David Moenning's Daily State of the Markets: 7/23

Never Mind?

Here’s a link to listen to an Audio Version of the report:�

For what seems like forever and a day, “the trade” among the hedge fund types (aka the evil speculators) was to be long “stuff” (oil, steel, coal, natural gas, etc) and be short just about anything in the financial sector. But, with the powers-that-be telling us once again that we’ve seen the worst in the financial crisis and convincing anyone that will listen that it’s simply un-American to short bank stocks, “the trade” has now been reversed. So nowadays, the way to print money in your leveraged portfolio is to be long just about any old bank or broker and to be short all the stuff that makes the world go around.

However, the advent of the “new trade” and the corresponding gains in the financials, brings up an interesting question. Since the financials are now sporting eye popping returns over the past week – Wachovia (WB) is up +85%, Fannie Mae (FNM) has gained +90% and even the beleaguered Lehman Bros (LEH) has put together a move up of +63% – do you suppose we’ll soon be hearing calls for MORE speculation instead of less? After all, things are now going the right direction, aren’t they? So, do you think we’ll soon hear one of the geniuses in Washington stand up and say “Oops, Never Mind” with regard to the witch hunt for the evil speculators?

Yesterday’s market was highlighted by yet another impressive run higher in the banks and brokers. Again, perhaps the evil speculators were to blame, but who really cares when the banking index soared +9% and the brokers jumped an equally impressive +8.4%.

The move in the financials was spurred once again by an earnings report that was bad, but not nearly as gosh-awful as had been expected. For example, Wachovia (WB) opened down when the company reported a quarterly loss of $8.9 Billion, or $1.27 per share, on revenues that fell short about $1 Billion. They then added insult to injury by announcing that the dividend was being cut by 87%. In addition, Fitch added fuel to the fire by downgrading WB’s debt. So, as one might expect, traders initially voted with their feet and Wachovia opened lower by about -11%.

However, just about the time that the folks in Washington might have been thinking about coming up with more ways to nail those nasty short-sellers, Wachovia announced that they were NOT interested in issuing more stock at this time. And just like that, boom – WB and the rest of the bank stocks were off to the races. And while we sincerely doubt that all of the buyers are long-term investors looking to put the stock away for the next decade, Wachovia did wind up with a nifty little gain of +27.4% on the day. God bless the speculators, eh?

Turning to this morning, we don’t have any economic data to review before the bell but analysts are being kept busy with a boatload of earnings reports as more than 150 S&P companies report this week. So far in the early going, we’ve got strength in the dollar and another drop in crude, which, as you might have guessed, is providing support for equities.

Running through the rest of the pre-game indicators; the major foreign markets are up nicely across the board. Crude futures are moving down again with the latest quote showing oil trading off $2.05 to $126.37. Interest rates are higher this morning with the yield on the 10-yr currently trading at 4.13%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 25 points; the S&P’s are up about 3.50 points, while the NASDAQ looks to be about 6 points above fair value at the moment.

Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell:

Broadcom (Nasdaq: BRCM) – Reported $0.25 vs. $0.35
CH Robinson Worldwide (Nasdaq: CHRW) – Reported $0.52 vs. $0.55
E-Trade Financial (Nasdaq: ETFC) – Reported -$0.19 vs. -$0.14
Illumina (Nasdaq: ILMN) – Reported $0.29 vs. $0.28
Intuitive Surgical (Nasdaq: ISRG) – Reported $1.28 vs. $1.18
Nabors Industries (NYSE: NBR) – Reported $0.73 vs. $0.69
Norfolk Southern (NYSE: NSC) – Reported $1.18 vs. $1.05
Pactiv (NYSE: PTV) – Reported $0.50 vs. $0.48
STMicroelectronics (NYSE: STM) – Reported $0.18 vs. $0.12
Southern Financial Group (NYSE: SFG) – Reported -$0.22 vs. -$0.17
Washington Mutual (NYSE: WM) – Reported -$3.34 vs. -$1.04
Yahoo! (Nasdaq: YHOO) – Reported $0.10 vs. $0.10

Today’s Earnings Before the Bell:

Arkansas Best (Nasdaq: ABFS) – Reported $0.64 vs. $0.75
Air Products (NYSE: APD) – Reported $1.32 vs. $1.31
Allegheny Technologies (NYSE: ATI) – Reported $1.55 vs. $1.56
Boeing (NYSE: BA) – Reported $1.16 vs. $1.30
ConocoPhillips (NYSE: COP) – Reported $3.50 vs. $3.53
EMC Corp (NYSE: EMC) – Reported $0.18 vs. $0.17
Exelon (NYSE: EXC) – Reported $1.13 vs. $1.01
General Dynamics (NYSE: GD) – Reported $1.60 vs. $1.44
Genzyme (Nasdaq: GENZ) – Reported $0.98 vs. $0.97
Hershey (NYSE: HSY) – Reported $0.28 vs. $0.28
McDonalds (NYSE: MCD) – Reported $0.94 vs. $0.86
PepsiCo (NYSE: PEP) – Reported $1.03 vs. $1.02
Pfizer (NYSE: PFE) – Reported $0.55 vs. $0.54
Phillip Morris (NYSE: PM) – Reported $0.86 vs. $0.83
AT&T (NYSE: T) – Reported $076. vs. $0.76
The Travelers (NYSE: TRV) – Reported $1.50 vs. $1.45
Unisys (NYSE: UIS) – Reported -$0.04 vs. $0.03
Whirlpool (NYSE: WHR) – Reported $1.53 vs. $1.37
Wyeth (NYSE: WYE) – Reported $0.91 vs. $0.87

News, Upgrades/Downgrades/Brokerage Research:

Freeport McMoRan (NYSE: FCX) – Mentioned positively at Citi
Target (NYSE: TGT) – Downgraded at Credit Suisse
American Axle (NYSE: AXL) – Downgraded at Deutsche Bank
First Horizon Nat’l (FHN) – Upgraded at Goldman
PNC Financial (NYSE: PNC) – Upgraded at Goldman
US Bancorp (NYSE: USB) – Downgraded at Goldman
Kinetic Concepts (NYSE: KCI) – Upgraded at Goldman
AXA (NYSE: AXA) – Upgraded at HSBC
Frontline (NYSE: FRO) – Upgraded at JP Morgan
Caterpillar (NYSE: CAT) – Downgraded at JP Morgan
Costco (Nasdaq: COST) – Downgraded at JP Morgan
Nordic American Tanker (NYSE: NAT) – Upgraded at JP Morgan
Mirant (NYSE: MIR) – Downgraded at Lehman
Washington Mutual (NYSE: WM) – Downgraded at Merrill, Piper Jaffray
Onyx Pharmaceuticals (Nasdaq: ONXX) – Downgraded at Merrill
Vodafone (NYSE: VOD) – Upgraded at Morgan Stanley
Baker Hughes (NYSE: BHI) – Upgraded at RBC Capital, UBS
SunTrust Banks (NYSE: STI) – Upgraded at UBS

Disclosure: Mr. Moenning and/or related firms hold long positions in: ILMN

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.










David Moenning’s Daily State of the Markets:



Here’s a link to listen to an Audio Version of the report:

http://PlayAudioMessage.com/play.asp?m=518585&f=TWMNEC&ps=13&c=FFFFFF&pm=2&h=25



Never Mind?



For what seems like forever and a day, “the trade” among the hedge fund types (aka the evil speculators) was to be long “stuff” (oil, steel, coal, natural gas, etc) and be short just about anything in the financial sector. But, with the powers-that-be telling us once again that we’ve seen the worst in the financial crisis and convincing anyone that will listen that it’s simply un-American to short bank stocks, “the trade” has now been reversed. So nowadays, the way to print money in your leveraged portfolio is to be long just about any old bank or broker and to be short all the stuff that makes the world go around.



However, the advent of the “new trade” and the corresponding gains in the financials, brings up an interesting question. Since the financials are now sporting eye popping returns over the past week – Wachovia (WB) is up +85%, Fannie Mae (FNM) has gained +90% and even the beleaguered Lehman Bros (LEH) has put together a move up of +63% – do you suppose we’ll soon be hearing calls for MORE speculation instead of less? After all, things are now going the right direction, aren’t they? So, do you think we’ll soon hear one of the geniuses in Washington stand up and say “Oops, Never Mind” with regard to the witch hunt for the evil speculators?



Yesterday’s market was highlighted by yet another impressive run higher in the banks and brokers. Again, perhaps the evil speculators were to blame, but who really cares when the banking index soared +9% and the brokers jumped an equally impressive +8.4%.



The move in the financials was spurred once again by an earnings report that was bad, but not nearly as gosh-awful as had been expected. For example, Wachovia (WB) opened down when the company reported a quarterly loss of $8.9 Billion, or $1.27 per share, on revenues that fell short about $1 Billion. They then added insult to injury by announcing that the dividend was being cut by 87%. In addition, Fitch added fuel to the fire by downgrading WB’s debt. So, as one might expect, traders initially voted with their feet and Wachovia opened lower by about -11%.



However, just about the time that the folks in Washington might have been thinking about coming up with more ways to nail those nasty short-sellers, Wachovia announced that they were NOT interested in issuing more stock at this time. And just like that, boom – WB and the rest of the bank stocks were off to the races. And while we sincerely doubt that all of the buyers are long-term investors looking to put the stock away for the next decade, Wachovia did wind up with a nifty little gain of +27.4% on the day. God bless the speculators, eh?



