Posts Tagged stock
Bounce Or New Beginning?
Posted by Tetyana Matychak in Fund Markets on August 31st, 2010
Although it was one of the last summer Friday’s, trading was surprisingly volatile. Despite the fact that most traders were likely working on their short game or vacationing with the family, there was a serious dose of data input to the game on Friday ranging from economic results, corporate guidance, and of course, some very important Fedspeak. The end result was an impressive move up in the indices, which may or may not represent a new beginning for the bull camp.
While the bears could be heard making remarks about short-covering and discussing the height to which a dead cat could actually bounce, the bulls talked about a second successful test of 1040 and a move “into the gap” that was created by Tuesday’s opening dive lower. And while no one knows for sure how much farther the bulls can run, it does appear that our heroes in horns were able to wrestle the ball away from their opponents on Friday.
There were three key inputs to the session. First, we had the first revision to the second quarter GDP in the U.S. While down significantly from the initial estimate made earlier in the month (remember, the government’s first estimate didn’t even include all the data from the final month of the quarter), the growth rate of 1.6% was actually better than the consensus for a rate of 1.3% and the whisper numbers containing a zero-handle. The takeaway from the report was that although the growth has indeed slowed, the economy does continue to grow. And in short, this is what “slowdowns” look and feel like.
The next bit of data was less upbeat as Intel (INTC) revised its revenue guidance for the third quarter – and not in a good way. Although analysts following the chipmaker suggested that the move wasn’t exactly a surprise, the computers that look for key words were able to put “Intel” and “reduced guidance” together in order to create a swift downdraft. It is also interesting to note that the Intel news was released within a couple minutes of the University of Michigan’s Confidence index, which, while not a bad report by any stretch, also came in “below consensus.” As such, the computers clearly got busy for a period of about 10 minutes Friday morning. Read the rest of this entry »
Consumer Spending in U.S. Rises More Than Forecast
Posted by Tetyana Matychak in Favourites, Trading Markets on August 30th, 2010
Consumer spending in the U.S. rose more than forecast in July, exceeding gains in incomes, a sign the improvement will not last without more jobs.
Purchases rose 0.4 percent, the most since March, after little change the prior month, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent, less than projected, and the savings rate dropped.
Disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing the lack of jobs is hurting Americans’ spending power. Companies from Intel Corp. to J. Crew Group Inc. are cutting forecasts as unemployment and flagging confidence prompt households to scale back.
“This, so far, is allaying near-term double-dip concerns,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto, referring to fears the world’s largest economy will tip back into a recession. “It nonetheless showcases very lackluster growth in the U.S. economy.”
Stock-index futures fell after the report, extending earlier losses, and Treasury securities rose. The contract of the Standard & Poor’s 500 Index was fell 0.3 percent to 1,060.3 at 8:54 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 2.60 percent from 2.65 percent late on Aug. 27. Read the rest of this entry »
Investing In South Korea: Why This Emerging Market Is A Perfect Contrarian Opportunity
Posted by Tetyana Matychak in Investing on August 27th, 2010
The mere mention of this country’s name can cause the “Risk-o-Meter” to nudge higher. But it’s got nothing to do with the nation’s own economy or growth prospects.
Rather, the problem resides to its immediate north in the shape of the contentious Kim Jong-Il and the saber-rattling North Koreans. Their South Korean neighbors live with the constant threat of violence erupting at any moment – especially after North Korea allegedly torpedoed one of South Korea’s warships in March.
But the likelihood of a full-blown war is slim. Why? Because the United States still has some 28,500 troops in South Korea. And thanks to the long-standing U.S.-South Korea alliance, any North Korean attack would effectively be an attack upon the United States, too.
Even Kim Jong-Il knows that’s a bad idea and would end disastrously for his rogue nation.
And for investors, the overblown geopolitical climate is just one reason why I’m convinced that now is the perfect time to buy into this contrarian situation. But there are more… Read the rest of this entry »
Is Company Guidance Worth Listening To?
Posted by Tetyana Matychak in Trading Markets on August 26th, 2010
Yesterday I wrote a post titled “Q2 earnings scorecard — believe the guidance or believe the bears?” The point of that post was that forward guidance during the most recent earnings season closely matched the guidance offered during the previous earnings season and that, based on these fairly positive expectations of company management, it was unlikely that the economy was heading for a double dip.
