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http://www.federalreserve.gov/monetarypolicy/files/20090721_mprfullreport.pdf
[youtube:http://www.youtube.com/watch?v=n0NYBTkE1yQ&feature=player_embedded 450 300] Comments »A Podcast With Charles Lemonides on DOW 12-15k… Initial Claims: Prior 522k/ Mkt Expects 557 / Actual 554k. Continuing Claims Drop to 6.22 mln.. Exisiting Home Sales: Prior 4.77 mln / Mkt Expects 4.83 mln / Actual 4.89 mln
Market Oracle Confirms Lemonides Bullish Comment:
The price action following the SELL signals earlier this month can only be described as a VICIOUS BEAR TRAP !, We got sell signals, good ones for Stock BULLs such as myself (as of Mid March 2009) it was a clear sign to get ready to accumulate more, for bears it was a sign to double up for the long awaited bear market RETEST and maybe to make back some of the money lost shorting the rally ?
Even though rising prices for a bull during the stealth bull market is good, however, the vicious rally FOLLOWING Clear Technical SELL SIGNALS is something that signals alarm bells, as while it can be entertaining to gloat at the crushing of the bears, however when I look in the mirror, I have to wonder will I be next to be caught in a vicious BULL TRAP ! This is a vicious market and whether one is a bull or a bear one NEEDS to be on their guard as the consequences of getting sucked into TECHNICAL ANALYSIS, as opposed to REAL TRADING i.e. REACTING to Price movements in REAL TIME, could easily wipe traders out. More on REAL TRADING in my site walayatstreet.com which will go live once it is ready, yes people have been patiently waiting but the site cannot go live until it has the requisite articles to explain the many aspects of trading as the consequences of not doing so will result in a deluge of emails, so as with the markets PATIENCE is in order.
Back to the stock market, let’s dissect what happened, the precise point where the summer correction scenario abruptly terminated and where we are heading to next:
Original Analysis
The analysis of April 26th concluded that the Dow is targeting a high of 8,750 by mid May 2009 which was expected to be followed by a significant correction of 14% towards a Dow target of 7,500.
Dow Hits 8750 Target
The Dow hit the target on 2nd of June which was confirmed in the quick update at the time, and therefore expectations were for the significant correction to materialise.
Dow Gives Sell Signals During June and Early July
Analysis of of 7th July – The Dow spent early June distributing along 8,800, which gave plenty of time to put on short positions with tight stops. The key chart trigger was the lower high at 8,600 which targeted a break of 8,200. The pattern size is 400 points which projects to 7,800 before the next expected bounce. The overall pattern size was about 650 which projects to 8,200 minus 650 = 7,550, which is pretty close to the original projection of April 26th for the target for the Correction AFTER the peak around 8,750. The chart also showed a head and shoulders price pattern with a similar measuring move.
The conclusion was that the Dow was still projecting towards a target of 7,500 to suck in more traders on the bear side before the resumption of the stealth stocks bull market. The Mega-trend remained for the stocks stealth bull market to move towards a target of 9,750 by the end of this year.
Dow Busts TA Expectations by Triggering a Series of Buy Triggers
Technical analysis was busted – There is no point in second guessing as to why the pattern changed, the fact is simple technical analysis DOES NOT WORK MOST OF THE TIME, hence one needs to always have at the FRONT of their mind, (not the back) that the MARKETS ARE MANIPULATED! As I have voiced throughout the year at key market turning points to ignore the fundamentals and listen to the price, as you are trading the price not the data! Still the price re-action observed was not something that could have been anticipated by anyone, rather only reacted to in real time trading environment.
Where Next for the Stock Market
Near 1000 point moves spread over just over a week makes this a great traders market but is it still a forecasters market ? I have say it is tough to call a market as vicious as this but my existing analysis as of March 09 is for a rally to 9750 for the Dow this year, the price action to date is inline with this expectation. So taking into account that this is a potentially very vicious market here is my analysis –
Dow Analysis and Projection
TREND ANALYSIS – The rally off of 8,090 has been strong and powerful and could carry for some more points before correcting. The key change to the behaviour of the trend is the development of a new primary trend line that should now contain all corrections and in fact projects towards 9,750 into December 2009. Therefore implying that we could see the Dow touch this line several times during the year. The anticipated immediate correction is expected to bounce off of this line.
RETRACEMENT LEVELS – The Dow Rally from 8087 has retraced 100% of the decline from 8877. The correction therefore was 8877 to 8087 or 33% which is a sign of strength. A rally of 200% of the correction projects towards a target of 9667. With intermediate term targets of 133% 9137, 150% 9272, 166% 9400 as key potential resistance areas. Therefore this is suggestive of a sustained trend along these price points, to be accompanied by corrections of between 33% to 50%.
PRICE POINTS – Immediate support is at 8,600, which would represent a 50% retracement from the above 9137 % level. The heavy consolidation area between 8,600 and 8,900 is indicative of further price action in this range which is suggestive of the Dow spending further significant time in this zone for several months. This is suggestive of more sharp rallies followed by downtrends back into this price zone for some months. Key support is at 8080 a break of which would negate this scenario.
ELLIOTT WAVE THEORY – Elliott wave count is straight forward and has not changed since the Stock market bottomed in March. The abc correction followed by the strong rally, is highly suggestive of an impulse wave 1, therefore implying a bull run of similar magnitude of the rally from 6470 to 8900, which projects to 10,500 that’s significantly above the original target of 9,750.
MACD – the MACD indicator cross has signaled a buy, which is supportive of an overall bullish trend, though not at a particularly oversold level therefore implying that the trend will be more volatile and laboured than that of the rally from 6470 to 8900. As well as signaling that the eventual peak may set the market up for a more significant decline.
CYCLES – The bull market is suggestive of a 3 months up, 1 month down overall cycle pattern, this suggests a target of late October for the rally peak before a more significant correction takes place.
SEASONAL TREND – The seasonal trend should be for stocks to decline into early September, therefore this is contrary to the building scenario.
