News

Housing and Auto Data Send the Market Higher

By Robert Perrego, at 5:36 pm on February 2nd, 2010

Housing, financial and auto companies blazed the market path lower last year as the poster children for the economic nightmare that took the Dow Jones Industrial Average from its all time high of 14,198 to the low at 6,469.  Today, while Paul Volcker continued beating up on the banks, Ford Motor Co. (NYSE: F), General (Government) Motors and D.R. Horton Inc. (NYSE: DHI) released data giving the market optimism and also 117 points.  Ford reported their January sales increased 25% and GM was up 14% while Toyota and Chrysler dropped.  D. R. Horton actually posted a profit and the Pending Home Sales Index increased by a percentage point on a month-over-month basis, showing a flicker of strength in the housing sector.

The Dow Jones Industrial Average added 111.32 points (+1.09%, 10,296.85) with 28 of 30 companies finishing with gains while the S&P 500 rose 14.13 points (+1.30% ,1103.32).  The Nasdaq 100 lagged behind, gaining only 16.20 points or 0.92% (1,776.92)

Treasury Secretary Timothy Geithner defended the largest budget ever proposed in the history of the world, as Senators grilled him on President Obama’s new $3.8 trillion budget, fully loaded with a $1.56 trillion deficit.  At the same time, Paul Volcker was defending legislation to limit proprietary trading by banks.  Somehow, someone got the idea that proprietary trading caused the credit crisis.  Back when professional proprietary equity trading was taking off (prop day-trading), it seemed every evil deed within 50 miles of Wall Street was blamed on ‘proprietary trading’, ‘fast money trading’ and ‘day traders.’  I was a prop trader for six years and from what I remember, the people that knew the least about trading always blamed trading, even when it had absolutely nothing to do with trading.  “Deja vu all over again.” (Yogi Berra 1960)

New York spot gold added another $8.30 an ounce (+0.75%, $1,113.90, 4:32 p.m.) after popping up $25 yesterday as the PowerShares DB US Dollar ETF (NYSE: UUP) looks like its recent rally is over.  The UUP lost 0.34% today as it closed below its 200 day exponential moving average and also broke below the uptrend line that has been in effect since January 14th.  Nothing moves straight up or down in the financial markets so, while the UUP’s medium term trend is still up, the short term picture is down.  The UUP closed at $23.27 and the 200 day EMA is at $23.31.  The relevant support levels below are $23.16 (top support) and $22.90 (50 day EMA).

Oil is on fire, literally and figuratively, as a cold winter in the United States has propped prices up and Nymex crude gained $2.64 a barrel (+3.55%, $77.07, 4:32 p.m.) for a second straight very strong day.  Strength was seen in most commodities and the record $1.56 trillion proposed budget deficit cannot be ignored here.  If we start running the dollar printing presses like that budget says, while holding interest rates low to create jobs, some very nasty inflation will not be far behind.

PNC Financial Services Group (NYSE: PNC) is going to offer $3 billion of common stock in order to redeem $7.6 billion of preferred shares it gave the U.S Treasury for a TARP loan.  One by one the private firms are paying the TARP back with interest and click here for a great web page that tracks where all the money went.  From what I can see Fannie Mae, Freddie Mac, General Motors, Chrysler and AIG have all our tax money.  I hope Volcker makes sure the auto companies, government sponsored entities (Fannie and Freddie) and insurance companies are not engaged in proprietary trading to protect us from more economic calamities.

We have MBA Purchase Applications reporting at 7 a.m. tomorrow, the Challenger Job-Cut Report at 7:30 a.m., ADP Unemployment at 8:15 a.m., the ISM Non-Manufacturing Index at 10 a.m. (51.0 expected) and the EIA Petroleum Status Report at 10:30 a.m.  Watch the oil market around that EIA report as the 6% gain in crude in the last 2 days will set oil up for a plunge if the numbers do not come in bullish.

Selected earnings estimates for Wednesday, February 3, 2010:

AFFX -0.10 after the close, AKAM 0.43, AMP 0.75 atc, ARW 0.61, AIZ 1.01 atc, BDK 0.77, BRCM 0.44 atc, CSCO 0.35 atc, CMCSA 0.27 before market open, DBD bmo, FNF 0.22 atc, HNT 0.67 bmo, HMC bmo, IP 0.23 bmo, ITT 0.93 bmo, WFR 0.00, MWW -0.01 atc, NOV 0.77 bmo, ONNN 0.14 atc, PFE 0.50, RL 1.01 bmo, RVSN 0.17, R 0.47, SLAB 0.62, SPF 0.02 atc, TMX 0.40 atc, TMO 0.88 bmo, TWX bmo, V 0.91 atc, WWW 0.45 bmo, YUM 0.48 atc.

