Wednesday, February 6, 2008
Consumer Courage Collapses....
U.S. consumer confidence fell to a 14-year low according to the ABC News/Washington Post Consumer Comfort Index. 59% of Americans think the economy is already in a recession. The index fell 13 points over the last month, similar to its reaction prior to the 1990-91 and 2001 recessions.
Housing Woes Take Toll on Toll Bros....
Toll Bros. (TOL) warned Q1 revenue fell 22% to $843M. TOL expects Q1 writedowns of $150-300M. Backlog fell 42% to $2.4B. Gross contracts signed fell 46%.
CEO Robert Toll said he has yet to see the proverbial light at the end of the tunnel.
CEO Robert Toll said he has yet to see the proverbial light at the end of the tunnel.
Google Bringing Free Music to China...
Google (GOOG), together with a Chinese parter, is about to reveal a market-changing service that will offer free, licensed music downloads in China. The move is a direct challenge to Baidu's (BIDU) music search domination, which has helped it keep Google at bay.
Analysts say 90% of China's 162 million internet surfers use pirated music from their computers at least once a day.
Now we know why Google ticked higher all day yesterday.
Analysts say 90% of China's 162 million internet surfers use pirated music from their computers at least once a day.
Now we know why Google ticked higher all day yesterday.
BHP Billiton Raises Bid for Rio Tinto...
Mining giant BHP Billiton (BHP) late Tuesday upped its bid for rival Rio Tinto (RTP) to $147 billion. The move came a few days after Aluminum Corp. of China and Alcoa Inc. (AA) bought a big block of Rio shares.
Disney Beats Estimates....
Walt Disney Co. (DIS). The Burbank, CA-based entertainment company reported Tuesday fiscal first-quarter net income of $1.25 billion, or 66 cents a share, down from $1.7 billion, or 83 cents a share in the year-earlier period.
Excluding non-recurring items, adjusted earnings were 63 cents a share, compared with the mean estimate of analysts surveyed by Thomson Financial of 52 cents a share. Revenue for the quarter ending Dec. 31 rose 9% to $10.45 billion from last year's $9.58 billion.
Disney is up 1.80 to $31.80 premarket...helping give the Dow a lift this morning.
Excluding non-recurring items, adjusted earnings were 63 cents a share, compared with the mean estimate of analysts surveyed by Thomson Financial of 52 cents a share. Revenue for the quarter ending Dec. 31 rose 9% to $10.45 billion from last year's $9.58 billion.
Disney is up 1.80 to $31.80 premarket...helping give the Dow a lift this morning.
Earnings Due Today....
COMPANIES REPORTING EARNINGS
• Alcon Inc. (ACL). Expected to report Q4 earnings of $1.28 a share, according to analysts polled by Thomson Financial.
• Biogen Idec Inc. (BIIB). Expected to report Q4 earnings of $0.80 a share.
• Cisco Systems Inc. (CSCO). Expected to post Q2 earnings of $0.38 a share.
• Electronic Data Systems (EDS). Expected to post Q4 earnings of $0.57 a share.
• Fiserv Inc. (FISV). Expected to post Q4 earnings of $0.71 a share.
• IAC Interactivecorp (IACI). Expected to post Q4 earnings of $0.55 a share.
• Kimco Realty Corp. (KIM). Expected to post Q4 earnings of $0.26 a share.
• McClatchy (MNI). Expected to post Q4 earnings of $0.48 a share.
• MetLife Inc. (MET). Expected to post Q4 earnings of $1.43 a share.
• Polo Ralph Lauren Corp. (RL). Expected to report Q3 earnings of $0.77 a share.
• Prudential Financial Inc. (PRU). Expected to report Q4 earnings of $1.88 a share.
• Sara Lee Corp. (SLE). Expected to report Q2 earnings of $0.24 a share.
Cisco's the main one today....due after the close this evening.
• Alcon Inc. (ACL). Expected to report Q4 earnings of $1.28 a share, according to analysts polled by Thomson Financial.
• Biogen Idec Inc. (BIIB). Expected to report Q4 earnings of $0.80 a share.
