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Monthly Archives: January 2013
Upgrades and Downgrades This Morning
AAPL, BBBY, SNP, CHD, CLX, CL, CPA, CVS, DDS, EMR, GMCR, KMB, NFLX, PG, GOLD, ROST, SWC, SYMC, TIF, VECO,
Comments »In Play and On the Wires
Capitulation Blues: The Bears Are Jumping Out of Windows
“Though it’s already a few weeks into winter, Wall Street bears may be finally ready to hibernate, though no doubt against their will.
A powerful rally in which virtually all fears have been bypassed has pushed stock marketdetractors to the brink, ready to wave the proverbial white flag as the only direction for the market seems to be up, up, up.
“They’re almost ready to throw in the towel,” Scott Bauer, of Trading Advantage, told CNBC. “I don’t want to say ‘capitulation,’ (but) guys down here really are saying, ‘All right, I can’t fight it anymore, let’s go.'”
The term “capitulation” refers to the point when sentiment has gone so far in one direction that a turnaround, be it higher or lower, is a certainty. (Read More: S&P 1,500: The Last Barrier Before a New Record?)
One of the most respected maxims on trading floors is that bull markets end on good news and bear markets on bad news. In simpler terms, that somewhat counterintuitive observation means a run higher stops when the market no longer reacts positively to good news, while a run lower halts when the market no longer falls on bad news.
Lately, the news has been mostly good, if only marginally so.
The worst of the fiscal battles in Washington have abated for the moment, and companies have managed to beat sharply lowered earnings expectations. The European debt crisis is on the back burner, and geopolitical tensions, particularly in the Middle East, have quieted….”
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Weekly Jobless Claims: Prior 335k, Market Expects 355k, Actual 330k
Mole Implicates Another Former SAC Capital Trader in Insider Trading
“Dipak Patel, a former SAC Capital portfolio manager, has been fingered by a mole, says the WSJ.
The undercover informant has told federal investigators that she passed confidential information to the trader for years.
Patel, who was a technology stock manager for Steve Cohen’s hedge fund, has yet to be charged with any wrongdoing. He left SAC Capital in 2010.
Investigators have been concentrating their efforts on SAC Capital in a big way for years. The heat has been especially intense since last November, when federal prosecutors wrote that SAC CEO Steve Cohen interacted with alleged insider trader, Mathew Martoma in a complaint. Six former SAC employees have been convicted of or pleaded guilty to insider trading since 2009.
Comments »$AAPL Commentary From 15 Analysts
$MMM Beats on the Top Line, Misses on Profits
“MINNEAPOLIS (AP) — 3M, which makes Post-it notes, industrial products, and construction materials, says its fourth-quarter net income rose 3.9 percent as growing profits in health care and consumer goods offset declines in other areas.
3M Co.’s businesses cover a wide range of industries and it gets its sales from all over the globe, so its results are a closely-watched economic bellwether.
The Maplewood, Minnesota-based company earned $991 million, or $1.41 per share, for the quarter that ended Dec. 31. That matched analysts’ expectations. A year ago it earned $954 million, or $1.35 per share.
Revenue rose 4 percent to $7.39 billion. Analysts expected $7.17 billion.
The company affirmed its 2013 profit guidance of $6.70 to $6.95 per share. Analysts expect $6.86 per share.
Its shares rose 51 cents to $100 in premarket trading…”
Comments »Higher Fuel and Labor Costs Hurt $LUV’s Profits
“DALLAS (AP) — Southwest Airlines Co. says fourth-quarter earnings fell by nearly half on higher spending for fuel, labor and maintenance.
The airline’s revenue rose slightly, however, as the average fare climbed almost $8 higher than a year ago.
Southwest also said that bookings for the first three months of 2013 look strong. It said that based onbookings and ticket prices so far, a key revenue measure should rise by 2 percent to 3 percent in January compared with the same month last year.
Southwest, the nation’s fourth-biggest airline, said Thursday that net income was $78 million, or 11 cents per share. That’s down from $152 million, or 20 cents per share, a year earlier.
Excluding items such as fuel contracts, the net income would have been 9 cents per share, beating the 7-cents-per-share forecast among analysts surveyed by FactSet.
