October 31, 2014
From what I understand, kids don’t go door to door in Japan on Halloween. However, over the past decade or so, Halloween has become very popular among adults in Japan. Apparently the Japanese Central Bankers have gotten in on the trend, as well. The BOJ pulling off a shocking quantitative easing trick overnight, that was a real treat for Japanese stocks, as well as stock prices worldwide. So, money may start to get more expensive in the U.S. by next year, but if you have a yen for cheap money – well – you get the pun there.
On the famous other hand, the slow moving train wreck that is the Russian economy took another hit today. The Russian Central Bank raised interest rates by 1½ percent. The Russian Central Bank’s key lending rate is now 9½ percent as Russia struggles to keep investor funds from fleeing while at the same time combat spiking domestic inflation.
GoPro shares look like the winner of the morning after absolutely killing it on sales and profits last quarter. GoPro shares are almost 16 percent higher pre-market. AbbVie shares are about 4½ percent higher on good earnings and guidance. Starbucks turned in a disappointing sales number last night and their shares are off almost 4 percent today.
The Chicago PMI and the final Consumer Sentiment reading from U of M come before 10 today. Overseas stocks are all higher. Japanese stock rose almost 5 percent overnight. Our futures are actually off their highs of the morning, but at this point, we are still in strong rally mode. Adjusted for fair value, S&P 500 futures are higher by 22 points, the Dow futures are up 185, and the NASDAQ futures are about 58 points above fair value.October 30, 2014
The Federal Reserve Open Market Committee announcement yesterday was exactly what almost everyone expected. Q-eternity turned into Q-enough already, yet the “considerable time” language was retained. That infers that it will be well into 2015 before we see a rise in short-term interest rates.
We won’t have to wait that long for a sense of how the economy is doing now. At 8:30 this morning, the Government takes its first stab at estimating the country’s Gross Domestic Product for the third quarter. The average estimate is an increase of 3.1 percent. Of course, it will be late December before we get the final verdict.
We’ll also get Weekly Jobless Claims at 8:30, but the morning’s focus will likely be on Janet Yellen’s 9 o’clock speech at a Fed diversity conference in Washington.
American Realty Properties shares are indicated about one percent higher this morning after diving almost 20 percent yesterday. Of course, word of an SEC investigation, accounting irregularities, intentional cover-ups – that kind of thing leads traders to sell now and ask questions later.
Kellogg just announced 94 cents in operating profit, which was two cents better than expected. Shutterfly is indicated another 4 percent lower this morning, after losing 4 percent yesterday after lowering earnings expectations.
Asian markets were mixed overnight, but Europe is a bit of a mess. Overall Europe in down more than one percent, and our futures are pointing south at this point as well.
Adjusted for fair value, S&P 500 futures are lower by about12 points, the Dow futures are down 35, and the NASDAQ futures are about 28 points below fair value.
October 29, 2014
This afternoon, we’re likely to hear about the official end of the Federal Reserve’s bond buying program, known by the popular, but extremely geeky name of “quantitative easing.” So what? Well, it’s kind of like the designated hitter rule. It’s been around for a long, long time. It fundamentally changed the rules of the game. And, in the view of many, except for aging power hitters, whether it was necessary or not, it’s an experiment that we can do without.
Nevertheless, expect the Fed, in spite of some internal dissent, to reassure the markets that a hike in short term interest rates is still a long way off. For as much as the Fed is supposed to operate independently from the stock market, they can ill afford any action that restrains the economy.
There are another slew of earnings reports to consider. So far this quarter, only about 19 percent of big companies have failed to meet or beat analyst estimates. Perhaps the most discussed is last night’s report from Facebook. Revenue and profit were both better than expected. However, Facebook shares are about 8 percent lower pre-market after warning about increasing expenses in the year to come.
Overseas markets are mostly a little higher. We might be in wait-and-see mode until the Fed announcement at 2 o’clock. Adjusted S&P 500 futures are lower by less than a point, the Dow futures are up 15, but the NASDAQ futures are about 11 points below fair value.
October 28, 2014
If you like to keep track of financial headlines, your head better be on a swivel today.
