September 30, 2014
Welcome to the last day of the third calendar quarter of 2014. For all the recent volatility in stock prices, the third quarter has been pretty much a non-event for large-cap stocks. The S&P 500 Index is higher for the quarter, but by less than one percent. Small-cap stocks, however, haven’t been quite so fortunate. The Russell 2000 Index closed last night about 6 percent lower than its level of June 30th.
Shares of Ebay are getting about a 9 percent boost pre-market on the announcement that their PayPal unit will split off into a separate public company by sometime in the second half of 2015.
Ford Motor shares dove about 8 percent late yesterday after Ford blamed losses in South America and Russia as well as the costs of recent recalls for lowering their profit forecast.
Walgreen reported earnings about a half hour ago. The 74 cents per share matched estimates and revenue was in line. Walgreen shares are about 2 percent higher on the news.
The Case-Shiller Home Price Index, the Chicago Purchasing Managers Index and the Conference Board’s reading on September Consumer Sentiment all come by 10 this morning, but in the meantime stock prices are headed higher. In fact, we should recover the bulk of yesterday’s losses in the very early going today.
At this point, adjusted for fair value, the S&P futures higher by more than 5 points, the Dow futures are up 46 and the NASDAQ futures, boosted by the Ebay announcement, are about 18 points above fair value.September 29, 2014
In case you hadn’t noticed, October is less than 48 hours away. October, of course, is the month that brings us falling temperatures, falling leaves, and sometimes stock prices that fall fast enough to make us look forward to Halloween for panic-relief.
Not that the market plunges EVERY October. However, with the so-called financial media falling all over itself to predict the end of the 5½ year-long stock market rally, those with a tendency to time the market may well decide that it’s time.
This morning (and this week) will be chock full of economic data to consider. In just about 11 minutes, August Personal Income and Spending figures are expected to be up three-tenths of a percent and five-tenths of a percent, respectively.
The Pending Homes Sales and Dallas Manufacturing Surveys come in the 10 o’clock hour.
And it looks as if Shrek might get a new swamp in Japan. Softbank is reportedly offering 32 dollars per share to buy Dreamworks Animation. That’s a 10 dollar per share premium to Friday’s closing price for Dreamworks. Also, Encana is buying Athalon Energy for almost 6 billion dollars.
Asian markets were mixed overnight, but Europe is, on average, about a half percent lower, as are our futures. At this point, adjusted for fair value, the S&P futures lower by 11½ points, the Dow futures are down 92 and the NASDAQ futures are about 25 points below fair value.
September 26, 2014
If anyone forgot that stock prices can be volatile, welcome to this week. Yesterday, one percent or greater decline in the major indexes was the third big decline of the week. We will see the indexes bounce back at the open this morning, but don’t get too excited about it. Although the Dow futures are indicating an increase of about 70 points in the Dow Jones Industrial Average, about half of that gain comes courtesy of one stock. That would be Nike.
Last night, Nike reported better than expected profits and margins and some surprising European growth. Nike shares are indicated about 7 percent higher pre-market.
Blackberry reported a loss of 2 cents this morning, which was much better than the forecasted 15 cent loss. Blackberry still says that they’ll be cash-flow break-even by the end of 2016.
The Government’s final guess at second quarter Gross Domestic Product comes in just a little more than 15 minutes from now and is expected to creep up to 4.6 percent. We’ll also get the University of Michigan’s final verdict on September Consumer Confidence just before 10 o’clock. Expect a reading of 84.6.
Asia was mostly lower overnight, but Europe has turned a bit higher. At this point, adjusted for fair value, the S&P futures higher by almost 7 points, the Dow futures are up 79 points and the NASDAQ futures are now 17 points above fair value.
September 25, 2014
Stock prices haven’t finished lower for four consecutive days all year. Yesterday would have ended that streak. Instead, stock prices rallied steadily throughout the day to finish about one percent higher.
Dovish monetary remarks from a Federal Reserve official and the President of the European Central Bank helped out yesterday, as well as a surprisingly strong increase in the report on New Home Sales.
This morning at 8:30 we’ll get the August Durable Goods Report. The headline number is expected to dive to a negative 17, but only because of a tailspin in aircraft orders, which were very, very strong in July. Absent transportation orders, the Durable Goods number is expected to rise about eight-tenths of a percent.
