News, Tracked.com Topics

Face-Off: Microsoft vs. Google

By Taryn Cooper, at 1:12 pm on March 1st, 2010

In the spirit of yesterday’s closing ceremonies at the Olympics, I would say that — much like Team Canada vs. Team USA — a turf-war has erupted between two American-as-Apple-Pie tech companies.  Perhaps you’ve  heard of them.  We have “Microsoft” on one side, and another named “Google” in the defensive zone.

Microsoft has been incredibly vocal with its accusatory stance against Google, suggesting their business is anti-competitive.  Microsoft is no stranger with being accused of monopolistic practices, back in the late-90s going through that themselves.

The thing that stands out to me is whether Microsoft should care or not.  Let’s be fair, these two companies are like Goliath vs. Goliath.  While there is healthy competition in the technology space, each is successful and has their niche in their own right.   While they have similar products, typically Microsoft and Google target different populations but are potentially each other’s biggest competition.

I can’t say whether Microsoft is simply picking on Google because they can, but it seems interesting to me that several outlets today have picked up the idea that Microsoft is encouraging victims of Google to file complaints with regulators on their anti-competitive practices (an idea, that by the way, Microsoft is denying).

It appears as though Google is getting their licks in the media — you know, the whole saying of building something up just to tear it down, etc etc.   And with it’s trouble in China, along with its Google Books drama in the U.S., Microsoft’s deputy general counsel Dave Heiner also wrote in a blog post today that “Google’s way of working with advertisers and publishers makes it hard for Microsoft’s competing Bing search engine to win search volume.”

I wonder how long it will be before Google starts taking its public licks, much like Microsoft did in the late-1990s, for being the monolith it was but it’s still standing and of course, won’t be going away anytime soon.  The same could be said for Google, as it’s going through it’s growing pains of falling out of favor.  We’ve seen evidence of this recently with public fall-out from it’s Buzz launch, which had many more “ifs” involved in its release than answers.  To me though, I think that Google will walk away from this unscathed, as they have a team of lawyers working for them to ensure that whatever may happen quickly goes away.

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News

Market Jumps in the Afternoon, Fed Raises Rates after the Close

By Robert Perrego, at 5:03 pm on February 18th, 2010

The Dow Jones Industrial Average jumped about 50 points within 15 minutes at 2:15 p.m. this afternoon, adding to slight gains earlier in the day to finish up a solid 83.66 points (+0.81%, 10.392.90).  Travelers Companies Inc. (NYSE: TRV) led the Dow higher gaining 1.91% (+$0.99, $52.).  Wal-Mart Stores Inc. (NYSE: WMT) reported $1.17 per share in earnings before the open this morning, with analysts expecting $1.12.  The world’s largest retailer missed on revenues though ($113.65 billion vs. 114.56) and the market sent the stock into the penalty box, dropping it 1.09% (-$0.59, $53.47).

The S&P 500 gained 7.24 points (+0.85%, 1,106.75) on the day with gains in most all industries except transportation and finance.  The Nasdaq 100 climbed 12.53 points (+0.51%, 1,823.39).

The market traded slightly higher early in the day but with no volatility or major movements.  At 2:15 p.m. there was a jump that one market player attributed to possible short covering.  A software engineer in Texas flew a small plane into a building containing an IRS office, and with the market these days, there were short positions put on in the event a terrorist connection was found.  It turns out that the pilot was more than a little frustrated with the IRS (what a surprise) and left a seven page online rant describing what was (or was not) going on in his head.  As soon as it was apparent that the plane crash was not a hidden terrorist cell or something more sinister, the market pop could have been a short squeeze as all those speculative short positions ran for the exits.  Who says the IRS and short side traders are bad?  On a down note, the IRS is expected to announce new taxes on software engineers to pay for a new building (just kidding).

