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September 30, 2009
It’s the last day of the third quarter, and it certainly has been a good one if you’re long stocks. Of course, those who hid from stocks because of the conventional wisdom of “sell in May and go away” or “September is always a horrible month” have once again learned an expensive lesson.
If you own shares of financial firm CIT Group, pay attention. There may be an expensive lesson on the way. CIT stock is around 30% lower in the pre-market on reports that a deal is being cobbled together that would cut the company’s debt but wipe out the common shareholders, handing control of the company to bondholders.
Darden Restaurants reported earnings of 67 cents for last quarter, which was a penny better than expected. Trouble is, they predicted that the rest of the year looks pretty soft, and Darden stock will be on the short order menu this morning.
Nike and Jabil Circuit both checked in with better than expected earnings.
The Shanghai Index in China was higher by about one percent overnight. Mainland Chinese stocks will now take a breather for a national holiday. This is some holiday – stocks will not trade there again until a week from Friday. European markets are just very slightly higher, and absent an unpleasant surprise in the final reading on 2nd quarter Gross Domestic Product at 8:30, we also will head higher at 9:30. At this point, adjusted for fair value, S&P 500 futures are up a point, the Dow futures are higher by about 15 and the NASDAQ futures are about 2½ points above fair value.
September 28, 2009
It’s gotten to be pretty much like clockwork. If a bank is going bust, we find out about just after four o’clock on Friday. Monday morning, however, is usually the realm of mergers and acquisitions. This Monday morning, Xerox has announced that it will buy Affiliated Computer Services for 6.4 billion dollars in cash and stock. That comes on the heels of last week’s news that Dell is buying Perot Systems, as more and more hardware makers try to bulk up their services revenue.
The price paid here may raise some eyebrows. The 6.4 billion is a 35% premium to Friday’s close, and Friday’s close for Affiliated was close to a 52 week high. Time will tell if Xerox, which only has a 7.8 billion dollar market cap, is overpaying.
In other deals, Abbott Labs is buying the pharmaceuticals business of Belgium’s Solvay for $7 billion and it looks like Kraft’s bid for Cadbury may be going hostile.
Japanese and Chinese stocks were lower by almost 3 percent overnight, but Europe is trending higher after the German election resulted in a more business-friendly government coalition.
Our futures are a bit better than they appear on their >
The August Durable Goods number rolls out at 8:30 this morning. This is a number that measures orders for long-lasting goods – the stuff that’s built to last a few years or more. The Durable Goods number fell off a cliff last fall and continued to decline until last month, when we saw a surprisingly strong increase of about 5 percent. Last month’s number was goosed by a surge in orders for aircraft, and of course an artificial cash-for-clunkers increase. This time around, we’re expecting a much more subdued seven-tenths of a percent overall increase.
Blackberry maker Research in Motion checked in with a disappointing earnings report and a soft forecast last night after the market close. RIMM shares will be in the discount bin this morning.
The University of Michigan’s final word on September Consumer Sentiment just before 10 this morning is expected to read 70.5, a little better than the preliminary estimate.
Japan was off 2½ percent overnight and although most Asian markets were lower, European markets are edging into positive ground this hour.
Absent a big surprise with Durable Goods at 8:30, we’re looking at a mixed open for stocks. At this point, after you adjust for fair value, the S&P futures are just about flat, the Dow futures are up 8, but the NASDAQ futures, reflecting the bad forecast out of Research in Motion, are about 7 points below fair value.
September 24, 2009
The G20 meetings officially kick off in Pittsburgh this morning as world economic powers sit down to figure out how to coordinate efforts to lift the world out of its economic funk.
At 8:30 we’ll hear about new claims for unemployment benefits for the week ending September 19th. It’s expected that new claims rose by about 5,000 to the 550,000 level, as the tepid economic recovery continues to be a pretty much jobless one. At 10 o’clock, the August data on existing home sales is expected to improve by about 100,000 annualized units to the 5.35 million unit level.
Earnings are on the way from Steelcase, RiteAid and American Greetings today and we’ll also get a natural gas inventory report. Rising inventories have been depressing natural gas prices this year, although the spot price has been on the rise most of this month.
