Wall Street Wrap

Financials Weak and Dow 10,000 No More

By Robert Perrego, at 5:06 pm on February 8th, 2010

The Dow Jones Industrial Average slid steadily all afternoon closing down 103.84 points today (-1.03%, 9,908.39) and closed below 10,000 for the first time since November 4th of last year.  All but 2 of the 30 components were losers today with the three weakest stocks all being finance related companies.  Bank of America Corp. (NYSE: BAC) dropped 3.46% (-$0.52, $14.48), American Express Co. (NYSE: AXP) lost 2.80% (-$1.06, $36.79) and the Travelers Companies Inc. (NYSE: TRV) finished lower in the red by 2.44% (-$1.23, $49.05).  Home Depot Inc. (NYSE: HD) was the strongest of the Dow components gaining 2.18% and also up were home builders Lennar Corp. (NYSE: LEN) +4.62%, Beazer Homes USA Inc. (NYSE: BZH) +3.64% and Pulte Homes Inc. (NYSE: PHM) +2.29%.

The S&P 500 dropped 9.45 points (-0.89%, 1,056.74) and the Nasdaq 100 was down 11.24 points (-0.64%, 1,734.88) and was the leader by being the smallest loser.

I guess the sky stopped falling over in Europe as the euro stabilized against the dollar and Greece was mentioned by the talking heads on CNBC slightly less than the babbling about former Merrill Lynch & Co. chief John Thain getting a new job over at CIT Group Inc.  Various cures for what ails Greece have been proposed from applying for loans from the International Monetary Fund to getting more on their credit card from other EU members.  I vote the EU members bail the EU members out as we pay into the IMF and the chances of Greece paying that money back anytime soon with a strike or protest every other day does not look to good to me.  The Greeks are proud of the fact they invented democracy and the rest of the world is pretty happy they gave it to us, but constantly striking, protesting and having your voice heard pays less taxes than actually going to work.

The dollar slipped marginally, but stayed up at level it has not seen since August of last year.  With the dollar at this relatively high level and basically scared up a tree by the crisis in Greece (and other countries), commodities are looking like a bargain if you think the dollar will come back down when (if) Europe stabilizes.

New York spot gold lost $2.70 an ounce and last traded at $1,062.30 (-0.25%, 4:24 p.m.) as this percentage loss outperforms the 1%+ the DJIA lost.  CNBC has had gold up all day over $10 an ounce and I am guessing the futures contract they are watching is longer dated than the spot market.  If you are invested in or trading the gold ETF’s you will find that they correlate more closely with the spot market than whatever CNBC decides to display.

Oil gained $0.48 to $71.65 a barrel (+0.65%, 4:27 p.m.) as the steep slide down from last Wednesday’s peak is halted.  Oil reversed in this general neighborhood last December with the United States Oil Fund (NYSE: USO) bottoming at $35.48 on December 11th before running up to $41.17 on January 8th (+16%).  For all you channel and range traders out there, today’s close at $35.09 does hit short term bottoms from last December, September and August.

We have a relatively light economic calendar this week with no speeches or testifying for Timothy Geithner.  Fed Chairman Ben Bernanke testifies in front of the house Financial Services Committee on Wednesday about how he is going to let all the air out of the liquidity balloon without crushing job creation (like that is happening now anyway).  As long as I don’t hear ‘then we pray’, it sounds like a plan to me.  Ben is a pretty smart guy and the fact that our economically challenged politicians are going to quiz him on whatever he decides to do and then possibly even understand his answer is comical.

Tomorrow at 7:45 a.m. we have the ICSC-Goldman Store Sales, at 8:55 a.m. we get the Redbook and Wholesale Trade numbers come out at 10.

Selected earnings estimates for Tuesday, February 9th:

AGU 0.24, AFG 0.98 after the close, BIDU 1.68 atc, BJS 0.04, CAM 0.53, CHD 0.80 before market open, CVH 0.56 bmo, EOG 0.98 atc, IT 0.26 bmo, IFF 0.62 bmo, LGF -0.23 atc, MLM 0.33, TAP 1.10, NYX 0.48 bmo, PCH 0.04 bmo, PHM -0.19 bmo, RNR 2.50 atc, TIN 0.03 bmo, KO 0.67 bmo, VSH 0.12 bmo, VMC -0.01, DIS 0.39 atc, XL 0.70 atc