Thus far this morning, among the companies with better-than-expected earnings reports are Marsh & McLennan, DuPont and AutoNation. Last night, biotech company Amgen beat the $2.11 estimate by 19 cents. Also this morning, Pfizer reported 57 cents of operating earnings. That was a two cent beat and Pfizer also detailed plans to buy back 100 million shares of its own stock. Pfizer shares are more than 1½ percent higher pre-market. Facebook reports after 4 this afternoon.
Kohl’s is out with an earnings warning. Honda Motors cut its sales guidance overnight.
Japanese retail sales were up 2.3 percent year over year, which was an upside surprise as Japanese consumers start to shake off a rise in their consumption tax earlier this year.
Durable Goods and Consumer Confidence numbers are on the way and both are expected to be improvements from last month. Expect Durables at nine-tenths of a percent and the Confidence reading at 86.8.
Asian markets were mixed overnight, but Europe is solidly higher at this hour, with an average gain of about one percent. Our futures are indicating upward price movement at 9:30. Adjusted S&P 500 futures are higher by about 11 points, the Dow futures are up 87, and the NASDAQ futures are 22 points above fair value.
October 27, 2014
The bulk of the third quarter earnings reports are in, and on balance, were pretty impressive once again. Not that they’re all in, mind you. But this week, the focus may turn a bit in the direction of economic reports and the Fed.
On Wednesday, we hear about the results of another Federal Reserve Open Market Committee meeting. On Thursday, the Government’s first guess at third quarter Gross Domestic Product will be released. Today, we’ll get a report on the health of the services industries at 9:45, to be followed by the September Pending Home Sales report and the Dallas Fed’s manufacturing survey.
A business sentiment survey in Germany this morning is helping drag European stocks lower. German business sentiment is at a 22 month low. The results of a stress test of the European banking system wasn’t horrible, but isn’t helping either. And amid the independence protests in the street, mainland China has delayed a new program which would open their stock market to Hong Kong and vice versa.
Merck reported operating earnings that beat the 88 cents estimate by two cents. The GAAP number was much worse, at 31 cents. And CVS and RiteAid cut off the ApplePay service over the weekend. They are reportedly about to back a competing service.
Overseas markets are mixed, but generally a little lower. Adjusted S&P 500 futures are lower by almost 2 points, the Dow futures are down 10, and the NASDAQ futures are now actually a point above fair value.
October 24, 2014
We were able to get through a week or so without a scary ebola headline, and the S&P 500 Index responded by rising a little more than 4 percent. This morning, of course, we wake up to confirmation of a case of ebola in New York City, which is not exactly a place where people never come into close contact with each other.
Anyway, those of us out here in the hinterland can concentrate on the quarterly earnings reports. We have another bunch of good ones, including the report from Ford Motor Company. Adjusted earnings of 24 cents per share beat the estimated 19 cents. Yes, that was a lot less than last year, revenue was a little light and losses in Europe continue to be a problem. But all that was expected. Ford shares were bid about 3 percent higher earlier this morning, but are now pretty much unchanged.
Procter & Gamble met estimates, but United Parcel, Colgate Palmolive, Bristol Myers and Shire Pharmaceuticals all checked in with higher profits than expected.
There’s a little good news from the Treasury Department (and how often does THAT happen?) In 2015, the maximum amount that you can contribute to you 401k plan will rise to $18,000, and the catch-up for those 50 and older will rise to $6,000. Remember, that until someone discovers a crystal ball that works, your BEST investment strategy is to save more money, especially if you get a tax deduction in the bargain.
In the meantime, the futures are suffering from a minor ebola infection again this morning, but their condition is improving. Adjusted S&P 500 futures are lower by about 4 points, the Dow futures are down 23, and the NASDAQ futures are about 11½ points below fair value.
October 23, 2014
The terrible events in Canada yesterday turned our little stock market rally inside out. However, as it now appears to be an isolated incident and not a coordinated terrorist event, yesterday’s price declines should be reversed when the market officially opens this morning.
