David Moenning's Daily State of the Markets: 07/26
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Price: $167.04 -0.57%
Overall Analyst Rating:
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Dividend Yield: 0.5%
Revenue Growth %: -4.1%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
Revenue Growth %: -4.1%
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Trying to Decide
Good morning. Stocks have now reversed course from the prior day’s action for seven straight sessions. At issue is the question of whether or not the difficulties in the subprime mortgage market are spreading into other financial arenas. One day the climate is bad and then the next day it isn’t. Thus, it would appear the traders are trying to decide if this issue, which isn’t exactly new, is going to be a big problem going forward.
Yesterday was a perfect example of the current state of indecision as the market rebounded from Tuesday’s drubbing, but wound up reversing course in a significant way twice on an intraday basis. Stocks started off higher right out of the gate on the back of another batch of strong earnings and it looked like the bulls might have regained their mojo as the Dow rebounded 100 points.
But, the gains didn’t last long once word hit the street that the sale of $12 billion in debt financing for the Chrysler deal was being postponed due to ‘market conditions’. In English, this means they couldn’t sell the debt at the prices they were looking for. This obviously lent credence to Bill Gross’s comments that prices for financing are on the rise.
Next, we got word that the $10 billion sale of senior loans for the financing of Alliance Boot was also a no-go and before you could figure out who the heck Alliance Boot was (it’s a British company and part of the FTSE 100), the Dow had given up all of its gains and was staring at losses of almost 50 points.
However, as more than one analyst pointed out yesterday, this is not exactly a new problem. The climate for financing has been getting more difficult for some time now and, so far at least, has had little to no impact on the flow of M&A deals.
Perhaps it was this realization that helped stocks rebound into the close or maybe it was the reminder that the economy is doing fine from the Fed’s Beige Book report. But, in any event, stocks wound up climbing higher into the close.
Turning to this morning, the mood appears to have reversed course once again as worries over the climate for deal financing not only here but also abroad continue to swirl. In addition, the fact that oil is now sitting above $77 is attracting attention.
On the economic front, the government reported that sales of Durable Goods rose by 1.4% in June, which was below the consensus estimate for an increase of 1.9%. And when you strip out the sale of autos, the numbers showed a decline of -0.5%, which was well off from the guesstimates of +0.5%.
Running through the rest of the pre-game indicators, the foreign markets are all down hard at the moment. In the oil pits, crude futures are moving up again with the latest quote up $1.13 to, brace yourself: $77.01. Interest rates are lower this morning on flight-to-quality action with the yield on the 10-year currently trading at 4.84%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a very tough open at the present time. The Dow futures are currently down by about 125 points; the S&P’s are off by almost 18 points, while the NASDAQ looks to be about 17 points below fair value at the moment.
Stocks "In Play" This Morning:
Yesterday’s Earnings After the Bell:
Apple (Nasdaq: AAPL) – Reported $0.92 vs. $0.72
Amerprise Financial (NYSE: AMP) – Reported $0.98 vs. $0.94
Express Scripts (Nasdaq: ESRX) – Reported $0.56 vs. $0.54
E-Trade (Nasdaq: ETFC) – Reported $0.42 vs. $0.40
LSI Corp (NYSE: LSI) – Reported <$0.01> vs. <$0.03>
Murphy Oil (NYSE: MUR) – Reported $1.32 vs. $0.97
Pulte Homes (NYSE: PHM) – Reported <$2.01> vs. <$2.05>
Qualcomm (Nasdaq: QCOM) – Reported $0.55 vs. $0.51
Terex (NYSE: TEX) – Reported $1.66 vs. $1.62
MEMC Elec Materials (NYSE: WFR) – Reported $0.81 vs. $0.76
Zimmer Holdings (NYSE: ZMH) – Reported $0.98 vs. $0.98
Today’s Earnings Before the Bell:
AmerisourceBergen (NYSE: ABC) – Reported $0.60 vs. $0.62
Aetna (NYSE: AET) – Reported $0.83 vs. $0.80
Black & Decker (NYSE: BDK) – Reported $1.75 vs. $1.73
Bristol Meyers Squibb (NYSE: BMY) – Reported $0.37 vs. $0.36
Comcast (Nasdaq: CMCSA) – Reported $0.19 vs. $0.19
Cummins (NYSE: CMI) – Reported $2.13 vs. $1.57
Rockwell Collins (NYSE: COL) – Reported $0.86 vs. $0.83
DR Horton (NYSE: DHI) – Reported <$2.62> vs. <$0.76>
Dow Chemical (NYSE: DOW) – Reported $1.07 vs. $1.05
Ford (NYSE: F) – Reported $0.13 vs. <$0.37>
Kellogg (NYSE: K) – Reported $0.75 vs. $0.70
Mylan Labs (NYSE: MYL) – Reported $0.52 vs. $0.56
3M (NYSE: MMM) – Reported $1.23 vs. $1.18
Newell Rubbermaid (NYSE: NWL) – Reported $0.55 vs. $0.52
Raytheon (NYSE: RTN) – Reported $0.79 vs. $0.68
Thermo Fisher Scientific (NYSE: TMO) – Reported $0.65 vs. $0.60
Exxon Mobil (NYSE: XOM) – Reported $1.83 vs. $1.96
News, Upgrades/Downgrades/Brokerage Research:*
Hess Corp (NYSE: HES) – Downgraded at Bear Stearns
Ryder Systems (NYSE: R) – Upgraded at Bear Stearns
Baidu (Nasdaq: BIDU) – Upgraded at Citi
Pogo Producing (NYSE: PPP) – Upgraded at Credit Suisse
Merrill Lynch (NYSE: MER) – Removed from Conviction Buy list at Goldman
Encana (NYSE: ECA) – Upgraded at Lehman
US Steel (NYSE: X) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: ESRX, TEX, WFR, CMI, MER
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Good morning. Stocks have now reversed course from the prior day’s action for seven straight sessions. At issue is the question of whether or not the difficulties in the subprime mortgage market are spreading into other financial arenas. One day the climate is bad and then the next day it isn’t. Thus, it would appear the traders are trying to decide if this issue, which isn’t exactly new, is going to be a big problem going forward.