Tags: , , , , , , , , , , , , , , , , , , , , , ,

Wall Street Wrap

Slow Day on the Street

By Robert Perrego, at 4:36 pm on December 23rd, 2009

Two of the four economic releases today showed a weak housing market after yesterday’s market experienced a modest rally off of the Existing Home Sales report.  A confirmation of the Existing Home report with strong numbers from the MBA Purchase Applications or the New Homes report would have been very bullish for the market, but as it is, the lone solid number from yesterday looks like an outlier.  The question is, was yesterday’s number the outlier or today’s?  Reading the reaction of the home-builder stocks, the rise yesterday was more than the drop today, so we can say the market thinks the positive trend illustrated by yesterdays number to be the path.  Over two days Pulte Homes Inc. (NYSE: PHM) is up 64 cents (+6.8%, $10.06), Ryland Group Inc. is up 80 cents (+4.05%, $20.54), D R Horton Inc. (NYSE: DHI) is up 38 cents (+3.54%, $11.12), Toll Brothers Inc. (NYSE: TOL) is up 77 cents (+4.19%, $19.15), Lennar Corp. (NYSE: LEN) is up 41 cents (+3.19%, $13.27) and Beazer Homes USA Inc. (NYSE: BZH) is up 3 cents (+0.60%, $4.99).

The market was very slow today with the biggest action coming at 10 a.m. when the New Home Sales number was released.  That number came out below expectations and the market sold off immediately with the Dow Jones Industrial Average dropping 30 points within the next 24 minutes.    The DJIA has dropped faster and farther many times so even this action, though it was the quickest move today, was not much.  The DJIA finished up 1.51 points (+0.01%, 10,466.44) on a day that probably drove day traders crazy and cost them money.  The S&P 500 added 2.89 points (+0.25%, 1,120.76) and the still outperforming Nasdaq 100 gained a decent 12.48 points (+0.67%, 1,851.99).

The New York Spot price for gold gained $3.80 an ounce ($1,087) after being up more than $12 during the day.  The SPDR Gold Trust (NYSE: GLD) was strong most the day, trading as high as $107.45 before gradually declining into the close at $106.55.  There was a sale of about a half-million shares in the last minute of trading that dropped the stock almost 30 cents.

Nymex crude jumped $2.20 a barrel (+2.96%, $76.60, 4:11 p.m.) on inventory supply data and dollar weakness.  The dollar opened lower today lending to the strength in gold and oil.  The dollar-euro relationship has traded to within 25 cents of its 200 day moving average and some say this may mark the end of the recent dollar rally.

Tomorrow we get Durable Goods Orders (0.5% expected) and Jobless Claims (470,000) at 8:30 a.m. and Natural Gas inventory levels at 10:30 a.m.

Friday the markets are closed for Christmas.

Tags: , , , , , , , , , , , , , , , , , , ,

Wall Street Wrap

Fed Says Job Losses Abating, Leaves Rates Unchanged

By Robert Perrego, at 4:48 pm on December 16th, 2009

Well the good news is job losses are slowing down but the bad news is we are still losing jobs.  In the last meeting for 2009, the Federal Open Market Committee voted to keep interest rates “exceptionally low” for “an extended period of time” while noting that they are seeing some improvement in household spending.  This meetings statement was very similar to the past few except some comments were made on slowly improving areas of the economy such as household spending and decreasing job losses.  These statements strengthened the dollar with the US Dollar Index Future spot price trading up on the announcement.  You do not hear ‘The Fed’ without hearing ‘exit strategy’ these days and as it is widely thought that raising interest rates with 10% unemployment would not be greeted favorably by the Obama Administration, the first step towards the ‘exit’ would be to stop their quantitative easing programs.  So, The Fed also stated they will continue to purchase agency mortgage-backed securities through February 1, 2010 but after that ‘the store is closed.’

After The Fed announcement at 2:15 p.m., the Dow Jones Industrial Average dropped about 30 points net into the close to finish down 10.88 points (-0.10%, 10,441.12) while the S&P 500 dropped about 5 points on the announcement and finished up 1.25 points (+0.11%, 1109.18).  The Nasdaq 100 rose 2.61 points (+0.14%, 1,800.82).

The dollar traded up on the announcement and basically closed unchanged on the day.  Earlier in the day the usual relationships were acting as expected with the dollar down and stocks and commodities up.  Interestingly, the dollar rallied into the end of the day and erased its losses while gold and oil also closed near their highs on the day.  New York Spot Gold added $13.60 an ounce (+1.21%, $1,136.60, 4:14 p.m.) and the SPDR Gold Shares (NYSE: GLD) bounced off support and broke higher by $1.36 (+1.25%, $111.59).  The GLD’s chart looks very nice for more upside movement as the latest gold pullback may have seen its lows.  Paulson, Einhorn and most every other gold bull was saying they would be buying on dips and I wonder just how much they were able to add to their positions over the past 3 or 4 days.