The earnings spigot is wide open this morning. And, once again, bad earnings reports are few and far between. Locally, General Motors’ adjusted earnings of 97 cents beat the 95 cent estimate. GM did take 16 cents of one-time charges related to some Russian debt and the August flood at the Tech Center. GM shares are up 1½ percent pre-market.
Also checking in with better-than-expected earnings are Southwest Airlines, Eli Lilly, Comcast, 3M and United/Continental Airlines. Caterpillar stands out as the big surprise of the morning, beating the $1.36 estimate by a whopping 36 cents. Caterpillar stock is higher by more than 4 percent pre-market. Under Armour earned a penny per share more than expected, as sales of apparel and footwear sales were up almost 30 percent. Under Armour boosted guidance, but traders were expecting even more, and the shares are down almost 5 percent pre-market.
October 22, 2014
Yesterday’s rally went a long way to make people forget that it’s October. The market timers may have gotten shaken out of stocks during the past couple of weeks. Investors, of course, who stayed the course, were rewarded with yesterday’s 2 percent rise in the S&P 500 and nearly 2½ percent rise in the NASDAQ.
This morning, stocks on the rise include Boeing, Ingersoll-Rand, Yahoo and Dow Chemical. All three reported better than expected earnings and sales. The best of that bunch appear to be Dow Chemical and Yahoo. Those shares are indicated about 3 percent and 4 percent higher respectively.
EMC missed the 36 cent profit estimate by two cents. We’re also hearing from Abbott Labs, General Dynamics and Xerox today. AT&T reports after the close of the regular trading session.
For those who are still paying attention to consumer inflation, the monthly CPI comes at 8:30 this morning and inflation is expected to be absolutely missing in action.
Overnight, Japanese stocks came bouncing back to the tune of 2.6 percent. Mainland China was a lit lower, but Europe, on the whole is a little higher this morning.
It’s one of those odd mornings when the futures look negative on their >
October 21, 2014
It appears that stock traders have now come to the conclusion that we’re not all going to die from Ebola by Halloween, and that Europe will probably survive, at least until the end of the year. Now, it’s the last of the three big “e’s” that will get attention. That “e” of course, would be earnings news.
Once again, earnings reports are generally better than expected. Yes, IBM’s lousy report yesterday held down the Dow Industrials. But after hours, Apple beat both earnings and revenue estimates, after selling more than 13 million new iphones. Apple shares are almost a couple percent higher this morning.
This morning, United Technologies checked in with a good report and reaffirmed full year estimates. Travelers beat the $2.27 estimate by 34 cents per share.
On the famous other hand, Verizon missed the 82 cent estimate by a penny, and while Coca-Cola’s revenue missed and Coke lowered earnings guidance. Traders are lowering their bid for the shares by more than 3 percent. McDonald’s just reported $1.09 per share in profit, which was well short of the $1.37 estimate. Domestic same store sales were down 3.3 percent and overall revenue fell short. McDonald’s shares are off about 2 percent pre-market.
Not a lot of green arrows in Asia overnight, with Japan losing about 2 percent. Europe, however, is solidly higher. Our futures were hurt by the Coca-Cola and McDonald’s reports, but are still pointing to higher prices at 9:30. Adjusted for fair value, the S&P 500 futures are higher by more than 11 points, the Dow futures are up 59, and the NASDAQ futures are about 36 points above fair value.
October 15, 2014
In case you thought that yesterday’s go-nowhere market may have signaled a bottom in the current downdraft, you may not have counted on more bad Ebola news. But, that’s what we have this morning. A new case of an infected Houston health-care worker helped send the futures lower this morning, after what had been a mildly positive start.
If traders can put the ebola threat aside, they’ll have a whole bunch of economic reports and earnings news to consider.
Producer Prices, September Retail Sales, the Empire Manufacturing Survey and the Fed’s Beige Book all come today. Among companies beating expectations last night and so far this morning include Intel, St. Jude Medical, PNC and Blackrock, whose profit was up more than 25% from a year ago. Bank of America lost a penny per share, but that was 8 cents per share better than expected.
Still to come are reports from American Express, Netflix and Ebay.