Yesterday was a perfect example of the current state of indecision as the market rebounded from Tuesday’s drubbing, but wound up reversing course in a significant way twice on an intraday basis. Stocks started off higher right out of the gate on the back of another batch of strong earnings and it looked like the bulls might have regained their mojo as the Dow rebounded 100 points.
But, the gains didn’t last long once word hit the street that the sale of $12 billion in debt financing for the Chrysler deal was being postponed due to ‘market conditions’. In English, this means they couldn’t sell the debt at the prices they were looking for. This obviously lent credence to Bill Gross’s comments that prices for financing are on the rise.
Next, we got word that the $10 billion sale of senior loans for the financing of Alliance Boot was also a no-go and before you could figure out who the heck Alliance Boot was (it’s a British company and part of the FTSE 100), the Dow had given up all of its gains and was staring at losses of almost 50 points.
However, as more than one analyst pointed out yesterday, this is not exactly a new problem. The climate for financing has been getting more difficult for some time now and, so far at least, has had little to no impact on the flow of M&A deals.
Perhaps it was this realization that helped stocks rebound into the close or maybe it was the reminder that the economy is doing fine from the Fed’s Beige Book report. But, in any event, stocks wound up climbing higher into the close.
Turning to this morning, the mood appears to have reversed course once again as worries over the climate for deal financing not only here but also abroad continue to swirl. In addition, the fact that oil is now sitting above $77 is attracting attention.
On the economic front, the government reported that sales of Durable Goods rose by 1.4% in June, which was below the consensus estimate for an increase of 1.9%. And when you strip out the sale of autos, the numbers showed a decline of -0.5%, which was well off from the guesstimates of +0.5%.
Running through the rest of the pre-game indicators, the foreign markets are all down hard at the moment. In the oil pits, crude futures are moving up again with the latest quote up $1.13 to, brace yourself: $77.01. Interest rates are lower this morning on flight-to-quality action with the yield on the 10-year currently trading at 4.84%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a very tough open at the present time. The Dow futures are currently down by about 125 points; the S&P’s are off by almost 18 points, while the NASDAQ looks to be about 17 points below fair value at the moment.
Stocks "In Play" This Morning:
Yesterday’s Earnings After the Bell:
Apple (Nasdaq: AAPL) – Reported $0.92 vs. $0.72
Amerprise Financial (NYSE: AMP) – Reported $0.98 vs. $0.94
Express Scripts (Nasdaq: ESRX) – Reported $0.56 vs. $0.54
E-Trade (Nasdaq: ETFC) – Reported $0.42 vs. $0.40
LSI Corp (NYSE: LSI) – Reported <$0.01> vs. <$0.03>
Murphy Oil (NYSE: MUR) – Reported $1.32 vs. $0.97
Pulte Homes (NYSE: PHM) – Reported <$2.01> vs. <$2.05>
Qualcomm (Nasdaq: QCOM) – Reported $0.55 vs. $0.51
Terex (NYSE: TEX) – Reported $1.66 vs. $1.62
MEMC Elec Materials (NYSE: WFR) – Reported $0.81 vs. $0.76
Zimmer Holdings (NYSE: ZMH) – Reported $0.98 vs. $0.98
Today’s Earnings Before the Bell:
AmerisourceBergen (NYSE: ABC) – Reported $0.60 vs. $0.62
Aetna (NYSE: AET) – Reported $0.83 vs. $0.80
Black & Decker (NYSE: BDK) – Reported $1.75 vs. $1.73
Bristol Meyers Squibb (NYSE: BMY) – Reported $0.37 vs. $0.36
Comcast (Nasdaq: CMCSA) – Reported $0.19 vs. $0.19
Cummins (NYSE: CMI) – Reported $2.13 vs. $1.57
Rockwell Collins (NYSE: COL) – Reported $0.86 vs. $0.83
DR Horton (NYSE: DHI) – Reported <$2.62> vs. <$0.76>
Dow Chemical (NYSE: DOW) – Reported $1.07 vs. $1.05
Ford (NYSE: F) – Reported $0.13 vs. <$0.37>
Kellogg (NYSE: K) – Reported $0.75 vs. $0.70
Mylan Labs (NYSE: MYL) – Reported $0.52 vs. $0.56
3M (NYSE: MMM) – Reported $1.23 vs. $1.18
Newell Rubbermaid (NYSE: NWL) – Reported $0.55 vs. $0.52
Raytheon (NYSE: RTN) – Reported $0.79 vs. $0.68
Thermo Fisher Scientific (NYSE: TMO) – Reported $0.65 vs. $0.60
Exxon Mobil (NYSE: XOM) – Reported $1.83 vs. $1.96
News, Upgrades/Downgrades/Brokerage Research:*
Hess Corp (NYSE: HES) – Downgraded at Bear Stearns
Ryder Systems (NYSE: R) – Upgraded at Bear Stearns
Baidu (Nasdaq: BIDU) – Upgraded at Citi
Pogo Producing (NYSE: PPP) – Upgraded at Credit Suisse
Merrill Lynch (NYSE: MER) – Removed from Conviction Buy list at Goldman
Encana (NYSE: ECA) – Upgraded at Lehman
US Steel (NYSE: X) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: ESRX, TEX, WFR, CMI, MER
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
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