Wall Street Wrap

Market Edges Higher as Bonds, Finance and Commodities Strong

By Robert Perrego, at 5:06 pm on February 26th, 2010

The stock market tried to be bullish today but only managed a 4 point gain for the Dow Jones Industrial Average.  I say it was trying as the stocks posting gains were the names you would buy in a bull market.  Leading the DJIA was JP Morgan & Chase Co. (NYSE: JPM) which gained $1.38 (+3.25%, $41.97).  Looking at the components of the DJIA that were down today and it seemed as if they were selling the defensive names; Kraft Foods Inc. (NYSE: KFT) -1.35%, McDonalds Corp. (NYSE: MCD) -0.69%, Procter & Gamble Co. (NYSE: PG) -0.42%, Coca~Cola Co. (NYSE: KO) -0.35%, Johnson & Johnson (NYSE: JNJ) -0.21% and Wal-Mart Inc. (NYSE: WMT) -0.09%.

The Dow Jones Industrial Average edged up 4.23 points to 10,325.26.  The S&P 500 tacked on a small 1.51 point gain (+0.13%, 1,104.49) and the Nasdaq 100 was up 5.77 points (+0.31%, 1,818.68).  On the month the DJIA added 257 points (+2.55%), the S&P 500 climbed 30.71 points (+2.86%) and the Nasdaq 100 showed that the place to be in February was in technology, gaining 77.75 points (+4.47%).

Across all markets, bonds and commodities did the best with interest rates dropping in 14 of 17 major economies worldwide.  EVEN the Greek 10-year was lower by 30 basis points as bond prices rose on news the German Government might buy Greek debt through a state owned bank.  This strengthened the euro against the dollar causing commodities to rise.

Yesterday, I mentioned the CurrencyShares Euro Trust (NYSE: FXE) was something to keep your eye on thinking that the news in Greece has got to get better sometime.  The timing was spot-on (better to be lucky than good sometimes, but being right gets paid) as the FXE closed higher today than all but one day in the last two weeks of trading.  If the bad news has washed itself out, any further positive developments about the Greek Tragedy of 2010 will be bullish for the euro, commodities and stocks.

On the flip side of this, the PowerShares DB US Dollar Index (NYSE: UUP) closed lower than all days but one in the past two trading weeks.  Looks like the dollar is a bit high here, and with the possibility of Washington D.C. passing the $1 trillion health care bill next week via ‘reconciliation’, the path of least resistance for the greenback is down.  If the carry trade cowboys get involved here, shorting the dollar and buying stocks, March may indeed come in like a lion.

New York spot gold rose $10.00 an ounce to $1,116.60 (+0.90%, 4:22 p.m.).  A break out here would be at about the $1,130 level with support at $1,060.  The SPDR Gold Shares (NYSE: GLD) chart is starting to look very interesting with resistance at $111.  The only thing I do not like about the chart is the stochastics are too high, but a close (2 closes even better) through $111 and I am a buyer.  The GLD closed up $1.12 (+1.03%, $109.43).

Nymex crude is pushing $80 again up $1.51 today to $79.68 a barrel (+1.93%, 4:26 p.m.).  Analysts think that crude will trade more off of supply and demand fundamentals and less as a reaction to the dollar in the future.  This sounds like it means that oil will trade on the premise of a better functioning economy and not on gloom and doom and fiscal nightmares.

Existing Home Sales were reported this morning at down 7.2% (January) to a seven month low (5.05M vs. 5.5M expected).  Last month sales dropped off a cliff (-16.7%) and analysts did not have to think too hard as to why.  NO JOBS.  An economy can turn up or down on simple expectations.  You have a job and things are good, but then a friend gets the axe and your brother calls to tell you his company just shut down.  You may still have a good job, but you are not dying to go buy a new house at this point.

The federal tax credit for new home buyers seems to not have helped as much lately and I have a theory – all the new home buyers that were going to buy a home already did.  I do not think they are going to squeeze a lot more out of that program.  Also, in December you go Christmas shopping not house shopping and it is cold in January.  Hopefully, sales pick up in the coming months but with all this snow in February I would not bet on a strong number.

I saved this for last to go out on a good note: The USA Men’s Hockey Team beat Finland 6 -1 in the semifinals today and will play the winner of tonight’s Canada-Slovakia game for the Gold.  Team USA vs. Canada will be a great game to watch.  Win or lose that one, Team USA is cranking out the medals faster than Freeport-McMoran (NYSE: FCX) and this has been a great Winter Olympics for our athletes and for us.