Abbvie is reportedly reconsidering its proposed acquisition of Shire, given the Treasury’s change in tax rules regarding inversions. And word is that Ireland, under some significant pressure, is considering changing its tax rules, possibly putting the inversion strategy on life support.
Asian markets that were open were higher. Stocks in Greece fell about 5 percent yesterday. Today, Europe is lower across the board.
At this point, adjusted for fair value, the S&P 500 futures are lower by about 9 points, the Dow futures are down 62, and the NASDAQ futures are about 14 points below fair value.
October 14, 2014
Well, here come the earnings. How much a good earnings season takes traders’ collective mind off of Russia, Europe, China, Ebola and crossing the 200 day moving average is the big question.
Last week, the Dow Jones Industrial Average broke below its 200 day moving average. Yesterday, the S&P 500 did the same. In the world of technical analysis, that foretells the coming of a bear market to some, although that indicator really hasn’t worked all that well for the past 20 years or so. The last time we crossed the 200 day to the downside, back in 2012, it proved to be a pretty good buying opportunity.
Back to earnings, for a minute. So far this morning Citigroup’s $1.15 in profit beat the $1.12 estimate. Johnson & Johnson beat the $1.10 estimate by a nickel. Locally, Domino’s Pizza and Wolverine Worldwide beat the estimate profit numbers. Wells Fargo matched their bogey, while JP Morgan Chase, weighed down by significant legal expenses, missed the $1.38 estimate by 2 cents.
Yesterday’s early rally melted like butter out in the sun after 3 o’clock yesterday. We’ll see if today’s rally can hold. At this point, adjusted for fair value, the S&P 500 futures are higher by about 9 points, the Dow futures are up 65, and the NASDAQ futures are about 23 points above fair value.
October 13, 2014
Happy Columbus Day, everyone. It’s especially happy for bankers, mail carriers and bond traders – they have the day off. But stocks will trade in the U.S.
The big boys in the corporate world will start rolling out the earnings reports in volume tomorrow. Today, we’re awaiting the numbers from Omnicom’s third quarter. Expect adjusted earnings of 91 cents per share.
It’s expected to be a pretty good earnings season. Negative pre-announcements outnumbered positive projections by about 2 to 1, which is a much better ratio that we had a couple of quarters ago.
Nevertheless, last week showed us that fears about a recession in Europe, was in Russia and the spread of the Ebola virus have investors’ attention right now, and not in a good way.
European markets were lower earlier, but have now turned positive.
Japanese stocks did not trade overnight. Argentina and Canada are closed today. Our futures have been hovering around the flat line all morning, but have started to creep higher. At this point, adjusted for fair value, the S&P 500 and Dow Industrials futures are essentially flat, but the NASDAQ futures are once again the weak sister, now about 8 points below fair value.October 10, 2014
September and October are months known for stock price volatility, and this year is not falling short on that score. We’ve seen hundred point moves of the Dow Jones in12 of the past 18 trading sessions. Historically, we’re not out of line regarding volatility. Problem is, people aren’t accustomed to this, in that we’re living in a market that hasn’t seen a 10 percent correction in a long, long time, and we usually get one or two of those per year.
Symantec, the computer security firm, is the latest to announce that it will split into two companies. That follows up the big announcement from Hewlett-Packard earlier in the week.
Juniper Networks is out with an earnings warning this morning, and while we’ll get an earnings report from Fastenal, today will be relatively light on earnings and economic news. Earnings reports will roll out in volume starting next week.
No matter, even after a bunch of pretty decent reports yesterday, fears about European weakness and the dollar’s strength sent the machines into sell mode yesterday, and the selling may not be over.
Markets overseas followed us lower overnight, and although our futures are in better shape than earlier this morning, they are still pointing us toward weaker prices at 9:30.
At this point, adjusted for fair value, the S&P futures lower by about 3 points, the Dow futures are down 32 and the NASDAQ futures are particularly weak, now almost 24 points below fair value.
October 9, 2014
Earnings reporting season is off and running. But that wasn’t the big story from yesterday. What was a reasonably good day turned into a breakaway rally that recouped essentially all of Tuesday’s losses.