Former internet darling Jabil Circuit, which supplies parts to Apple, is having a good morning. Jabil reported fourth quarter income of a nickel per share, which was a nickel better than expected. They raised first quarter guidance and Jabil shares are looking to open 4 percent higher.
Overseas markets are mixed, although Europe is on average about a half percent higher. Our futures were nicely higher earlier this morning, but lost a lot of ground just in the past 15 minutes. At this point, adjusted for fair value, the S&P futures down 3 points, the Dow futures are down 2 points and the NASDAQ futures are now 5½ points below fair value.
September 24, 2014
One of the pleasant effects of the Fed’s super-low interest rate policy has been a noticeable recovery in prices for new and existing homes. The Fed’s ability to raise interest rates without destroying housing demand is a critical question as we look to the future.
Well, look no further than last week for a warning sign. The Mortgage Bankers Association reports that the number of mortgage applications last week fell by more than 4 percent. That included a 7 percent decline in refi applications as the average rate for a 30 year conforming mortgage rose to 4.39 percent. That rate was just 4.27 percent just two weeks ago. Overall, applications for home purchase mortgages is now down 16 percent from a year ago.
We’re entering the last trading week of the calendar quarter today, yet there have not been a great number of earnings warnings issued. Bed Bath & Beyond reported earnings last night of $1.17 per share, which was 3 cents better than expected.
Most of the big economic data comes tomorrow and Friday. But it looks as if our three-day skid may be over, or at least interrupted in the early going today. Overseas markets are mixed, but at this point, adjusted for fair value, the S&P futures are higher by more than 3 points, the Dow futures are up 41 and the NASDAQ futures are almost 8 points above fair value.
September 23, 2014
Stock prices took a significant breather yesterday and continue to breathe rather heavily this morning as we head toward a day that will be heavy on Fed-speak, but light on significant economic data.
Earlier this morning, the ICSC-Goldman Store Sales Survey told us that same-store sales inched upward last week and are now 4.1 percent higher than a year ago. At 9 o’clock, the Federal Housing Finance Agency will report on New Home Sales Prices and later on today, Bed Bath & Beyond and Carnival Cruises report earnings. CarMax just reported better than expected earnings, but the devil was in the details, and CarMax shares are indicated about 5 percent lower in pre-market trade.
Also looking to open lower are share of companies that have pending tax-inversion deals on the table. Shire Pharmaceuticals, AstraZeneca, Mylan and Burger King are all lower after the White House’s announcement that they changing the corporate tax rules without the blessing of Congress, to combat tax inversion strategies.
China and Australia were higher overnight, but just about all another foreign markets of substance are lower. Our futures have been on a slippery slope most of the morning. At this point, adjusted for fair value, the S&P futures are lower by about 6 points, the Dow futures are down 32 and the NASDAQ futures are about 13 points below fair value.
September 22, 2014
Well, the big hubbub over Alibaba came and went on Friday, with the stock closing well above it’s “friends and family” price, which was predictable. However, if you bought at the first publicly available price, you lost money on the day, which was also fairly predictable. In an interesting side note, some people thought that buying shares of Yahoo, which owned a big chuck of Alibaba stock, was a good “backdoor” way of participating in the Alibaba frenzy. Yahoo closed more than 2 percent lower on the day Friday, and this morning took downgrades from two major brokerage firms.
It’s Monday, so there must be a merger out there. Look to drug giant Merck. They will buy life-sciences firm Sigma-Aldrich for $140 per share in cash. That’s a 37 percent premium to Friday’s closing price.
At 10 o’clock, we’re expecting to hear that August Existing Home Sales rose by about one percent, following up a 2.4 percent increase in July.
Gold is trading sinking near $1,215 per ounce this morning as its slide continues, and silver is sliding even faster at a four-year low.
Most markets overseas are a little lower, and we should see some light red arrows at 9:30 as well. Adjusted for fair value, the S&P futures are lower by about 5 points, the Dow futures are down 19 and the NASDAQ futures are about 12 points below fair value.