Overseas markets were mixed overnight. The futures were stronger a couple of hours ago, but in spite of looking lower on their >
At this point, after you adjust for fair value, the S&P futures are higher by almost 4 points, the Dow futures are up 37, and the NASDAQ futures are about 7 points above fair value.
September 23, 2009
It’s Fed decision day. At 2:15 we’ll hear from Ben Bernanke and his buddies. Expect no change in interest rates and another official statement that praises a stabilizing economy, yet warning that risks are still too high to begin withdrawing significant liquidity from the system. Any statement that is interpreted to signal tighter money or increasing interest rates would not make traders particularly happy.
The weekly report on oil inventories is due this morning. Last week’s report told of a rise in gasoline inventories, which hopefully continues, and continues to contribute to the recent decline in gas prices at the pump.
General Mills reported quarterly earnings of $1.28 this morning. That beat expectations by a full twenty five cents. They also raised guidance for the full year. AutoZone missed estimates by two cents.
Earnings reports are also due today from Cintas, Bed Bath & Beyond, Red Hat and Paychex.
Chinese stocks were again lower overnight, but Europe is higher. Our futures have been a touch higher all morning, although they are off their best levels. At this point, adjusted for fair value, the S&P futures are higher by about 2½ points, the Dow futures are up 18, and the NASDAQ futures are almost 6½ points above fair value.
September 22, 2009
It used to be, prior to the start of the economic crisis is 2007, the Federal Reserve Open Market Committee would meet 8 times a year, and two of those meetings were two-day affairs. This year, it looks like they’ll have at least 11 meetings. No fewer than 7 will be last two days, and one of those two day confabs starts this morning.
Yesterday, stock prices took a little back-step, perhaps due to nervousness that the Fed will start pulling the plug on the swimming pool full of dollars they’ve created. That fear seems to be abating in a hurry this morning, as the dollar is again falling in value and stock futures and oil futures and gold are all once again on the rise.
The government announced yesterday that if you’re one of those taxpayers who have been ducking taxes by hiding assets offshore, perhaps with the help of certain big brokerage firms – you have another three weeks to come clean. After October 15th, the Government’s leniency program will end and those who haven’t fessed up will be facing full civil, and possible criminal penalties.
The Shanghai Index in China slipped 2½ percent overnight, but Europe is higher and that’s where we’re headed as well.
At this point, adjusted for fair value, the S&P futures are higher by almost 7 points, the Dow futures are up 57, and the NASDAQ futures are about 8 points above fair value.
September 21, 2009
We’re heading into the last full week of the third quarter. In years gone by, this is the time you would expect companies that were coming up short of their guidance to fess up. But earnings visability this year has been so non-existent, there’s not a lot of guidance from which to vary. The focus may shift to money managers who are still holding more than normal shares of cash. Stock prices have been on such a run, those managers may want to play a little catch-up before issuing their third quarter portfolio reports.
Dell is looking for a return on Perot Systems. Dell is buying Perot for 3.9 billion in cash. That’s a 68 percent premium from Friday’s closing price.
At 10 o’clock, the August Leading Economic Indicators are expected to have risen seven-tenths of a percent, which would be the fifth monthly increase in a row.
Asian markets were mixed overnight, but Europe is lower and we should head broadly lower at 9:30. At this point, adjusted for fair value, the S&P futures are down almost 10 points, the Dow futures are down 74, and the NASDAQ futures are about 11 points below fair value.
September 18, 2009
The market took a little pause yesterday after a back and forth session, and Asia followed our lead. But it looks like, at least in the early going, we’ll make back yesterday’s losses.
Last night Palm reported a much smaller loss than expected, checking in with a 10 cent per share loss against the 25 cent loss that was expected.
This morning’s headline comes from Texas Instruments which is hiking its dividend from 9 cents to 12 cents per share.
It’s a quadruple witching Friday, which has often resulted in a lot of afternoon price volatility. However, we also have the start of Rosh Hashanah at sundown, which means that many traders might have one foot out the door well before the 4 o’clock bell rings.
Bankrate.com reports that the average rate on 30 year conforming mortgage loans dropped to 5.38% last week, also jumbo loans are still up around 6.6 percent, which is keeping prices of high end homes in the gutter. The 3 month LIBOR loan is now under 29 basis points, as near zero interest rates continue to fuel the run in equities and commodities.