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Wall Street Wrap

Google Throws Their Phone into the Ring

By Robert Perrego, at 4:56 pm on January 5th, 2010

Ever since Eric Schmidt, Chairman and CEO of Google Inc. (NSDQ: GOOG), left the board of Apple Inc. (NSDQ: AAPL), people wondered how an executive of a possibly competing company ever got on the board in the first place.  Until today, Apple and Google never had a heads up competition but that all just changed.  The new Google phone, the Nexus One, is not a competitor to the iPhone in the same way as the Blackberry is.  The Google phone has been designed around ‘Apps’ and directly targets the iPhone user, whereas the Blackberry grew up through the business crowd and accessing emails and documents for work related issues.  The biggest winner will be the consumer as a legitimate challenger, supported by a cutting edge technology company, has now set their sights on this very lucrative market.  Google stock dropped 0.44% (-$2.76, $623.99) today while Apple stock gained 0.17% (+$0.37, $214.38).

The market was split today with the Dow Jones Industrial Average losing 11.94 points (-0.11%, 10,572.02) while the S&P 500 gained 3.10 points (+0.27%, 1,136.23).  The tech heavy Nasdaq 100 rose 1.73 points (+0.09%, 1,888.43).

As far away from the newest thing in technology as you can possibly get is where big gains were made today as coal companies posted advances on freezing temperatures around the world.  Massey Energy Corp. (NYSE: MEE) gained 4.25% (+$1.88, $46.03) and is up 10% over the last two days.  Not to be outdone, Arch Coal, Inc. (NYSE: ACI) jumped 4.59% (+$1.08, $24.56) and also is up over 10% in 2010.  Peabody Energy Corp. (NYSE: BTU) added 3.36% (+$1.62, $49.50) and CONSOL Energy Inc. (NYSE: CNX) was up 3.09% (+$1.64, $54.59).  If you got a lump of coal in your stocking this past Christmas, or even better coal shares, this is a belated Merry Christmas for sure.  The Market Vectors Coal ETF (NYSE: KOL) is up from $36.12 to $39.32 in 2010 for a gain of 8.86%.

Factory orders came in very strong as jumps in coal and petroleum prices contributed strongly with the reported number of a 1.1% increase besting the range expected (-1.1% to +1.0%) and more than doubling the expected number of +0.4%.  Tempering the strong results out of the factories was weak results in Pending Home Sales, as the month-over-month number dropped 16%.  This report can be taken with a grain of salt as it is possible few people are shopping for a house while shopping for holiday gifts.

Motor Vehicle Sales came in above the expected number this morning (8.5 million vs. 8.4) for December.  Ford Motor Co. (NYSE: F) saw sales jump 33% while Chrysler and General Motors, or Government Motors, both saw sales drop.  GM had sales down 5.7% but stated that in the four brands they will be keeping, sales were up 2.2% (the axe is falling on Pontiac and Saturn).

The oil market quieted down today after yesterdays $2 plus jump.  Nymex crude was up just 35 cents (+0.43%, $81.86, 4:04 p.m.) today.  The dollar opened lower and traded up into positive territory, as the DXY closed up 0.13% (+0.10, 77.62).  Gold opened higher and traded lower, inverse to the dollar as usual, but finished marginally down losing $2.60 an ounce (-0.23%, $1,118.30).

Byron Wein, BlackRock, Inc. (NYSE: BLK) Vice-Chairman, was on CNBC predicting a strong year for the Japanese stock market in 2010, and this guy has been around and good at picking markets for a long time.  There are a lot of countries you can ‘buy’, by investing in their ETF’s.  Some of these countries’ economies, and thus their ETF’s, are associated with different sectors of the market.  Japan has a tech heavy economy while Australia (EWA) and Canada (EWC) are natural resource plays.  If you want to bet with Byron, the iShares MSCI Japan Index Fund (NYSE: EWJ) would be the way to go and closed at $10.05 today.

Tomorrow we get the ADP Employment Report before the market opens at 8:15 a.m. and the ISM Non-Manufacturing Index (50.4) at 10 a.m.  Also able to move the markets is the minutes from the last FOMC meeting, which will be released tomorrow at 2 p.m.