Have a great weekend.

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

Tracked.com Topics

Tracked.com Topics: The Flu Economy

By Taryn Cooper, at 2:57 pm on November 5th, 2009

According to Flu.gov, 5%-20% of the U.S. population get the flu each year on average.  Unless you’ve been living in a cave (which might be the only way you can save yourself from contracting it), the media has been reporting ad nauseam H1N1 (aka “Swine Flu”) and to a lesser extent, seasonal flu statistics, outbreaks and who should be getting vaccinated this year (pregnant women, elderly folks and children are at the forefront).

I am none of those three, but I had the flu last year.  No way I want that again.  Got my flu shot already (but not H1N1).

On one hand, we might hear statistics about how many days are lost in the workplace or school due to flu outbreaks.  We learn about lost man hours, productivity declines and most importantly, the “epidemics” that can close offices and lose money for companies, large and small.

Where has the flu been “good” for the economy, for lack of a better term?

Clorox, the maker of such disinfecting products as it’s namesake bleach, reported earnings on Monday of this week, where profit rose 23%.  COO Jeff Peiros reported that “The upside related to the H1N1 flu was well above our forecast, given the rapid spread of the virus.”

I received my flu vaccine from Walgreen’s this year since they dispense on a as-we-get-them basis (as opposed to having flu shot clinics like CVS or Duane Reade).  While I was getting inoculated, I received a plug for getting the H1N1 vaccine.  The pharmacist told me, “We don’t have an age limit, and it’s first-come, first-served.”  Tuesday this week reported Walgreen’s October sales, suggesting that the nearly 5% jump was due in part to vaccine traffic (Pharmacy sales rose 6% over the month as well).

Other consumer companies may not be faring that well, however.  Johnson & Johnson, the maker of fever-reducing aficionados product Tylenol and its sister sleep-aid Tylenol PM, and popular alcohol-based hand sanitizer Purell (), plans to eliminate about 8,000 jobs.  JNJ has a strong consumer business, as the job cut plans have more to do with its struggling device making business and competition in the generic pharmaceutical area.  Since Purell sales have doubled in anticipation for flu and cold seasons, I dare say their consumer business might help things.

What about the pharmaceutical companies cashing in on the H1N1 hype?  MedImmune, a division of AstraZeneca, is under contract with the U.S. government to produce the live nasal spray vaccine.  GlaxoSmithKline, Sanofi-Aventis, CSL Limited, Baxter International and Novartis round out the other companies profiting off the H1N1 vaccine cash-cow (because “pig” would just be too ironic).

GSK CEO Andrew Witty suggested that an estimated paltry $1.7 billion in H1N1 vaccine sales were about right.  Sanofi-Aventis recently raised its forecasts on H1N1 growth, expecting about $500 million in sales of the vaccine.

Novartis and Baxter International warned on under-production of the H1N1 vaccine, estimated to be 30%-50% of seasonal flu vaccines.  While these companies did not raise forecasts of sales, something tells me they won’t be suffering from cash flu anytime soon.

‘Tis the season folks and if you haven’t gotten your flu shots yet, what are you waiting for.  Pharmaceutical companies needyour dollars!  Stock up on your disinfectants too, produced by Clorox and JNJ, buy them at Walgreen’s, CVS and Duane Reade.

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

News

Wall Street Wrap – Gold Shines Higher as Johnson & Johnson misses their Top Line

By Robert Perrego, at 4:37 pm on October 13th, 2009

The market oscillated around zero with no direction as gold climbed to a new all time high.  Johnson & Johnson (NYSE: JNJ) reported earnings this morning and beat their expected earnings number $1.20 to $1.13.  The fact that their top line, or revenues, dropped by 5% to $15.08 billion caused concern and dropped the stock 2.43% (-$1.52, $61.01).  Most companies beat their expected earnings number in the second quarter of this year by cutting costs, but most all did not hit their top line revenues number.  This drop in revenues for businesses across the board is a contracting of the business base and does not bode well for the company, the future of the market, or the economy.

A slightly larger share of a shrinking pie does not thrill investors as there can only be so much of your company costs, employees and infrastructure that can be cut before earnings and revenues continue to decline.  For example, if firms are cutting into their R&D budgets in order to hit that earnings target, what they are doing is sacrificing possible future sales and growth.  The financial media has been talking about this need for companies to start showing some type of expansion in business and not just more efficiency belt tightening.  Economists seem to all be in agreement that the recession ended in the second quarter, and the market has had a very powerful rally from the March lows.