Our stock futures have been recovering from modestly lower levels earlier this morning, and at this point are pointing toward higher prices at 9:30. At this point, adjusted for fair value, the S&P futures are up 2½ points, the Dow futures are up 22, and the NASDAQ futures are 2½ points above fair value.
September 17, 2009
Oracle’s first quarter earnings report was a bit of a downer last night. Yes, the 30 cents in earnings was in line, but sales fell short of expectations, and Oracle shares sold off a bit after hours.
Today we’ll hear from Palm and Discover Financial, as we pretty much wrap up high-profile earnings reports for the week. Earlier this morning, FedEx announced earnings that are exactly in line with what they predicted about a week ago.
There will be a little flurry of economic reports this morning. At 8:30, August Housing starts are expected to add to the string of 5 months of improvement. Expect an annualized rate of 596,000 versus July’s 581,000. Not expected to be improved are the weekly jobless claims. Expect new claims of 575,000. That would be 25,000 higher than last week’s number.
At 10 o’clock, the Philadelphia Fed reports their survey of manufacturing activity in the Northeast. That index is expected to rise to 8 from 7.5. It’s been improving steadily since February.
Overseas markets are almost all higher. The Shanghai Index in China was up 2 percent overnight. Our futures have been sliding back toward even over the past couple of hours. At this point, adjusted for fair value, the S&P futures are down a fraction, the Dow futures are up 7, but on the heels of the Oracle report last night, the NASDAQ futures are 6½ points below fair value.
September 16, 2009
Ben Bernanke finally said it yesterday -- the recession is most likely over. But you know, he’s an economist, so there must be “another hand.” On that other hand, he reads that the recovery will be long and slow, due to anemic job growth.
At 8:30, we’ll find out about consumer price inflation in August. Yesterday, producer prices came in much higher than expected overall, but excluding food and energy, were up only two-tenths of a percent. Expect the overall consumer index to have increased four-tenths of a percent, with the core rising one-tenth of a percent.
Mortgage applications fell a seasonally-adjusted 8 percent last week, on a slight increase in the 30 year rate. Oracle reports earnings later today.
It was a pretty good overnight in Asia, with many markets at their highs for the year. In London, the FSTE is also at a high for 2009, up almost a percent and a half. The Mexican market will be closed today for Independence Day.
Our futures have been just moderately higher all morning long. At this point, adjusted for fair value, the S&P futures are up 3 points, the Dow futures are up 31, and the NASDAQ future are just a point or so above fair value.
September 15, 2009
The stock market recovered from some early jitters yesterday as fears of a trade war with China were downplayed in Washington. Still, stock traders will be on the watch for any escalation of what could be very anti-free trade policy.
At 8:30 we’ll find out how much free trading went on during August at the nation’s retailers. A 1.9 percent increase is anticipated, versus July’s slight decline. Of course, cash-for-clunkers artificially goosed results by pulling ahead sales that otherwise would be happening later in the year.
August wholesale inflation data is also due at 8:30. Expect an eight-tenths of a percent increase.
Best Buy reported second quarter earnings of 37 cents that appears to have missed estimates by a nickel. Same store sales were lower, but better than expected. The early bid is about a dollar and a half lower for Best Buy stock.
Adobe Systems will announce their 3rd quarter earnings today. Kroger will also report in.
Our futures have rallied during the past half hour, but are still indicating a slightly lower open for the market. At this point, adjusted for fair value, the S&P futures are down a fraction, the Dow futures are down 3 points, and the NASDAQ futures are 4 points below fair value.
The lessons of the Depression are fairly clear. When you allow an asset bubble to be blown up with too much leverage, when you restrict the money supply and when you start trade wars, you get economic depression. Well, we had our overleveraged real estate bubble. Fortunately, so far the government has opened the spigot on the money supply, and someday soon it may convince the banks to start lending again. But this weekend’s announcement from the Administration slapping punitive tariffs on Chinese tires is sending a shiver through the stock futures.
China has responded by threatening to reciprocate against American chicken and auto parts. Hopefully, this is as far as things go and we can write it off to the Administration looking for some votes from certain union supporters. However, stock prices, which don’t have to pander for votes, will head lower at 9:30.