Turning to this morning, we don’t have any economic data to review before the bell but analysts are being kept busy with a boatload of earnings reports as more than 150 S&P companies report this week. So far in the early going, we’ve got strength in the dollar and another drop in crude, which, as you might have guessed, is providing support for equities.



Running through the rest of the pre-game indicators; the major foreign markets are up nicely across the board. Crude futures are moving down again with the latest quote showing oil trading off $2.05 to $126.37. Interest rates are higher this morning with the yield on the 10-yr currently trading at 4.13%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 25 points; the S&P’s are up about 3.50 points, while the NASDAQ looks to be about 6 points above fair value at the moment.



Stocks “In Play” This Morning:



Yesterday’s Earnings After the Bell:

Broadcom (BRCM) – Reported $0.25 vs. $0.35

CH Robinson Worldwide (CHRW) – Reported $0.52 vs. $0.55

E-Trade Financial (ETFC) – Reported -$0.19 vs. -$0.14

Illumina (ILMN) – Reported $0.29 vs. $0.28

Intuitive Surgical (ISRG) – Reported $1.28 vs. $1.18

Nabors Industries (NBR) – Reported $0.73 vs. $0.69

Norfolk Southern (NSC) – Reported $1.18 vs. $1.05

Pactiv (PTV) – Reported $0.50 vs. $0.48

STMicroelectronics (STM) – Reported $0.18 vs. $0.12

Southern Financial Group (SFG) – Reported -$0.22 vs. -$0.17

Washington Mutual (WM) – Reported -$3.34 vs. -$1.04

Yahoo! (YHOO) – Reported $0.10 vs. $0.10



Today’s Earnings Before the Bell:

Arkansas Best (ABFS) – Reported $0.64 vs. $0.75

Air Products (APD) – Reported $1.32 vs. $1.31

Allegheny Technologies (ATI) – Reported $1.55 vs. $1.56

Boeing (BA) – Reported $1.16 vs. $1.30

ConocoPhillips (COP) – Reported $3.50 vs. $3.53

EMC Corp (EMC) – Reported $0.18 vs. $0.17

Exelon (EXC) – Reported $1.13 vs. $1.01

General Dynamics (GD) – Reported $1.60 vs. $1.44

Genzyme (GENZ) – Reported $0.98 vs. $0.97

Hershey (HSY) – Reported $0.28 vs. $0.28

McDonalds (MCD) – Reported $0.94 vs. $0.86

PepsiCo (PEP) – Reported $1.03 vs. $1.02

Pfizer (PFE) – Reported $0.55 vs. $0.54

Phillip Morris (PM) – Reported $0.86 vs. $0.83

AT&T (T) – Reported $076. vs. $0.76

The Travelers (TRV) – Reported $1.50 vs. $1.45

Unisys (UIS) – Reported -$0.04 vs. $0.03

Whirlpool (WHR) – Reported $1.53 vs. $1.37

Wyeth (WYE) – Reported $0.91 vs. $0.87



News, Upgrades/Downgrades/Brokerage Research:

Freeport McMoRan (FCX) – Mentioned positively at Citi

Target (TGT) – Downgraded at Credit Suisse

American Axle (AXL) – Downgraded at Deutsche Bank

First Horizon Nat’l (FHN) – Upgraded at Goldman

PNC Financial (PNC) – Upgraded at Goldman

US Bancorp (USB) – Downgraded at Goldman

Kinetic Concepts (KCI) – Upgraded at Goldman

AXA (AXA) – Upgraded at HSBC

Frontline (FRO) – Upgraded at JP Morgan

Caterpillar (CAT) – Downgraded at JP Morgan

Costco (COST) – Downgraded at JP Morgan

Nordic American Tanker (NAT) – Upgraded at JP Morgan

Mirant (MIR) – Downgraded at Lehman

Washington Mutual (WM) – Downgraded at Merrill, Piper Jaffray

Onyx Pharmaceuticals (ONXX) – Downgraded at Merrill

Vodafone (VOD) – Upgraded at Morgan Stanley

Baker Hughes (BHI) – Upgraded at RBC Capital, UBS

SunTrust Banks (STI) – Upgraded at UBS



Disclosure: Mr. Moenning and/or related firms hold long positions in: ILMN



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.















David D. Moenning

Heritage Capital Management

Main: 630-250-4700

Direct: 303-670-9761

email: [email protected]







David D. Moenning

Heritage Capital Management

Main: 630-250-4700

Direct: 303-670-9761

email: [email protected]

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