A couple little lines in the Federal Reserve Open Market Committee minutes will take credit for the sudden surge. Originally, of course, the Fed’s goal was to maintain a healthy rate of inflation. Then, they were charged with providing an economic backdrop to encourage job growth. In yesterday’s minutes, for the first time, they also said that they are keeping an eye of GLOBAL economic performance, specifically weakness in Europe. Read that as meaning that interest rates may be held lower for a much longer period of time, which while it lasts, is great for financial assets like stocks.
Getting back to earnings, Alcoa reported better than expected earnings last night at 31 cents per share, which was a nine cent beat. This morning Pepsico surprised with $1.36 in profit, which was 7 cents better than expected. Alcoa and Pepsi shares are each up about 1½ percent premarket.
Japanese stocks were a little lower overnight, but the rest of Asia was higher. Europe paints more of a mixed picture. Our futures took a decided turn for the worse during the past hour.
At this point, adjusted for fair value, the S&P futures lower by about 7 points, the Dow futures are down 79 and the NASDAQ futures are almost 14 points below fair value.
October 8, 2014
Back in the days when Alcoa was a member of the Dow Jones Industrial Index, each quarterly earnings report from Alcoa signaled the beginning of the quarterly earnings reporting season for everybody. Nowadays, Alcoa is pretty close to first out of the gate, although we’ve already heard from a handful of other companies this quarter.
Alcoa will report after the close this afternoon, but ahead of that Costco has reported in, and the news is good. Although lower gas prices and a stronger dollar hurt results, profit was 13 percent higher than a year ago. Per share earnings of $1.58 beat the $1.52 estimate handily as same-store sales in September were up 7 percent. Costco shares are about 2 percent higher pre-market. JC Penney holds an investor day today and its shares are higher in front of that.
Overnight, The Chinese Purchasing Managers Index showed that manufacturing in China expanded again in September, but at a slower pace than in August.
Mortgage applications perked up last week for the first time in a while, for both refi’s and new home purchases as interest rates ticked lower. We’ll get the minutes from the Fed’s September Open Market committee meeting this afternoon.
Mainland China, Italy and Spain are a little higher. Just about everybody else is seeing red. Our markets could use a little shower of good news after yesterday’s bloodbath, and it may be on the way. At this point, adjusted for fair value, the S&P futures higher by about 5 points, the Dow futures are up 47 and the NASDAQ futures are about 14 points above fair value.
October 7, 2014
Given last week’s surprisingly low Unemployment Rate reported by the Labor Department, this morning’s 10 o’clock JOLTS report could be interesting. The average estimate is that the number of job openings actually increased to 4.71million, from the August total of 4.673 million. If the number of openings is going up, yet the rate of Unemployment is going down, either the numbers are a bit contradictory, or maybe more and more people are just dropping out of the labor force altogether.
Speaking of unemployment, Time Warner’s Turner Broadcasting Unit is saying bye-bye to 10 percent of their workers, just in time for the Holidays.
In spite of all the baseball players showering with champagne lately, it appears that bubbles aren’t what they used to be. Within the past hour, Sodastream, the company that sells the device that puts the fizz in any given drink, reported that quarterly sales are going to fall more than 20 percent short of estimates. Sodasteam shares are about 14 percent lower pre-market.
Samsung’s profits are headed lower for the first quarter in several years. Blame increasing competition in smartphones for that.
Asia is mixed, but Europe is lower. Our futures are fighting their way back from a pretty deep hole. But, they’re not out of the red yet. At this point, adjusted for fair value, the S&P futures lower by about 4 points, the Dow futures are down 30 and the NASDAQ futures are about 5 points below fair value.
October 6, 2014
Two big companies are getting together this morning, while one promises to split itself in two.
Health technology firm Becton Dickinson will acquire CareFusion for about 12 billion dollars in cash and stock. That works out to about a 25 percent premium to CareFusion’s closing price on Friday. This morning, Hewlett-Packard confirmed this weekend’s Wall Street Journal story. HP will split into two companies sometime next year. One will focus on PCs and printers, while the other will provide corporate hardware and services.