• Cisco Systems Inc. (CSCO). Expected to post Q2 earnings of $0.38 a share.
• Electronic Data Systems (EDS). Expected to post Q4 earnings of $0.57 a share.
• Fiserv Inc. (FISV). Expected to post Q4 earnings of $0.71 a share.
• IAC Interactivecorp (IACI). Expected to post Q4 earnings of $0.55 a share.
• Kimco Realty Corp. (KIM). Expected to post Q4 earnings of $0.26 a share.
• McClatchy (MNI). Expected to post Q4 earnings of $0.48 a share.
• MetLife Inc. (MET). Expected to post Q4 earnings of $1.43 a share.
• Polo Ralph Lauren Corp. (RL). Expected to report Q3 earnings of $0.77 a share.
• Prudential Financial Inc. (PRU). Expected to report Q4 earnings of $1.88 a share.
• Sara Lee Corp. (SLE). Expected to report Q2 earnings of $0.24 a share.
Cisco's the main one today....due after the close this evening.
Wellcare Gets Hawaii Contract...
Wellcare Health Plans Inc. (WCG) said its 'Ohana Health Plans Inc. unit was awarded a contract to participate in the Hawaii QUEST Expanded Access program, according to a filing with the Securities and Exchange Commission. The program provides Medicaid managed care services to Hawaii's Medicaid aged, blind and disabled members who are currently receiving services through the fee-for-service system.
Under the contract, 'Ohana will arrange for the provision of members' primary, acute and long term care services. The contract is effective Feb. 1 until June 30, 2011. 'Ohana is expected to begin providing services to members on Nov. 1. Shares of the Tampa-based managed-care services provider closed Tuesday at $47.71.
Under the contract, 'Ohana will arrange for the provision of members' primary, acute and long term care services. The contract is effective Feb. 1 until June 30, 2011. 'Ohana is expected to begin providing services to members on Nov. 1. Shares of the Tampa-based managed-care services provider closed Tuesday at $47.71.
S&P Warns of Bank Downgrades.....
S&P warns of bank downgrades if bond insurers slip: Commercial and investment banks could see their credit ratings cut if the bond insurers backing some of the banks' assets are downgraded, Standards & Poor's said. One analyst estimated that U.S. financial institutions could face as much as $70 billion in new writedowns if bond insurers lose their "AAA" ratings.
Tuesday, February 5, 2008
Daily Summary....
U.S. Markets
Dow -370.03 (-2.93%)
Nasdaq -73.28 (-3.08%)
S&P 500 -44.18 (-3.20%)
News That Moved the Market
Market Plunges On ISM Service Data. Stocks fell the most in nearly a year after a disappointing ISM service figure. The Institute for Supply Management announced its non-manufacturing index dropped to 41.9% last month, well below the 53.0% economists had estimated. Looking at today's report combined with the disheartening monthly jobs report announced on Friday, the risk of recession has grown very strong in the last week.
BHP Ups Bid for Rio Tinto. BHP Billiton (BHP, -4.1%) offered 3.4 shares for each share of Rio Tinto (RTP, -2.5% day, + 4.4% A.H) after Rio refused to begin merger talks. The bid is worth $147.4 billion.
MBIA Back Under Review For Downgrade. MBIA's (MBI, -3.2% day, -5.4% A.H.) AAA rating will come under further pressure after Fitch placed the bond insurer back under review for a downgrade. The ratings firm will probably increase the capital needed for the company to maintain its AAA rating. Fitch already has cut its AAA rating for Ambac Financial (ABK, -0.0%).
Disney Beats Estimates. Disney (DIS, -2.7% day, +5.9% A.H.) reported a 27% decrease in profits after the bell, but traded higher after topping analysts' estimates. Revenue jumped 9%.
