News

Palm Strong on Verizon, SFR and AT&T Deals

By Robert Perrego, at 5:14 pm on January 8th, 2010

At the Las Vegas CES yesterday Palm, Inc. (NSDQ: PALM) announced that Verizon and France’s SFR will start offering its Pre Plus and Pixi Plus to their handset lineups.  AT&T will also start offering Palm’s newest smart phones as Sprint Nextel Corp. (NYSE: S) lost their exclusivity to the Pre and Pixi recently.  This announcement caused RBC Capital Markets to call 2010 an ‘inflection year’ for Palm as they see more upside for their shares.  Palm closed up 11.18% today at $12.43 (+$1.25).  With the iPhone rumored to be moving to Verizon this fall and Google’s new Nexus One available across multiple service providers, the consumer is going to be the winner.  The more the providers are in competition, the lower prices should go.

The market dropped off the open on a bad employment number and spent most the day trending sideways with little action.  Someone turned the lights on late as the Dow Jones Industrial Average ran up 38 points in the last 25 minutes of trading to gain 11.33 points (+0.10%, 10,618.19) on the day, which sets yet another new 52 week high.  The S&P 500 rose 3.48 points (+0.28%, 1,144.95) and the Nasdaq 100 was up 15.87 points (+0.84%, 1,892.59).  Both the S&P 500 and the Nasdaq 100 set new 52 week highs.

Steel was strong again today as Schnitzer Steel Industries Inc. (NSDQ: SCHN) beat their earnings estimates and was upgraded from hold to buy at Cannacord Adams.  U.S. Steel Corp. (NYSE: X) had their price estimates raised by J.P. Morgan Chase & Co. from $55 to $70.  J.P. Morgan did not stop there as they also raised their price estimates on AK Steel Holding Corp. (NYSE: AKS) to $34 from $29.  Steel is having a strong week as Goldman Sachs Group Inc. (NYSE: GS) stated Wednesday the industry should be up 8% in 2010.  Today the Market Vectors Steel ETF (NYSE: SLX) was up 2.58% (+$1.70, $67.55) putting it up 9.8% for the year.  I guess that makes Goldman right, so does that mean they are selling it now?  AK Steel was up 9.33% today (+$2.20, $25.77), U.S. Steel was up 7.27% (+$4.43, $65.34) and Schnitzer Steel was up 6.18% (+$3.26, $55.95).

Gold was down about $8 prior to the announcement of the Employment Situation by the Labor Department.  At 8:30 this morning we found out that non-farm payroll employment dropped by 85,000 with the headline unemployment number staying at 10%.  While the November jobs number was revised to show that we actually created 4,000 jobs two months ago, most the gains have recently come from temporary jobs.  The January number will most likely go higher as temp workers for the holiday shopping season are let go.  The market reaction was stock futures down, dollar down and gold up.  By the open gold had risen from down $8 to up $8.  The dollar opened lower and rallied early, which means that gold opened up and sold off early.  Gold bottomed at 11 a.m. and climbed for the rest of the day and closed the week out at $1,137.30 an ounce (+0.64%, +7.20, 5:10 p.m.)

Nymex crude rose 19 cents to $82.85 a barrel (5:01 p.m.)

Harry Truman once said he wanted a ‘one armed economist’ as they always say ‘on the other hand…’

In the last 24 hours four regional Fed President’s spoke and here are four headlines from articles that my Tracked.com personal tracker picked up;

The Fed: Fed’s Hoenig urges quick action on sharp rate hike – This story is about comments from Thomas Hoenig, President of the Kansas City Fed and is bullish on the economy.

Eric Rosengren: No end in sight for high unemployment – This story is about comments from Eric Rosengren of the Boston Fed and is bearish.

Fed’s Lacker says U.S. growth prospects improving – This story is about comments from Jeffrey Lacker of the Richmond Fed and is bullish.

U.S. Consumption, Spending to Spur Job Recovery, Bullard Says – This story is about comments by James Bullard of the St. Louis and is bullish.

Ok – so that’s 3 to 1 on bullish.  Great.  But what I want to know is which guy has one arm?

Have a great weekend.

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Wall Street Wrap

Market Up on Strengthening Consumer Data

By Robert Perrego, at 5:25 pm on December 11th, 2009

Retail Sales for November were released at 8:30 this morning and sent the pre-market futures higher.  The Retail Sales month-over-month change was expected to come in up 0.9% and the range was 0.6% to 1.2%.  The actual number came in even above the range at 1.3% and it looks like the consumer is not dead, or too unemployed, to shop.  Then at 9:55, the Reuters/University of Michigan Consumer Sentiment Index was released and this number beat expectations by a large amount (73.4 vs. 67.4).  These two numbers seemed to confirm each other as the Dow Jones Industrial Average opened higher and never looked back.  The big mover in the DJIA was Alcoa Inc. (NYSE: AA), up 8.22% today (+$1.11, $14.61).  JP Morgan Chase & Co. (NYSE: JPM) upped their price target on Alcoa to $25 from $22 and it looks like some players got caught short.