FUNDAMENTALS – People always ask reasons as to why stocks should rise, though in reality the reasons always become apparent AFTER the market has already moved, as I warned in Mid March, however I did at that time also give possible reasons, which still remain as the primary reasons for explanations of why stocks are rallying into a stealth bull market –
A. The markets move ahead of the economy, whilst I don’t profess to know the EXACT reasons of why they will move AHEAD until that becomes apparent AFTER the market has already moved, however I do have some reasoning in that INFLATION, Zero Interest Rates (Forcing savers / financial institutions to take risks) Quantitative Easing (money printing), and HUGE Fiscal stimulus packages that are laying all of the ground work for the next bubble regardless of how bad things appear as any outcome that prevents another Great Depression will be seen as bullish! i.e. even a low growth high inflation stagflationary environment WILL be seen as a positive outcome against the present day data that points to a collapse of global demand on a scale not seen since the Great Depression. The governments HAVE learned the lessons from the Great Depression and WILL succeed in inflating the asset prices and ignite the next perhaps even bigger bubble, meanwhile the stealth bull market will continue which by the time everyone realizes what’s going on stocks will already by up by perhaps more than 50% from the low.
However in the final analysis one is trading the stock market and NOT the economic data, so yes reasons can always be found, but when it comes to actual trading they are irrelevant, especially at market junctures.
EARNINGS – Analysts are surprised !, earnings are surprising to the upside, the earnings ‘fundamentalists’ have been busy revising previous earnings forecasts that convinced many that fresh bear market lows were imminent and thus missing out on a stocks bull market that has already moved 40%!, Nevertheless its not surprising to me that earnings are surprising to the upside, expect even more ‘surprises’ later this year, after all where do you think a;; pf the bailout billions have gone ? It has to go somewhere and we are seeing it the profit surprises in master market manipulators of Goldman Sachs and JP Morgan
STOCKS STEALTH BULL MARKET – My last analysis in the midst of the correction stated that the probability of an end to the current fledgling bull market being at less than 20%, with the rally to date confirming that we remain in a STRONG MULTI-YEAR stocks stealth bull market. I am amazed that a 40% rally over 3 months is STILL perceived as a BEAR market rally?, what happened to the 20% rule?.
MARKET MANIPULATION – The powerful rally following a HUGE technical SELL SIGNAL, is clear sign of market manipulation i.e. in terms of generating the sell signal AGAINST the bull market trend so as to PROFIT from the subsequent powerful short covering rally. Don’t forget this is a BULL MARKET, All corrections are to get sucker money in on the short-side as an enable for a larger more profitable subsequent rally.
CONCLUSION – My earlier fears about a bull trap appear to be unfounded, the stock chart is talking that we are in a stocks bull market, and is suggestive of a trend higher towards a 2009 target of between 9750 and 10,000, with a high probability that we may get there before the end of October!. Key danger areas for this scenario are a. for the trend line to contain corrections, and b. that 8080, MUST HOLD.
To keep up to date on the state of the stealth stocks bull market, ensure your subscribed to my always free newsletter.
Your stock index trading analyst.
By Nadeem Walayat
http://www.marketoracle.co.uk
Business News
VIENNA – Oil prices remained above $65 a barrel on Thursday as traders looked to stock markets for direction after U.S. crude inventory data gave mixed signals on demand.
Benchmark crude for September delivery was down 3 cents to $65.37 a barrel by noon European electronic trading on the New York Mercantile Exchange. On Wednesday, the contract dropped 21 cents to settle at $65.40.
Oil prices have jumped from $58.78 a barrel during the last two weeks on growing investor optimism that the global economy will recover this year. But sluggish U.S. gasoline demand so far this summer has tempered some of that enthusiasm. Jittery traders continue to watch Wall Street and other major stock markets as they look for clues on the state of the economy.
“Oil prices lost ground around the globe on Wednesday in line with the Dow Jones index, which fell for the first time in eight trading days,” said analysts at Vienna’s JBC Energy. The Dow fell 34.68, or 0.4 percent, to 8,881.26.
The market got little direction from stocks Thursday, with Asian trading generally up but European shares flat or down slightly. And statistics from the Energy Information Administration Wednesday also were ambiguous on demand.
While the EIA said U.S. crude inventories fell by 1.8 million barrels last week, gasoline stocks rose by 800,000 barrels and inventories of distillates, including heating oil and diesel, reached their highest levels since 1984.
The report said U.S. gasoline in storage has risen about 3 percent from last year.
Still the price of oil may drift higher over the next few months as the global economy eventually emerges from recession.
“Beyond the background noise and swings in economic sentiment, the band from $65 to $75 per barrel would be the most comfortable range for prices to oscillate within this quarter, as part of the gradual normalization of market conditions,” Barclays Capital said in a report.
In other Nymex trading, gasoline for August delivery was up by close to a penny at $1.85 a gallon and heating oil was flat at $1.72. Natural gas for August delivery jumped more than 6 cents to $3.85 per 1,000 cubic feet.
In London, Brent prices rose 13 cents to $67.34 a barrel on the ICE Futures exchange.
Asian Stocks Trade Firmly in Posistive Territory
By Masaki Kondo and Shani Raja
July 23 (Bloomberg) — Asian stocks rose for an eighth day, led by automakers and technology companies, as a weaker yen boosted the prospects for Japanese export earnings and U.S. housing prices unexpectedly gained.
Japan’s Funai Electric Co., which gets 71 percent of its revenue in North America, climbed 3.9 percent. Bank of East Asia Ltd. rose 3.3 percent in Hong Kong as JPMorgan Chase & Co. said an offer of compensation from the city’s banks for notes linked to failed Lehman Brothers Holdings Inc. removed a drag on shares. Sun Hung Kai Properties Ltd. rallied 4 percent on a newspaper report that the company had rented most of the shops at a Singapore mall.
The MSCI Asia Pacific Index added 0.4 percent to 107.12 as of 8:04 p.m. in Tokyo, with five stocks advancing for every three that declined. The gauge has gained 9.2 percent in the past eight days, the longest winning streak since January.
“The sentiment is one of cautious optimism,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State, which holds about $110 billion. “The economy and markets are not likely to continue to recover in a straight line. There are going to be ebbs and flows.”
Hong Kong’s Hang Seng Index climbed 3 percent, led by financial shares. China’s Shanghai Composite Index gained 1 percent, while South Korea’s Kospi Index added 0.2 percent.