It immediately afterward occurred to me that it might be worthwhile to test the hypothesis that Upside guidance actually results in increased earnings.
In Q1 of 2010, roughly 20% of the companies that offered any guidance at all provided Upside guidance. Here are the Q2 results for this optimistic set of companies:
77% did actually deliver increased earnings
2% delivered no increase
21% showed a decrease in earnings
93% showed year-over-year top-line growth
7% saw a decrease in revenues
Companies that offer Inline or Mixed guidance usually see their stock price slammed during earnings season. Do they deserve it? Read the rest of this entry »
Housing’s a wreck. Builders rally. Huh?
Posted by Tetyana Matychak in Investing on August 25th, 2010
Existing home sales plummeted in July. New home sales sunk as well, hitting a record low. And even though luxury homebuilder Toll Brothers reported a surprise quarterly profit Wednesday, that was largely due to a tax break. Sales were down slightly from a year ago and orders dropped 16%.
Despite this, some investors appear willing to once again bet that the housing market has hit bottom. Shares of Toll Brothers (TOL) were up more than 2% in early afternoon trading.
The S&P SPDR Homebuilders (XHB) exchange traded fund, which holds other builders such as KB Home (KBH) and Pulte (PHM), as well as building materials makers and home improvement retailers, rose 1.5%.
It’s a strange reaction to say the least. The broad market is down because of more gloomy housing data. But the companies that are most directly tied to the health of the housing market are up?
It doesn’t make a heck of a lot of sense. It may be a case of traders betting for the umpteenth time that this is finally a bottom for housing.
That’s a mistake. Now that the tax credit for homebuyers has expired, it’s difficult to imagine what can juice the real estate market again in the near-term. Read the rest of this entry »
U.S. stock futures rise ahead of Bernanke testimony
Posted by Tetyana Matychak in Fund Markets on July 21st, 2010
U.S. stock futures rose on Wednesday, buoyed by Apple’s stronger-than-expected results, as investors braced for testimony by Federal Reserve Chairman Ben Bernanke and another barrage of earnings reports.
Nasdaq 100 futures gained 11.75 points to 1,851.50 and S&P 500 futures added 4.40 points to 1,084.50. Futures on the Dow Jones Industrial Average rose 31 points to 10,210. The Dow (DJIA 10,230, +75.53, +0.74%) ended up 0.7% on Tuesday, reversing intraday triple-digit
losses.
Sentiment was buoyed after Apple (AAPL 251.89, +6.31, +2.57%) reported last night a surge in earnings due to booming demand for its iPhone and iPad devices.
Strategists at Deutsche Bank said the spotlight Wednesday will be on Bernanke’s monetary policy report to the U.S. Senate Banking Committee.
“Expectations that Bernanke may announce policy accommodation measures seemed to help risk assets recover from the softer housing-starts data and Goldman Sachs’ earnings and revenue miss,” they wrote in a note. Markets will “likely listen carefully to decipher any hints about the possibility of a U.S. double-dip [recession].”
Bernanke will start speaking at 2 p.m. Eastern time, but before that investors will get a number of earnings reports from companies, including Morgan Stanley (MS 25.22, +0.44, +1.78%) , Wells Fargo & Co. (WFC 25.91, -0.11, -0.42%) and Freeport McMoRan Copper & Gold Inc. (FCX 64.32, +3.46, +5.69%) . Read the rest of this entry »
Stocks May Surprise By Year-End
Posted by Tetyana Matychak in Favourites, Fund Markets on July 5th, 2010
Economic news has been weak lately. Financial markets have performed poorly for over two months. Dow Theory “sell signals” have been issued. You may have heard a “death cross” is on the way. It is nearly impossible to find a bull among the growing sloth of bears. We are concerned about both the fundamentals and the technicals. However, in the context of history the current situation is not all that unusual.
On the economic front, the Wall Street Journal helps put recent weak economic numbers in some perspective. Stocks did quite well from late 2002 to late 2007. They also did well from 1992 to 1994.
Pauses aren’t uncommon early in a recovery. After rebounding from recession in late 2001 and early 2002, the economy had a 12-month stretch in which it grew at a paltry 1.5% annual rate, sparking fears of a double-dip recession. In late 1991, growth waned after a recovery had started. In the past 12 months, the economy has gotten off to a faster start than in 2002.