The market did not have much movement today as the Dow fluctuated from positive to negative finishing down 14.74 points (-0.14%, 9871.06) and the S&P 500 lost 3.00 points (-0.27%, 1073.19).  The Nasdaq 100 was up marginally, gaining 0.64 points (+0.03%, 1730.27).  All sectors moved fractionally today with the leader to the downside being finance off 0.9%.  The best performing sector was consumer cyclicals up 0.44%.

New York Spot Gold was up $5.90 (+0.56%, $1,062.60) at 4:05 p.m.  Spot traded as high as $1,066.50 before the market even opened this morning and traded back up to $1,065, during the day ticking new all time high trades.  The dollar was weak most the morning but at 2 p.m. the PowerShares Deustche Bank Dollar ETF (NYSE: UUP) ripped higher in what looks a lot like a short covering scare.  This shows that dollar shorts may be getting a bit hair trigger and nervous, and if so, we may be nearing the low in the dollar for awhile.  Even with this short-lived rip, the UUP finished down 5 cents (-0.22%, $22.57).

Nymex crude is pushing $75, gaining 88 cents today (+1.2%, $74.14) on the dollar weakness.  If oil breaks thorough $75 higher numbers are coming as there has been this upper limit on the trading range since the middle of June.

Tomorrow at 8:30 a.m. we get Retail Sales (-2.1%, 0.3% less autos – expected), at 10 a.m. Business Inventories (-0.9%) and Thursday the dreaded Jobless Claims at 8:30 a.m. (520K).

Major company earnings expected tomorrow are; (ABT, 0.90, before market open), (CCK, 0.79, after the close), (HST, 0.08, bmo), (JPM, 0.49, bmo), (GWW, 1.34, bmo) and (XLNX, 0.22)

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

News

Market Wrap – Berkshire gets Downgraded at a Possible Top

By Robert Perrego, at 4:42 pm on August 10th, 2009

Berkshire Hathaway Inc. (NYSE: BRK.A) has run up from $85,125 a share on July 10th to a high at $108,450 on Friday for a 27% gain in one month.  Today the stock got hit for 3.79% on a downgrade as the entire market sold off from last week’s rally.  Maybe it was just a fear of heights or the Bulls just got tired (most likely both) but the Dow Jones was down as much as 80 points intra-day and rallied back to close down only 32.27 points.  Berkshire lost $4,100/share (-3.79%, $104,000).

Berkshire Hathaway is Warren Buffet’s holding company for many different businesses including Coca-Cola (NYSE: KO), American Express (NYSE: AXP), Johnson & Johnson (NYSE: JNJ) and wholly owned insurer Geico of the marketing famed English accented gecko lizard.  While a large percentage of Berkshire is in financials of some type, Warren has bought a wide variety of companies based upon his value oriented stock picking method.  Berkshire can be watched as a proxy on the market and especially the finance sector which has been particularly strong as of late.  On the same note – when someone goes out and downgrades Berkshire it is best to pay attention.

What may have analysts and traders spooked is that The Federal Reserve is meeting tomorrow.  While it is highly unlikely that the Fed raises rates tomorrow (it would actually be political suicide for Bernanke right now), the statements accompanying the “we have decided to leave rates alone” could move the markets substantially.  A statement that sounds something like this; “Even though the economy remains weak The Fed now regards inflation a more significant future threat” would move the markets.  This type of statement would mean rate hikes are coming and the Treasury market will begin to react immediately pricing a rate hike in which means interest rates will rise (cost of money) and most likely a sell off in stocks would result.  No trader wants to be caught too long of stock with such an event being possible.  Right now credit is a long lost memory to a lot of companies and small businesses and if the cost of this credit is increased that loan becomes an even more distant dream.  This is a two day meeting and The Fed announces their decision on Wednesday at 2:15 p.m.

Inflation is a worry as Washington D.C. has been spending an awful lot of money lately and on top of that they have plans to spend a whole lot more.  I would think that when you are up to your neck in credit card debt and mortgage bills, the roof is leaking and the boiler just blew, not a lot of rational people would be out shopping for a new car.  To pay for all this and the ‘new car’, Treasury Secretary Timothy Geithner asked congress to increase the Federal Governments debt ceiling.  I guess $12.1 trillion is not a big enough credit card for the new Administration.  All this extra debt and dollar bills is what is worrying the Fed as far as that inflation thing is concerned.

The Dow Jones Industrials dropped 32.12 (-0.34%, 9337.95) but did recover from lower levels in the last two hours of trading.  The S&P 500 lost 3.38 points (-0.33%, 1007.10) and the Nasdaq 100 lost 9.06 points (-0.55%, 1610.43).