Japan’s Nikkei 225 Stock Average rose 0.7 percent, extending its advance to a seventh day, as the yen weakened against the dollar, raised earnings outlooks for car and electronics makers. Disco Corp., which makes precision machinery, jumped 5 percent after reporting a surge in sales.
U.S. Housing
Australia’s S&P/ASX 200 Index dipped 0.1 percent. National Australia Bank Ltd., the nation’s top lender by assets, slumped 5.2 percent after pricing a share sale at a discount. Woolworths Ltd., the country’s biggest retailer, sank 3.7 percent as rising valuations pushed a brokerage to cut its rating.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.2 percent. The gauge was little changed yesterday….
European Stocks Reverse Early Gains
By Andrew Rummer
July 23 (Bloomberg) — European stocks erased their advance as declines by travel and leisure stocks and automakers offset a rally by basic-resource companies.
The Dow Jones Stoxx 600 Index was little changed at 215.53 as of 11:38 a.m. in London, having earlier climbed as much as 0.5 percent.
By Elena Logutenkova
July 23 (Bloomberg) — Credit Suisse Group AG, the biggest Swiss bank by market value, said second-quarter profit rose 29 percent as revenue from trading stocks and bonds doubled.
Net income increased to 1.57 billion Swiss francs ($1.47 billion), or 1.18 francs a share, from 1.22 billion francs, or 97 centimes, a year earlier, the Zurich-based company said in a statement today. Credit Suisse advanced as much as 5.2 percent in Swiss trading.
Chief Executive Officer Brady Dougan cut 4,900 jobs since December, closed unprofitable businesses at the investment bank and reduced risk-taking to return the bank to profit this year. Earnings at the investment bank rose fivefold in the second quarter, while profit declined less than analysts estimated at the wealth management unit…..
U.K. Retail sales Rise More Than Expected
By Svenja O’Donnell
July 23 (Bloomberg) — U.K. retail sales jumped four times as much as economists forecast in June as signs of improvement in the economy and discounts encouraged shoppers to buy more food and clothing.
Sales climbed 1.2 percent from May, when they dropped 0.9 percent, the Office for National Statistics said today in London. Economists predicted a 0.3 percent increase, the median of 28 forecasts in a Bloomberg News survey shows. From a year earlier, sales rose 2.9%.
William Morrison Supermarkets Plc, one of the four main U.K. food retailers, said this week that earnings will beat its forecast, helped by discounts and promotions. Britain’s housing- market slump has shown signs of easing, and Bank of England Deputy Governor Charles Bean says the economy may now have stopped contracting.
“This is going to lead to near-zero GDP in the second quarter,” said Alan Clarke, an economist at BNP Paribas in London. “People have got their confidence back because if you keep you job, you’re in reasonably good shape. We’re past the worst, but we’re not heading for a boom.”
Japan & Taiwan See Exports Falling @ a Slower Pace
By Jason Clenfield and Janet Ong
July 23 (Bloomberg) — Japan’s exports fell in June at the slowest pace this year and orders for Taiwanese shipments declined the least in eight months, adding to evidence that Asia’s economies are on the road to recovery.
Japanese overseas sales dropped 35.7 percent from a year earlier, easing from a 40.9 percent decline in May, the Finance Ministry said in Tokyo. Orders for Taiwan exports, an indication of shipments in one to three months, fell 10.91 percent from a year earlier, easing from a 20.14 percent retreat in the previous month, the Ministry of Economic Affairs said in Taipei.
Worldwide stimulus worth $2.2 trillion has stabilized demand and boosted shipments for exporters including Komatsu Ltd. and Taiwan Semiconductor Manufacturing Co. East Asia’s rebound from the worst global recession since the Great Depression may be “V-shaped,” the Asian Development Bank said today.
“The slowdown in the exports decline is signaling a potential pick-up in the U.S. and Europe,” said Tony Phoo, an economist at Standard Chartered Bank in Taipei. “China is driving the pickup in demand.”
The Nikkei 225 Stock Average rose 0.7 percent at the close in Tokyo, taking its gains to 39 percent since reaching a 26- year low on March 10. The yen weakened to 94.30 per dollar from 93.59 before the report as the improvement in exports encouraged investors to buy higher-yielding assets abroad.
Taiwan’s benchmark Taiex index is the world’s ninth best performer this year, advancing 52 percent. Taiwan’s dollar was little changed at NT$32.985 against the U.S. currency.
Auto Parts, Chips
Japan’s trade slump eased in all of the country’s main markets. Exports to China fell 23.7 percent from a year earlier, the smallest drop since October, led by improving demand for steel, auto parts and chips. Shipments to the U.S. declined 37.6 percent, the least since December, and sales to Europe slid 41.4 percent, also the best this year….
Bristol Myers Squib To Buy Medarex For $2.4 bln
NEW YORK (Reuters) – U.S. drugmaker Bristol-Myers Squibb Co (BMY.N) on Wednesday said it will pay $2.4 billion to acquire Medarex Inc (MEDX.O), a biotechnology company that has been helping it develop a promising treatment for melanoma since 2005.
Medarex’s expertise in making antibody-based drugs could help Bristol-Myers as it strives to regain its stature as one of the world’s leading players in the oncology market, and to develop treatments for immunologic conditions such as arthritis, lupus and psoriasis.
The agreed offer of $16 a share represents a 90 percent premium to Medarex’s closing share price on Wednesday of $8.40 per share on Nasdaq.
Bristol already owns a 2 percent stake in Medarex, through its four-year-old partnership with its neighbor in Princeton, New Jersey.
Medarex has developed so-called “transgenic” mice with human immune systems that are able to generate fully human antibodies that can be used as drugs.
“The premium is not out of whack when you look at the scarcity value of this technology and the appetite for biotech companies right now,” a source familiar with the deal told Reuters. “It’s a small deal in size but a large deal in terms of the potential scope they gain with this science.”
Bristol-Myers and Medarex are developing one of the mouse-generated antibodies, called ipilimumab, as a treatment for patients in late stages of melanoma — the most deadly form of skin cancer. There are now no highly effective treatments for it.
In three mid-stage clinical trials, 30 to 42 percent of patients with metastatic melanoma treated with ipilimumab were still alive after two years, which Bristol-Myers said established a survival benefit.
The companies are now conducting a larger late-stage trial, requested by U.S. regulators, designed to show an unequivocal survival benefit.