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Tracked.com Topics

2010: A Car Odyssey?

By Taryn Cooper, at 4:05 pm on January 5th, 2010

Will 2010 be the year for automobile sales to ride again? A quote from Koichi Kondo, Honda Motor Co’s executive vice president and representative director, suggests that the automobile market has bottomed out (subscriber-content only).  This suggests that from here, the auto sales market can only go, as they say, “up.”

Anecdotes and statistics over the last month suggest though that while parts of the global auto economy have done well, the industry as a whole still has very far to go.

Toyota and Honda announced that they will be presenting new models in India, where currently Suzuki Motors has about 50% of the market.   India’s burgeoning middle-class, numbered at 50 million strong, should enjoy the competition.

Ford Motor Company’s overall sales were down in 2009, but had an uptick in December with a 33% sales gain.  As a result, its stock hit a since-2005-high of $11/share.

On the U.S. side, General Motors did not have an encouraging year, with sales dropping 33% over 2009.  However,  GM still inspires consumer confidence in Canada, leading Canadian automobile sales over the year.

Out of the “Big Three” in U.S. autos, Chrysler seems to have the most trouble climbing out of the abyss of Chapter 11.  Although sales slipped just 4% in the month of December, it was also the worst year reported for them in roughly 40 years.  In just a month, Chrysler CEO Sergio Marchionne is planning on curbing production in several assembly plants for 2010.

I still believe that 2010 is a recovery period for the automobile industry, especially in developed countries.  A few years ago, I saw an obscure broadcast on CNBC where an independent research analyst suggested that as auto sales go, so does the economy.

This thinking makes sense in a way since people will treat buying a new car as a “luxury” and less of a “need.”  Human nature dictates that they will take a wait-and-see approach and be less frivolous.  If consumers do not feel comfortable with the purchase, can’t swing new payments, or can eke out a few more years on their old car, chances are he or she will not go ahead and buy a car.

However, it is obvious that developing countries may have more buying power to keep auto companies afloat for the time being, so the companies can concentrate on building cars in the developed countries that are doing well (like economy and “green” cars).

A piece in the Business Standard today suggested that Americans are still buying cars.  Take out the whole cash-for-clunkers account.  What does that say for the auto retailers, who are still incentivizing car purchases in order to get customers into their dealerships?

The idea is ponderous,  to say the least.

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News

Good Morning From RakedIn – What’s News in Business?

By Taryn Cooper, at 8:03 am on September 10th, 2009

Hey, did you hear Steve Jobs made an appearance at the Apple event yesterday?

What can I tell you this morning?

Futures are pointing to a lower open this morning, with S&P 500 futures at 1,031, Nasdaq 100 futures at 1,665 and Dow Jones Industrial Average slipping 15 points. Oil futures gained this morning.

Overseas, the Abu Dhabi bourse gained and the Nikkei posted its biggest one-day gain in two weeks, while European stocks turned lower.

Corporate restructurings news also came from overseas this morning, as Daiwa announced they would buy Sumitomo Financial Group’s stake in its joint venture Daiwa Securities SMBC, in a deal valued at $2.2 billion. The Board of General Motors has also recommended Magna as the buyer of its Opel unit.

Keep your eyes on Texas Instruments and Monsanto today, as TI lowered its forecast and MON confirmed its earnings would come in the lower range this quarter.

Check out news on President Barack Obama’s speech last night on health care reform.  Expected report from the Labor Department on jobless claims due at 8:30 am EST.

Have a great day!

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News

Market Wrap – SnP 500 at 1,000 and Clunkers breathe life into Ford and GM

By Robert Perrego, at 4:37 pm on August 3rd, 2009

The Big Round Number Theory came true with 1,000 on the S&P 500 drawing the market like a magnet the last few trading days.  Today the S&P 500 not only traded 1,000 but traded through to a high of 1003.61 before backing off and closing at 1002.62.  Talking heads on CNBC are mentioning 1,120 as the next level to be reached as that would be a 50% Fibonacci Retracement from the 1,576 highs of October 2007 to the 666 lows of March 2009.  For more on Fibonacci see the Market Wrap from July 24th.  The S&P 500 has rallied 50% from that 666 low adding 336 (ok, real close) and once again the Fibonacci 50% raises its head.