Microsoft Corp. (NSDQ: MSFT) and Yahoo Inc. (NSDQ: YHOO) got clearance from regulators in both the United States and Europe to combine their search and advertising mojo in an attempt to mount a real challenge to the Goliath of the space, Google Inc. (NSDQ: GOOG), which controls some 66% of the market.  Microsoft gained $0.38 (+1.32%, $28.97) and Yahoo closed higher by $0.10 (+0.65%, $15.54).  Analysts think this combination could have legs as Microsoft’s ‘Bing’ search seems to deliver the goods and Yahoo can now free up some extra time to figure out why they passed on the $34/share buyout offer from Microsoft in 2008.

With today’s gain, the DJIA has closed significantly higher than its 50 day exponential moving average and has some clear sailing ahead of it to the upside.  There is minor resistance in the 10,430 area, but after that it looks like blue skies back towards the 52 week high at 10,725.  It looks like the U.S. stock market has broken free of the Greek tragedy, finally.

Looking at the gold chart shows it is right up against resistance formed by an island reversal, which involves horizontally lined up gaps.  A close above $1,130 in the spot price or $111 by the SPDR Gold Trust (NYSE: GLD) should signal a breakout and a run at its all time highs.  New York spot gold gained $14.20 an ounce today (+1.28%, $1,121.00, 4:16 p.m.)

Nymex crude jumped $1.85 to $79.18 a barrel (+2.39%, 4:19 p.m.).  It is looking like the February 9 call of trading the trend channel of the United States Oil Fund (NYSE: USO) between $35 and $41 is working out.

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BREAKING NEWS – The Federal Reserve just raised the discount rate by 0.25% to 0.75%.  This is not the more important federal funds rate.  To put this in perspective, the federal funds rate is what banks lend to each other at for overnight loans, while the discount rate is what rate the Fed lends to banks at.  While raising the discount rate does increase the cost of money, the fact that the federal funds rate is still at 0.25% still allows depository banks access to the cheaper loan.

The big news here is the surprise jack in rates.  The Fed used to always make these changes after a Fed meeting in order to be more predictable.  With the bottom dropping out of the credit markets in 2008, the Fed cut rates without meeting and now it seems they are going to raise them in the same manner.  This is one tool Bernanke can use to keep market players from getting too juiced up on the all the liquidity that has been injected into the system.  Also, this unexpected rise will put the carry trade cowboys on notice to stop shorting the dollar as now they will be less sure as to when a hike in the federal funds rate will come.  This uncertainty will scare them into lightening up on their dollar shorts.

The bad news is, if these cowboys buy their shorts in as now they are afraid of higher rates (which strengthen the dollar), they will be selling their ‘riskier’ assets – stocks and commodities.

Remember those comments earlier in this article about the clear sailing to the old highs – WHOLE NEW BALLGAME NOW FOLKS.

New York spot gold was at $1,121 before the announcement – now it is trading $1,110.90.  The Dow ‘Diamonds’, the ETF for the Dow Jones Industrial Average closed today at $104.17 and are now trading $103.45 in the after-market – translates to down about 72 points on the DJIA.

Do you think those guys that put the short positions on when they heard a plane hit a building with the IRS in it wish they were still short?

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Wall Street Wrap

4 Good Economic Numbers and The Market STILL Sells Off

By Robert Perrego, at 5:01 pm on January 29th, 2010

If you were still wondering what direction the market was headed in, today should have answered that question for you.  We got a very good GDP number and three other solid economic reports today, but you wouldn’t know it looking at where the market closed.  Apple Inc. (NSDQ: AAPL) got hit again for another $7.23 (-3.62%, $192.06) bringing the two day drop to $15.82 (-7.61%).  Microsoft Corp. (NSDQ: MSFT) reported after the closing bell yesterday and beat analyst expectations, then got sold off all day long after gapping up on the open (-$0.98, -3.36%, $28.18).  Tech has been taken apart over the past two days with the Nasdaq 100 losing 77.86 points (-4.28%)

The Dow Jones industrial Average dropped 53.13 points (-0.52%, 10,067.33) and the S&P 500 closed lower by 10.66 points (1,073.87).  Usually the DJIA and S&P run at about a 10-to-1 ratio, but strength in Home Depot Inc. (NYSE: HD) and a Goldman Sachs upgrade for Wal-Mart Stores Inc. (NYSE: WMT) provided strength to the Dow Average.  Sadly, one of the reasons these stocks were strong and upgraded was they are both firing people, and therefore cutting costs.  About 8 out of 10 stocks on my trading screen finished in the red (lower) today with 12 of the 30 DJIA components finishing in the green (higher).