The partners are also conducting a mid-stage trial of ipilimumab among lung cancer patients and a late-stage study of it against advanced prostate cancer.
Medarex’s technology has been used to develop several recently approved medicines, for which the company receives royalties…..
South Korea Fines QCOM $208 mln
SEOUL (Reuters) – South Korea’s anti-trust agency on Thursday imposed a $208 million fine on Qualcomm Inc and ordered the U.S. wireless chip and technology company to stop discriminating against companies using competitor’s products.
The Korean Fair Trade Commission (KFTC) ruling deals a blow to Qualcomm, which counts Korean mobile phone makers Samsung Electronics Co Ltd and LG Electronics Inc — the world’s No.2 and No.3 respectively — as its major clients.
Qualcomm said it deeply regretted the decision and warned that the decision could hurt the competitiveness of Korean mobile phone makers.
“There has been no illegal activity,” Qualcomm Korea head Cha Young-koo told reporters, adding that Qualcomm planned to appeal if the final statement, to be published in the next few months, maintained the fine.
The KFTC, which had been investigating the case for more than three years, said in a statement that Qualcomm abused its dominant position in the local market for code division multiple access (CDMA) mobile phone chips.
Qualcomm held a 99.4 percent share of that market in 2008…..
U.S. Banks Warn of Commercial real Estate Woes
Two of America’s biggest banks, Morgan Stanley and Wells Fargo, on Wednesday threw into sharp relief the mounting woes of the US commercial property market when they reported large losses and surging bad loans.
The disappointing second-quarter results for two of the largest lenders and investors in office, retail and industrial property across the US confirmed investors’ fears that commercial real estate would be the next front in the financial crisis after the collapse of the housing market…..
MCO Slides As BRK Reduces its Steak
Today will be a painful one for already-suffering Moody’s (MCO) shareholders, as Berkshire Hathaway (BRK) disclosed that it had cut its stake in the ratings agency by some 6 million shares. He now owns about 17% of the company, down from just over 20%.
The stock fall 10% after hours last night, after the news was announced.
Buffett’s stake in Moody’s has always been controversial, since the company has to rate Berkshire Hathaway — though they were just as behind the curve as anyone else in downgrading Berkshire earlier this year. With the ratings agencies set to be knee-capped, it’s not surprising that Buffett would choose to throw in the towel on this one.
Comments »Earnings Highlights: ABB*, AMZN, AXP, AUO, BIDU, BMY, BRCM, BUCY, BG*, COF, CIT*, EMC*, ECA*, FLIR*, F*, JNPR, MCD*, MSFT, MMM*, NFLX, NEM*, NOC*, OXY*, PM*, POT*, R*, TRA*, UPS*, WYE*, WFR, XRX*
Scrolling Headlines From Yahoo in Play
Q2 EPS $0.62, analysts’ view $0.69/shr
* Cuts FY 2009 EPS forecast to $4-$5
* Sees Q3 EPS $0.80 to $1.20 Vs $1.44 estimate
* Shares down 2.6 percent in premarket
(Adds dateline, details; All figures in U.S. dollars, unless noted)
TORONTO, July 23 (Reuters) – Potash Corp of Saskatchewan (POT.TO) (POT.N) posted a sharp drop in second-quarter profit on Thursday, hurt by lower sales volumes and weaker pricing. The world’s largest fertilizer maker also cut its full year forecast, sending shares down 2.6 percent.
The sector booked record profits in the first half of 2008, but has seen its fortunes turn dramatically in the span of a year.
Fertilizer inventories that were tight have ballooned, while pricing that rose steadily since early in the decade has collapsed.
Farmers continue to be extremely cautious in the wake of the global economic downturn, creating an unprecedented decline in potash and phosphate sales volumes as well as phosphate and nitrogen prices, the company said.
“The breadth and depth of the global recession continued to be very difficult to predict,” said Chief Executive Officer Bill Doyle. “We faced the most significant deferral of demand our industry has ever seen.”
Potash Corp said second-quarter earnings fell to $187.1 million or 62 cents a share, down from $905.1 million or $2.82 per share a year ago.
Analysts on average had forecast earnings of 69 cents a share, according to Reuters Estimates.
The company also cut its full year earnings per share forecast to a range of $4.00 to $5.00 from its prior view of $7.00 to $8.00 a share. It expects third-quarter earnings to between 80 cents per share and $1.20 per share.
Analysts were expecting the company to earn $5.13 per share for the full year and $1.44 a share for the third quarter.
Potash Corp’s U.S.-listed shares fell 2.6 percent to $86.61 in trade before the opening bell on Thursday.
POTASH SALES FROZEN Continued…
LOS ANGELES (AP) — Northrop Grumman Corp. said Thursday its second quarter profit dropped by 20 percent as the No. 2 defense contractor said it was hurt by higher pension costs and higher estimates in costs to complete several ships being built in its Gulf Coast shipyards.
The company, which makes military aircraft and defense electronics, said it earned $394 million, or $1.21 per share, in the three months ended June 30, down from $495 million, or $1.44 per share, a year ago.
Revenue rose 4 percent to $8.96 billion from $8.63 billion a year ago.
Excluding a gain of $64 million, or 13 cents per share, for legal matters, and a $105 million charge, or 21 cents per share, for cost increases to ships under construction at Gulf Coast shipyards, Northrop Grumman said it would have earned $1.29 per share.
That matched the average earnings expectation by analysts surveyed by Thomson Reuters. Earnings estimates typically exclude one-time items. But Northrop’s revenue beat analysts’ forecast of $8.68 billion.
The Los Angeles-based company reiterated its 2009 outlook of $4.65 to $4.90 per share, which is below analysts’ forecast of $4.96 per share.
As of June 30, Northrop received a total of $7.5 billion in new business awards, the same as it received a year earlier. The company had a total backlog of $70.4 billion by the end of second quarter, up from $66.9 billion in the prior year period.
Sales were led by the company’s electronic systems business, which increased 18 percent in the second quarter. Northrop Grumman said deliveries were up for of aircraft and space-based infrared systems and postal automation programs.
And its aerospace systems sales increased 8 percent, principally due to manned aircraft programs such as the fighter jet F-35 and other aircraft, including unmanned aircraft planes and other programs.
