David Moenning's Daily State of the Markets: 10/30
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Hoping For The Best
Although there is a rather lively debate going on at the present time as to whether the Fed should cut rates on Wednesday, yesterday’s action in the stock market suggests that investors are hoping for the best from Mr. Bernanke. So, despite another surge in oil prices, stocks enjoyed solid gains during Monday’s session and the NASDAQ actually finished at a new cycle high.
Frankly speaking, the bears feel that the potential problems for the market are quite clear right now. Our furry friends point to the worst real estate market in years, the problems in the credit markets, tightening lending conditions, big write-downs by banks and brokers, soaring oil prices, a weak dollar, and slowing corporate earnings as reasons to be concerned. However, with the Bernanke cavalry likely to ride on Wednesday, the market has been moving higher.
You've heard it before and you will no doubt hear it again a time or two before it’s time to head out with the kids for the trick-or-treating tomorrow – one of the first rules of investing is: Don’t fight the Fed. And while this time it may indeed be different, the bottom line is that most every investor knows that it rarely pays to be overly negative when the Fed is cutting interest rates.
Most analysts expect Mr. Bernanke to mount his white horse and ride to the rescue of the credit markets with a cut of 0.25% on Wednesday. While there are many economists who believe that the Fed should stand pat, the bottom line is with the ABX (an index tracking asset-backed paper) making new lows, credit spreads continuing to be elevated, and the ongoing problems with mortgage insurers it is a pretty safe bet that the cavalry will be forced to ride on Wednesday.
What is interesting right now is that stocks have been moving up despite the fact that oil continues to surge. While part of oil’s move is storm related and is likely to soon abate, it is tough to ignore the fact that crude oil closed at $93.53 yesterday. Sure, gasoline hasn’t followed suit – yet – but analysts expect this situation to change and change quickly if crude remains at the current rude levels.
Turning to this morning, we don’t have any economic data to review before the bell, but we will get a report on US Consumer Confidence at 10:00 am Eastern. In the early going, the reality of earnings write-downs is keeping some pressure on stocks. And with the Fed announcement not coming until tomorrow afternoon, it might be a slow day for the bulls.
Running through the rest of the pre-game indicators; the overseas markets are lower across the board this morning. Crude futures are heading lower today and the latest quote shows the December contract down $1.30 to $92.23. Interest rates are little changed this morning with the 10-yr trading at a yield of 4.39% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open lower. The Dow futures are currently off by about 35 points; the S&Ps are down by about 5 points, while the NASDAQ looks to be about 11 points below of fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
CB Richard Ellis (NYSE: CBG) – Reported $0.55 vs. $0.57
EOG Resources (NYSE: EOG) – Reported $0.79 vs. $0.81
FMC Technologies (NYSE: FTI) – Reported $0.60 vs. $0.55
Pitney Bowes (NYSE: PBI) – Reported $0.63 vs. $0.74
Principal Financial (NYSE: PFG) – Reported $1.17 vs. $1.00
Vulcan Materials (NYSE: VMC) – Reported $1.52 vs. $1.60
Today’s Earnings Before the Bell:
AGCO (NYSE: AG) – Reported $0.77 vs. $0.30
Automatic Data (NYSE: ADP) – Reported $0.45 vs. $0.43
Avon Products (NYSE: AVP) – Reported $0.32 vs. $0.32
BJ Services (NYSE: BJS) – Reported $0.64 vs. $0.60
Colgate Palmolive (NYSE: CL) – Reported $0.86 vs. $0.85
Liz Claiborne (NYSE: LIZ) – Reported $0.63 vs. $0.67
Procter & Gamble (NYSE: PG) – Reported $0.90 vs. $0.90
Qwest (NYSE: Q) – Reported $1.08 vs. $0.15
Sepracor (Nasdaq: SEPR) – Reported $0.37 vs. $0.26
Teva Pharmaceuticals (Nasdaq: TEVA) – Reported $0.64 vs. $0.62
Under Armour (NYSE: UA)– Reported $0.40 vs. $0.34
US Steel (NYSE: X) – Reported $2.27 vs. $2.63
News, Upgrades/Downgrades/Brokerage Research:
Las Vegas Sands (NYSE: LVS) – Downgraded at BMO Capital
Manpower (NYSE: MAN) – Upgraded at Citi
British American Tobacco (NYSE: BTI) – Downgraded at Goldman Sachs
Coca Cola Femsa (NYSE: KOF) – Upgraded at JP Morgan
Cisco Systems (Nasdaq: CSCO) – Target increased at Piper Jaffray
Verizon (NYSE: VZ) – Upgraded at Raymond James
General Motors (NYSE: GM) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: CSCO, FTI
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.
