September 30, 2011
So, you can lend money to an over-indebted government for the next 30 years at a return of 3 percent and hope like heck that inflation and long term interest rates hold at well less than 3 percent for the next 30 years. Good luck on that one, although a lot of money continues to flow in that direction.
It’s the last day of the quarter that can’t end soon enough for a lot of people. We’ll end it with a little flurry of economic data, including personal income and consumption at 8:30, the September PMI number at 9:45, which is expected to drop by a point to 55½, and the final Consumer Sentiment reading from the U of M at 9:55.
Outside of all that, it’s an ear out for earnings warnings, but both eyes on Europe. Stocks over there are lower by 1½ to 3 percent. Australia was flat but most Asian markets were lower overnight.
At this point, adjusted for fair value, the S&P futures are lower about 10 points, the Dow futures are down 90, and the NASDAQ futures are about 21 points below fair value.
One day after the Boston Red Sox booted a chance to keep playing the game, the German Parliament voted this morning to keep playing the game of kicking the euro-can down the road. And while the ultimate resolution of the European debt problem is still nowhere in sight, we’ve at least been spared a follow-up selling panic today.
Yesterday, the Dow took about a 300 point swan dive from top to bottom on worries about that German vote and in response to a Ben Bernanke speech. Mr. Bernanke says that this country’s jobless situation is a “national crisis” and that the Fed might have to do even more to ease credit conditions. Just in case you thought the Germans were the only can-kickers around.
At 8:30, the Government will kick out its final verdict on 2ndquarter Gross Domestic Product. It’s expected to be revised to a pretty anemic 1.2%, from an even more anemic 1.0 percent.
Advanced Micro Devices warned about slipping sales last night.
Asian markets were mixed, the U.K. is down, but France and Germany are now a bit higher. We should get off to a decent start barring a big GDP surprise.
At this point, adjusted for fair value, the S&P futures are higher by about 10 points, the Dow futures are up 92 points, and the NASDAQ futures are about 14 points above fair value.
You may recall that on Monday, we launched the last week of the 3rdquarter, and were on the lookout for companies that would announce an earnings warning during the week. After all, with the stock market seemingly signaling economic hardship last week, you’d expect that things are slowing down.
Well, so far, not much for the big boys. Yesterday, in fact, Jabil Circuit and Accenture, the big consulting firm, guided earnings and revenue higher. Of course, we still have three days to go in the quarter.
Only ten minutes to go before the August Durable Goods report is released. Expect a moderate two-tenths of a percent increase, after July’s big four percent surge. That number was goosed by a snap back in car sales as Japan recovered from the earthquake and tsunami.
Gold and silver as just very slightly lower this morning, as they are seemingly settling down after last week’s big losses.
Overseas markets are painting a mixed picture. Our futures aren’t nearly as strong as they were 24 hours ago, or for that matter even an hour ago, but they’re still indicating rising stock prices at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 3½ points, the Dow futures are up about 48, and the NASDAQ futures are about 11 points above fair value.
Oh, it’s SO much more fun riding a roller coaster than a merry-go-round, don’t you think?
Yesterday was a breath of fresh air for stock prices after last week’s drubbing, and if you liked yesterday, you’ll be loving today – at least in the early going. Fresh hopes of at least a temporary fix to the Eurozone debt problems have major European markets up 3 to 4 percent this morning, after most major Asian markets rose 2 to 5 percent overnight. Even gold is participating, up almost 75 dollars an ounce, after losing well over 200 dollars over the last three trading days.
Today’s economic report of note will be the Conference Board’s gauge of Consumer Confidence, which is expected to show a teeny improvement to 46½ after last month’s nearly 15 point decline. An hour before that, the July S&P Case-Shiller home price index of 20 major markets is expected to report nearly stable prices. That would amount to a 4½ percent price decline from a year ago.