DENVER (AP) — Newmont Mining Corp., one of the world’s largest gold producers, said Thursday its second-quarter profit sank 40 percent as copper prices fell and its tax bill jumped significantly.
The results missed Wall Street expectations, and its stock dipped in morning trading.
Richard O’Brien, president and CEO, told analysts the company’s giant gold mine in Australia will begin to produce concentrate in August which will boost performance in the latter half of the year.
“Our operating performance for 2009 is skewed for the last six months of the year,” he said on a conference call. “Again, I would like to reiterate that while we recognize the quarterly fluctuation will occur, we continue to drive our businesses meeting and exceeding our annual guidance.”
Newmont reported a net profit of $162 million, or 33 cents per share, compared with $271 million, or 59 cents per share, a year ago. Revenue grew 7 percent to $1.6 billion from $1.5 billion.
Results include items such as a $59 million charge related to the purchase of the remaining stake in Australia’s largest gold mine, the Boddington open-pit project near Perth, Australia. Excluding those items, the Denver company posted a profit 43 cents per share.
Thomson Reuters said analysts it surveyed estimated, on average, a profit of 47 cents per share on revenue of $1.64 billion. Analysts typically exclude one-time items.
Newmont’s gold revenue rose 4 percent to $1.37 billion from $1.32 billion. Copper sales increased 25 percent to $2.29 billion from $1.83 billion, but the company said realized copper prices were less than a year ago.
The company said its tax rate increased significantly, and it reported $136 million in income tax expenses. That compares with a tax benefit of $42 million a year ago.
Thomas Weisel Partners analyst Heather Douglas told clients the lower-than-expected results appeared to be related to less production from Newmont’s mine operations in Nevada and other expenses.
“Costs were better than expected, and guidance is essentially unchanged,” she wrote in a research note.
She also noted Newmont confirmed an agreement was reached on the divestiture of an interest in an Indonesia mine.
Last month, Newmont bought the remaining 33.3 percent interest in the Boddington mine from AngloGold Ashanti Ltd. for $1 billion. It now has total ownership of the mine.
Newmont trimmed the high end of its equity gold sales guidance because the Boddington mine startup was delayed at least a month. The company now expects sales between 5.2 million and 5.4 million ounces, previously expected as high as 5.5 million.
Shares of Newmont fell 6 cents to $41.92.
SAN FRANCISCO (AP) — Fresh off a successful bid for a major acquisition, EMC Corp. said Thursday that its second-quarter profit plunged 43 percent as companies remained hesitant to spend money on technology
The numbers still topped Wall Street’s forecasts, and EMC offered a stronger-than-expected outlook, citing better operational efficiency. As part of its cost-cutting, in January EMC announced plans to lay off 7 percent of its global work force, or about 2,400 people.
A leader in the data storage market, Hopkinton, Mass.-based EMC predicts that technology spending will continue to fall through the rest of the year. But it says some of its customers have stopped constricting their tech budgets, making it easier to predict their buying habits.
EMC said before the market opened Thursday that its quarterly net income was $205.2 million, or 10 cents per share, in the three months ended June 30. That compares with a profit of $360.1 million, or 17 cents per share, in the year-ago quarter.
The profit was 18 cents per share excluding employee stock compensation and one-time items. On that basis, analysts expected profit of 16 cents per share, according to a poll by Thomson Reuters.
Sales slid 11 percent to $3.26 billion, narrowly beating analysts’ average projection of $3.2 billion.
“It was a fine quarter — you can’t complain,” said Troy Jensen, an analyst with Piper Jaffray & Co. He found it positive that EMC gave detailed guidance at all, which the company hadn’t done the last two quarters because of uncertainty caused by the financial crisis.
As the leader in external disk storage systems, EMC is in a part of a market where sales slowed for the first time in five years at the end of 2008. Rivals’ sales are down, too. IBM Corp.’s storage revenue dropped 20 percent in the latest quarter.
EMC now expects 2009 sales of $13.8 billion, slightly above Wall Street’s estimate of $13.5 billion. That would still be down from last year, when EMC had $14.9 billion in sales.
Profit for the year is expected to be 82 cents per share excluding items, EMC said. Analysts were predicting profit of 78 cents per share. In 2008, EMC earned $1.04 per share, also excluding items.
Storage technology has a unique characteristic that should help its recovery. The amount of data being created only keeps going up, which forces companies to buy more capacity even in a down economy.
EMC is also trying to make itself more appealing to customers by grabbing Data Domain Inc., whose technology reduces the number of times the same file gets stored in corporate data centers. EMC battled rival NetApp Inc. in a month-and-a-half-long bidding contest for control of Data Domain and ended up paying $2.1 billion. EMC said it expects to close the Data Domain deal Thursday.
Q2 EPS $0.35 vs $0.29 year ago
* Rev rises 7 pct
* Cuts FY revenue view, upper end of EPS forecast
* Shares fall 9 pct in pre-mkt trade
July 23 (Reuters) – FLIR Systems Inc (FLIR.O), which makes thermal-imaging products and infra-red cameras, reported a 25 percent rise in quarterly profit, helped by growth at its government systems division, but lowered its full-year outlook partly due to expected impact of currency rates. For the latest second quarter, net income rose to $55.7 million, or 35 cents a share, from $44.6 million, or 29 cents a share, a year ago.
Revenue rose 7 percent to $278 million.
Revenue at the government systems division, which makes imaging products for the military, was up 22 percent to $160.4 million.
Analysts on average had expected earnings of 35 cents a share, before special items, on revenue of $296.5 million, according to Reuters Estimates.
The company lowered its revenue outlook for the year by $100 million to between $1.1 billion and $1.15 billion.
With the expected fall in revenue, FLIR cut the upper end of its earnings forecast and now expects a profit of $1.40 to $1.44 per share, down from its prior view of $1.40 to $1.47 per share.
Shares of the company were down 9 percent in trading before the bell. They closed at $23.56 Wednesday on Nasdaq.