New York Spot Gold was down $9.50 an ounce and trading at $945.90 at 4:18 p.m. and NYMEX Crude traded flat and lost only 8 cents at $70.87.

On the sector watch consumer cyclicals got hammered for 2.03% and finance was down 1.24% with energy up 0.68%.  Consumer non-cyclicals were up 0.44% while the cyclicals were getting hit and this shows traders getting defensively positioned.

In other headlines Southwest Airlines Co. (NYSE: LUV) submitted a cash bid of $170 million for Frontier Airlines, Carl Pickens and all his hot air decided not to farm wind, State Street (NYSE: STT) finally decided, just maybe, their loan portfolio might be as crappy as everyone elses and, just maybe, they did not set aside enough in loan loss reserves.

Paul Krugman brought up the second stimulus option this morning and the talking heads on TV were all over it all day.  I am no big fan of more spending especially in light of being $12.1 trillion in debt and I am very leary of every dollar this Administration spends as the last stimulus program of some $787 billion was mostly wasteful spending and even the Congressional Budget Office (all appointed by Congress’s controlling Democrats) analysis of the first one said it would be harmful to the overall economy in the long run.  So this means we need another one?

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

News

Market Wrap – Weekly lower closes across the Board, Oil breaks $60

By Robert Perrego, at 4:52 pm on July 10th, 2009

The G-8 in Italy, talks of stimulus, Sun Valley moguls talking media and Blue Dogs Democrats breaking ranks in Washington D.C. just happened to play out this week as the market traded off about 2% across the board.  From the G-8 meeting in Italy, Obama and his new bird watching buddy Nicholas Sarkozy were all over the front pages with something that could be more aptly called his ‘Berlusconi Stimulus Plan’.  Back in the real world, everyone from Robert Schiller to Nouriel Roubini to Warren Buffet had comments about a secondary stimulus bill that, no doubt, would cost us taxpayers a lot more money.

Today, a late day rally looked like it might take the Dow back into the green but sputtered out and the Dow closed down 36.65 (-0.44%, 8146.52).  The Nasdaq 100 was the only major index to finish in the green but was down for the week after gaining only 4.86 points today (+0.34%, 1419.84).  The S&P 500 dropped 3.55 points (-0.4%, 879.13).

Goldman Sachs Group Inc. (NYSE: GS) came out with upgrades and downgrades in the hardware sector today and believe it or not DELL Inc. (NSDQ: DELL) got the label of ‘Best Pick’.  That has not happened in a very long time.  Apple had their price target upped to $160 from $145 and at least that is believeable as Cramer almost popped a blood vessel on his daily ‘Stop Trading’ show disagreeing with the DELL pick.  Goldman figures Microsoft’s roll out of Windows 7 will spark an upgrade round DELL will benefit from.

AIG (NYSE: AIG) had a reverse split of 1 for 20 on July 1st and the stock quickly has dropped from $23.20 to its low trade trade today at $8.22 which is a 64.5% plunge in 7 trading days.  Sounds like the good old days are back at AIG?

The stock reversed today and closed at $11.74 making this intra-day climb from $8.22 to $11.74 a 42.8% gainer on the day!  AIG dropped 27% yesterday and popped for 23.8% today with very heavy trading volume on both days (60.5 million and 89.8 million shares) and the two day pattern forming what is called a ‘piercing pattern’.  Also, AIG hit this two day volume reversal at around the same level as their previous all time low looking a lot like a classic double bottom.

Why is this news worthy?  Well, AIG was the top gainer on the street on a day when they sent a request to the U.S. Government to look over the plan to pay millions of dollars in bonuses to their executives.  Last time AIG did this their executives got death threats.

Oil closed at $59.78 down 52 cents and the oil-down-Dow-down dance continues.  New York Spot Gold finished flat on the day at $912.30 an ounce.

The sector leader today was tech and industrials both up 0.50%.  with finance and energy the losers down 0.83% and 0.80%.

Next week is a heavy earnings week with the first big day being Tuesday.  Goldman is expected to hit $3.48 a share with Intel Corporation (NSDQ: INTC) posting 7 cents, Johnson and Johnson (NYSE: JNJ) $1.11 and YUM Brands Inc. (NYSE: YUM) a profit of $0.43.  The slump this week in front of a heavy week of earnings next could be telling us something.  The Dow and S&P held key support levels but the market is still mired in a short term downtrend.

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

« Older Entries