Boston Scientific and Campbell’s Soup were downgraded this morning. E-Trade, UPS, Under Armour and Motorola received upgrades.
Deutche Telecom may be readying a bid for Sprint-Nextel, which has Sprint off to the races in Europe this morning.
A couple of regional Fed Presidents and a Fed governor will be out on the rubber chicken circuit today, but we’ll have to wait until tomorrow to get any significant economic reports.
Markets around the world are lower. At this point, adjusted for fair value, S&P futures are down 8 points, the Dow futures are down 67, and the NASDAQ futures are about 12½ points below fair value.
September 11, 2009
Well, the Tigers have lost three in a row, but the stock market’s winning streak hit five yesterday, and that makes 13 higher sessions out of the last 17.
Japanese stocks were lower overnight. However, in China, where they have a stimulus program that actually designed to stimulate, the economic reports were much better than expected overnight. That pushed the Shanghai market higher by more than 2 percent and has other major markets in the green as well. European markets are generally higher by about one-half of one percent.
Just before 10 o’clock this morning, the University of Michigan’s first estimate of September Consumer Sentiment is expected to rise to a reading of 67.5 from the August level of 65.5.
Campbell Soup reports results a little later on, but other than that, it should be a pretty quiet day on the earnings front.
Our futures are looking a lot like they did 24 hours ago. At this point, adjusted for fair value, the S&P futures are down a point, the Dow futures are down 15, but the NASDAQ futures are actually almost a point above fair value.
September 10, 2009
Last night Texas Instruments upgraded its forecast for the quarter and TI stock looks to benefit this morning. Revenue will be higher than expected and earnings should come in around 39 cents per share, which is 4 cents better than the prior estimate. They cited a global revival in semiconductor sales.
The Bank of England held their short term interest rate target steady at a half of one percent this morning and did not increase their quantitative easing policy. By the way, the 3 month LIBOR rate is all the way down to three tenths of one percent.
Treasury Secretary Geithner gives Congressional testimony later today and a couple of Fed heads, both current and former are running around giving speeches as well. But truth be told, there’s just not a lot on the economic agenda.
Chinese stocks fell about one percent overnight, but other overseas markets are higher.
Our futures have hovered at very slightly lower levels all morning long, but have been improving over the past ten minutes. At this point, adjusted for fair value, the S&P futures are down a fraction of a point, and Dow futures are down 6, and the NASDAQ futures are a just a point below fair value.
September 9, 2009
For years and years, many financial advisers – at least the ones who aren’t commissioned salespeople – have been nagging American consumers to cut down on their debt-load. Well, it looks like all it took was a near-depression to get the message through. I guess losing your job has a tendency to get your attention.
According to the Federal Reserve, the amount of outstanding consumer credit has dropped by nearly 22 billion dollars in July. That’s a more than 10 percent decrease, and is the largest drop in over 65 years.
Mortgage debt, on the other hand, is seeing a lot of activity, at least during the past week. Mortgage applications for new purchases are up 9½ percent and refis are up over 22 percent. Amazing was a tick lower in interest rates can do.
The Fed’s Beige Book survey of regional economic activity will be released this afternoon. We’ll also get a mid-quarter update from Texas Instruments, but that’s about it for potential market-movers on the schedule.
Overseas markets paint a mixed picture this morning, although Europe is mostly higher. Our stock market has been very streaky of late. An 8 session rally was followed for 4 days of decline. However, were on a three session upswing as we head toward the open.
At this point, adjusted for fair value, the S&P futures are up a point, and Dow futures are up almost 6 points, but the NASDAQ futures are a couple of points below fair value.
September 4, 2009
We’ll have a lot of traders playing hooky this afternoon, expending their long weekend a bit. However, ahead of that, at 8:30 this morning, we’ll kick of Labor Day Weekend very fittingly with the Labor Department’s report on how many laborers weren’t able to labor during the month of August.
Yesterday’s late rally and this morning’s action in the futures indicate that traders are expecting a pleasant surprise from that report. Consensus estimates are 230,000 jobs lost, a 9½ percent unemployment rate and a two-tenths of a percent rise in the average hourly wage.