September 19, 2014
It’s a big day for early investors in Alibaba. Many of them will be selling shares to those on the “friends and family” list for 68 dollars per share. Many analysts expect the price to bubble up from there once the shares start trading, with the demand coming mainly from the general public and the actively managed mutual funds that don’t get an initial allocation.
Some people feel like they’re missing out on something special if they don’t buy Alibaba today. Of course, those same people have probably been waiting in line for a week to buy a new iphone. Historically, many share prices sink well below their offering price in the weeks following the initial public offering. A notable exception is Baidu, which has proven over the years to be quite a good buy at the IPO price. Baidu traded at less than 8 bucks nine years ago today, shortly after its IPO. Those shares are around $230 dollars apiece today. Baidu, of course, is a Chinese internet stock. Hmmmmmmmm.
Shares of Dresser Rand have not been sinking overnight. They’re indicated about 12 percent higher on buyout rumors. And software giant SAP will buy Concur Technologies in a 7.3 billion dollar deal. Concur shares are about 20 percent higher pre-market, while SAP is off about 3 percent.
Leading Economic Indicators come at 10 o’clock and are expected to come in four-tenths of a percent higher.
Overseas markets are mostly higher, and apparently, here we go again. Adjusted for fair value, the S&P futures are higher by about 7 points, the Dow futures are up 62 and the NASDAQ futures are about 15 points above fair value.
September 18, 2014
We escaped yesterday’s Federal Reserve Statement with the expected goodbye to asset purchases. However, it still may be a “considerable time” before the Fed starts raising rates, and that has traders in a very good mood this morning.
Of course, not everybody is in such a great mood. Shareholders in Rite Aid are reaching for the Dramamine this morning as the shares are set to catch about a 7 percent downdraft. Rite Aid beat the earnings estimate, but guided lower on deteriorating margins in the pharmacy department.
Not to be outdone, Pier One shares are looking to start the day about 12 percent lower after warning about lousy margins and lower profit.
At 8:30, the Weekly Jobless claims report is expected in at 305,000 new claims, and then at 10, the September Philadelphia Fed survey is expected to settle back to a reading of 23 from the very hot number of 28 reported for August.
Yes, Alibaba prices today and trades tomorrow. But before you get in line, be aware that there are reportedly no sale restrictions on possibly as much as 8 billion dollars worth of shares from early investors. That’s really good news if you already own those shares. Otherwise, maybe not so much.
Outside of Hong Kong, foreign markets have latched on to yesterday’s rally and we should continue higher at 9:30. Right now, adjusted for fair value, the S&P futures are higher by nearly 7 points, the Dow futures are up 44 and the NASDAQ futures are about 14 points above fair value.
September 15, 2014
While the traders are all abuzz with the upcoming Initial Public Offering of Alibaba, investors will be transfixed with the Federal Reserve Open Market committee this week.
Alibaba is China’s largest e-commerce company and word from their roadshow this morning is that due to strong interest, the IPO price, which is expected to be set this coming Thursday, may rise to near 70 dollars per share. The IPO is expected to raise well more than 20 billion dollars and demand for the shares is very strong indeed.
Before we learn the details of all that, we’ll get the details on the latest Federal Reserve interest rate policy. That comes on Wednesday afternoon and traders are worried that interest rates may be headed higher sooner than most believe.
The September Empire Manufacturing Index will tell us what’s happening with manufacturing in the New York area. That number comes at 8:30 and is expected to rise to almost 16 from the August reading of 14.69.
No trading in Japan overnight. Other markets overseas are mixed, but mostly a little lower. There’s not much going on with the futures this morning, as we’re looking for a pretty flat open for stocks. Right now, adjusted for fair value, the S&P futures are down a point, but the Dow futures are up 9 and the NASDAQ futures are 2½ points above fair value.
September 12, 2014
It should be a relatively quiet open for most share prices this morning as we round the corner and head for the last couple weeks of the third quarter.
There are a couple of stock prices on the move higher in the premarket. Darden Restaurants, starting to implement a turnaround plan for its Olive Garden eateries, reported first quarter earnings of 32 cents per share. That was a penny ahead of expectations, and Darden shares are indicated about 2½ percent higher pre-market.
A company named Conversant is being acquired by Alliance Data for over 2 billion dollars. Conversant shares are higher by 32 percent on that news.