Revenue ticked up 1.6 percent to $4.17 billion but fell short of the $4.20 billion that analysts expected.
Expenses rose faster, however, by 3.1 percent. That includes a 4.5 percent increase in labor costs and a 13 percent jump in maintenance as the airline continued to overhaul the cabins inside many of its planes….”
Comments »$BKW To Drop Supplier of Horse Meat
“LONDON (Reuters) – Burger King, one of the most popular fast-food chains in Britain, said on Thursday it had stopped using one of the firms caught up in the scandal of supplying grocers with beef that contained horse meat.
The British food industry has been rocked by the revelation last week that retailers including market leader Tesco and smaller chains Aldi, Lidl and Iceland had sold beef products that contained horse meat.
Food safety experts say horse meat poses no added health risks to consumers, but the discovery has raised concerns about the food supply chain and the ability to trace meat ingredients.
On its website, Burger King said it had decided to replace all Silvercrest products in Britain and Ireland with products from another approved Burger King supplier.
“This is a voluntary and precautionary measure,” Burger King, famed for its flame-grilled burgers, said. “We are working diligently to identify suppliers that can produce 100 percent pure Irish andBritish beef products that meet our high quality standards…”
Comments »$BMY Beats on a One Time Tax Break
“Bristol-Myers Squibb Co. (BMY) reported fourth-quarter earnings that topped analysts’ estimates after taking a tax benefit for a hepatitis C drug that failed last year.
Net income rose to $925 million, or 56 cents a share, from $852 million, or 50 cents, a year earlier, the New York-based drugmaker said today in a statement. Excluding certain items, profit was 47 cents a share, 5 cents better than the average of 15 analysts’ estimates compiled by Bloomberg. The earnings included an $83 million tax benefit the company recorded from Inhibitex Inc., acquired in 2012 for a hepatitis C drug that was abandoned after patients suffered heart ailments in studies.
Chief Executive Officer Lamberto Andreotti called 2012 a transition year for Bristol-Myers because it lost exclusive U.S. sales rights for its top-selling blood thinner Plavix and must begin to rely on new products such as its skin-cancer drug Yervoy. The company has “continued to build the post-Plavix portfolio and operating structure that provide a solid foundation for our future growth,” he said in a statement.
The growth may have to wait past 2013, which the company projected as another year of declining results. Bristol-Myers reduced the 2013 forecast it gave two years ago to $1.78 a share to $1.88 a share, after promising at least $1.95 per share. The forecast was in line with Wall Street’s lower estimates.
Bristol-Myers also predicted annual sales of $16.2 billion to $17 billion, compared with analysts’ estimates of $16.61 billion…”
Comments »Black Gold Fluctuates Before Energy Inventory Report
Currently WTI is up $0.44…
“Oil traded near the lowest level in a week in New York after U.S. crude stockpiles gained and capacity on the Seaway pipeline was reduced.
West Texas Intermediate was little changed after dropping yesterday by the most in a month. Crude supplies rose by 3.2 million barrels last week, the biggest increase in six weeks, the industry-funded American Petroleum Institute said. An Energy Department report today may show inventories climbed by 2.2 million barrels, according to a Bloomberg News survey. London- traded Brent’s premium to WTI widened yesterday after Enterprise Products Partners LP (EPD) said capacity was limited on the Seaway link, curbing shipments from Cushing,Oklahoma, the delivery point for New York futures.
“The market could resume its move lower should the Energy Department report this afternoon confirm robust gains in U.S. crude inventories,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail. Prices may decline to $93 a barrel, he said.
WTI crude for March delivery was at $95.43 a barrel, up 20 cents, in electronic trading on theNew York Mercantile Exchange at 11:57 a.m. London time. The contract dropped $1.45 yesterday, the most since Dec. 21, to the lowest closing level since Jan. 16. The average volume of all futures traded was 63 percent above the 100-day average.
Brent for March settlement was at $112.59 a barrel, down 21 cents, on the London-based ICE Futures Europe exchange. The number of futures traded was 35 percent higher than the 100-day average. The European benchmark contract was at a premium of $17.06 to WTI futures, down from $17.57 yesterday. The gap was $15.16 on Jan. 17, the narrowest in almost six months….”