For the Nasdaq it was a whole different story with the only relative strength of a large cap stock provided by Amazon.com Inc. (NSDQ: AMZN).  Amazon avoided getting sold off too hard by announcing a $2 billion share buyback.  The Nasdaq 100 dropped 30.06 points (-1.69%, 1,741.04) and when the tide goes out, all the ships go down, so Amazon still closed lower by 62 cents (-0.49%, $125.41).  Why would a company announce a multi-billion dollar buyback when their stock is at an all time high, and the market is looking ripe for a retreat?  Maybe the guys running Amazon should go to their website and buy a book or two about technical analysis and trading, because if they started buying today, they stand a good chance of buying too high.

The silver lining to this cloud is that the indexes have all sold off into support levels.  The DJIA closed at 10,063 with 10,090 as support.  Two closes through support are needed to confirm a break and today is only one.  The S&P 500 is right on support at 1,071 and the Nasdaq 100 has support at 1,733.  The first half of next week’s trading will be important to show whether or not this drop is a just a pullback or the beginning of a larger decline.  The fact that the longer term uptrend lines for all three indexes have been broken leads me to believe that the market is done climbing for awhile.  When an uptrend is broken it does not mean the market is going down.  It could mean the market goes into a sideways trend or a downtrend, or it could mean sideways and then a resumed uptrend.  Only time will tell.  I think we go lower from here as it looks like the big boys are selling earnings and unloading stock.

The dollar ripped higher on the strong GDP number (5.7% vs. 4.5%) as the PowerShares DB US Dollar ETF (NYSE: UUP) gapped above its 200 day exponential moving average ($23.32) and traded even higher into its close (+0.77%, $23.45).  Commodities got hit on the dollar strength as copper was off 2.08%, coal dropped 4.56% on bad earnings from Arch Coal Inc. (NYSE: ACI), steel lost 1.62% and the ag’s were weaker by 1.09%.

Surprisingly, gold hung in there tough as now it may be trading as more of a safe haven and a currency than a commodity.  As the money rotates out of equities it looks like some of it is finding a home in the shiny yellow metal.  New York spot gold lost only $5.10 an ounce to $1,080.30, which is a 0.47% drop (4:47 p.m.)  It is unusual that the absolute percentage move in the dollar is greater than the corresponding percentage move in gold.

Oil dropped on the dollar strength as Nymex crude lost 98 cents and last traded at $72.65 a barrel (-1.28%, 4:42 p.m.)

Next week should be interesting, to say the least.  It is Friday now, after the close and high time to close the trading screen and go have a great weekend.

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Wall Street Wrap

Drop and Pop, Market Recovers some of its Loss

By Robert Perrego, at 4:56 pm on January 28th, 2010

Volatility returned to the Market as a broad morning sell off took the Dow Jones Industrial Average down as much as 181 points.  The selling climaxed with a 52 point drop at 11:30 a.m. to the day lows at 10,055, which pierced the support at 10,090 detailed in this column last Friday.  The rest of the trading day saw the DJIA climb back 130 points (-51) before rolling over in the final 20 minutes of trading to close down 115.70 points (-1.13%, 10,119.93).  Through all the selling, the financial companies maintained relative strength as JP Morgan Chase & Co. (NYSE: JPM), Bank of America Corp. (NYSE: BAC), Well Fargo & Co. (NYSE: WFC) and Goldman Sachs Group, Inc. (NYSE: GS) were under water for less than two hours and closed with small gains, while the broad market finished with a loss.  It is interesting to note that the big banks that Obama has targeted for his newest tax were the companies showing strength the day after his State of the Union speech.

