s paid vacation earlier this month, which was, as usual, paid for by those who pay taxes. The somewhat mythical Unemployment Rate is expected to hold steady at 7.3 percent.
We’ll also get September Producer Price Index at 8:30, for those of you who are looking for any sign of future inflation.
There’s inflation in the price of Netflix shares this morning. They are higher by almost 10 percent pre-market. Last night, Netflix reported 52 cents in operating profit, three cents ahead of estimates. But they hiked 4thquarter guidance and that’s what has the stock moving again this morning. On the famous other hand, a disappointing outlook has shares of Texas Instruments down about 3 percent.
Lockheed Martin beat the $2.26 estimate by 40 cents, DuPont, Travelers and Delta Airlines also beat estimates and Apple will unveil the latest ipad and ipad mini designs at 1 o’clock this afternoon.
Overseas markets are mixed. Our futures have perked up a little bit on some of the earnings news this morning. Adjusted for fair value and the S&P futures are up a fraction of a point, the Dow futures are up 16, and the NASDAQ futures are almost 14 points above fair value.
October 21, 2013
The Government’s latest tactic in deficit reduction appears to be to fine the big U.S. banks heretofore unheard of amounts of money. JP Morgan Chase has reportedly agreed in concept to a 13 billion dollar fine for alleged misdeeds in connection with mortgage securities. Much of that mortgage business was acquired by JP Morgan at Government request, in the form of Washington Mutual and Bear Stearns. This comes on the heels of last week’s twin fines of $4 billion and (relatively paltry) 100 million dollars against JP Morgan Chase with respect to Fannie Mae, Freddie Mac and the London Whale trading fiasco, respectively. Gosh, you wonder where all that money comes from. The Federal Housing Finance Authority is reportedly looking to fine Bank of America 6 billion dollars sometime soon.
Anyway, let’s switch focus to news about corporate earnings BEFORE they can be handed over to Washington in one form or another.
McDonald’s reported third quarter earnings of $1.52. That was a penny better than expected on in-line revenue. McDonald’s is raising their dividend by 5 percent. The shares are indicated about one percent lower pre-market. Halliburton and Texas Instruments report in later on.
Here’s something we haven’t seen in a while – oil is under a hundred dollars per barrel again. In the past, that’s a level around which certain OPEC countries threatened production cuts. We’ll see if they can afford that nowadays.
At this point, it’s a split decision from the futures. Adjusted for fair value and the S&P futures are lower by a point and a half, the Dow futures are down 17, but the NASDAQ futures are almost 4 points above fair value.
October 18, 2013
Yesterday, traders came to grips with the fact that they didn’t have to worry about a Treasury default anymore – well, at least for the next three months. Accordingly, the buying started in just about all type of stock, as long as its initials weren’t IBM.
If you’re looking for economic reports delayed by the Government shutdown, please cool your jets. The September Employment Report is now scheduled for Tuesday of next week. Inflation and other reports will come the week after.
Of course, corporate earnings reports are not delayed and this morning, they are pretty much chock full of good news. Google shares are almost 10 percent higher this morning after a blowout earnings report last night. General Electric shares are a couple percent higher, after beating the 35 cent estimate by a penny, although revenue was light. Schumberger and Morgan Stanley beat estimates on better than expected sales. Morgan Stanley looks 3 percent higher pre-market. Baker Hughes, another oil concern, earned 81 cents, 3 cents better than expected on in-line revenue.
The miss of the morning would be SunTrust Bank, earning 66 cents versus the expected 69 cents.
Japan was down a tiny bit, but just about everybody else overseas is higher and our futures have been solidly positive all morning long. Adjusted for fair value, the S&P futures are higher by 4 points, the Dow futures are up 18, and the NASDAQ futures are about 24 points above fair value.
October 17, 2013
Well, the Bikersons in Washington finally called it a night, coming to agreement with just about everything the Democratic side wanted. See, it does work a lot like a marriage. For all the disruption to the economy and to the lives of a lot of government workers and government suppliers, it sure looks like if you really want to effect change in Government policy, it might really be helpful to win the next election.