Nymex crude added $2.03 a barrel (+2.87%, $72.72, 4:09 p.m.) as it seems the pullback in oil may be over with too.  We were below $70 a barrel on Monday but a nice run over the last two days has changed all that.  Copper, steel, coal and agricultural commodities were all up as well.

Another federal agency was in the news today as the Federal Trade Commission filed a lawsuit against Intel Corp. (NSDQ: INTC) for anti-competitive behavior.  I think the legal community founded Intel and they didn’t do it for semiconductor chips as this company generates lawsuits about every other day.  The lawsuit cites bundling practices and even a secretly redesigned compiler software that makes their competitors chips run a little slower.  Intel finished lower by 42 cents (-2.12%, $19.38).

Nvidia Corp. (NSDQ: NVDA) jumped higher as they are one of the firms that Intel is supposedly squeezing out of the chip market as the graphics chip company added $1.26 (+8.05%, $16.91).

Housing companies were strong today as Housing Starts were up 46k over last month and Permits were up 32k.  Beezer Homes USA Inc. (NYSE: BZH) gained 13.36% (+$0.60, $5.09), Pulte Homes Inc. (NYSE: PHM) gained 5.06% (+$0.45, $9.34), D. R. Horton (NYSE: DHI) gained 4.89% (+$0.48, $10.29) and Lennar Corp. (NYSE: LEN) was up 4.73% (+$0.57, $12.62).

The big economic news of the week was the FOMC meeting and with that out of the way we have Jobless Claims tomorrow at 8:30 a.m. with the expectations being 465k with a range from 460 to 470.  Friday is a quaruple witching day in the options market.

Tiger Woods name was only mentioned 232,000 times on CNBC today as something really important to all of our lives probably did not happen or have anything at all to do with Tiger Woods but CNBC was there to cover it.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,

Wall Street Wrap

They Are Calling Everything a Bubble, Except Housing

By Robert Perrego, at 11:11 pm on November 17th, 2009

Home Depot Inc. (NYSE: HD) reported earnings today before the bell and beat estimates by 5 cents ($0.41 vs. $0.36), hit their expected revenue number of $16.26 billion and guided higher for the fourth quarter.  Then the shares went and traded off 2.38% today.  Even though Home Depot guided higher, expectations for the fourth quarter were even higher yet on Wall Street.  Yesterday Lowe’s Companies Inc. (NYSE: LOW) reported and missed by a penny as their profit dropped 30% year-over -year.  In trading action today Home Depot dropped 66 cents (-2.38%, $26.99) and Lowes dropped 26 cents (-1.19%, $21.48)

Home Depot is a Dow Jones Industrial Average component which rose 30.46 points (+0.29%, 10,437.42).  The S&P 500 was up barely adding a point (+0.09%, 1,110.32) and the Nasdaq 100 gained 4.65 points (+0.25%, 1,812.21)

Everyone is talking about bubbles lately, spurring Bernanke to comment on the dollar, which was previously thought to be the playground only for the Treasury.  Worries are becoming so common that it brought San Francisco Fed President Janet Yellen to comment directly on whether or not the Fed should get involved with the markets.  Previously The Fed would stick to its knitting and worry about unemployment and price stability.  Economists and bankers in China are worried we are causing a Chinese real estate and equity bubble by keeping interest rates at practically zero and flooding the world with liquidity.  And to top this all off, just about everyone seems to think commodities are in a bubble.

The concern in the U.S stock market is the ever increasing leverage employed due to the dollar carry trade.  The short dollar position is very crowded now and participants and pundits are becoming more and more worried about such a precarious situation.  Who would have thought everyday discussions would be about bubbles so soon AFTER a bubble popped.

The one thing you won’t hear mentioned in the same sentence with ‘bubble’ is housing here in the U.S.  The only thing that seems to be keeping homes selling at all is the first time buyer tax credit, which was just extended.  We have a ‘Tale of Two Cities’ here for the housing related stocks – the ones that got hammered and the ones that got obliterated.  From the peak of the home building ‘bubble’ (past tense I guess you can get them into the same sentence) to their lows, Beazer Homes USA Inc. (NYSE: BZH) lost 93.7%, Pulte Homes Inc. (NYSE: PHM) lost 80.1% and Lennar Corp. (NYSE: LEN) lost 78.9%.  Beazer is down 93.7% AFTER it bounced 2,005% of its low of $0.24 on March 9th.  Home Depot and Lowe’s are only down 39.1% and 39.9% respectively and the best performing home builder was Toll Brothers Inc. (NYSE: TOL) at down 64.5%.  This makes you wonder where these stocks would be without the first time buyer program.