ECA
4:51AM EnCana beats by $0.25, misses on revs (ECA) 52.57 : Reports Q2 (Jun) earnings of $1.22 per share, excluding non-recurring items, $0.25 better than the First Call consensus of $0.97; revenues fell 49.3% year/year to $3.76 bln vs the $4.44 bln consensus. Co’s financial performance was enhanced by its commodity price hedges, which contributed a $900 mln after-tax gain, or $1.20 per share, to cash flow in the second quarter. Second quarter natural gas and oil production remained flat at 4.6 bln cubic feet equivalent per day compared to 2Q08. Free cash flow was $1.1 bln, down 8%.
NEW YORK (MarketWatch) — Ryder System Inc. /quotes/comstock/13*!r/quotes/nls/r (R 27.99, +0.46, +1.67%) said Thursday that second-quarter earnings fell to $23 million, or 41 cents a share, compared to $63 million, or $1.09 a share, from a year ago. Revenue fell to $1.24 billion, down 25% compared with $1.66 billion in the same period of last year. Analysts polled by FactSet Research estimated, on average, earnings per share of 38 cents and sales of $1.25 billion. Ryder said it anticipates the weak overall economic environment and protracted freight recession to continue throughout the remainder of 2009.
NEW YORK (AP) — Cigarette maker Philip Morris International said Thursday its second-quarter profit fell 9 percent as the stronger dollar shrunk profit earned in other currencies. Still, it beat Wall Street expectations and raised its 2009 profit estimate.
The seller of Marlboro and other brands overseas earned $1.55 billion, or 79 cents per share, in the three months that ended in June. That is down from $1.69 billion, or 80 cents per share, a year earlier.
Excluding one-time charges, the company earned 83 cents per share. That beat analyst expectations for 77 cents per share.
The stronger dollar dragged down per-share profit by 19 cents. Companies that do business overseas are hurt by the stronger dollar as profits earned in local currencies are converted into fewer dollars.
Revenue fell 9 percent to $15.21 billion from $16.7 billion. Excluding excise taxes, revenue was $6.13 billion, falling short of analysts’ forecast of $6.18 billion.
In Europe, consumers bought fewer cigarettes, leading Philip Morris’ shipment volume to fall by 3 percent. The declines were particularly bad in Italy, Poland and Spain.
Still, the company raised its forecast for 2009 profit to a range of $3.10 to $3.20 per share from a range of $2.85 to $3 per share.
Philip Morris International Inc. is the world’s largest non-governmental cigarette seller, smaller only than state-controlled China National Tobacco Corp. It has offices in Lausanne, Switzerland, and in New York. It was spun off from Richmond, Va.-based Altria Group Inc. — owner of Philip Morris USA — in 2008. The spin-off was widely seen as freeing Philip Morris International to more aggressively pursue growth in emerging markets.
Like its competitors, the company also is pursuing sales of smokeless products. Earlier in July, it said it would buy Swedish Match South Africa Ltd.
Philip Morris International and Swedish Match are already partners in a joint venture to sell Swedish snus and other smokeless tobacco products in markets outside the U.S. and Scandinavia.
Snus are small teabag-like pouches that users stick between their cheek and gum.
HOUSTON (AP) — Occidental Petroleum Corp. said Thursday its first-quarter profit fell 70 percent from a year ago as results were hit hard by lower oil and natural gas prices.
The Los Angeles-based oil and gas producer said Thursday net income for the April-June period amounted to $682 million, or 84 cents a share. That compared with $2.3 billion, or $2.78 a share, a year ago, when commodity prices were soaring.
Revenue plunged 48 percent to $3.7 billion.
Still, the results beat expectations and shares rose $1.01 to $71 in premarket trading.
Analysts surveyed by Thomson Reuters expected earnings of 80 cents a share and revenue of $3.8 billion.
Occidental, like others in the industry, has faced severe market conditions amid the worst recession in a generation.
The biggest difference from a year ago was the price of oil, which spent most of 2008 at triple-digit levels and contributed to enormous profits before crude markets collapsed. A barrel of crude was trading Thursday at around $65 on the New York Mercantile Exchange, twice what a barrel cost earlier this year.
Natural gas prices have fallen sharply too as consumers scale back energy consumption and inventories build.
Occidental said its worldwide realized price for crude in the second quarter was $52.97 a barrel, compared with $110.12 a barrel a year earlier. Domestic realized natural gas prices fell too — $2.87 per thousand cubic feet in the most-recent quarter versus $9.99 a year ago.
On a positive note, Occidental said daily oil and natural-gas output in the second quarter rose 10 percent to 649,000 barrels of oil equivalent.
For the first six months of 2009, Occidental’s earnings were $1.1 billion, or $1.29 a share, down from $4.1 billion, or $5 a share, a year ago.
Sales fell to $6.8 billion from $13.1 billion.
OAK BROOK, Ill., July 23 /PRNewswire-FirstCall/ — McDonald’s Corporation today announced strong operating results for the second quarter ended June 30, 2009, driven by positive global comparable sales in every area of the world. In constant currencies, the Company posted higher revenues, operating income and earnings per share compared with the prior year.
We’re driving results by staying focused on our global business strategy, the Plan to Win,” said Chief Executive Officer Jim Skinner. “In today’s economic environment, our performance speaks to the strength of our plan and McDonald’s ongoing commitment to our customers around the world.”
McDonald’s reported the following second quarter highlights:
- Global comparable sales increased 4.8% with the U.S. up 3.5%, Europe up 6.9% and Asia/Pacific, Middle East and Africa up 4.4%
- Consolidated operating income increased 2% (11% in constant currencies)
- Earnings per share were $0.98, including $0.09 per share of negative impact from foreign currency translation and $0.01 per share of incremental income related primarily to the sale of Redbox Automated Retail, LLC and also related to the developmental license transaction in Indonesia. Second quarter 2008 earnings of $1.04 per share included a $0.10 per share gain from the Company’s sale of its minority interest in Pret A Manger
- Approximately $1.4 billion returned to shareholders through share repurchases and dividends
- On July 22, McDonald’s Board of Directors declared a quarterly cash dividend of $0.50 per share of common stock, payable on September 15, 2009 to shareholders of record at the close of business on September 1, 2009
Jim Skinner continued, “As consumers find themselves more cash-strapped and time-challenged, they continue to count on McDonald’s for value, convenience and variety across our menu. The ongoing appeal of McDonald’s is a testament to the dedication of our owner/operators, suppliers and employees who provide an exceptional restaurant experience for each customer, every time.”