Now that the crisis can has been kicked down the road for two or three months, we can look forward to a rush of delayed economic data from the Government, much of which will likely come next week.
Earnings news dominates this morning. Just about everybody reporting in beat earnings estimates, including IBM, Goldman Sachs, Verizon, SupervalU and Blackstone. Goldman Sachs also raised their dividend by 10 percent. However, a couple of big companies came up short on revenues. Those two would be Goldman and IBM. That’s going to hurt the Dow Jones Industrial Average disproportionately today.
The Dow Index is dollar-weighted. The pricier the stock per share, the more clout it carries. IBM and Goldman are the second and third priciest stocks per share among the 30 Dow components. Goldman is down 2 ½ percent and IBM is down 7 percent pre-market. Accordingly the Dow futures look pretty ugly.
Overseas markets are mixed. Us, not so much. Adjusted for fair value, the S&P futures are lower by almost 6 points, the Dow futures are down 121, and the NASDAQ futures are about 12 points below fair value.
October 16, 2013
The great game of chicken continues in Washington D.C. as we sit here on the Eve of Destruction. While the odds still favor a resolution of the debt ceiling issue, just because the gravity of the alternative, it will be interesting to see how many of those chickens are running around with their heads cut off after the next election.
Turning attention to those who DO, rather than those who politic, earnings are flowing fast and furious this morning, and generally, they are coming in better than expected. Blackrock matched the $3.88 cent profit estimate. CSX, Intel and Yahoo all beat expectations, although the forward guidance from Intel and Yahoo was less than sterling. Bank of America earning 20 cents per share, which was a 2 cent beat and Pepsico beat the $1.17 estimate by 7 cents. BNY Mellon and PNC also beat estimates. IBM will report in after 4 o’clock.
Japanese stocks were relatively flat overnight. Italy is higher, but most other markets overseas are following our lead lower from yesterday. However, hope springs eternal with the futures. At least today. Tomorrow, maybe not so much. Adjusted for fair value, the S&P futures are up about 6 points, the Dow futures up 62, and the NASDAQ futures are about 12½ points above fair value.October 15, 2013
In case you might have forgotten, today is the last day to file your 2012 individual income tax returns, assuming that you filed for an extension of time back in April. So, if you haven’t started collecting your receipts, better hurry before your accountant heads out for the baseball game this afternoon.
As I mentioned yesterday, earnings reports are starting to roll out in force.
Coca Cola reported 53 cents in quarterly operating profit, which was right in line with expectations. Revenue was a little light, as was the increase in case volume worldwide.
Johnson & Johnson beat the $1.32 estimate by 4 cents, on better than expected sales. J&J shares are up almost 2 dollars pre-market. Citigroup checked in with the miss of the morning, making $1.02, versus the $1.04 estimate, on weaker than expected revenue. Citi shares are down about one percent pre-market.
Mainland China was flat overnight, but most other markets overseas were higher overnight, on the promise of continued solvency of the United States.
As we await some kind of budget and debt ceiling deal out of the Senate the futures have given up the gains of earlier in the morning.
At this point, adjusted for fair value, the S&P futures are lower by almost 2 points, the Dow futures are flat, although the NASDAQ futures are about 3 points above fair value.
October 14, 2013
We’re looking at a rough morning for stock prices. For the past few weeks, the far right wing of the House of Representatives held the world economy hostage as they unsuccessfully tried to defund Obamacare. Now that they’re retreated on that demand and it looked like we could put the debt limit crisis in the rear-view mirror, the far left wing of the Senate is playing the bully by trying to re-fund the sequester spending cuts that are scheduled to go into effect next year.
The deadline, of course, for all parties to get their act together is either later this week or early next, depending on which government accountants you ask. Most are still betting on a resolution. It’s just a shame that we have to go through all of this.
Chinese exports declined a fraction of a percent in September. A six percent increase was expected.
Most domestic economic reports we would normally expect this week will be unavailable due to the Government shutdown. But the shutdown will not delay the flood of corporate earnings reports that starts this week. Today, Johnson & Johnson, Citigroup, Coca-Cola and Intel all check in.