Earnings season gets its officially unofficial kick-off on Wednesday, when Alcoa reports. But that doesn’t mean that some companies won’t jump the gun. Today we’re expecting numbers from Container Store and Helen of Troy. They are expected to report second quarter earnings of 11 and 80 cents per respective share.
There’s nothing particularly interesting on the economic docket. The overseas markets that are trading today are pretty much all higher after our rally on Friday.
Our futures were higher earlier on in the morning. But, if the market were to open right now, it would open higher. At this point, adjusted for fair value, the S&P futures higher by almost 6 points, the Dow futures are up 49 and the NASDAQ futures are about 8 points above fair value.
October 3, 2014
The last big report from a big-data week comes at 8:30 this morning with the Labor Department’s September Jobs Report. Expect that the Unemployment Rate held steady at 6.1 percent and the 215,000 new non-farm jobs were created last month.
It seems that every week or so we’re hearing about another data security breach among major companies. There was Target, then Home Depot, and now JP Morgan Chase reports that some 76 million accounts could have been compromised. The good news is that reportedly no passwords or financial information was accessed. But you had to know that in the >
Mylan shares are having a good morning in the pre-market. Mylan raised their third-quarter guidance to $1.14 from 92 cents, and full-year guidance from $3.19 to $3.35. Mylan shares are indicated about 4½ percent higher.
A bunch of overseas markets are taking the day off, but most of those that are open are trading higher.
Our direction may change after the Jobs Report comes at 8:30. But if the market were to open now, it would open nicely higher. At this point, adjusted for fair value, the S&P futures higher by about 12 points, the Dow futures are up 101 and the NASDAQ futures are more than 23 points above fair value.
October 2, 2014
October certainly got off to a flying stop yesterday, with major stock indexes losing about 1½ percent on the day. Not to be outdone, oil prices dropped two percent, and are now below 90 bucks per barrel for the first time in about a year and a half.
Third quarter earnings reports won’t start to roll until next week, but in the meantime, we’ll have plenty of jobs-related data to review.
The monthly Employment Report comes tomorrow morning, but this morning the Challenger Job Cut Report told us that layoff announcements in September totaled only about 30,000. That’s the lowest level of announced layoffs in 14 years, and that’s good news.
Not included in that report is this morning’s bad news from Rovio. That’s the company that gave us the Angry Birds video game. They announced that 16 percent of their workers will soon be deleted from the payroll. The Weekly Jobless Claims Report comes at 8:30. Expect 297,000 new claims for Unemployment benefits.
Every morning there seems to be another biotech company on the elevator north. This morning it’s Esperion Therapeutics. Their shares are more than 30 percent higher on promising results for a cholesterol drug.
No rate change from the European central Bank this morning. We may see a little recovery at 9:30, but probably very little. At this point, adjusted for fair value, the S&P futures higher by about 4 points, the Dow futures are up 26 and the NASDAQ futures are about 10½ points above fair value.
October 1, 2014
It’s the first day of the month that brings back a lot of bad stock market memories. I’m sure that financial headline hysteria mongers will be reviving those memories repeatedly during the next few weeks. However, if you look at market returns over the past 25 years, just about half of the stock market’s rise has come in just the last three months of the year.
No matter what happens with stock prices today, you next European vacation continues to get cheaper and cheaper. This morning, the latest German Purchasing Manager’s Index fell into contraction at a reading of 49.9. That has the euro lower once again at just under $1.26. That’s about 10 percent lower than the euro stood against the dollar just 5 months ago.
Of course, if you don’t have a job, any European vacation may be a little out of reach. General Mills just announced about 750 white collar layoffs to match a similar number of previously announced blue collar job cuts.
Shares of Angie’s List are spiking more than 20 percent higher this morning on a rumor that they may be looking to go private. Shares of companies that are working on drugs to fight the Ebola virus are also having a good morning after a case of Ebola was confirmed in Texas.
September Car Sales figures will be trickling in all morning long. But at this point, adjusted for fair value, the S&P futures lower by about 3½ points, the Dow futures are down 13 and the NASDAQ futures are about 8 points below fair value.
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