David Moenning's Daily State of the Markets:
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Price: $95.59 +0.13%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 5.9%
Revenue Growth %: -1.9%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 5.9%
Revenue Growth %: -1.9%
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Will It Be A Trick Or A Treat?
The big question on investors' minds this morning is if this afternoon’s announcement by Mr. Bernanke and Co. will be a trick or a treat for the bulls. While there is no shortage of opinions on the topic of if the Fed should cut rates and if so, by how much, the general consensus is that we will see a reduction of 0.25% in the Fed Funds and Discount Rates this afternoon at 2:15 pm Eastern.
However, yesterday’s Wall Street Journal article suggesting that a rate cut isn’t exactly a sure thing got the bears fired up in the early going. And with most everyone in waiting-on-Bernanke mode, there was little buying interest during the session.
It also didn't help much that both Procter & Gamble (PG) and US Steel (X) had some not-so encouraging words about the state of the economy or that PG was openly concerned about the consumer. And finally, with the greenback hitting new lows against the Euro for the third straight session, there was simply no reason to step in and be a hero yesterday.
Getting back to the question of the day, once the FOMC announces their decision, it will be very interesting to see how the market reacts. The glass-is-half-empty crowd argues that today is a lose-lose situation for stocks on all three possible Fed scenarios.
For example, the thinking is that if Mr. Bernanke decides to stand pat and leave rates unchanged then traders will voice their displeasure with a host of sell orders. Next, if the Fed cuts rates by 0.25%, the argument is that this outcome is already baked into the market and thus, a “sell the news” reaction could occur. And finally, if Mr. Bernanke decides to cut by 0.50%, the bears tell us that this would be an admission by the Fed that things are worse than anyone had expected.
Turning to this morning, we’ve got a host of economic data to review, so let’s get to it. First, ADP reported that their survey of private employment showed an increase of 106,000 jobs this month, which was much better than the expectations for an increase of 58,000.
The government also reported that the economy's GDP grew by 3.9% in the third quarter, which was higher than the consensus number of 3.1% and the best number since 2006. Next up, on the inflation front, the report showed that the Prices index rose by +0.8%, which was actually well below expectations for a reading of 2.0%. And finally, the Personal Consumption report came in on pace with expectations with Personal Consumption at 3.0 vs. 3.1, the Employment Cost Index rose by +0.8% vs. +0.9%, and the Core PCE was a bit hotter at +1.8% vs. expectations for +1.5%.
Running through the rest of the pre-game indicators; the overseas markets are mostly higher this morning. Crude futures are heading higher today and the latest quote shows the December contract up $0.60 to $90.98. Interest rates are a little higher this morning with the 10-yr trading at a yield of 4.43% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open higher. The Dow futures are currently ahead by about 35 points; the S&Ps are up by about 5 points, while the NASDAQ looks to be about 3 points ahead of fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Crown Castle (NYSE: CCI) – Reported ($0.26) vs. ($0.14)
Chipotle Mexican Grill (NYSE: CMG) – Reported $0.62 vs. $0.53
DreamWorks (NYSE: DWA) – Reported $0.47 vs. $0.44
Equity Residential (NYSE: EQR) – Reported $0.58 vs. $0.56
Invitrogen Corp (Nasdaq: IVGN) – Reported $1.02 vs. $0.82
Lincoln National (NYSE: LNC) – Reported $1.29 vs. $1.37
McKesson (NYSE: MCK) – Reported $0.82 vs. $0.72
Wynn Resorts (Nasdaq: WYNN) – Reported $0.67 vs. $0.60
Today’s Earnings Before the Bell:
Boyd Gaming (NYSE: BYD) – Reported $0.43 vs. $0.42
Constellation Energy (NYSE: CEG) – Reported $1.45 vs. $1.53
Clorox (NYSE: CLX) – Reported $0.88 vs. $0.62
Rockwell Collins (NYSE: COL) – Reported $0.93 vs. $0.89
Hess Corp (NYSE: HES) – Reported $1.23 vs. $1.36
Interactive Corp (Nasdaq: IACI) – Reported $0.37 vs. $0.35
Kraft (NYSE: KFT) – Reported $0.44 vs. $0.41
MasterCard (NYSE: MA) – Reported $1.80 vs. $1.42
NCR (NYSE: NCR) – Reported $0.39 vs. $0.26
Transocean (NYSE: RIG) – Reported $2.12 vs. $1.99
News, Upgrades/Downgrades/Brokerage Research:
Energizer (NYSE: ENR) – Downgraded at Bear Stearns
Qwest (NYSE: Q) – Downgraded at CIBC, JP Morgan
McKesson (NYSE: MCK) – Upgraded at Citi
Teva Pharmaceuticals (Nasdaq: TEVA) – Upgraded at Friedman Billings
Comcast (Nasdaq: CMCSA) – Estimates reduced at Goldman Sachs
TRW Automotive (NYSE: TRW) – Removed from Conviction Buy list at Goldman
Las Vegas Sands (NYSE: LVS) – Downgraded at Lehman
Medtronic (NYSE: MDT) – Upgraded at Morgan Stanley
Chipotle Mexican Grill (NYSE: CMG) – Target increased at Piper Jaffray
Under Armour (NYSE: UA) – Downgraded at Raymond James
Estee Lauder (NYSE: EL) – Downgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: IVGN
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.
