David Moenning's Daily State of the Markets: 2/4
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Price: $60.40 +0.22%
Overall Analyst Rating:
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Dividend Yield: 3.8%
EPS Growth %: -34.0%
Overall Analyst Rating:
NEUTRAL ( Up)
Dividend Yield: 3.8%
EPS Growth %: -34.0%
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Surprise, Surprise, Surprise
Here's a link to listen to an Audio Version of the report:
In short, Friday's session was full of surprises, most of which wound up being positive for the bulls. First, our heroes in horns were able to overcome a surprisingly disappointing report on job creation for January. Although the bears were screaming about recession the very moment the report was released, traders were able to shrug off the data as old news and focus instead on the positive things happening.
Another big surprise was Mr. Softie's (MSFT) hostile bid for Yahoo! (YHOO), which spoke volumes about the current decline in stock prices and the outlook for the business landscape. Apparently Microsoft had already done the deal dance with Yahoo last February, with Yahoo’s stock trading in the $32 range. So, with the stock closing Thursday’s session 40% below last February’s level, the boys at Microsoft decided that they cold turn back the clock and get the deal done this time.
The fact that Microsoft decided to pounce on Friday says that they feel the price decline in Yahoo shares presents an opportunity. The takeover bid also told traders that Microsoft is confident enough in their business outlook to do their biggest deal ever. And with a 62% premium to Thursday’s closing price, the arbs were seen scurrying around trying to figure out who might be next.
The ISM Manufacturing report was also a bit of a surprise. Analysts had been looking for a reading of 47.0, which would have been the second straight monthly reading below 50. If you recall, readings below 50.0 are indicative of contraction in the manufacturing sector. But instead, the manufacturing composite came in at 50.7, which would seem to indicate that growth in the sector has resumed.
And finally, with all the worry about the potential fallout from the troubles at the bond insurers, it was pleasantly surprising to learn that a global consortium of eight large banks had been formed to explore the idea of bailing out the likes of MBIA Inc. (MBI) and AMBAC (ABK). Remember that this is the latest concern relating to the credit mess, as any further problems in this area would cause additional writeoffs in the banking community, which is something that none of them can afford at this point.
Turning to this morning, we don’t have any economic data to review before the bell today but we will get a report on Factory Orders at 10:00.
Stocks are modestly lower in the pre-market session as there is some concern relating to the ECB and LIBOR rates this morning. In addition, there just might be some hesitancy toward the market after the best weekly performance in four years last week.
Running through the rest of the pre-game indicators; Asian markets soared overnight with Shanghai gaining +8.3%, Hong Kong was up +3.8%, and the Nikkei rose by +2.7%. European markets are more restrained at the moment on this morning’s credit concerns, but are up a bit. Crude futures are down again this morning with the latest quote off $0.29 to $88.67. Interest rates are moving higher with the 10-yr trading at a yield of 3.66% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a flat-to-down open. The Dow futures are currently about 14 points lower; the S&Ps are off by about 2 points, while the NASDAQ looks to be about even with fair value at the moment.
Stocks "In Play" This Morning:
Today’s Earnings Before the Bell:
Archer Daniels Midland (NYSE: ADM) – Reported $0.73 vs. $0.74
BE Aerospace (BEAV) – Reported $0.46 vs. $0.44
Humana (NYSE: HUM) – Reported $1.43 vs. $1.32
Wendy’s (NYSE: WEN) – Reported $0.21 vs. $0.23
News, Upgrades/Downgrades/Brokerage Research:
Sara Lee (NYSE: SLE) – Upgraded at Bear Stearns
Gannett (NYSE: GCI) – Downgraded at Bear Stearns
BankRate Inc (Nasdaq: RATE) – Downgraded at Citi
Gamestop (NYSE: GME) – Upgraded at Citi
Pep Boys (NYSE: PBY) – Upgraded at Credit Suisse
Cablevision (NYSE: CVC) – Upgraded at Deutsche Bank
Google (Nasdaq: GOOG) – Removed from Conviction Buy list at Goldman
Kohls (NYSE: KSS) – Upgraded at Goldman
Grey Wolf (NYSE: GW) – Upgraded at Jefferies
Patterson UTI Energy (Nasdaq: PTEN) – Upgraded at Jefferies
PepsiAmericas (NYSE: PAS) – Upgraded at JP Morgan, Downgraded at UBS
Broadcom (Nasdaq: BRCM) – Downgraded at JP Morgan
Palm (Nasdaq: PALM) – Upgraded at JP Morgan
Halliburton (NYSE: HAL) – Upgraded at JP Morgan
Tyco (NYSE: TYC) – Upgraded at Merrill
Wachovia (NYSE: WB) – Downgraded at Merrill
Wells Fargo (NYSE: WFC) – Downgraded at Merrill
Yahoo (Nasdaq: YHOO) – Downgraded at Think Equity
American Express (NYSE: AXP) – Downgraded at UBS
Capital One (NYSE: COF) – Downgraded at UBS
Discover Financial (NYSE: DFS) – Downgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: PAS
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.