Keep an eye on Apple shares, after yesterday’s report out of JP Morgan citing a 25% cut in supplier orders for ipad components. Apple lost a little ground yesterday, but is indicated about 5 dollars higher pre-market.
Hang on to your hats and keep all valuables tucked in your pockets – the roller coaster rolls again at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 21 points, the Dow futures are up about 184, and the NASDAQ futures are about 32 points above fair value.
Traders will once again focus on Europe this week as European policy makers keep trying to find a way to get the German taxpayers to pay off the Greek taxpayers’ debt without making the Germans too angry. Okay, that’s an overstatement, but not much of one. There’s a vote regarding the latest plan in the German Bundestag this coming Thursday.
Even though the Lions had a pretty good third quarter yesterday, we’ve had a pretty miserable third quarter in the stock market. Fortunately, it will be over at the end of the week. Keep an eye out for companies that take this opportunity to warn about potential shortfalls in their third quarter earnings performance.
At 8:30, the August New Home Sales Report is expected to reflect a 4% decline.
Gold is down another 24 bucks an ounce after a rather breathtaking 100 dollar dive on Friday. Oil, meanwhile has inched up just 7 cents or so, almost back to the 80 dollar per barrel mark once again.
Major Asian markets that traded were about 2 percent lower overnight, but European markets are roughly 3 percent higher this morning, with banking stocks leading the way.
Our stock futures have cooled off a bit over the past half-hour, but are still suggesting that we’re in for a meaningful rise in prices at 9:30. At this point, adjusted for fair value, the S&P futures are higher by about 12 ½ points, the Dow futures are up about 106, and the NASDAQ futures are about 15½ points above fair value.
The only good news for stock prices yesterday came in the form of a little rally in the last half hour. That saved the Dow from a 500 plus-point loss. But, what we gained back in that half hour may be gone in the first ten minutes today.
Reports out of Europe have Greece getting closer and closer to their seemingly inevitable debt default. The Greek Government is in denial of that report, among lots of other things. In Washington, yet another deadline looms on appropriating funds to run our Government. That, and a lot of money flooding into the bond market as the hedge funds try to front-run the Fed, and we’ll see more pressure on stock prices early on.
The revolving door that leads to the executive suite at Hewlett-Packard continues to spin full speed. After that political thing didn’t quite work out, Meg Whitman has found a chair at the head of the table at HP. She will have her hands full reversing the spiral that has more than halved the price of Hewlett-Packard stock since the middle of last year.
European markets are getting hammered again this morning. Germany and France are off another 3 percent. England is off a percent and a half. Hey, Japan wasn’t down at all. They, of course were closed for the day.
And don’t look now, but gold is down another 2½ percent and spot silver is getting crushed this morning, down more than 10 percent.
Need some good news? Last night Nike beat estimates and their shares were up about 5 percent after-market.
At this point, adjusted for fair value, the S&P futures are down 18 points, the Dow futures are down 168, and the NASDAQ futures are about 38 points below fair value.
Well, yesterday’s policy announcement from the Federal Reserve looks like it will be the “pivot point” of the week. And, as they say “it’s all downhill from here.” The Fed has managed to pull off the very difficult task of coming up with a new monetary strategy that is making everyone unhappy. The free money folks wanted more, the tea party guys wanted nothing, and anyone holding stocks apparently wants to sell them so far today.
Of course, it’s not all Bernanke’s fault. A lousy manufacturing number in China overnight and a lack of any resolution of the Greek tragedy in Europe are contributing to the global selloff.
If you’re hoping for some economic news that might turn the tide, the only hope on the horizon is the 10 o’clock report on August Leading Economic Indicators. Unfortunately, it’s expected to reflect a big fat zero, following up July’s increase of one half of one percent. Of course, there’s the weekly Jobless Claims number at 8:30, but if you think that THAT will be good news, well, you really are quite the optimist. Expect 420,000 new claims.