The market finished ’split’ as the Dow Jones Industrial Average (+65.67, +0.63 %, 10,471.50) and S&P 500 (+4.06, +0.63%, 1,106.41) closed higher while the Nasdaq 100 finished lower (-7.31, -0.40%, 1,792.06).  The DJIA closed less than one point from closing at a new 2009 high, gaining 82.6 points (+0.80%) on the week.  The broader S&P 500 was basically flat on the week gaining less than a point and the Nasdaq 100 added 7.46 points this week, which is a 0.42% gain.

It was not all good news out of Washington D.C. as a financial reform package cleared the House.  You wouldn’t be risking much if you bet that whatever is in this new raft of regulations, our brilliant politicians will be regulating for the last problem and not the next one.  The last big set of regulations created mark-to-market after Enron and their ilk cooked their books, and some of the ’solutions’ for the last problem had to be suspended in March as the ‘market’ mortgage bonds were being marked to, was not functioning.  Of course, Barney Frank (D-Mass) was on TV blaming the Republicans for pretty much everything he could and going on about how this new set of regulations would fix everything.  Sorry Barney, I am not buying it.  I have seen this movie too many times before.

The dollar had a strong day and the market was up!  This has not happened too often as of late, as the carry trade has caused a reverse correlation between these two.  The Dollar Index Future was up 50 cents or 0.66% to $76.55.  This rising dollar took its toll on the commodity space as oil and gold both dropped.  New York Spot Gold dropped $15.40 an ounce (-1.36%, $1,114.40, 4:48 p.m.) on the stronger dollar.  The SPDR Gold Trust (NYSE: GLD) closed down $1.50, its sixth negative day in a row, and is now $9.86 off its all time high close.  The GLD traded as low as $108.72 today, which was 35 cents above its 200-day exponential moving average.  Most analysts and traders are bullish long term on gold and talk about buying the dip.  Moving averages act as support and if this 200-day holds, the GLD is near the bottom of its ‘dip’.

Nymex crude broke down through the $70 level as it is currently trading $69.60 a  barrel (-$0.67, -0.95%, 4:54).  This is the eighth straight losing session for oil with many talking heads naming the rising dollar as the culprit.

Well, it took over a year but it finally happened.  CNBC published a story today discussing a value-added tax and a national sales tax.  Why this took so long is a mystery to me as every politician in the country seems to be running around spending like a drunken sailor during the day and dreaming up new taxes on soda, the number of miles you drive and whatever you currently have in your back pocket at night.  Nothing I like better than more taxes seeing as I live in New York City, one of the highest taxed places in the country.  One day a few of these politicians might wake up and maybe take an economics course or buy a clue.  If this keeps up, all the people working hard at their jobs for less and less money as they are being taxed to death from every direction, may actually decide a welfare check, day time soap operas and government cheese looks like a stress free life and a good time.  Then who would we tax?

Have a great weekend.

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News

Wall Street Wrap – IBM Beats Earnings, Misses Revenues, Weighs Heavy on the Market

By Robert Perrego, at 5:01 pm on October 16th, 2009

International Business Machines Corp. (NYSE: IBM) reported after the bell yesterday and beat their expected earnings number by 2 cents ($2.40 vs. $2.38).  As has been the case in most earnings releases this quarter and last, IBM missed their revenue number ($23.6B vs. $23.86B) and the market punished the stock, dropping it $6.34 today (-4.95%, $121.64).  As the Dow Jones Industrial Average is a price weighted index, a rule of thumb is that every Dow component point move is equal to about 7.5 points in the Dow.  Using this, we find that IBM accounted for about 48 points of the 67 point loss in the Dow today.

The Dow Jones dropped 67.03 points today (-0.66%, 9995.91), finishing the week on a down note, but up 130.97 (+1.3%) for the week.  The S&P 500 was down 8.88  points (-0.80%, 1087.68) and up 16.19 points on the week (+1.5%).  The Nasdaq 100 lost 14.04 points today (-0.80%, 1739.32) settling up 11.56 points (+0.67%) for the week.

Big scandal news out this morning involving a billionaire trading on insider information that netted him about $20 million.  Just how much of an idiot is this guy?  That is all I have to say on that subject, except; throw the book at him, no bail, do not pass Go, do not collect $200 – GO DIRECTLY TO JAIL!