Tomorrow Notable Earnings
Time Warner (TWX) Before Open
Prudential (PRU) After
CloseCisco (CSCO) After Close
Economic Events:
8:30 AM: Productivity and Costs
10:30 AM: Crude Inventories
Dow -370.03 (-2.93%)
Nasdaq -73.28 (-3.08%)
S&P 500 -44.18 (-3.20%)
News That Moved the Market
Market Plunges On ISM Service Data. Stocks fell the most in nearly a year after a disappointing ISM service figure. The Institute for Supply Management announced its non-manufacturing index dropped to 41.9% last month, well below the 53.0% economists had estimated. Looking at today's report combined with the disheartening monthly jobs report announced on Friday, the risk of recession has grown very strong in the last week.
BHP Ups Bid for Rio Tinto. BHP Billiton (BHP, -4.1%) offered 3.4 shares for each share of Rio Tinto (RTP, -2.5% day, + 4.4% A.H) after Rio refused to begin merger talks. The bid is worth $147.4 billion.
MBIA Back Under Review For Downgrade. MBIA's (MBI, -3.2% day, -5.4% A.H.) AAA rating will come under further pressure after Fitch placed the bond insurer back under review for a downgrade. The ratings firm will probably increase the capital needed for the company to maintain its AAA rating. Fitch already has cut its AAA rating for Ambac Financial (ABK, -0.0%).
Disney Beats Estimates. Disney (DIS, -2.7% day, +5.9% A.H.) reported a 27% decrease in profits after the bell, but traded higher after topping analysts' estimates. Revenue jumped 9%.
Tomorrow Notable Earnings
Time Warner (TWX) Before Open
Prudential (PRU) After
CloseCisco (CSCO) After Close
Economic Events:
8:30 AM: Productivity and Costs
10:30 AM: Crude Inventories
Dow loses 368 points...
Dow -368 to 12,265
S&P -44 to 1336
Nasdaq -73 to 2309
Volatility Index (VIX) +2.39 to 28.38
NYSE Breadth - 15-1 Downside Volume to Upside Volume (That's Bad!!)
Almost on cue the Market is heading back down to retest lows of January 22. A retest is a retracement back to previous lows, but not getting all the way there. This is a typical pattern after we see large, sharp selloffs similar to the one we saw in January. Experienced traders typically will not reenter the market until a retest happens. Look for a large round of buying if the Dow hits the 12,000 level. That is 265 points lower from here.
One troubling thing about today's selloff was that it was not accompanied by a sharp move higher in the VIX. This shows that today's selloff was not due to fear. Meaning we have more selling to come. The selloff won't be over until we get a sharp rise in the VIX, typically above the 35-37 level.
That 15-1 negative breadth is one of the worst readings I've seen in 15 years...yet no fear seen in the VIX???
S&P -44 to 1336
Nasdaq -73 to 2309
Volatility Index (VIX) +2.39 to 28.38
NYSE Breadth - 15-1 Downside Volume to Upside Volume (That's Bad!!)
Almost on cue the Market is heading back down to retest lows of January 22. A retest is a retracement back to previous lows, but not getting all the way there. This is a typical pattern after we see large, sharp selloffs similar to the one we saw in January. Experienced traders typically will not reenter the market until a retest happens. Look for a large round of buying if the Dow hits the 12,000 level. That is 265 points lower from here.
One troubling thing about today's selloff was that it was not accompanied by a sharp move higher in the VIX. This shows that today's selloff was not due to fear. Meaning we have more selling to come. The selloff won't be over until we get a sharp rise in the VIX, typically above the 35-37 level.
That 15-1 negative breadth is one of the worst readings I've seen in 15 years...yet no fear seen in the VIX???
Keep an Eye on the VIX....
The Volatility Index (VIX) is spiking higher as the market is selling off further.
The VIX measures that amount of fear in the market. Typically it acts as a contrary indicator for the market. When it spikes up over 35, that typically has marked bottoms in the market. On January 22, it hit 37.
Today it is up 2.05 to 28.04
The VIX measures that amount of fear in the market. Typically it acts as a contrary indicator for the market. When it spikes up over 35, that typically has marked bottoms in the market. On January 22, it hit 37.
Today it is up 2.05 to 28.04
Stocks that are bucking the trend....
Market selling off hard so far today (Dow -250). As we have been saying, it looks like traders are trying to bring stocks down to retest the lows made on January 22.