Here's a link to listen to an Audio Version of the report:
In short, Friday's session was full of surprises, most of which wound up being positive for the bulls. First, our heroes in horns were able to overcome a surprisingly disappointing report on job creation for January. Although the bears were screaming about recession the very moment the report was released, traders were able to shrug off the data as old news and focus instead on the positive things happening.
Another big surprise was Mr. Softie's (MSFT) hostile bid for Yahoo! (YHOO), which spoke volumes about the current decline in stock prices and the outlook for the business landscape. Apparently Microsoft had already done the deal dance with Yahoo last February, with Yahoo’s stock trading in the $32 range. So, with the stock closing Thursday’s session 40% below last February’s level, the boys at Microsoft decided that they cold turn back the clock and get the deal done this time.
The fact that Microsoft decided to pounce on Friday says that they feel the price decline in Yahoo shares presents an opportunity. The takeover bid also told traders that Microsoft is confident enough in their business outlook to do their biggest deal ever. And with a 62% premium to Thursday’s closing price, the arbs were seen scurrying around trying to figure out who might be next.
The ISM Manufacturing report was also a bit of a surprise. Analysts had been looking for a reading of 47.0, which would have been the second straight monthly reading below 50. If you recall, readings below 50.0 are indicative of contraction in the manufacturing sector. But instead, the manufacturing composite came in at 50.7, which would seem to indicate that growth in the sector has resumed.
And finally, with all the worry about the potential fallout from the troubles at the bond insurers, it was pleasantly surprising to learn that a global consortium of eight large banks had been formed to explore the idea of bailing out the likes of MBIA Inc. (MBI) and AMBAC (ABK). Remember that this is the latest concern relating to the credit mess, as any further problems in this area would cause additional writeoffs in the banking community, which is something that none of them can afford at this point.
Turning to this morning, we don’t have any economic data to review before the bell today but we will get a report on Factory Orders at 10:00.
Stocks are modestly lower in the pre-market session as there is some concern relating to the ECB and LIBOR rates this morning. In addition, there just might be some hesitancy toward the market after the best weekly performance in four years last week.
Running through the rest of the pre-game indicators; Asian markets soared overnight with Shanghai gaining +8.3%, Hong Kong was up +3.8%, and the Nikkei rose by +2.7%. European markets are more restrained at the moment on this morning’s credit concerns, but are up a bit. Crude futures are down again this morning with the latest quote off $0.29 to $88.67. Interest rates are moving higher with the 10-yr trading at a yield of 3.66% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a flat-to-down open. The Dow futures are currently about 14 points lower; the S&Ps are off by about 2 points, while the NASDAQ looks to be about even with fair value at the moment.
Stocks "In Play" This Morning:
Today’s Earnings Before the Bell:
Archer Daniels Midland (NYSE: ADM) – Reported $0.73 vs. $0.74
BE Aerospace (BEAV) – Reported $0.46 vs. $0.44
Humana (NYSE: HUM) – Reported $1.43 vs. $1.32
Wendy’s (NYSE: WEN) – Reported $0.21 vs. $0.23
News, Upgrades/Downgrades/Brokerage Research:
Sara Lee (NYSE: SLE) – Upgraded at Bear Stearns
Gannett (NYSE: GCI) – Downgraded at Bear Stearns
BankRate Inc (Nasdaq: RATE) – Downgraded at Citi
Gamestop (NYSE: GME) – Upgraded at Citi
Pep Boys (NYSE: PBY) – Upgraded at Credit Suisse
Cablevision (NYSE: CVC) – Upgraded at Deutsche Bank
Google (Nasdaq: GOOG) – Removed from Conviction Buy list at Goldman
Kohls (NYSE: KSS) – Upgraded at Goldman
Grey Wolf (NYSE: GW) – Upgraded at Jefferies
Patterson UTI Energy (Nasdaq: PTEN) – Upgraded at Jefferies
PepsiAmericas (NYSE: PAS) – Upgraded at JP Morgan, Downgraded at UBS
Broadcom (Nasdaq: BRCM) – Downgraded at JP Morgan
Palm (Nasdaq: PALM) – Upgraded at JP Morgan
Halliburton (NYSE: HAL) – Upgraded at JP Morgan
Tyco (NYSE: TYC) – Upgraded at Merrill
Wachovia (NYSE: WB) – Downgraded at Merrill
Wells Fargo (NYSE: WFC) – Downgraded at Merrill
Yahoo (Nasdaq: YHOO) – Downgraded at Think Equity
American Express (NYSE: AXP) – Downgraded at UBS
Capital One (NYSE: COF) – Downgraded at UBS
Discover Financial (NYSE: DFS) – Downgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: PAS
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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