The S&P 500 finished down 12.97 points (-1.16%, 1,084.53) and the tech heavy Nasdaq 100 really took it on the chin losing 47.80 points (-2.62%, 1,771.10) as Apple Inc. (NSDQ: AAPL) sank $8.59 (-4.13%, $199.29) and Qualcomm, Inc. (NSDQ: QCOM) lost $6.72 (-14.23%, $40.48)

CNBC carried the cloture vote for Bernanke’s Fed reappointment and earlier on it may have seemed that the needed votes for confirmation would not reach 60.  As the day wore on and the yes votes ticked higher, so did the market.  The final vote came to 77 Yes and 23 No, which reconfirms Ben as the Chairman of the Federal Reserve for another four years.

The market was under early pressure from yet another bad weekly Jobless Claims number and a poor showing by the Durable Goods release.  While the four week moving averages, which smooth out the weekly readings, are still headed in the right direction, we have seen the jobs number come in 30,000 higher than expected for more than a few weeks now.  The question is: Is this a result of bad forecasting by the economists or is the jobs picture getting uglier?  No matter how you answer, the ‘recovery’ is going very slowly at best.

At the end of yesterday’s Wall Street Wrap, I mentioned that today would see more than a few transportation companies reporting earnings.  Other than the techs, the Dow Jones Transportation Average (.TRAN) fared the worst today, dropping 2.33%.  The Dow Transports are of special importance as those following Dow Theory look for the Industrial Average and the Transportation Average to tell them where the market is headed.  The Theory says that when both averages are making new highs a Bull market is confirmed.  On the other hand, when both are making new lows, a Bear market is confirmed.  If you are only looking at 2010, both averages made new lows today as the DJIA closed at its lowest point since November 9, 2008 and the DJTA posted its lowest closed since November 27, 2009.

Apple’s drop today could be seen as a sign that yesterday’s iPad unveiling was less than impressive.  After the close today, tech giants Amazon.com Inc. (NSDQ: AMZN) and Microsoft Corp. (NSDQ: MSFT) reported earnings.  Amazon beat expectations ($0.85 vs. $0.72) on a per share basis and beat on revenues as well ($9.52 billion vs. $9.04).  Amazon stock was trading lower in the after-market at $121.70 (4:23 p.m.) after closing the regular trading session at $126.03 (+$3.28, +2.67%).  Microsoft reported strong earnings on the heels of a new product cycle as they introduced Windows 7 last last year.  Mr. Softy reported earnings of 74 cents a share vs. the expected 59 cents on revenues of $6.7 billion.  Microsoft closed at $29.16 in the regular trading session and was up to $29.32 in after-market trading (4:27 p.m.)

New York spot gold traded as low as $1,072.40 an ounce before rising $14 to close at $1,086, losing only $1.20 (-0.11%, 4:43 p.m.)  As the stock market sags gold seems to be hanging in there and this could be a flight to safety.  The PowerShares DB US Dollar ETF (NYSE: UUP) rose 0.17% today and closed within 4 cents of its 200 day exponential moving average.  The stochastic oscillator for the UUP has just crossed above 80 and has not rolled over to point lower yet, but once above 80 a reversal is much more likely.  With support for gold in the $1,060 to $1,070 level, an area it visited today, and the UUP approaching resistance and a high stochastic reading, a reversal looks in the cards for a higher gold price soon.  Nymex crude gained 25 cents to $73.92 a barrel (4:49 p.m.)

Tomorrow has the GDP report (4.5% expected) and the Employment Cost Index (0.4%) being released at 8:30 a.m.  The Chicago PMI (57.0) is out at 9:45 a.m. and Consumer Sentiment (73.0) is at 9:55 a.m.