Investors may want to tread lightly in the finance sector going forward as the two strongest banks, Goldman Sachs Group Inc. (NYSE: GS) and JP Morgan & Chase Co. (NYSE: JPM) have already reported earnings and blew their numbers away on the top and bottom lines.  JP Morgan reported before the open on Wednesday and their stock gapped up, then spent the next three trading sessions sliding back to where it was before the report.  Goldman reported great numbers and promptly sold off.  This would seem to tell you that the stocks may be fully priced, and if the creme-de-la-creme’s numbers are out, with their stocks selling off right after, what hope do the rank and file have?

Holders of Bank of America Corp. (NYSE: BAC) stock got to watch it gap down on the open, as the bank came out with $2.24 billion in losses or -26 cents a share.  The stock gapped lower 94 cents on the open and closed down 84 cents (-4.64%, $17.26).

Multi-national conglomerate General Electric Co. (NYSE: GE), a company that sometimes seems to be in every business line on the planet, posted revenue declines in every single one of their business lines.  GE still beat their number ($0.22 vs. $0.20), but you can only ignore a shrinking business for so long and the stock dropped 4.22% (-$0.71, $16.08).

So going into the weekend, let’s finish this up with some good news;  Google Inc. (NSDQ: GOOG), the internet advertising behemoth, actually beat both their revenue number ($4.38B vs. $4.24B) and their earnings number ($5.89 vs. $5.40) and the stock went UP!  Google gained $19.94 points today (+3.76%, $549.85)

After a strong week last week, gold was basically unchanged this week.  The Spdr Gold ETF (NYSE: GLD) was up only 34 cents on the week ($103.18) as the momentum from last week did not carry over.

Oil tacked on another 95 cents and is closing on $80 a barrel fast ($78.69, +1.22%).

Next week we get more earnings, more economic releases and maybe even another kid that is in the balloon, no he’s not, yes he is, no he’s not…

Have a great weekend!

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News

Wall Street Wrap – Goldman’s Trading Desks are on Fire!

By Robert Perrego, at 5:07 pm on October 15th, 2009

Goldman Sachs Group Inc. (NYSE: GS) reported earnings before the open and posted $5.45 a share in earnings on net income of $3.03 billion and revenues of $12.37 billion.  Expectations were for $4.24 and $11.02 billion.  Goldman crushed the earnings number by 28% on strong performances by fixed income, commodities and currency trading.  If you were to ask Goldman the questions oft heard on CNBC; “Should the government have stepped in and not let Lehman go bankrupt?” and “Should the government have saved Bear Stearns?”  their answer… NO WAY!

Goldman is the undisputed king of the trading world.  When the mortgage bond market was teetering on the edge of collapse, and then did collapse, where was Goldman?  Short.  When other financial firms were posting loss after loss after loss and taking asset write-downs, what was Goldman doing?  Making money.  Now that two of Goldman’s biggest competitors in bond and commodity trading are defunct, whats is Goldman doing?  Goldman is making money hand over fist!

Bear Stearns profitable trading operations were absorbed by JP Morgan and merged in with existing operations.  Lehman’s trading operations were simply dismantled.  Now, the inside spreads in the markets Lehman and Bear were active in are wider, leaving more profit for the existing players.  Besides the obvious loss of competition, what has characterized the third quarter?  The third quarter has seen gold rise 5.9%, steel up 18%, copper up 22%, oil up 6.5%, coal up 24% and the dollar down over 5%.  Not only are the spreads wider in the bond markets, but the commodity and currency markets are hot and active.

But even better, there is still fear in the markets.  People are afraid of losing their jobs all over Wall Street.  The government is sharpening the long knives and screaming about compensation.  A trader plays a ’strong hand’ when he can afford to lose.  A trader makes maximum money when he sticks to his convictions and rides the trade for all its worth.  When a trader is looking over their shoulder, worried about whether or not the firm has enough capital and hence worried about his trading line, worried about some bureaucrat making life difficult, worried about the P&L manager calling him, or otherwise distracted from anything but the trading, they are dead meat.  This ‘weak hand’ jumps out of winners too early, doubles down on losers and does not make huge profits.  Goldman was short the hot mess of a mortgage market, Goldman was long commodities, Goldman is bid low and offered high in the bond market.  Goldman is focused, liquid, lean, mean and killing it!  And, Goldman is trading against traders playing ‘weak hands’.

Citibank (NYSE: C) lost another $3.2 billion, caved in to the U.S. government and sold their most profitable trading unit, is selling divisions, downsizing, blah, blah blah…  they are a mess.

Goldman’s stock lost $3.65 today (-1.89%, $188.63) with today’s closing price up 28% since the start of the quarter, the same percentage as what their earnings beat was.  Goldy made $3.54 last quarter, so earnings increased 54% QoQ.