McDonald’s U.S. delivered solid comparable sales for the second quarter and drove operating income up 5%. The U.S. business gained market share during the quarter with a balanced focus on classic menu favorites like the Big Mac, beverage value offerings and the national launch of the McCafe premium coffee line-up.
McDonald’s Europe delivered strong second quarter comparable sales led by performance in the U.K., France and Russia. In constant currencies, Europe’s second quarter operating income rose 10%. Alignment behind Europe’s key priorities of enhancing local relevance, upgrading the customer and employee experience and building brand transparency continues to deliver results……
SIOUX CITY, Iowa–(BUSINESS WIRE)–Terra Industries Inc. (NYSE: TRA – News) (“Terra”) announces income available to common stockholders for the 2009 second quarter of $80.5 million ($0.81 per diluted share), down from $202.2 million ($1.94 per diluted share) for the same period in 2008. For the 2009 first half, Terra’s income available to common stockholders was $110.4 million ($1.11 per diluted share), compared to $302.3 million ($2.91 per diluted share) for the 2008 first half.
Terra also declared a dividend of $0.10 per common share, payable Sept. 10, 2009, to holders of record as of Aug. 20, 2009.
Analysis of Second Quarter Results
Revenues for the 2009 second quarter totaled $453.5 million, compared to $843.1 million for the 2008 second quarter. This $389.6 million decrease in revenues from the 2008 to the 2009 second quarter was due to lower nitrogen products selling prices and sales volumes. These factors were caused by continued weakness in nitrogen markets due to the general economic slowdown, and customers’ reluctance to replenish inventories.
Lower natural gas costs due to reduced demand and ample supplies related to the overall sluggish economy helped to reduce production costs. Terra achieved a gross margin of 34.6 percent for the 2009 second quarter, compared to a gross margin of 35.1 percent for the 2008 period.
Second quarter cost of sales also reflects maintenance turnarounds at Terra’s Woodward ammonia and UAN plants. The cost of these activities was an estimated $4.9 million on a pretax basis ($3.3 million after tax), or $0.03 per diluted share.
Terra’s GrowHow UK joint venture continued to operate its Billingham and Ince locations at reduced rates for much of the second quarter. Sales volumes were down by approximately 36 percent in the 2009 second quarter versus the 2008 second quarter due to lower demand.
Other operating expenses included costs related to the CF Industries Holdings, Inc. unsolicited share exchange offer of approximately $12.6 million on a pretax basis ($8.5 million after tax), or $0.09 per diluted share.
Analysis of First Half Results
Revenues for the 2009 first half totaled $873.3 million, compared to $1,417.8 million for the 2008 first half. This $544.5 million decrease in revenues from the 2008 to the 2009 first half was due to lower nitrogen products selling prices and sales volumes, caused generally by the same factors as those affecting the 2009 second quarter.
Similar to the second quarter, lower first half natural gas costs due to reduced demand and ample supplies related to the economic slowdown helped to reduce production costs. Terra achieved a gross margin of 26.8 percent for the 2009 first half, compared to a gross margin of 32.7 percent for the 2008 period.
First half cost of sales also includes the curtailment of ammonia production at the Donaldsonville and Woodward plants for much of the first quarter, and maintenance turnarounds at the Yazoo City and Woodward facilities in the first and second quarters, respectively. The cost of these activities was an estimated $25.7 million on a pretax basis ($17.6 million after tax) or $0.18 per diluted share.
Other operating expenses for the 2009 first half included costs related to the CF Industries Holdings, Inc. unsolicited share exchange offer of approximately $14.3 million on a pretax basis ($9.8 million after tax), or $0.10 per diluted share…..
ATLANTA–(BUSINESS WIRE)–UPS (NYSE:UPS – News) today reported operating profit of $895 million on a 16.7% revenue decline for the second quarter ended June 30. Adjusted diluted earnings per share were $0.49 compared to $0.85 last year. The quarter’s results were adversely affected by continuing weakness in global economic activity.
Adjusted diluted earnings per share exclude a charge for the remeasurement of certain foreign currency obligations which did not qualify for hedge accounting treatment. The after-tax charge was $48 million and had no impact on operating income or cash flow. Including this non-cash charge, diluted earnings per share were $0.44.
Consolidated revenue was $10.8 billion compared to $13.0 billion for the prior-year quarter, while consolidated volume was 914 million packages, down 4.7%.
“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, UPS chairman and CEO. “We continue to invest in growth opportunities, even as UPSers improve productivity and help our customers manage through these challenging times. We are a company that can weather this recession, positioning ourselves well to benefit when economic recovery occurs.”
ST. PAUL, Minn.–(BUSINESS WIRE)–3M (NYSE: MMM – News) today announced second-quarter earnings of $1.12 per share on sales of $5.7 billion, with operating income margins of 20.8 percent (a). Sales and per-share earnings declined 15.1 percent and 15.8 percent year-on-year, respectively. On a sequential basis, sales and per-share earnings increased 12.4 percent and 51.4 percent, respectively, and operating income margins improved by 5 percentage points. Free cash flow (h) conversion was 160 percent of net income, with strong contributions from reduced capital expenditures and lower inventory levels.
Excluding special items (b-e), net income was $843 million and earnings were $1.20 per share, down 14.9 percent and 13.7 percent, respectively. Operating income margins increased 50 basis points year-on-year to 22.6 percent. 3M’s Health Care and Consumer and Office businesses each delivered double-digit year-on-year profit improvements.
“We drove strong results in the second quarter, exceeding our own expectations for profits, sales and free cash flow,” said George W. Buckley, 3M chairman, president and CEO. “Operating discipline was key to the quarter, as discretionary spending was well-controlled and restructuring actions proceeded according to plan. 3M employees across the globe are undaunted in facing this recession, and I applaud their efforts.”
Buckley said that while sales were helped by improved demand for consumer electronics and respiratory products used to prevent the spread of the H1N1 virus, 3M’s sound operational strategy and early actions to address the recession were at the core of the strong Q2 performance.
“Our second-quarter results give us confidence in both our plan and in our ability to execute that plan,” Buckley continued. “While the exact shape and timing of the economic recovery is unknown, we will move ahead efficiently and energetically so that 3M emerges from the downturn an even stronger company.”