Comments »The IMF Cuts Global Growth Forecasts Again
“The International Monetary Fund cut its global growth forecasts and now projects a second year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery.
The world economy will expand 3.5 percent this year, less than the 3.6 percent forecast in October, the Washington-based IMF said today in an update of its World Economic Outlook report. While the fund projects growth this year increasing from last year’s 3.2 percent pace, it expects the 17-country euro area to shrink 0.2 percent in 2013, instead of growing 0.2 percent as forecast in October.
“Is Europe on the mend? I think the answer is yes and no,” IMF Chief Economist Olivier Blanchard said in a video released with the report. “Something has to happen to start growth.”
For the global economy, “this is better, but it is not great,” Blanchard said at a press conference today. “In particular, the growth numbers are not enough to make a dent to the unemployment rate in advanced economies.”
The IMF foresees Spain leading the contraction in the euro area, while growth slows in Germany, the region’s largest economy.
World Index
The MSCI All-Country World Index fell 0.2 percent to 1,391.21 at 11:00 in New York. It’s climbed 15 percent in the last six months. The euro fell 0.3 percent, trading at $1.3289.
“It’s clear that financial markets are ahead of the real economy. The question is whether they are too much ahead or not,” Blanchard said. “What we know is that it always takes some time for financial markets’ optimism to feed to the real economy and at this stage there are still obstacles to it.”
While measures to stem the debt turmoil last year helped boost financial markets around the world and decrease sovereign bond yields from Spain to Greece, European officials now still face a recession and unemployment at a record 11.8 percent in the euro area. The IMF warned that the region still poses a “large” risk to the rest of the world if efforts under way to strengthen its economies and work on a banking union slip.
Economic Contraction…”
Comments »$CBK To Pink Slip 4-6k Jobs
“Commerzbank AG (CBK), Germany’s second- biggest bank, will cut 4,000 to 6,000 jobs over the next four years to reduce costs and meet its profit goals.
The job reductions will apply to all units worldwide with the retail bank having “significant overcapacity,” according to an internal memo obtained by Bloomberg news, the contents of which were confirmed by spokesman Simon Steiner in Frankfurt. Chief Executive Officer Martin Blessing declined to comment on the cuts at the World Economic Forum in Davos,Switzerland….”
Comments »$NOK Skips a Dividend for the First Time in 143 Years
“Nokia Oyj (NOK1V) will omit a dividend for the first time in at least 143 years as the struggling Finnish mobile-phone maker retains cash for its comeback attempt.
The company announced the decision as it reported its first net income in seven quarters and an increase in net cash. Even the World Wars and the breakup of the Soviet Union, a major buyer of Nokia’s networking gear, didn’t stop the company returning cash to investors.
Nokia is trying to claw back business after sales plunged and combined losses had reached almost 5 billion euros ($6.7 billion) since early 2011. Chief Executive Officer Stephen Elop has cut more than 20,000 jobs and is conserving cash to challenge Apple Inc. (AAPL) and Google Inc. (GOOG) with devices running Microsoft Corp. software….”
Comments »European Markets Little Changed Despite a Beat in Manufacturing and Service Area Data
“European stocks were little changed, near a two-week high, as a measure of manufacturing and services in the euro area rose more than expected, offsetting Apple Inc. (AAPL)’s slowest profit growth since 2003. U.S. index futures and Asian shares declined.
EasyJet Plc (EZJ) added 4.1 percent after saying fiscal first- quarter sales gained. Logitech International SA slumped 7.5 percent after reporting a third-quarter loss of $195 million. Banca Monte dei Paschi di Siena SpA plunged 6.1 percent after the Bank of Italy said that the world’s oldest lender hid documents from its regulators.
The Stoxx Europe 600 Index (SXXP) retreated 0.1 percent to 287.99 at 11:15 a.m. in London, after earlier sliding as much as 0.4 percent. The equity benchmark has climbed 3 percent this year after U.S. lawmakers agreed on a compromise budget. Standard & Poor’s 500 Index futures dropped 0.2 percent today, while the MSCI Asia Pacific Index fell 0.3 percent.