Bucking the trend:
Google (GOOG) up 9 to $504.50
Las Vegas Sands (LVS) up 11.50 to $93.00
Wynn Resorts (WYNN) up 9 to $120.50
Thornburg Mortgage (TMA) up .75 to $12.00
Intuitive Surgical (ISRG) up 4 to $311.00
Dolby Labs (DLB) up 1.67 to $49.05
KB Homes up 1.07 to $27.25
Continental Airlines up 1.06 to $29.00
Bucking the trend:
Google (GOOG) up 9 to $504.50
Las Vegas Sands (LVS) up 11.50 to $93.00
Wynn Resorts (WYNN) up 9 to $120.50
Thornburg Mortgage (TMA) up .75 to $12.00
Intuitive Surgical (ISRG) up 4 to $311.00
Dolby Labs (DLB) up 1.67 to $49.05
KB Homes up 1.07 to $27.25
Continental Airlines up 1.06 to $29.00
11:30 am Update....
Dow -231
S&P - 27
Nasdaq -38
The major indices continue to be under selling pressure. All ten S&P sectors are posting a loss in excess of 1%, five of those sectors are posting a loss larger than 2%.
A poor ISM Services reading helped give Treasuries a boost as traders up their bets on the size of the next Fed rate cut. The 10-year is up 27 ticks, pushing its yield down to 3.54%.
S&P - 27
Nasdaq -38
The major indices continue to be under selling pressure. All ten S&P sectors are posting a loss in excess of 1%, five of those sectors are posting a loss larger than 2%.
A poor ISM Services reading helped give Treasuries a boost as traders up their bets on the size of the next Fed rate cut. The 10-year is up 27 ticks, pushing its yield down to 3.54%.
Yahoo / Microsoft Square Off...
Yahoo (YHOO) may play 'hard to get' in an effort to entice Microsoft's (MSFT) to sweeten its $46.1B bid. Yahoo has received a number of tentative approaches from media, telecom and private equity groups that could potentially lead to a rival bid. Microsoft revealed Monday it would have to borrow money for the first time in order to foot the bill.
Yum Brands Reports In-line Earnings....
After Monday's closing bell, fast-food giant Yum Brands Inc. (YUM, $35.81, $0.57, 1.62%) reported fourth-quarter net income of $231 million, or 44 cents a share, nearly unchanged from $232 million, or 42 cents, a year ago. Total sales at the company came in at $3.01 billion, up 8%. Same-store sales, or those at outlets open at least a year, climbed 8% worldwide. The average estimate had been for the company to earn 42 cents a share on revenue of $3.21 billion. Looking to the current year, Yum raised its 2008 profit target from $1.82 to $1.85 per share, excluding one-time gains.
Yum Brands is the owner of KFC, Pizza Hut and Taco Bell chains...
Yum Brands is the owner of KFC, Pizza Hut and Taco Bell chains...
Las Vegas Sands Disappoints...
Las Vegas Sands Corp. (LVS). The Las Vegas-based developer and operator of hotel, gambling, and resort businesses late Monday reported fourth-quarter adjusted earnings of $71.1 million, or 20 cents a share, compared with $132.9 million, or 37 cents a share, during the year earlier. The company posted net income of $39.9 million, or 11 cents, a share, down from $113.6 million, or 32 cents a share, last year. Revenue for the three months ended Dec. 31 came in at $1.05 billion versus $636.3 million a year ago.
The company said its latest results were impacted, in part, by increases in operating costs related to its global expansion, as well as higher depreciation and amortization expense.
The stock is trading up 3 points pre-market.
The company said its latest results were impacted, in part, by increases in operating costs related to its global expansion, as well as higher depreciation and amortization expense.
The stock is trading up 3 points pre-market.
Companies Reporting Earnings Today...
• Ace Ltd. (ACE). Expected to post Q4 earnings of $1.90 a share, according to analysts polled by Thomson Financial.
• Avon Products Inc. (AVP). Expected to report Q4 earnings of $0.28 per share.
• CME Group Inc. (CME). Expected to report Q4 earnings of $3.62 a share.