The big question on investors' minds this morning is if this afternoon’s announcement by Mr. Bernanke and Co. will be a trick or a treat for the bulls. While there is no shortage of opinions on the topic of if the Fed should cut rates and if so, by how much, the general consensus is that we will see a reduction of 0.25% in the Fed Funds and Discount Rates this afternoon at 2:15 pm Eastern.
However, yesterday’s Wall Street Journal article suggesting that a rate cut isn’t exactly a sure thing got the bears fired up in the early going. And with most everyone in waiting-on-Bernanke mode, there was little buying interest during the session.
It also didn't help much that both Procter & Gamble (PG) and US Steel (X) had some not-so encouraging words about the state of the economy or that PG was openly concerned about the consumer. And finally, with the greenback hitting new lows against the Euro for the third straight session, there was simply no reason to step in and be a hero yesterday.
Getting back to the question of the day, once the FOMC announces their decision, it will be very interesting to see how the market reacts. The glass-is-half-empty crowd argues that today is a lose-lose situation for stocks on all three possible Fed scenarios.
For example, the thinking is that if Mr. Bernanke decides to stand pat and leave rates unchanged then traders will voice their displeasure with a host of sell orders. Next, if the Fed cuts rates by 0.25%, the argument is that this outcome is already baked into the market and thus, a “sell the news” reaction could occur. And finally, if Mr. Bernanke decides to cut by 0.50%, the bears tell us that this would be an admission by the Fed that things are worse than anyone had expected.
Turning to this morning, we’ve got a host of economic data to review, so let’s get to it. First, ADP reported that their survey of private employment showed an increase of 106,000 jobs this month, which was much better than the expectations for an increase of 58,000.
The government also reported that the economy's GDP grew by 3.9% in the third quarter, which was higher than the consensus number of 3.1% and the best number since 2006. Next up, on the inflation front, the report showed that the Prices index rose by +0.8%, which was actually well below expectations for a reading of 2.0%. And finally, the Personal Consumption report came in on pace with expectations with Personal Consumption at 3.0 vs. 3.1, the Employment Cost Index rose by +0.8% vs. +0.9%, and the Core PCE was a bit hotter at +1.8% vs. expectations for +1.5%.
Running through the rest of the pre-game indicators; the overseas markets are mostly higher this morning. Crude futures are heading higher today and the latest quote shows the December contract up $0.60 to $90.98. Interest rates are a little higher this morning with the 10-yr trading at a yield of 4.43% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open higher. The Dow futures are currently ahead by about 35 points; the S&Ps are up by about 5 points, while the NASDAQ looks to be about 3 points ahead of fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Crown Castle (NYSE: CCI) – Reported ($0.26) vs. ($0.14)
Chipotle Mexican Grill (NYSE: CMG) – Reported $0.62 vs. $0.53
DreamWorks (NYSE: DWA) – Reported $0.47 vs. $0.44
Equity Residential (NYSE: EQR) – Reported $0.58 vs. $0.56
Invitrogen Corp (Nasdaq: IVGN) – Reported $1.02 vs. $0.82
Lincoln National (NYSE: LNC) – Reported $1.29 vs. $1.37
McKesson (NYSE: MCK) – Reported $0.82 vs. $0.72
Wynn Resorts (Nasdaq: WYNN) – Reported $0.67 vs. $0.60
Today’s Earnings Before the Bell:
Boyd Gaming (NYSE: BYD) – Reported $0.43 vs. $0.42
Constellation Energy (NYSE: CEG) – Reported $1.45 vs. $1.53
Clorox (NYSE: CLX) – Reported $0.88 vs. $0.62
Rockwell Collins (NYSE: COL) – Reported $0.93 vs. $0.89
Hess Corp (NYSE: HES) – Reported $1.23 vs. $1.36
Interactive Corp (Nasdaq: IACI) – Reported $0.37 vs. $0.35
Kraft (NYSE: KFT) – Reported $0.44 vs. $0.41
MasterCard (NYSE: MA) – Reported $1.80 vs. $1.42
NCR (NYSE: NCR) – Reported $0.39 vs. $0.26
Transocean (NYSE: RIG) – Reported $2.12 vs. $1.99
News, Upgrades/Downgrades/Brokerage Research:
Energizer (NYSE: ENR) – Downgraded at Bear Stearns
Qwest (NYSE: Q) – Downgraded at CIBC, JP Morgan
McKesson (NYSE: MCK) – Upgraded at Citi
Teva Pharmaceuticals (Nasdaq: TEVA) – Upgraded at Friedman Billings
Comcast (Nasdaq: CMCSA) – Estimates reduced at Goldman Sachs
TRW Automotive (NYSE: TRW) – Removed from Conviction Buy list at Goldman
Las Vegas Sands (NYSE: LVS) – Downgraded at Lehman
Medtronic (NYSE: MDT) – Upgraded at Morgan Stanley
Chipotle Mexican Grill (NYSE: CMG) – Target increased at Piper Jaffray
Under Armour (NYSE: UA) – Downgraded at Raymond James
Estee Lauder (NYSE: EL) – Downgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: IVGN
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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