Although there is a rather lively debate going on at the present time as to whether the Fed should cut rates on Wednesday, yesterday’s action in the stock market suggests that investors are hoping for the best from Mr. Bernanke. So, despite another surge in oil prices, stocks enjoyed solid gains during Monday’s session and the NASDAQ actually finished at a new cycle high.
Frankly speaking, the bears feel that the potential problems for the market are quite clear right now. Our furry friends point to the worst real estate market in years, the problems in the credit markets, tightening lending conditions, big write-downs by banks and brokers, soaring oil prices, a weak dollar, and slowing corporate earnings as reasons to be concerned. However, with the Bernanke cavalry likely to ride on Wednesday, the market has been moving higher.
You've heard it before and you will no doubt hear it again a time or two before it’s time to head out with the kids for the trick-or-treating tomorrow – one of the first rules of investing is: Don’t fight the Fed. And while this time it may indeed be different, the bottom line is that most every investor knows that it rarely pays to be overly negative when the Fed is cutting interest rates.
Most analysts expect Mr. Bernanke to mount his white horse and ride to the rescue of the credit markets with a cut of 0.25% on Wednesday. While there are many economists who believe that the Fed should stand pat, the bottom line is with the ABX (an index tracking asset-backed paper) making new lows, credit spreads continuing to be elevated, and the ongoing problems with mortgage insurers it is a pretty safe bet that the cavalry will be forced to ride on Wednesday.
What is interesting right now is that stocks have been moving up despite the fact that oil continues to surge. While part of oil’s move is storm related and is likely to soon abate, it is tough to ignore the fact that crude oil closed at $93.53 yesterday. Sure, gasoline hasn’t followed suit – yet – but analysts expect this situation to change and change quickly if crude remains at the current rude levels.
Turning to this morning, we don’t have any economic data to review before the bell, but we will get a report on US Consumer Confidence at 10:00 am Eastern. In the early going, the reality of earnings write-downs is keeping some pressure on stocks. And with the Fed announcement not coming until tomorrow afternoon, it might be a slow day for the bulls.
Running through the rest of the pre-game indicators; the overseas markets are lower across the board this morning. Crude futures are heading lower today and the latest quote shows the December contract down $1.30 to $92.23. Interest rates are little changed this morning with the 10-yr trading at a yield of 4.39% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open lower. The Dow futures are currently off by about 35 points; the S&Ps are down by about 5 points, while the NASDAQ looks to be about 11 points below of fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
CB Richard Ellis (NYSE: CBG) – Reported $0.55 vs. $0.57
EOG Resources (NYSE: EOG) – Reported $0.79 vs. $0.81
FMC Technologies (NYSE: FTI) – Reported $0.60 vs. $0.55
Pitney Bowes (NYSE: PBI) – Reported $0.63 vs. $0.74
Principal Financial (NYSE: PFG) – Reported $1.17 vs. $1.00
Vulcan Materials (NYSE: VMC) – Reported $1.52 vs. $1.60
Today’s Earnings Before the Bell:
AGCO (NYSE: AG) – Reported $0.77 vs. $0.30
Automatic Data (NYSE: ADP) – Reported $0.45 vs. $0.43
Avon Products (NYSE: AVP) – Reported $0.32 vs. $0.32
BJ Services (NYSE: BJS) – Reported $0.64 vs. $0.60
Colgate Palmolive (NYSE: CL) – Reported $0.86 vs. $0.85
Liz Claiborne (NYSE: LIZ) – Reported $0.63 vs. $0.67
Procter & Gamble (NYSE: PG) – Reported $0.90 vs. $0.90
Qwest (NYSE: Q) – Reported $1.08 vs. $0.15
Sepracor (Nasdaq: SEPR) – Reported $0.37 vs. $0.26
Teva Pharmaceuticals (Nasdaq: TEVA) – Reported $0.64 vs. $0.62
Under Armour (NYSE: UA)– Reported $0.40 vs. $0.34
US Steel (NYSE: X) – Reported $2.27 vs. $2.63
News, Upgrades/Downgrades/Brokerage Research:
Las Vegas Sands (NYSE: LVS) – Downgraded at BMO Capital
Manpower (NYSE: MAN) – Upgraded at Citi
British American Tobacco (NYSE: BTI) – Downgraded at Goldman Sachs
Coca Cola Femsa (NYSE: KOF) – Upgraded at JP Morgan
Cisco Systems (Nasdaq: CSCO) – Target increased at Piper Jaffray
Verizon (NYSE: VZ) – Upgraded at Raymond James
General Motors (NYSE: GM) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: CSCO, FTI
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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