• CNET Networks (CNET). Expected to report Q4 earnings of $1.29 a share.
• Duke Energy Corp. (DUK). Expected to post Q4 earnings of $0.24 per share.
• Martin Marietta Materials (MLM). Expected to post Q4 earnings of $1.55 per a share.
• Nabors Industries (NBR). Expected to post Q4 earnings of $0.73 a share.
• THQ Inc. (THQI). Expected to post Q3 earnings of $0.33 per share.
• Walt Disney Co. (DIS). Expected to report Q1 earnings of $0.52 per share.
• XL Capital (XL). Expected to report Q4 earnings of $1.76 a share.
• Avon Products Inc. (AVP). Expected to report Q4 earnings of $0.28 per share.
• CME Group Inc. (CME). Expected to report Q4 earnings of $3.62 a share.
• CNET Networks (CNET). Expected to report Q4 earnings of $1.29 a share.
• Duke Energy Corp. (DUK). Expected to post Q4 earnings of $0.24 per share.
• Martin Marietta Materials (MLM). Expected to post Q4 earnings of $1.55 per a share.
• Nabors Industries (NBR). Expected to post Q4 earnings of $0.73 a share.
• THQ Inc. (THQI). Expected to post Q3 earnings of $0.33 per share.
• Walt Disney Co. (DIS). Expected to report Q1 earnings of $0.52 per share.
• XL Capital (XL). Expected to report Q4 earnings of $1.76 a share.
Apple Adds New iPhone & iPod Models...
Apple Inc. (AAPL) $131.65 : Co announces it has added new models of the iPhone and iPod touch which have double the memory, doubling the amount of music, photos and videos. The iPhone now comes in a new 16GB model for $499, joining the 8GB model for $399. iPod touch now comes in a 32GB model for $499, joining the 16GB model for $399 and the 8GB model for $299.
Boston Scientific Beats by $0.15
Boston Scientific beats by $0.15, beats on revs; guides Q1 EPS above consensus, revs in-line (BSX) 12.85 +0.48 : Reports Q4 (Dec) earnings of $0.24 per share, excluding charges and amortization expense, $0.15 better than the First Call consensus of $0.09; revenues rose 4.2% year/year to $2.15 bln vs the $2.13 bln consensus.
Co issues mixed guidance for Q1, sees EPS of 0.15-0.20, excluding charges and amortization expense, vs. $0.12 consensus; sees Q1 revs of 1.96-2.08 bln vs. $2.09 bln consensus.
Co issues mixed guidance for Q1, sees EPS of 0.15-0.20, excluding charges and amortization expense, vs. $0.12 consensus; sees Q1 revs of 1.96-2.08 bln vs. $2.09 bln consensus.
SOHU Beats Earnings Estimates...
Sohu.com beats by $0.08, beats on revs; guides Q1 EPS above consensus, revs above consensus (SOHU) 48.95 -1.54 : Reports Q4 (Dec) earnings of $0.39 per share, including stock based comp, $0.08 better than the First Call consensus of $0.31; revenues rose 90.1% year/year to $65.3 mln vs the $55.4 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.34-$0.37, including stock based comp, vs. $0.32 consensus; sees Q1 revs of $66.5-$68.5 mln vs. $59.00 mln consensus.
Co states, "...With the Beijing 2008 Olympic Games kicking off in 185 days, the Sohu brand resonates across China as we broaden our media reach to penetrate the Olympic audience. We expect the continued expansion of the total Chinese internet population, combined with our advancements in technology and our Olympic sponsorship, to help us to increase our market share of internet users. We believe that we will continue to reap the rewards of our success and strong branding for 2008 and beyond."
Co states, "...With the Beijing 2008 Olympic Games kicking off in 185 days, the Sohu brand resonates across China as we broaden our media reach to penetrate the Olympic audience. We expect the continued expansion of the total Chinese internet population, combined with our advancements in technology and our Olympic sponsorship, to help us to increase our market share of internet users. We believe that we will continue to reap the rewards of our success and strong branding for 2008 and beyond."
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