From CNBC: Former Federal Reserve Chairman Alan Greenspan said that the recent stock market decline is “typical” of a recovery, and that international instability has more to do with the recent decline than problems in the United States. “What we’re looking at is an invisible wall, which we’ve run into here. Which, essentially, as far as I can see, is a typical pause that occurs in an economic recovery,” Greenspan said in an interview with CNBC. “Ordinarily we’re saying that the stock market is driven by economic events, I think it’s more in the reverse.” Read the rest of this entry »
Stock futures fall after euro hits new 4-year low
Posted by Tetyana Matychak in Fund Markets on June 1st, 2010
Stock futures tumbled Tuesday after the euro fell to a new four-year low. Major U.S. indexes are set to resume their slide due to fresh concerns about the health of Europe’s economic recovery. Stocks fell late Friday ahead of the long holiday weekend after Fitch Ratings cut its view on Spain’s debt.
A slowdown in manufacturing in China also worried investors. U.S. traders will get a reading on the domestic manufacturing sector after the market opens.
The Dow Jones industrial average fell 122 points Friday. Dow futures are down another 120 points early Monday.
The euro fell as low as $1.2112 before easing off that low to $1.2155. Markets worldwide have been tracking the euro, the currency used by 16 countries in Europe. The euro has been seen as an indication for confidence in whether countries like Greece, Spain and Portugal will be able to cut spending to contain mounting debt without stalling a recovery.
Investors in recent weeks have used any signs of weakening around the world to sell stocks and move into safe-haven investments like the dollar and U.S. Treasurys. Read the rest of this entry »
Winfrey Hires a Star Manager
Posted by Tetyana Matychak in Budget on May 20th, 2010
Oprah Winfrey has made a fortune in television, magazines and movies. Now she has hired someone to manage it.
Ms. Winfrey, one of the most powerful brands in media, has begun setting up a so-called family office to handle her personal investments, according to people familiar with the situation. Her first hire: Peter Adamson, a well-regarded investor who currently serves as chief investment officer for Eli Broad, the Los Angeles billionaire and philanthropist.
The move comes as Ms. Winfrey begins a new chapter in her professional life. In January she plans to launch her own channel, the Oprah Winfrey Network, a joint venture between Ms. Winfrey’s Harpo Inc. and Discovery Communications Inc. that aims to reach 80 million homes in the U.S.
A spokeswoman for Ms. Winfrey confirmed the hire but declined to elaborate. Mr. Adamson didn’t return emails and telephone calls seeking comment.
Ms. Winfrey historically has been private about her financial affairs, but this is believed to be the first time she has established a full investment organization around her fortune.
Wealthy investors typically hire managers at banks and brokerage firms to handle their financial affairs. A family office is considered a step up from such an arrangement, with a team of advisers working exclusively, and directly, for the client. Read the rest of this entry »
Euro-zone troubles may keep stocks on edge
Posted by Tetyana Matychak in Fund Markets on May 17th, 2010
Stocks could face more volatility this week as growing doubts about whether Europe can solve its deepening debt crisis are likely to take center stage again.
A $1 trillion rescue package unveiled at the week’s start gave only temporary relief to investors, who are increasingly worried about the impact of the crisis on the global recovery and the euro.
Wall Street also will be anxious to see the results from retailers next week, and will pay special attention to their forecasts for the rest of the year. Wal-Mart Stores (WMT.N) and Lowe’s Co (LOW.N) are among companies expected to report.
Below-par results on Friday from retailers, including Nordstrom (JWN.N) and J.C. Penney Co Inc (JCP.N), cast some doubt on the consumer’s health.
The week also brings government data on inflation, which is expected to remain tame, and on housing, a sector still struggling to recover from the country’s worst economic downturn since the 1930s.
The three major U.S. stock indexes ended Friday’s session with losses ranging from 1.5 percent to 2 percent amid worries over Europe’s debt problems. The CBOE Volatility Index .VIX or VIX, which is Wall Street’s fear gauge, jumped 17.1 percent. Commodity prices also dropped sharply, with oil sliding to a three-month low below $72 per barrel. The euro fell to an 18-month low against the dollar. Read the rest of this entry »
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Consumer Spending in U.S. Rises More Than Forecast
30 August 2010
Monetary Policy Gets No Respect
19 July 2010Stocks May Surprise By Year-End
5 July 2010
Is A Global Reserve Currency A Necessity?
28 June 2010
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