Here’s some cautionary news from a company call Cardhub.com. U.S. consumers are now carrying an average credit card balance of about $6,800, and it’s expected to top $7,000 by the end of the year. Yes, that’s lower than the $8,400 average balance right before the bottom fell out at the end of 2008. However, it’s estimated that the point at which monthly payments become unsustainable and delinquencies soar is only about $1,500 away.
At 8:30, August Retail Sales are expected to have ticked up by a half percent. U of M’s Sentiment Index comes at 9:55, but in front of that, we’re looking pretty flattish.
At this point, adjusted for fair value, the S&P 500 futures are higher by almost a point, the Dow futures are up 3, and NASDAQ futures are about a half point below fair value.
September 11, 2014
The stock market was already worried about Russian incursions into Ukraine and ISIL atrocities in Iraq. In the aftermath of President Obama’s speech last night, what better day to worry about what might lie ahead than September 11th? And if the equity futures are any indication, traders are worried, indeed.
Before we get to that, there are a couple interesting stock stories this morning. RadioShack is a stock that has been given up for dead by more than one analyst. Earlier this morning, the stock was indicated more than 30 percent higher, on word that they were going to restructure, close stores, seek capital -- you know the drill. Anyway, that pre-market exuberance seems to have calmed somewhat. RadioShack shares now looking to only rise a bit, and still trade at less than a buck per share.
Lululemon should have a nice morning after reporting 33 cents in quarterly profit, which was 4 cents better than expected. Lulu raised full year guidance, even though gross margins are down to just over 50 percent, from a prior 54 percent. Shares are indicated about 14 percent higher pre-market.
Jobless claims come at 8:30, but there is word that the European Union is about to slap Russia with more economic sanctions, and that has had the futures sliding lower all morning.
At this point, adjusted for fair value, the S&P 500 futures are lower by 7 points, the Dow futures are down 66, and NASDAQ futures are about 13 points below fair value.
September 10, 2014
Granted, it was a Labor Day shortened week. However, mortgage applications turned in their worst numbers in 14 years, dropping more than 7 percent on the week. Purchase applications were only down 3 percent, but refinancings were off 11 percent on slightly higher interest rates.
Trending higher in the pre-market are shares of Land’s End. Quarterly profit of 37 cents per share beat the estimates by a mile, and were actually higher than the comparable quarter last year. Gross Margins improved to 48½ percent from 45½. It’s all good news for Land’s End shares, which have been higher in the pre-market by about 4 to 5 percent.
Microsoft is reportedly nearing a deal to buy Mojang, the maker of the popular Minecraft video game. The price tag is rumored to be about 2 billion dollars, or about the price of a certain professional basketball team.
Following yesterday’s drop in the U.S. markets, most markets overseas are lower, although European markets really aren’t down by much. Our futures are off their earlier highs. At this point they are still positive, but we’re still more than an hour away from the open. Adjusted for fair value, the S&P 500 futures are higher by about a point and a half, the Dow futures are up 22, and NASDAQ futures are about 2½ points above fair value.
September 9, 2014
We’re less than five hours away from the most attention-getting announcement of the day. That, of course, is Apple’s rumored unveiling of the iPhone 6.
Supposedly the new iphone will feature a bigger screen, and then a bigger-than-that-screen screen. We may get word on the status of the iWatch, as well. Not that any of this will stop war, or cure cancer, or anything like that. But it is one more way to get people who don’t really need another gadget to run up their credit card balances.
General Mills announced last night that they will buy organic food producer Annie’s at a 37 percent premium.
Dick’s Sporting Goods suffered a broker downgrade this morning. Ralph Lauren gets an upgrade.
Within the last hour the National Federation of Small Business Optimism Index rose to a post-recession high of 96.1. Job openings grew last month but small businesses are not, on average, forecasting big future employment increases.
Markets in South Korea and Hong Kong were closed overnight. Asian markets that did trade were mixed. Europe is mostly a smidge lower. Our futures have lost their earlier gains. At this point, adjusted for fair value, the S&P 500 futures are lower by about a half-point, the Dow futures are down 10, and NASDAQ futures are a fraction of a point above fair value.