“It’s back to reality in a way: mixed news on the macroeconomic front, plus Apple, is impacting the equity markets today,” said Francois Savary, who oversees about $8.1 billion as the chief investment officer at Reyl & Cie. in Geneva. “The market wants to see that companies can increase sales and earnings-per-share down the road, and this is the key to sustain the rally.”
The volume of shares changing hands in Stoxx 600 companies today was 30 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Composite PMI…”
Comments »The Aussie and New Zealand Dollars Rise on China PMI Data
“The Australian and New Zealand currencies rose versus the yen after a survey of companies showed Chinese manufacturing expanded at the fastest pace in two years, brightening the outlook for commodity exports.
The South Pacific dollars advanced against their Japanese counterpart after the announcement by HSBC Holdings Plc and Markit Economics for the preliminary reading of a Purchasing Managers’ Index for China beat analysts’ forecasts. The so- called Aussie weakened versus New Zealand’s dollar as signs of limited inflation in the larger economy caused traders to add to bets on the size of interest-rate cuts this year.
“We have seen a bounce back in the Australian and New Zealand dollars due to the Chinese PMI data,” said Tim Waterer, a senior foreign-exchange dealer at CMC Markets in Sydney. “The fact that we’ve seen another improvement in Chinese activity lends itself to support a currency like the Aussie, which is hypersensitive to all things Chinese.”
Australia’s dollar rose 0.4 percent to 93.94 yen as of 4:52 p.m. in Sydney. It fell 0.4 percent to $1.0517 and slid 0.4 percent to NZ$1.2473. New Zealand’s currency gained 0.9 percent to 75.32 yen and added 0.1 percent to 84.31 U.S. cents.
The preliminary reading of the PMI Index was 51.9 in January, according to a statement from HSBC Holdings Plc and Markit Economics today. That compares with the 51.5 final reading for December and the 51.7 median estimate of analysts surveyed by Bloomberg News.
China is Australia’s largest trading partner and New Zealand’s second-largest export destination.
Inflation Contained…”
Comments »China’s Manufacturing Accelerates at the Fastest Pace in Two Years
“China’s manufacturing is expanding at the fastest rate in two years, according to a private survey of companies, bolstering prospects that economic growth will accelerate for a second straight quarter.
The preliminary reading of a Purchasing Managers’ Index (SHCOMP) was 51.9 in January, according to a statement from HSBC Holdings Plc and Markit Economics today. That compares with the 51.5 final reading for December and the 51.7 median estimate of 17 analysts surveyed by Bloomberg News.
The data suggest that China’s expansion at the start of 2013 will equal or exceed its 7.9 percent clip in the fourth quarter. Sliding Japanese exports and below-forecast growth in South Korea reported today underscore Asian economies’ dependence on China as austerity measures in Europe limit demand.
“Despite the still-tepid external demand, the domestic- driven restocking process is likely to add steam to China’s ongoing recovery in the coming months,” Qu Hongbin, HSBC’s chief China economist in Hong Kong, said in a statement.
Asian stocks extended losses after North Korea threatened to conduct a nuclear test. The Shanghai Composite Index fell 0.8 percent, retreating from gains of as much as 1.8 percent. The MSCI Asia Pacific Index of stocks dropped 0.1 percent as of 4:05 p.m. Tokyo.
Japan Exports…”
Comments »Japan Reiterates a Currency Weakening Policy, Yen Falls After Three Days of Upside
“Japan’s deputy economy minister said that a yen at 100 to the dollar wouldn’t be a problem, indicating global criticism may fail to convince Prime Minister Shinzo Abe to temper his push to weaken the currency.
“The current level around 90 can be said to be a correction of the strong yen, but it isn’t over yet,” Yasutoshi Nishimura said in an interview today in Tokyo. He said a level of 110 to 120 would raise import costs, echoing the view of Abe’s adviser Koichi Hamada and suggesting that the government won’t back a currency free-fall.
Nishimura joins Japanese officials pushing back at international criticism as the yen’s 8 percent decline in two months causes friction ahead of February’s Group of 20 meeting. He said theBank of Japan (8301) will need to pursue bolder monetary easing to achieve its new 2 percent inflation target, speaking after data today showed exports fell for a seventh month and a record annual trade deficit….”
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