FedEx beat earnings estimates by a penny, but then lowered full-year guidance a bit on rising fuel costs. FedEx shares are lower by about one percent pre-market.
Overseas, things are a mess. All major markets are at least 2 percent lower. Russian stocks are more than 6 percent lower. At this point, adjusted for fair value, the S&P futures are down 29 points, the Dow futures are down 246, and the NASDAQ futures are about 51 points below fair value.
2:15 this afternoon could well prove to be the pivot point of the week. Ben Bernanke and the Fed’s Open Market Committee are expected to roll out their latest plan to save the world, or at least lower the unemployment rate. It’s expected that they will not expand their holdings of U.S. Government bonds, but will try to push down on long term interest rates by changing the duration of the portfolio. If you don’t understand all that, don’t worry. It’s not likely to change anyone’s chances of getting a job anyway.
Computer system Software and hardware firm Oracle appears to be getting the job done. Last night, Oracle reported a 36 percent rise in annual profit. Operating earnings were 48 cents per share, beating estimates by a penny. Better software and service revenue helped to offset disappointing server sales.
We’ll get the August Existing Home Sales number at 10 o’clock. Expect an annualized rate of 4.75 million units. But make no mistake, absent some significant news about the European debt crisis, stock prices should stay pretty much on hold until Bernanke grabs the spotlight at 2:15.
Mainland China rose 3 percent overnight, but other markets overseas paint a mixed picture. At this point, adjusted for fair value, the S&P futures are down 5 points, the Dow futures are down 40, and the NASDAQ futures are about 6 points below fair value.
Standard & Poor’s downgraded Italian sovereign debt last night. European markets seem to be saying, “Yeah, we knew that” this morning, as most of them are higher on the order of one to one and a half percent.
On this side of the Atlantic, we’re looking to make up most of the ground lost yesterday right off the get-go. Traders are focusing on the widely anticipated third act of the Federal Reserve’s play entitled “How we saved the economy.” This act may be called, “Let’s twist again, like we did last summer.”
Tomorrow, the Fed is expected to bring back an economic tool from the 1960’s, popularly dubbed “Operation Twist” in which they would attempt to lower interest long term interest rates by buying long-term Government bonds and selling short term bonds. The idea is to stimulate the economy. The problem may be that high interest rates are the least of the problems the economy >
One problem we may all >
Asia mixed, Europe higher. At this point, adjusted for fair value, the S&P futures are up 9½ points, the Dow futures are up 82, and the NASDAQ futures are about 21 points above fair value.
A carbon copy of last week would be good news for stock prices. Last week the markets rose every day for the best week they’ve had since July. However, today is another day, as they say. Renewed worries about Greece, the Eurozone and this morning’s expected lecture from President Obama have the stock futures pointing decidedly lower.
At 10:30, the President will reportedly pass out the proposed invoice for his Jobs spending proposal of a couple of weeks ago. But don’t worry, if you’re one of the roughly 50 percent of the population who doesn’t pay any income tax, you’ll likely have nothing to fear from the proposal. The most intriguing speech of the week will come on Wednesday, as Ben Bernanke holds court after the Open Market Committee decides their next stimulative step for the economy.
Netflix shares have been halved in price over the past two months. Now the company itself will split in two. The CEO also apologized for “miscommunicating” the recent price increase, although it appears that all the subscribers who left understood exactly what was happening. And not to be outdone, Tyco will split into three separate companies as the trend of the mega-merger is starting to feel oh-so-90’s.
Japanese stocks did not trade in deference to “Respect for the Aged” Day. The rest of the major markets overseas are lower.
At this point, adjusted for fair value, the S&P futures are down 17½ points, the Dow futures are down 137, and the NASDAQ futures are about 28 points below fair value.