The company raised its 2009 sales expectations. 3M now expects 2009 organic sales volume to decline between 10 percent and 13 percent, versus a previous planning assumption of negative 11 percent to negative 15 percent. The company also expects 2009 full-year earnings to be in the range of $4.10 to $4.30 per share, versus a previous range of $3.90 to $4.30. All estimates quoted exclude special items.
Key Financial Highlights…
- $0.54 diluted EPS compared with $0.63 for the year-earlier second quarter and $0.53 in the first quarter of 2009; incremental noncash pension/retiree benefit costs reduced second-quarter 2009 EPS by $0.05, consistent with first-quarter results
- 1.4 million net gain in total wireless subscribers to reach 79.6 million, up 6.7 million over the past year
- 1.2 million retail postpaid wireless net adds, the company’s best-ever second-quarter total — up 29.0 percent from results in the year-earlier quarter and up 31.8 percent versus the first quarter of 2009; record low postpaid subscriber churn at 1.09 percent
- More than 2.4 million iPhone activations in the second quarter, reflecting a record-setting iPhone 3GS launch; including iPhone, more than 3.5 million increase in 3G integrated devices in service (handsets with QWERTY or virtual keyboards in addition to voice functionality)
- 37.2 percent increase in wireless data revenues to $3.4 billion, more than double the total for the second quarter two years earlier; growth driven by messaging, Internet access, access to applications and related services
- Sixth consecutive quarter with a year-over-year increase in wireless postpaid subscriber ARPU (average monthly revenues per subscriber), up 2.3 percent to $60.21
- Continued strong growth in AT&T U-verseSM TV subscribers, with a net increase of 248,000, to reach 1.6 million in service; more than three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T (adding broadband, wireline voice and wireless)
- 17.0 percent growth in wireline IP data revenues driven by rapid expansion in AT&T U-verse services and growth in business products such as Virtual Private Networks (VPNs) and managed Internet services……
power-systems and automation-technologies major, reported second-quarter net income fell 31% on 12% lower revenue. Net income was $675 million, or 30 cents a share, compared with $975 million, or 42 cents, in the year-earlier quarter. Revenue was $7.92 billion compared with $9.03 billion. In local currencies, revenue declined 2%. At the end of the quarter, the backlog was $25.91 billion, off 11% in dollars and 1% in local currencies. ABB affirmed its targets set for the years 2007 through 2011, except for the robotics division, which it said “requires further restructuring.” The company also said that for the second half, visibility in its markets “remains limited.”
Xerox beats by $0.05, reports revs in-line; guides Q3 EPS below consensus; guides FY09 EPS in-line (XRX) 7.00 : Reports Q2 (Jun) earnings of $0.16 per share, $0.05 better than the First Call consensus of $0.11; revenues fell 17.7% year/year to $3.73 bln vs the $3.72 bln consensus. Co issues downside guidance for Q3, sees EPS of $0.10-0.12 vs. $0.14 consensus. Co issues in-line guidance for FY09, sees EPS of $0.50-0.55 vs. $0.51 consensus.
LONDON (MarketWatch) — Bunge /quotes/comstock/13*!bg/quotes/nls/bg (BG 65.44, -0.33, -0.50%) said that its second-quarter net income fell 58% to $313 million, or $2.28 a share, compared to a year ago. Sales at the agribusiness and food company declined 23% to $10.99 billion. Analysts had been expecting earnings per share of 73 cents, according to data compiled by FactSet. “We expect a strong second half of the year, with results weighted more heavily to the fourth quarter when the Northern Hemisphere harvest is well underway and our fertilizer economics have stabilized,” said chief financial officer Jacqualyn Fouse. The firm reiterated that its expecting 2009 earnings in a range of $4.90 to $5.40 a share.
TRENTON, N.J. (AP) — Drugmaker Wyeth on Wednesday posted a 13 percent jump in second-quarter profit, trouncing Wall Street forecasts, as cost cuts overcame lower sales due to generic competition and the strong dollar.
The maker of children’s vaccine Prevnar and antidepressant Effexor also hiked its 2009 profit forecast.
Madison, N.J.-based Wyeth, the world’s No. 12 pharmaceutical company by sales, is being bought by No. 1 drugmaker Pfizer Inc. later this year.
Wyeth said its net income amounted to $1.27 billion, or 94 cents per share. That’s up from $1.12 billion, or 83 cents a share, a year earlier.
The maker of children’s vaccine Prevnar and antidepressant Effexor said that without $44.9 million in restructuring costs and $21.2 million in costs for the acquisition by Pfizer, net income would have been 98 cents per share. That was 13 cents more than Wall Street expected.
Revenue was down 4 percent, to $5.7 billion from $5.95 billion, as the strong dollar reduced worldwide revenue about 6 percentage points.
Analysts polled by Thomson Reuters were expecting earnings per share of 85 cents and revenue of $5.58 billion.
Meanwhile, Wyeth raised its 2009 profit forecast to a range of $3.48 to $3.58 per share, from a range of $3.33 to $3.53.
On Monday, Wyeth shareholders voted overwhelmingly to approve the Pfizer deal, which still requires approval by antitrust regulators in the U.S. and a few other countries. The two companies are working on selling parts of their animal health businesses to gain approval.
“We remain focused on delivering strong performance as we work with Pfizer toward the successful integration of our two companies,” Wyeth Chief Executive Bernard Poussot said in a statement.
“Wyeth’s results reflect the ongoing strength of our biotechnology and vaccine franchises,” as well as infant formula and other nutrition items sold in many foreign countries, he said.
Excluding currency effects, sales jumped 24 percent to $783 million for Prevnar, the world’s top-selling vaccine, which protects against pneumonia, meningitis and other pneumococcal diseases.
Revenue also was up sharply for Enbrel, an injected biologic drug for rheumatoid arthritis, at $1.4 billion. Sales rose 9 percent both for Wyeth’s hemophilia medicines, which brought in $248 million, and for the nutritional products, which made $436 million.
However, sales were down 22 percent, excluding currency effects, to $772 million for blockbuster antidepressant Effexor.
For first six months, net income increased 6.5 percent to $2.47 billion, or $1.83 per share, from $2.32 billion, or $1.72 per share, in the first half of 2008.
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