New York Spot Gold held tough today in the face of a rising dollar gaining marginally up $1.30 an ounce to $1,141.10.  Of note today in gold trading was a single trade in the gold ETF (NYSE: GLD) of 2,525,000 shares at $111.205.  This is a single trade with a dollar amount of $280.7 million.  It looks like some institutional equity salesman made a real nice commission check today.

Nymex crude gained 24 cents to $79.41 a barrel and the dollar gained 0.63% with the Dollar ETF (NYSE: UUP) up 14 cents to $22.36.

So wait a minute!  The dollar goes up and so does gold, oil and stocks?  Methinks this bubble thing could be overblown.  Then again it may not as you only really know a bubble when you are hearing the air whooshing out and you are sell-sell-selling.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,

Wall Street Wrap

Wall Street Wrap – Goldman ups Gold to $1,200

By Robert Perrego, at 5:44 pm on November 11th, 2009

Goldman Sachs Group Inc. (NYSE: GS) raised their price target on gold to $1,200, citing continued low interest rates and central bank buying.  The interesting shift over the past year or so has been that central banks are now net buyers of gold, where in the past they were sellers.  “Gold conspiracy” allegations exist, due in part to central bankers being such traditional sellers of gold.  The “conspiracy” is that the world’s central banks are suppressing the price of gold to hide the true rate of inflation.  Goldman has noticed that central banks are now deciding that even if their government needs money, and the gold they have had on hand for decades now has a very large profit built in, the perception is that a) it is going higher, and b) that it is a good way to diversify from paper currency, most importantly the dollar.  Governments from India to China to Chile are now net buyers of gold.

China reported that their industrial production was up 16% showing that somewhere on the planet an economy is doing well.  Next week Obama travels to China and he has stated he will ask them to appreciate their unit of currency, the yuan.  China has seen decent internal economic growth but a large share of their jobs still rely on the export business.  Appreciating the yuan will make U.S. goods cheaper relative to Chinese goods, and thus hopefully create more jobs here at home.  Sounds good right?  Appreciating the yuan also depreciates the dollar even more, and that means the trillion dollars plus the Chinese are holding will be worth less.  The Chinese may agree to appreciate the yuan even though they lose jobs and dollars, as they would like to see the U.S. consumer back on their economic feet and buying Chinese goods like locusts as we did in the good old days.

The reason I am so bullish on gold, and pretty much every other commodity, is that if this economic recovery remains tepid and jobs are hard to find worldwide, we could end up with a spiral race to the basement among the world’s currencies.  Each government will be trying to steal jobs from the others by devaluing their currency to make their products cheaper worldwide.  As the currencies are devalued, relatively, commodities increase in value.  It is not easy to run a printing press and have a gold bar pop out the other end.

The Dow Jones Industrial Index was up 44.29 points today (+0.43%, 10,291.26) with the S&P 500 gaining 5.5 points (+0.50%, 1,098.51) and the Nasdaq 100 put in the strongest performance rising 9.78 points (+0.55%, 1,782.95)

New York Spot Gold is up $11.90 an ounce (+1.08%, $1,117.70, 4:54 p.m.) and traded an all time high of $1,119.60 this morning.  Something VERY unusual happened today as both the Dow and gold rose AND the dollar was UP!  For quite some time now the Dow and gold would go exactly opposite the dollar.  I can see the Goldman stamp of approval on gold hyping up some buyers but the Dow rising too?  This is very strong relative performance for gold, and my chart of the iShares Gold ETF (NYSE: GLD) shows me that gold has now broken out to the topside of the ‘return’ or ‘reaction’ line of its trend channel.  This is very bullish as this means there is NO MORE resistance to the upside.

Nymex crude was up 23 cents to $79.20 a barrel today.  Hurricane Ida turned into tropical storm Ida and is no longer threatening oil production in the gulf.

The home-builders were on fire today with Toll Brothers (NYSE: TOL) saying business jumped a greater than expected 42% year over year.  This had all the home-builders up over 5%.  TOL +16.42%, BZH +12.35%, PHM +8.13%, DHI +5.73% and LEN +5.73%.

Tomorrow we get Jobless Claims.  Let’s look at this positively, Thursdays are always an adventure now.

Tags: , , , , , , , , , , , , , , , , , , , ,

« Older Entries