Netflix is likely to be the stock to watch today. In July, Netflix announced a new pricing scheme, designed to make it more expensive for customers to continue movie-by-mail rather than movie-by-streaming. So, as they say, how’s that workin’ for ‘ya? Well, this morning, Netflix their subscriber growth estimate for BOTH mailed and streaming subscribers. Although they reaffirmed third quarter financial guidance, the stock is getting pounded pre-market by more than 15 percent.
At 8:30 we'll find out how much we’re all getting pounded by price inflation – at least according to what the Government says. The CPI is expected to have risen two tenths of a percent in August, both on the core and the headline numbers
By the way, it was three years ago today the Lehman Brothers was allowed to fail by the U.S. Government, setting off a colossal financial crisis that led to all kinds of volatility in the stock market. However, if you’re keeping score, the S&P 500 closed at 1192 three years ago. This morning, the futures are indicating an open of about 1189, a difference of just 3 points.
The market’s collective eye is still on Europe and European stocks are about 2 percent higher this morning. Our futures look pretty good as well. At this point, adjusted for fair value, the S&P futures are higher by 6 points, the Dow futures are up 54, and the NASDAQ futures are almost 15 points above fair value.
It would be nice if our stock markets could get their collective mind off of Europe for a while. But like it or not, that’s where we’ve taken our cue lately. In case you haven’t noticed, the last couple of sessions started with pretty significant declines, only to rally into the green AFTER the European markets closed for the day.
This morning is different only in that things may be looking a little more stable across the Atlantic. The Italian parliament is expected to approve new austerity measures today, European stocks are on the rise, as are our futures.
Just in case traders get an appetite to change focus, we will get a couple of pieces of economic candy on which to chew. At 8:30 the August retail sales report is expected to reflect only a two-tenths of a percent increase. That would be a pretty big downer after July’s one-half of one percent, but bad weather will likely get the blame. We’ll also get the August Producer Price Index, which is expected to go negative by a tenth of percent as inflation remains remarkable absent, at least according to Government statistics.
China and India higher overnight, most of the rest of Asia fell. But Europe is higher and that’s where we’re headed as well, at least in the early going.
At this point, adjusted for fair value, the S&P futures are down almost 8 points, the Dow futures are up 66, and the NASDAQ futures are almost 16 points above fair value.
A very late rally yesterday pulled stock prices higher. In great part, the rally was sparked by speculation that the Chinese Government is about to deem Europe as “too big to fail.” In order to raise their standing among European nations, protect the value of their euro holdings and prevent an important export market from collapsing, the thought is that the Chinese government may chow down on a big bite of Italian and Spanish sovereign debt. That, of course, would take pressure off the German government, whose electorate is getting pretty tired of the word “bailout.”
Over on this side of the world, it looks like we’re back to nothing more than a politicial campaign when it comes to the American Jobs Act. Last week, President Obama was very tight-lipped about how the new jobs plan would be funded, even suggesting that at least part would come from spending cuts. Yesterday, the cat came out of the bag – virtually all the cash would come from tax increases. So, here we go again – on the inevitable road to nowhere.
Most of the economic data for the week starts tomorrow. We will get a report on August Import prices at 8:30. We’ll also hear earnings from the Crackerbarrel Restaurant folks. Best Buy reported 47 cent of earnings for last quarter. That was a six-cent miss on disappointing revenue. Full year guidance, however, is still within analysts’ expectations. Best Buy stock is bid a bit higher premarket.
The overall market may start a little softer. At this point, adjusted for fair value, the S&P futures are down almost 5 points, the Dow futures are lower by 66, and the NASDAQ futures are about 7 points below fair value.
The focus is once again on Europe this morning, and what we’re seeing is not real pretty.
The Greek Government, presumably trying to calm fears of sovereign default, now says that it has plenty of cash on hand to last into October. Problem is, today is September 12th. So, between that and a reported explosion at a French nuclear plant, European markets are pretty much a mess. French stocks, for instance, are lower by about 5 percent. Greece, by the way, proposes to add a new tax to raise revenue, as modern governments are wont to do.