Asia was mixed, but mainly higher. Europe is mainly lower. At this point, adjusted for fair value, the S&P futures are down 11½ points, the Dow futures are down 99 points, and the NASDAQ futures are about 19 points below fair value.
October 11, 2013
We have a little calm AFTER the storm this morning. Yesterday brought us a huge rally in stock prices, based on the hope that the Government shutdown issue will be resolved by early next week and the debt ceiling issue will be pushed off until November.
A couple of big banks reported earnings this morning, and they were both better than expected. Operating earnings at JP Morgan Chase were $1.42 per share, which was 25 cents better than expected. Now that’s operating earnings. It doesn’t include nasty stuff like one-time charges, big payments of fines to the Government and the like. Wells Fargo beat the 97 cent earnings estimate by 2 cents. Revenues at both banks were a little bit less than expected.
Shares of supermarket company Safeway are jumping this morning after reporting 27 cents of profit, which was an 11 cent beat.
The overseas markets that are open are trading higher after yesterday’s rally here.
U of M’s preliminary look at October Consumer Sentiment comes just before 10 this morning. Expect it to dip a bit to a reading of 76.
Our futures look higher on their >
October 10, 2013
Hope springs eternal. President Obama reportedly sat down with Congressional Democrats last night and has a meeting scheduled today with Congressional Republicans. With all due respect, it’s nice to have them talking to each other for a change, rather than the news media. Hopefully they will find a way to save >
A troika of stocks will be facing the music this morning. Chevron, an oil firm, Citrix, a global computing firm, and Ruby Tuesday, a restaurateur and darn good Rolling Stones song, all either reported lousy results or warned about upcoming lousy results yesterday, and the shares of each are lower pre-market. Chevron is off just a bit, but Citrix off 12 percent and Ruby Tuesday down over 16 percent.
On the hope of a compromise in Washington, gold prices are once again down to about $1,300 per ounce this morning.
Chinese stocks were off one percent overnight, but Japan was up one percent. Europe is higher and our futures have been pointing north al morning long.
At this point, adjusted for fair value, the S&P futures are up about 14½, the Dow futures are up 122, and the NASDAQ futures are about 28 points above fair value.
October 9, 2013
If you believe that more competition leads to lower prices for the consumer, perhaps you should prepare to pay more for your next suit. Joseph A. Bank is offering 48 dollars per share to buy The Men’s Wearhouse. That’s a 42 percent premium to yesterday’s closing price. Shares of both companies are sharply higher in the pre-market.
At 2 o’clock this afternoon, we’ll get the minutes from the latest Fed meeting, which should be an interesting read, considering the Fed’s decision to continue its massive bond-buying program.
Mortgage applications rose more than one percent last week as the average interest rate on a 30 year loan dipped to 4.42 percent.
Costco shares are more than one percent lower premarket after reporting a quarterly operating profit of $1.40, which was 6 cents short of estimates.
We’ll FINALLY get the Ben Bernanke replacement drama behind us today, as Janet Yellen will get the nomination to be Chairperson of the Federal Reserve. Senate confirmation should be a breeze.
Overseas markets are mixed. Our futures are well off levels of earlier this morning, but are still indicating higher stock prices if the market were to open right now. At this point, adjusted for fair value, the S&P futures are up about 3½, the Dow futures are up 22, and the NASDAQ futures are about 9 points above fair value.
October 8, 2013
Yesterday gave us another day of hand-wringing over a debt ceiling that’s getting a little closer to our collective head every day. This morning, all appears quiet as far as the stock futures are concerned, but a little bit of compromise in Washington could go a long way on Wall Street.
The third quarter earnings season unofficially kicks off after the close of trading today, with Alcoa expected to report six cents of operating profit, which would double up the profit of a year ago. We’ll also hear from Wolverine Worldwide.
If you own a share of Kyocera, go ahead and run them through the photocopy machine. You’ll have two shares tomorrow after today’s two-for-one split.