The Dow Jones Industrial Average gained 47.08 points (+0.47%, 10,062.94) and the S&P 500 was up 4.54 points (+0.41%, 1096.56) while the Nasdaq 100 dropped 0.901 points (-0.05%, 1753.36).  The energy sector was up 2.28% as oil broke above $75 and tech was the weakest sector down 0.34%.

Nymex crude added $2.40 a barrel (+3.19%, $77.55, 4:24 p.m.) as the charts showed a breaking of resistance at $75.  Today, the EIA Petroleum Report at 11:00 a.m., showed a giant 5.2 million barrel draw in gasoline stocks causing an immediate jump in oil prices.  It was off to the races for the rest of the day after that.

New York Spot Gold got clocked for $12.90 (-1.21%, $1,049.80, 4:45 p.m.) even though the CPI came in at the high end of estimates this morning (+o.2%).  This drop could be the beginning of a pullback to support at the $1,020 level, before a possible attack on $1,100.

The two major economic reports tomorrow are Industrial production at 9:15 a.m. (0.2%, 69.6%) and Consumer Sentiment  (74.0).

Major Earnings for tomorrow; (BAC, -0.07, before market open), (GE, 0.20, bmo), (GPC, 0.65, b,o), (HAL, 0.26), (MAT, 0.63, bmo) and (MTG, -1.62, bmo).

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News

Wall Street Wrap – ISM Down, Jobless Claims UP, Market Down

By Robert Perrego, at 4:54 pm on October 1st, 2009

Yesterday the Chicago PMI showed the way lower to the market, but after an early drop the market recovered.  Nonetheless, what happened is that it showed the market was susceptible to a drop from an economic number.  This morning the 8:30 a.m. Jobless Claims report came in above expected at 551,000 jobs lost when 537,000 was expected.  Even worse, the previous number was 530,000 and 551 is going in the wrong direction.  We are supposed to be recovering from this recession, yes?  Then, to bookend the bad jobs data with the bad Chicago PMI from yesterday, the ISM Manufacturing Index came in at 52.6 with 53.5 expected and 52.9 the prior number from August.  Once again, heading in the wrong direction.  So the market asked itself; “Hmmmm, what good economic news have we got this week?”  It answered itself with a resounding “None”, and then sold off ALL DAY LONG.

The Dow lost 203.00 points (-2.09%, 9508.28) while the S&P got hit for 27.23 points (-2.57%, 1029.85) and the Nasdaq 100 was the biggest percentage loser on the day dropping 52.58 points (-3.05%, 1666.41).  Ugly across the board.

The dollar strengthened contributing to the stock market’s woes as this stronger dollar caused commodity based stocks to drop.  Dow Jones Industrial Average component Exxon Mobil Corp. (NYSE: XOM) lost $1.34 (-1.95%, $67.27) and looking at its daily chart, Exxon has just started the break down from the large symmetrical triangle it has formed over the past four months (as mentioned in my previous Wall Street Wrap dated 9/24).

All 30 Dow components were down today, with the biggest loser in percentage terms being JP Morgan Chase & Co. (NYSE: JPM) losing 5.59% (-$2.45, $41.37).  The race to the bottom was won by the finance sector today dropping 4.13%, with energy in second at -3.45%.  The ’strongest’ performing sector today was consumer non-cyclicals losing only 1.76%.

Surprisingly, even with a stronger dollar and weaker economic indicators, Nymex crude was up 21 cents today to $70.38 a barrel.  New York Spot Gold lost the $1,000 plateau last seen trading at $998.90 an ounce down $8.80 (-0.87%, 4:14 p.m.)

Now for the really bad news; The S&P 500 today broke down through the uptrend line the market has had since the very bottom back in March.  The wonderful uptrend we have been experiencing all spring and summer is now in jeopardy.  The Nasdaq 100 broke down through its major uptrend line on the 25th and broke down through its secondary trend line today.  The Dow broke down through its secondary trend line on the 25th and closed right on its major uptrend line today.  To sum this all up, technically speaking, things are starting to look pretty grim for the Bulls.  We get a bad employment number tomorrow and sell-off into the weekend and LOOK OUT BELOW!

Traders are most likely looking forward to the headline number of the week, the Employment Situation number expected out at 8:30 a.m. tomorrow.  This is the big number as we get that percentage that sticks in every one’s head.  Right now it is at 9.7%, but the estimate range for tomorrow is 9.6% to 9.9%.  With all the other job numbers missing this week, I suspect we go up the 1 or 2 tenths.

I have an idea to keep this market from dropping – this week we have had the ADP employment number, the Jobless Claims number and now we get the Employment Situation number tomorrow – so how about we cancel a few of these and just see one number a week?

Leaving you on that cheery note – the numbers for tomorrow are a loss of 170,000 jobs and 9.8%.

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