It should be a pretty light-data day. However, a couple of companies are making moves this morning. Broadcom will but Netlogic Microsystems for 50 bucks per share. Netlogic closed Friday just south of 32 bucks per share.
McGraw-Hills will split into a market info company and an educational company, and no, they won’t be called “McGraw” and “Hill.” It will be McGraw-Hill Education and McGraw-Hill markets. Wonder if they had to hire a PR firm for that.
The futures have been moving around pretty active this morning. But, that doesn’t mean that they’re good, if you’re long the stock market. At this point, adjusted for fair value, the S&P futures are down 20 points, the Dow futures are lower by 178, and the NASDAQ futures are almost 35 points below fair value.
Stock markets around the world and our stock futures awaited President Obama’s speech last night and upon hearing it, took a turn for the worse. However, the futures aren’t down as much as one might expect based on what we heard. When you rob Peter to pay Paul, you never get an argument from Paul. Last night, the President named all the “Pauls” without identifying any of the “Peters.”
By the way, in spite of all this wonderful job-creating news, the Wall Street Journal is reporting that Bank of America is actually considering cutting up to 40,000 jobs. That’s a little higher than the 30,000 previously rumored, and the 3,500 previously announced.
Last night Texas Instruments lowered their revenue guidance for the quarter. But, on the famous other hand, what people are not spending on technology they are apparently spending on yoga-wear. Lululemon Athletica again surprised to the upside with earnings of 26 cents. That compares to a 22 cent estimate and a 15 cent profit a year ago.
Before the opening bell rings, we’ll hear from Kroger, which is expected to have earned 43 cents per share and seen a 4.8% same store sales increase. MacDonald’s August same store sales were up only 3 ½ percent, versus the 4.7% estimate.
Stocks finished up slightly in Australia, but Asian markets declined. European stocks are lower across the board. At this point, adjusted for fair value, the S&P futures are down 2 points, the Dow futures are lower by about 6 points, and the NASDAQ futures are about 3 points below fair value.
September 8, 2011
Both the Bank of England and the European Central Bank held their respective short term interest rate policies steady this morning. In England, rates have been targeted at one-half of one percent for 2½ years now. The ECB, which hiked rates in July, now seems to be on perma-hold as well, and may well cut rates again before year end.
Of course, the big event of the day in this country will be the start of the new professional football season, with President Obama doing the pre-game show. So, tonight we’ll get to see cheerleaders before the only teams with the apparent ability to move the ball even take the field.
A little more than ten minutes from now the weekly jobless claims number is expected to show the job market is still at 4thdown and forever, with 408,000 new claims.
Just in case your afternoon starts with a little too much excitement, tune in as Ben Bernanke speaks to the Economic Club of Minneapolis today at 1 o’clock.
Chinese stocks were lower overnight, and a lot of other overseas markets that were higher are now slipping.
Our futures looked to be on the merry-go-round this morning. But during the past hour, they appear to have bought a ticket on the roller-coaster again. At this point, adjusted for fair value, the S&P futures are down 4½ points, the Dow futures are lower by about 29 points, and the NASDAQ futures are about 5½ points below fair value.
One step back, and then one step forward. It looks like yesterday’s late surge in stock prices will continue in the early going today, as the futures are suggesting that yesterday’s overall loss might be recovered early on.
Also looking for recovery, or at least stability are a couple of big companies this morning. Yahoo! finally showed CEO Carol Bartz the door, which was not totally unexpected. However, big changes are afoot at Bank of America. BofA has talked about cutting 3,500 positions. Now they’re reportedly talking about a number closer to 30,000. Not exactly the kind of jobs plan we were looking to hear about this week. Two of those looking for new employment will be the head of wealth management and the head of consumer and small business banking at the beleaguered Bank of America. Bank of America stock is indicated about 4 percent higher pre-market.