Believe it or not, J.C. Penney reported September same store sales this morning that reflected improvement over August. Although same store sales are still down 4 percent year-over-year, Penney officials said that they anticipate continued progress for the remainder of the year. JC Penney shares are trading about 7 percent higher pre-market.
Alcatel-Lucent will trim 10,000 people from their payrolls. That’s about 15% of their total workforce. Most of those job cuts will be in Europe, the Middle East and Africa.
Asia mostly higher overnight, Europe is mostly lower. Our futures are improving a bit. At this point, adjusted for fair value, the S&P futures are up a 1½, the Dow futures are up 14, and the NASDAQ futures are almost 4½ points above fair value.
October 3, 2013
Yesterday, we started lower, got worse through most of the day, but then improved to almost a break even, perhaps on the hope of some sort of compromise at last night’s meeting of our President and Congressional leaders. So much for that hope. We’ll be starting the day lower once again.
Earnings reports won’t start to roll out in volume until next week, and with the Labor Department closed down, we won’t get the monthly Jobs Report tomorrow. However, there are a couple of economic data points to view today.
At 8:30, Weekly Jobless Claims are expected to rise to 313,000 from last week’s surprisingly low 305,000. Then, at 10 o’clock, the ISM survey of services industries in September is expected to slip to 57.5, which would be down more than a point from the August number. The Chinese version of that survey was very positive overnight, and led to a nearly one percent rally in Chinese stocks overnight.
One of the more dovish Federal Reserve officials, Eric Rosenberg, says that the Fed’s current stimulus program will be tapered, but the tapering might last “several years,” which would presumably put any move to increase in short term interest rates off until late in the decade.
Japan was little changed overnight, but the rest of Asia was higher. Europe is narrowly mixed. Our futures are just about at the same level as 24 hours ago. At this point, adjusted for fair value, the S&P futures are lower by 7 points, the Dow futures are down 54, and the NASDAQ futures are about 12 points below fair value.
October 2, 2013
Well, we have the Government shut down. Now, if we could just get them to shut up.
As the politicians take advantage of every opportunity to get on radio and cable television to bash each other over the shutdown, traders are unfortunately hanging on every word. Yesterday’s gain stock prices may disappear in the early going today, as they appears no end in sight to the shut down, and just two weeks left until the FAR more important decision on the debt ceiling.
At 8:15, the monthly employment report, as calculated by payroll firm ADP is expected to report the 178,000 new jobs were created in September. Normally, this report gets a little, but not a lot of attention. However, given the shut-down of the Labor Department, the Government’s official Job Report, which is due Friday, will not be forthcoming.
Mortgage Applications dropped a little less than a half-percent last week, according to the Mortgage Bankers Association.
Asian markets rose overnight, but Europe is mostly lower.
Our futures are off their lows of the morning, but that doesn’t mean they’re looking good. At this point, adjusted for fair value, the S&P futures are lower by 7 points, the Dow futures are down 40, and the NASDAQ futures are about 10 points below fair value.
October 1, 2013
As expected, the Government shutdown commenced at midnight. Threat of the famous shutdown has had stock prices declining for more than a week now. However, as we wake up this morning, the sun rose in the East, the coffeemaker still worked, and unless you’re trying to get into a National Park, museum or monument today, your life will likely not be much different.
The big crisis, of course, lies 17 days ahead. Should there be no agreement to raise the national debt limit, things will get ugly in the financial markets.
Things will get ugly for 8,500 employees of drug-maker Merck. Merck affirmed their earnings guidance this morning, but announced an additional 8,500 planned job cuts, in addition to those already in their plans.
Walgreen shares are looking almost one percent higher pre-market. Last night, Walgreen reported a same store sales increase of 4.6% and operating earnings of 73 cents, which beat estimates by a penny and were 10 cents higher than a year ago.
Automakers will report September Sales figures today, with an expected annual light-vehicle sales rate of 16 million units.
In Australia and England stocks are lower, but most other markets overseas are higher. At this point, adjusted for fair value, the S&P futures are higher by 3 points, the Dow futures are up 25, and the NASDAQ futures are about six and a half points above fair value.
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