September 8, 2014
It’s Monday, so we must have at least one corporate deal to report. This morning, General Electric has finally found a buyer for its appliance division. Electrolux will pay 3.3 billion dollars in the deal. Electrolux is trading about 6 percent higher in Europe on the news, while GE shares are little changed pre-market.
Hertz shares are also about 6 percent higher on word that their CEO is stepping down.
Earnings news from Campbell Soup is not all that bad. However, Campbell’s lowered its profit outlook for fiscal 2015 by about a dime from the former $2.61 target. Campbell’s blames a “challenging consumer environment.” So, if anyone challenges you to not have a bowl of tomato soup this coming year, you’ll know why. Campbell shares are indicated about 1½ percent lower.
We all know why auto maker Tesla shares dropped over 3 percent on Friday. Tesla founder Elon Musk said that Tesla shares were “kind of high” at around $285 per share. Of course, some people thought the stock was ridiculously high last year at $160 per share.
Nothing much on the economic calendar today, outside of a report on consumer credit at 3 o’clock.
At this point, adjusted for fair value, the S&P 500 futures are lower by about 2½ points, the Dow futures are down 31, and NASDAQ futures are just about 4 points below fair value.
September 5, 2014
There are hundreds of economic reports for traders to analyze each month. But the number that gets the most attention among the monthly reports is the Monthly Employment Report. And why not? With the Federal Reserve’s belief that they are responsible for creating new jobs by lowering interest rates, traders AND investors should pay attention.
The problem is that good news on new jobs, which is presumably good news for the economy, could be bad news for the ultra-low interest rates that have been supporting the stock market’s 5½ year rally.
Expect that the 8:30 Employment Report will reflect creation of 230,000 new jobs in August and a decline in the Unemployment Rate to 6.1 percent. Both of those numbers would indicate a stronger Jobs market month-over-month. Average hourly earnings are expected to have risen two-tenths of one percent after a “no-change” in July.
Shares of El Pollo Loco are more than 4 percent higher on a good earnings report, which was their first after the recent IPO.
Asian markets were mixed overnight, but major European markets are lower.
Our direction at the open may change at 8:30, but at this point, adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down 47, and NASDAQ futures are just about 3½ points below fair value.
September 4, 2014
Traders knew that this morning’s big news would be coming from the European Central Bank and about a half hour ago, the ECB did not disappoint. Continuing to follow in our six-year old footprints, the European Central Bank cut a key interest rate from fifteen-one hundredths of a percent to just five-one hundredths of a percent. Even more aggressive monetary easing is apparently on the way in Europe, where economic growth remains an elusive concept.
ECB President Draghi will hold a press conference shortly to elaborate.
Shares of Telecom-equipment firm Ciena are getting roughed-up in the pre-market. Ciena reported 32 cents of adjusted quarterly profit, which as a four cent beat. Unfortunately, they forecast lower-than-expected sales and a worse-than-expected operating margin. Ciena shares are off about 10 percent this morning.
Weekly Jobless Claims come at 8:30 and the August ISM Services Index at 10 is expected to slump a bit to a level of 57.5. Even though lower than the July reading, 57½ would still indicate growth in the services sector of the economy.
Asian markets were mixed overnight. Europe is higher on the interest rate cut.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 41, and NASDAQ futures are 10 points above fair value.
September 3, 2014
The S&P 500 Index slipped a little yesterday, but still held above the 2000 level.
This morning, some Ukrainian news has European markets in a little relief rally and has our futures pointing higher. However, the veracity of the news itself is in dispute. Overnight, Ukrainian leaders said that a cease fire has been negotiated with Russia. Russia, of course, is sticking to the story that they’re not involved in the Ukraine, and so can’t negotiate something in which they’re not involved. They did say, though, that they are helping to resolve Ukraine’s problem. Whatever. European markets are one percent higher on the belief that maybe there will be some Russian natural gas available to them this coming winter.
Also a little higher this morning are shares of luxury home builder Toll Brothers. Profits doubled last quarter on rising sales at rising prices. Last week, however, overall new purchase mortgage applications fell by two percent. That was more than offset by a surge in refi applications on falling interest rates.
August Car sales results will be rolling in all morning. We’ll also get the July Factory Orders at 10 o’clock and the Fed’s Beige Book at 2.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 59, and NASDAQ futures are about 9 points above fair value.
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