Australia’s Gross Domestic Product topped expectations last quarter, rising 1.4% year-over-year. We’ll also hear from the Bank of Canada later on. No change in Canadian interest rate policy is expected.
Nvidia raised their earnings guidance yesterday. Fairchild Semiconductor lowered theirs.
Overseas markets are higher across the board, with a good number of major markets higher by 2 percent or more. Adjusted for fair value, the S&P futures are up 11 points, the Dow futures are higher by about 93 points, and the NASDAQ futures are about 18 points above fair value.
We’re looking at a short week, but it’s a week that might contain a bunch of events, and many of those potential events might be not-so-nice. Before week’s end, we’ll have a better idea of how the French, the Germans and the Italians are going to deal with the debt crisis in Europe. We’ll find out if the President has a jobs plan that contains more than name calling and class warfare. And then, of course, there’s the tenth anniversary of the September 11thattacks. In short, a lot of things could go wrong, and our futures haven’t missed that fact this morning.
There aren’t a lot of traditional domestic economic reports scheduled this week, but just about every major central bank (except our own) will meet to discuss economic policy. This morning, the Swiss Central Bank decided to peg the maximum value of the franc to the euro.
At 10 o’clock, the August ISM index of non-manufacturing activity is expected to drop to the stall-speed level of 51 from July’s 52.7.
Asian markets are mostly lower. Europe is mixed after a big drop yesterday. Our stock futures? You may want to cover your childrens’ ears here – unless they’re short. Adjusted for fair value, the S&P futures are down 30 points, the Dow futures are down about 252 points, and the NASDAQ futures are about 41 points below fair value.
Welcome to the First Friday of the Month. That means that the early going in the stock market is likely to be, at least somewhat, and perhaps greatly influenced by the Monthly Employment Report. In just about 8 minutes, the Labor Department is expected to announce that about 60,000 new non-farm jobs were created in August and that the Unemployment Rate held steady at 9.1%. Of course, this is the setup for President Obama’s big Jobs Plan speech next Thursday. Hopefully, they’ll be able to schedule the President’s speech so that it doesn’t conflict with something really important, like a football game. You gotta love our priorities in this country.
Anyway, they appear to have their priorities straightened out at Pier One, which raised earnings guidance for the current quarter yesterday.
Markets overseas may have noticed our pre-employment report dive yesterday, as green arrows are few and far between this morning. Some major European markets are down between 2 and 3 percent.
Our futures aren’t quite that bad, but they aren’t very good. Adjusted for fair value, the S&P futures are down almost 13 points, the Dow futures are down about 98, and the NASDAQ futures are about 20 points below fair value.
Well, it’s September. We’ll hear no shortage of stories about September’s well-earned reputation as a lousy month for stock prices. Of course, the last two Septembers haven’t been bad at all. In fact, last September, the S&P 500 rose almost 9 percent. So, while history is instructive, it’s not necessarily predictive.
What can be predicted is that the Bickersons will all be back in Washington D.C. next week and as of yesterday, couldn’t even agree on what day next week they’ll start bickering again.
We’ll get the August Car sales Reports as the day goes along. Expect double digit gains from the major domestic automakers, compared to last August’s rather ugly numbers and an annualized rate of 12.1 million total vehicle sales. The weekly jobless claims number in about ten minutes should report about 407,000 new claims. However, watch the ISM Manufacturing Index at 10 o’clock, which could drop below 50 for the first time since July of 2009. A reading below 50 would indicate a contraction in Manufacturing activity. Expect a reading of 48½.
Costco reported an 11 percent rise in August same store sales, which was better than expected. They also announced that long-time CEO and co-founder will retire at the end of the year. Target and Macy’s and BJ’s Wholesale also reported better than expected sales. GAP’s sales fell short.
Stock futures are off their lows of the morning, and have rallied quite a bit over just the past five minutes or so. Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down about 4½, and the NASDAQ futures are just about even with fair value.
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