There were three other big pieces of news today concerning Clunkers, Taxes and Apple’s Board.  The U.S. Governments Cash-for-Clunkers program has been a runaway hit generating sales for car dealers and manufacturers.  This program is a hit with the current car-buying public as they are getting a fat government funded rebate check and a cheaper car.  The environmentalists love it as, supposedly, gas chugging cars are being taken off the road and being replaced by gas sipping more environmentally friendly autos.  This is a great program if you are buying a car, selling a car or hugging a tree.  If you think about it though these groups of people are in the minority and what everyone else has to realize is that money has to come from somewhere – as in your tax dollars.  So, if you think this is a great program and you are not buying or selling, you are getting sold out!

Over the weekend Larry Summers and Treasury Secretary Geithner were asked if they would rule out a middle-class tax increase and they did not exactly say ‘NO’.  This caused a wave of news stories about Obama breaking yet another campaign promise.  President Obama should be careful in here – it is not like he has made good on the long list (or any) of promises Candidate Obama made just last year.

In the last piece of big news on the day, Eric Schmidt CEO of the tech gargantuan Google (NSDQ: GOOG) resigned from the Board of Directors of the consumer tech goods giant Apple Inc. (NSDQ: AAPL).  After three years on Apple’s board Eric may have finally noticed that the two companies are now producing a lot of similar products including browsers (Chrome vs. Safari), cell phones (Android vs. iPhone) and the recent dust up after Apple would not let a Google app be sold through its iTunes hub.

On the economic news front the ISM Manufacturing Index almost, ALMOST, showed expansion in that beat down sector.  The way this index reads is above 50 means expansion and below contraction.  This morning the number reported in at 48.9 above the expected 46.5 with the prior number being 44.8.  Definitely headed in the right direction.

The dollar got hit again as after closing on Friday at its lowest levels since September showed weakness to every chart reader on the planet so the bears lined up to hit it today dropping the Powershares Dollar ETF (NYSE: UUP) 0.81% and this drop in the dollar fueled a commodities rally across the board.  You put a strong manufacturing number together (well a ‘less bad’ number) with a commodities rally, throw in no significant ‘bad’ news and you are going to get a rally.

New York Spot Gold was only up $1.70 at $956.20 an ounce at 4:07 p.m. est after trading up as much as $8 an ounce.  Gold is still trying to blast out from this resistance band around $950 and after that would be the $1,000 level.  NYMEX Light Sweet Crude Oil ripped up $2.13 a barrel (+3.08%, $71.20) at 3:59 p.m. est amid news that world oil supplies are running out.

OK – enough already!  Last year we got all these stories and oil went to $145 and then, lo and behold, 8 months later oil is at $30 a barrel and someone made a lot of money on the way up and on the way down.  This is all just starting to seem a bit too cute – oil is down and the economy is moribund and then as soon as things start turning around the ‘experts’ come out of the woodwork wishing there were more rotten, percolated dinosaurs around.  The Chief Economist at the International Energy Agency (IEA) in Paris states that we have only 10 years of oil left.  Someone check this guys bank accounts and look for recent large deposits please.  I have seen this movie before.

The Dow finished up 114.95 points (+1.25%, 9286.56) and the S&P 500 closed above 1,000 at 1002.63 (+1.53%, 15.15) with the Nasdaq 100 rising 24.76 points (+1.54%, 1628.12).

In the sector watch we have the top performer being energy popping 3.65% on that $2+ jump in oil with the industrial sector up 2.15% on the rise in the ISM number.  In third was the financial sector up 1.92%.  The ‘loser’ of the group was merely the sector to rise the least as today was an across the board rally with tech bringing up the rear at plus 1.31%.

Economic Reports Tuesday: ICSC Goldman Stores Index 7:45 a.m., Personal Income and Outlays at 8:45 a.m. -1.1% expected, Pending Home Sales index 10 a.m.

Earnings Tuesday: AYE (0.43) before the open, ADM (0.45) bto, BMC (0.49) after the close, SAM (0.62) atc, CHD (0.79), ED (0.49), DHI (-0.23) bto, EMR (0.57) bto, ETR (1.26), HCP (0.51) bto, ICE (1.13) bto, KFT (0.54) atc, MLM (0.77) bto, NI (0.01) bto, PZZA (0.34) atc, PPL (0.40) bto, RTI (-0.02) bto, SXE (0.41) atc, TM (N/A) bto, AUY (0.09) atc

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