On the earnings front, H&R Block reported a loss of 39 cents per share on lower than expected revenue. That’s two cents worse than expected, although they did affirm earnings guidance for the entire year. Abercrombie & Fitch was hit with a broker downgrade this morning.
Haven’t mentioned this in a while, but borrowing costs continue to decline, which is a good thing for many stressed borrowers. The 3 month LIBOR rate is now less than a third of one percent, at just over 31 basis points after spiking to the 4½ percent range about a year ago.
Japanese stocks were off a quarter percent overnight, but all other major overseas markets are higher. European markets are up by one percent or more.
At this point, adjusted for fair value, the S&P futures are up about 4 points, Dow futures are up about 29 and the NASDAQ futures are about 5 points above fair value.
In case we forgot that the implosion of Lehman Brothers, the near implosion of Merrill Lynch and others and the freeze up of the credit markets – came last September, the cable business channels have been doing a bang-up job of reminding us this week. That story will be revived on September 14th, the one-year anniversary. But for now, the hype is getting a little old, and the stock market may pick itself back up and resume the summer rally.
Some good job statistics would certainly help and we’ll get plenty of stats in the next 24½ hours. Today, weekly jobless claims numbers will be released in about 11 minutes. Expect 580,000 new claims and about 120,000 continuing claims for unemployment benefits. Tomorrow, the more important monthly numbers are expected to show some modest improvement.
As the day rolls on, retailers will be announcing their August sales results. So far, there’s relatively good news from Costco. They reported a 2 percent decline in same store sales, but analysts expected a 6 percent drop. Walgreen actually posted a rise in same store and overall sales in August.
Asian markets were mixed, but Europe is solidly higher as the ECB decided to hold interest rates steady. Pending an unpleasant surprise at 8:30, we will head higher at 9:30. At this point, adjusted for fair value, the S&P futures are up almost 9 points, Dow futures are up 70 points and the NASDAQ futures are about 11 points above fair value.
September 2, 2009
We should get a little stability in the early going after a pretty good drubbing yesterday. Stock prices have now declined for three straight sessions, following up their 8 session winning streak. Let’s see what happens next Tuesday, when the big boys get back from vacation.
The stock of BP, the old British Petroleum, looks to open about 4 percent higher this morning after BP announced what they termed a “giant” oil find in the Gulf of Mexico. Apparently no one told about this whole “peak oil” thing.
Outplacement firm Challenger, Gray and Christmas reported this morning that layoff announcements in August were 14 percent lower than a year ago. That can be viewed as a sign of promise. It can also be viewed as a sign that there are no more employees left to cut loose. Ranked by industry, Automotive ranked number 2 in the magnitude of August layoff announcements.
For corporate earnings, the bright side of job cuts is a presumed increase in productivity be the employees who are still employed In ten minutes, we’ll get the government’s estimate of how much productivity rose in August and how much labor costs fell. Figure on about a 6 percent productivity pickup and a 6 percent decline in costs.
ADP announced their August jobless report about 4 minutes ago, and the futures, which were pretty flat, took a decided turn for the worse.
At this point, adjusted for fair value, the S&P futures are down about 3, Dow futures are down 25 points and the NASDAQ futures are about 6 points below fair value.
September 1, 2009
A late rally pared the losses yesterday. But nevertheless, August wrapped up with about a 3½ percent gain for stocks. That runs the winning streak to six months for the market. Of course, now it’s September, which is always a cause for pause, if not always declines.
One thing that won’t decline is car sales for the month of August. Industry sales are expected to have run at about a 13 million unit annualized rate. We’ll know by the end of the day as the car makers will tell us just how much the “cash for clunkers” program goosed their numbers. Now, if only the government could buy everything for everybody.
There’s lots of economic news due starting at 10 o’clock. Foremost will be the August ISM Manufacturing Index which is expected to read 50.5. That would be the first time in some time that the index reflects a slight expansion in manufacturing activity.
Disney stock received a broker downgrade this morning after yesterday’s announcement of its acquisition of Marvel entertainment.
Asian markets turned a bit higher overnight, but Europe is losing some ground. Our futures have improved, but are still pointing toward lower prices at the open.
At this point, adjusted for fair value, the S&P futures are down nearly 4 points, Dow futures are down 37 and the NASDAQ futures are about 4 points below fair value.
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