Selected earnings releases for Friday:

ACI 0.17 before market open, AVY 0.68 bmo, CVX 1.70, FO 0.52, HON 0.90 bmo, MAT 0.68 bmo, NWL 0.27 bmo, PCAR 0.07 bmo, WL 0.04 bmo.

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Wall Street Wrap

Large Cap Tech Strong, IBM Highest Close Since 2000

By Robert Perrego, at 4:37 pm on January 14th, 2010

Large capitalization tech stocks filled 4 of the 5 largest percentage gainer slots in the Dow Jones Industrial Average today.  Intel Corp. (NSDQ: INTC), Microsoft Corp. (NSDQ: MSFT), International Business Machines (NYSE: IBM) and Cisco Systems Inc. (NSDQ: CSCO) placed 2 through 5 with yesterday’s star, Merck & Co., Inc. (NYSE: MRK) leading the pack again.  Merck had follow through strength after gaining 3.67% yesterday on an upgrade, as mentioned in this column yesterday.  IBM (+$2.08, +1.59%, $132.31), the old-school tech and business services company, has been in a sustained uptrend for 14 months now and is less than $6 from its all-time high of $138.  IBM is exhibiting incredible relative strength here in what is supposedly a ‘bad’ economy.

The DJIA was up 29.78 points today (+0.27%, 10,710.55) with Merck up 2.72%, Intel up 2.48%, Microsoft up 2.00% and Cisco up 1.25%.  The S&P 500 gained 2.78 points (+0.24%, 1,148.46) and the Nasdaq 100 rose 1.29 points (+0.08%, 1,887.38)

All eyes are on Intel as they are expected to report 30 cents a share today ($10.2 billion revenue expected) for Q4 2009 after the close today.  This is 2 cents higher than Q3 2009 and only 13 cents less than what Intel has earned over their last 4 quarters combined.  Intel is up over 75% from its bottom in February 2009 and traded heavy volume today of over 130 million shares.  It looks like a lot of people believe in the Intel rebound in earnings, and they must see the stock going higher as with that much volume trading and the stock moving higher the buyers have to be believers.  No one buys a stock to see it go down.

The DJIA broke 10,700 and the US dollar future spot price (.DXY) traded it’s lowest level since December 8th as it looks like the carry trade cowboys may be back in business.  The PowerShares DB US Dollar ETF (NYSE: UUP) has now spent its fourth consecutive day below its 50 day exponential moving average (-0.26%, -$0.06, $22.64) and looks to be going lower.  Seeing this, the cowboys figure; “Hey, the Fed’s not raising rates anytime soon and that dollar looks like its going lower.  Throw some shorts on that doggie and let’s buy some stocks!”

UPDATE: Intel reports $10.6 billion in revenues and 40 cents a share.  The stock is trading higher by 50 cents in the after-market ($21.97, 4:19 p.m.)  Tech should be strong tomorrow.

Oil dropped again.  I also did not freeze on the way to work today.  Warmer weather is causing a pullback from the spike higher the energy sector saw last week.  The weak jobless claims and retail sales reports this morning show a weak economy and less economic activity, and therefore less oil demanded.  Nymex crude dropped 50 cents a barrel (-0.57%, 4:15 p.m.) to $79.20.

Gold gained $5.40 an ounce as it tries to rebound from a $25 slide two days ago on the Chinese interest rate hike.  The daily stochastics for gold look to be peaking here and this second peak, which is lower than the all time high peak set back on December 3, 2008, will be the first two points a downtrend line can be drawn through.  The technical picture for gold is looking weak in the short term.  New York spot gold was last seen trading at $1,141.70 an ounce (+0.40%, 4:40 p.m.)

Tomorrow we get the Consumer Price Index (0.1%, 0.1% expected) and the Empire State Manufacturing Survey (13.0) at 8:30 a.m.  At 9:15 a.m. Industrial Production (0.6%, 71.9%) numbers are announced and at 9:55 a.m. Consumer Sentiment (74.0) is released.

Major Earnings Reports for Friday: JPM 0.62 expected, before the open.

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